Carbon Neutral Visionof Nippon Steel

September 2nd, 2024
Clean Coal Day International MeetingIronmaking by iron ore reduction is necessary
27
for the future16221
To make steel products,
either iron ore (iron oxide) must be reduced
19
12or scrap (after reduction) must
be recycled.

Scrap generation
12 increases with steel stocks.
1512⚫ However,even in 2050, global scrap generation is expected to remain
at about 50% of crude steel production, and the iron ore reduction
9process will continue to be essential.
76Gap between global scrap generation and crude steel production

100 milliontons(億ｔ)20153020202030

Scrap generation
スクラップ発生2050
27

Crude steel production
粗鋼生産

25211920151051216121210159672015

2020

02030

Steelmaking by scrap
recycling alone
cannot meet theworld's steel demand(This situation will bethe same in 2050.)

From a volume
perspective, it isessential to produce
and use iron orereduced steel.

2050
Source: JISF, Long-term vision for climate change mitigation: A challenge towards zero-carbon steel

スクラップ発生粗鋼生産© 2024 NIPPON STEEL CORPORATION All Rights Reserved.

Reduction is an essential process in extraction of Iron from its ores

3In nature, iron exists as oxides, iron ore. To produce steel products,
oxygen must be removed (= reduced) from iron ore.

Reduction bycarbon (coal)➢ Mass productive➢ Stable in proficiency➢ Cost competitive

From iron orethat exists as ironoxides (e.g.,Fe2O3) in nature,

C Exothermic

Fe2O3

Reduction byhydrogenChallenge:➢ CO2–free process

1t of steelmaking emits
approx. 2t of CO2

Reduction

CO2

Steel isproduced

Melting Refining MoldingFe

H2 Endothermic H2O
Fe2O3Reduction

Melting Refining MoldingFe© 2024 NIPPON STEEL CORPORATION All Rights Reserved.

Process for reducing iron ore : Blast Furnace(BF) Method Features

4• Currently, BF method is the only process in which high-grade steel can be mass-produced from iron ore.
• Unlike many other manufacturing industries where respective products are processed in dedicated lines, in steel
industry all products share the same upstream line and diverge into different product lines.
• BF method is extremely efficient system where the by-product gas generated in iron ore reduction and melting by
coking coal can be reused as energy source (heat, electric power, etc.) for the integrated steel making processes

Iron ore (iron oxide))(Fe+O)

Approx. 2t of CO2 is generated
by making 1t of steel*Most of the CO2 is generated in or before BF

BOF↑CO/CO2
Sintering Furnace↑H2/CH4
Coking coal(C)ＢＦ

Coke oven1) Iron ore, or iron oxide, isremoved of oxygen(reduced) and turns into
1,500 ℃ molten ironContinuouscaster

Pig iron(Iron, or Fe)

Produce high-quality steel through precise
control of manufacturing processes
3) Semi-finished products are processed2) Molten iron is removed ofinto steel products with respective
impurities and solidified intosizes, shapes, and features (throughsemi-finished products withprocesses such as hot-rolling,
standardized sizes and shapes
annealing, galvanizing, etc.)© 2024 NIPPON STEEL CORPORATION All Rights Reserved.

5Carbon Neutral Vision 2050
Released in March 2021

<Aim to reduce CO2 emissions by 30% by 2030 and achieve carbon neutrality by 2050>

Our 2030 target is ambitious compared to those of our global peers, and is feasiblyaligned with the Japanese government’s plan
Provision of high-performance steel
products and solutions that contribute to
reducing CO2 emissions in society
Reduce CO2 emissions at
the time of production andprocessing by customers

Reduce CO2 emissions at thetime of use of our products
by end customers

Decarbonization of steelmaking
process for providing carbon
neutral steel
Reduce CO2 emissions incustomers’ supply chains

By providing high-performance steel products and solutions, and by decarbonizing steelmaking
process ahead of other countries, we are determined to provide carbon neutral steel to our customers(including approximately 6,000 companies in Japan) and support their international competitiveness.
From September 2023, we will launch sales of NSCarbolex® Neutral, a steel product that is certified as
reducing CO2 emissions by a third-party organization.

© 2024 NIPPON STEEL CORPORATION All Rights Reserved.

Carbon Neutral Process
Stable supply
Scrap

Low-qualityiron ore

Cokingcoalof greenhydrogen at
reasonable cost

6

Stable supply ofgreen power atreasonable cost

Breakthrough technologies
Nippon Steel challenges
3 external conditions for which
Gov’t support is required

INPUT

Hydrogen injection into BF(COURSE50~ SuperCOURSE50)
Pig iron

Refining

Directly reducediron

Pig iron

Directly reducediron

Directly reduced
ironElectric
melting
furnace

High-grade steel
production inlarge size EAF

equally productive as BF

BOF

Rolling mill

Rolling mill

CO2
Steel products
OUTPUT

EAF route

Melting

BF and BOF route

Reduction

Hydrogen direct
reduction of iron(shaft furnace etc.)

CCUS is required to offset CO2emissions in carbon neutral
process because coking coal
will still be needed asensuring stability of operation.

CCUS *End products

Chemicals, biofixing,
underground storage* Carbon Capture, Utilization and Storage© 2024 NIPPON STEEL CORPORATION All Rights Reserved.

7

Challenges of Hydrogen Utilization in Blast Furnaces
1. Current blast furnace operation
with coke (coal)

2. Technical Challenges in Hydrogen Conversion

Iron ore
BF gas (CO2, CO, etc.)

Coking coalReduction
withFe＋carbonO
Inner volume
5,000 m3

Pulverized coal

Separation
by gravity

Hot blast(1,200°C）

Molten slag

Molten irona) Reducing agent and Source of heatb) Support of raw materials at hightemperature, maintaining gas flowin the furnace

・Generating CO2・Due to the exothermic
reaction,1) the reaction
sustained and 2) theFe isiron
is melted at highExothermic
temperature, andthe composition canbe easily adjusted

C・Generating H2O(steam)・Due to the temperaturedrop in the furnace,Fe 1) the reaction is notsustained andEndothermic2) produced iron does
not melt

H2
Reduction
Fe＋
withhydrogen O

CO2

H2O

⇒Challenge:
Injection hydrogen athigh temperature(with explosion risk)*Gas from blast furnace is utilized as an energy source.

© 2024 NIPPON STEEL CORPORATION All Rights Reserved.

Challenges of 100% hydrogen use in direct reduction

8Currently, high-grade ores used as raw materials for reduced iron are scarce, accounting for only
about 5% of total iron ore production, and a shift to reduced iron production using low-grade ores
is essential.
We are challenging to develop technology for a direct reduction process that uses low-grade ore
as raw material and 100% hydrogen instead of methane (natural gas) as the reducing material.
Iron oreProblems

In addition to the issues of the existing DRI
process,
1) Hydrogen reduction is endothermic.
→ Hydrogen preheating to be required.
2) Powdering of raw materials at low temperatureand sticking of products.
→ Less powdering and less sticking ore (only
10% of commercially available ores) to be fed,
so usage restrictions of raw materials are
greater than BF method.

Steam
H2O

Iron pellet

Shaft furnace
2)

Sticking

Challenge
Technologies for blowing a large amount ofpreheated flammable gases at hightemperature into the furnace, and expandingores applicable to the hydrogen process

Powdering

HeatedH21）
Solid iron （DRI, HBI)HBI+non-ferrous components© 2024 NIPPON STEEL CORPORATION All Rights Reserved.

9Carbon Neutral Vision 2050
present
2022

Hirohata EAF
Start studies on
started commercial
shift to EAF
operation
Started production of Established ElectricElectrical Steel Sheet Furnace Project
via EAF～2030
Accumulate knowledge ofhigh-grade steelmaking in EAF

Yawata EAF(replacement of BF)

2025

2022

Hydrogeninjection
into BF

Start study forscale-up

CCS

～2030

～2030

Start demonstration
at the Kimitsu #2 BF

COURSE50
implementation

2023

2024

Verified 22% of
CO2 reduction

Verified 33% of
CO2 reduction

Try to verify
40% reduction

Establishing
ImpleImplementation
mentationtechnology

Establishing
Implementation
technology

2026

Started R&D by using
a pilot plant inKimitsu Area

Advanced CCS projects
Survey on theimplementation(JOGMEC)

Around ～2040

2027

ironFrom 2008
Started R&D process of Under construction ofhydrogen injection facility
COURSE50

Hirohata EAF
expansion

～2030

2024

Set up a small EAF (ofUnder
10t/ch size) in the Hasaki
construction R&D Center and startexperimentSet up a small DRI
Plan to consistently developUnderfurnacein the Hasaki
technologies for both large-size
R&D Center and start
construction
EAFs and reduced ironHydrogen direct
experimentproduction
tobeusedinthereduction ofEAFs at Hasaki R&D Center
Electric melting
furnace2050

Mid-scale tests(under consideration

Around ～2040

SuperCOURSE50
Establishing
Implementation Impletechnology mentation
CO2 emission
reduction by
50%

Realization of Carbon Neutral Process

High-grade
steel
production inlarge size EAF

2023

2030
30% reduction© 2024 NIPPON STEEL CORPORATION All Rights Reserved.

10To realize carbon neutral
Three Factors to increase costsa)Huge R&D costsb)Huge CAPEX
for practical implementationc)Increase in operational cost

⮚ Financial support for R&Dand practical implementation⮚ Equal-footing ininternational competition

Support for every single step of Initiatives
from R&D to social implementationa) R&Db) Practicalimplementationc) Electricity &Hydrogen Costd) Rawmaterials© 2024 NIPPON STEEL CORPORATION All Rights Reserved.

11Green Innovation Fund adoption
GI fund

As ofDec., 2021

Use of hydrogen insteelmaking processTotalAddition~Mar. , 2024.3

193.5 ＋ 256.4 ＝Bn,449.9
Bn.

Bn.

(unit: JPY)

R&D Item #1
Development of hydrogen injection into BFs(1)Development of hydrogen reduction
technology utilizing on-site hydrogen

14.0

29.6 ＝＋Bn.
Bn.

43.6

(2)Development of low-carbon technology
utilizing hydrogen from external sources
and CO2 contained in BF gas

121.4 ＋ 117.2 ＝

238.6

Bn.

Bn.

Bn.

Bn.

Corresponding technologies that
NSC has been pushing forward

COURSE50 BF

SUPERCOURSE50 BF

R&D Item #2
Development of hydrogen direct reduction technology: low-grade iron ore reduction only by using hydrogen
100% hydrogen use in(1)Development of direct
34.5 ＋ 79.6 ＝ 114.1
direct reduction processhydrogen reduction technology
Bn.
Bn.
Bn.
(shaft furanace etc.))(2)Development of impurity removal
technology for EAFs using direct reducediron(3)Development of technologies such as
high-efficiency melting by an electric
melting furnace using directly reduced iron23.6 ＋ 7.0 ＝Bn.

Bn.

23.0 ＝Bn.

30.6
Bn.

23.0
Bn.

Production of high-gradesteel in large size EAFs
Electric Melting Furnace

GI (Green Innovation) Fund : A government fund to provide continuous support to companies and others committed to ambitious goals to achieve carbon
neutrality by 2050, from R&D and demonstration to social implementation, for a period of 10 years.
© 2024 NIPPON STEEL CORPORATION All Rights Reserved.

3 challenges for achieving a carbon-neutral society
Technologydevelopment

Predictabilityof investment
recoveryInfrastructure

12⚫ Discovery of technology development seeds and securingof budget (completed)⚫ A development project is underway⚫ Technical review for implementation (in progress)⚫ Determine the predictability of investment recoveryand strategic significance, including government support and greensteel market formation⚫ Green steel market formation
Turning the environmental value (CO2 reduction) tothe economic value⚫ Electric Power System Reform (7th Strategic Energy Plan)
Comprehensive power supply and demand measuresand safe utilization of nuclear technology⚫ Social implementation of hydrogen, ammonia, andCCUS© 2024 NIPPON STEEL CORPORATION All Rights Reserved.

13Efforts to surmount the 3 challenges
Lobbying to the entire society, with a focus on making policy andinstitutional proposals to the government and industry
Green Innovation (GI) Fund

Technology Gov’t support in"Utilization of hydrogen in the steelmaking processdevelopment
development planning and testing･･･

Budgetingcompleted

Gov’t support for One-third of the total investment borne by the government
capital expenditures by use of GX Transition Bonds･･･

Institutionalization
completed

Gov’t support for
operating costs

Establishment of a strategic materials and production base tax
system (Green Steel)･･･

Institutionalization
completed

Adoption of the mass balance method at Worldsteel
and development of guidelines･･･

High-levelagreement inprinciple

Lobbying for revision of ISO, GHG protocol, etc.

･･･ Implementing and“ ¥193.5 bln ➡ Raised to ¥449.9 bln

Predictabilityof investment
recoveryInternational
standardization

preparing

GX League [Ministry of Economy, Trade and Industry]

Creation of economic ➡ Growth-oriented carbon pricing
GX Product Market Study Group [Ministry of Economy, Trade and Industry]value from theenvironmental value and the Government GX Implementation Committee(CO2 reduction)･･･ Start of discussion
on GX market
creation

Exchange of opinions with the automobile industry and others

Safe use of nuclear and other energy sources for the 7th Strategic Energy Plan ･･･

Infrastructure

EnergyinfrastructuredevelopmentHydrogen and Ammonia: Revised Basic Hydrogen Strategy,

Committee
recommendations

Hydrogen Society Promotion Law･･･

Bill passed

CCS: JOGMEC/Advanced CCS Support Program･･･

Project
participation© 2024 NIPPON STEEL CORPORATION All Rights Reserved.

14This presentation does not constitute an offer or invitation to subscribe for or purchase any securities and nothing contained herein shall form the basis of any
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Any statements in this document. other than those of historical facts, are forward-looking statements about future performance of Nippon Steel Corporation and its
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© 2024 NIPPON STEEL CORPORATION All Rights Reserved.