Plan amendment of the new plant of KSVC, which has entered the 3rd year as Japanese company

                                                                        SOCIALIST REPUBLIC OF VIETNAM

   Kyoei Steel Vietnam Company Limited                                              Independence - Freedom - Happiness

                No: ……………….                                                                                Ninh Binh, 1^st October 2014

RE: Plan amendment of the new plant of Kyoei Steel Vietnam Co., Ltd., which has entered the 3^rd year as Japanese company

To whom it may concern:

First of all, Kyoei Steel Vietnam Co., Ltd. would like to thank you for your continued cooperation and enthusiastic support.

From this October our company has entered the 3^rd year since it became a company with 100% invested capital by Japan on 1^st October 2012. We will continue to supply the products with reliable quality produced by Japanese technology as ever. We would appreciate if you keep using our products.

We are pleased to announce about the plan of building new plant project, which we have advanced since our establishment, in Khanh Phu Industrial Zone, Ninh Binh Province with the following directions:

1. We decide to suspend one year to review the entire plan of building the Electric Arc Furnace; only after specific consideration we will give official decision on the construction start time.

2. We are considering installing the steel rolling line first.

(REASONS FOR THE AMENDMENTS )

1) Reviewing the appropriateness of building the Electric Arc Furnace:

- Demand for construction steel has declined for 3 consecutive years from 2011, while the supply continues to increase leading to larger gap between supply and demand.

- Investing in new Electric Arc Furnace will contribute to the increase of billet supply, except for a part of these billets used for the rolling line within the company, it will also maintain the excess supply of domestic billets.

Above are some major changes in the business environment at present compared to 3 years ago when KSVC decided to invest in the new plant. Thus, the investment in Electric Arc Furnace as originally planned is no longer suitable for the current situation, so we have to suspend the plan one year to review the entire investment’s content during this period, then based on the result of  we will make a decision on the construction start time.

2) Research and consideration of installing steel rolling mill first:

- In the situation of difficult growth in demand for construction steel, KSVC still attempts to increase the sales quantity and survives in the northern market. Demand for steel in Vietnam market has declined for 3 consecutive years, but last year the market bottomed out, which means steel demand is gradually recovering. If KSVC installs rolling mill first to grasp the opportunity and maximize the rolling capacity, it will take 3 years later to meet market demand as original forecast. The existing steel mill with small capacity cannot meet increasing sales demand; therefore we will consider installing a new steel rolling line first.

With more than 60 years of experience in steel industry in Japan, our consistent opinion is that we should have Electric Arc Furnace combined with rolling line to be able to compete with the others, and this viewpoint never changes. We understand the special characteristics of business environment in Vietnam steel market, so it is necessary to study about time to build the Electric Arc Furnace. Therefore, we hope that you would understand and sympathize for this amendment.

Finally, we wish to have your continued cooperation and enthusiastic support. Sincerely thanks!

Kyoei Steel Vietnam Co., Ltd.