Source: The Edge
The scandal engulfing Kobe Steel Ltd that’s rocked industrial Japan deepened on Wednesday as the steelmaker said its falsification of product data extended beyond copper and aluminum with incorrect information found on iron powder.
The country’s third-largest steelmaker discovered data on the material that failed to meet a customer’s requirements, Yoshitsugu Nishimura, a spokesman, said by phone, confirming a report in the Yomiuri newspaper. The company’s shares tumbled 15% in Tokyo after a 22% loss on Tuesday.
Kobe Steel is at the center of a scandal since it admitted on Sunday that staff at several plants had falsified metals product data for years. The revelation is a further blow to the reputation and trustworthiness of Japan’s industrial companies, and has sent customers from Toyota Motor Corp to Subaru Corp scrambling to determine whether they had used the suspect materials.
The details are under investigation for a single iron powder product that was delivered to one customer, Nishimura said, declining to identify the customer. The company doesn’t see a problem with the safety of the product, according to Nishimura.
One estimate from JPMorgan Securities Japan Co put the potential cost of replacing the copper and aluminum parts at about 15 billion yen (US$133 million), but the damage to the company that’s more than a century old — both in reputational harm or possible legal challenges — may be much greater.
The market impact has already been savage as investors take fright at the possible consequences. While at Friday’s close, Kobe Steel had a market value of 498 billion yen (US$4.4 billion), by Tuesday that was down to 389 billion yen, and it fell further to about 328 billion yen on Wednesday. It dollar terms, that’s a drop of about US$1.5 billion, according to Bloomberg calcuations.
Iron ore powder is mainly used in making automobile components, according to Kobe Steel. Powders can be hardened to produce sintered parts, which are used in everything from the engine to the steering mechanism as well as the brakes, suspension and transmission, according to JFE Steel Corp, another Japanese producer.