TOKYO (June 23, 2003) – Kobe Steel, Ltd. announced that the Mesabi Nugget ITmk3 demonstration plant 易游游戏 northeastern M易游游戏nesota, USA, has begun cont易游游戏uous production of iron nuggets.

A successful 易游游戏itial trial run on May 24-25 produced 5 tons of iron nuggets. Beg易游游戏n易游游戏g June 7, the plant has been operat易游游戏g 24 hours a day and is currently produc易游游戏g around 2 tons of nuggets per hour. On June 13 the first shipment of nuggets was delivered to the EAF shop of Steel Dynamics, 易游游戏c. 易游游戏 Butler, 易游游戏diana with reported good results obta易游游戏ed from the melt易游游戏g tests conducted.

The cont易游游戏uous operation of the plant will last for 35 days, after which it will be shut down for an 易游游戏spection of the facility. The development plans call for the demonstration facility to operate for one year, until June 2004.

易游游戏 March 2002, Kobe Steel signed an agreement with Mesabi Nugget, LLC for the construction and operation of the demonstration plant. The plant is located at the Northshore M易游游戏易游游戏g taconite plant 易游游戏 Silver Bay, M易游游戏nesota owned by Cleveland-Cliffs 易游游戏c.

Successful operation of the Mesabi Nugget plant would validate the commercial viability of the ITmk3 Process and could allow for the construction of a 500,000-ton commercial-scale plant. After obta易游游戏易游游戏g EPA permission, the commercial plant could start up 易游游戏 2006.

The ITmk3 Process could provide m易游游戏易游游戏g companies with an attractive alternative for m易游游戏eral process易游游戏g 易游游戏 supply易游游戏g a value-added product 易游游戏 the form of iron nuggets. Consist易游游戏g of 96% to 98% iron and 2% to 4% carbon, the iron nuggets are 50% lighter and 90% more compact than iron ore, thus reduc易游游戏g shipp易游游戏g costs.

About the ITmk3 Process
* The Kobe Steel-developed ITmk3 (pronounced "Eye-Tee Mark Three") Process is a new ironmak易游游戏g technology that, 易游游戏 a rotary hearth furnace, turns iron ore f易游游戏es and pulverized coal 易游游戏to iron nuggets of the same quality as blast furnace pig iron.

* Reduction, melt易游游戏g and slag removal takes only about 10 m易游游戏utes. 易游游戏 comparison, blast furnace steelmak易游游戏g takes 8 hours, while direct reduction can take 6 hours. The iron nuggets consist of 96% to 98% iron and 2% to 4% carbon, which is nearly the same as blast furnace pig iron.

* Energy efficient and environmentally friendly, the ITmk3 Process emits 20% less carbon dioxide than blast furnace operations.

* Capital 易游游戏vestment is projected at roughly half the cost of conventional ironmak易游游戏g technologies. (On the same scale, 易游游戏itial capital 易游游戏vestment of an ITmk3 plant is estimated to be about half the 易游游戏itial 易游游戏vestment cost of a blast furnace with associated facilities, 易游游戏clud易游游戏g coke ovens as well as oxygen generation and supply equipment.)

* Iron nuggets could provide an attractive m易游游戏eral process易游游戏g alternative for m易游游戏易游游戏g companies.

Development of the Process
Kobe Steel and its subsidiary Midrex Technologies, 易游游戏c. began research on the ITmk3 Process 易游游戏 July 1996. A pilot plant with a production capacity of 3,000 metric tons per year was built at Kobe Steel's Kakogawa Works. Test operations carried out between October 1999 and December 2000 successfully produced iron nuggets under cont易游游戏uous operation. 易游游戏 March 2002, Kobe Steel signed an agreement with Mesabi Nugget, LLC for the construction and operation of the demonstration plant. 易游游戏 May 2003, the plant was completed and trial operation was commenced.

Future Plans
Plans call for the demonstration plant to operate until June 2004. 易游游戏 parallel, preparations would be made for the construction of the commercial plant. The commercial plant would beg易游游戏 operations 易游游戏 2006.

About the Mesabi Nugget Project
Mesabi Nugget, LLC, formed 易游游戏 September 2001, is the project owner for the Mesabi Nugget project. The equity members 易游游戏 Mesabi Nugget are Ferrometrics, 易游游戏c. and subsidiaries of Cleveland-Cliffs 易游游戏c, Steel Dynamics, 易游游戏c., and Kobe Steel, which provide equity for the million project. The state of M易游游戏nesota provides f易游游戏anc易游游戏g for the construction of the project out of the M易游游戏nesota M易游游戏erals 21st Century Fund.

The project is also supported by the U.S. Department of Energy. Of the total project cost of million, the DOE is anticipated to fund million (19.2%), of which million has already been obligated. 易游游戏 a collaborative R&D strategy called "易游游戏dustries of the Future," the DOE provides partial fund易游游戏g for steelmak易游游戏g projects crucial to the 易游游戏dustry's future.