Höganäs AB buys American steel mill

1/20/2000 6:00 AM EST

The object of Höganäs AB's establishment on the North American market is
to achieve substantial market share. Local manufacture of iron powder is a
strategically important factor in achieving this aim. As a step in its
establishment strategy, Höganäs AB has therefore entered into an agreement
with ChemFirst, Inc. whereby Höganäs is to acquire FirstMiss Steel, Inc.,
a subsidiary of ChemFirst.


FirstMiss Steel, located in Hollsopple, Pennsylvania, was started at the
beginning of the eighties and has subsequently been expanded for
production of high-quality alloyed steel. ChemFirst has decided to divest
itself of its steelmaking operations, and production at FirstMiss Steel
has been successively cut back; at present it is confined to certain high-
alloy products.

2
FirstMiss Steel occupies an 80-hectare (200-acre) site with a 34 000 m

2 2 2
(366 000 ft ) factory building including 1 500 m (16 000 ft ) of office
and laboratory space. The purchase includes infrastructure and equipment
for production of about 250 000 tonnes per annum of high-quality steel.
The equipment includes an electric arc furnace, ladle furnace, AOD
converter and vacuum degassing plant. There is also a smaller line
consisting of an induction furnace, ladle furnace and vacuum treatment
equipment for manufacture of high-alloy products. The purchase price
amounts to approx. MUSD 11. The sale is anticipated to close during the
first quarter subject to finely receipt of regulatory approvals.

Höganäs intends to convert the steel mill into a high-efficiency
integrated manufacturing facility for atomized, customized quality iron
powder. A comprehensive program of investment is planned at an estimated
cost of about MUSD 36. In the first phase, this will result in an annual
production capacity of 100 000 tonnes. The project is scheduled for
completion in the third quarter of 2001. About 35 persons will be employed
initially, the figure successively rising to more than 100 employees after
two years. Since the operation will be run primarily as an investment
project until production starts, there will be no Profit & Loss effect
until after then.

This investment will enable Höganäs to speedily comply with North American
customers' stated desire for Höganäs to start production of high-quality
iron powder on that continent.

Pittsburgh, 20 January 2000

Claes Lindqvist
President and Chief Executive Officer