OREANDA-NEWS. January 29, 2016. Sumitomo Corporation (Head Office: Chuo-ku, Tokyo; President: Kuniharu Nakamura) and The Japan Steel Works, Ltd. (Head Office: Shinagawa-ku, Tokyo; President: Ikuo Sato; hereinafter “JSW”) have reached a basic agreement on major terms and conditions with Gerdau S.A. (Head Office: Porto Alegre, Rio Grande do Sul, Brazil; hereinafter “Gerdau”), the largest steelmaker in Brazil, based on which the two Japanese companies will participate in the manufacture and sale of forged parts for wind power generation and establish a joint venture with Gerdau in Brazil, subject to the prior approval of antitrust authorities in several jurisdictions.

The joint venture (tentative name “Gerdau Summit”) shall engage in the manufacture and sale of forged parts for wind power generation as an extension of Gerdau’s existing business of manufacturing and selling forged and cast products. Currently, in order to meet the increasing electricity demand, the Brazilian government announces the policy to encourage the installation of new wind power generation which will lead to almost double the wind power ratio out of national total power supply from 6% in 2015 to 11% in 2024. To foster this policy, the government provides various supports for wind power generation projects as well as encourages domestic manufacturing of wind power generation-related parts. The parties believe that this project serves such country’s policy and wind power industry and further envision that the joint venture company will become the biggest supply center of forged products for wind power generation within MERCOSUR* area.

JSW has long been leading the world’s forging industry with its manufacturing technologies, mainly in the energy field such as power generation. Sumitomo Corporation, meanwhile, has gained expertise and built up networks for wind-power-related projects through its infrastructure business and the sale of related components. The two companies shall combine their respective strengths to further solidify the robust production foundation of Gerdau, one of the leading steelmakers in the world. These companies shall jointly work to launch the manufacture and sale of forged parts for wind power generation, focusing mainly on Brazil but also reaching into the entire Central and South American market. JSW has plenty of experiences to transfer its forging and casting techniques to foreign countries. Based on such experiences, JSW launches its overseas joint venture project for the first time in the forging and casting field.
Forged and cast parts are necessary materials for a wide range of industries, and demand for these materials, including demand for forged parts for wind power generation, is expected to increase in line with Brazil and other South American countries’ economic growth. Sumitomo Corporation and JSW will commit themselves to the growth of this joint venture and thereby contribute to the development of the region’s industry and economic growth.