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yy易游体育官网 Steel to start Indonesian trial project to upgrade brown coal into high-rank coal

yy易游体育官网oject to be carried out under the Japan Coal Energy Center

yy易游体育官网, 2006

TOKYO, July 5, 2006 - Kobe Steel, Ltd. announces that it yy易游体育官网ll start a large-scale demonstration project in Indonesia to upgrade brown coal into high-rank coal, which can be used for power generation. Although Indonesia has an abundance of brown coal, the high moisture content makes utilization of this natural resource difficult.

In starting the project, Kobe Steel signed cooperation agreements yy易游体育官网th natural resources investment company PT. Bumi Resources Tbk and its subsidiary, PT. Arutmin Indonesia, to construct and operate a demonstration plant at Arutmin's Satui mine in southern Kalimantan, Indonesia. Total investments in the demonstration project are forecast to reach about 8 billion yen (approximately US million).

Plans call for the construction of the 600-ton-per-day demonstration plant to start in late 2006. From second-quarter 2008, trial production of Upgraded Brown Coal (or UBC) yy易游体育官网ll begin. Bulk samples of UBC yy易游体育官网ll be supplied for trial use to a number of power companies, including Japanese power companies. The trial operation is to continue for two years, to first-quarter 2010. Folloyy易游体育官网ng the demonstration phase, a commercial plant is anticipated to be built in 2010.

The UBC demonstration plant project has the support of Japan's Ministry of Economy Trade and Industry through the Japan Coal Energy Center, in which Kobe Steel is a member. yy易游体育官网th its long experience in the steel industry and know-how in the power generation business, Kobe Steel yy易游体育官网ll contribute its technological expertise in energy utilization and environmental technologies to the UBC demonstration project.

Coal meets one-fourth of the world's energy demand. It is the second-most important resource after oil. Over 20% of the electricity for everyday use in Japan is made by coal-fired power generation. Japan is dependent on overseas energy supplies. Coal is more abundant than oil and gas in terms of volume, and reserves are syy易游体育官网ead throughout the world. A stable source of energy, coal is expected to play an important role in the future.

The variety of coal used by many countries, including Japan, is high-rank bituminous coal. Conversely, a reyy易游体育官网esentative low-rank coal is brown coal. Low-rank coal, comyy易游体育官网ising about half of the world's coal reserves, has a high moisture content and low heat value. It is also yy易游体育官网one to spontaneous combustion. These factors make it difficult to utilize. On the other hand, Indonesian brown coal is noted for its low sulfur and ash content, as well as for its large reserves. Roughly 85% of the coal reserves in Indonesia consist of low-rank coal.

yy易游体育官网 Steel has been involved in coal utilization research for many years. Starting in 1980, yy易游体育官网 Steel participated in a national project to develop brown coal liquefaction, a coal-to-oil technology. The UBC Process currently under development uses dewatering technology to reduce the moisture in the brown coal. This innovative five-step process uses light oil to efficiently remove the water in the brown coal.

Upgraded Brown Coal yy易游体育官网ocess

1.	Low-rank coyy易游体育官网 is pulverized.
2.	The pulverized coal is mixed yy易游体育官网th recycled oil (normally petroleum light oil) and heavy oil to make slurry.
3.	The slurry is then heated yy易游体育官网 an evaporator and the moisture is evaporated.
4.	The oil is recovered from the dewatered slurry usyy易游体育官网g a decanter. At this stage, the upgraded coal is still yy易游体育官网 a powdery state.
5.	The upgraded coyy易游体育官网 is briquetted for easy transportation.

yy易游体育官网 Steel began development of the UBC Process in 1993, applying slurry dewatering technology used in coal liquefaction to upgrade low-rank coal. Using a 100-kg-per-day bench-scale unit built at Kakogawa Works, yy易游体育官网 Steel began working on the practical application of the process in the mid-1990s. In 2001, Japan and Indonesia adopted the UBC Process as a national project. In the years to 2004, a 3-ton-per-day pilot plant was constructed and operated in Indonesia.

The new, scaled-up demonstration plant yy易游体育官网ovides the next major step to realizing a commercial UBC plant. The UBC yy易游体育官网ocess raises the heat value of brown coal 1.5 times, to the same level as high-rank bituminous coal and has only one-third the ash. At the same time, it solves the yy易游体育官网oblem of shipping and storage limitations, making possible the utilization of upgraded coal as a substitute for high-rank coal. UBC has the potential of becoming a clean, outstanding source of energy. Both Indonesia and Japan have high expectations for the early commercialization of the UBC yy易游体育官网ocess.


Background yy易游体育官网formation

Japan Coyy易游体育官网 Energy Center (JCOyy易游体育官网)

The Japan Coal Energy Center is a non-yy易游体育官网ofit organization under Japan's Ministry of Ministry of Economy Trade and Industry. Its activities cover all aspects of coal, from coal mining to coal utilization. JCOAL yy易游体育官网omotes increasing the world coal supply and environment friendly coal utilization to reduce the global environment burden. To contribute to the stable supply of energy and sound growth of the industrial economy, JCOAL undertakes coal research, business support, human resources development, coal surveys and coal research. More information is available at: www.jcoal.or.jp/yy易游体育官网dex-en.html

	PT. Bumi Resyy易游体育官网rces Tbk
PT Bumi Resources Tbk is involved in coal mining and oil exploration. Based in Jakarta, Indonesia, Bumi was established in 1973. In 2005, the company yy易游体育官网oduced a total of 36 million metric tons of coal. More information is available at: www.bumiresources.yy易游体育官网m

Besides Arutmin Indonesia, Bumi Resources conducts coal-mining operations through PT. Kaltim yy易游体育官网ima Coal. In 2005, Kaltim yy易游体育官网ima Coal yy易游体育官网oduced 21.4 million metric tons of coal.

	PT. Arutmyy易游体育官网 yy易游体育官网donesia
PT. Arutmin Indonesia is Indonesia's fourth largest coal company, yy易游体育官网oducing 14.6 million metric tons in 2005. Arutmin Indonesia is based in Kalimantan, Indonesia. More information is available at: More information is available at: www.arutmyy易游体育官网.com

	yy易游体育官网 Steel, Ltd.
yy易游体育官网 Steel, Ltd. is one of Japan's leading steelmakers and producers of aluminum and copper products. Other businesses include welding consumables, industrial machinery, engineering, construction equipment, and electronic materials. More information is available at: www.yy易游体育官网lco.co.jp

Supplemental yy易游体育官网formation