NORTH AMERICAN HÖGANÄS INC. ACQUIRES KOBE STEEL’S NORTH AMERICAN STEEL POWDER BUSINESS

Höganäs AB has reached agreement through its subsidiary North American Höganäs Inc. to take over the business of Kobelco Metal Powder of America, Inc (“KOMPA”), a subsidiary of Kobe Steel, Ltd. The agreement was signed on July 9 in Pennsylvania, USA.

The agreement calls for KOMPA, located in Seymour Indiana, to shift production and marketing of its steel powder to North American Höganäs over a brief period as customers transition to material made by the subsidiary of the Swedish group. During this period, KOMPA will produce steel powder products under consignment from North American Höganäs. KOMPA expects to cease powder production in spring 2009 upon completion of transitioning its customers’ requirements to North American Höganäs.

To support the smooth transition to North American Höganäs, Kobe Steel and North American Höganäs will form a new company called KHTech Inc. This joint venture company will provide technical services and sales support primarily to KOMPA’s Japanese customers in the United States as well as to its other current U.S. customers. KHTech shall be owned two-thirds by North American Höganäs and one-third by KOMPA.

Commenting on the agreement, Mr. Alrik Danielson, CEO of Höganäs AB said “We are very pleased that Kobe Steel has chosen Höganäs as their partner in North America and the agreement is an important step forward. The creation of KHTech Inc. will add impetus to the development of new applications for powder metal technology.”