Novelis partners with Kobe Steel in South Korea
The joint venture is designed to optimize capacity at Ulsan, South Korea, facility.
Novelis Inc., headquartered in Atlanta, has announced that it has entered into a joint venture agreement with Kobe Steel Ltd., a producer of aluminum rolled products in Japan. Novelis will sell Kobe Steel 50 percent of its ownership interest in its Ulsan, South Korea, facility for $315 million to form the joint venture Ulsan Aluminum Ltd. Through the venture, Novelis and Kobe Steel jointly will own and operate the Ulsan facility, with each company remaining responsible for its metal supply and commercial relationships, Novelis says.
The joint venture transaction is expected to close in September 2017, subject to customary closing conditions, according to Novelis.
By entering this joint venture, Novelis says it will better use its rolling capacity at Ulsan, which will continue to focus on automotive and specialty sheet to meet the increasing demand for lightweight rolled aluminum products across Asia. Partnering with what it describes as another world-class manufacturing company is designed to allow Novelis to drive operational efficiencies and process enhancements. As a result, Novelis’ Ulsan facility, along with its Yeongju facility in South Korea and its Changzhou facility in China, will be better positioned to deliver innovative, value-added products and services to customers, the company says. The transaction also is expected to generate cash proceeds to enhance Novelis’ strategic flexibility and reduce its net debt.
“As a company, we constantly identify business opportunities that allow us to deliver maximum value across our global operations and we continue to see Asia as a strategic market,” says Steve Fisher, president and chief executive officer of Novelis. “By entering into this joint venture, we are able to leverage our deep experience with other successful joint ventures to more efficiently serve our customers and increase our strategic flexibility in order to capitalize on potential future market opportunities.”
Located in the industrial hub of Korea, Novelis’ Ulsan facility employs approximately 600 people and currently focuses on the production of rolled aluminum sheet for a variety of markets in Asia. The plant recently completed a major expansion, adding a new three-stand hot finishing mill and as a pusher furnace and annealing furnaces.
Novelis operates in 10 countries, has approximately 12,000 employees and had $10 billion in revenue for its 2016 fiscal year. The company supplies aluminum sheet and foil products to transportation, packaging, construction, industrial and consumer electronics markets throughout North America, Europe, Asia and South America.
Novelis is a subsidiary of Hindalco Industries Ltd., an industry leader in aluminum and copper, and metals flagship company of the Aditya Birla Group, a multinational conglomerate based in Mumbai, India.
Kobe Steel is a diversified corporation with businesses in the three core areas of materials, machinery and electric power. The materials businesses include steel, welding, aluminum and copper. The machinery businesses consist of industrial machinery, construction machinery and engineering. Electric power supply is the third core business. Kobe Steel has head offices in Kobe and Tokyo, Japan. The Kobe Steel Group, consisting of Kobe Steel and its numerous subsidiaries and affiliates, has more than 36,000 employees.