Japan's largest steel producer by capacity Nippon Steel has made a final investment decision (FID) on its ¥870bn ($6bn) electric arc furnace (EAF) expansion project, the company announced today, aiming to start full-scale production before March 2030.
This comes as part of the company's wider decarbonisation strategy to achieve carbon neutrality by 2050. Nippon Steel will build three new EAF facilities including expansion and modification under the investment plan (see table). Combined output capacity will be around 2.9mn t/yr, according to the firm.
This comes on top of the existing 700,000 t/yr EAF facility at its Setouchi steelworks in western Japan.
As much as ¥250bn of the total investment cost could be subsidised by the Japanese government, according to the firm.
But the public fund is not sufficient, Nippon Steel said, reiterating that the successful return on investment will require the creation of a green steel market. The price of low-carbon steel products should be evaluated and priced fairly, the firm said.
This stems from concerns among domestic steel producers including Nippon that green steel would be viewed as too expensive and that consumers will not purchase it. Production costs of green steel are higher compared with steel produced with conventional methods that emit more greenhouse gas (GHG) emissions, but its functionality is no different, Japan's trade and industry ministry Meti said.
Japan aims to hit its net zero emissions goal by 2050 and it is critical to reduce GHG emission from the steel industry, which accounts for 35pc of total emissions in the country's manufacturing industry, according to Meti.
Fellow steel producer JFE Steel also came to an FID in April on its first large-scale 2mn t/yr EAF facility in western Okayama prefecture, aiming to start commercial operations in April-June 2028.
| Nippon Steel's EAF investment oultine | |||||
| Location | Investment plan | Production capacity (mn t/yr) | Commencement of production | Investment amount (¥bn) | Governemnt Subsidy (¥bn) |
| Kyushu Works, Yawata Area | New construction | 2.0 | 2nd Half, FY2029 | 630 | 180 |
| Setouchi Works, Hirohata Area | Expansion | 0.5 | 2nd Half, FY2029 | 140 | 43 |
| Yamaguchi Works, Shunan | Modification | 0.4 | 2nd Half, FY2028 | 99 | 29 |
| Total | - | 2.9 | - | 868 | 252 |
