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Agreement to Expand Plant at Inner Mongolia Erdos EJM Manganese Alloys Co., China

Oct. 4, 2007


JFE Steel Corporation
Mitsui & Co., Ltd.
Erdos Japan Co., Ltd.


Main Contents

TOKYO - JFE Steel Corporation (President: Hajime Bada), Mitsui & Co., Ltd. ("Mitsui"; President: Shoei Utsuda) and Erdos Electric Power & Metallurgical Co., Ltd. ("Erdos"; President: Linxiang Wang) have reached agreement to expand the silico-manganese plant operated by the three companies as a joint venture at Inner Mongolia EJM Manganese Alloys Co., Ltd. ("Erdos EJM"). After receiving the necessary licenses and permits from the Chinese authorities, the partners plan to increase the company's capitalization from 15 million US dollars to approximately 30 million US dollars by the end of the year.

Expansion will entail construction of a second plant (No. 2 plant) that will be of the same capacity as the No. 1 plant that came online in July 2006 (25,500 kVA x 2 units; 75,000 tons/year); commercial production is expected to commence at the end of 2008. When the No. 2 plant comes online, Erdos EJM will have a total silico-manganese production capacity of 150,000 tons/year, making it the largest producer in China and one of the largest producers anywhere in the world.

The JFE Steel group purchases approximately 90,000 tons of silico-manganese a year, employing it as a manganese additive and de-oxidant in steelmaking. The vast majority is imported from Erdos EJM. However, the rapid growth of the Chinese steel industry in recent years has resulted in a sharp increase in demand for silico-manganese in the domestic Chinese market, making it more challenging to secure stable supplies of the material. The addition of the No. 2 plant will give the JFE Steel group a more stable silico-manganese sourcing system.

Mitsui supplies manganese ferroalloy, primarily to Japanese firms. Its investment in the construction of the No. 2 plant at Erdos EJM will strengthen its framework for a stable supply of silico-manganese to the JFE Steel group and other customers.

Erdos, working under the Chinese central government's policy to develop the western regions of the country, is implementing a ferroalloy production project using thermoelectric power generated with the abundant coal resources in the city of Erdos, Inner Mongolia Autonomous Region. The addition of the Erdos EJM No. 2 plant alongside the No. 1 plant and the ferrosilicon and silicon carbide plants will further expand the company's ferroalloy production system.

Profile of Joint Venture

Company name Inner Mongolia Erdos EJM Manganese Alloys Co., Ltd.
Address Qi Panjing, ErdosCity, Inner Mongolia Autonomous Region, People's Republic of China
Capital 15 million US dollars (to be increased to 30 million US dollars)
Shareholders Erdos 51.0%
JFE Steel 24.5%
Mitsui 24.5%
Product lines Silico-manganese
Production capacity No.1 plant 75,000 tons/year (25,500 kVA x 2 units)
Production began in July 2006
No.2 plant 75,000 tons/year (25,500 kVA x 2 units)
To be commissioned at the end of 2008
Major markets Japan, China, etc.

Profile of Erdos Electric Power & Metallurgy Co., Ltd.

Established in 2003 as a wholly-owned subsidiary of Erdos Cashmere Group Co., Ltd. In accordance with the Chinese central government's policy to promote development in the western region, the company has been producing ferroalloys using thermoelectric power generated with rich coal resources in Erdos City.

Erdos Cashmere Group Co. is an integrated processing company that began in 1969 spinning cashmere and continues to be one of the world's largest processors of cashmere products. Headquartered in Erdos City, Inner Mongolia, the group includes 72 subsidiaries and affiliates; flagship Erdos Cashmere Products Co., Ltd. is listed on the Shanghai Stock Exchange.

Location of Inner Mongolia Erdos EJM Manganese Alloys Co. Location of Inner Mongolia Erdos EJM Manganese Alloys Co.

Notice:
This press release includes forward-looking statements about Mitsui. These forward-looking statements are based on the current assumptions and beliefs of Mitsui in light of the information currently available to it, and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause Mitsui's actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. The risks, uncertainties and other factors referred to above include, but are not limited to, those contained in Mitsui's latest annual report on Form 20-F, which has been filed with the U.S. Securities and Exchange Commission.
This press release is published in order to publicly announce specific facts stated above, and does not constitute a solicitation of investments or any similar act inside or outside of Japan, regarding the shares, bonds or other securities issued by us.

Information

For inquiries on this matter, please contact

Mitsui & Co., Ltd.
Corporate Communications Division
Telephone: +81-3-3285-7562
Facsimile: +81-3-3285-9819