Apr. 1, 2024
Nippon Steel Corporation
The Nippon Steel Group will seize global growth opportunities, become a pioneer in decarbonization, and
take a giant step forward as the “Best Steelmaker with World-leading Capabilities.”
1. Our management reforms, and our aim to become the “Best Steelmaker with World-leading
Capabilities”
The Nippon Steel Group has carried out management reforms such as the consolidation of production lines
through structural measures in Japan, a significant margin improvement in direct contract-based sales, and
the selection and concentration process of overseas businesses. Our efforts have paid off and we are
coming close to reaching the target of 1 trillion yen in underlying business profit, far exceeding the
initial target of 600 billion yen. Our domestic steelmaking business is expected to become more profitable
by the active programs in progress to refresh the upstream steelmaking processes and a hot strip mill, and
by making progress in upgrading the product mix through the subsequent launch of active facility
investments in strategic products such as electrical steel and ultra-high-tensile steel.
Another pillar has been the expansion of overseas businesses. In India, AM/NS India is generating profits
steadily, and is expanding its production capacity in this growing market. In the ASEAN region, G Steel
and GJ Steel, electric arc furnace steelmakers in Thailand, have joined our Group, enabling us to develop
an integrated business model from upstream steelmaking to product. In the United States, we are doing our
utmost to complete the planned acquisition of U. S. Steel.
While the global expansion of steel production itself is the horizontal axis of our business strategy, the
vertical axis is the expansion of our business domains upstream and downstream of steel production, such
as raw materials, steel distribution and processing. In the raw materials business, we have already
completed investment in coking coal in Canada, and are considering investment in direct reduced iron. In
steel distribution business, we are advancing the sophistication of the supply chain with Nippon Steel
Trading Corporation and other processing companies in the Group. By taking these actions, we will make our
earnings structure even more solid.
The important point here is that our steelworks in Japan are where the vertical and horizontal axes
intersect and are the linchpin of our entire steel businesses. The continual important and fundamental
management issue is to maintain and strengthen cost competitiveness and profitability backed by frontline
manufacturing capabilities, collaboration between steelworks and marketing divisions, and management
capabilities of cross-region steelworks.
When we establish the globally expanding vertical and horizontal axes with a strong domestic steelmaking
business at the core, we will stand at the top of the global steel industry, achieving our aim of becoming
the “Best Steelmaker with World-leading Capabilities.”
2. The key challenges we face: Two growth opportunities
Let me explain my views on various issues that we will face as we go forward.
Concerning the underlying business environment, we are witnessing the formation of market blocs in the
global economy with the ongoing quest for economic security in the background. In the steel market, the
deceleration of the Chinese economy and the growth of India has resulted in the decoupling between
declines in product prices and stubbornly high raw material prices, which will continue as a structural
problem. In Japan, amid a declining population and a shift away from manufacturing to a service-based
economy, a natural recovery in steel demand cannot be expected. Our management policy based on this
macroeconomic recognition is exactly what we are implementing in our Medium- to Long-term Management Plan
up to fiscal 2025. We need to carry through this plan to the finish line, and in addition, I would like to
touch on some of the key challenges, in particular growth opportunities and decarbonization.
First, we will take this time of great changes in society and capture new business opportunities to our
advantage. Response to global climate change has become a major force in the industry, and new demand has
been created in the materials field through changes in the industrial structure. Moreover, we need to
develop measures that lead to the growth of domestic business by exploring new needs which are born amid
the above-mentioned industrial changes, in fully concerted efforts of our Group from product development
to steel distribution and processing network. We will actively explore to capture these new business
opportunities while maintaining our domestic production scale and serving the very purpose of the
manufacturing industry in creating new added value for society.
Second, we will further strengthen our global business—our growth engine in terms of both production
scale and profitability, and enhance the management that supports it. We are expanding our integrated
steelmaking business in growing markets, particularly in India, ASEAN, and North America following the
completion of the planned acquisition of U. S. Steel. This means that we are entering a new stage in our
global expansion. Japan needs to become the global headquarters that deploys necessary resources according
to local needs and provides strong support for the sound development of local Group companies. Our
domestic steelmaking business thereby needs to become a linchpin that supports these overseas businesses.
We will need to enhance the strategic management function of the headquarters. On the technology side in
areas such as R&D, manufacturing technology, facility maintenance and engineering, we will exert the
true value of our manufacturing strength on the world stage, which has been honed in our domestic
business—as I stated as the intersection of the vertical and horizontal axes.
3. Decarbonization measures: A group-wide challenge
The next issue I would like to mention is about decarbonization, which can be the greatest challenge for
us.
We aim to reduce greenhouse gas emissions by 30% or more by 2030, as we advance toward achieving carbon
neutrality by 2050. Fundamentally, steel has one of the lowest greenhouse gas emissions per ton among
various industrial materials and is a recyclable material that can be reused repeatedly. The importance of
steel remains unwavering even in the age of carbon neutrality. As it is inexpensive and has excellent
properties, it is used in overwhelmingly large quantities, which makes the steel industry accountable for
about 40% of the CO2 emissions of Japan’s industrial sector. In recent years, there have
been discussions of regulations where CO2 emissions could become an international trade
constraint, and it is no exaggeration to say that the success or failure of our decarbonization measures
may affect Japan’s industrial competitiveness.
The specific issues to be addressed include technical themes such as R & D and facility planning, the
creation of markets where investment costs can be recovered, and the establishment of a national policy to
support these actions. As a pioneer in the industry, we are fully committed to developing technologies
such as hydrogen reduction and large-scale electric arc furnaces that will drastically revolutionize
conventional steelmaking processes, and to advancing efforts to realize massive capital investment plans
jointly under public and private sector cooperation. The rise in manufacturing costs due to the
elimination of fossil fuels must ultimately be reflected in the prices of steel products and the prices of
products using steel to make the market economy work. The concept that the reduction of CO2
emissions as environmental value generates economic value must become a common understanding and be
included in behavioral norms for the entire supply chain, including consumers. Thus, various initiatives
to move society as a whole are indispensable to resolving the issue of decarbonization. This is a theme
that can be achieved particularly by the Nippon Steel Group, as a leading steelmaker. We are a company
that can make a significant contribution to improving the global environment by decarbonization. In order
to continue to contribute to society and be needed by society, we will keep working on decarbonization as
a top management priority.
The Nippon Steel Group is determined to seize global growth opportunities, become a pioneer in
decarbonization, and take a giant step forward as the “Best Steelmaker with World-leading
Capabilities.”
I sincerely ask for your support and cooperation.
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