Yasushi Aoki's presentation

© 2012 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.

Nippon Steel & Sumitomo Metal Corporation

Yasushi Aoki

November 20th 2012

General Manager, Raw Materials Development

Mozambique’ s Role in Japan’s Steel Growth

1


Current Situation of Japanese Steel Industry

Strategic Responses Taken by NSSMC

Why Mozambican Coal ?

Our Approach to Mozambican Coal

Expectation for Mozambican Coal

2

Contents


Current Situation of

Japanese Steel Industry

3

© 2012 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 4

World Steel Industry is Financially Affected

by Slowdown in World Economy

European Debt Crises

Slowdown in Chinese Economy

“Fiscal Cliff” in US

Current Situation of World Steel Industry


0

20

40

60

80

100

120

140

160

0

200

400

600

800

1,000

1,200

1,400

1,600

'03 '04 '05 '06 '07 '08 '09 '101sthalf

'102ndhalf

'111sthalf

'112ndhalf

'121sthalf

'122ndhalf

million ton

5

Annualized basis

Financial Crisis

Earthquake

(Forecast)

Steel Output and Financial Result of JSM

?

billion yen


© 2012 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada.

Strong Japanese Yen vs US$

(Jan 2006 = 100)

Won

Euro

RMB

Yen


Export Ratio

(Direct + Indirect)

Export Ratio

(Direct only)

Domestic Steel Demand & Export Ratio in Japan


-40

-20

0

20

40

60

80

2002 '03 '04 '05 '06 '07 '08 '09 '10 11 '12 e

Steel Export Steel Import Net Export Quantitymillion ｔon

-40

-20

0

20

40

60

80

2002 '03 '04 '05 '06 '07 '08 '09 '10 11 '12 e

Steel Export Steel Import Net Export Quantitymillion ｔon

Korea China

8

(Importer → Exporter )

Steel Trade in Korea & China


Total

Importer

China Korea Japan ASEAN5 Others

Exp

orte

r

China

Export Volume 48.08 10.19 0.90 7.08 29.92

Increase-

decrease rate +18% +20% +26% +31% +14%

Korea

Export Volume 29.13 4.00 3.65 5.46 16.02

Increase-

decrease rate +15% +6% +29% +40% +8%

Japan

Export Volume 40.18 6.62 8.55 9.15 15.87

Increase-

decrease rate -8% -13% -20% -5% +1%

（Source: Statistics of China, Korea, Japan）

Steel Export from Japan

Steel Export from Korea

Steel Export from China

% : Increase-decrease rate of Steel Export

Volume for 12 months from Mar. 2011 -

Feb. 2012 to Mar. 2010 - Feb. 2011

China

Korea

Japan

（MT / 12 months, %）

9

Impact of Exports from China & Korea


0.24 0.25 0.27 0.28 0.3 0.32 0.34 0.38 0.38 0.34 0.39 0.36 0.38 0.42 0.44

0.4 0.37 0.37 0.37 0.4 0.39 0.43 0.43 0.390.25

0.32 0.39 0.4 0.41 0.430.12 0.16 0.19 0.240.28 0.35

0.380.42 0.432

0.55

0.580.62 0.645

0.654

0

0.73

0.76 0.780.83

0.890.98

1.061.15

1.23 1.20 1.14

1.291.37

1.421.49

1.60

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012(f) 2013(f) 2015(f)

China

Developed Countries

Developing Countries

2009 2010 2011 2012(f) 2013 (f)

World Total 1.14 1.29 1.37 1.42 1.49

China : + 4.0% Developed countries : +1.1% Developing countries : +4.6%

China : + 4.0% Developed countries : +1.1% Developing countries : +4.6%

c . f. Ch ina - Stee l Consumpt ion Growth Rate and Value of Elast ic ity of GDP

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20112012

Forecast2013

ForecastSteel Consumption Growth Rate 1.4% 27.1% 21.1% 25.7% 14.7% 26.0% 8.7% 11.9% 2.9% 26.1% 5.1% 5.8% 4.0% 4.0%

GDP Growth Rate 8.4% 8.3% 9.1% 10.0% 10.1% 10.4% 11.6% 13.0% 9.6% 9.2% 10.4% 9.2% 8.0% 8.5%

Value of Elasticity of GDP 0.2x 3.3x 2.3x 2.6x 1.5x 2.5x 0.7x 0.9x 0.3x 2.8x 0.5x 0.6x 0.5x 0.5x

(source : Steel Consumption - WSA, GDP Growth Rate -IMF)

(Unit: Billion ton)

(Unit: Billion ton)

Mid-Long Term World Steel Demand

10


Strategic Responses

Taken by NSSMC

11


Globalizing

the Steel Business

Utilizing

Advanced

Technologies

Improving

Cost Competitiveness

Product Development

Manufacturing Technologies Synergies JPY 150bn per annum

Reduce Costs Constantly

NSSMC

Targeting Global Production Capacity : 45 → 60 to 70 mil tons

Strategy & Measures of NSSMC

12


Number of Cars Produced （Actual・Estimates）Million Cars

（Sources: Public Information, NSSMC Data）

Mexico

TENIGAL 49%

New CGL Line [0.4 mil ton] Operation （2013）

China

BNA 50%

[Cold Roll 2.2 mil tons / CAPL 0.95 mil tons / CG

1.25 mil tons]

2007 2008 2009 2010 2011

888 930 1,379

1,826 1,842

2007 2008 2009 2010 2011

210 217 156

234 268

Europe ArcelorMittal/

Cross License of Technology

2,285 2,178

1,706 1,983

2,113

2007 2008 2009 2010 2011

129 139 100

164 148

2007 2008 2009 2010 2011

225 233 264 356 394

52%

[Cold Roll 1 mil ton]

Thailand SUS

India

JV with Tata 49%

New Cold Roll Line[0.6 mil ton]Operation（2013）

Under Construction

In Operation

USA

I/N Tek

I/N Kote 50%

40%

[Cold Roll 1.7 mil st / CAPL 1.2 mil st]

[CG 0.5 mil st / EG 0.45 mil st]

2007 2008 2009 2010 2011

1,336 1,078

722 983 1,079 North America

Brazil

UNIGAL

＃2CGL[0.55 mil ton]Expansion（2011）

30%

[CG 0.48 mil ton]

2007 2008 2009 2010 2011

370 394 378

419 433 South America

＜Nippon Steel & Sumitomo Metal＞

Domestic and Abroad CGL/CAPL

Production Capacity in Total: around 15 mil tons

＜Domestic: 8.5 mil tons/Abroad: 6.8 mil tons＞

*Equity Basis: around 3 mil tons

[CG 0.36 mil tons] Operation（2013）

Nippon Steel & Sumikin

Galvanizing (Thailand) Co., Ltd.

100%

Thailand

Nippon Steel & Sumitomo Metal

13

Global Supply Network of Steel Sheets for Cars


U.A.E

AGIS

NIGERIA

MRM

Vietnam CSVC

NPV

PEBSB

Malaysia N-EGALV

YKGI

50.1%

10%

30%

51%

12%

South Africa Safal Steel

7%

20%

（HGI ）

（CRC）

（HGI/ PPGI)

（ERW Pipe , Steel Pipe for

Fences)

（HGI/ PPGIC, Other Products for Construction)

（EG)

（HGI/ PPGI）

（CRC）

（Steel Pipe Pile, Sheet Pile)

（Steel Sheet for Fabrication ）

South East Asia/ U.S.A

NS Bluescope

Coated Products 50%

USA Western Tube & Conduit

95%

To Capture the Demand Expected to Grow in Developing Countries

Supply of CRC 0.5-0.6mtpa

Supply of CRC 0.28 mtpa

Supply of HRC 0.15 mtpa

Supply of CRC 0.15 mtpa

Supply of CRC : 0.08mtpa Supply of CRC : 0.15mtpa

10%

Nippon Steel & Sumitomo Metal

14

Global Supply Network of Steel Products for Construction

//upload.wikimedia.org/wikipedia/commons/c/cb/Flag_of_the_United_Arab_Emirates.svg

http://ja.wikipedia.org/wiki/%E3%83%95%E3%82%A1%E3%82%A4%E3%83%AB:Flag_of_Singapore.svg

http://ja.wikipedia.org/wiki/%E3%83%95%E3%82%A1%E3%82%A4%E3%83%AB:Flag_of_Brunei.svg


• High-end OCTG/Line Pipe

• X120 High Strength large-diameter tube

• High quality slabs for marine structures

As a supply and development hub of leading

and high-end products, we seek for synergy

effect in technology.

We will respond to growing steel demand in energy industry by combining existing technologies of NSC and SMI.

As VSB・USIMINAS・NPC main hubs, we supply

energy industries in growing areas.

• OCTG/Line Pipe

• High quality slabs

Domestic Production Overseas Production

（Products）（Products）

Investment Ratio：VSB/39%, USIMINAS/28%, NPC/33%）

Global Deployment : Energy & Resources


80

90

100

110

120

130

140

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

JFY2010 JFY2011

PCI RatioCoke ratioReducing Agent RatioSemi Soft Ratio

(Q1 JFY2010 = 100)

Technological & Operational Challenge for Usage of Coal

Strategy & Measures in Raw Materials


MUSA

NIBRASCO

CBMM

70%*

31.4%

2.5%

Elkview 2.5%

Revuboe 23.3%

Hail Creek

Moranbah North

Warkworth

Integra

Bulga

Foxleigh

8.0%

5.0%

9.5%

6.0%

12.5%

10.0%

Robe River 14.0%

Beasley River 37.6%

* USIMINAS

（planned）

Brazil

Canada

Mozambique Australia

Self Sufficiency of Iron Ore Self Sufficiency of Coal

(Total Volume：68MT)

Ratio：approx. 25%

(Total Volume：32MT)

Ratio：approx. 20% Total Procurement Volume

(FY2010)

Mines with long-term contracts or investments

Iron ore

Coal

% Investment %

Other alloy

（under exploration）

17

Investment in Raw Materials Assets


Why Mozambican Coal ?

18


1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20102011

Est.

2012

Est.

Japan 69 65 60 57 66 68 68 69 67 66 67 68 55 67 66 65

South Korea 8 11 17 20 21 20 21 21 21 21 22 23 22 27 32 34

India 2 6 9 11 13 13 14 16 20 22 24 28 28 30 34 37

China 0 0 0 0 0 0 3 5 5 3 3 3 31 35 25 37

European Union 62 62 59 60 51 46 46 44 45 45 46 45 36 44 45 41

Brazil 8 10 11 11 14 12 13 13 13 13 15 16 13 14 18 13

Total Import 167 171 180 178 190 187 190 195 200 198 214 220 210 253 253 262

Australia 49 58 74 99 106 107 113 116 122 125 138 135 136 155 131 162

Canada 22 27 29 28 28 25 24 25 26 23 25 25 21 27 27 31

China 3 3 7 6 13 14 17 13 11 9 5 5 1 1 4 1

United States 55 58 47 30 18 14 15 19 19 22 27 36 31 51 65 58

Total Export 167 171 180 178 190 187 190 195 200 198 214 220 210 253 253 262

25%

62%

28%

19

Trend of Seaborne Coking Coal Trade

100%

100%


●： Existing coal field ★： New developing coal field

Australia： Bowen Basin

USA： Appalachian Mountains

Mongol: Tavan Tolgoi

China： Shanxi Province

Mozambique: Moatise Region

Russia: Elga

Canada： Rocky Mountains

20

Map of Hard Coking Coal


“Premium” Hard Coking Coal

Access to the Coast

♦ Great Opportunity to Establish a Firm

Presence in the Seaborne Market

Advantages of Mozambican Coal


Our Approach to

Mozambican Coal

22


Nacala Tete

Beira

Revuboè

Ownership

Talbot Group 58.9%

NSSMC Group 33.3%

POSCO Group 7.8%

Target

Start up Operation 2015 or after

Ramp up to 5 million tons p.a.

23

Minas de Revuboè, Limitada

Moatize


Expectation for

Mozambican Coal

24


Maintain & Improve Competitiveness

is the key

Timely Development of Rail & Port

ex. Installment of Nacala Route

Human Resource Development

Fair & Open Policy

25

Expectation for Mozambican Coal


Japanese Government is Ready to Support

Mozambican Coal

Joint Statement by METI / MIREM (Oct.29, 2012)

5 Year Development Plan for Mozambican Coal Industry

◆ Human Resources Development Programs

◆ Geological Research

◆ Master Plan for Coal Development & Usage

Financial Support by JBIC on Infrastructure

Development can be expected

26

Support by Japanese Government


Muito Obrigado !

Let’s work together to build

a new & successful model !

27

Yasushi Aoki's presentation

Documents

Transcript of Yasushi Aoki's presentation