Yasushi Aoki, Nippon Steel - Japan's Steel Growth and the Role of Mozambique Coal
 

Yasushi Aoki, Nippon Steel - Japan's Steel Growth and the Role of Mozambique Coal

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Yasushi Aoki, Nippon Steel delivered the presentation at IMM’s Mozambique Coal Conference 2013. ...

Yasushi Aoki, Nippon Steel delivered the presentation at IMM’s Mozambique Coal Conference 2013.

The IMM’s Mozambique Coal conference features a comprehensive program which discusses the latest mining developments, assesses the way forward for the country’s crucial port and rail progress and examines Mozambican Government policies and the investment opportunities.

For more information about the event, please visit: http://www.immevents.com/mozambiqueconference

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Yasushi Aoki, Nippon Steel - Japan's Steel Growth and the Role of Mozambique Coal Yasushi Aoki, Nippon Steel - Japan's Steel Growth and the Role of Mozambique Coal Presentation Transcript

  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.  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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 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 Elasticity of GDP 2000 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 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)
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. -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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 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$172/MT Japan ( Prices of Hot Rolled Sheets in local currency as of Apr. 2009 = 1.0 ) Bao Steel Prevailing List Price ( Source :The Japan Iron and Steel Federation ) 2009 4 Hot Rolled Sheets Prices by Region 7
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. © 2013 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada. Strong Japanese Yen vs US$ (Jan 2006 = 100) Won Euro RMB Yen 8
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. Upstream process 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) KimitsuWakayama 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 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 1,079North 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 433South 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.14 • 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. Why Mozambican Coal ? 17
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 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%
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. ●: 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.20  “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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. Our Approach to Mozambican Coal 21
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. Our Approach to Mozambican Coal 22  As a Final Consumer of Coal  As an Investor for a Coal Mine
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. NacalaTete 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 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.
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. Expectation for Mozambican Coal 26
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. 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 2002 2003 2004 2005 2006 2007 2008 2009 2010/1Q 2010/3Q 2011/1Q 2011/3Q 2012/1Q 2012/3Q 2015 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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.  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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.  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
  • © 2013 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved. Muito Obrigado ! Let’s work together to build a new & successful model ! 30