We have decided to increase the production capacity of specialty graphite, consisting of isotropic graphite and extruded graphite, to 1,000 tons per month, which is 1.6 times the current capacity. Since 2004, sharp increase in worldwide demand for specialty graphite products for semiconductor and heat treatment applications, has caused the supply shortage. We exercised de-bottlenecking last year and increased capacity of isotropic graphite from 300 tons to 400 tons per month. However, supply-demande constraint still has not eased. This is because on top of demand increase from conventional applications inclusive semiconductors there is very strong growth in new segments and markets on which we have worked strategically, such as alternative energy, automobile materials, new generation aircraft and emerging foreign markets represented by BRICs. We have decided to make this capital investment, taking into consideration expansion programs of other companies and projecting med.-long term demand in these markets and segments where our presence is quite high, in order to fulfill supply responsibility to our customers and to capture this big opportunity swiftly.

This expansion will be of restoration of mothballed equipment and installation of new facilities. The full capacity will be materialized in the middle of 2007. The total cost of investment will be 2 billion yen including de-bottlenecking exercise last year. With this expansion, we will have the prodcution capacity of 550 tons for isotropic graphite and 450 tons for extruded graphite per month respectively, which ranks us as one of the biggest manufactures of specialty graphite in the world. We will aim to acquire top share of the market in the coming years.