- Decline in steel prices triggers cost-cutting plan
- Company’s crude steel capacity stands at around 6 mnt
Japan Metal Daily: In its medium-term management plan, which ends in FY’26, Japan’s Kobe Steel will revise its three-year investment plan (based on decision-making), which includes investments related to decarbonisation, downward from around JPY 950 billion to about JPY 750 billion.
In light of the fact that there is a sense of slowdown in the trend toward decarbonisation, the current medium-term management plan prioritises the pursuit of economic rationality and delays the decision-making timing for some decarbonisation-related investments.
Of the initial investment plan of JPY 950 billion, JPY 300 billion will be invested in carbon neutrality (CN, virtually zero CO2 emissions), but this will be reduced to about JPY 150 billion. Delaying the development of new technologies for electric arc furnaces is the case.
Decarbonisation slowdown
President Shihiko Katsukawa said, “With the decline in demand for steel products faster than expected, we would like to consider new cost reduction measures, and the situation that the time for rewinding blast furnaces will not change from the mid- to late-2030s.”
“While we will continue our efforts to achieve carbon neutrality by 2050, we will respond flexibly to changes in the current environment,” he said.
The company had previously announced plans of reducing CO2e emissions by 30-40% by 2030 compared with 2013 and supplying 1 million tonnes (mnt) of CO2-neutral steel by 2030. It also announced plans of lowering BF-related emissions by charging of low-CO2 DRI briquettes into the company’s blast furnaces.
Revised investment plans
In addition to lowering CN-related investment from around JPY 300 billion to about JPY 150 billion, the government will reduce investment related to strengthening earning power from about JPY 170 billion to about JPY 120 billion, and investment related to the pursuit of growth from about JPY 100 billion to about JPY 70 billion.
On the other hand, human capital-related investment remained at around JPY 60 billion. Investment in rationalisation and renewal, including DX (digital transformation), will be raised from about JPY 320 billion to about JPY 350 billion.
In FY’24, the first year of the medium-term plan, the company decided to invest in the in-house production of KOBEMAG, a highly corrosion-resistant plated steel sheet (JPY 32 billion), making Kansai Thermochemical a subsidiary (JPY 9 billion), and increasing various other production facilities.
Katsukawa explained the current changes in the environment, saying, “There is a sense of slowdown in the trend toward decarbonisation, and inflation is accelerating.” In addition, he emphasised that the company’s “policy of working to achieve carbon neutrality will not change, and in the long run, the amount of investment required will not change.”
Note: This article has been written in accordance with a content exchange agreement between Japan Metal Daily and BigMint.
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