May 25, 2021

JFE Holdings, Inc.

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Outline of
JFE Group Environmental Vision for 2050

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2

JFE Group Environmental Vision for 2050

SDGs

Towards Carbon Neutrality
Climate change is an extremely important issue from the perspective of business continuity.

Global climate-change issues, such as increasingly abnormal weather, must be addressed
urgently.

2020 was the starting point for responding to climate change through CO₂reduction activities.
Achieving carbon neutrality in 2050 is the most important issue in JFE’s mediumterm business plan.


Based on our corporate philosophy of contributing to society with the world's most innovative technology,
we will accelerate our research and development of new technologies and pursue super-innovativetechnologies to combat climate change.

In addition to addressing our business risks, we will seek business opportunities that allow us to help
realize a more sustainable world and enhance our corporate value by contributing to CO₂ emissions reduction
across society.



The philosophy of the Task Force on Climate-related Financial Disclosure (TCFD) will be reflected in ourbusiness strategies and deployed in a systematic manner

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3

JFE Group Environmental Vision for 2050

SDGs

Towards Carbon Neutrality(Group‐wide investment in GX in the 7th Medium‐term Business Plan: 340 billion yen)
R&D, etc. 50 billion yen
ST CAPEX for electrical steel sheet in Kurashiki 49 billion yen
EN monopile approx. 40 billion yen

1.

7th Medium‐term Business Plan Initiatives

ST: JFE Steel
EN: JFE Engineering• Steel business: Reduce steel‐business CO2 emissions in FY2024 by 18% vs. FY2013

2.

Initiatives for carbon neutrality by 2050

*CCU: Carbon dioxide Capture and Utilization

a. Reduce CO₂ emissions at JFE Steel• Pursue super‐innovative technologies mainly for carbon‐recycling blast furnaces and CCU*
• Develop hydrogen‐based ironmaking (direct‐reduction) technology, maximize use of electric arc furnacetechnology, etc.

b. Expand contributions to CO₂ emissions reduction in society

CO₂ emissions reduction contributions:

12 million tons in FY2024• Engineering business: Expand and develop renewable‐energy
25 million tons in FY2030
power generation and carbon‐recycling technologies.
• Steel business: Develop and market eco‐products and eco‐solutions.
• Trading business: Increase trading in biomass fuels, steel scrap, etc. and strengthen business in supply
chain management (SCM) for eco products.

c. Accelerate groupwide commercialization of offshore wind‐power business
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4

Initiatives in Carbon Neutrality by 2050
Steel business: Reduce CO₂ emissions in FY2024 by 18% vs. FY2013
Drive JFE’s carbon neutrality by decarbonizing steel processes, etc.
GX investment in steel business: 160 billion yen over 4 years

Engineering business: Support carbon neutrality in society through expansion
and development of renewable‐energy power generation and CR technologies, etc.
GX investment in engineering business: 130 billion yen over 4 years（Mt/year）

CR: Carbon Recycling

CO₂ emissions reduction

58.1

‐10.5

Steel business
CO₂ emissions

18%
47.6

Steel business:
Carbon neutrality by 2050

25.0
12.0

Engineering business: Increase
contributions to CO₂ reduction

Engineering business
CO₂ emissions reduction
FY2013

FY2024(CO₂ reduction base year)(last year of 7th Medium‐term Business Plan)

FY2030
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5

Steel‐business Initiatives
for Carbon Neutrality

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6

Outline of Steelmaking Process

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7

Steel Manufacturing Process

Large
Ship

Scrap

Cokes

Coke Oven

Sintered Ore

Cokingcoal

1.35 billion t/year

1.28 billion t/year

Wharf

Pig Iron
Sintering Machine
Blast
Furnace

Iron OreConverter

Continuous Casting
Machine

Scrap

Pellet Plant

Iron Ore

0.52 billion t/year

0.11 billion t/year
DirectReduction
Furnace1.87 billion t/year(Including Ingot)

Reduced Iron
Electric Arc Furnace

Natural Gas

Hot Rolling Machine
SlabSteel Sheets (Coil)
Heating Furnace

Bloom

Steel

BilletPlatesThick Plate Rolling Machine

Source: 2019 data on production volumes, World Steel Association (WSA)

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8

CO₂ Emissions in Steelmaking
Blast furnace and converter method:
Carbon (reducing material) used to remove oxygen from iron oxide in iron ore
Combustion of carbon (heat resource) provides heat to melt iron→More CO₂ generated compared to direct‐reduction or electric‐arc‐furnace methods

CO₂ emission

2.0t‐CO2/t*1*1 JFE Group CSR Report (2020)*2 Ultra‐Low CO₂ Ironmaking: Transitioning to the Hydrogen Economy,
Midrex Technologies, Inc. etc.
*3 Ferrum Vol. 3 (1998) No. 1 , etc.

1.0〜1.5t‐CO2/t*2

0.5t‐CO2/t*3

Blast furnace andconverter method

Direct reduction method Electric arc furnace method
Scrap melting
Natural gas reduction＋Electric arc furnace melting＋Pellet production
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CO₂ Emissions in Steelmaking (Blast furnace and converter method) 14% of domestic CO₂ emissions come from steel manufacturing
 CO₂ reduction in ore reduction process is important to achieve carbon neutrality
Ratio of CO₂ emissions from steel manufacturing processes (t‐CO2/t‐crude steel)

Most (over 80%) CO₂
emissions are fromiron ore reduction
process in blast
furnaces

Converter

Continuous
Casting
MachineRolling
toProducts

Average

Blast Furnace(Iron ore reduction)

Coke

Sinter

Raw materials mining
Source: “2050 Carbon Neutral Basic Policy,” Japan Iron and Steel Federation, February 15, 2021
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10Outlook for Global Steel Production and Accumulation
 Demand for crude steel will increase Obsolete scrap will also increase, but not enough to meet steel demand Constant supply of pig iron is essential for supply of high‐performance steel products
Pig iron and crude steel production and scrap usage (billion tons/year)

Steel accumulation (billion tons)
200.0

4.0
3.5

Crude steel production
150.0

3.0

Amount of scraps used
2.5
100.0

2.0
1.5

Pig iron production

1.0
0.5

0.0

50.0

Steel accumulation

0.0

Source: "The Challenge of Zero Carbon Steel: Long‐term Global Warming Countermeasures,” Japan Iron and Steel Federation, November 2018
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11

Advantages and Problems of Current Steelmaking Process
Each method has advantages and disadvantages that require multi‐track technological development.
Blast furnace

Electric arc furnace

Direct reduction
High‐purity ore pellets

Coke

Sinteredore

Scrap
Byproduct gas

Electricity

Byproduct gas

Reducediron

Reduction
furnace

Characteristics of Carbon
Reduction and melting in one process
CO reduction (exothermic reaction)
Carburization for lower melting temperature

Reforming
furnaceNatural gas

CO & H2

Hot air

Blast
furnace

OxygenFe 1500℃
MoltenironElectric arc
furnace

Advantages Stable mass production
 Can use existing equipment
 Can use low and medium grade ore Can manufacture high‐grade steel

 CO₂ emissions are low

Disadvantages• Requires replacement of coke andother materials with carbon‐neutral
reducing materials• Use of CCUS* is essential• Yet‐unestablished method needed
to prevent temperature drop in
furnace during hydrogen reduction• Hydrogen cost is high

•
•
•
•
•

Reducedpellets

MoltenironElectric arc
furnace CO₂ emissions are low*CCUS: Carbon Capture, Utilization and Storage

Low productivity
Manufacturing high‐grade steel is difficult
Scrap alone is insufficient iron source
Requires a carbon‐neutral power source
High cost of electricity (Japan)

 Carbon neutrality once 100% hydrogen
reduction is possible• Only high‐grade ores can be used
• New measures needed to prevent
temperature drop in furnace duringhydrogen reduction• Hydrogen cost is high• Capital investment cost is highCopyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

12

Roadmap to Carbon Neutrality in 2050
• Accelerate research and development for early establishment of new technologies• Adopt multi‐track approach to develop super‐innovative technologies, focusing on carbon
recycling blast furnace + CCU and hydrogen ironmaking (direct reduction)• Maximize utilization of industry‐leading electric arc furnace technology

CO₂ reduction
targets

Transformation ofsteel‐making
processes

18% reduction compared to
FY2013 (steel business)

Determine and announce revised
targets for FY2030 under 7th
medium‐term period

Develop carbon‐recycling
blast furnace with CCU(Devise processes and large‐scale
production in stages)

Carbon neutrality by 2050

Implementation
Assumes development of
infrastructure for supplying large,
inexpensive quantities ofhydrogen and a system for sharing
the costs throughout society

Process Integration
Utilize transition technologies for existing processes:
Iron sources
・Ferro‐coke, COURSE50, CCU, etc.
diversification
・Maximize use of industry‐leading electric arc furnace technology
Manufacture high‐grade steel, introduce eco‐friendly electric arc furnaces, etc.

Develop hydrogen‐based ironmaking(direct reduction)

Implementation
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13

Carbon‐recycling Blast Furnace
Technology Development

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14

Carbon‐recycling Blast Furnaces• To maximize the blast furnace method for mass, high‐efficiency production, including for high‐grade steel, technologies for
reducing CO₂ emissions from blast furnaces are vital.
• Combining carbon‐recycling blast furnaces with carbon dioxide capture, utilization and storage (CCUS) will enable steel
works to recycle CO₂ while using raw materials of the same grade as those in conventional blast furnaces, thereby leading to
net zero‐carbon emissions.

Sintered Ore

Sintered Ore

Coke

Effective
Utilization

Coke

High-purity
ore pellet

Byproduct Gas

Byproduct Gas

CarbonRecyclingfor heating & power
generation

for internal use,
reduction furnaces etc.

Hydrogen
H₂

Hydrogen
H₂

Hot Air
Blast
Furnace

Blast
Furnace
Molteniron

Normal blast furnace

Molteniron

Reduction
furnace

Methanationequipment

Power generation

Methane CH4(CN reductant)

OxygenO₂ReducedPelletCarbon-recycling blast furnace

Melting

Electric
Arc
FurnaceHydrogen-based ironmaking

Production scale

4 million tons per unit per year

4 million tons per unit per year
(similar to normal blast furnace)

2 million tons per unit per year
(similar to normal direct‐reduction method)

ReductantCoke and pulverized coal

Coke and recycled methaneHydrogenRaw materials

Low‐grade raw materials possible

Low‐grade raw materials possible

Restricted (high‐grade ore)

CO₂ emissions

Two tons of CO₂ per ton of pig iron

Targeting zero
(blast furnace reductions and CCUS methods)

Targeting zero (carbon‐free method)

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15

Concept of Carbon‐recycling Blast Furnace

CO₂

Reuse of carbon

Green hydrogen(Maximize benefits of carbon)
Blast furnace process

Methanation

Carbon‐recycling
Blast Furnace
CO₂ from blast furnaces is converted into carbon‐neutral reductant (methane)by using hydrogen, thereby replacing coal‐derived reductant

Methane（CH4 ）Copyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

16

Carbon‐recycling Blast Furnace and Carbon Cycle (CCU*)
 Carbon recycling maximized in blast furnace to reduce CO₂ emissions
 CO₂ emissions minimized through society‐wide carbon recycling of excess CO₂
Renewable energy, etc.
Green hydrogen

Using surplus CO₂

H2
Replace conventional petrol‐based
chemical products
using CCU‐produced methanol (seebelow**)

Blast
furnace
Separate CO₂

Carbon‐recycling
blast furnace

Convert excess CO₂ into
basic chemicals (methanol, etc.)

Carbonrecycling
Green hydrogen

Convert basic chemicals into chemical
products** (synthetic resin, paints, etc.)

Recycle plastic
containers, etc.

Process
加⼯Collect and transport
Waste plastic(useable in blast furnaces)

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17

CO₂ Emissions Reduction Using Carbon‐recycling Blast Furnace
 CO₂ generated from blast furnace is converted to methane and used repeatedly as
reducing material.
 CO₂ emissions are reduced by replacing coke with carbon‐neutral methane as the
reducing material.
Blast furnace gas

CO2 CO H2
Effective utilization in CCUS

Coke
Heating
Burner*Carbonrecycling

メタネーション
Methanation
H2

O2
CH4
Carbon‐neutral reductant※循環ガス使⽤による*Useof circulation gas

H2O
Methanation reaction
CO2 + 4H2 → CH4 + 2H2O

CO₂ reduction target of 30% in blast furnace, aiming at carbon neutrality through CCUS utilization
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18

Overview of Methanation Technology
 Methanation: Technology for using green hydrogen to convert CO₂ (blast furnace
exhaust gas) into methane (carbon‐neutral reducing material) Key CCU technology expected to help realize carbon‐neutral society
H2
Heat‐transfer oil
From blast furnace gas
CO2

Reaction heat

Heat
exchange
To carbon‐
recycling blast
furnaceHeat‐transfer oilcooler
Coolingwater

Methanation
reactor*Cooling water
Crude methane

Methane (carbon‐
neutral reductant)

Gas cooler
Gas‐liquid separator
Producedwater

Methanation reaction

CO2 + 4H2 → CH4 + 2H2O
*Shell and tube (S&T) reactors, plate reactors, etc.
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19Effectiveness of Oxygen Blast Furnace (1)An oxygen blast furnace can maximize the amount of methane blown in by heating carbon‐neutral
methane with combustion heat that conventionally is used to heat nitrogen gas.
Challenge

Need to develop an all‐new technology to reduce CO₂ emissions by blowing inlarge amounts of carbon‐neutral methane with oxygen. (world's first)
Carbon recycling blast furnace (air blower)

Carbon recycling blast furnace (oxygen blower)

Heat balance in combustion area*

Heat balance in combustion area*

Coke

CH4

CO₂
emissions

Can reduce
the amount of coke

CO₂emission
reduction

CH4

N2
CO
Combustion heat
(Supply)

Combustionarea*
Molteniron

COCombustion heat
(Supply)

Gas heating(Consumption)

CH4
Air（N2+O2）

Combustionarea*
Molteniron

Gas heating(Consumption)

CH4
O2*Combustion heats gas to approx. 2,000°C to melt iron
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20Effectiveness of Oxygen Blast Furnace (2)Zeroing out nitrogen in blast furnace gas reduces amount of exhaust gas by about ½, and increasing CO₂ concentration
enables CO₂ separation process to be downsized since less energy is required
Challenge•

Interlock operation with large‐scale methanation facilities (world's first)

Carbon recycling blast furnace (air blower)

N2

Carbon recycling blast furnace (oxygen blower)

Separation Effective utilization
Process
In CCUSCO2 CO H2

Separation Effective utilization
In CCUS
Process

CO2 CO H2
Miniaturization &less separationenergy

CO2

CO2
H2
CH４

Methanation

Air（N2+O2）

H2

CH４
O2

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21

High‐efficiency CCU Methanol Production Technology
Application in carbon‐recycling blast furnaces with CCU for CO₂ emissions reduction currently is jointly
being developed by JFE and Research Institute of Innovative Technology for the Earth (RITE).
New type of reactor for CCU methanol synthesis uses steel works exhaust gas to produce methanol
significantly cheaper compared to conventional reactors.

CCU Methanol Synthesis
New-type reactor

Blast furnace
gas
Green
hydrogen
Sweep gas（N2, etc.）

H2O

catalyst

Methanol
CH3OH

H2O

Generated
water

H2O

H2O Separation membrane

H2O

H2O
H2O

H2O

Methanol synthesis lab experiments

CO2 + 3H2 ↔ CH3OH + H2O

80
Reactivity (%)
反応率%

H₂O selectively permeates
separation membrane forgreatly increased reaction
rate

Chemical equilibrium shifts to right (reaction acceleration)

New-type reactor

60
40
20

Reactivity＞60%
Conventional
reactor（No.1）

0
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22

Roadmap for Developing Carbon‐recycling Blast Furnace and Technology
Conduct elemental technology development and small‐scale testing for both carbon‐recycling
blast furnaces and CCU methanol synthesis, targeting completion of proof‐of‐principle
process by 2027
2020
Element development
Partial technology test

Carbon‐ recycling
blast furnace

CCU
methanol
synthesis

Proof of principle to becompleted by 2027

Small‐scale demo
(150m3 scalein Chiba area)

2030
Large‐scale
development

Implementation*

CR blast‐furnace elemental technology development: (1) Develop simulation model, (2) Design operations and facility(furnace shape, etc.) based on analysis of in‐furnace phenomena (gas flow and temperature distribution), (3) Maximize
combustion efficiency through pure oxygen methane burner combustion experiments
Partial demonstration of CR blast furnace: Conduct large‐volume city gas injection test at Keihin No.2 blast furnace (before
shutdown)
CCU elemental technologies development: (1) Develop low‐cost CO₂ separation technology for CCU (2) Develop high‐efficiency methanol synthesis reactor

Element development
Basic design

Small‐scale demo

Large‐scale
development

Implementation*

Elemental technology development: (1) Develop low‐cost CO₂ separation technology for CCU (2) Develop high‐efficiency
methanol synthesis reactor
Basic design: (1) Conduct CO₂ separation lab tests to evaluate CO₂ separation efficiency and determine operation method(2) Conduct methanol synthesis lab tests to evaluate reaction rate and simulate reaction rate maximization*Pursuant to development of infrastructure for cheap, high‐volume hydrogen supply and system for sharing related costs throughout society
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23

Development of Technology for
100% Direct Hydrogen Reduction

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24Effectiveness of Hydrogen‐reduction Technology
 Oxygen is removed from iron ore in a reduction furnace to produce reduced iron (Fe), which is then melted inan electric arc furnace.
 The amount of CO₂ generated with the current direct‐reduction method is about 1/2 that of the blast furnace
method.
 Using hydrogen during reduction and green electricity during melting produces zero CO₂ emissions.

CO₂ emissions from various steel processes

Direct‐reduction process
High‐grade pellets (Fe2O3)

2.0t‐CO2/t

Reduction(natural gas to hydrogen)

Reduced iron (Fe)CO₂ emissions

Gas for reduction
1.0〜1.5
t‐CO2/tZero CO₂
emissionsElectricity

Melting(to green power)

Blast furnaceand converter
methodDirect‐reduction Direct‐reduction method(green hydrogen &methodgreen electricity)(natural gas)

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25

Problems and Solutions for Hydrogen Reduction (1): Endothermic Reaction

ProblemEndothermic reaction inhibits reduction

Solution

Develop raw material preheating and hydrogen heating technology(Hydrogen reduction causes endothermic reaction)

Problem

SolutionEndothermic reaction inhibit reduction

・Develop raw material preheating technology
・Develop hydrogen heating technology

High‐grade pellets (Fe2O3)
Fe 2O 3＋H 2 → Fe+H 2O(Endothermic reaction)
Exothermic effect weakened by noore reduction with CO

Hydrogen (H2)

Poor reduction(material sticking, etc.)

Reduced iron (Fe)Preheated raw materials (Fe2O3)

Heated hydrogen
Hydrogen (H2)

Reduced iron (Fe)

Reduction failure due to insufficient heat

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26

Problems and Solutions for Hydrogen Reduction (2): Limited Raw Materials

Problem High‐grade raw materials are produced in limited quantities and difficult to obtain.
Solution

Expand sourcing through collaboration with raw material supplier (BHP*)

Problem

Solution

Currently, direct reduction can only use
scarce high‐grade raw materials, of which
production is limited.
Direct reduction

Blast furnace

QualityHigh grade

Low to medium
grade

Production(billion
tons/year)

0.17

2.06

Develop processing technology forlow‐ and mid‐grade materials with BHP

Use as raw material for direct reduction

Low‐ and medium‐grade raw materials are not used
for direct iron reduction because they are difficult topelletize and have low Fe content.
*One of three largest iron ore suppliers, mainly producing in Australia
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27

Development of Electric Arc Furnace
Process Technology

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28

Production of High‐grade Steel in Electric Arc Furnace Process
・Steel products are manufactured by melting steel scrap and direct‐reduced iron in an electric arc furnace.
・The resulting CO₂ amount is about 1/4 that generated by the blast furnace‐converter method.
・CO₂ emissions should be reducible to zero using hydrogen‐reduced iron and green electricity.

Electric Arc Furnace processRawmaterials

Secondary refining
Component andtemperatureadjustment

Continuous casting

Direct‐reduced ironGreen electricity

2.0t‐CO2/t‐iron

CO₂ emissions

Hydrogen‐reduction furnace

Scrap
Electric arc furnace
Raw material
melting

CO₂ emissions from various steel processes

CO₂ emissions cut to 1/4

0.5t‐CO2/t‐ironSource:
METEC（2015）

Zero CO₂
emissions
Blast furnaceand converter
methodElectric arc furnace
method(scrap melting)Direct‐reduction
method(green hydrogen &green electricity)

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29

Production of High‐grade Steel in Electric Arc Furnace Process: Problem and Solution (1)Problem
Solution

Improve productivity of electric arc furnaces, currently 30% less than that ofblast furnace‐converters
Reduce electric power intensity
High‐speed, high‐efficiency melting technology for use in electric arc furnaces

Solution

Problem
Productivity improvement(1)Technology to melt scrap and reduce iron at high speed(2)Technology for efficient meltingwith less electric power
ECOARCTM eco‐friendly, highefficiency electric arc furnace(in use at JP Steel Plantech Co.)

productivity(1) Continuous
scrap charging

30% less
Productivity
500 tons
per unit
per hourBlast furnaceand converter

300 tons

per unit
per hour*(top level globally)

Electric arc
furnaceTo dust collectors

Continuous scrap charging in high‐speed, high‐efficiency melting furnacewith high temperature exhaust gas
preheating
Electrode(2) High‐temperature
exhaust gas
preheating

Need to further improveenergy efficiency andproductivity(3) High‐speed and high‐efficiency melting

JFE Bars & Shapes Corporation*Millennium Steel, Jumbo size 420t twin DC FastArc®EAF （2011）
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30

Production of High‐grade Steel in Electric Arc Furnace Process: Problem and Solution (2)Problem Quality constraints for products with electric arc furnaces(Many steel types are difficult to manufacture in terms of quality)

Solution Technology to remove impurities and detoxify impurities

Problem

Solution

Elimination of quality constraints(1) Technology to remove impurities(2) Technology to detoxify impurities

Electric arc furnace process (scrap & reduced iron)
Material degradation due to increased impurity
concentration

・Many steel types hard to manufacture
in electric arc furnaces●Vehicle steel sheets: Defects & poor processing performance●Electrical steel sheets: Deterioration of properties
Blast furnace and converter1

Electric arc furnace steel2

For ex.: Cu 0.02‐0.03%
N 〜0.003%

For ex: Cu 0.2‐0.4%
N 0.004%〜

Steel plates for cars

Electrical steel sheet(motor cores)

Sources: 1:“Iron and Steel Smelting,” The Japan Institute of Metals (2000), 2“Electric Furnace Steelmaking Method,” Iron and Steel Academy (2019)
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31

Technology for Using Scrap
in Converters

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32

Technology for Scrap Use in Converters
Problem

Need more robust melting technology to increase use of scrap in converters

Solution(1) Design and engineer larger and more durable burners for use in large converters(2) Utilize carbon‐free fuels (hydrogen or carbon‐recycled methane) to reduce CO₂ emissions

Oxygen gas
Oxygen gas
supplyequipment

Fuel, oxygen andpowdered raw
materials

NewburnerConverter

Problem

Solution

Increasing volume of
scrap usage in aconverter reduces heat

High-efficiency heat‐transfer
heat-transfer burner
High‐efficiency
burnerformelting
scrap
in
converters
for melting scrap in converters
Transferring combustion heat to ironusing powdered material* heated withnew burner

New heat technology
JFE Steel’s “ONLY1” technology

Molteniron(already commercialized stainless‐steel converters)
Develop burner for normal steel converter

Scrap

Current heat source for converters
Heat from oxidation reaction of carbon
and silicon in hot metal

Development Goals:(1)Design and engineer large burners(2) Use carbon‐free fuels such ashydrogen gas*Source: JFE Technical Report No. 38, p. 53 (2016)

Scrap ratio: 12‐15% (current) → 20% or more (target)

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33

Development of Process
for Achieving Carbon Neutrality

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34

Summary of Process Development
Accelerate R&D for (1) blast furnace technology, (2) direct‐reduction technology, (3) electric arc furnacetechnology and (4) conventional technology→ Develop innovative technologies multilinearly, aiming to achieve carbon neutrality

Blast
furnacetechnology• Carbon‐recycling blast furnace with CCU
Blast
furnace• COURSE50 and Super‐COURSE50• Ferro coke
Green

Direct‐reduction Reduction
technology furnace• Hydrogen‐based ironmaking(direct reduction)hydrogen,Measures for hydrogen endothermic reaction
and restriction of raw materials

Carbongreen
electricity,

neutrality& low‐costElectric arc
furnacetechnology

Electric arc
furnaceConventional technology• Electric arc furnace
Measures to improve productivity and lower electricity costs
Measures to manufacture high‐grade steel
Measures to expand scrap (hard‐to‐use scrap, etc.)

mass
supply• Expanded use of scarp in converters, etc.
Development of high‐efficiency, heat‐transfer burner
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35

Eco Products(Electrical Steel Sheets Strategy)

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36

Eco‐products: JFE’s Electrical Steel Sheets Strategy

JFE SteelElectrical steel
sheet
manufacturing

JFE Shoji
Electrical core
processing anddistribution

Expand supply system for highly
value‐added electrical steel sheets

World's No. 1 global distribution
and processing system forelectrical steel sheets

Japan

Expand non‐oriented
electrical steel sheet
manufacturing facilities

Sharing
Strategies

Expand collaboration withalliance partners
Build SCM in new regions

Overseas

Will study electrical steel
sheet JV with JSW (India)

Deepen processing
capabilities of coil centerssynergyeffectCapture growing demand for high‐grade electrical steel sheets both in Japan and overseas on group‐wide basis
Copyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

37

Eco‐products: Strategy for Electrical Steel Sheets in Japan
Japan
海外

Expand manufacturing facilities fornon‐oriented electrical steel sheet (N/O)**Announced on April 1, 2021

Increase capacity of West Japan Works (Kurashiki
district) to meet rising demand for high‐grade non‐oriented electrical steel sheets used in EV drive motors

Total
investment

Approx. 49 billion yen

Operation startFirst half of FY2024

Production
capacity
CO2 reduction

Demand Forecast of high‐grade non‐oriented electrical steel sheets

Double current production capacity forhigh‐grade non‐oriented electrical steel
sheetsAbout 1.5Mt CO₂/year (due to increased
adoption of electric vehicles)

Demand for high‐grade non‐oriented electrical steel sheets, indispensable for electric automobiles,
is expected to rapidly increase as global environmental regulations are accelerated/strengthened
Europe: Ban sales of gasoline
vehicles
2025: Norway
2030: Germany, Netherlands & UK
2040: France

India: Promote shift to EVs
100% by 2047

Japan: Promoteelectrification
Shift to all electric vehicles
Government: from 2035
Tokyo: from 2030

USA: Convert to ZEVs and ban use ofgasoline vehicles
ZEV (EV, FCV, PHEV): 13 states haveregulations
California: Ban gasoline vehicles in 2035

China: Shift to new energy
vehicles and HEVs
EVs, FCVs & PHEVs
2025: At least 20%
2030: At least 50%
Convert gasoline vehicles to HEVs
2025: At least 50%
2030: 100%

Demand for High‐Grade Non‐Oriented
Electrical Steel Sheets(Calculated by JFE; 2019 results = 1.0)

Copyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

38

Eco‐Products: Overseas Strategy for Electrical Steel Sheets
Overseas

MOU with JSW of India to study
feasibility of electrical steel sheet JV**Announced on May 7, 2021

Agreed with strategic‐alliance‐partner JSW tostudy establishing grain‐oriented steel (G/O)
manufacturing and sales company in India

2009 Signed strategic comprehensive agreement
2012
Licensed manufacturing technology for non‐oriented
electrical steel sheets (N/O)
JSW becomes India's largest N/O supplier

2021
Agreed to study feasibility of G/O manufacturing & sales
company

Demand Forecast of Grain‐oriented Electrical Steel Sheets

The global demand for grain‐oriented electrical steel sheets in transformers is expected toincrease due to continuous growth in demand for electric power and the expanding adoption ofrenewable energy. The demand in India for grain‐oriented electrical steel sheets is expected to increase by
1.7 times in 2030 compared to 2019 results.
Electricity demand in India

Demand for grain‐oriented Electrical Steel Sheets in India(Calculated by JFE; 2019 results = 1.0)

1.6 times ≒ annual rate + 4% (world's largest)

Source: World Energy Outlook 2020, IEA
Copyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

39

Carbon Neutrality Initiatives
in Engineering and Trading Businesses

Copyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

40

Commercialization of Offshore Wind‐power Business• By commercializing our manufacturing of foundation structures (monopiles), we will
become the forerunner in the business of offshore wind-power generation and establish a
supply chain across the entire group, including foundation manufacturing and O&M.1• Aim to expand business in the field of renewable energy by leveraging the JFE Group's
collective strengths (synergies) with JFE Engineering as the main player.

JFE Engineering

JFE Steel

Feasibility study of seabed-fixed
foundation structure (monopiles) for an
offshore wind power generation

Increased production capacity and stablemass production of large and heavy
plates for offshore wind power generation
Steel supply

Utilization of Kurashiki No. 7 Continuous Casting Machine in Kurashiki
district (scheduled to start operation in FY2021)

Steel supply
SCM support
Steel supply

SCM Support

JFE Shoji

Each company under the group

SCM construction for steel products andprocessed products for offshore wind power
generation contributes to groupcollaboration

JMU2: fabrication of offshore wind turbine
floats and construction of work vessels
Group-wide: O&M with maximum use ofresources

1 O&M: Operation & Maintenance. Applied repair and analysis techniques
2 JMU: Equity method affiliate Japan Marine United Corporation

Copyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

41

Offshore Wind Demand and Monopile Market Trends
Offshore wind power has been introduced mainly in Europe and China (24 GW as of 2018),
but significant growth is expected in Asian countries (including Japan) and North America.

Total installed offshore wind power (GW)

Source: "Future of Wind," IRENA (2019)

Estimated market expansion
in Japan
Expected
power
generation
（GW）

Steel
consumption
（Mt）

10

1.5

30〜
Public and private 45
sector adoption targets

4.5〜
6.75

2050

13.5

2030
2040

Trends in Japan’s monopile market

90

Source: Japan Wind Power Association

From around 100,000 tons per year in FY2024, it is forecast to expand to 160,000 tons in the late 2020s and exceed 200,000
tons from the 2030s.
Note: Market size and steel consumption estimates based on ratio of foundation types per target installations

Copyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

42

JFE Engineering’s Initiatives: Study Monopile Production
Study of monopile foundation‐structure manufacturing
Strategy

Establish monopile plant, first of its kind in Japan, deploying
technologies for designing offshore structures, processing andwelding large and heavy steel plates, and applying robust marine
anticorrosion coatings

Investment scale

About 40 billion yen for plant buildings, machinery andequipment, wharf maintenance, etc.

Production period

Production targeted to start in April 2024 (corresponding to startof construction of Round 1 project)

Market share

Approx. size of main machine (12MW class)

blade
100m

wind turbine
260m

50% share (target)

Transition pieces

tower(pipes connecting to wind turbine tower)● 9 to 11m in diameter● About 500t in weight

30m

Monopiles (super heavyweight)

80m

Thick walls, large diameters & long length● 9 to 11m in diameter● About 1,400t in weight

Copyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

43

JFE Steel Initiatives: Expand Large‐scale Heavy‐duty Plate Production Capacity
Larger wind turbines to reduce power costs require larger foundation structures⇒ Contribute to offshore wind power business with large, thick, high‐quality cross‐section plates
manufactured from world top‐class continuous‐casting machine with large cross section
Investment in facilities for large and heavy plates
for offshore wind
New continuous casting machine atKurashiki district

Large and heavy slab

JFE’s large‐size steel plate:
Up to 37 tons (largest in Asia)<New continuous casting machine>• High‐efficiency casting of large cross‐sectional slabs• Advanced control technology for greatly
improved slab surface and internal quality

Other mills : about 20‐28 tons
Heating furnace
for large & heavy slabs

Large and heavyslab

Hot rolling mill

Accelerated
cooling system

Advantages of large‐size plates
in monopile manufacture
A tube for monopiles
made with large‐size plates
A tube made withconventional‐sizesteel plates

Less welds
Longer tube length

Mass production of high‐quality, large cross‐section,
large single‐weight thick plates
Large‐size plates for offshore wind: over 200k tons/year
・Reduction of welding
・Reduction of assembly man‐hours

Lower production cost・Shorter production lead time・Increase in production volume

Promote introductionof offshore wind power・Multiple welds
・Shorter tube length

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44

O&M Using Group Resources
Lifecycle cost structure for seabed‐fixed offshore wind turbines (European case: METI‐Mitsubishi Research Institute data)
R&D
2.9%

Manufacture ofwind turbines
23.8%

Manufactureof foundation
structure
6.7%

ElectricalsystemRemovalInstallation
15.5%

7.7%

O&M market size: around 2 trillion yen(Mitsubishi Research Institute data; based on Japan’s target of introducing 10 GW by 2030)

Power generationcompany

JFE aims to support the stable operationof wind turbine generators as a partnerof generator manufacturers

Wind turbine generator
cooperation

External
corporation

Nacelle repair andfailure support

BOP

BOP＝Balance of plant (offshore foundation
structure, etc.)

cooperation

Windmillmanufacturer

JFE Group

JFE Group

Partner company

Blade repair

Spare parts
supplyEquipment diagnostic
forecasts

External
corporation

Structural corrosion evaluation

 Utilize know‐how cultivated in onshore wind O&M and steel structure fabrication
 Collaborate with other companies to support the stable operation of domestic offshore wind farms
Copyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

45

Engineering Business Contributions to Carbon Neutrality
Contributions to CO₂ Reduction through Engineering Business
Renewable Energy

Carbon Recycling Biomass, geothermal, solar, offshore wind
power (through group synergies), etc.
 Waste power generation

Conversion of CO₂ into synthesis gas andchemical products
 CO₂ separation and recovery

Renewable‐energy business (EPC & projects)

Practical use of carbon recycling Diversify power sources (offshore wind & hydro)(CO₂‐based chemical production technology)

 Participate widely in EPC and project management

Solar,
geothermal,
wind power,
biomass &waste power

Offices
Factories

Regional
PPS*

CO2
Waste
Waste
plastic

Development process Provide energy services such as local supply of
renewable energy sources and zero‐emission plans forclients

Incinerators, steel works, powerand chemical plants, etc.

SyngasRawmaterials ofchemicalproducts

CO+H₂

Publicfacilities●Carbon recycling of CO₂

Homes●Chemical recycling of waste plastics

Simultaneousachievement*Power producer and supplier that produces
electricity locally for local consumption
Copyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

46

JFE Engineering’s Support of Local Production for Local Consumption
Support local energy production for local consumption (independent and decentralized) andregional carbon neutrality through biogas power generation from food waste and expansionof regional power producers and suppliers (PPS)*
Sapporo Biofood Recycling
Feed & fertilizer production fromfood waste and biogas power
generation
Food recycling and sales of locally
produced electricity

Niigata city
Niigata Swan Energy
Sales of locally produced electricity
from waste power generation

Fukuyama city

Hachimantai city

Fukuyama Mirai Energy
Sales of locally produced electricity fromwaste power generation

Hachimantai Geothermal Plant sales
Local electricity from MatsuoHachimantai Geothermal Power Plant

Kumamoto city

Tohoku Biofood Recycling

Smart Energy Kumamoto
Sales of locally produced electricity
from waste power generation

Biogas power generationfrom food waste
Food recycling and sales of locally
produced electricity

Tokorozawa city
Tokorozawa Mirai Denryoku
Sales of locally produced electricity
from waste power generation

Toyohashi city

J Biofood Recycling

Honokuni Toyohashi Electric Power
Sales of locally produced electricity
from biogas power generation

Biogas power generation from food waste
Food recycling and salesof locally produced electricity*Produce electricity locally for local consumption

Copyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

47

Trading Business Contributions to Carbon Neutrality
Leverage global network and corporate resources
for carbon neutrality within JFE group and society

JFE Shoji
JFE
Steel

JFE
Engineering

Reduce CO₂ emissions
in steel business

Facilitate wider useof renewable energy

Collaborate with JFE Steelto expand steel scrap
procurement and explore
procurements of reducediron and later hydrogen

Scrap
Reduced ironSupport the stable supply offuel for biomass power plants
operated by JFE Engineering tohelp reduce CO₂ emissions

HydrogenBiomass fuelAim to become carbon neutrality
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JFE Holdings,Inc.
RightsReserved.
Reserved.
Copyright© 2021
JFE Holdings,Inc.
AllAllRights48

Carbon Neutrality Proposals to Society

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49

Proposals to Society
JFE’s key business concern is developing carbon‐neutral steelmaking, but many other issues
also must be resolved.

Costs of Achieving Carbon‐neutral Steel Massive research and development costs⇨ Approximately 100 billion yen by 2030 and more by 2050 (will require maximum use ofgovernment R&D support, such as Green Innovation Fund) Massive investment in equipment⇨ Total capital investment in steel works will exceed R&D costs (approximately 500 billion
yen per blast furnace with a capacity of 4 million tons per year) Stable supply of inexpensive, high‐volume green hydrogen and electricity, anddevelopment of related infrastructure (Ensure the global competitiveness of industrial
power price) Even with cheap hydrogen, production costs will significantly increase**Assuming 20 yen per Nm3 of hydrogen

Significant cost increases are inevitable and there are limits to the efforts ofindividual companies. Government support and cooperation with society willbe essential, including for the creation of a mechanism through which society
would bear the increased costs.
Copyright © 2021 JFE Holdings ,Inc. All Rights Reserved.

50

This document is not a disclosure document under the Financial Instruments and Exchange Act, and the accuracy and completeness of theinformation is not guaranteed. In addition, the forecasts and other information presented are based on information available at the time of thebriefing and include uncertainties. Therefore, please refrain from making investment decisions based solely on this material. The Company
assumes no responsibility whatsoever for any damages resulting from the use of this material.

Please do not reproduce, reprint, or upload this document to a website without permission.

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