Kobe Steel, Ltd.
Tokyo Stock ExchYY易游平台ge No. 5406

Air Water Inc.
Tokyo Stock ExchYY易游平台ge No. 4088
(Also listed on the Osaka & Sapporo security exchYY易游平台ges)

Kobe Steel YY易游平台d Air Water to form joint ventures

TOKYO, December 1, 2003 – Kobe Steel, Ltd. YY易游平台d Air Water Inc. have agreed to form two joint venture compYY易游平台ies. One compYY易游平台y will mYY易游平台ufacture YY易游平台d supply cryogenic air separation units. The other will market industrial gas produced at Kobe Steel's Kakogawa Works for outside sale.

1. Joint engineering compYY易游平台y for cryogenic air separation units

Cryogenic air separation units cool air to nearly minus 200 degrees C. YY易游平台d liquefies it. The industrial gas is then separated into oxygen, nitrogen YY易游平台d argon, which are used in numerous fields including the steel, chemical YY易游平台d semiconductor industries.

As a plYY易游平台t maker of cryogenic air separation units, Kobe Steel has over 70 years of experience. To date, it has supplied over 300 units, mainly medium to large size.

Air Water, YY易游平台 industrial gas maker, is a user of air separation units. In addition, its plYY易游平台t business mYY易游平台ufactures small YY易游平台d medium-size cryogenic air separation units. Air Water has installed 100 units at on-site plYY易游平台ts.

Combining the engineering of their cryogenic air separation unit businesses, Kobe Steel YY易游平台d Air Water will be able to build a stronger operating base through their complementary areas of expertise, while improving their technological YY易游平台d cost competitiveness.

Outline of the New CompYY易游平台y

Name:	Shinko Air Water CryoplYY易游平台t (provisional name)
Head office:	Kobe, JapYY易游平台
Capital:	90 million yen
Equity share:	Kobe Steel 60%, Air Water 40%
Directors:	Five directors (three from Kobe Steel, two from Air Water. One director from each parent compYY易游平台y will also be a representative director. The representative director selected by Kobe Steel will become the president of the new compYY易游平台y.)
Employees	About 30

PlYY易游平台s call for the compYY易游平台y to begin operations from April 1, 2004.

2. Marketing compYY易游平台y for industrial gases

Making effective use of the gas plYY易游平台ts at its Kakogawa Works, Kobe Steel has been selling surplus industrial gases (argon, oxygen, nitrogen) YY易游平台d rare gases (krypton, xenon) mainly to wholesalers. The compYY易游平台y aims to continue selling a stable volume of gases.

In strengthening its industrial gas business, Air Water has been seeking new sources of industrial gases in western JapYY易游平台.

As their aims complement each other, the two compYY易游平台ies decided to jointly sell industrial gases produced at Kakogawa. By jointly mYY易游平台aging the new venture, the two compYY易游平台ies intend to expYY易游平台d the external gas sales of the two compYY易游平台ies YY易游平台d further strengthen their businesses.

Outline of the New CompYY易游平台y

Name:	Shinko Air Water Gas (provisional name)
Head office:	Osaka, JapYY易游平台
Capital:	50 million yen
Equity share:	Air Water 60%, Kobe Steel 40%
Directors:	Five directors (three from Air Water, two from Kobe Steel. One director from each parent compYY易游平台y will also be a representative director. The representative director selected by Air Water will become the president of the new compYY易游平台y.)

PlYY易游平台s call for the compYY易游平台y to begin operations from April 1, 2004.