NKK, Siderca Reach Basic Agreement on Seamless Pipe Joint Venture
NKK has reached a basic agreement with Siderca S.A. of Argentina to form a seamless steel pipe manufacturing joint venture. Siderca is a core company of the pipe division of the Buenos Airesbased Techint Group, the world's largest supplier of seamless steel pipes. Competition has heated up in the seamless steel pipe market, which is dependent on foreign customers like major oil companies. NKK has, therefore, decided to team up with Siderca and the Techint Group in order to expand its global sales of seamless pipes. The new joint venture will draw on NKK's highly valued technology and Techint's extensive sales and cost competitiveness to create the world's best seamless pipe supply system. Since December 1997, NKK has promoted a sales alliance with Siderca and Tamsa (Tubos de Acero de Mexico S.A.) of Mexico, another Techint Group unit. The alliance has mainly focused on the licensing of NKK premium joints for oil country tubular goods (OCTGs). As major oil companies continue to merge and restructure, customer needs have also diversified. Purchases are now being made from a single supply source, with customers seeking total one-stop service, including global logistics and development of new products for use in the severe environment of oil fields. To respond to such needs, NKK has formed a global sales and marketing alliance with Siderca. Having now reached a basic agreement on a joint venture, the two companies will begin detailed talks to finalize specific contracts. Their aim will be to supply seamless pipes in varied grades and sizes, improve cost competitiveness, build a global production and sales network, and expand services for domestic customers by using their combined strength. Basically, NKK plans to spin off the seamless pipe division of its Keihin Works and form a new joint venture company with Siderca, which will produce and sell seamless steel pipes, beginning in the first half of fiscal 2000. NKK will supply billets, material for seamless steel pipes, and support research and development at the new company. Reflecting substantial equality in the partnership, Siderca will own 51% of the joint venture, with NKK holding 49%. The name of the new firm, as well as its capital and other details, will be finalized at a later date. The NKK-Techint Group alliance will create the best seamless pipe supply system in the world, by utilizing NKK's advanced technology for high-grade alloy steel pipes and ability to develop high-strength premium joints and Techint's massive production capacity and cost competitiveness. Both parties will jointly establish international manufacturing bases in Japan, other Asian countries, Latin America and Europe, and be assisted by a global sales network. The Techint Group is a conglomerate specializing in steel, engineering and oil and gas production. Its seamless pipe division produces 2 million metric tons per year, the largest amount in the world, and comprises Siderca (approx. 700,000 M/T per year), Tamsa (approx. 600,000 M/T per year) and Dalmine S.p.A of Italy (approx. 700,000 M/T per year). These three companies form together the DST Group and have over 20 sales offices around the world.
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