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Nippon Steel & Sumitomo Metal Corporation
Yasushi Aoki
July 15th 2013
General Manager, Raw Materials Development
Japan’s Steel Growth
and the Role of Mozambican Coal
1
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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
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Current Situation of
Japanese Steel Industry
3
4
2009 2010 2011 2012 2013 (f)
World Total 1.14 1.29 1.37 1.43 1.47
China : + 4.8% Developed countries : +2.6% Developing countries : +5.6%
China : + 3.1% Developed countries : +2.5% Developing countries : +2.6%
(Unit: Billion ton)
(Unit: Billion ton)
0.42
c.f . China - Steel Consumption Growth Rate and Value of Elastic ity of GDP2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(f) 2020(f)
Steel 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% 1.9% 3.5% 1.3%GDP Growth Rate 8.4% 8.3% 9.1% 10.0% 10.1% 10.4% 11.6% 13.0% 9.8% 9.2% 10.4% 9.2% 8.0% 7.8% 7.3%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 N/A
World Steel Demand
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24% 26%24%
29%32% 31%
28%26%
28%30% 30%
38% 38%
34%
43% 43% 40%46% 50%
51% 50%
48%50% 52% 53%
59%58%
55%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
20
40
60
80
100
120
140
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Direct Export
Indirect Export
Net Domestic Demand
5
Domestic Steel Demand & Export Ratio in Japan
Overseas
Demand
Domestic
Demand
million ton
Export Ratio
(Direct + Indirect)
Export Ratio
(Direct only)
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-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
6
(Importer → Exporter )
Steel Trade in Korea & China
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0.5
1.0
1.5
2.0
2.5
4 7 10 2010.01
4 7 10 2011.01
4 7 10 2012.01
4 7 10 2013.01
4
Apr-Jun 2009 Bench Mark Price IO CFR US$ 60/MT HCC FOB US$129/MT
Apr-Jun 2011 Bench Mark Price IO CFR US$171/MT HCC FOB US$330/MT
Apr-Jun 2013 Bench Mark Price IO CFR US$137/MT HCC FOB US$172/MT
Japan
( Prices of Hot Rolled Sheets in local currency as of Apr. 2009 = 1.0 )
Bao Steel Prevailing List Price
( Source :The Japan Iron and Steel Federation )
2009 4
Hot Rolled Sheets Prices by Region
7
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© 2013 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada.
Strong Japanese Yen vs US$
(Jan 2006 = 100)
Won
Euro
RMB
Yen
8
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Strategic Responses
Taken by NSSMC
9
© 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.
Global Strategy
Technological Superiority
World-leading Cost Competitiveness
Building an organization with world-leading competitive strength by 2015
NSSMC Group will pursue world-leading technologies and manufacturing capabilities, and contribute to society by providing excellent products and services.
10
Creating the Best Steelmaker with World-leading Capabilities
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Up
stre
am
pro
cess
Kimitsu ・ Shift to two-blast-furnace operation (No. 3 blast furnace to cease operation) End of FY2015
・ Streamlining of No.1 steelmaking plant - No. 5 continuous caster to cease operation - Shift to one-basic-oxygen-furnace operation
(One basic-oxygen-furnace to cease operation)
1H of FY2014 1Q of FY2016
Wakayama ・ Postponement of operation of the new No. 2 blast furnace (Two-blast-furnace operation with No. l and No. 5 blast furnaces to continue)
Kimitsu Wakayama
Two-BF operation No.1 BF(3,700m³) No.5 BF(2,700m³)
Postponement of operation of the new No.2 BF
・No.3 BF to cease operation
No.3 BF : 4,822m³ <May, 2001~>
・No.5 continuous caster to cease operation
・Shift to one-basic-oxygen- furnace operation
Blast Furnace (BF) 14 13 (End of FY15)
Basic Oxygen Furnace 32 31 (1Q of FY16)
Continuous Caster 30 29 (1H of FY14)
The number of facilities
11
Cessation of Selective Operations to Optimize Fixed Costs
and Realize Highly-productive Low-cost Operation
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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
12
Global Supply Network of Steel Sheets for Cars
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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
13
Global Supply Network of Steel Products for Construction
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• 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
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80
90
100
110
120
130
140
150
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
PCI Ratio
Semi-soft Ratio
Reducing Agent Ratio
Coke Ratio
15
Technological & Operational Challenge for Usage of Coal
Strategy & Measures in Raw Materials
(Q1 JFY2010 = 100)
JFY2010 JFY2011 JFY2012
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MUSA
NIBRASCO
CBMM
70%*
31.4%
2.5%
Elkview 2.5%
Revuboe 33.3%
Hail Creek
Moranbah North
Warkworth
Integra
Bulga
Foxleigh
8.0%
6.25%
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)
16
Investment in Raw Materials Assets
*
*
*Joint investment with Nippon Steel Trading
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Why Mozambican Coal ?
17
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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%
18
Trend of Seaborne Coking Coal Trade
100%
100%
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●: 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
19
Map of Hard Coking Coal
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“Premium” Hard Coking Coal (But High in Ash & TS)
Access to the Coast
♦ Great Opportunity to Establish a Firm
Presence in the Seaborne Market
Advantages of Mozambican Coal
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Our Approach to
Mozambican Coal
21
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Our Approach to Mozambican Coal
22
As a Final Consumer of Coal
As an Investor for a Coal Mine
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Nacala Tete
Beira
Revuboè
Ownership
Talbot Group 58.9%
NSSMC Group 33.3%
POSCO Group 7.8%
Target
Start up Operation after 2016
Ramp up to 5 million tons p.a.
23
Minas de Revuboè, Limitada
Moatize
Benga
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Historical Development
24
Jul. 2004 : Prospecting license granted.
2005–2006 : Initial study conducted, utilizing NEDO’s subsidies
for development
2009 : Initial feasibility study conducted, again utilizing
NEDO’s subsidies for development
Nov. 2010 : Mining concession applied for.
Apr. 2013 : Mining concession granted.
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Priority of Work for This Year
25
Preparation of the Resettlement Plan and the
Grant of the DUAT (which are Preconditions
to the Grant of the Environmental License)
Negotiation of Rail and Port Allocations
Preparation for Local Employment and
Human Development
Completion of Bankable Feasibility Study
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Expectation for
Mozambican Coal
26
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IRR15%前提の価格: USD/MT
51
122
367
331
48
125
98
300
129
330
0
50
100
150
200
250
300
350
400
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
/1Q
20
10
/3Q
20
11
/1Q
20
11
/3Q
20
12
/1Q
20
12
/3Q
20
15
Term Spot高止まり ジリ高
トラブル時は暴騰futureto date
145
170
Most of the Traditional Coking Coal
Suppliers have Now Turned to
Cost-Focused Suppliers.
Minimum price level required for sustainable
operation at existing mines or for each
expansion /greenfield project to be
economically viable, depending on the stage
of each Mines.
Upward Pressure to
Increase the Mining Cost !!
27
Coking Coal Prices
Expected to Remain
Volatile !!
Volatile Coal Prices & Upward Cost Pressure
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Maintain & Improve Competitiveness,
Even in the Challenging Situation (Prices,
Costs), is the Key; Therefore,
Expect Supports from the Mozambican
Government; for Example,
Timely Expansion of Rail & Port (ex. Installment of Nacala
Route), Which Also Enable to Reduce Total Costs
Human Resource Development
Continuation of Fair & Open Policy for Investment Security
28
Expectation for Mozambican Coal
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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
29
Support by Japanese Government
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Muito Obrigado !
Let’s work together to build
a new & successful model !
30
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