Back to the Future 2: Japanese steelmaker Nippon Steel commits to coal-fired steel in USA for decades

The Australasian Centre for Corporate Responsibility​ (ACCR) is commenting on today’s announcement from Nippon Steel Corporation (NSC) that it will invest in extending the production life of a coal-dependent, carbon-intensive blast furnace currently operated by U.S. Steel.

NSC’s $US14.1 billion acquisition of U.S Steel is still pending US regulatory approvals, and this new investment is in addition to the $1.4 billion capital injection committed previously.

• NSC will spend $300 million to reline blast furnace #14 at Gary Works, U.S Steel’s largest manufacturing plant.
• The investment intends to extend the life of the blast furnace by up to 20 years.

Last week, NSC announced the purchase of a 20% stake in Whitehaven’s Blackwater coal mine in Queensland, Australia - raising concerns about its previous commitments to being a globally competitive leader in the green steel market.

In June, shareholders in NSC showed significant support for three climate-related shareholder proposals at the company’s annual general meeting, which urged the world’s fourth largest steelmaker to improve its decarbonisation strategy.

Commenting on the announcement, Fiona Deutsch, Lead Analyst at the Australasian Centre for Corporate Responsibility said:

“This $300m capital expenditure on relining a coal-fired blast furnace is extremely disappointing. Nippon Steel is making a commitment to outdated technology and high emissions - not decarbonisation.

“Steel does not have a climate problem, it has a coal problem. By extending the life of a coal-fired blast furnace by two decades, Nippon Steel is once again leaving its investors unclear about the company’s commitment to being a globally competitive leader in the green steel market.

“Of particular concern for investors is that Nippon Steel’s current emissions reduction targets cover only its Japanese production.

“Without a clear plan for decarbonisation of the U.S Steel business if the acquisition goes ahead, it’s unclear to Nippon Steel’s investors how investments in prolonging coal-based steelmaking contribute to long term value.

“Nippon Steel is overlooking a key opportunity. The United States is a leader in secondary steelmaking, which has significantly lower emissions. Nippon Steel could learn from these practices, positioning itself as a leader in the global green steel transition.

“Instead, the company is sticking with technologies that fail to meet the urgency of the moment.”