SOURCE: Ternium S.A.

Ternium S.A.

May 17, 2010 18:00 ET

Ternium and Nippon Steel Corporation Sign Memorandum of Understanding to Form Joint Venture in Mexico

LUXEMBOURG--(Marketwire - May 17, 2010) -  Ternium S.A. (NYSE: TX) and Nippon Steel Corporation announced today that they have signed a non-binding memorandum of understanding with the intention to form a joint venture in Mexico for the manufacturing and sale of hot-dip galvanized and galvannealed steel sheets to serve the Mexican automobile market.

The joint venture, which would require an investment of approximately US$350 million over two and a half years, would be expected to build a hot-dip galvanizing plant (equivalent to the state-of-the-art equipment now in operation at Nippon Steel's steelworks in Japan) in the vicinity of Monterrey City, and subsequently to manufacture and sell high-grade and high-quality galvanized and galvannealed steel sheets, including outer-panel and high-strength qualities. The plant, which would have a production capacity of about 400,000 metric tons per year, would be primarily intended to respond to customer demand (including that of Japanese car makers) for high-grade automotive steel sheets in Mexico. The Mexican automobile market is a growing and important market for both Nippon Steel and Ternium and is expected to further grow in the future. 

The two companies will now maintain exclusive negotiations towards a binding joint venture agreement, which shall be subject to final documentation, due diligence, feasibility studies, agreement on other issues, and regulatory and corporate approvals.

Forward Looking Statements

Some of the statements contained in this press release are "forward-looking statements." Forward-looking statements are based on management's current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to gross domestic product, related market demand, global production capacity, tariffs, cyclicality in the industries that purchase steel products and other factors beyond Ternium's control.

About Nippon Steel

Nippon Steel, with its consolidated annual crude steel production of 40 million metric tons, is one of the leading steelmakers in the world. By virtue of its technical expertise of the world's highest level, which keeps on advancing day by day, and deployment of global and domestic strategic alliances, the company holds an unchallenged position in the global market of high-end steel products. More information about Nippon Steel is available at http://www.nsc.co.jp/en/index.html.

About Ternium

Ternium is a leading steel company in Latin America, manufacturing and processing a wide range of flat and long steel products for customers active in the construction, home appliances, capital goods, container, food, energy and automotive industries. With its principal operations in Mexico and Argentina, Ternium serves markets in the Americas through its integrated manufacturing system and extensive distribution network. The Company has an annual production capacity of approximately nine million tons of finished steel products. More information about Ternium is available at www.ternium.com.