Is U.S. Joint Venture Galv Line in Jeopardy?

U.S. Steel and Kobe Steel announced Sept. 25 that as joint venture partners they planned to begin construction on the new CGL line in fourth-quarter 2017. The $400 million line, with an annual capacity of 500,000 tons, would utilize a proprietary process to coat advanced, Generation 3 lightweight steels for the auto industry.

Soon after the announcement of the joint venture investment, Kobe Steel admitted it sold copper, aluminum and steel products (wire and powders) that had failed quality control tests to about 500 customers, and falsified data to cover it up. The questionable materials have been used in products ranging from automobiles to aircraft. The investigation continues into whether any of the materials pose a danger as applied, but the Japanese steelmaker undoubtedly faces a host of lawsuits. The company’s stock price has plummeted as a result of the scandal, putting its commitment to the PRO-TEC project, and even the company’s viability, in jeopardy, say analysts.