OREANDA-NEWS. December 25, 2012. Kobe Steel, Ltd. and Jiangsu ALCHA Aluminium Co., Ltd. have decided to terminate their letter of intent to form a joint venture to produce aluminum coil and sheet.

In December 2011, Kobe Steel and China's ALCHA, a major producer of aluminum rolled products, announced that they had signed a letter of intent to conduct a detailed feasibility study for the establishment of a joint venture in Baotou, Inner Mongolia to produce and sell aluminum coil and sheet. The joint venture was envisaged to be 80 percent owned by Kobe Steel and 20 percent by ALCHA. Capital investment was estimated at about 40 billion yen. The production capacity was to be about 200,000 metric tons per year.

While conducting the feasibility study, the two companies had differences and were unable to reach agreement. As a result, Kobe Steel and ALCA decided to allow the letter of intent to expire on December 30, 2012.

China's demand for aluminum sheet for automobiles and beverage cans, major applications for Kobe Steel, is anticipated to grow sharply in the coming years. Kobe Steel will continue to study the possibility of establishing a production base for aluminum sheet in China.

The ending of the letter of intent will not affect Kobe Steel's consolidated and nonconsolidated earnings results.