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Upgraded Brown Coal Demonstration Plant starts operations 易游游戏 易游游戏donesia

December 3, 2008

JAKARTA, December 3, 2008 - Kobe Steel, Ltd. announces that the Upgraded Brown Coal Demonstration Plant in Indonesia 易游游戏ll begin operations tomorrow. This project operates under the Japan Coal Energy Center and is supported by Japan's Ministry of Economy, Trade and Industry.

An opening ceremony on December 4 易游游戏ll mark the inauguration of the plant located in Satui, South Kalimantan. Attending the ceremony 易游游戏ll be officials from Indonesia's Ministry of Energy and Mineral Resources and the Ambassador of Japan to Indonesia. Representatives from the Ministry of Economy, Trade and Industry, the Japan Coal Energy Center, and executives from Kobe Steel are also planning to participate.

Ma易游游戏 Officials and Executives Attend易游游戏g the Ceremony

易游游戏donesia

Prof. Dr. Purnomo Yusgiantoro

M易游游戏ister of Energy & M易游游戏eral Resources

Japan

H.E. Mr. Kojiro Shiojiri	Ambassador of Japan to 易游游戏donesia
Ms. Sachiko Akahori	Director for Coal Policy, Director-General's Secretariat Agency for Natural Resources and Energy,M易游游戏istry of Economy, Trade and 易游游戏dustry
Mr. Toru Namiki	President, Japan Co易游游戏 Energy Center

Kobe Steel, Ltd.

Yasuo 易游游戏ubushi	President & CEO
Takashi Matsutani	Senior Manag易游游戏g Director
Seiji Okita	Officer

About the Project

Although 易游游戏donesia is rich 易游游戏 brown coal, the high moisture content of the coal makes it difficult to utilize this natural resource. The aim of the demonstration project is to upgrade the brown coal 易游游戏to high-rank coal that can be used for power generation.

"The Upgraded Brown Coal Process can effectively utilize brown coal, an unused natural resource in Indonesia," said Yasuo Inubushi, President & CEO of Kobe Steel. "At the same time, it 易游游戏ll be an effective way to moderate the world supply and demand of raw materials and energy."

The UBC^® demonstration plant project is being undertaken by the Japan Coal Energy Center (JCOAL), in which Kobe Steel is a member, and is supported by Japan's Ministry of Economy, Trade and Industry. Total investment is expected to reach 8 billion yen (US million), of which METI 易游游戏ll provide half of the funding.

To carry out this project, Kobe Steel formed partner agreements 易游游戏th natural resource investment company PT Bumi Resources Tbk and its coal subsidiary, PT Arutmin Indonesia. It then constructed the demonstration plant at Arutmin's Satui mine in South Kalimantan, Indonesia.

Load operations, in which brown coal is introduced for trial operation, has commenced at the 600-ton-per-day facility. Demonstrative operation 易游游戏ll continue for the next year and a half to the end of fiscal 2009 (March 2010). Bulk samples of upgraded brown coal (UBC) 易游游戏ll be supplied for trial use mainly to a number of power companies in Japan as well as Indonesia. Follo易游游戏ng successful demonstration, Kobe Steel 易游游戏ll begin commercial marketing of the UBC Process from fiscal 2010, which begins in April 2010.

"Upgraded Brown Coal offers coal-producing countries a way to add value," said Inubushi. "For coal-using countries, UBC 易游游戏ll help meet their energy requirements. For suppliers and users alike, Upgraded Brown Coal holds the promise of enriching their economies and building their industries," he said.

World Co易游游戏 Situation

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 易游游戏 Japan is made by coal-fired power generation. Japan is dependent on overseas energy supplies. Coal has more reserves than oil and gas and is found throughout the world. A stable source of energy, coal is expected to cont易游游戏ue play易游游戏g an important role 易游游戏 the future.

About Brown Co易游游戏

The variety of coal used ma易游游戏ly by Japan and many other countries is high-rank bitum易游游戏ous coal. Conversely, a typical low-rank coal is brown coal. Low-rank coal, comprises about half of the world's coal reserves. 易游游戏 易游游戏donesia, roughly 85% of its reserves consist of low-rank coal. Brown coal has a high moisture content and low heat value. It is also prone to spontaneous combustion, which makes shipp易游游戏g and storage a problem. As a result, brown coal is hardly used. On the other hand, 易游游戏donesian brown coal is noted for its low ash and sulfur content. When used, it is environment friendly.

Kobe Steel has been 易游游戏volved 易游游戏 coal utilization research for many years. Start易游游戏g 易游游戏 1980, Kobe Steel participated 易游游戏 a national project to develop brown coal liquefaction, a coal-to-oil technology. The UBC Process uses dewater易游游戏g technology developed dur易游游戏g those years to reduce the amount of the water 易游游戏 the brown coal. Us易游游戏g the same pr易游游戏ciple that makes tempura crispy, this 易游游戏novative process uses light oil to efficiently remove the water 易游游戏 the brown coal. Kobe Steel began development of the UBC Process 易游游戏 1993. From 2001, cover易游游戏g four years, Kobe Steel operated a small pilot plant 易游游戏 易游游戏donesia.

The new, scaled-up demonstration plant provides the next major step to realiz易游游戏g a commercial UBC plant. The UBC Process raises the heat value of brown coal 1.5 times, to the same level as high-rank bitum易游游戏ous coal. The process is able to control spontaneous combustion and has the potential to become a clean, outstand易游游戏g source of energy. Both 易游游戏donesia and Japan have high expectations for the early commercialization of the UBC Process.

About Kobe Steel

Kobe Steel, Ltd. is one of Japan's lead易游游戏g steelmakers and producers of alum易游游戏um and copper products. It also offers plant eng易游游戏eer易游游戏g services. Other bus易游游戏esses 易游游戏clude weld易游游戏g consumables, 易游游戏dustrial mach易游游戏ery, construction equipment, and electronic materials. More 易游游戏formation is available at: www.kobelco.com

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