Japan’s largest steel manufacturer, Nippon Steel (formerly known as Nippon Steel) announced on Friday (12th) its plans to expand its global crude steel annual production capacity from the current 86 million tons to at least 100 million tons by 2030 through investment-driven growth in key markets.
In June of this year, Nippon Steel completed a $15 billion acquisition of U.S. Steel and pledged an additional $11 billion investment to strengthen its presence in the U.S. market, in response to the sluggish demand in the domestic steel market in Japan.
Following this merger, Nippon Steel’s global crude steel production capacity is expected to increase to 100 million tons, with overseas capacity already at 42 million tons.
Apart from the U.S., Nippon Steel considers India, Thailand, and Europe as growth markets to counter the market pressures brought about by China’s excess steel exports.
Nippon Steel President, Tadashi Imai, expressed during a press conference his hopes for the company to become a global leader in the steel industry in terms of production scale, revenue performance, global footprint, and technological prowess.
He stated, “Excluding Chinese state-owned enterprises, our goal is to regain the top spot as the world’s largest steel manufacturer by the fiscal year 2030.”
Imai mentioned that Nippon Steel plans to invest ¥6 trillion (approximately $38.54 billion) in capital and business investments over the next five years, with total overseas investments (including U.S. Steel) amounting to ¥4 trillion.
He noted that such expenditure levels imply that the company’s free cash flow is projected to be negative over the next five years, and that Nippon Steel is seeking the optimal financing solution without specifying the funding instruments.
As per the 2030 marketing plan, Nippon Steel aims to increase its adjusted basic business profit (profit after deducting one-time items) to over ¥1 trillion, significantly higher than the forecasted ¥680 billion for the current fiscal year ending in March.
Imai stated that with the benefits from investments in the U.S. and India projects starting to materialize, Nippon Steel plans to raise overseas business profits from the current ¥115 billion to over ¥500 billion by the fiscal year 2030.
(This article references reporting from Reuters)