JFE GROUPREPORT
2021
Integrated ReportPublication of JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Koji Kakigi
President and CEO
JFE Holdings, Inc.

Corporate Vision<Reporting Period>

Tool map

FY2020 (April 1, 2020, to March 31, 2021). Reports on some activities
undertaken outside this period are included.

Corporate Values

The holding company JFE Holdings, Inc. and its three operating companies
Corporation. Additionally, some reports may include the equity-method
affiliate Japan Marine United Corporation and Group companies underaffiliates).

Standards of Conduct

Guidelines· Value Reporting Foundation (VRF):

1. Provide quality products and services

International Integrated Reporting
Framework· Ministry of Economy, Trade and Industry: Guidance for Collaborative Value

following Standards of Conduct in all corporate activities. These

2. Be open to society

standards embody the JFE Group's Corporate Vision and go

3. Work with communities· GRI: Sustainability Reporting Guidelines GRI Standards

hand-in-hand with its Corporate Values.

4. Globalize· Financial Stability Board: The final report of the Task Force on Climate-

Senior managers are responsible for communicating thesechain partners, and creating effective systems and mechanisms
to ensure adherence to ethical standards.

5. Exist harmoniously with the global
environment
6. Maintain proper relations withgovernments and political authorities

Senior managers are also responsible for measures to prevent

7. Maintain crisis readinessthe recurrence of any violation of these standards. Additionally,

8. Respect human rights

they must report violations promptly and accurately to internal

9. Provide challenging work environments

and external stakeholders, determine the persons of relevant

10. Comply with laws and ordinances

authority and accountability, and resolve matters rigorously.

Corporate Governance Report

JFE Steel Corporation, JFE Engineering Corporation, and JFE Shoji

the operating companies (consolidated subsidiaries and equity-method

standards to employees of Group companies and their supply

JFE Group CSR REPORT<Organizations Covered>

Challenging Spirit, Flexibility & Sincerity

All JFE Group personnel are required to faithfully adhere to theNon-financial Information

Creation

related Financial Disclosures (TCFD)

DX REPORTJFE GROUP REPORT 2021
(Integrated Report)

CSR Report 2021
https://www.jfe-holdings.co.jp/en/csr/
Corporate Governance Reporthttps://www.jfe-holdings.co.jp/en/company/info/pdf/corporate-­governance.pdf
DX REPORT
https://www.jfe-holdings.co.jp/en/
investor/library/dxreport/index.html

Financial Information

Financial results
Publication Date

Investors’ meeting documents

Online: December 2021; (Next issue (planned): November 2022)
Disclaimer
All current plans, strategies, and beliefs published in this report that are
not historical facts contain forecasts about future performance, which are
subject to risks and uncertainties. Actual results may greatly differ fromthose forecast due to various factors including future trends in the global
and Japanese economies, and in related industries. Accordingly, please
note that we do not guarantee the reliability of such forward-looking
information.

Securities report
IR Libraryhttps://www.jfe-holdings.co.jp/en/
investor/library/index.html

2

JFE GROUP REPORT 2021

The JFE Group will contributeto society with the world’s
most innovative technology.

Since fiscal 2018, JFE Holdings, Inc. has published an integrated report that combines nonfinancial information, such as environmental, social, and governance (ESG) initiatives, with financial information including business strategies, with the objective of furthering the understandingof the JFE Group’s value creation narratives over the medium to long term among all stakeholders, including shareholders and investors.
Fiscal 2021, the first year of the Seventh Medium-term Business Plan, is a pivotal year for JFE
Holdings, marking the formulation of the JFE Group Environmental Vision for 2050 that aims forcarbon neutrality by 2050 and stronger efforts to address climate change. Our mission is to be
essential to society’s sustainable development and to create safe, comfortable lives for people
everywhere. Ensuring environmental and social sustainability (helping to resolve social issues)and establishing economic sustainability (stable earnings power) will be crucial to making thishappen. We aim to be a robust corporate group able to provide value over the long term. We
hope this report furthers everyone’s understanding of our initiatives on these fronts.
On editing this report, we referred to the Value Reporting Foundation (VRF)’s International
Integrated Reporting Framework and the Ministry of Economy, Trade and Industry’s Guidance forCollaborative Value Creation. Relevant departments worked earnestly together to prepare thisreport in accordance with the Company’s guidelines. Here, we state that the production process
and content of this report is fair and just.
We will continue to engage in dialogues with our stakeholders, and do our utmost to realize
sustained environmental value and social value, while also enhancing our corporate value. Afterreading the JFE GROUP REPORT 2021 integrated report, please share with us your ideas andopinions about JFE Holdings. While building relationships of trust with all of our stakeholders
from a long-term perspective, we would like to take a step forward together into a brighter
future. We ask for your continued support.

1.

JFE Group’s Value Creation Story

5

The Value of Steel 

7
9
11
13
15

History of Value Creation 
Outline of the JFE Group Process of Value Creation 
Material Issues of JFE Group Corporate Management 

2.

Strategy to Create Value Message from the CEO 
Seventh Medium-term Business Plan (FY2021–2024) Message from the CFO 

3Special Feature

JFE Group Environmental Vision for 2050 

Business Strategies

 usiness Model (Steel Business
B
and Trading Business) 

17

Key Issues of JFE Group Corporate Management (Materiality)

57

Fiscal 2020 KPI Outcomes and
Evaluations for Priority CSR Issues 59

Sustainability Management 63

Our Contributions to Resolving Climate Change 

65
69
71
73
75
77
78
85
87
89

Ensuring Occupational Safety and Health Securing and Training Diverse Human Resources Respect for Human Rights Thorough Compliance 
Corporate Governance 
Risk Management 
Stakeholder Relationships Management Organization 

4.

industry and society through the provision of products and services based on steel. In this section, we
introduce the value creation story of the JFE GroupP. 5

throughout its history, and touch upon its future aims.

Strategy to Create Value
The JFE Group aims to ensure environmental, social,and economic sustainability through its Seventh
Medium-term Business Plan and the JFE Group
Environmental Vision for 2050. In this section, we

P. 17

introduce our strategies to create further value by
providing solutions for sustainability.

Sustainability Management
The JFE Group is strengthening its responsivenessto changes in the business environment in order torealize sustained growth in corporate value. In thissection, we introduce the system behind this andP. 63

our initiatives on this front.

Financial and Corporate Information 91
Financial Highlights 
Non-financial Highlights Company Profile / Share Information 
Annual Highlights Operating and Main Group Companies 
Financial Information 

91
93
95
96
97
99

4

Financial and Corporate Information
Here, we present a compilation of financial andnon-financial data, as well as corporate information.

P. 91

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Fiscal 2021 Key Issues for Management and KPIs 

Material Flow 

The JFE Group has contributed to the development of

19
25
27
29

35
Business Model (Engineering Business) 
37Business Overview: Steel Business 
39Business Overview: Engineering Business  43
Business Overview: Trading Business 
47
Business Overview: Shipbuilding Business  50
Dialogue with Outside Executives 
51

3.

JFE Group’s Value Creation Story5

1.JFE Group’s

Value Creation
Story
History of Value Creation 
Outline of the JFE Group Process of Value Creation 
Material Issues of JFE Group Corporate Management 

7
9
11
13
15

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

The Value of Steel 

6The Value of Steel

Steel supports safe and comfortable lives
for an abundant world in the future

Excellent recyclability
Steel is a material with excellent recyclability, such as its property enabling magnetic separation andretrieval. Even after a final product made of steel ends its life in society, it is reborn over and over again
into a high-quality, high-functional product through highly efficient separation and retrieval technologies, thereby reducing environmental load throughout its life cycle.

Steel’s Life Cycle Assessment (LCA)
Steel establishes a highly sophisticated value chain of Produce–Use–Recycle thanks to its excellent recyclability, and is reborn as anything over and over again. Therefore, it is important to evaluate steel’s environmental impact by encompassing the entire life cycle including recycling. JFE Steel participated in the initiative to quantify the life cycle environmental impact of steel products, which is led by theJapan Iron and Steel Federation, as one of the core members, and developed an ISO/JIS Standard* for the calculation. The results provided through the use of this standard have shown that the more superior the recyclability of material is, the less environmental impact
such as global warming becomes. In Japan, there are 15 blast furnace and electric furnace steelmakers, including JFE Steel, that compileand disclose average data for life cycle inventory (LCI) for each steel product.

RECYCLE
Efficient separation and retrieval ofsteel using its magnetic property
Dismantle and collect* ISO 20915: Life Cycle Inventory Calculation Methodology for Steel Products (2018.11)
JISQ 20915: Life Cycle Inventory Calculation Methodology for Steel Products (2019.6)

7
Iron ore makes up 85%(approx. 180 billion tons)of the earth’s metal
resources

2050

Steel contributes tosocial developmentswith its rich resources

tons a year

1.55 billion

PRODUCE
Steel can be recycled over
and over again

tons a year

Steelworks

Natural resources

85%

Blast Converter Electric
furnacefurnace

Pig iron production (Blast furnace)

1.22 billion
tons a year

1.40 billion
tons a year2015

1.62 billion
tons a year

2.68 billion
tons a year

Steel can be reliably produced in large volumes to support our lives and society. Steel is also an environmentally friendly material, emitting far less
CO2 than other materials during production. Steel is an essential material for the safe and comfortable lives of people, and it is key to the sustainable development of society.

Steel is a material with rich reserves and along history of development. It can be stably
mass produced at a reasonable price, contributing to the sustainable development ofsociety.

Global demand (2020)

Price*

Approx.

1.9 billion tons

130,000
tons

Carbon Aluminum
fiberInternal investigation

Reasonably priced!

990

Low
environmental
impact!

5–8

The world’s quotient, with Japan as 100 (2015)
No.1!

1
Steel

The Japanese steel industry (converter
furnace steel) produces steel with the lowest
environmental impact when compared toother major countries in the world as a resultof its longstanding efforts toward environmental conservation, including developing
and spreading the use of energy-saving
technologies.

The functional equivalent of greenhouse gas(GHG) emissions of steel at the manufacturing stage is 1/4 to 1/5 of that of aluminumand carbon fiber.

Approx.

65 million tons

230
Carbon Aluminumfiber

Aluminum

103

117

119

122

123

128

130

109

600
500
400

(CFRP)
USA

RussiaIndia

Brazil45

France67

United Kingdom

100

Source: World Auto Steel data

China

22.0

Germany

16.5

South Korea

2.3

80

Source: Research Institute of Innovative Technology
for the Earth (RITE)

400‒500 kg

Worldaverage

200
0

1950

1960

1970

Source: World Steel Association

Japan

China

tons = 7.0 tons
per person

Demand for steel
2050

2.13 billion
tons a year

Foundation for life and society
In our lives, steel helps reduce our burden on the environment. For example, by using high-tensile
steel (thinned-down steel sheets that keep their strength) in automobiles, automobile weight
can be substantially reduced without sacrificing passenger safety during vehicle collisions,
thereby contributing to lower CO2 emissions in society as a whole.

Potential for evolution
Steel can be elongated two to three times more than aluminum at thesame strength, and is three to five times stronger at the same extended
rate, making it the optimal material for the world-class structures of thetimes, such as Tokyo Skytree. Steel still has considerable potential for
evolution. The emerging needs of society will make steel evolve, and contribute to a productive future.

 rends in annual steel consumption per capita by countryT(kg per capita, year)

120

Reinforced Plastic

GHG emissions per unit ofweight (CO2 equivalent)(kg-CO2/kg)
Functionally equivalentweight (kg)68.2 billion
29.4 billion tons =Cans Automobiles Buildings

The potential to grow on a global level

Standard indeveloped countries

2050

2015

4.0 tons per person

The world average of the annual consumption of steel currently stands
at approximately 230 kg per capita. Going forward, the long-term global
demand for steel is expected to keep growing alongside the economic
development of emerging countries.

(kg)

8

tons a year

Processing and different manufacturing

800

Products

Source: Japan Iron and Steel Federation

2015

Automobiles, construction materials, etc.

140

100

Carbon Fiber

Japan

Internal investigation* Comparisons with othermaterials’ prices per unit
weight, with steel as 1

116
100

Steel

Steel scrap

Steel stock

Final product and usage

Contributing to sustainable
development of our lives and economy
by the world’s best energy-saving andenvironmental technologies

New steelmaterial

93.1%

1.29 billion

Japan’s steel industry keeps the
top energy efficiency in the world HG emissions during material production
G(CO2 equivalent)(kg-CO2) 1,106

30–100Approx.

Steel xtremely low environmentalE
impact at the manufacturing stage
when compared to other materials

Steel is reborn as
anything

USE

2050

High economic efficiency and low environmental impactM ass production at low cost

Steel can bereborn as­anything over
and over again

Crude steel production

2050

2015

Source: Mineral Commodity
Summaries (2021)

Steel
product
recycling ratio

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Approx. 180
billion tons

0.56 billion

Magnetic
separation* A limited form of material recycling that involves application of
the heat generated from the incineration of materials as well as
recycling where the material may deteriorate or change in quality.

Steel scrap used2015C losed-loop recycling of steel
Steel can be recycled many times as the raw material of products made in the same steel material while maintaining theoriginal properties of the iron material itself. Closed-loop
recycling is superior to open-loop recycling* that recycles othermaterials in terms of sustainability. This is due to the fact that itis designed to reduce the amount of natural resources being
newly introduced, moreover reduce the discharge of environmentally hazardous substances, and reduce waste.

ThailandIndia

Vietnam omparison of strength and elongation between steel, aluminum,Cand carbon fiber633

230 kg1980

1990

Elongation (%)

498

approx.

60

265
252
75
2000

2010

2019

40
(CY)

20
0

Elongates

Steel

2 to 3 times
3 to 5 times stronger

Carbon fiber

Aluminum alloy

400

Internal investigation

800

1,200

1,600

Tensile strength(MPa)History of Value Creation
2002

JFE Group launched

JFE Steel

JFE Engineering

JFE Shoji

Japan Marine United

Seventh Medium-term Business Plan 2021–2024

1896– Kawasaki Steel1912– NKK (Nippon Kokan)

For details, please refer to page 25.

First Medium-term Business Plan

Second Medium-term Business Plan

Third Medium-term Business Plan

Fourth Medium-term Business Plan

Fifth Medium-term Business Plan

Sixth Medium-term Business Plan

2003–2005

2006–2008

2009–20112012–20142015–20172018–2020

Realizing our merger’s full potential

Expanding high-value-added products

Targeting future-oriented technological development

Expanding into growing markets overseas

Capturing global demand to the fullest extent

Boosting competitiveness with advanced technology

The primary aim behind the establishment of JFE was to securestable profitability early on and to strengthen its businessfoundation through active investment and financing.
We consolidated facilities, and reorganized and integrated
Group companies to build a strong business structure bystrengthening the competitiveness of our core businesses
in steel and engineering.

JFE shifted to establishing a highly profitable business structure based on the production and sale of high-quality, highvalue-added products and the provision of sophisticatedservices. We also invested actively to establish systems forstable production and expanded sales of high-value-added
products.

Despite a harsh business environment brought on by events
including the global financial crisis in 2008 and the Great East
Japan Earthquake in 2011, we pursued development of innovative technologies to accelerate our leap forward into the future,with a focus on envisioned developments in the following 10
years. We also reinforced our corporate structure to increase
profitability as the No. 1 supplier of high-value-added products.

We further strengthened our profit base for growth by investingoverseas and developing innovative new products. Corporate
resources were allocated intensively in emerging markets where
significant growth was expected over the medium to long term.
We also reinforced production abroad and strengthened overseas
sales and technical functions for further growth.

We formulated a manufacturing and sales system to maximize
opportunities for capturing demand in Japan stemming from government initiatives to upgrade disaster resilience and prepare for
the Olympic and Paralympic Games in 2020. Overseas, we
focused on capturing demand related to infrastructure reinforcement in emerging countries and initiatives for energy savings andenvironmental protection. Also, we continued to invest in new
business in fields and geographic regions showing strong potential for future growth.

Our focus was on strengthening competitiveness through theapplication of data science and other advanced technologies tomeet sophisticated and diversifying needs throughout society.
Having made sustainable societies one of our priorities, we­pursued a number of environmental, social, and governance (ESG)
initiatives, including environmental protection, development of
human resources, and establishment of a governance system.

2002 (Establishment)–

Corporate restructuring
and establishment

9

JFE Holdings

2005–

2010–

2020–

March 2008
Turned Universal Shipbuilding Corporation into a subsidiarythrough acquisition of shares owned by Hitachi Zosen
Corporation and JFE Engineering
November 2008
Established JFE Steel Galvanizing (Thailand) Ltd.
April 2009
JFE R&D merged with JFE Steel

July 2010
Capital participation in JSW Steel Ltd. in India
April 2011
Absorption merger with JFE Urban Development
April 2012Restructured electric furnace steelmaking operations
and launched new JFE Bars & Shapes Corporation
July 2012
Transferred all shares issued by Kawasaki
Microelectronics to MegaChips Corporation
October 2012
Turned JFE Shoji into a wholly owned subsidiary throughshare exchange

January 2013
Established Japan Marine United Corporation through thebusiness integration with IHI Marine United Inc. andUniversal Shipbuilding Corporation
May 2013
Established PT. JFE Steel Galvanizing Indonesia
December 2014
Acquired Kelly Pipe Co., LLC, a U.S. steel pipe wholesaler
December 2014
Acquired Standardkessel Power Systems Holding GmbH
April 2015
Established AL GHARBIA PIPE COMPANY LLC in the United ArabEmirates (UAE)
September 2015
Capital participation in Formosa Ha Tinh Steel Corporation (FHS)of the Formosa Plastic Group

August 2016
Established NUCOR-JFE STEEL MEXICO in Mexico
Established J Bio Food Recycle with the JR East Group
February 2017
Established joint venture AGRIMECO & JFE STEEL PRODUCTS
CO., LTD. with AGRIMECO to sell processed construction
materials in Vietnam
March 2017
Established joint venture in steel powder business with the
BaoWu Steel Group in China
September 2019
Acquired Cogent Power Inc., an electrical steel sheet processor in Canada

March 2020
Completed acquisition of shares in Mitsui E&S Plant
Engineering Inc. (inaugurated JFE Project One Co., Ltd.)Started joint venture with Guangdong Shaoguan Iron andSteel Songshan Co., Ltd., an affiliate of the BaoWu SteelGroup
January 2021
Established Nihon Shipyard Co., Ltd. as joint venture with
Imabari Shipbuilding
April 2021
Completed acquisition of shares in Mitsui E&S Environmental
Engineering Inc. (inaugurated JFE Environment Technology
Co., Ltd.)

November 2003
Fired up No. 2 blast furnace in Kurashiki district
March 2004
Fired up No. 2 blast furnace in Keihin district
June 2004
Halted operations at No. 5 blast furnace in Chiba district

March 2005
Fired up No. 5 blast furnace in Fukuyama district
March 2006
Started up No. 5 coke oven (Battery D) in Fukuyama district
April 2006
Fired up No. 4 blast furnace in Fukuyama district

February 2010
Fired up No. 3 blast furnace in Kurashiki district
December 2010
Started up No. 6 coke oven (Battery B) in Kurashiki district
May 2011
Fired up No. 3 blast furnace in Fukuyama district
September 2011
Launched operations of incinerator for earthquakerelated waste for Sendai City
December 2014
Started up No. 3 converter furnace at No. 3 steelmaking
plant in Fukuyama district

July 2015
Operated No. 2 production facilities for Clean Mix®
high-performance steel powder products in Chiba district
May 2017
Affiliate FHS fired up No. 1 blast furnace
December 2017
Launched operations of recycled plastic pallet production plantin western Japan
November 2018
J Bio Food Recycle started operations at food recycling plant

November 2019
Operated No. 3 coke oven (Battery A) in Fukuyama district
December 2019Operated No. 3 sintering machine in Fukuyama district

March 2020
Decided to restructure and build optimized domestic­production system
April 2020
Banked* No. 4 blast furnace in Kurashiki district (plan to finish
upgrade work on blast furnace in December 2022)
June 2020
Banked* No. 4 blast furnace in Fukuyama district (resumed
operations in September 2020)*S uspend operations in a restart-capable state by stopping air
blast flow
June 2021
Operated No. 7 continuous casting machine in Kurashiki district
Operated No. 3 coke oven (Battery B) in Fukuyama district

2002 (Establishment)–

2005–

2010–

2015–

2020–

August 2005
Opened Customer Solutions Lab (CSL) at Steel
Research Laboratory
November 2005
Opened THiNK SMART at Steel Research Laboratory
March 2006
Started operation of new integration system J-Smile
September 2008
Launched companywide video conference system

February 2010
Operated J-Flessa optimal production and sales­planning system
October 2014
Steel Research Laboratory opened Customize Center
Fukuyama in Fukuyama district

August 2016
Launched system to identify fraudulent inspection certificatesfor steel products
December 2016
Launched One JFE® system to integrate shipment and delivery­operations in all regions
June 2017
Launched operations of JFE integrated product database as basis
for SCM
March 2018
Established Global Remote Center (GRC) (integrated monitoring of­product plants, including overseas ones)
September 2018
Introduced J-mAIster® on all production lines as a control failure repair
support system that uses IBM Japan’s IBM® Watson technology

November 2018
Developed and started operations of Pla’cello® data analysis
tool that does not require expert IT knowledge
December 2018
Introduced safe behavior support technology using AI image
recognition
February 2019
Opened one of the world’s largest centers for evaluating major
breakdowns and fatigue in the steel field
July 2019
Started fully automated operations of waste incinerator
October 2019
Built a rank-based, systematic education system to train
employees into data scientists
November 2019
Introduced data science technology(blast furnace CPS)at all
blast furnaces
Companywide rollout of J-dscom® system for detecting signsof equipment anomalies

July 2020
Opened JFE Digital Transformation Center as base to­promote DX
July 2020
Started to offer BRA-ING fully automated system for­operating waste incinerators
October 2020
Introduced training simulator using mixed reality (MR)technology

June 2004
Opened JFE College as curriculum for training young
employees

March 2006
Introduced policy for addressing large-scalepurchases of the Company’s sharesEstablished special committee
June 2007
Appointed two outside directors
Shortened terms of directors from two years
to one year

2011–Started to gift desks, chairs, and canned foods to­educational authorities in Ghana and Nigeria
November 2011
Launched ferro-coke production pilot plant in Keihin
district
September 2012
Opened corporate childcare center at JR Tsurumi­station building
March 2014
Selected as Nadeshiko Brand Stock by Tokyo Stock
Exchange

Fiscal 2015
Began to evaluate effectiveness of Board of Directors
October 2015
Formulated JFE Holdings’ Basic Policy on Corporate GovernanceEstablished Nomination Committee and Remuneration Committee
April 2017
Opened childcare center in Chiba district at East Japan Works (childcare­centers were opened in other districts later)
June 2017
Presidents of JFE Engineering and JFE Shoji appointed as directors
Increased number of outside directors and outside Audit & Supervisory Board
Members by one each

April 2018
Formulated JFE Group’s Human Rights Basic Policy
August 2018
Formulated JFE Group’s Declaration of Cybersecurity
Management
November 2018
Obtained qualification for DBJ Employees’ HealthManagement Rated Loan Program from the Development
Bank of Japan
February 2019
Formulated the Raw Materials Purchasing Policy and Action
Guidelines
May 2019
Declared agreement with Task Force on Climate-related
Financial Disclosures (TCFD) recommendations
June 2019
Appointed first female Audit & Supervisory Board Member

June 2020
Appointed first female outside director
July 2020
Initially selected for inclusion in FTSE4Good Index Series
and FTSE Blossom Japan Index, leading indexes for ESG
investment
September 2020
Disclosed JFE Group’s targets for reducing CO2 emissions
October 2020
Commenced testing of medium-size facilities for producing
ferro coke in Fukuyama district
February 2021
Signed memorandum of understanding with BHP about initiatives to reduce carbon in steelmaking processes
May 2021
Formulated JFE Group Environmental Vision for 2050
May 2021
Discontinued policy to prevent large-scale purchases of theCompany’s shares (anti-takeover measures)

R&D, DX, etc.

April 2004
Launched new integration system(business
management)

10

JFE GROUP REPORT 2021

Production facilities

JFE GROUP REPORT 2021

September 2002
Established JFE Holdings
Listed on Tokyo Stock Exchange, Osaka Securities Exchange, andNagoya Stock Exchange
January 2003
Corporate split agreement for NKK and Kawasaki Steel approved
April 2003
Established JFE Steel, JFE Engineering, JFE Urban Development, andJFE R&D
Kawasaki Microelectronics, Inc. became a wholly owned subsidiary
December 2003
Guangzhou JFE Steel Sheet Co., Ltd. established as joint venturewith Guangzhou Iron and Steel Enterprises Holdings Ltd., in China

ESG (governance structure,­climate change, main policies)

Outline of the JFE Group
JFE         Holdings
JFE Steel11

JFE Engineering

JFE Shoji

Japan Marine United(equity-method affiliate)

Steel businessEngineering businessTrading business

Shipbuilding business

JFE Steel provides high-value-added productsthat meet the diverse needs of its customers
with its world-class technologies and productdevelopment capabilities, backed by a highlyinternationally competitive system based on
two major integrated steelworks in Japan.

JFE Engineering provides technologies to effectively utilize diverse resources as green energy
in the environmental and energy fields, andproactively engages in plant operation as well.
It globally operates social infrastructure business,such as constructing bridges.

JFE Shoji operates globally through supply chain
networks across Japan and the world, handlinga wide range of products with a focus on steel
products, including steel raw materials, nonferrous metals, chemicals, fuel, equipment, ships,
foods, and electronics.

Backed by its top-class capabilities in construction and technologies in Japan, Japan Marine
United manufactures large-scale ships including
tankers, containerships, and dry bulkers, inaddition to merchant ships and defense ships,
such as escort ships, mine sweepers, and naval
ice breakers.

Overview of External Conditions and Initiatives at Operating Companies

Strength 1. Competitiveness of steelworks: Large-scale consolidated steelworks

Steel business and Trading business

Main bases of JFE Steel

12

Competition with rivals has heated up in product markets and regional markets. Domestic sales of steel are for a broad range of demand
fields, including building construction, civil engineering, automobiles, industrial machinery, and electrical machinery, with diverse coverage of sales formats. With a shrinking domestic market due to a falling birthrate and an aging population, and given global economic
conditions in Japan and Asia, trends in the supply–demand balance for steel in Japan and around the world may have an impact on

West
Japan
Works

the sales volume and prices for steel produced by the JFE Group. In overseas markets, competition might intensify as a result of­structural changes, namely an increase in exports as domestic demand declines in China and expansion in steel production capacityin emerging countries.
In the steel business, JFE aims to optimize production volume to match changes in the balance of supply and demand for steel prod-

Sendai Works
The Sendai Works specializes in bar and steel wire.
With an integrated production system fromsteelmaking to rolling, theSendai Works provides
high-quality products
thanks to thorough quality
and process management.

The West Japan Works is situated on roughly
25.1 million square meters of land as JFE Steel’s
core steelworks, one of the largest steelworks inthe world. We aim for it to be the best steelworks
in the world in terms of both quality and quantity,
with advanced technological capabilities andhighly efficient production.

Fukuyama
district

Kurashiki
district

aims to stabilize the earnings foundation by increasing the sales ratio of technologically advanced products to counter steel mills in

Bar
Steel
platesShapedsteel

Steel sheets
Surface(hot-rolled andtreatedcold-rolled
steel sheet
steel sheets)(zinc)

SteelplatesElectrical
steel

Steel Structural Materials Solutions Center(THiNK SMART)
Joint research with customers, universities, and corporate research institutions in the structural steel field

Steel
wire

Fukuyama district

Customer Center Fukuyama (CCF)
EVI base for customers in the automobile and steel
materials fields

emerging countries. By producing more steel locally through investments in overseas steelmakers and a vertically integrated structure
UOE steel pipes

overseas, JFE is keen to establish a global supply structure able to flexibly adapt to changes in international market conditions.
In the trading business, we are strengthening our sales capabilities in Japan through a restructuring of distribution functions, andmaking timely upgrades to equipment necessary to reinforce the foundation. Overseas, we are aggressively moving to strengthen distribution and processing functions in our four-pronged global structure, and to increase sales of JFE Steel’s products in high-value-added
fields. Furthermore, we aim to maintain and enhance our presence with customers overseas by utilizing products made by the JFE GroupBar

JFE Bars & Shapes Corporation

Engineering businessbridges and environmental facilities, such as energy plants and waste incinerators. We also take on operation and maintenance con-

Nishinomiya Plant(East Japan Works)

tracts for facilities in design, build, and operate (DBO) projects, and operate our own recycling, power generation, and electricity retailsales businesses. The portfolio in this business is dominated by public infrastructure projects, such as waste incinerators and bridges.
We aim to stabilize earnings and reinforce self-managed businesses as long-term sources of reliable earnings, due to the possibility of

Chita Works
The Chita Works is one of a few steelworks in the worldthat specializes in the production of steel pipes. It
boasts the best product lineup in the world for a single
steelworks, producing a wide variety and sizes of steel
pipe products.

Stainlesssteel sheet

Seamless steel pipe, welded steel pipe

Domestic production volume

Trading business
25.4%
FY20203,227.2

Steel business
61.4%

billion yen

2,255.2 billion yen

Revenue

Engineeringbusiness
13.2%

The East Japan Works sits on approximately 15.98
million square meters of land located near the Tokyo
metropolitan area. It consists of the Keihin district,
where Japan’s first private-sector steelworks wasbuilt, and the Chiba district, where Japan’s first
integrated steelworks was constructed after theend of World War II. The Nishinomiya plant produces
stainless steel products with the Chiba district.

Keihindistrict

Steel sheets
Surface(hot-rolled
treatedandsteel sheet
cold-rolled(zinc)
steel sheets)

Chiba
district

SteelplatesWeldedsteel pipe

Steel sheets SurfaceStainless(hot-rolled treated steel steel sheet
andsheet (zinccold-rolled and tin plate)steel sheets)

Iron
powderStrength 2. Stable customer base

Revenue / business profit(Billion yen)932.5 billion yen

East
Japan
Works

Deformedbarorders being influenced by domestic economic conditions, and the aims and policies of national and local governments.

Revenue

Shapedsteel roduction bases ofP
JFE Bars & Shapes

Shapedsteel

In the engineering business, JFE engages in engineering, procurement, and construction (EPC) projects for equipment, centered on

Steel wire

JFE Bars & Shapes recycles steel products
from steel scrap by utilizing the steelmaking
process of electric furnaces at five domestic
steelworks.

(including alliances) and other suppliers.

Chiba district

Customer Solutions Lab (CSL)
Early vendor involvement (EVI) base for customers in
the automobile field

485.7 billion yen* Revenue of 3,227.2 billion yen includes adjustments of –446.1 billion yen

400

3,000

300

2,000

200

1,000

100

0

West Japan Works
15.6 million tons

(Billion yen)

4,000

2016

2017

2018

2019

JGAAP
Sales / revenue (left)
Ordinary income / business profit (right)

2020

IFRS

2021

(Plan)FY2020Nationwide crude
steel output
82.8 million tons

0

(FY)

About 29% of domestic crude
steel output

Projects, etc. 27%

East Japan Works
6.7 million tons
Sendai Works
0.5 million
tons
JFE Bars & Shapes
Corporation
1.2 million tons

Korea 10%

Spot 17%

Construction 13%

China 9%Customersin JapanAutomobiles
29%
Shipbuilding
12%

Secondaryprocessing 19%

Shipment
destinationby country

Thailand 7%
Indonesia 2%

Export andshipment
destination

Other Asian countries 13%

Other
manufacturing 10%

North America,
Latin America 4%Japan 51%

Other countries 4%

Overseasbases andpartners
49%

Manufacturing(automobiles,
shipbuilding, electrical machinery) 24%

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

term trends in supply–demand conditions for steel. JFE Steel will strategically invest in the West Japan Works, its core steelworks, toSteel sheets Surface(hot-rolled treated steel
and cold-rolled sheet (zincsteel sheets) and tin plate)

Joint development facilities with customers

Keihin district

ucts within and outside Japan, and to create an optimal production structure through the integration of facilities with an eye on longincrease cost competitiveness and put in place a structure able to generate profits in a changing market environment. The Company

Steel Research Laboratory
This laboratory conducts research in basic technologythat supports all of our production bases, while also
developing production processes and products.

Process of Value Creation
External conditions

To be essential to society’s

Climate change

Our Vision­sustainable development andL abor shortages due to falling birthrate
and aging population

to create safe, comfortable lives

Population growth in emerging countries

for people everywhere tronger demand for resourcesSand energy
Aging of infrastructure and equipment
Advances in AI and IoT

Creation of social value

Creation of economic value• Become carbon neutral• Increase cash flow

• Contribute to safe and comfortable lives• Achieve world-class earnings power• Secure excellent human resources andenhance job satisfaction• Ongoing investment in technologicaldevelopment• Create a prosperous coexistence withlocal communities• Return value to stakeholders• Establish a robust financial foundation

Transition to a mobility society

13

14
OutcomeBusiness           model

InputIntellectual capital
36.2 billion yen• Number of customers (delivery
destinations) (FY2020)• Number of registered patents(as of September 2021)* Total of JFE Steel, JFE Engineering, and14,173 patents

Approx. 24,000 customers

JFE          Holdings

Steel BusinessEngineering

Trading

Business

Business

Business(JFE Engineering)(JFE Shoji)(Japan Marine(JFE Steel)JFE Shoji (FY2020)

Shipbuilding

United) (equity-* Number of domestic patents regis-West Japan Works: 6
East Japan Works: 2• Number of bases (as of April 2021)
regions (Group total)

Natural capital• Steel raw materials (FY2020)

58.7 million tons

(iron ore, coal, and limestone)• Recycled raw materials (FY2020)

0.8 million tons (steel scrap)

Biomass power generation facilities

Human capital

Bridges and steel for bridges

Urban environmental plants

Very large crude oil carrier (VLCC)

supports the lives of people

64,371 persons(Group consolidated)

Growth strategy

FY2020 results
Contributions to resolving
climate change

SeventhMedium-term
Business Plan

JFE Group
Environmental
Vision for 2050

P.25

P.29
Establish economic                   sustainability

Financial capital

1,760.1 billion yen

Engineering
Business

Sustainability of the               environment and society•A nnual training hours (FY2020)• Total equity (IFRS)(as of the end of March 2021)(    ) P.37

Business model that strongly• Number of employees(as of the end of March 2021)

Approx. 0.67 million hours a year
(total of operating companies:
approx. 32 hours a year per employee)

Steel Business,
Trading Businessassociated with high-added value

Important management issues                   (materiality)

P.15, 57

Basics of business activities
Compliance

P.77

Respect for human rights

P.75

Corporate governance

P.78

Promotion of materiality

109 locations in 22 countries andSteel sheets for tableware andkitchenware(    ) P.35

A business model that creates a JFE brand• Number of blast furnaces(as of April 2021)

Steel sheets for automobiles

method affiliate)

tered to the JFE Group

Manufacturing capital

Output into market (FY2020 revenue: 3,227.2 billion yen)Comprehensive strengths                  created in each business,          backed by                   world-class technologies

JFE Steel
Reductions in CO2 emissions:10.8 million tons
(comparison with FY2013)
JFE Engineering
Contribution of CO2 emissions
reductions:9.65 million tons
JFE Steel
Recycled water resource usage:

93.0%

Increase competitiveness with DX
JFE Steel
Data scientists: 350 employees

World-class technological­capabilities that meetcustomer needs
Domestic patent publications:
1,113 patents* Total patents published in Japan and patents
published under Patent Cooperation Treaty,
designated to be transferred to Japan

Ratio of high-value-added ­products:
Approx. 40%
Emergency measures during
the pandemic
Cost reductions: 100 billion yen

Asset reductions: 180 billion yen

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

• R&D expenses (FY2020) Social and otherrelated capital

OutputMaterial Issues of JFE Group Corporate Management
Identification of material issues of corporate management

Areas of Focus

The JFE Group has identified material issues and set KPIs to address these issues with the objective of
maximizing the creation of social value and minimizing its negative impact on society as Group capital isdeployed to satisfy the needs of diverse stakeholders. The material CSR issues that we identified in2016 were comprehensively selected from 35 CSR-related issues in light of the expectations of society,while considering the unique nature of the Group’s operations. Priorities were assigned to the identified
material issues based on (1) the expectations of stakeholders and (2) correlation with operations(impact on society). We identified 13 issues in five focus areas.
In fiscal 2021, we formulated the Seventh Medium-term Business Plan, recognizing that ensuring
environmental and social sustainability (helping to solve critical issues) and establishing economic
sustainability (stable earnings power) are key to the JFE Group’s sustainable development. Accordingly,
we reorganized our materiality by adding economic issues to our existing CSR issues to identify all
our material issues of corporate management. We will demonstrate the Group’s vision of “contributing
to society with the world’s most innovative technology” by working in concert to address these issues.

+

STEP 1

Identification

By measuring the businesses of the JFE Group against thefollowing yardsticks, we have identified 35 core issues for
our CSR initiatives:

STEP 1

Prioritization (Groupwide Meeting)

We prioritized the above 35 issues in two ways: stakeholder
expectations and relevance to business societal impact,
and identified 13 issues in five focus areas.
Groupwide meeting
Managers from each operating company discussed theprioritization from the perspectives of group management
and their respective operating companies’ interests.
STEP 3

Validation

The following process validated the material CSR issues
identified:•C onfirmation and examination by each operating company•E xamination and approval by JFE Group CSR Council** Participants included the President of JFE Holdings (chairperson),executive vice president, Corporate Officers, full-time Audit & Supervisory
Board Members, and the presidents of operating companies, etc.

STEP 3

Select 20 material issue candidates

Economic-related issues were added to the list of reassessed material CSR issues, and their appropriatenessas issues for the JFE Group was deliberated by the GroupManagement Strategy Committee, screening out 20 material
issue candidates.
STEP 4

Identify the 13 most important material issues

The Group Management Strategy Committee and the Boardof Directors discussed the 20 material issue candidates,
and narrowed them down by identifying the most important
for the JFE Group, as 13 material issues of corporate
management.

KPIs for material issues
The JFE Group has set and worked toward achieving KPIs in initiatives for the identified material issues. In fiscal 2020, we evaluated theresults in the previous fiscal year, revised KPIs based on these results and the opinions of stakeholders, and undertook fresh initiatives
to address issues. The KPIs for material issues of corporate management that we identified for fiscal 2021 were set following
examination by operating companies, discussion at management meetings, and deliberations by the Group Management Strategy
Committee and Board of Directors.
Please see page 57 for information about our initiatives in fiscal 2020 and KPIs for fiscal 2021.

•	Prevent workplace accidents•	Ensure the health of employees
and their families•	Pursue diversity and inclusion

Accumulate and hand down­technologies and skills•	Create workplaces that­motivate employees• Shift focus of steel business fromquantity to quality (structural reform)•Reduce costs to strengthen costcompetitiveness and ensure quality
competitivenessI mprove margins and ensure stableearnings power

Strengthen competitiveness of
products and services (promote
the growth strategy by providing
high-value-added solutions)

Sources of competitive advantages

Engineering business: Engineering, procurement,
construction, sales, and technological development•	Contribute to reduction of
CO2 emissions across the society aintain work environments
M
where all personnel can
maximize their abilities

 romote DX and other measures toP
improve production efficiency,
yields, and labor productivity

Set material economic issues

Steel and trading businesses: Production, sales, andtechnological development•	Reduce the JFE Group’s
CO2 emissions•	Strengthen human resources
development

16• Increase ratio of high-value-added
products and services• Ensure stable earnings power basedon the sales strategy, including
technological solutions andexpansion of growth businesses•	Increase efficiency andenhance cost competitivenessin production and engineering•	Raise quality of products andservices and ensure reliablesupplyJFE GROUP REPORT 2021

 ustainable Development Goals (SDGs)•S

Based on discussions at each operating company, major
strategies in the Seventh Medium-term Business Plan weregrouped together with sources of competitive advantages
in the JFE Group’s business model, and economic-related
issues were clarified for the economic sustainability of theGroup.

Relevant SDGs

Pursue world-class earnings power
Reinforce resilience of productionand engineering capabilities(realize world-class earnings
power through DX and othermeasures)

Basis of activity

JFE GROUP REPORT 2021

STEP 2

STEP 2

Maintain the physical andmental health of employees andtheir families→ P.73

Reevaluate existing material CSR issues•G RI G4 Sustainability Reporting Guidelines•B enchmark surveys on the three business areas

Prioritize safety first

Recruit and nurture diverse
human resources

FY2021: Identifying material issues ofcorporate management• ISO 26000• Internal documents on employee satisfaction surveys, etc.

• Reduce the JFE Group’s CO2 emissions• Contribute to reduction of
CO2 emissions in society

Ensure occupational safety
and healthMaterial issuesof corporate
management

Material Issues

I nitiatives for achieving carbon
neutrality by 2050

→P.71

The material CSR issues identified in 2016 were reassessed
for their importance in terms of relating to current operations, stakeholder expectations, and achievement of KPIs.

•E
 SG survey via external assessment→ P.29, 65

Material economic
issuesProcess for identifying material issues

FY2016: Identifying material CSR issues

Contribute to resolving climatechange issues (initiatives forachieving carbon neutrality
by 2050)

Material CSR
issuesActivity

15

Details•	Expand business by increasing
value added in products andservices with advanced
technologies•	Sales strategies for realizing
sustainable growth•	Ensure adherence tocorporate ethical standards
and compliance

Thoroughly enforce compliance→ P.77

Respect human rights•	Respect human rights acrossthe supply chain→ P.75
Please see page 57 for KPIs for each priority issue.

Improvement in ROE by achieving KPIs
KPI-related factors• Expansion of growth businesses• Expansion of solutions business• Increase in ratio of high-valueadded products and profitability• R&D in new products andtechnologies

Improvement drivers
Sales revenue
growth rate

• Improvement of production
efficiency and yields• Improvement of labor productivity• Advances in technologicaldevelopment with DX

Manufacturing cost rate

• Improvement in labor productivity• Increase in production andengineering efficiency, improvement of cost competitiveness

SG&A expense ratio• Reduction of inventory basedon higher production efficiency
and yields• Reduction of fixed costs basedon structural reform• Improvement of production
efficiency

The KPIs set for each material issue are closely tied to financial targets. Achieving KPIs
for each issue affects various drivers of improvement, leading to the achievement of thefinancial target (ROE of at least 10%) and results in increasing corporate value over the
medium to long term. The connection between these initiatives for material issues andfinancial targets is deeply shared at operating companies and on the front lines,
increasing the effectiveness of these initiatives.

Operating profit margin
ROIC

ROE
Working capitalturnover rate
Fixed asset turnover rate

Invested capitalturnover rate

Optimal capital
structure

10% or higher

17

2.Strategy toCreate Value
Seventh Medium-term Business Plan (FY2021–2024) Message from the CFO 
Special Feature

JFE Group Environmental Vision for 2050 

Business Strategies	Business Model (Steel Businessand Trading Business) Business Model (Engineering Business) Business Overview: Steel Business Business Overview: Engineering Business Business Overview: Trading Business Business Overview: Shipbuilding Business 
Dialogue with Outside Executives 

19
25
27
29
35
37
39
43
47
50
51

Key Issues for Management of the JFE Group (Materiality)
Fiscal 2021 Key Issues for Management and KPIs 	Fiscal 2020 KPI Outcomes and
Evaluations for Priority CSR Issues

57
59

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Message from the CEO 

18

MESSAGE FROM THE CEO
Aiming to change itself
for the sake of our planet’s future,
JFE is taking on the greatest
challenge since its founding.
19

JFE is engaged in worldwide business centered around thePeople expect JFE to contribute to industrial and societal

production of steel. It is also involved in engineering activities

development with high-performance materials that help thefor the construction of safer and more convenient world

world become carbon neutral as well as support human life.

with steel, and global trading activities to create value in

Such materials include high-tensile steel for extra-lightdiverse ways.

automobiles, high-performance electrical steel for electric

What I would like to tell our stakeholders at first is thatsteel products will support human life and will continue to be

President and CEO
JFE Holdings, Inc.

container ships.
Meanwhile, societal and economic conditions are changing

ment in the future. As economies expand in emerging coun-

faster than ever before, including competition from emerg-

tries, especially in Asia, demand will continue to strengthen

ing Chinese steelmakers, the necessity to address climate

for automobiles, buildings, infrastructure, cargo ships, andchange, and the seemingly unending COVID-19 pandemic.
sustainable development of society and the assurance ofload of steel is lower than that of many other materials.

safe and comfortable human life by adapting to these

Furthermore, it can be easily recycled and endlessly turnedchanges. To fulfill this mission, we aim to improve our corpo-

into new products while maintaining high quality. I am confi-

rate value and sustain our growth over the medium to longdent that the superiority of steel as a material will remainterm by securing our own sustainability (stable earnings

unchallenged long into the future.

power) as well as the sustainable development of society

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Our mission is to become an indispensable company for a

the growing concern for climate change, the environmental

and the environment.

Review of the Sixth Medium-term Business Plan
During our Sixth Medium-term Business Plan (fiscal 2018–

and a global economic rebound in the second half, our2020) we experienced extreme change in our business­earnings returned to the black, but it was not enough to fully

environment, well beyond what was anticipated when we

offset our first-half loss. As a result, we were unable to turn aformulated the plan, including the global pandemic andprofit for the full year.

intense trade friction between the U.S. and China.

20

vehicle (EV) motors, and high-strength steel plate for large

an indispensable material for industrial and social develop-

containers. There is no substitute for steel. Also, considering

Koji Kakigi

Losses in both fiscal 2019 and 2020 prevented JFE from

The business environment was very challenging during thebusiness continued to generate stable earnings despite

period of our previous plan. Our steel business responded

the pandemic, demonstrating its resilience. Initiatives andIn the first half of fiscal 2020, the global pandemic sharply

achieving its key financial and earnings targets under thewith advanced digital transformation (DX) initiatives andoutcomes realized under the previous plan now form a vital

curtailed the production activities of major customers. The

Sixth Medium-term Business Plan, for which I express mycapital investments to upgrade production bases, which led

foundation for our sustained growth into the future.

demand for steel products fell an unprecedented 30%

deepest apologies to our stakeholders. In fiscal 2021, how-to fewer production problems and smoother repairs. Due tobetween April and June. Even a 10% drop in production

ever, we expect to see major improvement in earnings in our

structural changes in the business, in March 2020 wevolume is extremely serious, so the degree of decline thissteel business and year-on-year profit growth in our engi-

decided to strategically restructure and consolidate thetime was even worse than what we experienced during theneering and trading businesses. We now expect consoli-

steel business as the first step toward creating a more2008 financial crisis. Thanks to our emergency measures

dated business profit to greatly exceed our initial forecast.

robust corporate structure. Meanwhile, the engineeringMessage from the CEO

Pursuing World-class Earnings PowerThe medium- to long-term outlook for JFE’s core steel busi-

Seventh Medium-term Business Plan: Stable Earnings Foundation and Carbon Neutrality

ally JFE’s main market, where the domestic population iscontinuing to decline in size. Overseas, meanwhile, it will be

Strong Efforts to Become Carbon Neutral

21

ness is inevitably impacted by conditions in Japan, tradition-

hard to expand export volume without sacrificing profitability

At a time when the business environment is undergoingof competitors. This will include proprietary technology forin light of increasing price competition for commodity steel

sudden and significant change, there is a rapidly growing

carbon recycling blast furnaces, which would allow us to

products and the shift to local production for local consump-sense of crisis regarding global climate change. It is imperative

convert existing production facilities into carbon-recycling

tion. To give JFE the best chance to achieve sustainable

that we take collective action to protect our environment for

facilities. If this technology is commercialized, we expect thatgrowth, overcome global competition, and suitably address

future generations.

it will reduce CO2 emissions by at least 30% in individual

climate change, our current plan dramatically repositions

Making steel in blast furnaces is best suited to producing

single blast furnaces, and carbon neutrality can be realized

our business focus by pivoting toward quality (profit perlarge volumes of high-quality, high-performance products,

by combining with Carbon Capture, Utilization and Storage

ton of steel shipment) and away from quantity (tons ofbut this results in CO2 emissions. JFE views climate change(CCUS). We aim to complete proof-of-principle process bysteel produced).

as a crucial issue of its business continuity, so in September

2027 to ensure the feasibility of this technology. But since2020, ahead of the Japanese government, we announced ourno single proven method for becoming carbon neutral has

for many years, and at the same time, we aimed to increase2030 and 2050 targets for reducing CO2 emissions.

We have focused on producing high value-added products

22

been discovered yet, we plan to explore a range of potential

production and sales volume of between 40 million and 50

Our new Seventh Medium-term Business Plan includes

technologies, such as hydrogen-based steelmaking (direct

million tons under the JFE brand in the previous medium-term

the JFE Group Environmental Vision for 2050, which outlines

reduction), ferro coke, and the combined use of technolo-

business plan. The thinking was that it would be impossible toprices for steel by overhauling our selling prices and by

specific initiatives to reduce CO2 emissions in an effort togies including e­ lectric furnaces.

generate earnings reliably unless we were among the world’s

talking with our customers about appro­priate pricing.

top 10 steelmakers in terms of output. But the fact is that

Additionally, we plan to offer a more advanced product mix

become carbon neutral—the end goal—by 2050. We have

The development of steelmaking technologies that do notemit CO2 during production would be a difficult task for acompanies with large production capacity are not necessarily

and will continue to cut costs through our application of new

by 18% in our steel business as of fiscal 2024, the final year

single private company to achieve, in my opinion. This is why

profitable. I think business model has been changed due to

DX technology.

of the current plan. This would put us within reach of achiev-

we believe that government assistance and collaboration

structural changes in the business environment. Therefore,

The phrase “the most transformative period in company’s

ing our goal of reducing CO2 emissions by 20% or more bywith society will be necessary, including the creation of afor our new business plan, I decided that creating a businesshistory” contained in the current plan expresses our strong

fiscal 2030, as announced last year. During the current plan,framework for society to bear the projected huge increases

structure capable of reliably generating profits was moredetermination to achieve world-class earnings power by

we expect to announce updated initiatives for attaining ourin costs for R&D, investment in prototypes, and procuring

important than expanding our output.

pivoting away from our previous pursuit of volume-based

fiscal 2030 target, including our development of advanced

green hydrogen and electricity. Through enhanced coor­

During the current plan, JFE will concentrate strategically

growth. Ultimately, we aim to establish a robust earnings

new technologies.

dination with society we hope to achieve carbon neutrality

on priority fields (automobiles, energy, construction materi-foundation to lock in a profit of 10,000 yen per ton of steel

by 2050.

als, and infrastructure) and reducing fixed costs throughthrough our disciplined pursuit of quality.

To become carbon neutral by 2050, we aim to establish
ultra-innovative technologies as quickly as possible, ahead

For details, please refer to page 29.

structural reforms, rather than attempt to grow earnings byincreasing domestic production. We also aim to reconstitute

Carbon Neutrality as a Business Opportunity

For details, please refer to page 41.

As we develop diverse businesses and leverage our uniqueproduce the monopiles, JFE Steel will supply the heaviest

Growth Strategy Centering on Overseas Steel Business and Engineering Businesstechnologies, we intend to expand operations in unique ways

steel plate available in Asia, and JFE Shoji will handle distribu-

To drive the overall growth of our entire group, we aim to expand

grain-oriented electrical steel sheet with JSW Steel Ltd., ourbased on the view that the accelerating worldwide move-tion and steel processing. Furthermore, other companies inthe scale of our overseas steel business and also our engi-

strategic alliance partner in India. The demand for electricity

our group will help to maintain structural components andneering business in the environmental and recycling fields.

is projected to increase strongly as India’s economy expands,

ment toward carbon neutrality is a business opportunity.
For example, in the engineering business, we will expand

our equity-method affiliate, Japan Marine United, is looking

We have two main business models for our overseas steel

resulting in more demand for grain-oriented electrical steel

for a business opportunity to build the required work vessels

business. The first one, our vertically integrated businessneeded to produce transformers. Our growing involvement

and floating wind power plants.

model, entails supplying semi-processed steel sheets fromwith highly value-added electrical steel sheet is expected toOffshore wind power generation will be a key to expanding

Japan and providing processed materials to the local cus-

help us pivot from quantity to quality as we grow our earnings.

renewable energy in Japan, which is why the Japanese gov-

tomers in overseas markets. The second one, our “insider

We also aim to develop new revenue-generating busi-

JFE was the first company in Japan to commercialize theernment has set medium- and long-term targets for rollingbusiness” model, calls for investing in leading, reliable part-nesses by providing overseas companies with advanced

production of monopiles needed to secure offshore wind

out wind power and raising the domestic procurement ratio.

ners in growth markets to provide steel products by using

solutions. This will involve leveraging the technologies andpower turbines to the seabed. I have long sought to expand

After solidifying our operational base in Japan, we aim toour partners' material. We especially hope to increase earn-knowledge we have accumulated over the years not only

JFE businesses that maximize our group synergies, and the

expand this business throughout Asia.

ings by deepening partnerships through this second model

inside our domestic production basis but also to the outsideduring the current plan.

of our company globally. The initiative is in line with ourour business to construct environmental plants such as
renewable energy plants with expectation of contributing tolowering CO2 emissions in the society by 12 million tons as of
fiscal 2024 and 25 million tons as of fiscal 2030.

monopile business is one such example. JFE Engineering will

For details, please refer to page 34.

As a part of this effort, we are looking closely at jointly
establishing a production and sales company for

new strategy to find new applications for our advanced
technologies and knowledge within the global steel industry.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

formulated practical steps aimed at cutting CO2 emissions

Message from the CEO

In engineering, we will focus on the environmental andfields of waste-to-energy power generation, food recycling,
and plastic recycling, we expect to significantly increase

neutral field centered on renewable energy. We have set

alliances, M&A and our use of DX. Moreover, we will aggres-employees has a major impact on corporate activities overdecline, we have been achieving measurable progress inambitious targets including 1 trillion yen in revenue and asively invest in the promising field of renewable energy,

the medium to long term. While hiring and training employees

passing technical know-how down to younger workers since

profit margin of 8% (segment profit 80 billion yen) by fiscal

including offshore wind power and geothermal power plants.

does not boost earnings immediately, I believe we must havethe previous plan, supported with our use of DX technology.

JFE’s human resources strategy for hiring and training

Since middle-aged employees in our steel business are in

2030, roughly double the current levels. Although achieving

In our trading business, plans call for M&A and othera sound system for securing talented and diverse personnel if

During our current plan, we are expanding the scope of thisthese targets will not be easy, we plan to execute capital and­investments to establish a leading global system for pro-

we wish to remain resilient to change. JFE gladly hires women

project to train data scientists and upgrade other necessary

business investments amounting to an unprecedented 220

cessing and distributing electrical steel and also to rein-

and mid-career personnel and makes concerted efforts toemployee skills.

billion yen over the first four years, the period in which weforce supply chain management (SCM) systems forcreate workplaces that further the abilities and motivations ofintend to build a foundation for growth to 2030. In our coreautomotive steel.

our employees.

Establishment of a Robust Financial Foundation
23

Human Resources Strategy for Sustaining Business Activities

recycling fields, our greatest strengths, and the carbon-

For details, please refer to page 73.

Safety Measures to Eliminate Serious Accidents

Under our previous plan, investments to modernize aging

We will emphasize financial soundness as a means tofacilities and update our production base reached a peak.

secure funds for investments in growth and to become more

Going forward, investments will be focused more strategi-carbon neutral. Our development and implementation of

Based on the basic philosophy that safety must be priori-dents involving falls or getting wedged between equipment.

cally, aiming to enhance our competitiveness and establish

ultra-innovative technologies by 2050 will require huge

tized over everything else, JFE has concentrated on ensuring

Under the current plan, JFE has earmarked 10 billion yen fora more stable earnings base. Investments will target high-investments, so we are keen to improve our profitability andperfect safety by modifying facilities so that accidents

annual investments in groupwide safety. We will push forward

growth and high-return projects, such as green transfor­

reinforce our financial position in order to prepare for thecannot happen, and by thoroughly training employees andwith measures to truly improve the safety of our equipment

mation (GX) and DX, in addition to further facility upgrades.

necessary R&D, verification, and then implementation of

updating rules on safety. Our first and foremost priority isand our work, including through deployment of safety-­

Funds for such these investments will be secured asthese ultra-innovative technologies.

to operate continuously safe environments in workplaces

support tools built with IT and data-science technologies.

where everyone can work without worry. For example, we

Based on our strong conviction that it is possible toplan to install systems so that when an employee enters a­prevent all accidents, we will make every effort to promote

restricted zone, they will be detected by sensors and thesafety.

required by selling assets and businesses that are contrib­
uting little to earnings.

For details, please refer to page 27.

We take very seriously the fact that we have not eliminatedwe will expand training techniques to include hands-on

serious accidents, which remains a top priority.

training and virtual reality (VR) training on how to avoid acci-

Improving Our Responsiveness to Change
The business environment has changed dramatically in

For details, please refer to page 71.

Under our current plan, we are strengthening our group-

several ways since I became CEO. The international politicalwide governance by having the Group CSR Council improvesituation has evolved at a dizzying pace over the past few

our cross-organizational risk management structure. The

years, affecting not only our production activities but also

committee is also creating a comprehensive system to iden-

our customers and other corporations in unpredictable ways.

tify and address risks and changes in business conditions.

In some ways it is no longer possible to envision future risks

Furthermore, we have added important economic matters toand then create detailed responses in advance. Instead, I

our list of material CSR issues, based on which we are follow-

believe it is more appropriate to identify unanticipateding up on our execution of KPIs for each priority issue.

events as soon as possible and then flexibly change course

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

production line will stop automatically. In safety education,

Our Board of Directors is spending significantly more time

to address them as required. In other words, we need tolooking into ESG issues, such as climate change and humanimprove JFE’s responsiveness to change.

rights. We intend to enhance governance by using nonfinancial indicators related to the environment and society inorder to help guide our decision-making and determine
compensation for executive officers.

To Our Stakeholders
Our mission is to remain a company capable of developingworldwide are working to develop such technologies, but JFE

and providing products and services that benefit the worldis in position to lead the world and become the first company

regardless of the current operating environment.

to make this a reality.

The movement toward carbon neutrality is gaining

Our Seventh Medium-term Business Plan calls on employ-

momentum worldwide and the need to realize this goal isees to be proud, not to be afraid of failure when taking on

increasing at an accelerating pace. JFE is responsible forbold challenges, and to make sure that we remain essential

continuing its business by achieving carbon neutrality ofto society and humankind as we grow.

steelmaking process earlier than other steelmakers, as an

The four years of our Seventh Medium-term Business Plan

indispensable company for supporting social and industrial

are positioned as a period for transitioning to a new stage ofdevelopment and human life.

growth, signaling the beginning of the most transformative

I am driven by a strong sense of crisis that our company
may become irrelevant if we cannot establish a process for24

period in our history. I humbly ask for everyone’s understanding and support as we set about achieving our goals.

producing steel without emitting CO2. Steelmakers

Koji Kakigi
President and CEO

Seventh Medium-term Business Plan (FY2021–2024)
Key Measure 1

Ensure Environmental and Social Sustainability(1) Promotion of the JFE Group Environmental
Vision for 2050
In May 2021, we formulated the JFE Group Environmental Vision
for 2050 with the aim of becoming carbon neutral by 2050, positioning initiatives to address climate change as the highest priority issue for management.
To attain the ambitious goal of becoming carbon neutral by
2050, JFE intends to establish as early as possible the necessary
technologies for decarbonization ahead of its global competitors,
while assuming this global movement will progress on equal footing and decarbonization infrastructure will be put into place.
 lease refer to the Special Feature on page 29 for details about the JFE GroupP
Environmental Vision for 2050.

Initiatives in the Seventh
Medium-term Business Plan
Reduction of CO2 emissions by 18%

by the end of fiscal 2024 vs. fiscal 2013

Initiatives for Carbon Neutrality
by 2050
1. Reduce CO2 emissions at JFE Steel
2. Expand contributions to CO2 emissions
reduction in society
3. Groupwide commercialization of offshore wind
power business

25(2) Resolve issues impacting society
Safety/health management
Management takes seriously the fact that it has been unable to achieve its most important target of zero serious accidents.
The Company is concentrating efforts on ensuring 100% safety by modifying equipment so that accidents cannot occur.
→ Prioritize investment in safety measures: 10 billion yen annually Groupwide→ Promote multifaceted occupational safety management (supervision, detection, etc.) using advanced IT(1) Pursue world-class earnings capabilities in transition from volume to quality in the domestic
steel business
It has become vital to ensure strong earnings capabilities that are resilient to changes in business and market conditions, as it is likely
to become more challenging to expand exports while maintaining margins, and as the domestic market contracts. Accordingly, in themedium-term plan, the JFE Group is pivoting from volume to quality as its source of earnings, seeking a profit of 10,000 yen per ton ofsteel products.
Achieve world-class cost and quality competitiveness
Cost reductions

JFE contributes to the circular economy through a combination of its businesses in renewable energy power generation in each region,
regional power producers and suppliers*, as well as gas, waterworks, and other utility services, in addition to food recycling andwaste-to-energy power generation.
* Electricity is generated and supplied within a region to promote the local production and consumption of energy.

Respect human rights throughout the supply chain
In addition to the JFE Group’s supply chain, we engage in initiatives to ensure that human rights are respected in all global supply chains.
The JFE Group has performed due diligence into human rights since fiscal 2021, and will continue to expand its efforts on this front.
For details, please refer to page 75.

Expand margins and achieve stable profit

120 billion yen (Steel business)

Ratio of high-value-added products

50% (Steel business)(2) Promote growth strategies
Steel business

Steel businessEngineering businessTrading businessExamine establishment of a
joint company with JSW in
India for the production andsales of grain-oriented
electrical steel sheet

Expand solutions business
Increase earnings threefold
by fiscal 2024 vs. fiscal 2020

Expand sales revenue to thelevel of one trillion yen in
fiscal 2030

Expand overseas processing
supply chain management
for high-performanceelectrical steel sheet
Create No. 1 global distribution
and processing structure

Engineering BusinessP.43 43
business page

Trading BusinessP.47 47
business page

Steel Business P.39

JFE aims to enhance its business model, realize its growth strategy, and improve earnings capabilities while advancing DX projects.

Groundbreaking improvements in productivity

Create new businesses

Transform existing
businesses

JFE aims to expand the solutions business andJFE aims to optimize overall operations by

JFE will strengthen relationships with custom-

launch disaster prevention and preservation

utilizing cutting-edge digital technologies.

ers and improve products and services with DX.

businesses with digital services.

Along with expansion of its DX strategy, it has become more important for the Company to address cybersecurity risks, such as cyberattacks
and system intrusions. Management is strengthening governance and security measures, centered on JFE-SIRT*.
* JFE Security Integration and Response Team(4) Balance financial soundness with effective investment based on a “select and concentrate”
approachWith regard to investments for maintaining the functionality of aging facilities in the steel business, the Company takes a disciplined
approach to selecting projects based on returns on investment and necessity. Our priorities are being shifted to investments for improving earnings, modernizing facilities, and GX and DX projects.
Furthermore, JFE aims to achieve both financial soundness and returns on investments with sustainable financial management, securing
the funds necessary for investments while reducing assets through reviews of assets and businesses that contribute little to earnings.
Please refer to the Message from the CFO on page 28 for information about plans for investments and reducing assets.

(3) Enhance corporate governanceIn addition to corporate governance initiatives in the past, during the time frame of the plan, the JFE Group will examine the use of nonfinancial indicators related to the environment and society as management targets, and refer to various indicators when making investment decisions and setting director remuneration.
We will reinforce the Groupwide risk management structure, appropriately deal with various risks that arise in a changing businessenvironment, and further strengthen Group governance.
For details, please refer to page 78.

26(3) Significantly enhance competitiveness through DX

As business becomes more global and complex, JFE endeavors to hire personnel necessary for realizing its growth strategy while
sharpening its competitiveness, and to provide environments where employees can work to the fullest of their abilities.
→ Diversity and inclusion: Maximize the abilities of employees with diverse backgrounds→ Personnel training: Improve the skills of each employee and foster global talent→ Work-style reforms: Maintain work environments and internal systems so that employees can work safely and securely while applying their abilities

Contribute to regional societies through the engineering business

Establish Economic Sustainability

Financial and earnings targets
Consolidated

FY2020 Actual

FY2024 Plan

Operating companies

Business profit¥(12.9) billion¥320 billion

Steel businessProfit attributable to owners of the parent¥(21.8) billion¥220 billion(1.3)%

10%

Debt/EBITDA

8.1x

About 3xEngineering business

D/E ratio*1

93.2%

About 70%

*1 For liabilities with equity subject to credit ratings, these equities reflect the evaluationsof rating agencies*2 Steel business profit per ton(consolidated segment profit / non-consolidated sales volume)

Trading business

ROE

FY2020 Actual

FY2024 Plan

Profit per ton*2(3,000) yen/ton

10,000 yen/ton

Segment profit¥(65.4) billion¥230 billion

Segment profit¥24.0 billion¥35 billion

Revenue¥485.7 billion¥650 billion¥20.0 billion¥40 billion

Segment profit

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Facilitate employee participation

Key Measure 2

Message from the CFO
We will establish a robust financial and earnings

growth in the environment & recycling field and the renewableenergy field. In the trading business, our target is segment profitof 40 billion yen, by expanding the supply chain through M&A andfoundation during the Seventh Medium-term

Shareholder return policy and balancing investments and financial soundness

Business Plan while eyeing future investments
to become carbon neutral.

Masashi Terahata

Executive Vice President and CFO
JFE Holdings, Inc.

Review of the Sixth Medium-term Business Plan
27

Financial and earnings targets and resultsin the Sixth Medium-term Business Plan(billion yen)
Targets in the Sixth
Medium-term
Business Plan
(Average)

Results in the Sixth Medium-term Business Plan
FY2018FY2019FY2020290.0 / year

232.0

37.8

(12.9)

Profit attributable to220.0 / year
owners of parent

163.5(197.7)*1(21.8)

Debt/EBITDA ratio

About 3x

3.6x

6.7x

8.1x

Interest-bearing
debt outstanding—

1,523.8

Business profit

1,814.3*2

1,806.1*1 Impairment losses of 238.8 billion yen were booked as an exceptional item.
*2 Fiscal 2019 reflects an impact of 105.7 billion yen (increase at the start of
the fiscal year) from the application of IFRS 16 Leases.

Breakeven point chart for the steel business
Cost &
Sales

Fixed costs

1. Fixed cost reductions

Marginal profit• Halt upstream operations at East Japan Works(Keihin)• Improve labor productivity+

1. Fixed cost reductions

Breakeven point

2. Improve marginal profit• Raise ratio of high-value-added products• Overhaul sales prices• Reduce variable costs

2. Improve marginal profit
Aim to lower the breakeven point in order
to be able to generate profits when thebusiness environment worsens
Volume3000

Standalone crude steel output:
22.76 million tons per year in FY2020→ 26.0 million tons per years in FY2024

2000

0

As for our growth strategy, we intend to expand the solution
business of providing technological, operational, and researchknow-how in the steel business, and accelerate growth andexpand the overseas business by deepening the overseas“insider” business. We aim for 230 billion yen in segment profit byfiscal 2024, the final year of the business plan.
In the engineering business, we are aiming for segment profitof 35 billion yen by the final year of the plan through earnings

Establish a robust earnings foundation byslimming down and pivoting from quantity
to quality

Total investment (four years, decided basis)
Group total

About ¥1,450 billion

Total investment*
Of which, GX investment¥340 billion

Of which, DX investment¥120 billion

28* Capital investment 1,200 billion yen, business investment 250 billion yen¥200 billion

Asset compression plan

Engineering business +¥11 billion
Trading business +¥20 billion, etc.

(billion yen)

51.0

64.0

Of which, about 60%
fixed costs

Cost reductions

Steel business¥230.0 billion

Engineering business¥35.0 billion

Trading business¥40.0 billion* Segment profit: Business profit including finance income
and costs(12.9)FY2020results

320.0
37.9

FY2024 segment profit* targets by
operating company

60.0

120.0

Review earnings structure of steel business and advance Group growth strategy

neutral. To this end, JFE will continue to unwind cross shareholdings and generate 200 billion yen in cash by reviewing assets
and businesses that do not contribute much to earnings.
Regarding shareholder returns, one of the most important
issues for management, our basic dividend policy is to target a
dividend payout ratio of approximately 30%, unchanged fromthe previous medium-term business plan.

Changes in earnings toward business profit target for fiscal 2024

1000

Initiatives in the Seventh Medium-term Business Plan
In the Company’s main steel business, we will halt upstream
processes at East Japan Works (Keihin) and deploy DX technology to improve labor productivity, resulting in lower fixed costs(see 1 in the breakeven chart below). In addition, JFE aims toincrease the ratio of high-value-added products and overhaul
its selling prices, driving improvement in the marginal profit ratio(see 2 in the breakeven chart below). These initiatives will makeour earnings base more robust.

Under the Seventh Medium-term Business Plan, JFE has earmarked approximately 1,450 billion yen for a high level of investment but in line with plans to keep spending within depreciation
and after-tax and after-dividend profits. Of this investment
amount, 1,080 billion yen is allocated to the steel business, 220billion yen to the engineering business, and 120 billion yen to
the trading business. Compared with the previous medium-termbusiness plan, in the steel business we will reduce the ratio ofinvestment for maintaining functions and redirect these funds
toward growth investments, such as in GX, DX, and facility modernization, as well as investments in overseas business. In theengineering business, we will increase investments in line withthe goal of achieving revenue of 1 trillion yen by fiscal 2030.
Regarding our financial soundness, we aim to improve the D/E
ratio to around 70% by the final year of the plan in order to facilitate the flexible and stable procurement of funds, with an eye
on investing in growth and taking steps toward becoming carbon

Product mix,
metal spread

Highervolumes

Earnings improvementat Group companies
within andoutside Japan

Engineeringbusiness,
Trading business

FY2024targetSteel business

Outlook for Fiscal 2021 Earnings
In FY2021, in the steel business, JFE expects demand for steel
products to gradually recover as economies regain their footing
in Japan and overseas. For the full year, we estimate segment
profit will be 280 billion yen, reflecting the steady and rapid
incorporation of rising raw material costs into prices for steel
products, higher selling prices alongside improving market prices,
especially for exports, improvement at subsidiary companies
around the world, and one-off gains from inventory valuationdifferences. In total for the engineering business and the tradingbusiness, we expect profit to improve by 19 billion yen. We estimate segment profit of 25 billion yen for the engineering business and 38 billion yen for the trading business. For the current
fiscal year, we forecast consolidated business profit of 350

billion yen and profit attributable to owners of parent of
240 billion yen, a strong step toward realizing our targets in themedium-term business plan. In the steel business, profits forthis fiscal year include one-off gains on valuations, and we arestill in the process of moving toward an earnings structure able
to reliably generate this level of profit. By undertaking themeasures outlined in the plan, we will make progress on
strengthening our earnings structure.
For fiscal 2021, management plans to distribute an interim
dividend of 60 yen per share. As of August 2021, we have notyet decided on the year-end dividend, as we are watching trends
in earnings.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

JFE fell far short of its medium-term target for business profit,
owing to sudden changes in the business environment stemming from U.S.–China trade friction and the COVID-19 pandemic.
We reduced capital investment as we took emergency steps toshore up earnings and cash flow, mainly in the steel business.
Meanwhile, operating companies continued to invest in mediumto long-term growth. To fund these investments, we generated
215 billion yen in cash over the three years of the plan by sellingcross-held shares and land, as well as by reducing inventories.
As a result, we were able to slightly reduce the balance of interestbearing debt in fiscal 2020. During the Sixth Medium-term Business
Plan, JFE issued a total of 210 billion yen in corporate bonds,
while stabilizing and diversifying its procurement of funds.

advancing processing functions. As a result of these initiatives
at operating companies, JFE targets business profit of 320 billion
yen by the last year of the Seventh Medium-term Business Plan.

Special Feature

JFE Group Environmental Vision for 2050
Toward Carbon Neutrality by 2050
Background to formulation of vision and its aims
Having become an essential part of the sustained development ofsociety and the safe and comfortable lives of people, the JFEGroup believes that climate change is a serious management
issue that may affect its ability to sustain growth and improve
corporate value over the medium to long term. We believe thatclimate change, which is happening on a global scale, needs to beurgently addressed. To this end, we are working to cut CO2
emissions, marking 2020 as a pivotal year for countering climatechange. Ahead of other domestic steelmakers, the JFE Groupdeclared in September 2020 that it targets a reduction in CO2emissions of at least 20% in its steel business by fiscal 2030,
compared with the fiscal 2013 level, with the objective of becoming carbon neutral as quickly as possible around 2050.
In May 2021, the JFE Group formulated the JFE Group
Environmental Vision for 2050 with the aim of becoming carbon
neutral by 2050, positioning climate change initiatives as one of
the most important issues in its Seventh Medium-term Business
Plan as it moves to a new stage of growth.

Carbon neutrality initiatives in the steel business
Advantages and disadvantages on the path tocarbon-neutral steelmaking
Steel is an essential material that is key to an abundant planet in
the future, and demand for steel will never go away. Achieving acarbon-neutral process for steelmaking is necessary for the
future of the planet, but the technologies for this have not yet
been established. Steelmaking processes currently include blast
furnace steelmaking, electric furnace steelmaking, and directreduction steelmaking methods. Each process has advantages

Blast furnace
Sintered ore

29

and disadvantages with respect to the objective of attaining
carbon neutrality. We believe it will be important to take a multitrack approach to innovation for overcoming these disadvantages.
The JFE Group is working to create super-innovative technologies
by accelerating R&D in new technologies with the aim of becoming carbon neutral by 2050. We are moving strongly toward theultimate goal of carbon neutrality while going through a technology transition and advancing innovation.

Electric arc furnace

Coke

High-purity ore pellets

JFE Group Environmental Vision for 2050
Byproductgas

Byproduct gas

Electricity
Reduced iron•W
 e recognize climate change as a serious management issue and aim to become carbon neutral by 2050.
Hot air•W e intend to develop super-innovative technologies by accelerating R&D in new technologies.
•W e aim to improve corporate value, and view reductions in CO2 emissions across society as a whole as a business opportunity.

Oxygen• We will systematically work to resolve climate change problems while reflecting TCFD concepts in our management strategies.

Blast
furnaceFe 1,500°C

2. Initiatives for carbon neutrality by 2050
1) Reduce CO2 emissions at JFE Steel•P ursue super-innovative technologies mainly for carbon-recycling blast furnaces and Carbon Capture and Utilization(CCU)• Develop hydrogen-based ironmaking (direct-reduction) technology, maximize use of electric arc furnace technology, etc.
2) Expand contributions to CO2 emissions reduction in society•E ngineering business: Expand and develop renewable energy power generation andcarbon-recycling technologies

Targets for CO2 emissions reductions
12 million tons by FY2024• Steel business: Develop and market eco-products and eco-solutions•T rading business: Increase trading in biomass fuels, steel scrap, etc. and strengthen

25 million tons by FY2030

supply chain management (SCM) for eco-products
3) Accelerate Groupwide commercialization of offshore wind power businessmillion tons/year Steel business
CO₂ emissions

58.1

CO2 emissions
reduction

Steel business

Carbon neutrality
by 2050(10.5) 18%
47.6

25.0
Engineering business
CO₂ emissions reduction

Increase contributions to CO₂
reduction

12.0
FY2013(CO₂ reduction base year)

FY2024(last year of Seventh
Medium-term Business Plan)Engineering business

FY2030CO, H2
Molten iron

Reduced pellets

Electric arc
furnace• Stable mass production• Can use existing equipment• Can use low- and medium-grade ore• Can manufacture high-grade steel• CO₂ emissions are low• CO₂ emissions are low•C arbon neutrality once 100%hydrogen reduction is possible• Requires replacement of coke and other 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• 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)•O nly high-grade ores can be used•N
 ew measures needed to prevent
temperature drop in furnace duringhydrogen reduction•H ydrogen cost is high• Capital	
investment cost is high

* CCUS: Carbon Capture, Utilization and Storage

Roadmap for carbon neutrality
As an initiative in the Seventh Medium-term Business Plan, the JFEGroup aims to reduce CO2 emissions in the steel business by 18%
in fiscal 2024, compared with the fiscal 2013 level. With an eye
on becoming carbon neutral by 2050, the Company is keen todevelop super-innovative technologies centered on carbonrecycling blast furnaces, CCU, and hydrogen-based ironmaking
CO₂ reduction
targets

Transformation ofsteelmaking
processes at majorbases of the
JFE Group

18% reduction compared to FY2013(steel business)
2020

2024

(direct reduction). By maximizing the use of industry-leading
electric furnace steelmaking technologies, the JFE Group isproactively working to apply transition technologies to existingprocesses. We aim to establish as quickly as possible thedecarbonization technologies required to achieve our goal ofbeing carbon neutral by 2050.

Determine and announce revised targets for FY2030
under the Seventh Medium-term Business Plan period
2030

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

2040

2050

Implementation*

Utilize transition technologies for existing processes:• Ferro coke, COURSE50, CCU, etc.
• 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)

Carbon neutrality by 2050

Process
integration
Iron sources
diversification

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

JFE GROUP REPORT 2021

Steel business:
¥160 billion
Engineering business:¥130 billion
Trading business:
¥50 billion

Natural gas

Disadvantages

FY2013

Reforming
furnace

Advantages

JFE GROUP REPORT 2021

•S teel business: Reduce steel business CO2 emissions by 18% in FY2024 vs.

Reduction
furnaceElectric arc
furnace

MoltenironGroupwide GX investment under the Seventh
Medium-term Business Plan: ¥340 billion

30

Scrap

The JFE Group is vigorously advancing initiatives to deal with climate change as a part of its aim to become carbon neutral by 2050.

1. Initiatives in the Seventh Medium-term Business Plan

Direct reduction

Special Feature: JFE Group Environmental Vision for 2050

Carbon-recycling blast furnaces

Technological development 1

What are carbon-recycling blast furnaces?

normal blast furnaces into pure oxygen, the energy used to heat
nitrogen contained in the air can be used to heat methane,
increasing the thermal efficiency of the overall process. Adding
CCUS (CCU) to carbon-recycling blast furnaces will enable toproduction of basic chemicals such as methanol from the excess
CO2, moving one step closer to net zero CO2 emissions.

Carbon-recycling blast furnaces are a super-innovative technology that reuses carbon, by turning the CO2 emitted during thesteelmaking process into methane with methanation technology,
and then using this methane as an input in the blast furnacesteelmaking process. The aim is to reduce CO2 emissions by 30%
on a single blast furnace unit basis. By converting air sucked in byHydrogen-based ironmaking (direct reduction)

Technological development 2

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

Hydrogen-based ironmaking technologies entails using CO2-freehydrogen gas instead of natural gas, which is now used in the
direct-reduction steelmaking process that has recently become
practical. However, there are still some problems, namely that only
high-grade iron ore can be used as a raw material in direct-reduction
steelmaking, in addition to the challenges of endothermic reactions
for reduction with hydrogen. High-grade iron ore is produced inrelatively little quantity, and as the direct-reduction steelmaking
process gains momentum worldwide, high-grade iron ore may
High-grade pellets (Fe2O3)

Blast furnace gas (CO2, CO, H2)

Coke

Reduced iron

Effective utilization in CCUS

31

Heating burner*

Electricity

H2

Reduced iron (Fe)

O2

H2O

Technology development roadmap
Regarding the development of technologies for carbon-recycling
blast furnaces and CCU, the JFE Group will first develop basic
technologies and conduct small-scale trials with the objective ofcompleting verification work of the fundamental process by 2027.
On developing technologies for carbon-recycling blast furnaces,
the Company will develop basic technologies, including simulation

models, and conduct a city gas intake experiment at the Keihin
district as a stepstone experiment. We will also evaluate a smallscale prototype carbon-recycling blast furnace with 150 m3 ofcapacity. We are advancing the development of low-cost CO2
separation technology and high-efficiency methanol synthesis
reactors as basic technologies for CCU methanol synthesis.

Proof of principle to be completed by 2027

Carbon-recycling
blast furnace

Small-scale demo
(150 m3 scale in Chiba area)

2030

Large-scale development

Partial demonstration of carbon-recycling blast furnace:

Electrical steel is a key material that determines the performance of electrical equipment, and it is also widely used as iron core materials
in motors, transformers and other electrical machinery. By supplying high-performance electrical steel, JFE Steel contributes to the
reduction of CO2 emissions around the world from a materials perspective.

Domestic Strategy

Overseas Strategy

CCU methanol
synthesis

Business feasibility study for establishment of oriented electrical steel production and sales company in India (jointlywith JSW)

Implementation*

CCU 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		

Expansion of supply structure for high-value-added electrical steel

Expand manufacturing facilities for
non-oriented (N/O) electrical steel sheet

Conduct large-volume city gas injection test at Keihin No. 2 blast furnace (before shutdown)			steelmaking process, it is therefore hard to produce high-gradesteel of the same quality as blast furnace or converter furnace
methods. Technologies must be developed for removing these
impurities or making these impurities harmless in steel, in order toproduce high-grade steel. The JFE Group is also striving to
improve the productivity of electric furnaces by utilizing its industry-leading technologies for electric furnaces.

Implementation*(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(4) Develop optimal methane technologies for use as blast furnace gas

Large-scale development

Electric furnace steelmaking produces steel products by melting
steel scrap and direct-reduction iron. This process emits one
fourth the amount of CO2 than blast furnaces and converter
furnaces. Steel scrap, a raw material, contains impurities thatcannot be removed in the electric furnace steelmaking process,and the amount of these impurities is expected to increase in the
future, even in direct-reduction iron. With the electric furnace
Eco-Products

Carbon-recycling blast furnace elemental technology development:

Small-scale demo

 Leverage electric furnace technologies to their maximum(high-grade steel production, greater efficiency)(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

As demands increase for addressing global climate change, theelectrification of automobiles has advanced, which has translated
into rapid growth in demand for essential high-grade N/O electricalsteel sheet. JFE forecasts demand will more than triple by fiscal
2024. Management has therefore decided to invest roughly 49
billion yen, double the current level of investment, by the first halfof fiscal 2024 in expanding production capacity for high-grade N/Oelectrical steel sheet at its West Japan Works (Kurashiki district).

Demand for oriented electrical steel sheet used in transformers is
projected to grow on the back of increasing demand for electricity
and expanding installations of renewable energy around the world.
Demand for oriented electrical steel sheet in India is forecast to
increase by 1.7 times the 2019 level by 2030. The Company has
decided to examine the business feasibility of establishing a
production and sales joint venture with JSW, a strategic alliancepartner, for oriented electrical steel sheet in India.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Technological development 3

Element technology
development
Basic design

Electric arc furnace

Hydrogen reduction furnace

Methanation reaction

Carbon-neutral reductant

Element technology
development
Partial technology test

32

CO2 + 4H2 → CH4 + 2H2O

CH4

2020

Scrap

Gas for reduction(natural gas tohydrogen)

Methanation

Carbonrecycling* Use of circulation gas

become harder to obtain. To address this problem, JFE has
partnered with BHP, one of the world’s largest iron ore suppliers,
to expand production volume and develop new processing technologies for low- and medium-grade iron ore that is currently usedin blast furnaces. Through this partnership, we aim to expand
sources of raw materials and increase the competitiveness of
direct-reduction steelmaking with the use of low- and mediumgrade iron ore as inputs.

Special Feature: JFE Group Environmental Vision for 2050

Contributions to carbon neutrality in the engineering businessIn the engineering business, the Company is developing and commercializing carbon recycling technologies while striving to further
expand the renewable energy business, with the intention of helping all of society become carbon neutral.

Carbon recycling

Renewable energy• Biomass, geothermal, solar power, wind power generation• Waste-to-energy power generation

33• Conversion of CO2 into synthetic gas and chemicals• CO2 separation and collection
The JFE Engineering Group has worked to turn plastic waste into
usable resources, such as bottle-to-bottle recycling with thereuse of PET bottles. Leveraging this knowledge, we are developing technologies for the carbon recycling of CO2 and the chemical

The engineering business is engaged in the engineering, procurement, construction and operation of biomass, geothermal,
solar, and wind power plants. We aim to diversify power sources
into offshore wind, geothermal and hydroelectric power. We arealso keen to increase electricity generation at waste-to-energy
power plants from a resource recycling and effective use
standpoint. The generated electricity is supplied through JFEEngineering’s subsidiary Urban Energy as renewable energy in azero emissions plan, promoting the local generation and local
consumption of energy via regional power companies.

recycling of waste plastic. The JFE Group is contributing to therealization of a low-carbon, resource-recycling society throughthe development and commercialization of technologies for
producing chemicals with collected CO2, as well as technologies
for the separation and collection of CO2 emitted from incineratorsand power generation facilities.

Public-private initiatives for regional energy businessgovernments, while moving toward low-carbon localities throughthe greater use of renewable energy.
Group company J&T Recycling is involved in the food recycling
business, where food waste is collected and fermented to produce methane gas a fuel for power generation. We will facilitate
the expansion of renewable energy supply while advancing thefood recycling business.

JFE Engineering’s Support of Local Production for Local Consumption
Support local energy production for local consumption (independent and decentralized)
and regional carbon neutrality through biogas power generation from food waste andexpansion of regional power producers and suppliers*

Sapporo Biofood Recycling
Feed and fertilizer production from foodwaste 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

Hachimantai City
Hachimantai Geothermal Plant sales
Local electricity from Matsuo-Hachimantai
Geothermal Power Plant

Fukuyama City
Fukuyama Mirai Energy
Sales of locally produced electricity
from waste power generation

Tohoku Biofood Recycling

Kumamoto City

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

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

Tokorozawa City
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 sales of locally
produced electricity* Electricity is generated and supplied within a region to promote the local production and consumption of energy

Tokorozawa Mirai Denryoku
Sales of locally produced electricity fromwaste power generation

The Japanese government is backing offshore wind power plants
as a pillar of its Green Growth Strategy to realize carbon neutrality
by 2050. Against this backdrop, the JFE Group is leveraging its
comprehensive capabilities, mainly in the engineering business,to commercialize the offshore wind power plant business. As apioneer in this area, the JFE Group is building a supply chain,including basic production and operations and maintenance (O&M),
through the commercialization of production for monopiles (basic
structures attached to the seabed) that form the foundations ofoffshore wind power plants.

JFE Steel

JFE Engineering
Production of seabed-fixed foundation structure (monopiles) for an
offshore wind power generation* Plans call for constructing a monopile
plant (¥40 billion investment) on the
grounds of JFE Steel’s West Japan Works(Fukuyama district) in Kasaoka City,
Okayama Prefecture

Increased production capacity
and stable mass production of
Steel supply
large and heavy plates for offshore wind power generation* Utilization of Kurashiki No. 7
Continuous Casting Machine in theKurashiki district (started operation inJune 2021)

SCM support

SCM support
Steel supply

JFE Shoji

Steel supply

Each company under the group

SCM construction for steel products and processed products foroffshore wind power generation
contributes to group collaboration

JMU: Fabrication of offshore wind turbine
floats and construction of work vessels
Groupwide: O&M with maximum use ofresources

34

Monopile market trends
Offshore wind power plants have been constructed mainly in Europe
and China. In light of the recent growth trend in renewable energy,
offshore wind power plants are poised to see major growth in North
America and Asia, including Japan. In Japan, last year, the government
set targets for installing offshore wind power plants. The market
for monopiles looks likely to exceed 200,000 tons annually from2030 onward.

Expected power generation (GW) Steel consumption (million tons)

As of 2030

10

As of 2040

30–45

As of 2050

90

1.5

Public and private
sector adoption
targets

4.5–6.75
13.5

Source: Japan Wind Power Association* Cumulative totals for installed volume and steel materials

Initiatives at JFE Engineering

Initiatives at JFE SteelMonopile foundations support massive wind turbines that rise more than
Blade
100 m
200 meters above the sea, andconsist of monopiles and transition
pieces anchored to bearing groundon the seabed. Monopiles are ultralarge offshore structures. JFE
Transition
Engineering aims to start producing
piecesmonopiles in 2024 while leveraging
Monopiles
its engineering and production knowhow accumulated from the construction of large offshore structures near Japan,
as well as its thick steel plate processing andwelding technologies.

In offshore wind power generation, wind turbines and basic foundations (monopiles, etc.) have become larger in size in order toreduce the cost of electricity. In fiscal 2021, JFE Steel started
operating a new continuous steelmaking plant in the Kurashiki
district, and expanded production capacity at its steel plate plantin order to reliably mass produce the heavy steel plate for monopiles. Through these measures, we aim to cut costs and shorten
production times by reducing welding volume and the number ofassembly steps, and help advance the rollout of offshore wind
power plants.

Wind
turbine

260 m

Tower

30 m

Sea

80 m

SeabedA tube for monopiles made withlarge-size plates
A tube made with conventionalsize steel plates

Weld lines

Tube length

Little

Long

Lots

Short

O&M utilizing Group resources
A pioneer in the offshore wind power plant field, the JFE Group is building out a supply chain with its comprehensive capabilities in O&M,
which covers the operation, management, and maintenance of facilities that are essential for reliable operations of facilities. The JFEGroup is contributing to the O&M field in offshore wind power by leveraging its maintenance technologies accumulated over many years
in onshore wind power generation, as well as its knowledge of marine structure construction.
Life cycle cost structure for seabed-fixed offshore wind turbines (European case)
R&D
2.9%

Manufacture ofwind turbines
23.8%

Source: Mitsubishi Research Institute

Manufacture
Electricalof foundation
systemstructure
7.7%
6.7%

Installation
15.5%

O&M
36.2%

Removal
7.2%

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

JFE Engineering has established regional power producers andsuppliers with the cooperation of local governments around
Japan, as a part of its regional energy business that focuses on
supplying renewable energy. Electricity generated at waste-toenergy power plants constructed by JFE Engineering is supplied
to local public institutions in line with the concept for local production for local consumption of energy. We aim to improve local
industrial infrastructure and lower administrative costs for

Advancing commercialization of offshore wind power generation businessBusiness Model (Steel Business and Trading Business)

A business model that createsa JFE brand associated withhigh-added value

Leveraging competitive advantages through our business model

The competitive advantages of JFE’s steel and trading businesses are on three fundamental capabilities: (1) leading-edge ­technologicaldevelopment capabilities focused on customer needs, (2) production capabilities constantly being developed and enhanced
at production sites, and (3) sales capabilities underpinned by solid relationships of trust with customers established overyears by JFE Steel and JFE Shoji. We create new value tailored to customer needs and provide optimized solutions based on these threestrengths. These competitive advantages, treasured assets accumulated through many decades of effort and not easily matched byother companies, are the driving force behind our sustainable growth.

Steel Business P.39

Technology

Sales

Two major integrated steelworks
with highly competitive strengths

Technological development
to realize value creation

Responding to needs
in our stable customer base

JFE has two major integrated steelworks,
one each in western and eastern Japan,that boast world-class costs, products,
and technologies. Both facilities leverage
the highly competitive technologies,­intellectual property, and know-how­accumulated by JFE over many decades.

JFE continuously elevates its t­ echnologicalcapabilities to world-class levels to meet
Japanese demands for top-quality steel,which in turn enables the company to compete globally and create new value throughadvanced t­ echnological development.

• Provision of solutions

Global supply and application of service networks

JFE has built a solid and highly
stable global customer base – one thatcannot be easily matched by rivals –thanks to its practice of collaboratingfrom the early development stage to­accurately address the exacting needsof its many customers.

Overseas steelmakers(alliance partners)•U nderstanding
customer needs

Production
Continuously strengthening production capabilities for greater stability, productivity, and quality
 table production of value-added products• Production, product, and environmental technologies • S•T horough safety, environmental, disasteraccumulated over the years­measures and quality-control management• Global cost competitivenessRaw material processing

Blast furnaces

Sintered ore and coke

Converter and continuous castingPig ironSemi-finished products (slabs, etc.)• Product technologies• Processing technologies

Sintering machine Coke oven

Rolling
Downstream
processes

30 million tons of crude steel

Composition adjustment

Finishing and coating

Shipments

Sheets, plates, and steel pipes

Shipment

Cooling and processing

Shipments• Facility technologies• AI, IoT, and data science
technologies• Environmental conservation technologies

Final productHighly value-added products• Processing technologies

Raw material supply
Iron ore (Australia, Brazil, etc.)

34.58 million tons a year

Coking coal (Australia, Russia, Canada, etc.)

18.16 million tons a year

• Iron ore• Coking coal

• LimeReducing procurement• Auxiliary raw materials (metals, etc.)
costs and stabilizing• Water resources • Energy • Electricity
long-term procurements• Equipment

Sales strategies adjusted tochanging business environment

Core technologies+
Processing technologies+
Facility technologies+
AI, IoT, and data science
technologies+
Product technologies+
Environmental conservation
technologies

Sales activities• Introducing, proposing, and receiving
orders for products• Collaboration with customers on
product development• Global development through service
networks• Reflecting
customerneeds•New value
and productdevelopment•Quality
improvement

Optimal allocation to production bases• Production instructions• Progress management• Shipment control

Customers•P roposing
new valueand products• Value• Value•S trict quality
assurance

Profits+
Quality assurance• Ensuring the quality of the products
being delivered+
Technological services• Understanding needs and providing
technical support for customers• Analyzing specifications andproposing optimal solutions• Product development

Production plans• Products

Order inquiries
Aligning manufacturingterms and capabilities withcustomer needs

Investments• Capital
investments• R&D investments• Business investments (domestic
and overseas)• Environmental
investments

Returns tostakeholders• Investments

Steel business overview
JFE provides highly functional steel products to­customers worldwide as a blast-furnace steelmakerwith operations of the integrated steelworks, where it
can produce final products from iron ore as raw materials.
For global growth, JFE is expanding businesses withlocal partners and s­ olutions-related businesses,
starting with alliance-partner steelmakers overseas.

Sales

Innovation supported bytechnological development capabilities• Environmental-protection technologies

Raw materials and utility procurement(FY2020)

Technological development

Trading business overview
JFE Steel’s production bases

Nishinomiya Plant(East Japan Works)

Sendai Works
East Japan WorksWest Japan
Works

Chita WorksJFE Shoji Group is engaged in businesses
ranging from steel materials, machinery,
nonferrous metals, chemicals, and ships tofood and electronics, with an overarchingfocus on steel products. Through a global
network encompassing 96 companies, JFE
Shoji provides services that add value tosupply chain operations.
Overseas network
Steel processing centers

36

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Upstreamprocesses•C utting-edge AI, IoT, and data
science technologies

Trading Business P.47

Production

Logistics and processing

35

Measures

Business Model (Engineering Business)

Business model that strongly
supports the lives of people

The source of competitive advantages that reinforce our business model

The sources of our competitive edge in the engineering business are (1) our engineering capabilities (engineering, procurement,
and construction (EPC)) centered on building infrastructure that supports industry and human life, and (2) know-how to operating,
maintenance & managing accumulated over the years, especially in waste-to-energy power generation and waterworks plants, which(3) paired with our diverse human resources and DX projects, leads to more abundant life in the future. Leveraging these three advantages, we aim to help the world become carbon neutral while promoting a circular economy. We aim to be an engineering company that isconstantly leading the world and adapting to the change of the times.
As long as people in the world long for more comfortable and abundant life, there will never be an end to our mission. We will provide
optimal solutions for society and strive to realize a sustainable society.

37

The
Company

Establishing
relationships of trust

Measures P.43

Engineering, procurement, and construction

Operating business

Diverse human resources and DX

Project execution capabilities with
abundant experience andglobal structure

Business management
capabilities with strengths in
manufacturing expertise

Diverse human resources to support thebusiness and promotion of DX to support
the evolution of the company

In a variety of fields, such as energy, theenvironment, and bridges, JFE has constructed numerous highly functional andhigh-quality structures that satisfy customer needs, covering everything fromengineering to project handover. Moreover,
we will strengthen our competitiveness bybuilding out a global engineering system atoverseas bases.

We have accumulated operational knowhow in plants in particular, such as wasteto-energy power generation and waterworks,
and in the public services field, the Company
has an extensive track record in public–private projects. We also engages in our own
recycling operations and renewable energy
power generation business, and is expanding its presence in operation & maintenance business domains around the world.

Approximately 40% of our employees havediverse backgrounds, such as women,
foreign nationals, and career hires. We also
strive to create work environments thatdraw out the best abilities of each andevery employee. We support the advancement of “creation” and “responsibility” while
digitalizing operations with AI and IoT.

Customers

Investments

Profits• Business investment (domestic and overseas)• R&D investment• Capital investment

38

Returns to shareholders

Just For       the Earth
DesignMaterial and equipment procurement

Manufacturing

Construction

Operating businesses

Carbon     Neutral

Project management

Plant operation andmaintenance business

Maintenancebusiness• Management of water and sewage
facilities• Renewable energy power
generation• Assessment of facilities • Management of waste-to-energy
plants• Retail sales of electricity• Regular inspections• Repairs

Foundation    of life
Promotion of diverse human resources

Energy service
business• Energy supply

Recycling business• Food recycling• Plastic recycling• Incineration/
power generation

Promotion of DX

Business overview
By focusing on these business fields, which are needed around the world all the time, we propose integrated services from business                 planning to EPC and operating businesses.

Environment• Waste-to-energy plants• Industrial waste processing

Recycling• Food waste recycling• Plastic recycling• Incineration/power generation

Water• Water and sewage treatment plants• Water and sewerage pipelines

Energy• LNG terminals• Oil and gas pipelines• Chemical plants

Power generation andretail• Electricity retailing• Renewable energy power generation• Energy service provider

Steel structures andindustrial machinery• Transportation and logistics infrastructure(Bridges, ports, and harbor facilities)• Disaster prevention infrastructure (Seawalls andbreakwaters)• Industrial machinery (Cranes and steam turbines)

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Engineering, procurement, and construction

Business Strategies

Steel Business

Steel BusinessInitiatives in Fiscal 2020

JFE Steel Corporation

In the first half of fiscal2020, the COVID-19 pandemic caused a
rapid deceleration in global economic activity and brought
domestic economic activity to a near halt. As a result, demand forsteel plummeted. JFE Steel brought forward planned maintenanceof its No. 4 blast furnace in the Kurashiki district and temporarilysuspended (banked) its No. 4 blast furnace in the Fukuyama district.
When demand started to pick back up, JFE Steel was the firststeelmaker in the world to quickly restart a major blast furnace that
had been banked, and tool other measures to minimize costs inoperations. JFE Steel was able to quickly restore production and meetdemand for steel. In addition, costs were reduced 100 billion yen by
reducing maintenance and repairs and taking emergency measures
to reduce labor costs. JFE Steel also reduced capital investment
by 130 billion yen from 1 trillion yen during the Sixth Medium-term
Business Plan, but still made key investments in facilities to maintain the company’s production foundation as well as in safety, theShifting from quantity to quality andevolving to become carbon neutral
JFE Steel has established a solid yet lean business structure by
restructuring its operations to adapt to structural changes in thebusiness environment. While shifting from quantity (tons of steel)to quality (profit per ton of steel), JFE Steel also is accelerating its
technological development to become carbon neutral and torealize sustainable growth as a company that remains essential
to society.

Yoshihisa Kitano
President and CEO
JFE Steel Corporation

39

Strengths•World-class technologies that reduce­environmental load and contribute tocarbon neutrality

Threats and risks•Tougher global competition from new rivals
in China•Increasing demand for high-grade steel due
to shift to lighter and electric vehicles•World-leading R&D capabilities•Long-term decline in domestic steel
demand•Abundant technologies andoperational/research know-how•Uncertain outlook for global economy due
to U.S.–China trade friction•Demand for operational and ­environmental
support technologies from steelmakers inemerging countries• Strong alliances forged with steelmakers
around the world•Another wave of COVID-19 infections

JFE GROUP REPORT 2021

•Increasing demand for steel materials due tomedium- and long-term growth in emerging
countries•Increasing demand for infrastructure fornatural disaster prevention and replacement
to make Japan more resilient•Extensive customer base built up over the
decades

Fiscal 2020 results
Revenue

Non-consolidated crude steel output

Segment profit(billion yen)

(10,000 tons)(billion yen)

2,830.6

2,631

2,681.3

2,673

230.0

Approx.2,600
2,276

161.3

2,255.2

The company is facing structural changes in its business­environment. Japan, the most important market for JFE Steel, ispoised to shrink due to population decline. Overseas, in view ofincreasing production in local markets to handle local­consumption, it could become challenging to expand the volume
exports with sufficient margins. Meanwhile, JFE Steel is coming
under increasing ­pressure to address climate change andbecome carbon neutral.
For JFE Steel to grow sustainably as a steelmaker overthe long term, we certainly must work toward becoming
carbon neutral. However, technology for producing steel­without emitting CO2 has not been established yet and the­technical hurdles are quite high. It will be crucial to secure theneeded technological capabilities and the financial means toinvest in technological development. The Seventh Mediumterm Business Plan (FY2021–2024) represents the biggest­transformation in JFE’s history. During this period, it will be­absolutely essential to establish a robust earnings foundationand take bold steps toward becoming carbon neutral.
On the earnings front, JFE Steel is pivoting from quantity (tonsof steel) to quality (profit per ton of steel) while also advancing its
growth strategies and transitioning to a leaner, stronger­business structure. Management is keen to create a foundation
for reliably generating 10,000 yen in profit per ton of steel for atarget profit of 230 billion yen. Accordingly, JFE Steel is­restructuring operations by shifting production to high-valueadded products, which will include cutting annual crude steel
production capacity by some four million tons in Japan.

Through digital transformation and other measures, we aim to
reduce costs by 120 billion yen and raise labor productivity by
20% or more over the next four years. To increase margins andsecure earnings, JFE Steel is conducting a sweeping review of its
selling prices, aiming to increase prices to levels commensuratewith the high value demanded by customers.
Regarding its growth strategy, JFE Steel will deepen its overseas business and achieve higher earnings by increasing corporate values of our allied companies. The company also will expand
its solutions-based b­ usinesses, leveraging its know-how in technology, operations, and research to help customers produce
value-added products and lower their environmental impacts.
In the field of carbon neutrality, JFE Steel intends to reduce
CO2 emissions by 18% in fiscal 2024, compared with the fiscal
2013 level, with the intention of becoming carbon neutral by 2050.
Under the direction of a project team that was launched in
October 2020 and reports directly to the president, initiatives toreduce CO2 emissions are steadily advancing (see diagram in
Key Measure 2 on page 41). In fiscal 2024, we will update ourfiscal 2030 targets for reducing CO2 emissions to reflect our stateof progress in developing new technologies. In addition to steadily
reducing CO2 emissions through fiscal 2030, JFE Steel aims todevelop groundbreaking carbon-neutral technologies by 2050.
Right now, existing candidate technologies all offer advantages aswell as disadvantages, so the plan is to continue pursuing various
possible technologies from multiple angles.

Key measures in Seventh Medium-term Business Plan and fiscal 2024 earnings targets
1. Transition to a lean, robust business structure by shifting focus
from quantity to quality
2. Pursue innovation aimed at achieving carbon neutrality(8.7)

3. Use digital technologies to strengthen production bases andachieve new growth(65.4)

201820192020 (FY)

2018

2019

2020

2024 (FY)(Target)

2018

2019

2020

2024 (FY)(Target)4. Expand and accelerate overseas business via solutions based on
knowledge, skills, and data

Per-ton profit*

10,000 yen/ton(Target segment profit of 230.0 billion yen)
* Segment profit / unconsolidated sales volume in tons

JFE GROUP REPORT 2021

•Stronger demand for eco-products andsolutions that help reduce CO2 emissions• Cutting-edge AI, IoT, and data science
technologies to evolve the company
through digital transformation

40

Medium- to Long-term Strategy and Future Initiatives

Opportunities•Increasing demands for worldwide­reduction of CO2 emissions•World-class production technologies forhighly value-added products

environment, and disaster prevention in order to fulfill the company’s corporate social responsibilities. JFE Steel also did
not scale back its planned strategic investments in digitaltransformation.
In the fiscal 2020 second half, steel demand began to recover,mainly for automobiles, and prices started to improve. Although
JFE’s steel segment posted a full-year loss in fiscal 2020, a profit
was secured in the second half.
In fiscal 2021, JFE Steel forecasts segment profit of 280 billion
yen under the expectation that steel prices will remain favorable.
Profit will be boosted through cost reductions realized by newly
operating the No. 7 continuous casting facility in the Kurashiki
district and the No. 3 coke oven (Battery B) in the Fukuyama­district. Output will be strengthened by quickly relaunching theNo. 4 blast furnace at Kurashiki after maintenance is completed.

Business Strategies

Steel Business

Key Measures in the Seventh Medium-term Business Plan

Key Measure 3 Use digital technology to strengthen production bases and achieve new growth

Key Measure 1 Transition to a lean, robust business structure by shifting focus from quantity to quality• Complete the installation of cyber physical systems (CPS)* in all production processes during the Seventh Medium-term
Business Plan and thereby realize more stable operations while greatly improving productivity through the creation of integrated

Improve per-ton profit by reducing fixed costs and increasing the ratio of highly value-added products for enhanced earnings
Achieve world-class cost and quality competitivenessTargets

Cost reductions

Upover four years

that help to produce highly value-added products and reduce environmental impacts

Increase mix of highly value-added products*
to an unprecedented 50%

20% or more** Offer technological advantages that are recognized by­customers for their value added, and have greater earnings
power than commodity-type products* 13% via structural reforms and the rest via initiatives
such as digital transformation to increase labor productivity(1,670 → 2,000 tons per person per year) resulting in
reducing employees from 16,000 to 13,000

41• Expand solutions-based businesses by building a platform to provide technologies and operational and research know-how

TargetLabor productivity

120 billion yen

CPS at steelworks and across the entire company

Expand margins and achieve stable profit

Initiatives

Initiatives(1) Enhance product mix by strategically focusing production
on priority fields   • Increase high-grade non-oriented electrical steel sheet
production capacity   • Increase capacity for heavy, extra-thick steel plateused in offshore wind power applications   • Produce high-tensile steel sheet for automobiles(2) Fully overhaul product pricing   • Facilitate more suitable pricing by ensuring that JFE
products offering the high value sought by customers arerecognized accordingly by the market(3) Ensure quality competitiveness by improving productquality, production efficiency, and deliveries

CPS of all production
processes

Cyber

Modeling

Production sites

Data scienceAI

Big data(1) Establish profit base that is resilient to changes in
economic conditions by completing structural reforms• Greatly reduce fixed costs• Lower breakeven points(2) Promote digital transformation with new technologies• Raise production efficiency and yields• Greatly improve labor productivity* Systems that create value by gathering data (big data) from diverse sensors installed in equipment and products, and then assemble the data in cyberspace toperform data analysis before feeding back the results to the physical realm in real timeHigh Performance Computing

Cyber processes

Production
Information& sensor
data

CPS
Forecasting andcontrol

Real-time
integration

Feedback
Feedforward­technological fields, including blast furnaces, direct reduction, and electric furnaces

Directreduction
technology(steel business)(Adjust FY2030 targets under this medium-term plan)

Blast
furnace• Carbon-recycling blast furnace with CCU• COURSE50 and Super-COURSE50• Ferro coke• Hydrogen-based ironmaking (direct reduction)
Measures for hydrogen endothermic reaction and restriction of raw materials

Reduction
furnaceElectric arc
furnacetechnology

Electric arc
furnace• Electric arc furnace
Measures to improve productivity, lower electricity costs, manufacturehigh-grade steel, and expand usage of hard-to-use scrap, etc.

Conventional
technology

Converter
furnace• Expanded use of scrap in converters, etc.
Development of high-efficiency, heat-transfer burner* CCUS: Carbon Capture, Utilization and Storage

Framework for becoming carbon neutral
In October 2020, JFE created a companywide project
team that reports directly to the president to guideefforts toward becoming carbon neutral by 2050,
including by developing innovative technologies andworking to realize practical application. Additional units
set up in July and October 2021 are now helping toreform internal structures and accelerate initiatives
to advance toward carbon neutrality.
Board of Directors

Management
Committee

2050
Carbonneutrality

Carbon Neutral
Advancement Committee
Management Committee
members + project teamGreen hydrogenandgreen electricity
Low-cost,
stable, andmass supply

PhysicalCarbon neutrality

Blast furnacetechnology

FY203020% or more reduction vs. FY2013

Service portal(Flexibly adjust services to specific customer needs)
Solution services

Smart factories

Smart maintenance

Safe services

Energy optimization

Quality improvement & stabilization

Smart logistics

42

Solution platform (tentative)

Use cloud to provide subscription-based services for various solutions

Products andservices

Sales and orders
Logistics management

Production management
Know-howOperational technology
Operational management• Improve yields• Improve and assure
quality• Accelerate development

R&D
CPS

Safety technology
Control management

Quality management

Core data

Operational data

Sensor data

Actual processes

Key Measure 4 Expand and accelerate overseas business via solutions based on knowledge, skills, and data

• Expand returns from 1 vertical specialization businesses, such as steel production for automobiles• Further deepen 2 business with partners to tap into expanding demand in growth markets• Expand 3 solution businesses to provide cutting-edge technologies, operations and research know-how→Triple earnings in FY2024 compared to FY2020
2000

India

JSW

• Invested in 2009 (current equity ratio 15%)
• Deepening direct participation (participated in feasibility study for agrain-oriented electrical steel sheet manufacturing company)

For details about each technology, please see pages 30–32.

2010

2020

2030

1. Vertical specialization business
2. Partnership business
3. Solution business

China
Carbon neutral advancement project team

• GJSS started renewal construction (FY2020)• Formed JV (BJCMX) to produce iron powder (FY2018)

Project leader: Vice president in charge of Corporate Planning Department
Headquarters
Carbon Recycling Development Department(created on July 1)
Advanced Melting Process Development
Department (created on October 1)
Raw Materials
Green Raw Materials
Department
Section (created on July 1)• Formed JV (BJSS) to produce and sell specialty bar steel (FY2019)
Corporate Planning
Department• JFE Chemical formed JV for anode materials (FY2019)

Facilities Planning
Department

Technology Planning Department
Technology Planning Sales Coordination & Operation
Department
Planning Department
Planning Department

Steelworks and production plants Planning and production departments

Steel ResearchLaboratory
Specialized
teams

Vietnam

FHS• Invested in 2015 (current equity ratio 4%)

Mexico• NUCOR-JFE STEEL MEXICO began operating hot-dip galvanized steel sheet production facility
for automotive applications (FY2019)

UAE• AGPC started commercial production of large-diameter welded pipe (FY2019)

ASEAN region

JSGI (Indonesia) and JSGT (Thailand)• Production and sales of galvanized steel sheet and cold-rolled steel sheet for automobiles

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Achieve carbon neutrality by developing groundbreaking technologies in multiple areas and by accelerating R&D in traditional

FY202418% reduction vs. FY2013

Process• Raise efficiency andproductivity• Reduce costs• Prevent problems

Partners and other steelmakers in emerging countries

JFE internal know-how and data

Key Measure 2 Pursue innovation to achieve carbon neutrality

CO2 emission
reductions
targets• Realize remote
automation• Improve labor productivity• Pass down skills• Train personnel• Raise operational levels• Enhance safety andreliability• Save energy• Enhance environmental
and disaster measures

Business Strategies

Engineering BusinessEngineering BusinessInitiatives in Fiscal 2020

JFE Engineering Corporation

JFE Engineering expanded its operation & maintenance business thatis responsible for upholding the cornerstone of our life in public–private
partnership (PPP) operations, power generation and electricity
business, and the recycling business, in addition to its traditional
engineering, procurement, and construction (EPC) business.
In the EPC business, JFE Engineering received orders for major
projects, mainly in its fields of expertise: waste-to-energy power
plants, pipelines, bridges, and other public works projects, marking
steady progress in the “creation” business of the cornerstone of life.
In continuation from fiscal 2019, JFE Engineering expanded its
customer base and offerings of products and services throughM&A deals, endeavoring to improve corporate value further.
In operation & maintenance businesses, JFE Engineering participates in biomass power generation private finance initiative(PFI) projects and concessions in the water field, in addition to thecomprehensive management of new gas and waterworks projects, while currently preparing to launch operations of theseprojects. In the electric power field, we expanded our bases inareas where energy is produced for local consumption throughregional new electric power companies with connections to local
governments. J&T Recycling Corporation, which is in charge of theBecoming an engineering company
that contributes to the achievementof the SDGs with the mission ofHajime Oshitafoundation of life

43

When formulating a medium- to long-term strategy targeting theyear 2030, JFE Engineering came up with its purpose called “foundation of life,” Just for the Earth. We strongly back people’s lives andthe creation of a safe society for current and future ­generations.
Driven by a mission of “Just for the Earth,” the entire Company isworking diligently to contribute to the achievement of the SDGs andachieve its targets in the Seventh Medium-term Business Plan.

Strengths•Track record and technological prowess inthe environmental, recycling, and renewableenergy fields•Stable earnings foundation thanks to expansion in the operation & maintenancebusiness•Integrated provision of utilities (water, electricity, gas, etc.)

Threats and risks•Contraction in domestic public works
projects in line with government aims andpolicies•Increase in construction costs due tochanges in prices for equipment andmaterials•Decline in EPC projects due to fall in privatesector capital investment

Opportunities

Medium- to Long-term Strategy and Future Initiatives•Greater social expectations for SDGs
achievement•Stronger demand for infrastructure upgrades
and service life extension•Changes in social structure with privatizationof public services•Growing needs for renewable energy•Loss of business opportunities due to
COVID-19

Fiscal 2020 results
Orders received

Revenue

Segment profit(billion yen)(billion yen)(billion yen)

501.1

482.8

35.0

650.0

413.0
485.8

512.2

485.7
23.1

2019

2020 (FY)

2018

2019

2020

2024 (FY)(Target)

2018

2019

JFE Engineering focuses its efforts on the following five major
fields in its medium- to long-term strategies.
The first is the waste to resources field. With the intention ofcreating a business model centered on thoroughly using waste,
we will build a rock-solid earnings foundation by steadily expanding assets over the long term and tapping into demand for replacing aging waste-to-energy power facilities. Overseas, we areaccelerating the development of operation & maintenance businesses, in addition to EPC projects. In the recycling business, wehave identified three core businesses with strong social needs:
food recycling, plastic recycling, and waste incineration / power
generation. We aim to aggressively invest in and develop thesecore businesses nationally.
The second one is the carbon neutral field. In addition to solar
and biomass power generation that we have focused on, we arestrengthening our presence in the fields of offshore wind powerand geothermal power generation. In the offshore wind power
field, we will enhance our production structure for foundational
structures attached to the seabed, an area of expertise. JFE
Engineering is also accelerating the development of carbon recycling technology by leveraging its accumulated know-how inincineration technology.

The third field is combined utility services. As an operation &maintenance business that is a “responsible” cornerstone in our life,
JFE Engineering comprehensively provides utility services (water,electricity, and gas) to regions, including heat supply services,
through the launch of new local electric power companies andparticipation in concessions for the privatization of waterworks
services, which has expanded in recent years.
The fourth field is infrastructure. JFE Engineering is developing
and introducing new products, construction methods, andmaterials that address needs to maximize the use of already built
infrastructure, by reinforcing and extending the service lifeof infrastructure like bridges, gas plants, waterworks systems,
and pipelines.
DX projects are the fifth field. We are advancing the use ofdigital technology in all kinds of engineering work. In addition toincreasing the efficiency of work, our aim is to widely reform
work processes and provide digital twins and digital services thatutilize AI and IoT, such as adding new functionality to products
and services.

Key measures in the Seventh Medium-term Business Plan and fiscal 2024 earnings targets

24.0

1. Enhance medium- to long-term priority areas as growth fields•Waste to resources•Carbon neutral•Combined utility services•Infrastructure
2. Expand overseas operations by developing business in tune with local needs
3. Advance DX projects for all engineering work

20.1

2018

2020

44

2024 (FY)(Target)Revenue

650.0billion yen(Segment profit 35.0 billion yen)

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

•Track record and technological capabilities inthe broader infrastructure businessPresident and CEO
JFE Engineering Corporation

recycling business, has focused on expanding its food recycling
bases while participating in projects to recycle PET bottles,
demand for which has been growing each year. By expanding ouroperation & maintenance businesses, we aim to establish a corporate structure with earnings that are less susceptible to fluctuations in orders for projects.
In overseas operations, we are aggressively advancing efforts
to set up operation & maintenance businesses with local partners and carry out EPC projects with a focus on Europe andSoutheast Asia. We are making steady progress toward stabilizing operations overseas.
JFE Engineering is concentrating on digital reforms in thedevelopment of new technologies. Regarding waste-to-energy
power plants, we are implementing digital technologies that willlead to more stable operations and higher output of electricity
with the operation of fully automated waste incinerators and thedeployment of AI coupled with voluminous data accumulated
from operations.
Leveraging our accumulated technologies and know-how, wehave expanded and advanced business domains related to the“creation” and “responsibility” cornerstones of life.

Business Strategies

Engineering Business

Seventh Medium-term Business Plan

Business Strategy

Key Measure 2 Expand overseas operations by developing business in tune with local needs

In Asia and Oceania, the JFE Group is pursuing synergies through M&A and enhancing its competitiveness in EPC projects, mainly relatedExpand sales revenue to the level of one trillion yen in fiscal 2030

to the environment and energy plants. In Europe, the JFE Group will build an earnings foundation in EPC projects for environmental plants
and biomass power plants. In Africa, we are keen to make inroads into new markets with bridge ODA projects. Through these initiatives,(billion yen)

we aim to increase revenue to 100 billion yen.

Priority fields by area in overseas operations

250.0

260.0
Revenue

183.0

24.0 billion yen
12.0

650.0 billion yen

1 trillion yen

290.0

20.0

79.0

FY2020

450.0

100.0

80.0 billion yen

200.0

80.0
FY2024FY2030

Final year of the Seventh Medium-term
Business Plan
Waste to resources  Carbon neutral  Combined utility services  

EuropeSegment profit

35.0 billion yen

Segment profit

45

Revenue

Segment profit

211.7 485.7 billion yen

Accelerate business development in tune with local needs

Revenue

Asia/Oceania

Waste-to-energy
power generation

Waste-to-energy
power generation

Biomass power
generation

46

Recycling

FY202430－40 billion yen
AfricaBiomass fuelBridges and steel
structures

Infrastructure

Renewable energy
generation

100 billion yen

Waterworks

Bridge ODA

LNG business
Chemical plants

With our ambitious target for revenue of one trillion yen by fiscal 2030, we are creating a foundation for growth by setting revenue targets for fiscal 2024 in the four fields of waste to resources, carbon neutral, combined utility services, and infrastructure.

CO2
CarbonCombined utility

Resources

neutralservices

290 billion yen

80 billion yen

20 billion yen

260 billion yen• Establish stable profit
base in domestic environment business• Put priority in renewable energy (offshore
wind power generation,
biomass power plant,
solar power plant, geothermal power plant,
etc.)

Shift to comprehensive
business model, including
for efficient operation offacilities to contribute toenergy savings anddecarbonization

New technologies (newproducts, construction
methods, and materials) toaddress newly arisingneeds for strengthening
and improving life of
infrastructure* Food, plastic, incineration, andpower generation

10 billion yen

50－60 billion yen

Key Measure 3 Advance DX projects for all engineering work

Waste to• Priority investment andexpansion of domestic
market in recycling
business*

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Key Measure 1 Enhance medium- to long-term priority areas as growth fields

Infrastructure

To digitalize overall work, we aim to advance our AI and IoT technologies, and optimize operations while improving engineering efficiency
with next-generation EPC using digital twin technology. We also aim to provide new kinds of digital services to customers.
Use of AI and IoT
Increase use of AI and IoT based on
Pla’cello® data analysis
platform

Digital twin

Digital services• Recreate physical world in cyberspace• Optimal management services for facilities and infrastructure•V isualize all processes and costs in EPC projects• New services that leverage DX technology•O ptimize operations•D evelop carbon neutral
technologies
JFE Engineering is undertaking reforms with DX technology focused on three angles: AI and IoT, digital twin, and digital services, in orderto remain a front-runner in the engineering world.

Business Strategies

Trading BusinessTrading BusinessInitiatives in Fiscal 2020

JFE Shoji Corporation

In the second half of fiscal 2019, the world economy slowed down
due to trade friction between the United States and China, andthen in fiscal 2020 global economic activity was dulled by the
COVID-19 pandemic, which still lingers today. Under these circumstances, JFE Shoji maintained and expanded trading revenue
while expanding our business revenue as one of the basic policiesof the Sixth Medium-term Business Plan, and strengthened its
four global key regions (Japan, the Americas, China, and ASEAN).
In response to the pandemic, JFE Shoji reduced assets andapplied stricter criteria for investments and loans in order tosecure cash flow. JFE Shoji also focused on maintaining its supply
chain by managing inventory and checking creditworthiness. Froma medium- to long-term perspective of increasing competitiveness, JFE Shoji continued to reinforce its global supply chain.
More specifically, in the domestic steel business, JFE Shoji
strengthened processing and distribution functions through

Increasing our abilities to offer proposals and convey information, aiming to
be a trading company with presence

Toshinori Kobayashi

As the JFE Group’s core trading company, we constantly consider
the overall optimum sharing strategies with other Group companies to work on strengthening functions. Furthermore, we seek toincrease our abilities to offer proposals and convey information,
growing sustainably with our customers to be a company with astrong market presence.

President and CEO
JFE Shoji Corporation

47

Threats and risks

Opportunities•Robust business foundation with steelrelated businesses such as steel products,
raw materials, and machinery•Uncertainties in global economy caused bygeopolitical risks, such as tensions between
the United States and China•Solid sales, processing, and distribution
network in the four global key regions (Japan,
the Americas, China, and ASEAN)•Negative impact on corporate activities
from uncertainties surrounding the COVID19 pandemic•Revision of customers’ supply chains andprocurement strategies, in line with changes
in the external environment, such as U.S.–
China trade friction and the impact of
COVID-19•Maximization of comprehensive Groupcapabilities through strong collaboration
with JFE Steel and JFE Engineering•Slower growth in domestic market andcontraction in manufacturing industry due
to declining population•Highly specialized human resources with theability to propose projects backed by extensive experience in steel-related businesses•Changes in market structure and government policy due to a faster movement
toward carbon neutrality•Stronger demand for steel in emerging
markets of India and the ASEAN region•Higher demand for eco-products that canhelp reduce CO2 emissions and conserve
energy, in response to growing social expectations in the context of ESG and the SDGs
•Increasing potential to create new value
added and provide services in distribution
using DX and AI

48

Medium- to Long-term Strategy and Future Initiatives
Under the Seventh Medium-term Business Plan, in continuation of
the basic policies of the previous plan, JFE Shoji will build a foundation for growth for the Group in the growth fields such as electrical steel, steel for automobiles, and overseas construction,
while expanding its supply chain. Moreover, JFE Shoji will pair its
advantage in high specializations with its proposal capabilities toexpand transactions involving companies other than JFE Steel,while further enhancing its purchase and sales capabilities.
Moreover, JFE Shoji is striving to contribute to the activities of thewhole JFE Group in the increasingly important areas of ESG

management and the promotion of DX, while utilizing the information networks and management resources of the JFE Shoji Group
more than before.
JFE Shoji plans to invest 120 billion yen (including 50 billion yen
in GX investments) with the objective of expanding businessearnings and reinforcing the supply chain through M&A andinvestments in other companies. By steadily implementing thisgrowth strategy, JFE Shoji targets segment profit of 40 billion yen
in fiscal 2024.

Key measures in the Seventh Medium-term Business Plan and fiscal 2024 earnings targets
1. Initiatives in Priority Field•Electrical steel: Establish No.1 position
in global processing and distribution•Strengthen supply chain management of
automotive steel composite materials•Accelerate activities overseas in­construction materials business•Fully capture steel demand in Japan

Fiscal 2020 results
Revenue

Segment profit(billion yen)(billion yen)

1,125.8

40.0

35.7

2. Strengthen purchasing and sales
capabilities•Expand our presence in the steel;raw materials, machinery and materials

Ratio of consolidated income
to non-consolidated income(times)Segment profit targets (Comparisons with past medium-term business plans)

1.98

1,084.1(billion yen)
932.5

3. Initiatives for new business
opportunities•Expand environmental-solution businesses•Promotion of DX

27.0

1.42

Segment Profit

1.57
20.3

20.0

27.6

23.5

40 billion yen
FY2020 Segment Profit: 20 billion yen

Equipment and Business Investment:
Approx. 120 billion yen over four years
Fourth Medium-term
Business Plan ave.

Fifth Medium-term
Business Plan ave.

Sixth Medium-term
Business Plan ave.

* The Fourth and Fifth Medium-term Business Plans used JGAAP.

2018

2019

2020 (FY)

2018

2019

2020

2024 (FY)(Target)

2018

2019

2020 (FY)

Final year of the Seventh
Medium-term Business Plan

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Strengths

collaboration across the Group and beyond, building alliances andinvesting in independent processing centers while considering
the long-term decline in demand. Overseas, JFE Shoji stabilized
the management of an electrical steel processing company it
acquired in Canada in 2019. At the same time, JFE Shoji expanded
its network by launching a new service center for automotive steel
in Mexico.
In the raw materials business, JFE Shoji strove to increase customers by maximizing the utilization of Group resources, andfocused on growing sales of biomass fuel, demand for whichshould increase as renewable energy expands. In the machineryand materials business, JFE Shoji leveraged its accumulated
know-how in steel-related businesses to engage in new transactions involving solutions for electric power companies.

Business Strategies

Trading Business

Seventh Medium-term Business Plan

Business Strategy

Shipbuilding Business

Shipbuilding BusinessJapan Marine United Corporation (equity-method affiliate)

Key Measure 1 Initiatives in Priority Field

49• Electrical steel: Establish No.1 position
in global processing and distribution• Strengthen supply chain management of
automotive steel composite materials

JFE Shoji is building a best-in-class processing and distribution
network for electrical steel through M&A and alliances, whiledeveloping overseas processing centers over the long term.
During the medium-term plan, JFE Shoji aims to be No. 1 in global
electrical steel processing and distribution by expanding cooperation withalliance firms, deepening its processing functions, and building supply
chains in new regions.

Amid increasing needs for lighter vehicles to improve fuel economy, we expect more vehicles to use high-tensile steel, one of
JFE Steel’s strategic products. JFE Shoji will deepen its collaboration with JFE Steel’s automotive steel production bases aroundthe world. In addition, it aims to be
more sensitive to trends in hightensile steel in the supply chain, andaccelerate the global development of
the Group’s automotive steel products.

• Accelerate activities overseas
in construction materials business• Fully capture steel demand in Japan
While enhancing the presence of the JFE Group in the domestic
market, its most important market, JFE Shoji will maintain andexpand earnings by increasing new sales through the synchronization of strategies with JFE Steel.
Moreover, we will expand functions to secondary and tertiary
processing through collaboration
across the Group and beyond, andreinforce functions through deeper
connections within the Group.

In the steel products field, JFE Shoji is meeting the needs ofcustomers in Japan and around the world, while aiming to build aneven more stable purchasing structure and strengthening

relationships with alliance partners and other steel mills, in addition to JFE Steel’s products. In the raw materials and machineryand materials field, we are accelerating growth in businesses
unrelated to the Group, leveraging our insight, know-how, andpurchasing network that has been built up in transactions with
the JFE Group.

Key Measure 3 Initiatives for new business opportunities• Expand environmental-solution businesses• Promotion of DX

Viewing growing social expectations on ESG matters as an opportunity, JFE Shoji is focusing on the following initiatives.
(1) Enhance the processing and distribution of eco-products,
such as high-tensile steel for automobiles, and electrical steel
for improving energy efficiency, while building a supply chain
for steel used to construct offshore wind power plants(2) Help reduce CO2 emissions across society through global
resource recycling, in light of thegreater volumes of steel scrap
being handled, and expand transactions in biomass fuel, such as
palm kernel shells (PKS) andwood pallets

Though DX projects, we aim to increase the competitiveness of
our products and services in the supply chain, focusing on thecreation of new businesses that utilize digital technologies, andchanging existing businesses while greatly increasing productivity.

Palm kernel shells (PKS)

the finest products and services in the

Kotaro Chiba

ship and offshore field.

President and CEO
Japan Marine United
Corporation

As a leading company in Japan’s shipbuilding industry, Japan
Marine United, in its business fields of merchant ships, naval/
government ships, and offshore structures, aims to be a competitive shipyard that drives the maritime industry to realize a decarbonized society on the seas, leveraging its world-classenvironmental and energy-saving technologies.

50

Strengths

Threats and risks•Advanced environmental and energy-saving
technologies•Tougher international competition against
shipbuilders become larger in China andSouth Korea•Planning & Development capabilities fordesign of superior product, that leverage its
abundant R&D and design/engineeringresources•High productivity that leverages the uniquefeatures of each shipyard.

•Impact of U.S.–China trade friction on
seaborne trade and cargo movement•Higher prices for raw materials andequipment•Foreign exchange fluctuations (yenappreciation)

Opportunities•Progress toward a decarbonized society
Stronger environmental regulations  F aster momentum in new fuel adoption
and research  Invigoration of offshore wind power
generation markets•Growth picking back up in cargo movement
and recovery in market conditions once
economic activity returns to normal after the
pandemic ends

 edium- to Long-term Strategy andM
Future Initiatives

Initiatives in Fiscal 2020

Key Measure 2 Strengthen purchasing and sales capabilities• Expand our presence in the steel;raw materials, machinery and materials

opment of society and industry throughIn fiscal 2020, Nihon Shipyard Co., Ltd. (NSY) was established as asales and design joint venture between Japan Marine United andImabari Shipbuilding, as their capital and business alliance cameinto effect.
While utilizing the strengthened marketing, design, and sales
force of both companies, NSY aims to develop outstanding performance design and launch them timely to market, in order to fit
to increasingly strict environmental regulations on the path todecarbonization.
The alliance between Japan Marine United and Imabari
Shipbuilding enables both companies to receive a lot-order andconstruct ultra-large container ships in series, which had beendifficult for a single company in terms of building capacity toaccomplish to date.

In fiscal 2020, Japan Marine United created a business plan for
the next five years, laying out a vision for where it wants to be infive years, which is to be a core player that guides a maritime
cluster with world-leading technologies combining the engineering strengths of shipbuilding in Japan.
In the core merchant ships business, Japan Marine United aims todevelop ships that constantly outperform the competition by pioneering leading-edge environmental technologies with NSY at the center.
While improving the productivity of manufacturing facilities, production
systems, and human resources, we will reinforce the business foundation by sharpening our global competitiveness and moving toward
our vision for the future. We will contribute to the sustainable growthof an environment-friendly society, updating our business structure
for growing market, floating-type offshore wind power generation.

Fiscal 2020 results
In April 2021, JFE Shoji became a signatory to theUnited Nations Global Compact, declaring its support for these principles. JFE Shoji will comply with
the Ten Principles of the Global Compact andendeavor to achieve the SDGs.

Orders received

Net sales

Vessels built(billion yen)(billion yen)(vessels)

215.1

237.1

268.9

253.1

237.3

186.5

30

33

32

2019

2020 (FY)

United Nations Global Compact
https://www.unglobalcompact.org

2018

2019

2020 (FY)

2018

2019

2020 (FY)2018

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

JFE Shoji is keen to tap into growing demand for construction
materials in North America and the ASEAN region. In North
America, we are examining opportunities to expand business domains
through M&A. In the ASEAN region,
we aim to increase transactions withlocal general contractors and fabs,
while exploring collaborations withlocal companies to latch onto
strengthening demand.

Contributing to the sustainable devel-

Dialogue with Outside Executives

Outside executives talk about theSeventh Medium-term Business Plan andJFE’s future vision

What is your opinion of the Board of Directors’ activities as well as its responses to the pandemic
and other sudden changes in the business environment over the past year?
Kemori In the first half of fiscal 2020, the Board of Directors

and the importance of preparing for a possibly steeper

mainly discussed two topics. The first was how to reduce­economic downturn.

production in response to a sharp, steep drop in the demand

Another important topic is the deployment of digital tech-for steel products. A decision was made to temporarily halt

nology to facilitate new workstyles. The Board of Directors

operations at two blast furnaces and keep six blast furnaces

discussed how the pandemic has accelerated related reforms

operating, instead of scaling back output uniformly across all

and, as a result, JFE has kept up with other progressive

eight furnaces. The Board of Directors made a proper deci-Japanese companies in shifting paper-based and face-to-sion after President Kitano of JFE Steel explained the situa-

face work to digital processes.

tion to us, including technical aspects in ways that we all
could understand.
The second topic was how to reduce losses and control

51

Ando I was appointed to this position in June 2020, during the
pandemic, so I have not had the opportunity to visit the front-interest-bearing debt in the face of substantial losses fore-lines and talk with people there. At JFE, Board of Directors’

casted due to a deteriorating metal spread,* a source ofmeetings are opportunities for participants to voice opinions

earnings for the Company. It was extremely challenging tofrankly and exchange ideas freely. All participants, including

reduce costs while significantly cutting back production

Audit & Supervisory Board Members, engage actively in dia-volume. Emergency measures were implemented and thelogue with no distinction made between ‘insiders’ and ‘outsid-

Nobumasa Kemori

Masami Yamamoto

Yoshiko Ando

Company sold off assets, which kept interest-bearing debt

ers.’ As the chair, President Kakigi supports deliberations with

Outside Director

Outside Director

Outside Director

within the parameters set by management.

information as needed, but he makes a full effort to guide

Mr. Yamamoto joined Fujitsu in 1976 and was
appointed director and then senior advisor(current post from June 2019) after first serving
as president and later chairman. He is also an
outside director of Mizuho Financial Group, Inc.
He has been a director of JFE Holdings sinceJune 2017.

Ms. Ando joined the Ministry of Health, Labour andWelfare in 1982 and retired in 2018 after serving
as director-general of Labour Policy and DirectorGeneral for Human Resources Development. She
currently is an outside Audit & Supervisory Board
member of Kirin Holdings Company, Limited andan outside director of Sansei Technologies, Inc.
She has been a director of JFE Holdings sinceJune 2020.

discussions toward conclusions that consider the opinions

appropriately. However, I strongly believe that managementof outside Board members. From this perspective, I believe

needs to maintain constant awareness of the equity ratio

an inside director is better able to perform the role of the JFE(equity attributable to owners of parent ratio) to remainchair, although outside directors are often placed in charge

prepared for any rapid or unforeseeable change in theof corporate governance matters.

­business environment.
* Product sales price – Raw material procurement priceOhyagi Japan’s steel industry is strongly affected by trends inthe macroeconomic environment. JFE Steel has a high export
ratio of over 40% for steel products, so both trade friction

Right before my appointment, the Company announced
emergency measures to counter COVID-19 and the Board of
Directors discussed how to follow up on these measures at
every meeting thereafter. Outside Board members brought up
various problems and clearly conveyed their awareness of thecrisis, even when the meetings were held by phone.

between the U.S. and China and the pandemic have had big
impacts. Moreover, under the Sixth Medium-term Business
Plan from fiscal 2018 to fiscal 2020, the Company invested
large amounts of capital to strengthen its production capacity,
resulting in increased interest-bearing debt and a decreasein the equity ratio. At the Board of Directors’ meetings, as an
Audit & Supervisory Board Member, I voiced my opinion regarding the risks involved in concentrating capital investments

Shigeo Ohyagi

Tsuyoshi Numagami

Isao Saiki

Outside Audit & Supervisory
Board Member

Outside Audit & Supervisory
Board Member

Outside Audit & Supervisory
Board Member

Mr. Ohyagi joined Teijin in 1971 and assumed
his present post as senior advisor in June 2018
after serving as president and then chairman.
He is also an outside director of KDDI
CORPORATION, MUFG Bank, Ltd., and Tokyo
Electric Power Company Holdings, Incorporated.
He became an Audit & Supervisory Board
Member of JFE Holdings in June 2014.

Mr. Numagami became a professor in
the Graduate School of Commerce andManagement at Hitotsubashi University in
2000. After serving as dean, board member
and executive vice president, he took his
present position as professor in the university’s
Graduate School of Business Administration in
April 2018. He became an Audit & Supervisory
Board Member of JFE Holdings in June 2018.

Mr. Saiki was admitted to the Japanese bar in
1989 and joined Ginza Law Office (current Abe,
Ikubo & Katayama Law Firm), where he has beena partner lawyer since January 1998. He
became an Audit & Supervisory Board Memberof JFE Holdings in June 2017.

What do you think of the process used to formulate the Seventh Medium-term Business Plan?
Yamamoto Discussions about the Seventh Medium-term

the Sixth Medium-term Business Plan, triple the amount of time

Business Plan began with a strong sense of crisis shared by

was spent on formulating the new plan. Schedules were set up

both the Board of Directors and Company executives regarding

so that our deliberations could concentrate separately on thewhat the Company must do to survive a challenging businesssteel, engineering and trading business segments. I think it isenvironment, given that substantial losses were incurred inrare for a company to allocate this much time for discussion

both fiscal 2019 and the first half of fiscal 2020. Compared with

about a medium-term business plan.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Mr. Kemori joined Sumitomo Metal Mining in
1980 and served as president, chairman, andadvisor before being appointed honorary advisor
in June 2021. He is also as an outside directorof NAGASE & CO., LTD. and Sumitomo Realty &Development Co., Ltd. He has been a directorof JFE Holdings since June 2018.

Overall, I feel the Board of Directors handled the situation52

Dialogue with Outside Executives
Whereas the previous plan sought growth in volume terms,

Saiki When we evaluated the previous plan, we thought it

Numagami I think an important shift introduced in the new plan

this seventh plan focuses on quality-based growth. It also sets

would be better to examine the accumulated measures

is the Company’s intention to sell various steel solutions toof executives, so I believe it is our duty to back them up as

out a clear policy for sustainability. While we must wait to see­undertaken by each operating company within the broader

overseas corporations. This could act as a springboard for trans-much as possible. The success of this initiative over the next

the actual outcome, I am confident that this plan has been wellcontext of what JFE aims to accomplish overall. Similarly, we

forming JFE from a manufacturer into a platformer. In platformer

four years will determine the future direction of JFE over theconsidered down to the last detail.

initially considered setting targets for only fiscal 2021 underbusiness, unlike general manufacturing, business development

next decade or two, in my opinion.

a special single-year plan for emergency measures during

skills can be more crucial than technology types/levels. This will

Numagami Overall, I think the process for formulating thethe pandemic, and then launch the Seventh Medium-term

place great emphasis on the seamless sharing of internal know-

Ohyagi Medium-term business plans typically have goals thatseventh plan was excellent. In particular, two forums were

Business Plan from fiscal 2022. However, once we finallyhow, something that is already well under way in the engineering

can be achieved within their time frames, but the Seventh

created for discussing Companywide efforts involving offshore

decided to launch the new plan in fiscal 2021, I was concernedbusiness.

Medium-term Business Plan looks more like a vision with long-wind power generation. Executives carefully explained thethere would not be enough time to discuss broader outlines.

initiatives being taken at each operating company and ample

But despite my concerns we were able to hold thorough dis-furnaces and offshore wind power plants. While JFE has anvisionary plan, ensuring there is executive capacity to carry ittime was set aside for discussions, which ended up being

cussions, so I believe the process turned out to be quite good.

opportunity to lead the world in carbon-recycling technology,

out will be crucial.

quite thorough.

I think the business plan is well put together, despite the time

European companies already have first-mover advantages inconstraints and rapid changes in the operating environment.

the field of offshore wind power plants. But considering the cost

­forward-looking investment, but earnings in the steel industry

and time required to transport plant materials and equipment

are broadly exposed to trends in the economic environment.

Furthermore, Japanese politics and economics are becoming increasingly linked to global politics, so the plan reflects

53

I am also interested in the Company’s carbon-recycling blast

Measures outlined in the new plan lean heavily on the input

term objectives set 10 or 20 years into the future. For such a

Measures in the plan include a significant amount of

deep discussions by the Board of Directors about global mat-Ando When groups of companies are managed within a hold-from Europe to Japan, I believe JFE may have a competitive

There may well be situations where the Company will have toters. I believe the plan will be impactful in the sense that JFE ising company structure, overall business control can be chal-advantage. Going forward, I see the Company accumulating thediscuss how much progress can be made depending on exter-taking on the biggest transformation since its founding.

lenging depending on how the holding company is positioned.

know-how and expertise it needs to gradually enhance its pro-nal conditions. In this case, it may be necessary for the

I had thought that discussions about the JFE Group would be

ductivity in this field.

Company to change its approach while flexibly deploying
people, equipment, funding, and information. I believe it is myframed in terms of its operating companies engaged in steel,
Saiki My main interest is the project to commercialize off-

responsibility as an Audit & Supervisory Board Member to makebroad framework was first established for the entire group andshore wind power business. The fulcrum of this project will be

sure the Company will be able to follow through with its plans.

then details about each individual part were added to thethe realization of synergies through cooperation among the

The history of any company is one of constant change, butframework. I believe this improved the visibility of how each

three businesses. JFE’s basic stance in the past has been to

now we are also approaching pivotal transformations in society

company generates synergy within the Group. A fair amount of

put an operating company in charge of a single business, withand the market. Implementing change under the Seventh

time was spent discussing offshore wind power generation,

JFE Holdings serving as a pure holding company, but in thisMedium-term Business Plan will require constant awareness

which I feel has the potential to become a promising businesscase it will act as a hub. I expect this to lead to changes inof the Company’s market positioning. So far, JFE has provided

capable of leveraging group synergies.

governance and business methods throughout the Group.

supply chains with upstream raw materials, but now it must

The Board of Directors has received reports about thisfocus on developing more nimble businesses as a platformer.

Kemori I am interested in the pivot from quantity to quality. The

The second key, improving production capacity per employee,steel business is basically a cash cow for JFE because it gener-

requires the establishment of KPIs. Using one of my ideas, JFE

ates a large percentage of total sales revenue. Among compa-

now analyzes and compares its current productivity to that ofnies that use large-scale equipment, it is common to pursue

sector peers that are globally competitive. As a result, JFE has

competitive advantage by increasing volume. At first glance,

set KPI targets of 2,000 tons of annual output per employee andturning the focus away from volume seems to run counter toprofit of 10,000 yen per ton of steel shipment. To achieve thesethis common practice. However, competitiveness in manufactur-

targets, I am confident that JFE will do its utmost to attain world-

ing is defined not by the Company as a whole, but by the pro-class profitability as a steelmaker.

duction capacity of individual plants, or blast furnaces in thiscase. Also, the production capacity of blast furnaces can be
described as the amount of output per on-site employee.
The first key, production capacity per blast furnace, is greatly
affected by the volume of the blast furnace itself. By maximizing
the operating rates of blast furnaces using a digital technology
called cyber physical systems (CPS), it is possible to further
boost capacity. This idea, which is unique to JFE, aligns with thecompany’s vision of ‘contributing to society with the world’s
most innovative technology.’

project on numerous occasions and posed tough questions to

We must think carefully about where to position the Company

operating company executives about its outlook and feasibility.

while keeping a close eye on society’s evolution.

I believe the initial concept has been brushed up significantly
as a result of these discussions.

Ando The Seventh Medium-term Business Plan’s targets forCO2 reduction (by the end of fiscal 2024) are realistic in view

Yamamoto Under the Seventh Medium-term Business Plan,of current conditions, but I think future objectives will require

the Company’s first step is to clear the very high hurdle ofbackcasting from the Company’s targets for 2050. I believe, as

becoming carbon neutral by 2050. The steel industry currently

Mr. Ohyagi said earlier, the visionary nature of the new planemits more than 10% of CO2 emissions in Japan as a whole. To

reflects this viewpoint.

achieve net zero emissions, next-generation technologies

Initiatives to achieve monumental targets naturally require

such as carbon-recycling blast furnaces are needed to com-the input of more than just one company working on its own.

pletely makeover traditional steelmaking processes. This will

While monitoring progress in R&D, government policy objec-

require the use of data control combined with DX technologies.

tives, and global trends, we will continue to oversee the

A massive undertaking to solve the technological issues for

Company’s progress from an objective viewpoint, one step

carbon neutrality has begun, aiming ultimately at generating

removed from the action.

profits as well as innovating technology.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

engineering and trading, but during the plan’s formulation a

Which measures outlined in the Seventh Medium-term Business Plan do you find the most intriguing?

54

Dialogue with Outside Executives

What risks and issues do you envision materializing and possibly impacting the implementation of

in developing the needed technologies. I think JFE’s highnewsletters. JFE’s respect for individuals will translate into

company plans?

expectations and pride regarding technology are the sources

stronger organizational capabilities, in my view.

of its competitive advantage.
Saiki In the steel business, changes in the external environ-the environmental value of its carbon-free steel and ultimately

ment could tighten the metal spread and tilt operations into

prevail on the basis of its total value proposition. We envision

the red. While the Seventh Medium-term Business Plan incor-

needs for sweeping changes in sales methods and sales chan-porates lessons learned from the previous plan, risks could stillnels to enable the Company to realize selling prices commen-

materialize under similar situations. As an outside director, I am

centers next to its main offices and taking other forward-

ness at JFE. For example, at the Intercity Baseball Tournament

looking initiatives, but some of these efforts still feel like theyheld in 2019, when JFE East Japan won its first game, thelack direction. Female employees have increased, and now

surate with the value of its products.

enthusiasm of the employees was incredible.

many are approaching eventful stages in their lives, so the

The mindset of overcoming hardships and taking on chal-Company’s responsiveness will be tested. I wish to visit work-

Numagami Assuming JFE develops a solutions business as alenges until objectives are achieved has been instilled fromplaces to talk one-on-one with these employees. Regarding

the top down to each and every employee. I believe this is

the promotion of women to managerial positions, the Company

JFE’s greatest strength. JFE continues to take on challenges

has set targets as a priority issue. I have hopes for ongoingwith a positive attitude, so I have great hopes for its coming

efforts to groom women for executive positions in the operat-

accomplishments.

ing companies, but for now I am looking forward to the day

platformer, a certain degree of openness will become necessary so that other steelmakers can participate in the platform.
To provide various solutions overseas over the long term, sometechnologies probably will have to be opened up. If theCompany resorts to the standard practice in the Japanese55

women in the workplace. JFE has been setting up childcare
Yamamoto I can feel everyone’s passion for the steel busi-

constantly thinking about what management should do withits major investments in the event that risks appear.

Another point to watch is the Company’s promotion of

manufacturing industry of holding back its proprietary technologies that could wind up being a mistake.
Another point to note is the pace of growth in the engineering business, which at some point will require more business
managers. If a company or business grows too fast, personnel
hiring and training might not be able to keep pace. An ironcladrule of management is to prioritize the allocation of resources,
starting with upper management. The pace of future growthlarge investments that JFE would have trouble funding on its

will hinge on the JFE Group’s ability to develop necessaryown. A business model that involves all industries and thehuman resources internally as well as acquire such personnel

government too probably will be needed. Under such a sce-from outside.

nario, it is unclear what kind of leadership role JFE could

ings to provide briefings.

cepts for carbon-recycling blast furnaces and offshore wind
power generation are examples of its will to develop strengths
unlike those of other domestic steelmakers. I strongly hopethat the Company will continue to evolve in this direction.
JFE ranks second in terms of crude steel output in theJapanese steel industry. If the Company does not disclose
information adequately, the world will not know about its ambitious plans. JFE is taking on some amazing challenges, so toensure that the world appreciates these efforts I hope theCompany will step up its dissemination of information.

assume within an industry consortium. The chance that

Kemori On top of the external risks that everyone has identi-

investment plans could differ from past objectives is some-

fied, I would like to add that internal risks may also increase.

Numagami Global developments regarding carbon neutrality

Ohyagi I think JFE needs to put more effort into developing

thing greater than zero. Since stakeholder interests can some-

The Seventh Medium-term Business Plan accepts the chal-and hydrogen-based societies could turn into promising busi-

innovative technologies and producing products that are

times be at odds with each other, I think the first challenge,

lenge of dealing with major changes, but changes can occur

nesses, but this will depend on governments playing cruciallysuperior to those of its competitors. Frontline employees atthroughout business processes. Issues related to safety, theimportant roles. JFE has many technological strengths, but

JFE research labs and plants will be key in this endeavor. Given

Furthermore, initiatives to become carbon neutral, even if

environment, and quality could arise if such changes occur

beyond its technical and on-site capabilities, the ability tothat employees come to work for 7–8 hours a day, they must

successful, could well increase production costs. Also, rival

one after another. Focusing too much on external risks might

comprehensively read the international situation and govern-

be given opportunities to feel joy, motivation and growth insteelmakers overseas will probably manufacture cheaper

result in the Company losing its footing due to unforeseen

ment trends will become increasingly crucial. The Board of

their jobs. A ‘good company’ must have an open organizational

products that are not carbon neutral. Basically, moves tocircumstances. I hope the executives are well aware of the

Directors examines issues from multifaceted viewpoints by

culture in which fair decisions are made in a controlled andinternal risks.

freely discussing everything from daily issues to internationaltransparent environment. In this sense, as an Audit &situations. Continually building on such wisdom is one of JFE’s

Supervisory Board member, I believe JFE is a very good com-

greatest strengths.

pany. I want to help make sure that this excellent corporate

and risk, will be the proper management of projects.

decarbonize have inherent risks in terms of price competition
for steel products. To compensate for this, JFE must promote

Lastly, what are your thoughts on the JFE group’s greatest strengths for supporting sustained
growth? As outside directors, what are your expectations and hopes?

56

its unwavering spirit of taking on new challenges. JFE’s con-culture, the foundation for all activities, is passed on toAndo I believe JFE’s strength is derived from the growth engine
and potential of each of its three relatively independent operating companies. Under the Seventh Medium-term Business

Kemori I believe JFE’s greatest strength is its willingness toabout targets for reducing CO2 emissions. Carbon neutrality byPlan, the Company has plotted a course for generating new

take on the challenge of resolving issues in the modern world

2050 has been set as the ultimate objective, beginning withsynergies in each business, centered on the environment.

by applying its technological capabilities. The company’s cor-

reduction targets for fiscal 2024. Perhaps midway targets for

Another strength of JFE is its human organizational capabili-

porate vision and Seventh Medium-term Business Plan

fiscal 2030 also could have been set, but the executives wereties that encompass the individual talents of employees. This

embody this willingness.

adamant that numerical targets disclosed to the public had tois evident in how well the administrative office responds to ourDuring the formulation of the Seventh Medium-term

be backed up by technologies capable of achieving them. So

opinions and requests, and in the activities being undertaken

Business Plan, I was deeply impressed by the deliberations

the Company will draw up targets after monitoring its progressby employees, which are reported in the group’s internal

future generations.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Yamamoto Initiatives to become carbon neutral will require

when female employees will attend Board of Directors’ meetSaiki Like everyone has said, I also feel that JFE’s strength isKey Issues of JFE Group Corporate Management (Materiality)
Groupwide

Fiscal 2021 Key Issues of Corporate Management and KPIs

JFE Steel

JFE Engineering

JFE Shoji

The JFE Group has set key performance indicators (KPIs) for its initiatives to address priority issues, and worked towardachieving its targets. In fiscal 2021, the Company revised its material CSR issues, adding economic material issues to thelist, and defined key issues for management. As a unified Group, we aim to contribute to the realization of sustainable growthfor both the JFE Group and society as a whole by tackling these key issues for management.
Areas of Focus

Details

Material Issues

Reduce the JFE Group’s CO2 emissions
Contribute to resolving climatechange issues (initiatives forachieving carbon neutrality by
2050)

Initiatives for achieving carbon neutrality
by 2050

JFE Steel
JFE Engineering
JFE Shoji
JFE Steel• Reduce the JFE Group’s CO2 emissions
 ontribute to reduction of CO2•Cemissions in society

Contribute to reduction of CO2 emissions acrossthe society

JFE Engineering

JFE ShojiGroupwide57
JFE Steel

Ensure occupational safety
and healthPrioritize safety firstPrevent workplace accidents

 aintain the physical and mental healthMof employees and their families

JFE Engineering

JFE Shoji

Activity

Recruit and nurture diverse
human resources aintain work environments where allM
personnel can maximize their abilities
 ccumulate and hand down technologies
Aand skills

Pursue diversity and inclusion
Groupwide

Strengthen human resources development
Create workplaces that motivate employees

Pursue world-class earnings power
Reinforce resilience of
production and engineering
capabilities(realize world-class earnings
power through DX and othermeasures)Groupwide

Increase efficiency and enhance costcompetitiveness in production and engineering romote DX and other measures toP
improve production efficiency, yields,
and labor productivity

JFE SteelJFE Steel

JFE Engineering

JFE Steel

Raise quality of products and services and ensure
reliable supply

JFE Engineering
JFE Shoji

Strengthen competitiveness of
products and services(promote the growth strategy
by providing high value-added
solutions)Improve margins and ensure stableearnings power

Expand business by increasing value added in
products and services with advanced technologies• Increase ratio of high-value-added
products and services

JFE Steel

JFE Engineering• Ensure stable earnings power basedon the sales strategy, including
technological solutions and expansionof growth businesses

JFE SteelSales strategies for realizing sustainable growth

JFE Engineering
JFE Shoji

Basis ofactivity

Thoroughly enforce compliance
Respect human rights

Ensure adherence to corporate ethical standards
and compliance
Respect human rights across the supply chain• Reduce CO2 emissions in its own plants and offices FY2024: 40% reduction from FY2013 levels• Reduce CO2 emissions through the procurement of electricity derived from renewable energy (reduce domestic CO2 emissions by at least 20% from FY2019 levels by the end of FY2024)• Launch sales and implement eco-friendly products and technologies*: at least 15 cases in FY2021 (the cumulative total of at least 60 cases for the period from FY2021 to FY2024)* Products and technologies that contribute to saving energy and resources, reduce waste and environmentally hazardous substances, and do not require hazardous substances for manufacturing or use.
• Provide renewable energy power generation facilities• Help reduce CO2 emissions in society by expanding the bases of the recycling business (for plastic, food, etc.)
Contribute to reduction in CO2 emissions (FY2021): 10 million tonnes per year
1. Global resource recycling of steel scrap• Promote steel scrap transactions to exceed the volume for FY2020 (FY2024 target: +5% from FY2020)
2. Increase transaction quantity of fuel for biomass power generation plants and create framework for reliable supply of fuel• Expand transactions of biomass fuel (palm kernel shells and wood pellets) above FY2020 levels (FY2024 target: +100% increase from FY2020)• Diversify supply sources to ensure stable supply
Workplace fatalities: Zero occurrences• Lost-work injuries rate
below 0.10
below 0.25
below 0.45
[Key measures](1) Enhance safety
Install electromagnetic locks at the secondary mill entrances: 100% by FY2024(2) Restructure the safety and health management system
ISO 45001 certification in all districts: 100% by FY2022[Key measures](1) Eliminate falling accidents (100% implementation of following measures)• Pre-operation checks (curing openings in high locations and edges of work floors)• Strict adherence during operations (use of safety belts)(2) Eliminate accidents involving being caught in heavy machinery or struck by flying/falling objects (100% implementation of following measures)• Pre-operation checks (ensure on-site understanding of work plans)• Strict adherence during operations (no entry measures, allocation of worksite guides)(3) Turn off equipment, machines, and tools while non-standard operations(4) Multifaceted management of occupational safety and health• Conduct remote safety patrols on premises by integrating multiple video images• Introduce an AI-based system for detecting intruders[Key measures](1) Install safety sensors (100% of plan) (2) 100% implementation of crane operation drills (at least once a year at each company)(1) Provision rates of healthcare guidance
60% (FY2023 target)(2) Reduce rates of smokers (ensure employee health and prevent exposure to passive smoke)
1.5% reduction per year (total for operating companies)
1. Rates for female recruits
Career-track (white-collar position): 35% or more Career-track (technical position): 10% or more On-site position: 10% or more
Career-track (white-collar position): 35% or more Career-track (technical position): 10% or more Production/construction position: 10% or more (four-year average)
Career-track position: 30% or more
2. Females in managerial positions: 5 times the 2014 August figure (FY2025 target)
3. Rate of male employees taking childcare leave or time off related to child rearing: at least 90%• Training hours per person• Shift focus of steel business fromquantity to quality (structural reform)• Reduce costs to strengthen costcompetitiveness and ensure quality
competitiveness• Formulate an investment plan for CO2 reduction using new benchmarks for steadily achieving the target of reducing CO2 emissions by 18% from FY2013 levels by the end of FY2024• Achieve 35% of its CO2 reduction target by energy conservation and technological development in FY2021• Create a structure for promoting technological development with a focus on carbon recycling blast furnaces toward achieving carbon neutrality by 2050

Groupwide

40 hours or more per year

20 hours or more per year

20 hours or more per year

Annual leave acquisition rate of at least 75% (total for operating companies)• Engagement survey
Affirmative response to questions about motivation: 75%
1. Improve labor productivity by 20% by the end of FY2024
FY2021 KPI:
• Establish investment plans for automation, remote operation and robotics with a focus on DX• Set milestones for investment and number of personnel for each fiscal year
• Plan and systemize concrete labor policies to smoothly facilitate structural reform of the Keihin district
2. Achieve stable quality and enhance yields through measures including introduction of quality prediction technology based on integrated data encompassing the entire process from steelmaking to final processing using DS*
Improve yields by 0.5% in FY2021 to achieve 2% by FY2024* Data Science• Increase the efficiency of engineering operations by introducing DX technologies
1,200 engineers for big data analysis utilizing Pla’cello** Proprietary data analysis platform using AI.
1. Make steady progress on capital investments to improve the level of quality assurance and product testing, and achieve 100% automation from test measurement to mill sheet data entry for the four priority items:
tensile test, molten steel analysis, thickness measurement for hot and cold rolled steel sheets, and coating weight measurement.
In addition, achieve 100% automation from test instructions, sample collation to test measurement and mill sheet data entry.
2. Strengthen the manufacturing infrastructures using DX
Aim to apply to equipment listed below in FY2021 to implement CPS* in all production processes by the end of FY2024.
Kurashiki’s new continuous casting DS operations, hot rolling CPS (temperature model/Kurashiki), cold rolling CPS (automatic operation/Kurashiki) and integrated quality CPS (galvanizing/Fukuyama)* Cyber-Physical System
1. Secure a stable number of certificated managing engineers 2. No major quality problems
1. Make consistent investment in processing and distribution operations
2. Conduct quality audits at Group companies• Continue conducting quality audits at 32 Group manufacturing affiliate companies in Japan and overseas (audit completed: 100%)
1. Pursue strategic research and development focusing on priority development fields*
Develop new products and technologies
FY2021: at least 20 cases (at least 80 cases in total from FY2021 to FY2024)* Automobiles, energy, infrastructure construction materials, DX technology, and green transformation (GX) technology
2. Increase the mix of high value-added products* to 50% in FY2024 (sell 10.9 million tonnes, 50% of sales excluding half-finished products, by FY2024)
FY2021 KPIs
9.3 million tonnes in sales of high value-added products (up 1.5 million tonnes from FY2020)* Products that offer technological advantages and are recognized by customers for their added value while having greater earnings power than commodity products.
3. As a step toward triple earnings in the solution business by FY2024 from the FY2020 level, focus efforts on receiving orders for the new solutions business model (utilization of DS, provision of maintenancetechnologies, etc.) and secure first order. With an eye on receiving continuous orders thereafter, update external sales platform and maintenance know-how.
1. Develop technologies in four priority fields of waste to resources, carbon-neutrality, combined utility service and DX, and at least 60% of R&D expenses on these four fields.
2. Number of patent applications: at least 80 per year
• Expand the earnings difference between high value-added products (A-rank products) and commodity products to 5,000 yen per tonnes by FY2024
FY2021 KPI: Aim for 25% of target
Expand the stable earnings base
Expand the operating businesses
1. Sales: 250 billion yen
2. Expand bases: at least 3 bases• Recycling business (food, plastics, electronic appliances, etc.) • Regional electricity retail new power business • Waste processing business • Water and sewage operations business
Increase competitiveness of products and services by improving value added in supply chain management through business expansion• Make investments to improve value added in supply chain: at least 5 per year
1. Steady execution of training to foster and maintain a sense of compliance (100% attendance from the target audience)
2. Improve employee awareness of ethics reflected in the Corporate Ethics Awareness Survey (next survey is scheduled for FY2022)
1. 100% attendance from the target audience for human rights awareness training 2. Implement human rights due diligence58

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Ensure the health of employees and their families

2021 KPIs

Operating Company

Key Issues of JFE Group Corporate Management (Materiality)
Groupwide

Fiscal 2020 KPI Outcomes and Evaluations for Priority CSR Issues
Since fiscal 2017, the Company has set KPIs for priority CSR issues it identified in fiscal 2016, and engaged in initiatives toevaluation of KPIs for priority CSR issues in fiscal 2020 are reflected in initiatives to address key issues for management infiscal 2021.
Areas of Focus

JFE Engineering

JFE Shoji

Evaluation criteria
Target attributes

resolve these issues. In fiscal 2020, JFE evaluated the results of the previous fiscal year, and set KPIs while considering theunique nature of each operating company, advancing CSR management while going through a PDCA cycle. The results and

JFE SteelSet for each fiscal year
Quantitative

Qualitative

Set medium- to long-terms(in case of setting a multi-year target)

Accomplished 100% or better

Accomplished 80%-99%

Accomplished 79% or less

Final target accomplished 100% or better

Final target partly accomplished with someresults (80% or better with linear
interpolation).

Working toward the goal but no results yet(79% or less with linear interpolation).

Fully accomplished with significant results.

Partly accomplished with some results.

Working toward the goal but no results yet.

* In Groupwide evaluations, the lowest result among the companies is taken as the overall result.

Material CSR Issues

Operating Company

JFE Steel

Stably supply
products

59
Ensure quality

Targets/KPIs

1. Flexibly respond to changes in demand arising from environmental changes and maintainstable operations to ensure stable product supply
2. Make steady progress on strengthening the manufacturing base, including measures tostabilize blast furnace operation

JFE Engineering • Secure a stable number of certificated managing engineers

Initiatives and Results for FY2020• Improved facility operations at each steelwork and district by steady progress in strengthening the manufacturing infrastructures• Flexible operation of blast furnaces to match changes in demand during COVID-19 (introduction of CPS to blast furnace operations)• Maintained previous fiscal year’s delivery achievement rate in FY2020, despite sharp swings in demand• Stable number of managing engineers was secured while achieving high sales revenue

JFE Shoji• Make consistent investment in processing and distribution operations•C arried out selective investments necessary for this fiscal year to ensure stable product supply under COVID-19
Amount of investment (approved amount):• Reinforcement: 7.3 billion yen • Renewal and safety 2.7 billion yen • System: 0.6 billion yen

JFE Steel• 	Make steady progress on capital investments to improve the level of quality assurance andproduct testing, and achieve full automation of the four critical items: tensile test, molten
steel analysis, steel sheet thickness measurement, and coating weight measurement•S teadily invest in automation to finish all approved investments during FY2020 for reaching 100% automation of four priority areas from test measurements to mill sheet
descriptions (Automation achievement rate tensile test: 93.9%, molten steel analysis: 99.9%, automobile steel sheet thickness measurement: 98.7%, and coating
weight measurement: 99.9%)

JFE Engineering • No major quality problems

JFE Shoji• Conduct quality audits at Group companies and continue conducting quality audits at
32 Group companies in Japan and overseas (expanded target companies from 30 to 32)
1. Pursue strategic research and development
By developing DS*1 application technology, in FY2020 aim to inaugurate the JFE Digital
Transformation Center (JDXC*2), promote an AI application at blast furnaces, promote a DS
application at three sintering plants in Fukuyama, and apply J-dscom*3 to all hot strip lines

Provide quality products(customer satisfaction)

2. Develop new products and technologies
FY2020: 20 cases or more (achieve the cumulative total of 135 cases from FY2015 to FY2020)

JFE Engineering•M ajor quality problems: None (examples: legal violations, failure to fulfill customer requirements)•B egan considering quality audits by remote due to the difficulty of conducting on-site audits under COVID-19; determined procedures and methods based on preliminary
check sheets and remote conferences in January 2021
•C
 ompleted quality audits for all 17 domestic Group companies (including remote audits for six companies)

1. Pursued strategic research and development
JDXC opened in July 2020, applied AI to blast furnaces, applied DS to three sintering plants in Fukuyama, and finished application of J-dscom to all hot strip lines

2. D eveloped new products and technologies
FY2020: 13 cases (3 new products, 10 new technologies) (total from FY2015 to FY2020: 152 cases)

Note: Missed numerical target in FY2020 due to slowdown in economic activity associated with COVID-19. Achieved the target for cumulative total cases encompassing the Fifth andSixth Medium-Term Business Plans.

• Pursue technological development in three critical areas: leveraging ICT, climate change,
and recycling plastics
Numerical target: Ratio of R&D expenses for the three critical areas: 30% or more•R atio of R&D expenses for the three priority fields: 36%
Total costs in FY2020 R&D: 4.07 billion yen, including 1.48 billion yen for three priority fields

1. All sales personnel are to take rank-based training for the sales department within two yearsof being posted to the department
2. Conduct CS survey and ensure feedback of results

1. All office heads, managers, and newly appointed employees took the course within two years
2. Implemented feedback on CS survey results

Activity
JFE SteelRespond to
customer needs

Develop andprovideecofriendly
products

JFE Engineering • Use data collected from customer surveys to enhance customer satisfaction

JFE Shoji• Invest in the development of strong sales personnel
All target employees are required to meet the goal of human resource development throughskill training and participation of overseas employees in joint training held in Japan

JFE Steel• Expand eco-friendly products and technological offerings: 15 or more in FY2020(target accumulated total of 105 for the period from FY2015 to FY2020)• Create new business or products that contribute to environmental protection or expand
business: at least one applicable case per year
Promote plastic recycling businessPromote food waste recycling business
JFE Engineering
Promote home electronic appliance and fluorescent light recycling businessPromote renewable energy-generated power supply businessDevelop and offer eco-friendly productsProtect the global
environment
JFE Steel

Mitigate climatechange• Aim to reduce our CO2 emissions by at least 20% in FY2030 from FY2013 level• Establish project team and formulate and implement a scenario by the end of FY2020 torealize the above• Participate in technological development led by the New Energy and Industrial Technology
Development Organization (NEDO) to realize zero-carbon steel; develop a long-term road
map in 2020 to 2021 for technological development• Begin actual operation testing with a ferro-coke pilot plant

1. Two or more offerings per year of products/services that contribute to climate change mitigation
Promote waste-fueled power generation
Promote biomass power generation
JFE Engineering
Promote a digestion gas power generation plantPromote geothermal, solar photovoltaic, and wind power generation
2. At least 1% y-o-y reduction of carbon footprint of factories and offices

60•C ollected construction completion evaluation forms for public-sector projects and customer surveys about quality management system (QMS) for private-sector projects(total: 322 projects)•C onveyed customer feedback to sector heads, divisions managers, and others• F ully achieved the target of human resource development through skill training; skill training: 4 courses, 125 participants• F Y2020: 10 cases (2 new products, 8 new technologies) (total from FY2015 to FY2018: 107 cases)

Note: Missed numerical target in FY2020 due to slowdown in economic activity associated with COVID-19. Achieved the target for cumulative total cases encompassing the Fifth and Sixth
Medium-Term Business Plans.

• Implemented 3 cases of new business and business expansion
Established a Bottle-to-Bottle joint venture (Kyoei J&T Recycling)
Launched a joint venture with three companies for biogas power generation from food waste (Tohoku Biofood Recycling)
Inherited the refuse-derived fuel (RDF) gasifying power generation business (Omuta Recycle Electric Generation)•D isclosed the FY2030 target for reducing CO2 emissions by at least 20% from FY2013 level• Project team launched for CO2 reduction and formulated a scenario for achieving carbon neutrality• Participated in the NEDO technological development project for making zero-carbon steel a reality• Began verification tests at the ferro-coke production pilot plant (NEDO project)

1. Delivered two biomass power generation plants and two large-scale solar power generation plants
2. Achieved 16% reduction (FY2019: 16,800 t/year, FY2020: 14,100 t/year)

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

JFE SteelPursue researchand development*1: Data Science*2: JFE Digital Transformation Center*3: JFE Detecting-anomaly-Signs & Color-Mapping system

Assessment

Key Issues of JFE Group Corporate Management (Materiality)
Groupwide

Fiscal 2020 KPI Outcomes and Evaluations for Priority CSR Issues
Areas of Focus

Material CSR Issues

Operating Company

JFE SteelProtect the global
atmosphere

Targets/KPIs

1. Continue work on keeping NOx and SOx emissions at low levels
2. VOC emissions: maintain a low level (30% decrease compared to FY2000)
3. Benzene emissions: maintain a low level (80% decrease compared to FY1999)
4. Dichloromethane emissions: maintain a low level (40% decrease compared to FY1999)

JFE Engineering • Continue work on keeping NOx and SOx emissions at low levels

JFE SteelProtect the global
environment

Pursue resource
recycling

Prevent
workplace
accidents

Basis ofactivity

Thoroughly enforce
compliance

Ensureadherence tocorporate ethicalstandards andcompliance

Note: The amount in parenthesis represents the value equivalent to the total volume restriction.

1. Recycling rates
Rubble: 99.4%
Sludge: 98.9%
Industrial waste: 85.4%• Global recycling of steel scrap: Increase scrap transactions to exceed the volume for FY2017(FY2020 target: +3% from FY2017)• Contributed to the expansion of a recycling-oriented society by steadily increasing scrap transactions since FY2017• Domestic transactions volume decreased in FY2020 to levels lower than in FY2017 due to COVID-19, failing to meet the target (−1.7% from FY2017)

Groupwide

1. Workplace fatalities: zero occurrences
2. Lost-work injuries rate for ST: up to 0.10
 [Key measures] (1) Strengthen safety activities at each business unit to cover weak areas(2) Restructure the safety and health management system (introduce ISO)(3) Implement safety activities that utilize ICT (specific initiatives: introduce safety
monitoring system, support for safe work using AI image analysis, etc.)
Lost-work injuries rate for EN: up to 0.25
[Key measures] (1) Build a floor or hand rail for work in high places and wear safety belt
(2) Restrict people from areas near hoisted objects or heavy machinery in operation(3) Turn off equipment, machines, and tools when not in use(4) Verbal communication on safety awareness during site patrol and implementing corrective measures[Example of advanced initiative]Safety training by experiencing dangerous situations using VR and special vehicles
designed to instill an understanding of the sense of safety  [Key measures]Improve equipment (promoting installation of safety sensors, etc.) to prevent contact
between people and objects in motion

Groupwide

Recruit and nurture
diverse humanresources
Strengthen
human resources
development•S uccessfully maintained low emissions as it was significantly less than the value equivalent to the total annual volume restriction:
NOx: 124Nm3 (18,000Nm3), SOx: 42Nm3 (100Nm3)

JFE ShojiGroupwideGroupwide

Assessment

1. Continued work on keeping NOx and SOx emissions at low levels
2. VOC emissions: 66% decrease
3. Benzene emissions: 94% decrease
4. Dichloromethane emissions: 71% decrease

2. 99.1%• Provision rates of health guidance:
60% (by FY2023)
35% (by FY2020)

JFE Shoji

40% (FY2020)

1. Workplace fatalities: 1 occurrence
2. Lost-work injuries rate: 0.23
[Key measures]		 (1) Lost work injuries rate: Improved from 0.28 in the first half to 0.18 in the latter half		 (2) Restructure the safety and health management system: started implementing the system in all districts
		 (3) Safety monitoring system: Completed companywide deployment (users: about 2,400)
Lost-work injuries rate: 0.35
[Key measures]		 (1) Prioritized the following actions to prevent workplace fatalities.
		  • Installed working platforms / handrails and ensured wearing safety belts for work in high places		  • E
 nsured people remained at a safe distance from hoisted objects and heavy machinery in operation		  • T
 urn off equipment, machines, and tools while non-standard operations
		 (2) Made a focused effort on verbal communication during site patrols and implemented corrective measures to prevent unsafe behavior by relevant employees
		 (3) Promoted safety training based on a simulated experience of accidents using special vehicles and VR to increase the sensitivity for safety[Key measures]		  • 8
 1% of the installations by the end of FY2020
				

Note: Installations to be completed by end of November 2021

•C
 ontinued “100% adherence activities”• Promoted fixed-point patrols (patrols for closely observing and understanding tasks) and eliminated tasks unknown to managers and supervisors)• Provision rates of health guidance:
53.0%
39.1%
41.6%

• Rate of health examination for spouses: 60% (by FY2020)• Rate of health examination for spouses:
48.0%
47.2%
53.2%

• Ratios for female recruits
Career-track (white-collar position): 35% or more
Career-track (technical position): 10% or more
On-site position: 10% or more
Career-track (white-collar position): 20% or more
Production/construction position (technical): 5% or more
Career-track (white-collar position): 25% or more•R atios for female recruits
Career-track (white-collar position): 28%
Career-track (technical position): 7%
On-site position: 7%
Career-track (white-collar position): 18%
Production/construction position (technical): 0%
Career-track (white-collar position): 26.7%• Females in managerial positions: five times the 2014 August figure by 2025

• Female in managerial positions: 3.6 times the 2014 August figure• Training hours per person
Over 40 each year
Over 20 each year•T
 raining hours per person
38.5 hours per year
19.0 hours per year

Over 20 each year

17.5 hours per year• 100% attendance from the target audience for human rights awareness training• Rate of attendance for human rights awareness training: 100%

• Steady execution of training to foster and maintain a sense of compliance(100% achievement)• Steadily executed training to foster and maintain a sense of compliance (100% achievement)• Improve employee awareness of ethics reflected in the Corporate Ethics Awareness Survey• Improved employee awareness of ethics reflected in the Corporate Ethics Awareness Survey(next survey is scheduled in FY2022)

Groupwide62

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Pursue diversity
and inclusion

Initiatives and Results for FY2020

2. Recycle at least 98.0% of recyclable wastes generated at the Yokohama head office

Ensure occupationalsafety and health

Ensure the healthof employees andtheir families

JFE Engineering

1. Recirculated water usage rate: 93.0%
2. Recycling rate of co-products: 99.7%

1. Recycling rate at construction sites
Recycle at least 99.5% of rubble
Recycle at least 95.0% of sludge
JFE Engineering
Recycle at least 85.0% of industrial waste

61

Activity

1. Maintain the efficient use of water
Recirculated water usage rate: 90% or more
2. Recycling rate of co-products: 99% or more

JFE Steel63

3.Sustainability
Management   Material Flow Ensuring Occupational Safety and Health Securing and Training Diverse Human Resources Respect for Human Rights Thorough Compliance 
Corporate Governance 
Risk Management 
Stakeholder Relationships Management Organization 

65
69
71
73
75
77
78
85
87
89

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Our Contributions to Resolving Climate Change 64Sustainability Management

Our Contributions to Resolving Climate Change• Governance

Our Contributions to Resolving Climate Change

Basic Stance65

The JFE Group’s business involves steel manufacturing. That is why climate change issues are serious management issues from theviewpoint of business continuity. The steel business accounts for 99.9% of the Group’s CO2 emissions. The JFE Group is able tomanufacture steel with the lowest CO2 emission intensity among all the integrated steel mills in the world through developing
diverse technologies that enable energy saving and CO2 emissions reduction, and by applying them to our iron and steelmaking
processes we help to alleviate risks.
In addition, the JFE Group develops and possesses many environmentally friendly products and technologies which help customers
save energy at the stage of consumption, such as high-performance steel materials and power generation using renewable energy.
Viewing initiatives to address climate change as an opportunity, the JFE Group will further develop and spread technologies
for these processes and products. We aim to help resolve issues related to climate change by globally providing our various
accumulated technologies.

The JFE Group’s Standards of Conduct states that we will actively
work to exist harmoniously with the global environment, as well as
to raise living standards and advance societies. We acknowledge
that activities to protect the global environment, such as reinforcement of environmental conservation and response to climate change
issues, are absolutely essential to achieving a sustainable society.
In fiscal 2016, we designated “mitigating climate change” as
our CSR materiality in order to pursue a steady plan–do–check–act(PDCA) cycle and appropriate management of our ongoing initiatives to reduce CO2 emissions in iron and steelmaking processes
and to develop and provide environmentally friendly products.

The JFE Group Environmental Committee, established under
the JFE Group CSR Council and chaired by the President of JFE
Holdings, supervises and directs these initiatives across theGroup by setting targets, assessing progress, and holding discussions to improve the Group’s overall performance.
The Group Management Strategy Committee also deliberates
topics that are vital to our business, such as climate change
issues, and reports to the Board of Directors. The Board of
Directors provides supervision through discussions on environmental issues such as climate change based on these reports.

Examples of climate change-related issues reported to, deliberated, and decided at Board of Directors’ meetings• Declaration of endorsement of the final TCFD recommendation report• Information disclosure following the TCFD recommendations(scenario analysis, etc.)• Formulation of the JFE Group Environmental Vision for 2050 in theSeventh Medium-term Business Plan

66

• Strategy

JFE Group Environmental Vision for 2050

The many risks and opportunities involved with climate change
issues are integrated into the business strategies of the JFEGroup in the following ways. The Group has created the Seventh
Medium-term Business Plan to guide business and operations
from fiscal 2021 to fiscal 2024. Initiatives to address climatechange are positioned as a high priority issue for management
within the context of achieving sustained growth over the medium
to long term for the Group while increasing corporate value.
Moreover, the Company formulated the JFE Group Environmental
Vision for 2050 to plot a path toward achieving carbon neutrality
by 2050, with ensuring environmental and social sustainability as
a key measure. While incorporating initiatives to address climatechange in business strategies, the Company is systematicallytackling climate change by reflecting the concepts of the TCFD in

business strategies. The JFE Group is disclosing scenario analysis
and other information in accordance with the TCFD recommendations, and reflecting in its business strategies its assessments ofidentified risks and opportunities.
Under the JFE Group Environmental Vision for 2050, theCompany engages in corporate activities based on the threestrategies of reducing CO2 emissions in the steel business,making greater contributions to CO2 reductions in society, andtaking initiatives in the offshore wind power generation business.
We are taking steps to reduce CO2 emissions in the steelmaking
process, which has a major impact on the environment, and also
taking aggressive action to reduce burden on the environment
by developing environmentally friendly products and process
technologies, and providing solutions for recycling resources.

• Risk management

JFE Group’s CO2 emissions reductions / contributions to lowering CO2 emissions across society
Information disclosure based on the TCFD recommendations
JFE Holdings declared its agreement with the summary of the final TCFD* recommendation report , released on May 27, 2019.
* The Task Force on Climate-related Financial Disclosures, established by the Financial Stability Board (FSB),
based on the opinions of G20 Finance Ministers and Central Bank Governors.

Climate-related risks and opportunities significantly affect thefinance of companies in the medium to long term. The TCFD is atask force established by the FSB as requested at G20, to reducerisks that could destabilize the financial market. The TCFD reviews
methods of information disclosure that allows the financial market
to appropriately evaluate climate-related risks and opportunities,
and announces them as final recommendation reports.

The TCFD considers that it is important for investors and otherparties to accurately grasp what effects climate-related risks andopportunities pose on the financial conditions of the investee
before financial decision-making, based on which the TCFD recommends that information related to four core elements in organizational management—Governance, Strategy, Risk management,
and Metrics and targets—should be disclosed.

JFE Holdings is responsible for comprehensive risk management inaccordance with its Basic Stance for Building an Internal Control
System. The JFE Group CSR Council, chaired by the President of
JFE Holdings, collects Groupwide information and enhancesmanagement for the purpose of reducing the frequency andimpact of risks. The Corporate Officer responsible for risk works to
identify potential risks associated with ESG risks such as climatechange. If potential risks are identified, they are reviewed andassessed by the JFE Group CSR Council as necessary for further
examination or the deployment of countermeasures.

The Board of Directors deliberates, decides, and receives reports
on important matters related to ESG risks and CSR, including
climate change issues.
We identify and evaluate climate-related risks at the corporate
level, taking into account scenario analysis based on the framework recommended by the TCFD. We select material factors
impacting business and perform a closer analysis of their effects,
then utilize this in formulating future business strategies,
including the Seventh Medium-term Business Plan.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

The JFE Group aims to improve sustainability by helping to resolve issues related to climate change on a global scale, while
restructuring operations to adapt to changes in the business environment for steel. We are aggressively taking measures to reduce
CO2 emissions, positioning 2020 as a pivotal year for strengthening our response to climate change.
In May 2021, the JFE Group formulated the JFE Group Environmental Vision for 2050, which aims to achieve carbon neutrality by
2050. Initiatives to address climate change are also positioned as an issue of the highest priority in the Seventh Medium-term
Business Plan. To realize a sustainable society, the JFE Group intends to reduce CO2 emissions with its own technologies, thereby
helping society as a whole cut back CO2 emissions, while aiming to improve corporate value. Reflecting the concepts behind theTask Force on Climate-related Financial Disclosures (TCFD) recommendations in its business strategies, the Company is taking
systematic steps to mitigate climate change.
The development of processes that can produce high-performance steel in large volumes without emitting CO2 will have to beundertaken for the sake of the sustainable development of society. Implementing various measures on the path to carbon neutrality
will entail massive costs for R&D and upgrading to newly developed facilities. It is therefore important to consider how these costs
can be spread across society, and government assistance will also be necessary.
To reach the ambitious goal of carbon neutrality by 2050, the JFE Group aims to establish the essential technologies for decarbonization as quickly as possible, before global competitors, assuming infrastructure is upgraded to move away from carbon andthat initiatives will be taken on equal footing worldwide.

Sustainability Management

Our Contributions to Resolving Climate Change• Scenario analysis

Methods of monitoring issues relating to climate change
The JFE Group CSR Council, the Group Management Strategy
Committee, and the Management Committee monitor issues that
may impact our business. Monitoring is conducted throughquarterly reports on climate change issues from each operatingcompany deliberated by its environmental committee, etc., to takesuitable measures. The JFE Group Environmental Committee
strengthens the collection and management of information
relating to risks, to not only reduce the likelihood of risks occurringand their impact but also to strive to maximize opportunities.

While using scenario analysis to correctly understand the risks
and opportunities related to climate, we evaluate the effects
they have on current business strategies, and utilize them inestablishing future strategies. Due to our business having thepotential to be significantly affected by climate change, we have
set two scenarios.

• Metrics and targets

67

While restructuring its business in response to changes in thesteel business environment, the JFE Group aims to increasesustainability by resolving climate change issues on a global scale.
Positioning 2020 as a pivotal year for enhancing its response to
climate change, the JFE Group has set targets for reducing CO2
emissions on the path toward achieving carbon neutrality by
2050, namely a reduction of at least 20% in CO2 emissions byfiscal 2030, compared with fiscal 2013.
In May 2021, the JFE Group announced new targets for reducing CO2 emissions, formulating the JFE Group Environmental Vision
for 2050, which aims to achieve carbon neutrality by 2050. Initiatives
to address climate change are also positioned as an issue of thehighest priority in the Seventh Medium-term Business Plan.
Moreover, JFE Steel’s major domestic group companies set CO2
emissions reduction targets on a par with JFE Steel. Our businessstrategies include the initiatives of all Group companies within andoutside Japan to tackle climate change. Reflecting the concepts
behind the TCFD recommendations in its business strategies, theCompany is taking systematic steps to reduce CO2 emissions.

<Governance>
Disclose the organization’s
governance associated withclimate-related risks andopportunities<Strategy>

Summary of TCFD recommendationsa. D
 escribe the Board of Directors’ oversight of climate-related risks
and opportunitiesb. D
 escribe assessment of climate-related risks and opportunities,
and management’s role in company managementa. D escribe the climate-related risks and opportunities over the short,medium, and long term the organization has identifiedb. D
 escribe the impact of climate-related risks and opportunities on
the organization’s businesses, strategy, and financial planning

Disclose the actual and potential
impacts of climate-related risks
and opportunities on the escribe the resilience of the organization’s strategy, taking into
organization’s business, strategy, c. D
consideration different climate-related scenarios, including
and financial planning (if such
a 2°C scenario
information is important)<Risk management>
Disclose the processes used by
the organization to identify,
assess, and manage climaterelated risks<Metrics and targets>
Disclose the metrics and targets
used to assess and manage
climate-related risks andopportunities

2°C scenario
Important factor 1
Decarbonizationin steel production
processes

2°C scenario
Important factor 2
Increase in demand
for the effective use ofsteel scraps

Rising societal
demands for decarbonization towards
steel production
processes

Increased focus
on electric furnace
method, whichemits low levels ofcarbon2°C scenario
Important factor 3

Change inautomobile needs

Corporate governanceRisk management

Seventh Medium-term Business Plan (Major measures)
JFE Group’s value chain
Climate change (JFE Group Environmental Vision for
2050)

Important management issues (materiality)

Climate change (Metrics and targets)b. D
 isclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse Climate change (Metrics and targets)gas (GHG) emissions, and the related risks
Environmental data
Important management issues (materiality)
 escribe the targets used by the organization to manage climatec. D
related risks and opportunities and performance against targets

Rising expectations
toward electric
furnace steel
Increase in scrap
generation

2°C scenario
Important factor 4
Increase in demand
for solutions promoting decarbonization

Decrease of internal
combustion engines

Shifting todecarbonization

Demand for decarbonization and recyclability

Increase in demand
for solutions promoting transition toward
decarbonization
Overseas developmentof energy conservation
technologies

Expectations and concerns of stakeholders towards the JFE Group•S
 ignificant contribution throughinnovative technologies

Evaluation results

Opportunities• Increase in investment in theimplementation of innovativetechnologies• Increase in operation costs dueto the introduction of carbon
pricing

Risks• Replacement of converter steel
Opportunities
with electric furnace steel• Increase in JFE Group’s production of electric furnace steel

 ost competitiveness is maintainedCwhen carbon pricing is implemented
worldwide
Increase in operational costs (if not
introduced in an appropriate manner)

Procurement of raw
materials becomes
unstable due toincreased frequency
in climate disasters

Intensifying
climate disasters
alongside risingtemperatures

Procurement of raw
materials becomes
unstableIncrease in production of electric furnacesteel and the need for electric furnaceengineeringExpansion of the scrap logistics business• Increase in demand for electrical steel sheets for EV motors• Decrease in demand for special
steel due to the decrease ofinternal combustion enginesIncrease in demand for electrical steel
sheets due to more electric vehicles

Opportunities• Demand for further decarbonization and recyclability in steel
production• Renewable-energy power
generation plants• Low-carbon business(Eco Solution) in developing
countries using Best Available
Technology (BAT) developed
and commercialized in JapanIncrease in demand for special steel due
to increase in automobile salesIncrease in demand for high-tensile steel
sheets for automobiles• Replacement of automobile
steel due to the increased useof multi-materials

Refocus on the recyclability of steel

Risks

L imited impact of the increased use ofmulti-materials

Integrated constructions and operations of renewable energy (biomass,
geothermal, and solar power) plants

Opportunities

Integrated constructions and operations of waste incinerators and plastic
recycling plants
Integrated constructions of CCU and
CCS facilities
 verseas development of low carbon
Obusinesses

Important factor 6
Damages to businessbases due to climate
disasters

4°C scenario
Important factor 7
National resilience• Procurement of raw materials
becomes unstable

Risks• Increased damages due totyphoons and rainstorms

4°C scenario
Intensifying climate disasters alongside risingtemperatures• Increased damages due towater shortages

Risks

Intensifying
climate disasters
alongside risingtemperatures

Increased demand fordisaster prevention
products• Contribution with steel andrelated products that help
strengthen infrastructure

 ndergoing concrete measures
U“Alternative procurement methods andsource distribution”

F lood and water shortage response
measures already in motionF lood impacts due to rising sea levels canbe coped with the current measures• Flood damages due to rising
sea levels
Increase in importanceof strengthening
infrastructure68 estrictions on the amount of scrap
R
provided, increase in production of
converter steel

4°C scenario
Important factor 5

Climate change (JFE Group Environmental Vision for2050)
Climate change (Metrics and targets) evelopment and implementation ofD
innovative technologies on top of existing technologies

Investment in the implementation of
innovative technologies is possible

Climate change (JFE Group’s climate change strategy)

Scenario analysis based on the TCFD recommendationsa. D
 escribe the organization’s processes for identifying and assessing
climate-related risks
Risk managementb. D escribe the organization’s processes for managing climateEnvironmental management
related risksc. D
 escribe how processes for identifying, assessing, and managing
Climate change (Risk management)
climate-related risks are integrated into the organization’s overallrisk management
Seventh Medium-term Business Plan (Major measures)a. D
 isclose the metrics used by the organization to assess climaterelated risks and opportunities in line with its strategy and risk
management

Implementation ofcarbon pricing

Reduction of weight
and the increased useof multi-materials
Rising demands
for eco-friendly
raw materials

JFE’s disclosure (relevant sections in the CSR report)

Climate change (Governance)

Implementation of
innovative technologies
that achieve large-scaledecarbonization

Increase of EV motors

Change in demand forsteel for automobiles
and others• TCFD Content Index
TCFD disclosure recommendations

Societal changes and responses to changes

Opportunities

 trengthening infrastructure with steelS
and related products

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

JFE Steel, the steel operating company of the JFE Group, is amember of the Japan Iron and Steel Federation (JISF). The JFEGroup is pursuing the “Three Ecos” and innovative iron and steelmaking process development, which are the main pillars of the
Low-Carbon Society Implementation Plan formulated by the JISF.
Under this plan, the JISF targets the reduction of three million
t-CO2 by fiscal 2020 compared to BAU (Business As Usual: theestimated emissions based on production output without special
measures), and the further reduction of nine million t-CO2 byfiscal 2030. JFE Steel is also actively pursuing action to attain thetargets of the Low-Carbon Society Implementation Plan.
The JISF, in addition to these initiatives, established andannounced its long-term vision for climate change mitigation for2030 and beyond, which ultimately aims for Zero-carbon Steelproduction. JFE Steel also played an instrumental role in theformulation of this long-term vision. Moreover, in 2021 the JSIF
announced the Basic Policy of the Japan Steel Industry on 2050
Carbon Neutrality, declaring its support for the bold challenge ofquickly moving Japan’s steel industry to zero-carbon steel.

Both scenarios are based on the scenarios announced by theInternational Energy Agency (IEA). The analysis was performed
under the assumption that carbon pricing would be introduced
into major CO2 generating countries in order to achieve the
2°C target.

Sustainability Management

Material Flow
JFE Steel works to reduce the environmental impact of its iron and steelmaking processes, including throughthe effective use of resources. The company recycles 93.0% of the water it uses for production and uses 99.7%
of its co-products, such as iron-steel slag. In addition, 100% of co-product gas generated during production
is reused as fuel for reheating slabs, generating power for internal use and supplying power to the public.
Supply (Solid line)
Emissions (Dotted line)

JFE Steel
Input
Raw materials forsteel production

69

58.7 million tons

• Iron ore
35.4 million tons
• Coal

JFE Engineering (Head Office and Works)
CO2• Scope 1

43.8 million t-CO

2

Total CO2 emissions from energy
and non-energy sources• Scope 2

5.4 million t-CO

Greenhousegases emitted
during transportation (domestic
distribution)• CO20.34 million t-CO

2

Flue gas

Chemical substances (PRTR)• SOx

3.3 million Nm³• NOx• Released

10.3 million Nm³• Soot and dust

341 tons
1,694 tons

2

92 million tons
3.0%

18.1 million tons
• Lime
5.2 million tons
OutputSteel

123 million tons
4.0%

Evaporation loss

• Transferred

7.0%
Total water
consumption

Purchased energy•E lectric power purchased

Consumed by
JFE SteelSupplied to society

61.8%

38.2%

214 kℓ12.4 kℓsociety•C ity gas330,000 Nm³• Power•L PG

BOF and CC• Steam

Effective use ofrecovered energy

100%

Reheat furnace

Rolling22.8 million tons
(crude steel base)
Other products• Nitrogen

Shipments• Hydrogen

215 million tons

• Argon

Coke oven gas

BF gas

Effective use ofco-products

BOF gas

99.7%

Recycled materials• Steel scrap

Recycled

0.8 million tons

24.9% 3.3 million tons

• Steel scrap (BOF, etc.)• Waste plastics• Waste PET bottles

Landfill• Used consumer

Landfill

appliances

0.037 million tons

• Food waste• Used batteries• Dust, sludge, etc.

JFE Group Recycling Processes

0.3%

83.1 tons

10.0 million tons

Co-products• Tsurumi Engineering andManufacturing Center•T su Works

Output and Emissions
Products CO2
• Scope 2

7,200 t-CO2

Waste generated	•G eneral wastes

materials
Supplied to society

Recycled products• NF BoardTM• PET flakes• Palettes• Recycled resin

9,000 t-CO2
1,800 t-CO2•R oadbed materials• F ertilizer

34,700 tons

• Scope 1

• I ndustrial wastes

construction

74.8%

JFE Engineering• Materials for cement• Portand harbor13.4 million tons

· Slag10.8 million tons
· Dust
1.8 million tons
· Sludge 0.6 million tons·O
 thers 0.2 million tons

Marine and land
civil engineering
materials

JFE GROUP REPORT 2021

million tons

70

72,400 tons

Water

• Fuel gas• Chemicals

Blast furnace

6.6 kℓ•G
 asoline• Oxygen
Industrial water

84.4 kℓ erosene
•K

Steel products

93.0% 2,851 million tons

Coke oven andsintering plant

26.0 GWh•C lass A heavy oil•L ight oil

Energy supply to

Recovered energy
for recycling• Co-product gas• Waste heat recovery steam• Power generation by blast
furnace (BF) top gaspressure recovery turbine
(TRT)

3,066

Water resources recycled

36,900 tons

EnergyCommunity, Environment, and Society

JFE GROUP REPORT 2021

110.1PJ• Petroleum-based
fuels
21.3 PJ• Electric power
88.8 PJ

Input

OutputWastewater

Wastewater (ocean only)
Others (PRTR)

1,400 tons
1,100 tons
277 tons
157,000 tons
147 tons

Sustainability Management

Ensuring Occupational Safety and Health

Securing the safety of employees using AI

Ensuring Occupational Safety and Health

Basic Stance
The JFE Group engages in an extremely broad and diverse range of businesses, centered on the steel business; a massive equipment
industry; the engineering business, which has an extensive track record in construction work; and the trading business, whichranges from raw materials to processing and distribution. Safe and healthy workplaces are essential to sustaining these businessactivities, and a core facet of remaining a viable company. With the idea that all accidents are preventable, we promote self-driven
safety activities where each and every employee checks their own surroundings for safety. We also take action to ensure the healthof employees and their families based on the three pillars of workplace health, mental health, and physical health. We aim to be acompany that is safe, healthy, and motivates employees.

In the steel business, we ensure the safety of workers at manufacturing sites by utilizing the latest ICT, AI, and data science topursue the development and commercialization of further
advanced technologies. One example is the use of the safety
support system. This system has communications functions suchas audio and video sharing within the Group, and also allows thesharing of information including the locations and status of workers,
detection of approaching heavy machinery, and operational
environment such as the presence of gas, to ensure the safety ofworkers. This information is also shared to administrators throughsmartphones and the cloud. We will continue to strive to secure
the safety of workers using the latest technology.

Detection of heavymachineryGPSapproaching
Location
information
Worker

GPS

Video

Audio

Alarm andconcentration
information
mapped out

Cloud

Gas concentration
information(Oxygen concentration,
Bluetoothcarbon monoxide
Sharing on
concentration, etc.)
administrator’ssmartphone
Gas detector

Administrator

Administration screen

Ensuring the health of employees and their families
71

Prevention of workplace accidents
In its varied business activities, the JFE Group has worksites where work carries with it a relatively high risk of accidents and injuries, suchas work performed in high places, under high temperatures, and with heavy objects being carried around. With diverse employees working
on-site, including older people and women, our basic requirement is that each and every employee can work without worrying about theirhealth and safety, by maintaining safe work environments and preventing workplace accidents.

Management structure for health and safety

JFE Steel’s Management Structurefor Health and Safety

accidents, countermeasures are applied horizontally across theentire company, and the Board of Directors is kept abreast of
progress until the countermeasures are fully implemented acrossthe Company. This framework is described and thoroughly
operated in accordance with Companywide rules.
When an occupational injury occurs, the Company immediately
reports it to the JISF. After the cause of the accident is determined
and countermeasures are decided, the Company follows up withanother report. When a serious accident occurs, the Company
immediately submits a report on safety, disaster preparedness,and environmental conditions to the Ministry of Economy, Tradeand Industry, the Ministry of Health, Labour and Welfare, and theJISF. The JFE Group also endeavors to prevent accidents throughout the entire steel industry.

[Management]
Chiefs and vice chiefs
Safety and health divisions
Manufacturing divisions
Partner companies

Safety and health section(headquarters)

Internal audit

Collaboration

ISO 45001

JFE Steel

JFE Engineering

JFE Shoji

JFE Steel business sites offer the Active
Exercise program, which the West Japan
Works designed to help people increase
their physical strength and prevent injuries due to falling. The program’s effectiveness in preventing occupational accidents
and improving health has even attracted
attention outside the Company, so it isbeing shared as a contribution to society.

JFE Engineering has identified healthrelated issues at the Company using datafrom past health examinations, and introduced from fiscal 2019 a series of selfcare training sessions to address the riskof falling asleep.
Since fiscal 2020, we have continued
efforts to improve health literacy in an
attempt to get employees to be more
active and be more selective in what theyeat in order to address weight issues.

JFE Shoji provides helicobacter pylori(blood) tests as part of regular healthexaminations for prevention and early
detection of cancer, as well as subsidies
to cover expenses for women’s cancer
examinations. In November 2019, westarted subsidizing the costs of smoking
cessation outpatient services, to lower
the risk of lung cancer and stroke due tosmoking. We also provide e-learning withthe aim of raising health awarenessamong our employees.

We believe that health and productivity management will be greatly facilitated not only by the individual actions of Group companies but
also by recognition from outside. Accordingly, we actively cooperate with outside surveys.

Information sharing and support

Group companies

Japan Iron and Steel Federation

External investigation organizations

72

Activities of Group companies

External recognition

Executive officer meeting(report and deliberate)

Companywide safety meeting
Vice President in charge
Chiefs and vice chiefs

Safety and health office leader meeting(actions, information sharing)(examine horizontal application ofcountermeasures)

In addition to employees, we encourage them to work with healthinsurance associations to have their dependents get healthcheckups, with the aim of helping families maintain and improvetheir health. The ratio of dependents (aged 40 or older) receiving
health checkups has steadily risen, reaching 46.3% in fiscal 2020,
an 8.7 point improvement from 37.6% six years ago in fiscal 2014.

Name of SRI index, etc.

Description of selection criteria, etc.

Health & Productivity Stock
Selection Program
Certified Health & Productivity
Management Outstanding
Organizations Recognition
Program (White 500)

Under the Health & Productivity Stock Selection Program, the Ministry of Economy, Trade and Industry and
the Tokyo Stock Exchange cooperate to select companies that have been strategically implementing
employee health management from a business management viewpoint. JFE was selected for the Health &Productivity Stock Selection for the first time in 2018. Additionally, the Company was selected for the
Certified Health & Productivity Management Outstanding Organizations Recognition Program, which
certifies organizations that implement outstanding health management in collaboration with healthinsurance society members.

DBJ Employees’ HealthManagement Rated Loan
ProgramThis is the first financing option in the world to incorporate special health management ratings, which uses
the unique screening system developed by the Development Bank of Japan (DBJ) to evaluate and selectcompanies with excellent health management initiatives for employees, whereby setting financing terms
and conditions according to the evaluation result. The Company was rated as a top-ranking company withexcellent advanced initiatives for employees’ health management in 2018 in recognition of our advanced
health management so far.

Evaluation, etc.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

JFE Steel conducts risk assessments as an activity to reduce therisk of accidents. By assessing risks at the planning stages ofequipment installations and before scheduled and unscheduled
equipment maintenance, JFE Steel strives to prevent and reduce
the risk of accidents. We aim to lower the level of risk for workers
by pursuing the safest measures for operating equipment.
In the event that an occupational injury occurs despite these
efforts, JFE Steel spares no effort in investigating the cause of theaccident and preventing a reoccurrence. A committee to investigate
the accident is rapidly established to delve into the causes of theaccident in the relevant department and proposes countermeasures, following through until completion of the process. The
results of the investigation are shared by the committee with therelevant department and the labor union, while steps are taken toprevent a similar accident from occurring. Moreover, for serious

In order to realize safe and highly attractive workplaces that provide
motivation to workers and to powerfully promote the developmentof environments where diverse human resources can demonstrate
their full potential, the JFE Group has formulated the JFE Group
Health Declaration and collaborates with its health insurance
union and industrial health staff to strengthen employee health.

Sustainability Management

Securing and Training Diverse Human Resources

Training of data scientists

Securing and Training Diverse Human Resources

Basic Stance
As stated in the Seventh Medium-term Business Plan, the JFE Group must retain diverse and talented personnel, growing together
as a company and maximizing their abilities in order to remain essential in the sustainable development of society and the safe andcomfortable lives of people. To this end, the JFE Group is marshaling its efforts to promote diversity and inclusion, personnel training, and workplaces that are rewarding for all employees.

The JFE Group is active in securing and developing the humanresources necessary to pursue a DX strategy in each businessdomain.
Data science (hereinafter “DS”) technology is being applied inindustry at a rapid pace. In order to incorporate DS technology into
its business processes, JFE Steel has established a system toindependently foster data scientists in-house. Having knowledge
unique to the field of the steel industry is essential to applying DS
in actual manufacturing and R&D front lines. With the aim of fostering in-house data scientists and human resources that canharness DS, the Company established a pyramid-shaped rankbased training system according to the required level.
As of the end of fiscal 2020, we have trained over 350 in-house
data scientists, increasing by 2.2 times the number of DS-related

initiatives compared with fiscal 2018. By pursuing further training,
we plan to increase our number of in-house data scientists to 600
by the end of fiscal 2024.

Training of data scientists (JFE Steel)
600
240
100

2018

1.0

2019

350
1.7

4.0

2.2

2020

2024

Number of data scientists (people)
Trend in development and investment projects with fiscal 2018 = 1.0

Diversity and inclusion
73

experienced workers from different sectors, and its mid-careerhires represent one-sixth the total number of hires. At JFE
Engineering, approximately 80 local employees of overseas Group
companies are constantly rotated to Japan in order to nurture a
corporate culture of mutual understanding that bridges differences in cultures and customs.
Moreover, before revisions to the Act on Childcare Leave cameinto effect, we encouraged male employees to take time off forchildrearing and use their allotted vacation days. A target shared
among operating companies is to have at least 90% of male
employees take time off for childrearing or related activities.
The promotion of diversity
requires a solid commitment bymanagement. For example, JFE
Engineering has set up theDiversity Committee that reports
directly to the President, andmanagement guides the promotion of diversity. Such initiatives
are shared among operatingcompanies, which leads to greater
diversity across the JFE Group.

Advancement of personnel training
The JFE Group is unified in its efforts to improve the abilities of each and every employee, while placing emphasis on the training of global
human resources for expanding overseas businesses.

Accumulation and passing down of technical knowledge and skills
At JFE Steel, we believe improving the technical knowledge andskills of all employees at manufacturing sites is a source ofcompetitiveness for supplying high-quality products. Through ourpersonnel training system, we quantitatively measure, analyze,
and deploy the skill levels of each employee. As generations of
employees change at worksites, it is important to raise the skill
levels of young employees in particular. By training young

employees based on technical data stored in systems, we areable to quickly raise their skillsets to higher levels.
Using mixed reality (MR) and other IT tools, we are training
employees with simulations that cannot be experienced in theclassroom for a more effective and efficient curriculum. We arethus making improvements toward a more in-depth approach totraining even higher-quality personnel.

Securing and developing global human resources
It is essential for the JFE Group to secure and develop global
human resources to enhance its competitive strength in the
global market.
JFE Steel provides overseas training opportunities for its young
clerical employees to work at local offices and subsidiaries, foryoung engineers to give technical guidance at overseas affiliates,for mid-carrier employees to obtain MBAs overseas, and for managers to study foreign languages overseas, in order to develop theassets required for leading a global business. JFE Steel has provided opportunities for global human resources development toapproximately 330 employees since 2014.
JFE Engineering provides training programs for humanresources involved in overseas projects according to the skills

necessary for each position. Project managers learn quality
control, process control, and other project management skills,
and administrators learn tax, legal, trade and transportation,
personnel administration, risk management, and other skills, bothof which are designed to gain the comprehensive skills required tocarry out overseas projects. JFE Shoji holds overseas staff management training in Tokyo each year for talented local employees
employed in overseas local subsidiaries and offices. In addition,
the company also invites overseas staff to the head office inJapan for an extended-stay training to improve their skills still
further, with the aim of eventually promoting them as executives.
Through these and other efforts, JFE Shoji is promoting bilateral
globalization with overseas Group companies.

Creation of rewarding workplaces
In order to sustain development, the JFE Group is conducting a
sweeping review of work styles with the understanding that it isessential to establish work styles where all employees feel proud
and motivated about their work, while creating new value withhigh productivity.
When responding to the state of emergency during the COVID19 pandemic, new lifestyles and work styles became entrenchedthroughout society. Eyeing these changes, the JFE Group has
updated its work environments and internal systems so that its
employees can work safely and without worry, while maximizing
their abilities.
JFE Steel is promoting a new work style called Smart Work JFE
that helps increase employee productivity, maximizes output, andimproves engagement. As specific measures, JFE Steel is systemizing telework by expanding its work-at-home system, introducing

Microsoft Teams software and robotic process automation (RPA),
promoting paperless workflows, removing the use of seals withworkflows, and introducing a core-less flex-time system in a shift
to a high-value-added work style while furthering changes in thecorporate culture. These measures are also being undertaken at
operating companies.
JFE Engineering has created flexible work styles by enabling
work at home and shared office spaces in approximately 400
locations across Japan, permanently systemizing remote workfrom fiscal 2021 in addition to initiatives in steel centered on the
Smart Work Promotion Office.
JFE Shoji is examining what the office will look like in the newnormal, launching a project team to examine new work styles withthe aim of realizing more efficient and flexible ways to work.

74

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Positioning the promotion of diversity as an important management issue, the JFE Group is advancing initiatives to draw out all theabilities of its employees of diverse backgrounds, such as gender,
nationality, value systems, and varying lifestyles, in order to rapidly
and properly respond to quickly changing business conditions.
With regard to empowering women, the JFE Group has achieved
ahead of schedule its target for tripling the number of women in
management positions by 2020, compared with August 2014 as
the starting point. We have set a new target of increasing thenumber of women in management positions by five times theAugust 2014 number by 2025, in a proactive bid to promotewomen to management positions.
Since 2012, JFE Steel has targeted a hiring ratio of at least 10%
women for regular positions, and approximately 400 female
employees currently work at steelmaking sites Companywide. JFE
Steel has make work environments better for female employees,
such as by updating infrastructure in shower and locker rooms,
and by enhancing training for entry-level positions. JFE Steel also
focuses on measures to balance work with life events, enhancing
systems for achieving work–life balance and creating childcare
centers at major business locations.
JFE Steel proactively hires diverse personnel, includingSustainability Management

Respect for Human Rights

Respect for Human Rights

Basic Stance75

The JFE Group endorses and abides by the Universal Declaration of Human Rights, the International Bill of Human Rights, andother international conventions as well as the International Labour Organization (ILO)’s Declaration on Fundamental Principles andRights at Work.
The JFE Group views respect for human rights as both a corporate social responsibility and a foundation of its business.
Our determination to not engage in discrimination in our business activities is clearly expressed in our Standards of BusinessConduct, which we have upheld throughout our actions. In fiscal 2018, the JFE Group Human Rights Basic Stance was drawn up to
clearly define the Company’s position on human rights, covering the scope of rules that must be followed by each Group company
and their executives and employees. It also calls upon all stakeholders, including suppliers, to cooperate on initiatives to respect
and protect human rights.
We also invite outside experts to discuss business and human rights in seminars. Starting in fiscal 2021, the JFE Group commenced due diligence on human rights in accordance with the United Nations (UN) Guiding Principles on Business and Human
Rights. We will work together as a Group to push forward initiatives to realize a social that respects and protects human rights.
JFE Group’s Human Rights Basic Policy https://www.jfe-holdings.co.jp/en/csr/social/human_rights/

Respecting the rights of workers

Respect for freedomof expression

Respect forchildren’s rights

The JFE Group adheres to the laws and regulationsof various countries as well as collective agreements.
It also respects the rights to freedom of association as well as their right to collective bargaining.
Upper management, including the president andthe representative of the union, meets regularly
to discuss matters such as management issues,
work–life balance, working environments, andworking conditions. By conducting earnest labor–
management consultations, we strive to create
a vigorous workplace while working to maintainhealthy and sound labor–management relations.

The JFE Group upholds basic humanrights in its JFE Group’s Human Rights
Basic Policy and is committed torespecting and protecting the humanrights of each individual throughout
its corporate activities. We pay due
care to prevent violations of freedomof expression, as recognized by theInternational Covenant on Human
Rights and other international conventions, and to fully protect theright to privacy.

The JFE Group supports theConvention on the Rights of the Childand Children’s Rights and Business
Principles, and will seek to eliminate
child labor and respect every child’s
right to survival, right to development,right to protection, and right to participation, the four pillars of theConvention on the Rights of the Child.

Human rights due diligenceIn accordance with the UN Guiding Principles on Business andHuman Rights, the JFE Group began to conduct due diligence onhuman rights in fiscal 2021. Due diligence into human rights was
conducted in fiscal 2021, centered on JFE Holdings, JFE Steel, andother major Group companies. The JFE Group identifies risks tohuman rights, examines and executes corrective actions, anddiscloses information in an ongoing process to respect humanrights throughout the supply chain.

76

Initiatives in Fiscal 2021

Human Rights
https://www.jfe-holdings.co.jp/en/csr/social/human_rights/index.html

Human rights promoting activities
We conduct human rights training courses, offer guaranteed
employment opportunities, promote fair human resource
management, and work to prevent workplace harassment. Our
training courses encourage employees to develop a thoroughunderstanding of the JFE Group’s Human Rights Basic Policy andthe respect for human rights expected of a company in the international community. To this end, we continuously monitor andfollow up on seminars by designating 100% attendance as a KPI.

Human rights initiatives for the supply chain
JFE Steel recognizes that human rights violations and environmental issues pose actual business risks in procuring raw materials. We therefore established the Raw Materials Purchasing Policy
to develop and operate a sustainable procurement system forsourcing raw materials and practice purchasing with due respectfor human rights, regulatory compliance, and environmental protection. We also established Business Conduct Guidelines, asking
suppliers to comply with this initiative, and seek to publicize theguidelines across the supply chain via our corporate website.
With regard to conflict minerals, we have clearly stated ourpolicy to avoid purchasing them in our Business Conduct
Guidelines. Conflict minerals are natural resources thought to becontrolled by militias responsible for human rights violations andenvironmental destruction (tantalum, tin, tungsten, and gold
produced in certain regions, such as the Democratic Republic of
the Congo, are defined as conflict minerals under the U.S. WallStreet Reform and Consumer Protection Act). We comply withJapanese and overseas regulations, as well as internationalrules, governing the responsible procurement of minerals, andinvestigate and confirm with suppliers that they are not selling
conflict minerals.
Raw Materials Purchasing Policy Business Conduct Guidelines
https://www.jfe-steel.co.jp/en/company/purchase_policy.html

Identification ofhuman rights risks

Understanding actual
conditions

Risk assessment andmeasurement of
impactExamine mitigation
measures

In addition to referring to international rules and guidelines, such as the International Bill of Human Rights and the ILO
Declaration on Fundamental Principles and Rights at Work, the JFE Group identifies human rights risks specific to its
industry, and screens for human rights risks in Group supply chains, such as those related to occupational health andsafety, prevention of discrimination, and human rights violations in the supply chain.
The JFE Group verified the state of initiatives and the current management structure for dealing with risks to humanrights, conducting audits of human rights initiatives, systems, rules, and regulations at other companies within andoutside Japan. This entails checking the disclosure of policies for human rights risks, including for child labor and forcedlabor in raw materials purchasing policies, reporting systems as a means for people to seek help, and the state ofcompliance to prevent corruption.
The JFE Group assesses identified risks to human rights by measuring their seriousness and potential for materializing.
To more accurately reflect actual conditions, audits of the state of initiatives to respect human rights are conducted on
paper and by interview. During the risk assessment process, human rights issues that will have a negative impact on the
JFE Group and its stakeholders are identified.
Measures to mitigate critical risks that may have a major impact are examined, such as responses, preventive andcorrective measures, and promotion structures.

Board of Directors

Future initiatives
The JFE Group will build systems for reducing the risk of humanrights violations through an ongoing process of implementing
measures to mitigate human rights risks identified in fiscal 2021,
and disclosing information about these countermeasures.
Starting with supervision by the JFE Group CSR Council and theBoard of Directors, we will evaluate these initiatives and work to
improve them and increase their effectiveness.

Report on state of initiatives toaddress human rights risks

Instruction and supervision

JFE Group CSR Council

Conduct due diligence on human rights
1) Identify scope of management2) Identify risks and understandactual conditions5) Disclose information to
stakeholders
Disclosures

Risk assessment

HumanrightsMitigation measures4) Formulate and implement
countermeasures and plans

Measure impact3) Identify and assess impacts

JFE GROUP REPORT 2021

setting up a Corporate Ethics Hotline at each operating company
and dedicated consultation desks on harassment issues at major
offices, to ensure people can anonymously report issues andseek consultation. The Board of Directors and the JFE Group CSR
Council receive regular reports on the operational status of thesehelp desks and cases of harassment as well as other human rights
violations, and any incidents are advised and monitored.

Implementation schedule

JFE GROUP REPORT 2021

In order to steadily work on human rights initiatives, we established the JFE Group Human Rights Promotion Council, chairedby an corporate officer of JFE Holdings, under the JFE Group
Compliance Committee, chaired by the president of JFE Holdings.
This framework allows us to define Groupwide policies and share
information with departments responsible for human rights issues
that have been set up at each operating company.
In addressing all kinds of human rights risks, we emphasize
communicating with stakeholders through such initiatives as

Already implemented

Promoting human rights

Sustainability Management

Thorough ComplianceCorporate Governance

Basic Stance

Basic StanceIn expanding our businesses in Japan and abroad, it is important that JFE maintains relationships of trust with all stakeholders,
including its customers, shareholders, and local communities. Trust can only be built upon a strong foundation of “Ensuring
Thorough Compliance.” Misconduct and scandals resulting from compliance violations can instantly shatter the trust that has
taken many years to establish. Therefore, JFE believes it is extremely important that all members of the organization deepen theirknowledge and awareness of compliance and perform their jobs accordingly.

With the steel business, engineering business, and trading business at its core, the JFE Group develops a broad range of businesses in a wide range of areas together with many Group companies and partners. Establishing a proper governance system isessential toward improving independence and raising efficiency in each operating company, along with the optimal management ofrisks, which include those related to the environment, safety, and disaster prevention in the Group. It is also necessary for the sustainable growth of the Group and the medium- to long-term improvement of its corporate value.

Corporate governance system

Compliance System

77

The JFE Group’s Standards of Conduct guides employees to conduct their business activities based on the Corporate Vision andCorporate Values. They also help to strengthen awareness among all JFE Group executives and employees and ensure adherence
to corporate ethics.
The Compliance Committee, chaired by the President of JFE Holdings, generally convenes every quarter to deliberate basic
policies and issues and then supervise their implementation. Each operating company has a similar in-house system for promoting
and supervising compliance. In addition, operating companies have introduced a Corporate Ethics Hotline to ensure that crucial
information regarding compliance can be communicated directly from the front lines to top management.
JFE Group’s Standards of Conduct https://www.jfe-holdings.co.jp/en/company/philosophy/guideline.html

Nomination Committee
Remuneration Committee

Audit & Supervisory Board

Board of Directors(8 Directors, including 3 from outside)

Prevention of bribery

As a part of initiatives to enhance awareness of compliance, theJFE Group has compiled a Compliance Guidebook and distributed
it to executives and employees (domestic and overseas), to be
used in activities such as collation, to ensure that the rules are
fully communicated and informed.

The JFE Group does not tolerate any kind of illegal activity inJapan or any other country, including bribery, such as offering
money or other benefits to public officials, and never resorts tothese illegal activities to gain profit or resolve problems. Based onthese thoughts, the Group issued the JFE Group’s Basic Stance on
Preventing Bribery of Public Officials and disseminates it throughout
the Group including operating companies. The JFE Group also
maintains various systems to prevent the bribery of public officials.

Compliancehttps://www.jfe-holdings.co.jp/en/csr/governance/compliance/index.html

Internal whistleblowing system
The JFE Group has established a Corporate Ethics Hotline tomaintain corporate ethics, comply with laws and regulations, andprevent corruption. It is accessible to all executives and employeesof the JFE Group (employees, contract workers, part-time workers, temporary staff, and retirees) as well as the executives andemployees of business partners. As a specific means of reportingand consultation, an environment has been prepared for receiving
inquiries (it is also possible to anonymously file reports and seek
consultation) by email, a dedicated phoneline, and by regular mail.
Additionally, an external hotline to a law firm is also provided.
To encourage the active sharing of information, confidentiality
is strictly respected and the hotline is operated under rules andregulations that protect people who report information or seek
consultation from retaliation. Whistleblowing and requests for
consultation are regularly reported to full-time Audit & Supervisory
Board Members. Moreover, the operational status of the system
is reviewed by the Board of Directors.
Cases handled by the Corporate Ethics Hotline
Company
JFE Holdings and operating companies

FY2017FY2018FY2019FY2020

89

80

101

87

JFE Group’s Basic Policy on Preventing Bribery of Public Officials
https://www.jfe-holdings.co.jp/en/company/philosophy/anti-bribery.html(5 Audit & Supervisory Board
Members, including 3 from outside)Group Management Strategy Committee

JFE Group CSR Council

Management Committee

Internal Auditing

Corporate Officers

Accounting Auditor

Chair: CEO (President)

JFE Group Compliance Committee

Public Disclosure Committee

JFE Group Information Security Committee

JFE Group Internal Control Committee

JFE Group Environmental Committee

Corporate Value Enhancement Committee

Operating companies
Board of Directors

Management Committee

CEO (President)

Audit Department

Corporate Officers

Audit & Supervisory Board Members

Accounting Auditor

CSR and Compliance System Headed by the President

Resisting organized crime
The JFE Group declares in its Standards of Business Conduct that
it will firmly resist all antisocial forces, and has established the JFEGroup Policies for Addressing Antisocial Forces and Regulations for
Addressing Violence Directed at Companies to clarify the measures
to be taken in response to any issues against antisocial forces,
including manuals for initial responses to violence against the Group.

Antimonopoly Act compliance
The JFE Group views past violations of the Antimonopoly Act
seriously and continues to implement thorough measures toeliminate the possibility of future infringements.

Employee ethics awareness surveys
The JFE Group regularly conducts Corporate Ethics Awareness
Surveys of executives and employees of JFE Holdings and its
operating companies for the purpose of identifying latent risks
and assessing the degree of understanding in the Group’s
Corporate Vision, Corporate Values, and Standards of Conduct.

Group companies

Establishment of Basic Policy on Corporate Governance
The JFE Holdings, Inc. Basic Policy on Corporate Governance was established with the aim of pursuing the best practices in corporate
governance in line with its corporate vision.
JFE Holdings, Inc. Basic Policy on Corporate Governancehttps://www.jfe-holdings.co.jp/en/company/info/pdf/basic-policy.pdf
Corporate Governance Reporthttps://www.jfe-holdings.co.jp/en/company/info/pdf/corporate-governance.pdf

78

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Thorough compliance■ Shaded areas indicate executive organizations

JFE Holdings, Inc.

CEO (President)

Ensure adherence to corporate ethical standards and compliance

Arrows indicate lines of authority and reporting

General Meeting of Shareholders

Sustainability Management

Corporate Governance
JFE Holdings’ Outside Directors and Outside Audit & Supervisory Board Members (as of July 1, 2021)

Overview of the corporate governance system
Group governance system
The JFE Group comprises a holding company and three operatingcompanies: JFE Steel, JFE Engineering, and JFE Shoji.
JFE Holdings, a pure holding company at the core of the Group’s
integrated governance system, guides Groupwide strategy, risk
management, and public accountability.
Each operating company has developed its own system suited
to its respective industry, ensuring the best course of action forcompetitiveness and profitability.

Expertise and background

Major initiatives to strengthen thegovernance system
September
2002

June 2007

Established JFE Holdings

Added two outside directors and shortened
the term of directors from two years to one
year

Overview of the corporate governance system

79

Organizational design typeCompany with an Audit &Supervisory Board

Number of Directors (Of which, the numberof Independent Outside Directors)

8 members (3 members)

Number of Audit & Supervisory Board
Members (Of which, the number ofIndependent Outside Audit & Supervisory
Board Members)

5 members (3 members)

Term for Directors

1 year (The same for
Outside Directors)

October 2015

FY2015

Corporate Officer System

AdoptedVoluntary advisory committees of the Boardof Directors

Nomination Committee
and Remuneration
Committee• Seventh Medium-term Business Plan
• Large-scale capital investment (Revamping of the No. 6 blast furnaceof West Japan Works (Chiba), strengthening of electrical steel production facilities of West Japan Works (Kurashiki), etc.)• M&A (acquisition of Mitsui E&S Plant Engineering Inc.)• Initiatives to address ESG issues (carbon-neutral efforts, assessment
and review of KPIs for material CSR issues, etc.)

Governance system
JFE Holdings and each operating company have their respective
Audit & Supervisory Board Members. The companies are crosschecked by the Directors, who supervise operational execution,and the Audit & Supervisory Board Members, who conduct audits.
Also, a Corporate Officer system separates decision-making andexecution to clarify authority and responsibility, as well as toaccelerate execution. JFE Holdings’ Board of Directors is responsible for maintaining and enhancing management efficiency andpassing resolutions as legally required, laying down key management policies and strategies and supervising operational execution. The Audit & Supervisory Board oversees management for the
purpose of strengthening its soundness.

Initiated analysis and evaluation of Board of
Directors’ effectiveness
Reorganized the Board of Directors and the
Audit & Supervisory Board based on results of
their effectiveness analysis and evaluation• Added
the presidents of JFE Engineeringand JFE Shoji to the Board of Directors,
along with an increase of two outside members (Director and Audit & Supervisory
Board Member)

Independent Outside Directors
We elect Independent Outside Directors so that one-third or
more of the Directors are Independent Outside Directors.
Independent Outside Directors will be elected from persons who
are appropriate to bear the responsibility of strengthening governance, such as those who possess abundant experience as
management in global enterprises or experts who possess profound knowledge and satisfy our independence standards.
Currently, of the eight Directors, three are Independent Outside
Directors.

Independent Outside Audit &Supervisory Board Members
More than half of the Audit & Supervisory Board Members arefrom outside. Independent Outside Audit & Supervisory Board
Members will be elected from persons who are appropriate tobear the role of enhancing the auditing function, such as those
who possess abundant experience as management in global
enterprises or experts who possess profound knowledge andsatisfy our independence standards. Currently, of the five Audit &Supervisory Board Members, three are Independent Outside
Audit & Supervisory Board Members.
Standards for Independence of Outside Directors/Audit & Supervisory Board
Members of JFE Holdings, Inc.
https://www.jfe-holdings.co.jp/en/company/info/pdf/independence.pdf

Corporate
management/
GlobalFinance andEngineering
Management
management accounting
strategy

Legal

Academic

Publicadministration andpublic policy

FY2020Board ofDirectors’
attendees

FY2020
Audit &
Supervisory
Board
attendees

Position / Name

Major concurrent positions

OutsideDirector
Masami
Yamamoto

Director and Senior Advisor of
Fujitsu Limited
Outside Director of Mizuho Financial
Group, Inc.

●

●

●

●

15/15
(100%)—

OutsideDirector
Nobumasa
Kemori

Honorary Advisor of Sumitomo
Metal Mining Co., Ltd.
Outside Director of NAGASE & CO.,LTD.
Outside Director of Sumitomo
Realty & Development Co., Ltd.

●

●

●

●

15/15
(100%)—

OutsideDirector
Yoshiko Ando

Audit & Supervisory Board Memberof Kirin Holdings Company, Limited
Outside Director of Sansei
Technologies, Inc.

●

12/12
(100%)—●●

Nomination Remuneration
Committee Committee

Chair

MemberChairMemberSenior Advisor of Teijin Limited
Outside Director of KDDI

Outside Audit &CORPORATIONSupervisory
Outside Director of MUFG Bank, Ltd.
Board Member
Outside Director of Tokyo Electric
Shigeo Ohyagi

●

●

●

15/15
(100%)

18/18
Member
(100%)

15/15(100%)

18/18(100%)

15/15(100%)

18/18
Member Member(100%)

Power Company Holdings,
Incorporated

Outside Audit &Partner Lawyer of Abe, Ikubo &Supervisory
Board Member Katayama Law Firm
Isao Saiki●

Outside Audit & Professor, Graduate School ofBusiness Administration,
Supervisory
Board Member Department of Business
Administration of Hitotsubashi
Tsuyoshi
University
Numagami●●●

Approach to diversity in the
Board of Directors
With regard to the composition of the Board of Directors,
the Company elects Officers following deliberations by the
Nomination Committee, by focusing on the enhancement ofdiversity of the Board members, such as their expertise, knowledge, and experience in various fields, while balancing with theappropriate size of the Board. One female Audit & Supervisory
Board Member was appointed in June 2019 and one female
Director was appointed in June 2020, respectively. The Company
is working to enhance gender and global diversity mainly by electing Directors and Audit & Supervisory Board Members who possess a wealth of knowledge and experience as management inglobal enterprises. The Company will continue to systematicallyengage in initiatives to foster such human resources suitable forcandidates for Directors and Audit & Supervisory Board Members
by setting specific targets.

Nomination Committee andRemuneration Committee
In October 2015, the Company set up the Nomination Committee
and the Remuneration Committee as advisory bodies to theBoard of Directors to secure fairness, objectivity, and transparency in the appointment of and remuneration for Directors andAudit & Supervisory Board Members. For both committees, themajority of committee members are Outside Directors/Outside
Audit & Supervisory Board Members and the chairs are chosenfrom among these people.
The Nomination Committee deliberates and reports to theBoard of Directors on matters pertaining to the basic stance on
the election and dismissal of the President of the Company,
proposals for the election of candidates for the President of theCompany, succession plans of the President of the Company, andthe nomination of candidates for Outside Directors and Outside

●

●

80
MemberAudit & Supervisory Board Members. Four meetings were held in
fiscal 2020. All committee meetings had 100% attendance rates.
The Remuneration Committee deliberates matters pertaining to
the basic stance on the remuneration of Directors, etc., of theCompany and each operating company and reports to the Boardof Directors. Five meetings were held in fiscal 2020. All committee
meetings had 100% attendance rates.

Nomination Committee and Remuneration
Committee structure (as of July 1, 2021)
Outside Audit &Chair
Supervisory
Board Members

Committee

InsideDirectors

OutsideDirectors

Nomination
Committee222

Masami
Yamamoto(Outside
Director)

Remuneration
Committee

22

2

Nobumasa
Kemori (Outside
Director)

Support for Directors andAudit & Supervisory Board Members
Directors and Audit & Supervisory Board Members are provided
with opportunities and funding to receive training in legal matters,
corporate governance, risk management, and other subjects that
help them fulfill their roles and duties.
In addition, a briefing is held for Outside Directors and Outside
Audit & Supervisory Board Members prior to Board of Directors’
meetings.
Furthermore, Outside Directors and Outside Audit &Supervisory Board Members are provided with relevant information and opportunities to exchange opinions with the President of
the Company and other top managers, attend key hearings on
the operational status of individual departments, and inspectbusiness sites and Group companies within and outside Japan.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Major topics discussed at the fiscal 2020
Board of Directors’ meeting

June 2017

Established JFE Holdings, Inc. Basic Policy on
Corporate Governance, Nomination
Committee, and Remuneration Committee

Independent
executive

Sustainability Management

Corporate GovernanceEvaluation of effectiveness of the Board of Directors

81

Based on the Basic Policy on Corporate Governance, the effectiveness of the Board of Directors has been evaluated since fiscal
2015, and starting in fiscal 2018, a third-party organization has
analyzed and assessed its effectiveness from an objective standpoint independent from the Company. In fiscal 2020, all Directors
and Audit & Supervisory Board Members answered a revisedquestionnaire with some new questions regarding practicalguidelines for Outside Directors.
In addition, the outcome of initiatives in fiscal 2020 were
examined while referencing the opinions and suggestions
received from the fiscal 2019 analysis and evaluation.
Based on the results of the questionnaire and evaluation by thethird-party organization, the Board of Directors determined thatits overall effectiveness has been ensured through invigorated
discussions facilitated by thorough preliminary briefing sessions
attended by all Outside Directors/Outside Audit & Supervisory
Board Members, and by appropriate direction by the chairperson.

Furthermore, in addition to accurate and fair audits performedby the Audit & Supervisory Board Members, the members also
expressed opinions and actively asked questions at Board of
Directors’ meetings on management decision-making and reporting to further invigorate deliberations. Such outcomes support theconclusion that JFE functions more efficiently as a company with
an Audit & Supervisory Board.
This questionnaire raised issues for further improving its effectiveness, such as strengthening the supervisory functions of theBoard of Directors for Group risk management and addressing
sustainability issues, and creating more opportunities for theexchange of opinions among only Outside Directors throughmeetings of Outside Directors.
In light of these points, we will continue to proactively implement measures to improve the effectiveness of the Board of
Directors, with the ultimate aim of increasing the corporate valueof the JFE Group.

Fiscal 2020 Initiatives Based on Effectiveness Evaluation Results through fiscal 2019• 	Emergency measures were taken to counter COVID-19 infections and respond to rapid changes in the operating environment, as companies are

Executive remuneration
Executive remuneration is based on the Basic Policy on
Remuneration for Directors and Corporate Officers and the Policy
for Deciding Individual Remuneration for Directors and Corporate
Officers, which were formulated based on discussions andreports by the Remuneration Committee, and it is decided
through either a resolution of the Board of Directors or deliberations by the Audit & Supervisory Board Members, for an amountwithin the total limit approved at the General Meeting of
Shareholders.

Total remuneration, etc.
(thousand yen)

Directors (excluding Outside Directors)

199,166

Number of
executives

578,335

Outside Directors/Outside Audit &Supervisory Board Members

91,8472• 	Regarding specific initiatives to address sustainability issues, discussion was augmented by report topics concerning Groupwide efforts to become

Officers whose consolidated remuneration exceeded
100 million yen (FY2020)
Name

Koji Kakigi

were reported to the Board of Directors, which gave instructions for and supervised the updating of related systems. Based on the deliberations of the

Operating systemJFE companies are responsible for business decisions in accordance with their respective rules and procedures, whereas JFE
Holdings makes final decisions about Groupwide matters. Each
operating company determines key matters through a deliberative
process by its own Management Committee and Board of
Directors. In April 2017, JFE Holdings changed the operating

structure of key committees. Management strategies involving
the entire Group are now deliberated by the Group Management
Strategy Committee, and core issues of JFE Holdings, the operating companies, and the Group are deliberated by the Management
Committee before they are submitted to the Board of Directors
for resolution.

Structure of Group Management Strategy Committee and Management Committee
Committee

Company

Chairperson

Attendees

Group Management
Strategy Committee

JFE Holdings

President

Inside Directors (including 3 operating company Presidents),
Corporate Officers, and full-time Audit & Supervisory Board Members

JFE Holdings

President

Inside Directors (excluding 3 operating company Presidents),
Corporate Officers, and full-time Audit & Supervisory Board Members

Each operating company

President

Directors, major Corporate Officers, and Audit & Supervisory Board Members

Management Committeebonus is linked to the Company’s single-year performance and is• Annual
paid in cash once a year.
•S tock remuneration is granted as the Company’s shares and cash
equivalent to the amount of the Company’s shares converted to market
 he ratios of remuneration by type are structured so that the higher the•Tposition, the greater the weight of performance-linked remuneration,

82

annual bonus : stock remuneration = 60% : 20% : 20%.”

Position

Company

Director

JFE Holdings

Basic remuneration

Per company
Total(thousand yen) (thousand yen)

106,847

Director

JFE Holdings

12,000

Director

JFE Steel

94,847

Yoshihisa Kitano

Annualbonus
Short-term
performance-linked

106,847

Remuneration limit for the company’s Directors (all Directors):
within 700 million yen per year

106,847

Basic Policy on Remuneration for Directors
and Corporate Officers

Key decision-making(annual bonus and stock remuneration).
•B asic remuneration is paid as a fixed amount, in cash, each month

performance targets are achieved the ratio is “basic remuneration :7• 	Regarding corporate governance, in April 2021 the Group CSR Council, headed by the CEO, uniformly managed Groupwide risks, and important matters
Board of Directors, the Company will continue to improve risk management for the entire Group.

comprised of basic remuneration and performance-linked remuneration

Composition of remuneration for the Company’s Directors

carbon neutral, in addition to reports on the results of surveys of safety activities and employee awareness, as well as the state of operations forcorporate ethics internal reporting systems.

Committee.
•R emuneration for the Company’s Directors and Corporate Officers is• The Board of Directors shall determine a remuneration system
for Directors and Corporate Officers based on deliberations
regarding its appropriateness by the Remuneration Committee
to ensure fairness, objectiveness, and transparency.
• The remuneration level for Directors and Corporate Officers
shall be determined to secure excellent human resources
who are able to put the Group’s corporate vision into practice,taking into consideration the business environment of theGroup and remuneration levels at other companies in thesame industry or of the same scale.
• The ratio between basic remuneration and performancelinked remuneration (annual bonus and stock remuneration)
shall be properly established according to the roles andresponsibilities, etc., of each Director and Corporate Officer
so as to function as sound incentives toward the sustainablegrowth of the Group.

Stock remuneration
Servicelength

Performancelinked

Medium- to long-term
performance-linked
Remuneration limit forthe company’s Directors(excluding Outside
Directors): within 600
million yen over 3 years

Annual bonus
The annual bonus is calculated by multiplying the total amountof segment profit in a single fiscal year, as a performance-linked
indicator, by the degree of achievement of the indicator and apreset coefficient for each position.

Stock remuneration
The stock remuneration plan is determined in accordance withthe performance targets, etc., in the Group’s medium-term business plan. For the period between fiscal 2021 and fiscal 2024,
the payment level is determined according to the level of achievement of the target profit attributable to owners of the parent
company of 220 billion yen per year, set under the Seventh
Medium-term Business Plan. Furthermore, 5% or more ROE isthe minimal requirement for the payment.
The Seventh Medium-Term Business Plan includes a provision
for applying non-financial metrics in management targets. In thisregard, we will consider an optimal remuneration system that willfurther enhance corporate value.
The Company pays only basic remuneration to Outside Directors
and Outside Audit & Supervisory Board Members given theirrespective roles of supervising and auditing management from an
independent and objective standpoint. Annual bonuses and stock
remuneration are not paid by the Company to Directors who concurrently serve as executive directors of operating companies.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

administration.

Policy and the Decision Policy, based on reports from the Remunerationand the ratio for the Company’s President has been set so that when

Business Plan.
director who is an expert in labor administration, in addition to her management experience and specialist knowledge of law and businessby a resolution of the Board of Directors in accordance with the Basicvalue through the trust upon retirement.
Audit & Supervisory Board Members(excluding Outside Audit & Supervisory
Board Members)

increasingly expected to help combat COVID-19 and climate change, and improved discussions were held in formulating the Seventh Medium-term• 	Deliberations of the Board of Directors were improved thanks to greater diversity of Outside Directors, including the new appointment of a female• Remuneration for Directors and Corporate Officers shall be determinedaccording to position.

Executive remuneration (FY2020)
Position

Outline of the Policy for Deciding Individual
Remuneration for Directors and Corporate Officers

Sustainability Management

Corporate GovernanceInternal control

83

The JFE Group’s internal control system, in accordance with the
Basic Stance for Building an Internal Control System, is maintained through various committee regulations including the Rulesof the Board of Directors, Regulations for the Group Management
Strategy Committee, Regulations for the Management
Committee, Regulations for the JFE Group CSR Council,
Regulations for the Organization and Operations, Regulations forDocument Management, Regulations for Addressing Violence
Directed at Companies, and installation of the Corporate Ethics
Hotline. In April 2021, this Basic Stance was revised. With theobjective of strengthening the effectiveness and supervisory
functions of the Board of Directors with regard to risk management, the Group CSR Council, headed by the CEO (President) of
JFE Holdings, uniformly manages risk for the entire Group andreports important matters to the Board of Directors, which gives
instructions and supervises actions. The Basic Stance for Building
an Internal Control System is revised and improved from time totime to boost sustainable corporate value.
Basic Policies to Establish the Internal Control Systems
http://www.jfe-holdings.co.jp/en/company/info/pdf/corporate-governance.pdf

Approach regarding listed subsidiaries
Structure of JFE Group Board of Auditors
General Meeting of
JFE Group Auditors(hosted by JFE Holdings
and attended by 43
auditors from 55
companies)

New Audit &Supervisory Board
Member training
courses andother seminars

Subcommittees
and working groups(by topic)

JFE Steel and its
group companies

JFE Engineeringand its groupcompanies

Part-time Audit &Supervisory Board
Members

Part-time Audit &Supervisory Board
Members(5 auditors overseeing
20 group companies)

Audits by Audit & Supervisory Board Members
Audit & Supervisory Board Members attend meetings of theBoard of Directors, Group Management Strategy Committee,
Management Committee, and Group CSR Council, as well asother important meetings. To audit how Directors execute their
responsibilities, they conduct hearings with Directors andCorporate Officers regarding operational status and receive
operational reports from subsidiaries. In addition to undergoingstatutory audits, JFE companies take the following initiatives toimprove the effectiveness of internal auditing by the Audit &Supervisory Board Members, through efforts to share informationand strengthen coordination among the Members.
A total of 34 full-time Audit & Supervisory Board Members
have been appointed to 29 companies, including JFE Holdings.
Operating company personnel are dispatched to Group companies as part-time Outside Audit & Supervisory Board Members.
Each absentee Audit & Supervisory Board Member serves one to
five subsidiaries to raise the quality of the audits by their Audit &Supervisory Board Members and enhance Group governance.
Nine absentee Audit & Supervisory Board Members served 28
companies in total.
The JFE Group Board of Auditors includes both full-time Audit &Supervisory Board Members of each Group company and parttime Audit & Supervisory Board Members. Subcommittees andworking groups created to address specific issues meet autonomously to share information, investigate issues, and enhance
understanding. The findings of the year’s activities are presented
at the General Meeting of JFE Group Auditors and used for audits.

GECOSS is mainly engaged in the rental and sales of temporary construction materials, as well as in design and construction of temporary works. GECOSS
provides products and services that meet customer needs primarily in the civil engineering and construction industries by partnering with JFE SteelCorporation and Group companies. The Company believes that managing GECOSS as a subsidiary will help to maximize the value of GECOSS and the JFEGroup through various collaborative initiatives with JFE Steel in areas such as personnel exchange and R&D. GECOSS maintains its listed status as a means
to enhance its competitiveness as well as to secure market recognition and credibility in funding, sales and marketing, and hiring.

JFE Shoji and its
group companies(4 auditors overseeing
8 group companies)

Cooperation between Audit & Supervisory Board
Members and the Accounting Auditor
In fiscal 2020, the Audit & Supervisory Board Members held sevenscheduled or unscheduled meetings with Ernst & Young
ShinNihon LLC, JFE’s outside accounting auditor, in which thelatter presented its audit plan, completed work and detailed
results. The firm also presented a detailed explanation of its
quality management system to confirm its validity. In turn, theAudit & Supervisory Board Members explained their own audit
plans and other matters to the firm. The two sides also shared
opinions on related matters.

Cooperation between Audit & Supervisory Board
Members and the Internal Auditing Department
In fiscal 2020, the Audit & Supervisory Board Members held sixscheduled or unscheduled meetings with the internal auditing
department, in which the latter presented its internal audit plan,
work status, and detailed results. During the meetings, the Audit& Supervisory Board Members also shared opinions with thedepartment.

Operating company governanceSome Directors, Corporate Officers, and Audit & Supervisory
Board Members of JFE Holdings serve concurrently as the
Directors or Audit & Supervisory Board Members of operatingcompanies to strengthen governance and information sharing
across the Group. To strengthen governance, JFE Holdings’ managers attend each operating company’s General Meeting of
Shareholders and Management Planning Briefing, receive reportson their activities, and discuss the managerial policies ofsubsidiaries.

JFE Container is mainly engaged in the manufacture and sale of steel drums and high-pressure gas containers. JFE Container provides products that meetcustomer needs primarily in the chemical, petroleum, automobile, and gas industries by partnering with JFE Steel and Group companies. The Company
believes that managing JFE Container as a subsidiary will help to maximize the value of JFE Container and the JFE Group through various collaborative initiatives with JFE Steel in areas such as personnel exchange and R&D. JFE Container maintains its listed status as a means to enhance its competitiveness aswell as to secure market recognition and credibility in funding, sales and marketing, and hiring.

84

JFE Systems, Inc.
JFE Systems is mainly engaged in systems integration and solutions for the planning, design, development, operation, and maintenance of information
systems, as well as in building systems using its products and IT infrastructure solutions that support business systems. Computer systems in the steelbusiness support overall business activities, such as receiving orders, manufacturing, shipping products, and controlling quality, and are an important basefor using diverse data. In addition, as DX progresses, ensuring the accumulation of know-how and the continuity of personnel exchange will be essential for
maintaining the competitiveness of JFE Steel Corporation. JFE Systems maintains its listed status as a means to enhance its competitiveness as well as tosecure market recognition and credibility in funding, sales and marketing, and hiring.

The three aforementioned companies are subject to rules
different from those applicable to other consolidated subsidiaries, and other measures are also taken so as to ensure that eachof the companies conducts autonomous corporate activities
exercising autonomy and flexibility, secure management independence as listed companies, and make sure that the interest of thesaid subsidiaries’ shareholders other than the said subsidiaries
and the Company will not be unfairly impaired. In addition, withrespect to matters necessary for the Group’s risk management,

prior consultation and reporting are required from the threecompanies while securing their independent decision-making,so as to implement risk management as a member of the Group
companies.
Furthermore, the Company shall regularly verify the significance of maintaining the listing of the listed subsidiaries and takenecessary measures upon confirmation at its Board of Directors.
The content herein was verified and discussed at a Board of
Directors’ meeting held in May 2021.

Basic policies for strategic shareholdings and exercise of related voting rights
All shares held by the Company are the shares of subsidiaries oraffiliates. The Company’s wholly owned subsidiaries as well as
operating companies, JFE Steel Corporation, JFE Engineering
Corporation, and JFE Shoji Corporation (hereinafter the“Operating Companies”), do not hold listed shares as strategic
shareholdings, in principle. Strategic shareholdings, however, areallowed as an exception when holding the stocks of a company isdetermined to be necessary for maintaining and achieving growth
for the Group’s business.
The Board of Directors’ meetings regularly confirm the significance of the strategic shareholdings and whether the benefits
and risks of such holdings are commensurate with their capitalcost, and sell strategic shareholdings if there is no significance ofsuch shareholdings or there is a risk of damage to shareholders’interest. In April 2016, the Company decided to reduce its strategic shareholdings by approximately 100 billion yen and sold its
strategic shareholdings in the amount of approximately 140
billion yen (on a market value basis) by fiscal 2018. In November
2019, the Company decided on a policy to further sell its strategic shareholdings in the amount of 100 billion yen and sold all orpart of 143 stocks in fiscal 2019 and fiscal 2020. (Total sales
amount: approximately 145.9 billion yen (on a market value

basis)). Furthermore, at a meeting held in December 2020, theBoard of Directors examined the significance of its strategic
shareholdings and return on investment.
The exercise of voting rights of strategic shareholdings isdecided upon reviews by the Operating Companies on the content of the proposal and is appropriately implemented in a waythat will maximize shareholder interest. To be specific, the content of the proposal is to be checked by the investment application department and the investment control department, andapproval will be given to proposals which are considered not
to pose any threat to the maximization of interest of these
Operating Companies as shareholders.
Of the shares for investment purposes held by JFE Steel, which
has the largest balance sheet amount and accounts for the
majority of the shares for investment purposes posted in the
consolidated financial statements of the company, those sharesof JFE Steel that are held for purposes other than pure investments are shown below.
End of FY2018

End of FY2019

End of FY2020

Number of issues

238

219

171

Total balance sheet amount(billion yen)

2,410

1,661

960

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

JFE Holdings, the operating companies, and key Group companies
had internal audit organizations comprising 174 people as of April
1, 2021. These organizations share information to enhanceoverall auditing within the Group.

GECOSS CORPORATIONJFE Container Co., Ltd.

Strengthening internal control
Internal audits

As the Company practices its corporate vision of “contributing to society with the world’s most innovative technology,” to realize sustainable growth and enhancement of medium- to long-term corporate value, the Company forms a corporate group comprising companies
with high expertise, divides business functions within the Group, and conducts business development outside of the Group. Among theGroup companies, the Company has three listed subsidiaries, described below.

Sustainability Management

Risk Management

Privacy protection
JFE has established the JFE Group Privacy Statement for managing information including “My Numbers,” which are personallyidentifiable numbers under Japan’s social security and tax number
systems.
To maintain the appropriate protection of personal information,
employee trainings on the rules, which have been set in place inaccordance with the privacy statement, have been conducted as
stipulated in the applicable laws of each country related to businesses and guidelines.

Risk Management

Basic Policy
Based on its corporate vision of “contributing to society with the world’s most innovative technology,” the JFE Group maintains andactively uses a risk management structure to accurately identify and respond to Groupwide risks, with the aim of sustaining growthand improving corporate value across the Group.

JFE Group Privacy Statement
https://www.jfe-holdings.co.jp/en/privacy.html

Based on policies set by the committee, the JFE-SIRT* formulates and implements information security measures, performs
information security audits, offers guidance on responding toincidents, and generally enhances the level of Groupwide information security management.
* JFE-Security Integration and Response Team, established in April 2016

JFE Group Information Security Governance System
Board of Directors
Reports on policy and action plans

Instruction and supervision

Group CSR Council Chair: CEO (President)

Risk management system

85

Information security

CSR Promotion Structure
Board of Directors
Instruction and supervision

Group management philosophy, risk management, responsibilities tostakeholders and society, other corporate initiatives
ReportingGroup CSR Council
Head: President of JFE Holdings
Members: Vice President, corporate officers, Audit & Supervisory Board
Members, presidents of operating companies, otherGroup Compliance Committee
Group Environmental Committee

Group Information Security Committee
Public Disclosure Committee
Corporate Value Enhancement Committee

TopicsCompliance, environment, climate change, internal controls, personnel
and labor, safety, disaster prevention, social contributions, information
security, ESG risks, protection and improvement of corporate value, etc.
(1) Deliberate Group policies and CSR action plans(including instructions and guidance for important projects)(2) Supervision of policy uptake(3) Share information about issues and how problems were addressed,
horizontal development

Risk Management
https://www.jfe-holdings.co.jp/en/csr/governance/risk/index.html

Response to risks
Response to climate change risks
The JFE Group has formulated the JFE Group Environmental Vision
for 2050, which plots a path for becoming carbon neutral by
2050, and positions climate change initiatives as the highest
priority for management. Initiatives in the Seventh Medium-term
Business Plan call for reducing CO2 emissions by approximately
18% versus the fiscal 2013 level by the end of fiscal 2024 in thesteel business, while plotting out multiple avenues to attaining
carbon neutrality by 2050.
Risks are identified and evaluated based on a scenario analysis
conducted under the framework recommended by the Task Forceon Climate-related Financial Disclosures (TCFD), and importantfactors that may affect management are selected for further
analysis and used in formulating business strategies, including
the Seventh Medium-term Business Plan.

Intellectual property management
The JFE Group meticulously manages intellectual property
across its diverse business activities. To prevent infringementon third-party intellectual property, it constantly monitors thelatest information on intellectual property and implements allnecessary measures.

The JFE Group formulates various rules on information security
management to prevent information leakage and system failuresdue to cyberattacks and improper system use. Efforts are madeto enhance information security knowledge and awareness ofrules among employees through training and education. Additionally,shared IT measures are applied in each Group company andregular information security audits are conducted to reinforce
the overall information security management level in the Group.
The JFE Group Information Security Committee deliberates
important matters related to IT, especially information security,and decides policy.

JFE Group Information Security Committee

Head: Executive officer in charge of Group information security(Corporate Officers)

Planning and proposals

Decision

JFE-SIRT
Auditing and monitoring
ReportingExecution

Group companies

JFE Group’s BCP
Anticipating the possibility of natural disasters caused bytyphoons and major earthquakes as well as a rapid expansion in
infectious diseases such as a new strain of influenza, the JFEGroup has formulated a business continuity plan (BCP) toaddress contingencies. We conduct regular training based on
the BCP while also pursuing other countermeasures.

Response to large-scale natural disasters
The JFE Group has designated evacuation locations in the eventof a tsunami, maintains a Companywide system for sending out
guidance and instructions during communications controls andpower blackouts, and regularly backs up all of its data. The
Company is reinforcing its water removal facilities in steelworks
in response to the increasingly severe typhoons and torrential
rainfalls in Japan over the past few years.

Response to COVID-19
Our response to the COVID-19 pandemic has entailed the rapid
formation of a countermeasure examination team in accordancewith our response policy based on scenarios for outbreaks of new
types of influenza, and this team has taken various measures tocounter COVID-19. We have eased employment system requirements and encouraged employees to work from home, while

86

discouraging them from commuting to work. Even when employees come to work, they arrive and leave at different times of theday, partitions have been installed in offices, and meetings have
only been held online in an attempt to reduce the risk of infection
as much as possible. JFE Steel revised its BCP, which had envisioned a novel influenza outbreak, and kept important operations
running, including at steelworks and production sites. JFE Steelalso conducted operational simulations for the event that a local
outbreak increased the ratio of employees missing work, and took
various other steps as conditions changed. Above all, we thoroughly managed occupational health and safety measures, inaddition to updates to infrastructure for remote work environments. As well, all of us have been keen to increase vaccinations
in workplaces.
We will continue to engage in business operations while placing
the highest priority on the health and safety of our employees
and partners.
Through these initiatives, we are examining even more flexible
work styles in a bid to improve labor productivity further.

JFE GROUP REPORT 2021

Group Internal Control Committee

Operating companies, Group companies

JFE GROUP REPORT 2021

JFE Holdings is responsible for comprehensive risk managementin accordance with its Basic Stance for Building an Internal
Control System. A structure has been put into place for the
Board of Directors to supervise risk management and verify
its effectiveness.
The JFE Group CSR Council, chaired by the President of JFE
Holdings, verifies, evaluates, deliberates, and decides issues
related to policy and actions plans for risk management.
Specifically, adherence to Company policies and rules are monitored, such as for business activities, compliance (compliancewith the Antimonopoly Act, as well as laws and regulations preventing corruption, including bribery, of civil servants), the corporate vision, and the JFE Group’s Standards of Business Conduct.
It also supervises corporate officers responsible for the environment, climate change, personnel and labor, safety, disaster prevention, preventing human rights violations, such as sexual andpower harassment, quality management, financial reporting,information security, ESG risks, and other risks.
The Board of Directors regularly receives reports on Group
policies and action plans for risk management, and discusses anddecides on important matters related to risk management in its
role of supervising and verifying the effectiveness of risk management. The Company intends to continuously improve Groupwide
risk management in light of deliberations by the Board of Directors.

Regular reporting and supervision (sharing of risk information)

Sustainability Management

Stakeholder Relationships

External recognition in recent years

Stakeholder Relationships

Selected for inclusion in
the FTSE4Good IndexSeries and the FTSE
Blossom Japan Index

Promotion of interactive communication
The JFE Group strives to maintain agreeable and favorable relationships with all stakeholders, including shareholders, customers, clients,
employees, and local communities, for the sustainable growth and medium- to long-term increase of corporate value.

Selected for inclusionin the MSCI Japan
Empowering Women
Index (WIN)

Examples of dialogues with our main stakeholders
Stakeholders

87

Approach

We work to disclose information accurately,
fairly and in a timely and appropriate manner
as well as strive for active communication.
We established the Investor Relations andCorporate Communications Department as
an organization responsible for communicaShareholders/ tion with domestic and international
shareholders and investors, and promote
Investors
constructive dialogue as well as provide
management with the information acquired,with the aim of maintaining and improving
the relationship of trust.

Customers

Localcommunities

Ordinary General Meeting of Shareholders (convocation notices, noticesof resolutions, etc.)
Investors meeting (financial results, medium-term business plans, etc.)
and ESG briefings
Individual meetings (financial results, medium-term business plans, etc.)
Company briefings for individual investors
Plant tours for shareholders (steel, engineering, shipbuilding bases, etc.)(* R esults shown are for FY2019, suspended in FY2020 due to the
COVID-19 pandemic)
Publishing shareholder newsletters (JFE Dayori)
Various reports, including integrated reports and CSR reports(* N umber of copies for integrated report; CSR report only available on
the Company’s website)
Information via websites (for shareholders and investors), etc.

OthersFrequency (per year)

Scale, etc.

15

Approx. 150,000 persons(Unit shareholders)Approx. 600 persons in total

As needed
423

Approx. 300 persons in total
Approx. 1,500 persons
Approx. 1,800 persons

2 (Mid-year and annual) Approx. 220,000 copies/issue
1
Approx. 25,000 copies
As needed

The Group believes that the stable supply of
products and services and reliable quality
assurance, along with advancing researchand development, are necessary to meetcustomer needs. We will work to establish
win-win relationships by continuously
meeting customer needs and the trust theyplace in us.

Communication through sales activities and support for quality assurance As neededInterviews and questionnaires, such as that on customer satisfaction
As needed
Information via websites (product information), etc.
As needed

With the recognition of top management thatcreating workplaces to provide dignity and job
satisfaction for all is essential for maximizing
the potential of individuals, we have formulated
the Basic Stance on Human Resource
Management and Health Declaration and are
conducting various activities toward attaining
the goals.

Communication through daily operations and in the workplace
Internal newsletters and intranet
Various labor-management committees

As needed
As needed
2 to 4

Corporate Ethics Hotline
Various training sessions

As needed
As needed

Family days (visits by employee families, lunch at employees’ cafeterias, etc.)

As needed

Corporate Ethics Awareness Survey

1 (every 3 years)

Engagement survey (employee satisfaction survey)* An all-employee survey to understand the level of satisfaction with theCompany, used to shape measures and operations
Management feedback (360-degree diagnosis)* Corporate Officers and top managers evaluate their peers andsubordinates, providing feedback to individuals

1Management and labor unions at
each operating company
87 calls in FY2020
Position-specific, compliance,
human rights, etc.
Conducted at each operatingcompany
At the Company and operatingcompanies
At the Company and JFE Steel1

At the Company and JFE SteelTo ensure business continuity at
manufacturing bases where steelworks
are located and elsewhere, constructing
a relationship of trust with citizens inlocal communities and realizing
coexistence and prosperity are crucial.
We will pursue various activities with theaim of realizing sustainable growth andregional development, including
continued initiatives toward ensuringsafety and reducing our environmental
impact.

As needed
Approx. once ineach region
As needed
Plant tours
Clean-up activities (vicinity of manufacturing bases, regional cleaning, etc.) As needed
Sports promotion (baseball or jogging workshops, various sports
As needed
competitions, etc.)
As needed
Others (education at elementary schools, craft workshops, workplace
experience events, etc.)
As needed
Information via websites (environmental information, etc.)
Social contribution through JFE 21st Century Foundation
As needed(various research support, regional activity support, etc.)
JFE 21st Century Foundation: http://www.jfe-21st-cf.or.jp/eng/
Communication through local residents’ associations, events, etc.
Events at manufacturing bases (festivals, etc.)

Conducted at each operating company
Conducted at each operating company

Approx. 270,000 persons a year

* Suspended in FY2020 due to the
COVID-19 pandemic; results shown are
for FY2019 Awards for technology andproduct development, etc.

Award name

Description

Sponsor

Steelie Awards 2020

Development of resource saving type Si gradient steel sheet for high-speed
motorsWorld Steel Association

Development of production technology for hot-dip galvanized steel sheetsby control of atmospheric conditions

Ministry of Education, Culture, Sports,
Science and Technology

Chromium Ore Smelting Reduction Process Using Hydrocarbon Fuel Burner
Development of energy supply and demand guidance utilizing data science

Ichimura Foundation for New Technology
Energy Conservation Center, Japan
Keidanren Business Services, Internal
Newsletter Center
Japan Society for the Promotion of
Machine Industry
Japan Institute of Invention
and Innovation
Ministry of Economy, Trade and Industry

JFE Steel Magazine

55th Machinery Promotion Award, Japan Society for the Promotion of Machine
Industry Chairman’s Prize
FY2020 National Commendation for Invention, Japan Institute of Invention andInnovation Chairman’s Award
Selected as Global Niche Top Companies Selection 100

Surface inspection equipment based on twin-illumination and subtraction
technique
Discovery of minute surface defect detection equipment based on themagnetic leakage flux tester
High brittle crack arrest steel plate for super-large container ships

Inclusion in the Sompo
Sustainability Index

JFE EngineeringAward name

Description

Sponsor46th Distinguished Environmental System Award, Ministry of Economy, Tradeand Industry’s Industrial Science and Technology Policy and Environment
Bureau’s Director-General Award

Automated incinerator for general waste incorporating AI and data analysis
technology

Japan Society of Industrial Machinery
Manufacturers

FY2020 (38th) IT Award, IT Excellence AwardJFE Engineering’s DX promotion initiative: Aiming for normalization of changewith digital technology

Japan Institute of Information
Technology

JFE Holdings has been selected for inclusion in the S&P/JPX Carbon Efficient Index, which is developed, calculated, and publishedjointly by S&P Dow Jones Index in the U.S. and Japan Exchange Group. This index decides the weighting of constituent stocks basedon their levels of environmental information disclosure and carbon efficiency (carbon emissions per unit of sales). This is one of the
ESG investment indexes used by Japan’s GPIF.

Established in Britain in 2000, the CDP is a nongovernmental organization (NGO) that conducts ESG evaluations. It calls on
companies to disclose ESG-related information by responding to CDP questionnaires to facilitate the ESG investment decisions ofinstitutional investors. Currently, the CDP covers three environmental areas: climate change, water security, and forests, andcompanies are rated on an eight-point scale (from A to D-) for each area. The volume of information collected by the CDP has
become one of the largest in the world, with currently over 300 companies responding to the questionnaires, which are widely usedin various indexes by institutional investors and for socially responsible investment. The JFE Group proactively participates in CDP’s
activities as a member of CDP Reporter Services. The Group responds to climate change and water security questionnaires every
year. We made sure to disclose appropriate information for the CDP 2020 questionnaire, and as a result we received a high rating.

JFE Holdings has been chosen for the 10th consecutive year as a constituent of the Sompo Sustainability Index (former SNAM
Sustainability Index), which is operated by Sompo Asset Management. The index, which encompasses companies with highly
evaluated ESG ratings, contributes to investor asset formation by evaluating corporate value from a long-term perspective.

JFE Steel West Japan Works (Kurashiki) and JFE Shoji were named as Gold Level SQEP suppliers for the Supplier Quality Excellence
Process, a quality certification of the U.S.-based construction equipment manufacturer Caterpillar Inc. for five consecutive years
in 2021, having successfully updated its certification through an online audit during the pandemic. The program ranks suppliers
for compliance with ISO 9001 standards and Caterpillar’s own specifications and certifies the top firms as Platinum, Gold, Silver, orBronze level. Only a few companies in Japan have received Gold Level certification, and JFE Steel is the world’s first blast furnacecompany to be certified.

Inclusion in DX Stock2021

JFE Holdings has been selected as a Digital Transformation Stock Selection (DX Stock) 2021 for its proactive advancement of DX
projects. JFE Holdings has also been selected as a Competitive IT Strategy Company Stock, jointly announced by the Ministry of
Economy, Trade and Industry and the Tokyo Stock Exchange, for five consecutive years. This index has been part of the initiatives topromote strategic IT investments that will lead to medium- to long-term increase in corporate value and reinforced competitive strength.
From this year, the program has been changed to Digital Transformation Stock Selection (DX Stock) with a focus on digitaltransformation (DX) that fundamentally changes business models based on digital technology, and leads to new growth and enhanced
competitiveness. The Company has been selected as a DX Stock since 2020.

Major external awards
The JFE Group has received the Evaluation Committee’s Special Award at the 24th Environmental Communication Awards, sponsored by
the Ministry of the Environment and the Global Environmental Forum, for its CSR Report 2020, published in September 2020. This is thesecond year in a row the JFE Group has received this award.
The Environmental Communication Awards is a program designed to promote environmental communication with stakeholders
surrounding the business operator and further invigorate environmental activities by commending outstanding environmental reports
and communications for multiple stakeholders among various media such as CSR reports, integrated reports, and environmental
management reports. In this year's competition, 147 entries were submitted in the environmental report category and 114 in theenvironmental management report category, and the Group was selected as one of the four winners of the Evaluation Committee’sSpecial Award in the environmental report category. The award ceremony was held online on February 17, 2021.

The JFE Group’s CSR Report 2020, published in September 2020, has received the Special Prize in the Environment Sustainable Company
Category of the 2nd ESG Finance Awards Japan, sponsored by the Ministry of the Environment. This is the first time JFE has won the award.
Received 2nd ESG
ESG Finance Awards Japan is an awards system created with the objective of promoting and expanding ESG financing by sharing
Finance Awards Japan’s awareness broadly throughout society of advanced initiatives by institutional investors, financial institutions, intermediaries, andSpecial Prize in thecorporations to have a positive impact on the environment and society through aggressive initiatives at ESG finance and environmental
Environment Sustainable and social operations. The Environment Sustainable Company Category was established to promote the disclosure of corporate
Company Category
management efforts to improve the environment, while advocating that investment decisions be based on an understanding of how
environmental issues affect corporate value. The Special Prize is an award created to recognize companies that have made exemplaryefforts in the context of their corporate size and business nature. The award ceremony was held online on February 24, 2021.

World Steel
Association’s 2020
Steel Sustainability
Champions Award[CDP 2020 scores]
Climate change: B
Water security: ASupplier/Engagement: A-

88

The DBJ Environmentally Rated Loan Program is the first financing system in the world to incorporate special environmental
ratings, which uses a screening system developed by the Development Bank of Japan (DBJ) to evaluate environmental
management levels and select outstanding companies with three interest stages according to evaluation points. In March 2016,
JFE Holdings was rated as a top-ranking company that pursues excellent and advanced environmental initiatives in recognition of
its advanced environmental management, and we received a loan under the program.

Acquisition of Quality
Excellence Certificationfrom Caterpillar

Evaluation Committee’sSpecial Award in the
24th Environmental
Communication Awards

JFE Steel

FY2020 Keidanren Best Internal Newsletter Award

DBJ Environmentally
Rated Loan Program

100,000 or more persons a year

Awards for technology and product development, etc. (FY2020)

FY2021 The Commendation for Science and Technology by the Minister of
Education, Culture, Sports, Science and Technology, Awards for Science andTechnology (Development Category)
53rd (FY2020) The Ichimura Prize in Industry for Outstanding Achievement
FY2020 Energy Conservation Grand Prize Award in Energy Conservation Category

Evaluation by CDP 2020

JFE Holdings has been included in the MSCI Japan Empowering Women Index (WIN) managed by MSCI in the U.S. The index consists ofcompanies selected for their excellent approaches to ESG, based on multifaceted scores for gender diversity from among constituentsof the MSCI Japan IMI Top 700 Index. The top half of stocks in each sector are selected for inclusion. This index is one of the ESG
investment indexes used by Japan’s Government Pension Investment Fund (GPIF).

JFE Steel has been selected by the World Steel Association for the 2020 Steel Sustainability Champions award.
Steel Sustainability Champions is an award presented once a year by the World Steel Association to member companies that haveshown noteworthy outcomes in improving sustainability by leading the way toward a sustainable steel industry and a better society. Last
year, JFE Steel won the World Steel Association’s Steelie Awards for Innovation of the Year, a first for Japan’s steel industry, in recognitionof its development of innovative technologies that help reduce environmental burdens. Furthermore, through the JFE Group’s CSR
Report 2020, the Company is proactively disclosing to stakeholders measured data and its basic stance on sustainability in various
fields, including the environment and occupational health and safety. These initiatives have also been recognized.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Employees

Major communication methods, etc.

Selected for inclusion in
the S&P/JPX Carbon
Efficient Index

JFE Holdings was selected for the second straight year as a constituent of the FTSE4Good Index Series and the FTSE Blossom Japan
Index, which are investment indices provided by FTSE Russell, a subsidiary of the London Stock Exchange Group. Both indexes comprisecompanies that are demonstrating strong environmental, social, and governance (ESG) practices. It is used widely to create andevaluate sustainable investment funds and other financial instruments. The FTSE Blossom Japan Index is one of the ESG investment
indices used by Japan’s Government Pension Investment Fund (GPIF), one of the world’s largest pension management entities.

Sustainability Management

Management Organization
Executive Structure (as of July 1, 2021)

Outside Executive Structure (as of July 1, 2021)

Directors
Nomination
Committee Member

Nomination
Committee Member

Remuneration
Committee Member

Remuneration
Committee Member

89

Koji
Kakigi

Yoshihisa
KitanoMasashiTerahata

Representative
Director

Representative
Director

Representative
Director

Independent Executive

Independent Executive

Independent Executive

Chairperson
Nomination Committee

Chairperson
Remuneration Committee

Nomination
Committee Member

Remuneration
Committee Member

Masami
Yamamoto

Nobumasa
Kemori

YoshikoAndo

Director

Director

Director

Data of birth: May 3, 1953

Data of birth: February 20, 1958

Data of birth: October 31, 1959

Data of birth: January 11, 1954

Data of birth: April 12, 1951

Data of birth: March 17, 1959

1977
Joined Kawasaki Steel Corporation
2015	Representative Director, President and CEO of
JFE Steel Corporation, Representative Director of
JFE Holdings, Inc.
2019	Representative Director, President and CEO of
JFE Holdings, Inc. (current post)

1982
Joined Kawasaki Steel Corporation
2019	Representative Director, President and CEO of
JFE Steel Corporation (current post),
Representative Director of JFE Holdings, Inc.
(current post)

1982
Joined Kawasaki Steel Corporation2018	Representative Director and Executive Vice
President of JFE Steel Corporation
2019	Representative Director and Executive Vice
President of JFE Holdings, Inc. (current post)

Mr. Kitano has abundant experience and knowledge required
for management of the Group, which he has accumulated
through his experience in operations in steelmaking technology and production control departments, and execution ofduties as Corporate Officer such as supervision of steel
works and overseas business, corporate planning, and IT in
JFE Steel Corporation.

Mr. Terahata has abundant experience and knowledge
required for management of the Group, which he has
accumulated through his experience in operations such as
general administration and legal departments in the company
as well as operations in human resource and labor administration departments, and execution of duties as Corporate
Officer in management divisions such as accounting, finance,and procurement departments in JFE Steel Corporation.

Apr. 1976		 Joined Fujitsu Limited
Jan. 2010		Corporate Senior Executive Vice President of
Fujitsu Limited
Apr. 2010		 President of Fujitsu Limited
Jun. 2010		President and Representative Director of
Fujitsu Limited
Jun. 2017		Chairman and Director of Fujitsu Limited,
Director of JFE Holdings, Inc. (current post)
Jun. 2019		Director and Senior Advisor of Fujitsu Limited(current post)

Sep. 1980		Joined Sumitomo Metal Mining Co., Ltd.
Jun. 2006		Director, Managing Executive Officer andGeneral Manager of Non-Ferrous Metals Div. of
Sumitomo Metal Mining Co., Ltd.
Jun. 2007		Representative Director and President of theBoard of Sumitomo Metal Mining Co., Ltd.
Jun. 2013		Representative Director and Chairman of theBoard of Sumitomo Metal Mining Co., Ltd.
Jun. 2016		Director and Chairman of the Board of
Sumitomo Metal Mining Co., Ltd.
Jun. 2017		Executive Advisor of Sumitomo Metal Mining
Co., Ltd.
Jun. 2018		Director of JFE Holdings, Inc. (current post)
Jun. 2021		Honorary Advisor of Sumitomo Metal Mining
Co., Ltd. (current post)

Apr. 1982		Joined Ministry of Labour
J u l . 2013		General Manager, Workers’ Compensation
Division, Labour Standards Bureau of Ministryof Health, Labour and Welfare
J u l . 2014		Director-General, Equal Employment and Childand Family Bureau of Ministry of Health,Labour and Welfare
Oct. 2015		Director-General for Labour of Ministry of
Health, Labour and Welfare
Jun. 2016		Director-General of Statistics and Information
Policy of Ministry of Health, Labour andWelfareJ u l . 2017		Director-General for Human Resources
Development of Ministry of Health, Labour andWelfareJ u l . 2018		Retired from Ministry of Health, Labour andWelfareJun. 2020		Director of JFE Holdings, Inc. (current post)

Mr. Kakigi has abundant experience and knowledge required
for management of the Group, which he has accumulated
through his experience in operations in human resource andlabor administration departments, and execution of duties as
Corporate Officer in general administration, legal, accounting,finance, and procurement, in the Company and JFE SteelCorporation.

HajimeOshitaToshinori
Kobayashi

Director

Director

Data of birth: December 19, 1957

Joined NKK Corporation
1982
2017	Representative Director, President and CEO of
JFE Engineering Corporation (current post),
Director of JFE Holdings, Inc. (current post)

Joined Kawasaki Steel Corporation
1980
2016	Representative Director and Executive Vice
President of JFE Steel Corporation
2021	Representative Director, President and CEO of
JFE Shoji Corporation (current post), Director of
JFE Holdings, Inc. (current post)

Mr. Oshita has abundant experience and knowledge required
for management of the Group, which he has accumulated
through his experience in corporate planning, accounting,and finance, and a wide range of duties as Corporate Officer,
including overseeing domestic and overseas businesses at
JFE Engineering Corporation.

Significant concurrent posts
Honorary Advisor of Sumitomo Metal Mining Co., Ltd.
Outside Director of NAGASE & CO., LTD.
Outside Director of Sumitomo Realty & Development Co., Ltd.

NobuyaHara

KumikoBaba

Audit & Supervisory
Board Member

Audit & Supervisory
Board Member

Data of birth: December 11, 1961

Data of birth: October 10, 1965

1984
Joined NKK Corporation
2016	Audit & Supervisory Board Member of JFE SteelCorporation (current post)2017	Audit & Supervisory Board Member of JFE
Holdings, Inc. (current post)

1989
Joined Toshiba Corporation
2014
Joined JFE Engineering Corporation2018	Vice President of JFE Engineering Corporation
2019	Audit & Supervisory Board Member of JFE
Holdings, Inc. (current post)

Mr. Hara has abundant experience and knowledge in financeand accounting that he has accumulated through operations
related to corporate planning, accounting, and finance at JFE
Steel Corporation as well as accounting operations at theCompany. He also has abundant experience and knowledge
gained through corporate management operations at thegroup companies of JFE Steel Corporation, in addition toduties as its Audit & Supervisory Board Member.

Ms. Baba had engaged in operations such as contract
negotiation with overseas parties and business alliancesand launches of new business in Toshiba Corporation. Sincejoining JFE Engineering Corporation, she has executed duties
as Corporate Officer in the Company in addition to supervision of overseas businesses and accounting and financerelated operations and thus she has abundant experienceand knowledge about finance and accounting.

Independent Executive

Independent Executive

Independent Executive

Nomination
Committee Member

Remuneration
Committee Member

Nomination
Committee Member
Remuneration
Committee Member

Mr. Kobayashi has abundant experience and knowledge
required for management of the Group, which he has
accumulated through his experience in operations related
to sales of automotive steel at JFE Steel Corporation, andsupervising sales divisions as Corporate Officer.

Audit & Supervisory Board Members

Significant concurrent posts
Audit & Supervisory Board Member of Kirin Holdings
Company, Limited
Outside Director of Sansei Technologies, Inc.

ShigeoOhyagiIsao
Saiki

TsuyoshiNumagami

Audit & Supervisory
Board Member

Audit & Supervisory
Board Member

Audit & Supervisory
Board Member

Data of birth: May 17, 1947

Data of birth: August 11, 1961

Data of birth: March 27, 1960

Mar. 1971		Joined Teijin Limited
Jun. 2006		Senior Managing Director of Teijin Limited
Jun. 2008		Representative Director, President, CEO of
Teijin Limited
Jun. 2010		Representative Director, President, CEO of
Teijin Limited
Apr. 2014		Chairman of the Board of Teijin Limited
Jun. 2014		Audit & Supervisory Board Member of JFE
Holdings, Inc. (current post)
Jun. 2018		Senior Advisor, Teijin Limited (current post)

Apr. 1989		Admitted to the bar
Apr. 1989		Joined Ginza Law Office (current Abe, Ikubo &Katayama Law Firm)
Jan. 1998		Promoted to Partner Lawyer of Abe, Ikubo &Katayama Law Firm (current post)
Apr. 2014		Audit & Supervisory Board Member of JFE
Holdings, Inc.
Jun. 2014		Retired as Audit & Supervisory Board Memberof JFE Holdings, Inc.
Jun. 2017		Audit & Supervisory Board Member of
JFE Holdings, Inc. (current post)

Apr. 2000		Professor of Graduate School of Commerceand Management of Hitotsubashi University
Jan. 2011		Dean of Graduate School of Commerce andManagement of Hitotsubashi University
Dec. 2014		Board Member and Executive Vice Presidentof Hitotsubashi University
Apr. 2018		Professor of Graduate School of Business
Administration of Hitotsubashi University(current post)
Jun. 2018		Audit & Supervisory Board Member of JFE
Holdings, Inc. (current post)

Significant concurrent post
Partner Lawyer of Abe, Ikubo & Katayama Law Firm

Significant concurrent post
Professor of Graduate School of Business Administration of
Hitotsubashi University

Global management

Legal

Significant concurrent posts
Senior Advisor of Teijin Limited
Outside Director of KDDI CORPORATION
Outside Member of the Board of Directors of MUFG Bank, Ltd.
Outside Director of Tokyo Electric Power Company Holdings,
Incorporated

Expertise and background
Corporate management/
Management strategy

Engineering

Finance and accounting

Academic

Public administrationand public policy

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Data of birth: September 11, 1957

Significant concurrent posts
Director and Senior Advisor of Fujitsu Limited
Outside Member of the Board of Directors of Mizuho Financial
Group, Inc.

90

Financial and Corporate Information

Financial Highlights
The JFE Group adopted International Financial Reporting Standards (IFRS) from FY2018, in place of the generally accepted accounting principles in Japan (JGAAP).
(billion of yen)
JGAAP

IFRS
FY2010FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2018FY2019FY2020Operating results
3,195

3,166

3,189

3,666

3,850

3,431

3,308

3,678

3,961

3,873

3,729

3,227

Ordinary income (JGAAP) / Business profit*1 (IFRS)

165

52

52

173

231

64

84

216

221

232

37

(12)

Income before income taxes (JGAAP) / Profit before tax (IFRS)

115

(71)

75

160

226

74

105

213

209

209

(213)

(4)

EBITDA*2 (JGAAP) / EBITDA*3 (IFRS)

428

306

260

368

421

254

279

388

405

428

269

223

Net sales (JGAAP) / Revenue (IFRS)Profit attributable to owners of parent

58

(36)

39

102

139

33

67

144

164

163

(197)

(21)

Capital expenditures (construction basis)

180

197

179

175

225

212

234

257

287

329

391

342

Depreciation and amortization

246

238

194

181

176

177

182

159

172

196

231

236

Research and development expenses

33

34

33

31

32

35

35

34

37

37

38

36

Financial position
Total assets

91

Property, plant and equipment Shareholders’ equity (JGAAP) /Equity attributable to owners of parent (IFRS)Net assets (JGAAP) / Equity (IFRS)
Debt outstanding (JGAAP) / Interest-bearing debt outstanding (IFRS)

3,976

4,007

4,107

4,241

4,639

4,234

4,336

4,440

4,648

4,709

4,646

4,654

1,712

1,644

1,606

1,599

1,629

1,627

1,650

1,702

1,782

1,835

1,717

1,772

1,437

1,414

1,558

1,702

1,938

1,804

1,865

1,949

2,012

1,926

1,627

1,679

1,478

1,456

1,596

1,745

1,990

1,857

1,921

2,009

2,079

1,991

1,706

1,760

1,496

1,593

1,596

1,534

1,501

1,379

1,375

1,330

1,449

1,523

1,814

1,806

92

Cash flows
Cash flows from operating activities

302

110

287

254

297

267

185

298

235

268

261

247

Cash flows from investing activities

(302)

(205)

(163)

(164)

(216)

(137)

(163)

(194)

(284)

(313)

(358)

(164)

Free cash flow*4

0

(95)

123

90

81

129

21

103

(48)

(45)

(97)

83

Cash flows from financing activities

23

96

(147)

(105)

(78)

(144)

(18)

(90)

56

51

103

(30)

111

(69)

71

177

242

58

118

251

285

284

(343)

(38)

2,709

2,628

2,701

2,951

3,362

3,128

3,236

3,382

3,608

3,345

2,826

2,916

35

20

20

40

60

30

30

80

95

95

20

10

31.6

—

28.1

22.5

24.8

51.4

25.5

31.9

33.3

33.5

—

—

Per share data

Payout ratio (%)
Financial indicators
Debt/EBITDA ratio*5 (JGAAP) / Debt/EBITDA ratio*6 (IFRS) (times)

3.5

5.2

6.1

4.2

3.6

5.4

4.9

3.4

3.6

3.6

6.7

8.1

ROE*7 (JGAAP) / ROE*8 (IFRS) (%)

4.1

(2.6)

2.7

6.3

7.7

1.8

3.7

7.6

8.3

8.6

(11.1)(1.3)

ROA*9 (JGAAP) / ROA*10 (IFRS) (%)

4.6

1.7

1.6

4.5

5.5

1.7

2.3

5.2

5.1

5.0

0.8

(0.3)

Equity ratio (%)

36.2

35.3

37.9

40.1

41.8

42.6

43.0

43.9

43.3

40.9

35.0

36.1

D/E ratio*11 (JGAAP) / D/E ratio*12 (IFRS) (%)

76.5

83.5

76.9

67.9

59.0

56.9

51.4

58.1

62.0

68.2

96.4

93.2

Year-end share price (yen/share)

2,434

1778

1,767

1,943

2,654

1,516

1909

2144

1879

1,879

703

1,363

2,747

2,714

2,499

2,691

2,873

2,445

2,349

2,715

2,808

2,830

2,681

2,255

265

278

267

284

367

397

426

391

485

485

512

485

785

1,781

1,934

1,756

1,671

1,907

2,060

1,125

1,084

932

Segment information
Net sales (JGAAP) / Revenue (IFRS)   Steel business   Engineering business   Trading business
Ordinary income (JGAAP) / Segment profit*13 (IFRS)   Steel business

134

25

15

126

188

27

40

198

164

161

(8)

(65)

   Engineering business

12

14

16

18

18

20

26

19

20

20

23

24

7

21

24

15

21

33

35

35

27

20

   Trading business
Others
Crude steel production (JFE Steel on a non-consolidated basis) (million t)

28.8

26.9

28.0

28.7

28.4

27.4

28.1

28.5

26.3

26.3

26.7

22.8

Crude steel production (JFE Steel on a consolidated basis) (million t)

31.5

29.2

30.7

31.6

31.0

29.8

30.4

30.1

27.9

27.9

28.1

24.0

Shipment (JFE Steel on a non-consolidated basis) (million t) Average selling price (JFE Steel on a non-consolidated basis)(thousand yen/t)
Export ratio on a value basis (JFE Steel on a non-consolidated basis) (%)

26.3

24.7

25.2

25.5

26.1

25.4

25.7

25.3

23.8

23.8

23.5

20.5

77.9

82.0

70.6

75.7

77.1

66.8

62.8

75.3

81.5

81.5

78.8

74.8

Employees (JFE Holdings on a consolidated basis) (persons)

46.5

45.0

49.9

48.4

48.1

45.8

44.0

44.4

41.7

41.7

41.5

42.3

54,40054,13357,04457,21058,856

59,46060,43961,23462,07662,08364,00964,371*1 Business profit: Profit before tax excluding finance income and one-time items of a materially significant value*2 EBITDA (JGAAP): Ordinary income + Interest expenses + Depreciation and amortization*3 EBITDA (IFRS): Business profit + Depreciation and amortization*4 Free cash flow: Cash flows from operating activities + Cash flows from investing activities*5 Debt/EBITDA ratio (JGAAP): Debt outstanding / EBITDA*6 Debt/EBITDA ratio (IFRS): Interest-bearing debt outstanding / EBITDA*7 ROE (JGAAP): Profit attributable to owners of parent / Shareholders’ equity*8 ROE (IFRS): Profit attributable to owners of parent / Equity attributable to owners of parent* 9 ROA (JGAAP): (Ordinary income + Interest expenses) / Total assets (average)*10 ROA (IFRS): Business profit / Total assets*11 D/E ratio (JGAAP): Debt outstanding / Shareholders’ equity
For debt having a capital component, a portion of its issue price is deemed to be capital, as assessed by rating agencies.
*12	D/E ratio (IFRS): Interest-bearing debt outstanding / Equity attributable to owners of parent
For debt having a capital component, a portion of its issue price is deemed to be capital, as assessed by rating agencies.
*13 Segment profit: Profit including finance income in business profit

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Profit attributable to owners of parent (yen/share) Net assets (JGAAP) /Equity attributable to owners of parent (IFRS) (yen/share)
Dividends (yen/share)

Financial and Corporate Information

Non-financial Highlights
Environmental Indicators

Societal Indicators

CO2 emissions from energy sources (million t-CO2) andCO2 emission intensity (t-CO2/t-s) of JFE SteelSOx emissions by JFE Steel (million Nm3)

2.48
1.94

(FY)

1990
Scope 1

2013

4.2

2.08

50.8

2016

Scope 2

50.5

2017

47.3

47.9

2018

2019

5.4

1.8

41.9

2020

(FY)

1973

1990

4.5

4.6

4.1

4.3

3.3

2016

2017

2018

2019

2020

Emissions by JFE Steel (non-consolidated)

189

14.7

(FY)

2014

2016

2017

98.4

98.4

2017

2018

2019

2020

Industrial water accepted (million tons) andcirculated (%) by JFE Steel
93.5

93.5

93.4

97.1

220

218

221

45.2

109.0

97.4

88.1

1.4

1.8

4.2

1.7

(FY)

2016

2017

2018

2019

2020

Total

Final disposal

Recycling rate

Environmental capital investment (billion yen) andpromotion expenses for environmental activities(billion yen) of JFE Steel
1,164

93.0

1,121

1,113

1,131

(CY)

22.7

2016

2017

2018

2019

10.3

10.7

2020

* Industrial water circulated (%) = (Total amount - industrial water accepted) / total
amount × 100

2017

2018

2019

2020

2021

94

Percentage of female recruits (total)
Percentage of female recruits (career-track white-collar positions)

(FY)

2016

2017

2018

1,040

2020

41.6

53.5

39.1

2018

2020

54.2
52.4

46.4

2019

55.1

(CY)

47.3

45.7

46.0

2016

2017

52.4

52.3
49.4

53.2
48.0
47.2

2018

2019

2020

Employment of people with disabilities(as of June 1 of each year) (%)

1.16

1.22

1.20

(CY)

2016

1.20

2.62

1.21

2.50

1.00
1.02

0.82

0.60
0.21

2019

39.6

Lost-work Injuries

297

Promotion expenses for environmental activities
Environmental capital investment

61.7

22.1

468

433

Rate of health examination for dependents (%)

JFE Engineering
JFE SteelJFE Shoji* Target: dependents aged 40 or older (including dependents other than spouses)* Results for 2019 have been changed from preliminary to confirmed figures.

0.17

0.19

2017

12.9

JFE Engineering
JFE SteelJFE Shoji* Results for 2019 have been changed from preliminary to confirmed figures.

1.15

298

2016

(FY)

12.9

215

444

Industrial water accepted by JFE Steel (non-consolidated)Industrial water circulated by JFE Steel* (non-consolidated)

14.3

53.0

36.0

25.0

0.71

(FY)

2021

Percentage of female managers

36.8

Target: over 90%

213

2020

56.9

21.9

Emission by JFE Steel (non-consolidated)

93.8

23.3

64.2

98.3

10.3

1.6

2016

2019

Provision rates of health guidance (%)

17.8

1990

23.6

2017

0.17

2018

JFE Engineering
JFE Steel
Manufacturing industry average

2.34
0.76

0.45
0.28

2.33

2.01

2.48

2.39

2.20

2.23

2.51
2.39
2.37

2.14

0.35
1.86

0.23

2019

2.41

2020

JFE Shoji Group* JFE Steel and JFE Engineering: parent company, business associates and contractors; JFE
Shoji Group: domestic parent and group companies, business associates and contractors* Lost-work injuries = Number of lost-time injuries / number of hours worked × 1,000,000

(CY)

2016

2017

2018

JFE Steel

JFE Engineering

2019
JFE Shoji

2020

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

98.4

101.8

1973

2018

Number of female managers

145.4

(FY)

26.4

274

* Scope of calculation: JFE Holdings and operating companies

Waste generated at construction sites (thousand tons)
and recycling rate (%) of JFE Engineering

11.1

31.8

* Scope of calculation: total of three operating companies

34.6

10.5

34.6

355

94

6.0

CO2 emissions from energy sources intensity

11.5

Percentage of female recruits (total) (%) andpercentage of female recruits(career-track white-collar positions) (%)

228

NOx emissions by JFE Steel (million Nm3)

10.9

330

310

3.5

*1 The CO2 coefficient for electricity purchased in FY2020 is that of FY2019 on theJapan Iron and Steel Federation’s Commitment to a Low Carbon Society.
*2 T he figures in FY2018 have been updated as the CO2 coefficient for electricity
purchased in FY2019 on the Japan Iron and Steel Federation’s Commitment to a Low
Carbon Society was applied.
*3 Data of JFE Bars & Shapes Corporation Sendai Works is included in the figures from
FY2013 to FY2016.

13.7

6.1

4.9

-16%

2.03

58.1
56.6
55.7
54.2
53.5
5.6
4.9
6.1
6.3 47.3
6.2

52.5

93

2.03

1.99

5.7

5.4

36.8
1.98

58.3

Number of female managers (persons) andpercentage of female managers (%)

Financial and Corporate Information

Company Profile / Share Information

Annual Highlights
JFE Holdings

Company Profile (As of March 31, 2021)

2020
June Held the 18th Ordinary General Meeting of Shareholders
July	Selected for inclusion in FTSE4Good Index Series and FTSE Blossom
Japan Index for the first time
Aug.	Selected for inclusion in DX Stocks 2020 (sixth year running, including
Competitive IT Strategy Company Stock)
Sep.
Announced CO2 emission reduction target for the JFE Group
Sep.
Issued JFE Group Report 2020 (integrated report)
Sep.
Issued JFE Group CSR Report 2020 (online only instead of a publication)

Company Name (Trade Name): JFE Holdings, Inc.
Head Office:2-2-3 Uchisaiwaicho, Chiyoda-ku, Tokyo 100-0011, JapanTEL:+81-3-3597-4321

Established:

September 27, 2002

Capital:147.1 billion yen

Number of Employees:

64,371 (Consolidated) Male: 54,983 / Female: 9,388

Share Data (As of March 31, 2021)
Total Number of Shares Authorized
to Be Issued

95

Total Number of Shares Issued

614,438,399 shares

Total Number of Shareholders

215,592 persons

Minimum Trading Unit

100 sharesFiscal Year-End

March 31 of each year

Stock Exchange Listing

Tokyo Stock Exchange, Inc. andNagoya Stock Exchange, Inc.

Security Code5411

Shareholder Registry
Administrator

 izuho Trust & Banking Co., Ltd.
M
1-2-1 Yaesu, Chuo-ku, Tokyo
103-8670, Japan

Major Shareholders (As of March 31, 2021)
Shareholding ratio (%)

The Master Trust Bank of Japan, Ltd. (trust account)

53,606

9.30

Custody Bank of Japan, Ltd. (trust account)

31,127

5.40

Nippon Life Insurance Company

20,821

3.61

The Dai-ichi Life Insurance Company, Limited

13,1272.28

Mizuho Bank, Ltd.

12,1382.11

JFE Employees Stock Ownership Plan

10,266

1.78

Custody Bank of Japan, Ltd. (trust account 5)

8,774

1.52

STATE STREET BANK WEST CLIENT - TREATY 505234

8,471

1.47

JFE Business Partners Stock Ownership Plan

8,144

1.41

Tokio Marine & Nichido Fire Insurance Co., Ltd.

7,827

1.36

Distribution of Shareholders (As of March 31, 2021)

2020
Apr.	Established Kyoei J&T Recycling Corporation (J&T Recycling Corporation)
July	Started to provide "BRA-ING", a high-performance fully automatedoperating system for waste incinerators
Sep.	Acceptance of operation and maintenance order for waste-to-energy
plants in Fukuyama and Kurashiki
Oct.	Turned food biogas power generation business company Bios Komaki
into a subsidiary (J&T Recycling Corporation)
Oct.	Held the 50th anniversary ceremony of Tsu-Works
Oct.
Constructed new LUCANT™ plant for Mitsui Chemicals (JFE Project One)

Treasury shares
37,915 thousand shares (6.2%)

Foreign corporations, etc.
158,88 thousand shares(25.9%)

Individuals/other
115,15 thousand shares(18.7%)

Other domestic
corporations
57,344thousand shares(9.3%)

Financial instruments business operators
17,690 thousand shares (2.9%)

Oct.	Won Steelie Awards 2020 from World Steel Association for developmentof resource-conserving silicon-gradient magnetic steel sheet for
high-speed motors
Nov.	Commenced companywide deployment of automated smart cranes forcoil warehouses
Nov.	Launched Super-RQ quenching facility at Keihin steel plate mill
Dec.	Developed JNRF™ silicon-gradient magnetic steel sheet for high-speed
motorsDec.	Received Prize of the Chairman from Energy Conservation Center, Japan(ECCJ) for Energy Conservation Best Practices at Workplaces, Energy
Conservation Grand Prize Award for developing energy-supply demandguidance system based on data science
Dec.	Received Chairman’s Prize in 55th JSPMI Prize for surface inspection
system using twin-illumination and subtraction techniqueDec.	1.5 GPa-grade high-tensile strength cold-rolled steel sheets adopted forfirst time in vehicle body structural parts
Dec. 	Started testing Type 2 pressure accumulator for JFE-made hydrogenstations at commercial locations
2021
Feb.	Signed agreement with BHP to develop methods for reducing carbon insteelmaking
Feb.	Launched curriculum at Vietnamese university to train steel-structureengineersMar.	Developed world’s first ultrasonic robots for inspecting steel plate
Mar.	Developed energy-absorption structure made with ultra-high-strength
steel incorporating resins
Mar.	Greatly expanded processing landslide prevention piles with JFE Nejiru®
threaded joints
Mar.	Received 53rd Ichimura Industry Award for chrome ore smelting reduction
process using hydrocarbon fuel burner

Nov.	Received order for one of the world’s largest waste-to-energy plants in
Stapelfeld, Germany (SBG)
Dec.	Signed share transfer agreement to acquire shares of Mitsui E&S Plant
Engineering Inc.
2021
Jan.	Kesennuma Wan Oudan Kyo Bridge completed
Feb.	Nagoya Nishi JCT (NAGOYA-DAINI-KANJO EXPRESSWAY) completed
Mar.	Appointed as joint preferential negotiation right holder for transfer ofgas business and comprehensive consign of waterworks and sewage
businesses by Myoko City, Niigata Prefecture
Mar.
Ibaraki Trunk Line, one of the longest gas pipelines in Japan, completed

JFE Shoji (Trading business)
2020
Apr.	Merger of JFE Shoji Steel Construction Materials and JFE Shoji
Usuitakenzai
July	Established Renewable Energy Steel Products Team in Steel Overseas
Division

Oct.	Formed alliance with Niigata Steel and Fujita Metal to optimize steel
sheet processing businesses
Oct.	Invested in Sankyo Noritake Steel
2021
Feb.	Launched operations at second plant of JFE Shoji Steel Hai Phong, a coilcenter in northern Vietnam

Japan Marine United (Shipbuilding business)

Changes in Share Prices, Trading Volume and Dividends
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2,434

1,778

1,767

1,943

2,654

1,516

1,909

2,144

1,879

703

1,363

Trading volume (Million shares) (Fiscal year)

760

722

1,206

1,113

799

1,080

1,141

896

685

823

1,077

Annual dividends per share (Yen)

35

20

20

40

60

30

30

80

95

20

10

Share price (Yen) (As of year-end)

2020
Apr.	Won 2020 Commendation for Science and Technology from Minister of
Education, Culture, Sports, Science and Technology, Awards for Scienceand Technology (Development Category) for developing environmentallyfriendly high-quality stainless-steel smelting process
Apr.	Collaborated with Taiheiyo Cement and Research Institute of Innovative
Technology for the Earth (RITE) in establishing group to research technologies to fixate CO2 in carbonateMay	Collaborated with Tohoku University in establishing department toresearch advanced analysis technologies for steelmaking processes
June 	Received Field Innovation Award from The Japanese Society for Artificial
Intelligence for developing safety support system using human-behavior
analysis software
June	Named by Ministry of Economy, Trade and Industry to Global Niche Top
Companies Selection 100 for ARRESTEX heavy-crack-arrest steel platefor super-large container vessels
June	Opened JFE Digital Transformation Center (JDXC®) to pursue DX
initiatives
July	Completed rollout of steel sheet non-contact control technology for hot
dip galvanizing process in all production bases worldwide
July	Nine companies including Nihon Shipyard (then “JMU”) launched Ship
Carbon Recycling Working Group within Carbon Capture & Reuse (CCR)
Study Group to pursue zero-emission ship fuel based on methane
Sep.	Won seventh straight annual National Commendation for Invention forT-eye® system that uses magnetic flux leakage method to measureminute concave-convex defects in steel sheets
Sep.	Developed 100% chromate-free hot dip galvanized steel sheets
Oct.	Introduced training simulator that uses mixed-reality technology
Oct. 	Started demonstration testing of medium-sized facility to produce
ferro coke

JFE Engineering (Engineering business)

Note: In addition to the above, the Company retains 37,915 thousand shares as treasury shares. The treasury shares are not included in the shareholding ratio
calculation.

Financial institutions
227,449 thousand shares(37.0%)

Issued JFE Group DX Report 2020
JFE Group CSR Report 2020 won the Excellence Award in the 24th
Environmental Communication Award
Feb. 	Won the Environmentally Sustainable Companies Special Award in the
2nd ESG Finance Awards JapanMar.
Co-sponsored the 15th All-China Japanese Speech Contest

2020
June	Participated in the Designing the Future of Full Autonomous Ship Project(DFFAS Project) sponsored by the Joint Technological Development
Program for the Demonstration of Unmanned Ships under the administration of the Nippon Foundation
Aug.	Launched joint R&D program for transporting liquefied ammonia andusing it as a marine fuelOct.	Participated in newly established Planning and Design Center for Green
Ships

2021
Jan.	Launched Nihon Shipyard as joint venture in marketing, sales, and design
with Imabari Shipbuilding as part of capital and business allianceJan.	Received lot of 12 container ships by 3,000 TEU type from abroad
Mar.	Delivered Aegis destroyer Haguro to Japan’s Ministry of Defense

96

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Number of shares held(Thousand shares)

Name

Held the first JFE Group ESG Briefing

JFE Steel (Steel business)

Share Information (As of March 31, 2021)
2,298,000,000 shares

Oct.
2021
Feb.
Feb.

Financial and Corporate Information

Operating and Main Group Companies (As of April 1, 2021)
Notes 1: Net sales/Revenue: Results for FY2020
2: Number of employees: As of March 31, 2020 (Consolidated)* Equity method affiliates

Head office Chiyoda-ku, Tokyo   Yokohama head office Yokohama, Kanagawa Prefecture   Revenue
Number of employees 10,612 (male: 9,141; female: 1,471)

Trading Business

Head office

Shipbuilding Business

JFE Shoji

Engineering Business

JFE Engineering

Chiyoda-ku, Tokyo   Revenue

2,255.2 billion yen   Number of employees

45,797 (male: 40,054; female: 5,743)

Head office

Domestic group companies
JFE Mineral Company, Ltd.
Mizushima Ferroalloy Co., Ltd.
JFE Material Co., Ltd.
Chiba Riverment and Cement Corporation
Mizushima Riverment Corporation
JFE Precisions Co., Ltd.
JFE Plastic Resource Corporation
JFE Bars & Shapes Corporation
JFE Metal Products & Engineering, Inc.
JFE Galvanizing & Coating Co., Ltd.
JFE Welded Pipe Manufacturing Co., Ltd.
JFE Container Co., Ltd.
JFE Steel Pipe Co., Ltd.
Galvatex Corporation
JFE Pipe Fitting Mfg. Co., Ltd.
JFE Tubic Corporation
JFE Techno-Wire Corporation
JFE Kozai Corporation
Daiwa Kohtai Co., Ltd.
GECOSS Corporation
JFE Plant Engineering Co., Ltd.
JFE Advantech Co., Ltd.
JFE Civil Engineering & Construction Corporation
JFE Sekkei Ltd.
JFE Logistics Corporation
JFE West Technology Corporation
JFE Wing Corporation
JFE Techno-Research Corporation
JFE Systems, Inc.
JFE Chemical Corporation
JFE Life Corporation
JFE East Japan GS Co., Ltd.
JFE West Japan GS Co., Ltd.
JFE Apple East Corporation
JFE Apple West Corporation
Shinagawa Refractories Co., Ltd.*
Nippon Chuzo K.K.*
Nippon Chutetsukan K.K.*
EXA Corporation*
Setouchi Joint Thermal Power Co., Ltd.*
Setouchi Joint Thermal Power Co., Ltd.*
Mizushima Eco-Works Co., Ltd.*NKK Seamless Steel Pipe K.K.*

485.7 billion yen

Domestic group companies
Asukasoken Co., Ltd.
Urban Energy Corporation
AnyTech Inc.
Kitanihon Industrial Co. Ltd.
J&T Recycling Corporation
JFE Aqua Machine and Service Corporation
JFE Environmental Service Corporation
JFE Environment Technology Company, Limited
JFE Career Navi Corporation
JFE Technos Co., Ltd.
JFE Pipeline Engineering Corporation
JFE Business Support Yokohama Corporation
JFE Project One Co., Ltd.
J Farm Corporation
Japan Tunnel Systems Corporation*
JP Steel Plantech Co.*
Tohoku Dock Tekko K.K.
Fuji Kako Co., Ltd
Mie Data Craft Co., Ltd.

Chiyoda-ku, Tokyo   Revenue

932.5 billion yen   Number of employees

Domestic group companies
JMU AMTEC Co., Ltd.
IMC Co., Ltd.

Overseas group companies
JFE Techno Manila, Inc.
JFE Engineering (M) SDN. Bhd.
PT. JFE Engineering Indonesia
JFE Engineering India Private Limited
Mitr Project Sevices Co., Ltd.
Standardkessel Baumgarte Holding GmbHJ&M Steel Solutions Company Limited
DongJie Environmental Technology Co., Ltd.*98

7,910 (male: 5,757; female: 2,153)

Domestic group companies
JFE Shoji Steel Construction Materials Corporation
JFE Shoji Pipe & Fitting Corporation
JFE Shoji Electrical Steel Co., Ltd.
Kawasho Foods Corporation
JFE Shoji Electronics Corporation
JFE Shoji Coil Center Corporation
Niigata Steel Corporation
Nagano Can Corporation
Toyo Kinzoku Corporation
JFE Shoji Terre One Corporation
Tochigi Shearing Corporation
Hokuriku Steel Co., Ltd.
K&I Tubular Corporation
Taisei Kogyo Corporation
Kadota Kozai Corporation
JFE Shoji Zosen Kako Corporation
JFE Shoji Kohnan Steel Center Co., Ltd
Naigai Steel Corporation
JFE Shoji Tinplate Center Corporation
Mizushima Steel Corporation
Mizushima Metal Products Corporation
Nihon Jiseizai Kogyo Co., Ltd.
Kyushu-Tech Corporation
JFE Shoji Matech Inc.
JFE Shoji Machinery & Materials Corporation
JFE Shoji Business Support, Inc.
JFE Shoji Service Corporation
Kadowaki Steel Material’s Corporation
Tohsen Corporation
Shin Nihon Kogyo Corporation
Yashimanada Corporation
Mitsuwa Tekken Corporation
JFE Shoji Jutaku Shizai Corporation
Aichi Kanzai Kogyo Corporation
Hoshi Kinzoku Corporation
Showa Kigyo Corporation
Hokuriku Kogyo Corporation
Kohnan Blanking Service Corporation
JFE Shoji Cormec Co., Ltd.
Hanwa Kozai Co., Ltd.*
Kita-Kanto Steel Corporation*
Ohmi sangyo Co., Ltd.*

Yokohama, Kanagawa Prefecture   Net sales

Overseas group companies
Nova Era Silicon S.A.
Thai Coated Steel Sheet Co., Ltd.
JFE Steel Galvanizing (Thailand) Ltd.
Philippine Sinter Corporation
PT.JFE Steel Galvanizing Indonesia
JFE Steel Australia Resources Pty. Ltd.
Nucor-JFE Steel Mexico, S. Der. L. Dec.V.*
California Steel Industries, Inc.*
Hojalata Y Laminados S.A.*
Fujian Sino-Japan Metal Co., Ltd.*
Bohai NKK Drill Pipe Co., Ltd.*Guangzhou JFE Steel Sheet Co., Ltd.*
Inner Mongolia Erdos EJM Manganese Alloys Co., Ltd.*
Jiaxing JFE Precision Steel Pipe Co., Ltd.*
Shanghai Baowu JFE Clean Iron Powder Co., Ltd.*
BaoWu JFE Special Steel Co., Ltd. *JSW Steel Ltd.*
Thai Cold Rolled Steel Sheet Public Co., Ltd.*
P.T. Sermani Steel*
Perusahaan Sadur Timah Malaysia (Perstima) Bhd.*
JFE Steel Tubular Technical Center Pte. Ltd.*
J-Spiral Steel Pipe Co., Ltd.*
Agrimeco & JFE Steel Products Co., Ltd.*Al Gharbia Pipe Company*
JFE MERANTI MYANMAR Co., Ltd.
JFE Connections America, Inc.
GECOSS VIETNAM COMPANY LIMITED

237.3 billion yen   Number of employees

Overseas group companies
Guangzhou JFE Shoji Steel Products Co., Ltd.
Dongguan JFE Shoji Steel Products Co., Ltd.
Zhejiang JFE Shoji Steel Products Co., Ltd.
Jiangsu JFE Shoji Steel Products Co., Ltd.
JFE Shoji Steel Philippines, Inc.
Central Metals (Thailand) Ltd.
Steel Alliance Service Center Co., Ltd.
New Bangpoo Manufacturing Co., Ltd.
JFE Shoji Steel Vietnam Co., Ltd.
JFE Shoji Steel Hai Phong Co., Ltd.
JFE Shoji Steel Malaysia Sdn. Bhd.
PT. JFE Shoji Steel Indonesia
JFE Shoji Steel India Private Limited
VEST Inc.
JFE Shoji Steel America, Inc.
JFE Shoji Steel de Mexico, S.A. de C.V.
Kelly Pipe Co., LLC
JFE Shoji Steel Service Center Bajio, S.A.P.I. de C.V.
Cogent Power Inc.
Marushin Canneries(Malaysia)Sdn. Bhd.
JY Steel Processing Co., Ltd.
Kawarin Enterprise Pte. Ltd.*r. bourgeois JFE Shoji Magnetic Lamination, Inc.*

5,309 (male: 5,054; female: 255)

JMU Defense Systems Co., Ltd.

Employee Data (Non-consolidated: Actual figures for FY2020)
JFE Steel

JFE Engineering

JFE Shoji

Number of employees (March 31, 2021)	16,089(Male 14,718, Female 1,371)
Number of managers	2,781(Male 2,616, Female 165)
Ratio of female managers
5.9%
Number of recruits
489(Male 452, Female 37)
(New graduates 448,
Mid-career 41)
15.8 (Male 15.4, Female 18.2)
Average years employedTurnover rate
3.1%
Number of rehired employees
626
Number of annual leave days taken (average) 13.2 days/year
Overtime working hours (average)
15.0 hours/month
Number of employees working shorter hours
for childcare (total number of persons)81
Number of dispatched employees
169

Number of employees (March 31, 2021)	3,866(Male 3,324, Female 542)
Number of managers	2,401(Male 2,257, Female 144)
Ratio of female managers
6.0%
Number of recruits
138 ( Male 122, Female 16)(New graduates 77,
Mid-career 61)
14.4 (Male 14.4, Female 14.5)
Average years employedTurnover rate
1.5%
Number of rehired employees
44
Number of annual leave days taken (average) 17.2 days/year
Overtime working hours (average)
24.3 hours/month
Number of employees working shorter hours
for childcare (total number of persons)70
Number of dispatched employees
652

Number of employees (March 31, 2021)	1,003(Male 598, Female 405)
Number of managers	629
(Male 592, Female 37)
Ratio of female managers
5.9%
Number of recruits
43 (Male 24, Female 19)(New graduates 40,
Mid-career 3)
14.0 (Male 14.7, Female 12.8)
Average years employedTurnover rate
3.7%
Number of rehired employees
31
Number of annual leave days taken (average) 10.4 days/year
Overtime working hours (average)
29.8 hours/month
Number of employees working shorter hours
for childcare (total number of persons)62
Number of dispatched employees
16

JFE GROUP REPORT 2021

Japan Marine
UnitedJFE GROUP REPORT 2021

Steel Business

JFE Steel

97

Head office1. Preparation Policy of the Consolidated Financial Statements
	The consolidated financial statements of the Company are prepared in accordance with

Consolidated Financial Statements 

99

FINANCIALI N F O R M AT I O N

101Consolidated Statement of Financial Position 

101

Consolidated Statement of Profit or Loss 

103Consolidated Statement of Comprehensive Income 104Consolidated Statement of Changes in Equity 

105Consolidated Statement of Cash Flow 

107International Financial Reporting Standards (hereinafter referred to as “IFRS”) pursuant to the provisions of Article 93 of the Ordinance on Terminology, Forms, and Preparation Methods ofConsolidated Financial Statements (Ordinance of the Ministry of Finance No. 28 of 1976; hereinafter referred to as the “Ordinance on Consolidated Financial Statements”).

2. Audit Certification
In accordance with the provisions of Article 193-2, paragraph 1 of the Financial Instruments and100

Exchange Act, the consolidated financial statements of the Company for the fiscal year ended
March 31, 2021 were audited by Ernst & Young ShinNihon LLC.

3. Particular Efforts to Secure the Appropriateness ofConsolidated Financial Statements, etc.
	The Company is making particular efforts to ensure the appropriateness of consolidated financial
statements, etc. Specifically, in order to establish a system for gaining proper understanding of thedetails and revisions of accounting standards and relevant guidance and responding accordingly,

108

Other 155

Independent Auditor's Report 

156

the Company has joined the Financial Accounting Standards Foundation and attends seminars andworkshops held by the foundation.

4. Development of a System for Fair Preparation ofConsolidated Financial Statements, etc., in Accordance with IFRSIn order to prepare appropriate consolidated financial statements under IFRS, the Company keeps
up to date with the latest accounting standards and assesses their impact by obtaining press
releases and standards issued by the International Accounting Standards Board as necessary. The

Note:Fiscal Year (FY) 2020 in the following pages refers to the period beginning April 1,2020 and ended March 31, 2021

Company has also formulated the Group Accounting Policies in compliance with IFRS and conducts
its accounting based on those policies. In addition, the Company attends seminars and workshops
held by the Financial Accounting Standards Foundation, audit firms, and other organizations,
thereby accumulating expertise within the Company.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Notes to Consolidated Financial Statements Consolidated Financial Statements
Consolidated Statement of Financial Position(million yen)
Notes

As of
March 31, 2020

(million yen)
Notes

As of
March 31, 2020

As ofMarch 31, 2021

Liabilities and equity

AssetsLiabilities

Current assets

Current liabilities   Cash and cash equivalents

7, 21

86,704142,416   Trade and other payables

20, 21, 38

557,252

496,995   Trade and other receivables

8, 21, 38

678,098

751,824   Bonds payable, borrowings, and lease liabilities

21, 37, 38

376,473

277,027

27

44,81343,03813,24915,09012,507

11,518   Contract liabilities

27

142,075

101,282  Inventories

9872,602785,632

20,946

14,748   Other financial liabilities

22, 3889,46586,836   Other current liabilities

11

210,543

208,5101,304,306

1,139,017

21, 37, 38

1,437,835

1,529,112   Retirement benefit liability

24

143,316

141,186  Provisions

23

25,74024,105   Deferred tax liabilities

19

3,723

7,591

22, 3816,24645,417

11

8,398

8,387

1,635,261

1,755,800

2,939,568

2,894,818
147,143   Other financial assets

10, 386,307

13,359   Other current assets

11

108,410

79,4301,915,146

1,888,694  Total current assets
Non-current assets   Property, plant and equipment

12, 21

1,717,751

1,772,303   Income taxes payable, etc.
  Provisions  Total current liabilities
Non-current liabilities   Bonds payable, borrowings, and lease liabilities  Goodwill

13

6,497

6,200

   Other financial liabilities   Intangible assets

13

88,802

95,055   Other non-current liabilities

JFE GROUP REPORT 2021  Right-of-use asset

14, 21

102,322

111,938  Investment property

15

58,15858,3106, 18, 21

336,040

355,242   Investments accounted for using equity method  Total non-current liabilities
Total liabilities
Equity  Share capital

25

147,143  Capital surplus

25

652,430

652,465  Retained earnings

25

1,002,076

1,029,976  Treasury shares

25(180,637)(180,639)

6,012

30,278

1,627,026

1,679,223   Retirement benefit asset

24

15,52022,159   Deferred tax assets

19

94,93086,014   Other financial assets

10, 21, 38

296,004

244,505   Other components of equity

11, 21

14,946

14,547   Equity attributable to owners of parent   Other non-current assets  Total non-current assets
Total assets

6

2,730,974

2,766,278

4,646,120

4,654,972

23  Non-controlling interests  Total equity
Total liabilities and equity

79,52680,9301,706,552

1,760,154

4,646,120

4,654,972

102

JFE GROUP REPORT 2021  Contract assets   Income taxes receivable

101



As of
March 31, 2021

Consolidated Statement of Profit or Loss

Consolidated Statement of Comprehensive Income(million yen)
Notes

Revenue
Cost of sales

Fiscal year ended
March 31, 2020

(million yen)

Fiscal year ended
March 31, 2021

Notes

Fiscal year ended
March 31, 2021

(193,290)(19,063)27

3,729,717

3,227,285

12, 13, 29(3,334,103)(2,912,766)

395,614314,519

Other comprehensive income(356,992)(324,057)   Remeasurements of defined benefit plans

24, 35(4,975)

12,020  Net change in fair value of equity instruments designated asmeasured at fair value through other comprehensive income

35, 38(49,143)

46,751  Share of other comprehensive income of investments accounted
for using equity method

18, 35

3,148

13,284(50,971)

72,056Gross profit

Net loss

Fiscal year ended
March 31, 2020

Items that will not be reclassified to profit or loss
Selling, general and administrative expenses

12, 13, 28, 29, 30

Share of profit of investments accounted for using equity method

6, 18

8,782

14,239Other income

31

30,81825,782Other expenses

32(40,323)(43,394)

37,899(12,911)

Business profit (loss)

103

Profit on sales of fixed assets

6, 33

—

28,021

Impairment losses

6, 16(238,826)(7,544)(200,927)

7,566

Operating profit (loss)
Finance income

6, 34

Finance costs

6, 34

Loss before tax
19

Net loss

1,686

104
Items that may be reclassified to profit or loss   Exchange differences on translation of foreign operations

35(3,080)(609)   Effective portion of cash flow hedges

35

(44)

11,673(11,786)(825)  Share of other comprehensive income of investments accounted
for using equity method   Total of items that may be reclassified to profit or loss

18, 35(15,273)(14,184)(14,911)

10,238(213,473)(4,930)Total other comprehensive income(65,882)

82,29520,183(14,133)

Comprehensive income(259,172)

63,231(193,290)(19,063)
Comprehensive income attributable to   Owners of parent(263,243)

60,036(21,868)  Non-controlling interests

4,070

3,195

Comprehensive income(259,172)

63,231

Loss attributable to
Owners of parent(197,744)

Non-controlling interests
Net loss

4,454

2,804

(193,290)(19,063)

Earnings per share
Basic losses per share (yen)36(343.39)(37.98)

Diluted losses per share (yen)36(343.39)(37.98)JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Income tax expense

2,727   Total of items that will not be reclassified to profit or loss

Consolidated Statement of Changes in Equity
(million yen)(million yen)

Equity attributable to owners of parent

Equity attributable to owners of parent
Other components of equity

Notes

Balance as of April 1, 2019

147,143 Cumulative effects of changes
in accounting policies
Retroactively adjusted balance

105

Share capital

Capital surplus

Retained earnings

646,793

1,241,420

Treasury shares(180,670)

Other components of equity

Remeasurementsof defined
benefit plans

Net change infair value ofequity instruments
designated asmeasured atfair value
through othercomprehensive
income—90,730——(1,302)———

147,143646,793

1,240,117(180,670)—

90,730Net loss——(197,744)———

Other comprehensive income

—

—

—

—

(4,765)(46,129)——(197,744)—(4,765)(46,129)

Purchase of treasury shares

—

—

—

(73)

—

—

Disposal of treasury shares

—

(12)

—

17

—

—

  Comprehensive income

26

—

—

(40,363)

—

—

—

30

—

(34)

—

88

—

—

 Changes in ownershipinterest in subsidiaries

—

5,684

—

—

—

—

 Transfer from other components of equity
to retained earnings

—

—

67

—

4,765

(4,832)

—

—

—

—

—

—

—

—

—

—

—

—

—

5,637

(40,296)

33

4,765

(4,832)

147,143

652,430

1,002,076(180,637)—

39,768Transfer to non-financial assets

38

Other
  
Total transactions
with owners
Balance as of March 31, 2020

Balance as of April 1, 2020

Share capital

Capital surplus

Retained earnings

Treasury shares

Remeasurementsof defined
benefit plans

39,768147,143

652,430

1,002,076(180,637)—

Net loss——(21,868)———

Other comprehensive income

—

—

—

—

12,18659,433  Comprehensive income——(21,868)—

12,18659,433Purchase of treasury shares

—

—

—

(65)

—

—

Disposal of treasury shares

—

(22)

—

26

—

—

Dividends

26

—

—

—

—

—

—

 hare-based payment
S
transactions

30

—

(23)

—

37

—

—

 Change in scopeof consolidation

—

—

—

—

—

—

 Changes in ownershipinterest in subsidiaries

—

80

—

—

—

—

 Transfer from other components of equity
to retained earnings——

49,768—(12,186)(37,581) Transfer to non-financial assets

38

Other
  
Total transactions
with owners
Balance as of March 31, 2021

—

—

—

—

—

—

—

—

—

—

—

—

—

34

49,768(1)(12,186)(37,581)

147,143

652,465

1,029,976(180,639)—

61,620Equity attributable to owners of parent
Other components of equity

Equity attributable to owners of parent
Other components of equity

Notes

Balance as of April 1, 2019

Exchangedifferences on­translation offoreign
operations

Effective
portion of
cash flow hedges(16,547) Cumulative effects of changes
in accounting policies(2,532)

Non-controllinginterests

Total

Total

Notes

Total equity

Balance as of April 1, 2020
71,6501,926,337

65,422

1,991,759———(1,302)—(1,302)(16,547)(2,532)

71,6501,925,034

65,422

1,990,456———(197,744)

4,454(193,290) Other comprehensive income(15,393)790(65,498)(65,498)(384)(65,882)  Comprehensive income(15,393)790(65,498)(263,243)

4,070(259,172)

—

—

—

(73)

—

(73)

Retroactively adjusted balance Net loss

Purchase of treasury shares
Disposal of treasury shares

Exchangedifferences on­translation offoreign
operations

Effective
portion of
cash flow hedges

Non-controllinginterests

Total

Total

Total equity(31,941)(1,813)

6,012

1,627,026

79,526

1,706,552———(21,868)

2,804(19,063)(314)

10,59981,90481,904

390

82,295(314)

10,59981,90460,036

3,195

63,231

Purchase of treasury shares

—

—

—

(65)

—

(65)

Disposal of treasury shares

—

—

—

4

—

4

Net loss
Other comprehensive income  Comprehensive income

Dividends

26

—

—

—

—

(1,743)(1,743)

Share-based paymenttransactions

30

—

—

—

13

—

13

 Change in scopeof consolidation

—

—

—

—

694

694

—

—

—

5

—

5

Dividends

26

—

—

—

(40,363)(2,559)(42,922)

Share-based paymenttransactions

30

—

—

—

54

—

54

 Changes in ownershipinterest in subsidiaries

—

—

—

80

(854)

(774)

 Changes in ownership  interest in subsidiaries

—

—

—

5,684

12,287

17,971——(49,768)——— Transfer from other components of equity
to retained earnings Transfer from other components of equity
to retained earnings

—

—

(67)

—

—

—

—

(7,871)(7,871)(7,871)—(7,871)

—

—

—

—

112

112

—

(71)

(71)

(71)

—

(71)

—

—

—

—

306

306

—

(7,871)(57,639)(7,838)(1,791)(9,629)

—

(71)

(138)

(34,764)

10,034(24,730)(32,256)914

30,278

1,679,223

80,9301,760,154(31,941)(1,813)

6,012

1,627,026

79,526

1,706,552 Transfer to non-financial assets
Other
  
Total transactions
with owners
Balance as of March 31, 202038

 Transfer to non-financial assets
Other
  
Total transactions
with owners
Balance as of March 31, 2021

38

106

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Dividends
Share-based paymenttransactions

Notes

Net change infair value ofequity instruments
designated asmeasured atfair value
through othercomprehensive
incomeConsolidated Statement of Cash Flow

Notes to Consolidated Financial Statements

(million yen)
Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Loss before tax(213,473)(4,930)Depreciation and amortization

Notes

Cash flows from operating activities

107

231,577

236,353

Changes in allowance(6,601)(2,696)

Interest and dividend income(12,205)(7,179)Interest expenses

14,486

13,844

Changes in trade and other receivables

86,357(71,111)

Change in inventories

42,55986,569Change in trade and other payables(52,338)(42,479)

Other

184,494

47,381

Subtotal

274,856

255,751

Interest and dividends received

24,192

14,857

Interest paid

(13,241)(12,362)

Income taxes paid

(24,736)(10,972)

Net cash from operating activities

261,070

247,274(352,842)(308,123)

3,357

29,547

1. Reporting Entity
J FE Holdings, Inc. (the “Company”) is an incorporated
company established under Japan’s Companies Act and islocated in Japan. The consolidated financial statementsof the Company, as of March 31, 2021, encompass theCompany and its subsidiaries (the “Group”) and its interests in affiliates and joint arrangements of the Company.
 Details of the Group’s business are described in Note
“6. Segment Information.”

2. Basis of Presentation(1) Statement of compliance with IFRS		The Company meets the requirements of a “specified
company complying with designated international
accounting standards” as stipulated in Article 1-2 ofthe Ordinance on Consolidated Financial Statements,
and the Company therefore prepares its consolidated
financial statements in accordance with IFRS, in
accordance with Article 93 of the Ordinance on
Consolidated Financial Statements.
			 The Group’s consolidated financial statements forthe fiscal year ended March 31, 2021 were authorized
for issue on June 25, 2021 by the Board of Directors.

(2) Basis of measurement		The Group’s consolidated financial statements havebeen prepared on a historical cost basis, with the
exception of financial instruments, etc., described in
Note “3. Significant Accounting Policies.”

108(3) Functional currency and reporting currency		The Group’s consolidated financial statements arepresented in Japanese yen, which is the Company’sfunctional currency. Amounts less than one million yen
are rounded down.

Cash flows from investing activities

Proceeds from sale of property, plant and equipment, intangible assets,
and investment property
Purchase of investments(35,299)(5,731)

Proceeds from sale of investments

23,530128,898

Other

2,875

(8,812)(358,378)(164,221)

Net cash from investing activities
Cash flows from financing activities
Change in short-term borrowings

37(11,500)

3,396

Change in commercial papers

37

5,999

(88,999)

Proceeds from long-term borrowings

37

183,529

224,077

Repayments of long-term borrowings

37(104,825)(214,826)

Proceeds from issuance of bonds

37

120,000

60,000(73)(65)(40,363)—

Payments for purchase of treasury shares
Dividends paid to owners of parent

26

Other

37

Net cash provided from financing activities(48,865)(13,674)

103,900(30,092)

Effect of exchange rate change on cash and cash equivalents(2,176)2,752

Changes in cash and cash equivalents

4,416

55,712

Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

782,28886,70486,704142,416

3. Significant Accounting Policies(1) Basis of consolidation
		(i) Subsidiaries
		 Subsidiaries are those companies over which theCompany has control. If the Group has an exposure or
right to variable returns from involvement in theinvestee, and has the ability to use its power over theinvestee to affect the amount of returns, then it isregarded as controlling the investee.
		  The financial statements of subsidiaries areincluded in the consolidated financial statements of
the Group from the date of acquisition of control tothe date of loss of control.
		  If there is a change in equity interest in a subsidiary without loss of control, it is accounted for as acapital transaction. If there is a change in equity interest in a subsidiary accompanied by a loss of control,
the subsidiary’s assets and liabilities, non-controllinginterests related to the subsidiary, and other components of equity are derecognized, with any gain or loss
resulting therefrom recognized in profit or loss.
		  For subsidiaries whose reporting periods end on adate that differs from that of the parent entity, provisional financial statements as of the consolidated
reporting date are used.
		 (ii) Associates and joint arrangements
		Associates: An entity in which the Group owns at least
20% and at most 50% of the voting rights is considered an associate unless it can be clearly demonstrated that the Company cannot exercise influence
over financial and operating policy decisions of theentity. An entity in which the Group owns less than
20% of the voting rights is considered an associate if
the Company can exercise influence over financial
and operating policy decisions of the entity.
Investments in associates are accounted for using
the equity accounting method.
			 A joint arrangement is an arrangement in which
two or more parties have joint control such that decisions about the relevant activities of the arrangement
require the unanimous consent of the parties sharing
control. If the parties that share joint control haverights to the assets and obligations for the liabilities
relating to the arrangement, it is called a joint operation. If the parties that share joint control have rights
to the net assets of the arrangement, it is called ajoint venture. In relation to its interest in a joint operation, the Group recognizes its share of assets, liabilities, revenue, and expenses. Joint ventures areaccounted for using the equity accounting method.
			 For associates whose reporting periods end on adate that differs from that of the parent entity, provisional financial statements as of the consolidated
reporting date are prepared.
			 For JSW Steel Limited provisional financial statements are prepared based on December 31 as thereporting date because local legislation imposes
restrictions on when certain information becomes
available to the Company. Necessary adjustments
have been made for material transactions or events
disclosed between JSW Steel’s provisional reporting
date and the consolidated reporting date.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Purchase of property, plant and equipment, intangible assets,
and investment property				(iii) Consolidation eliminations
The balances of receivables and payables and transactions within the Group, and unrealized gains andlosses arising from transactions within the Group,
have been eliminated when preparing consolidated
financial statements.

(2) Business combinations

109

JFE GROUP REPORT 2021

(3) Foreign currency translation
		 (i) Translation of foreign currency transactions
		Foreign currency transactions are translated into thefunctional currency of each company using theexchange rate or similar rate prevailing on the transaction date. Monetary items denominated in foreign currencies at the end of the reporting period aretranslated into the functional currency at theexchange rate prevailing at the end of the reporting
period, and the resulting exchange differences arerecognized in profit or loss. When the valuation difference of a non-monetary item is recognized in othercomprehensive income, any exchange component isrecognized in other comprehensive income, and whena non-monetary item is recognized in profit or loss,
any exchange component is recognized in profit
or loss.
				(ii) Translation of foreign operations
Assets and liabilities of foreign operations are translated at the exchange rates prevailing at the end of(4) Financial instruments
		 (i) Financial assets
			 a. Initial recognition and measurement
			Financial assets are classified either as financial
assets measured at amortized cost or as financial
assets measured at fair value at the time of initialrecognition. The Group recognizes a financial
asset on the transaction date on which it
becomes a party to the contractual provisions of
the financial asset.
				 Financial assets that meet the following conditions are classified as financial assets measured
at amortized cost:				 • The asset is held in a business model ofwhich the objective is to hold the asset inorder to collect its contractual cash flows				 • The contractual terms of the financial asset
give rise on specified dates to cash flowsthat are solely payments of principal andinterest on the principal amountoutstanding			Financial assets other than financial assets measured at amortized cost are classified as financial
assets measured at fair value.
				 With the exception of equity financial assets
held for trading purposes that must be measured
at fair value through profit or loss, equity financial
assets measured at fair value are individually classified either as measured at fair value throughprofit or loss or as measured at fair value throughother comprehensive income, with that classification being made when the asset is initially recognized and applying continuously thereafter.
				 With the exception of financial assets measured at fair value through profit or loss, financial
assets are measured at fair value at initial recognition plus transaction costs directly attributable tothe acquisition. Financial assets measured at fairvalue through profit or loss are measured at fairvalue at initial recognition, and transaction costs
directly attributable to the transaction are recognized in profit or loss.

		 b. Measurement subsequent to initial recognition
			 (a) Financial assets measured at amortized cost			 After initial recognition, measurement is the amortized cost using the effective interest method.
			 (b) Financial assets measured at fair value throughprofit or loss			 A
 fter initial recognition, measurement is the fairvalue with subsequent changes recognized in
profit or loss.
			 (c) Equity financial assets measured at fair value
through other comprehensive income
			 A fter initial recognition, measurement is the fairvalue with subsequent changes recognized inother comprehensive income.
		   Amounts recognized in other comprehensive
income are transferred to retained earnings when
an asset is derecognized or its fair value declines
significantly (except when recovery is deemed
probable); they are not transferred to profit orloss. Dividends derived from such financial assets
are recognized as profit or loss.
				c. Derecognition
Financial assets are derecognized when the contractual rights to receive cash flows have extinguished orwhen the contractual rights to receive cash flows
have been transferred and substantially all risks andrewards of ownership of the financial asset are transferred to another entity.

d. Impairment
For financial assets measured at amortized cost, theCompany recognizes allowances for doubtful
accounts based on expected credit losses.
		  Allowances for doubtful accounts are calculated
as the present value of the difference between thecontractual cash flows due to the Group and the cash
flows that the Group expects to receive.
			 The Group determines whether the credit risk oneach financial asset has increased significantly sinceinitial recognition on each reporting date, and if thecredit risk has not increased significantly since initialrecognition, the amount of the allowance for doubtful
accounts is assessed based on the expected credit
losses (expected credit losses over 12 months)
resulting from default events that may occur within 12
months. If, on the reporting date, credit risk on a financial asset has increased significantly since initial recognition, the amount of the allowance for doubtful
accounts is assessed based on the expected credit
losses arising from all possible default events over the
expected lifetime of the financial asset (expectedcredit losses over full lifetime). However, in the case of
trade receivables, contract assets, and lease receivables that do not contain a significant financing component, regardless of the above, the amount of the				

allowance for doubtful accounts is always measured
using the expected credit losses for the instrument’s
full lifetime.
		  A receivable is determined to be credit-impaired
when a fact such as the commencement of legal liquidation proceedings due to the obligor’s bankruptcy,
etc., or the significant deterioration of the obligor’s
financial condition occurs. When it becomes apparent
that a receivable will be unrecoverable in the future
due to a write-off under the provisions of the
Corporate Reorganization Act, etc., the carrying
amount of the receivable is directly reduced.
		  Provisions of allowances for doubtful accounts onfinancial assets are recognized in profit or loss. In thecase of events that reduce the allowance for doubtful
accounts, reversals of allowances for doubtful
accounts are recognized in profit or loss.
		  Estimates of allowances for doubtful accounts
relating to financial assets reflect the following.
			 • Unbiased probability-weighted amounts­ alculated by evaluating a range of possiblecoutcomes			 • Time value of money			 • Rational and supportable information about past
events, current conditions, and forecasts offuture economic conditions, available at thereporting date without undue cost or effort(ii) Financial liabilities
		 a. Initial recognition and measurement
		 Financial liabilities are classified either as financial liabilities measured at amortized cost or as financial liabilities measured at fair value through profit or loss
at the time of initial recognition. The Group initiallyrecognizes issued debt securities on the date ofissue, and other financial liabilities are initially recognized on the transaction date on which the Group
becomes a party to the contractual provisions of
the financial liability.
		  Financial liabilities measured at amortized cost aremeasured at fair value minus transaction costs
directly attributable to the issue of the instruments atthe time of initial recognition. However, financial liabilities measured at fair value through profit or loss aremeasured at fair value at the time of initial recognition.
		 b. Measurement subsequent to initial recognition
			 (a) Financial liabilities measured at amortized cost			 After initial recognition, measurement is the amortized cost using the effective interest method.
			 (b) Financial liabilities measured at fair value
through profit or loss			 After initial recognition, measurement is the fairvalue with subsequent changes recognized in
profit or loss.

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JFE GROUP REPORT 2021

Business combinations are accounted for using theacquisition method.
		  Identifiable assets acquired through businesscombinations, liabilities assumed, non-controllinginterests of the acquiree, and goodwill are recognizedon the acquisition date (the date on which theacquirer obtains control of the acquiree). As a generalrule, identifiable assets acquired and liabilities
assumed are measured at fair value.
			 If the total value of the fair value of consideration(including contingent consideration) transferred in
the business combination, the amount of any noncontrolling interests of the acquiree, and the fair valueof the acquirer’s previously held equity interest in theacquiree (“Value A”) exceeds the net value (usually
the fair value) of the acquiree’s identifiable assets andliabilities assumed (“Value B”), the excess is recognized as goodwill. If, on the other hand, Value A is lessthan Value B, the difference is recognized in profit orloss as of the acquisition date.
		  Acquisition costs incurred are recognized as
expenses when incurred.
		  For each individual transaction, the Company
chooses to measure non-controlling interests at fairvalue or as a proportionate share of the fair value ofidentifiable net assets of the acquiree.
		the reporting period. In addition, revenues andexpenses of foreign operations are translated at the
average exchange rates for the reporting period
unless exchange rates fluctuated significantly during
the period. Exchange differences arising from translation are recognized in other comprehensive income,and the accumulated amount is included in othercomponents of equity.
 When disposing of foreign operations, the cumulative amount of exchange differences related to theforeign operations is recognized in profit or loss at thetime of disposal.

			
			

111

c. Derecognition
Financial liabilities are derecognized when thefinancial liabilities extinguish; that is, when the liabilities are discharged, are canceled, or expire.

			 b. Cash flow hedges
			The portion of the change in the fair value of derivatives used as hedging instruments that is determined to be an effective hedge is recognized inother comprehensive income, and the cumulative
amount is included in other components of equity.
The portion of hedges that is ineffective is recognized in profit or loss. Amounts accumulated inother components of equity are reclassified fromother components of equity to profit or loss in theaccounting period in which the transaction being
hedged affects profit or loss. However, if the forecast transaction being hedged subsequently
results in the recognition of a non-financial asset
or non-financial liability, the amount accumulated
in other components of equity is treated as an
adjustment to the initial book value of that nonfinancial asset or non-financial liability.
				 Hedge accounting is discontinued prospectively when the hedging instrument expires, is			 c. Derivatives not designated as hedges
			Changes in the fair value of such derivatives arerecognized in profit or loss.
				 ffsetting financial assets and financial(iv) O
liabilities
Financial assets and financial liabilities are offset andpresented at net when the Group has a legally
enforceable right to offset the recognized amounts
and intends to settle on a net basis or intends to realize the asset and settle the liability simultaneously.

(5) Cash and cash equivalents		Cash and cash equivalents consist of cash on hand,readily available deposits, and short-term investments
maturing within three months that are readily convertible to cash and subject to an insignificant risk ofchanges in value.

(8) Goodwill and intangible assets(ii) Intangible assets
Intangible assets acquired separately are measured
at cost at the time of initial recognition. Intangible
assets acquired in business combinations are measured at fair value as of the acquisition date.
			 The Group uses the cost model to measure thecarrying value of intangible assets subsequent totheir recognition. Under this model, intangible assets
are carried at cost less any accumulated amortization
and any accumulated impairment losses.
		  Intangible assets whose useful lives can be determined are amortized using the straight-line method
over their estimated useful lives. Intangible assets
mainly comprise software for internal use and haveestimated useful lives of 2–10 years.
				(9) Leases(6) Inventories
		Inventories are measured at the lower of cost and net
realizable value. Cost consists of material costs, direct
labor costs, other direct costs, and an appropriate
allocation of related manufacturing overhead costs.
Net realizable value is calculated by deducting theestimated selling costs from the estimated selling
price. Cost is mainly calculated based on the weighted
average method.
(7) Property, plant and equipment
		The Group uses the cost model to measure the carrying value of property, plant and equipment subsequent to its recognition. Under this model, property,
plant and equipment are carried at their cost less any
accumulated depreciation and any accumulated
impairment losses.
		  Property, plant and equipment other than land andconstruction in progress are mainly depreciated using
the straight-line method.
			 The estimated useful lives of major asset items
are as follows:			 • Buildings and structures: 2–75 years			 • Machinery and vehicles: 2–27 years		  The estimated useful lives, depreciation methods,
and residual values of property, plant and equipment
are reviewed at the end of each fiscal year.

				(i) Goodwill
		 Goodwill is not amortized; it is tested for impairment
annually or whenever an indication of impairment
exists. Impairment losses on goodwill are recognizedin the consolidated statement of profit or loss and are
not subsequently reversed.
		  Goodwill is carried at book value less accumulated
impairment losses.

		

		
		

At inception of a contract, the Group assesses
whether the contract is, or contains, a lease. If thecontract conveys the right to control the use of an
identified asset for a period of time in exchange forconsideration, the contract is, or contains, a lease.
(i) Leases as a lesseeAt the commencement date, the Group recognizes
right-of-use assets and lease liabilities. At the commencement date, right-of-use assets are initiallymeasured at the amount of the initial measurement oflease liabilities adjusted for any initial direct costs,
costs for restoration as required pursuant to the contract, and other costs. After the commencement date,the Group uses the cost model to measure right-ofuse assets. Under this model, right-of-use assets aremeasured at cost, less any accumulated depreciation
and any accumulated impairment losses. Right-of-use
assets are depreciated using the straight-line methodfrom the commencement date to the earlier of theend of the useful life of the right-of-use asset or theend of the lease term, unless it is reasonably certainthat the Group will acquire ownership of the leased
assets at the end of the lease term. The lease term isdetermined as the non-cancelable period of leased
assets, together with periods covered by an option toextend the lease if the Group is reasonably certain to
exercise that option, and periods covered by an option
to terminate the lease if the Group is reasonably certain not to exercise that option.

		 Lease liabilities are measured at the present valueof the lease payments that are not paid at the commencement date, discounted using the lessee’s
incremental borrowing rate. After the commencement
date, the Group measures the lease liability byincreasing the carrying amount to reflect interest on
the lease liability and reducing the carrying amount toreflect the lease payments made. In case of leasemodifications, the Group remeasures the lease liability. For a lease modification that is not accounted for
as a separate lease and decreases the scope of thelease, the Group decreases the carrying amount of
the right-of-use asset to reflect the partial or full termination of the lease, and recognizes in profit or loss
any gain or loss relating to the partial or full termination of the lease. The Group makes a corresponding
adjustment to the right-of-use asset for all otherlease modifications.
 However, the Group uses the exemption for shortterm leases and leases of low-value assets; instead ofrecognizing right-of-use assets and lease liabilities
for such leases, it expenses the lease payments on astraight-line basis over the lease term.

		 (ii) Leases as a lessor		Leases entered into as a lessor are classified as either
finance leases or operating leases according to thesubstance of the transaction rather than the form of
the contract. Assets held under finance leases arepresented as receivables in an amount equal to the
net investment in the lease.
		  In the case of subleases, the intermediate lessor
classifies the sublease with reference to the right-ofuse asset arising from the head lease.
		  In the case of operating leases, the Group records
the leased assets on the consolidated statement offinancial position and recognizes lease payments asincome on a straight-line basis over the lease term.
(10) Investment property		Investment property is real estate held for the purpose of earning rental income, capital gains, or both.
			 The Group uses the cost model to measure thecarrying value of investment property subsequent to
its recognition. Under this model, investment property
is carried at cost less any accumulated depreciation
and any accumulated impairment losses.
			 Investment property other than land is depreciated mainly using the straight-line method over theestimated useful life. The estimated useful life of theCompany’s main investment properties is 26 years.
		  The estimated useful lives, depreciation methods,
and residual values of investment properties arereviewed at the end of each fiscal year.

112

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

		 (iii) Derivative and hedge accounting		The Group enters into derivative transactions such as
forward exchange contracts and interest rate swaps
in order to hedge foreign exchange risk, interest raterisk, and the like.
		  At the inception of the hedge, the Group formallydesignates and documents the risk management purpose and strategy for the hedging relationship andthe implementation of the hedge. This documentation
identifies the hedging instrument, the item or transaction being hedged, the nature of the risk being
hedged, and the method of evaluating the effectiveness of the hedging instrument in offsetting theexposure to changes in the fair value or cash flows of
the hedged item due to the risk being hedged.
Moreover, the Group assesses at the inception of thehedging relationship, and on an ongoing basis,
whether a hedging relationship meets the hedge
effectiveness requirements.
		  Derivatives are initially recognized at fair value.
After initial recognition, fair value is measured andsubsequent changes are treated as shown immediately below.
			 a. Fair value hedges
			Changes in the fair value of derivatives used as
hedging instruments are recognized in profit orloss or other comprehensive income. Changes in
the fair value of the hedged item corresponding to
the hedged risk are recognized in profit or loss orother comprehensive income, with the carrying
amount of the hedged item being adjusted.

sold, or is terminated or exercised, or if the derivative no longer meets the requirements for hedge
accounting. When the forecast transaction is nolonger expected to occur, the amount accumulated in other components of equity is immediately
reclassified from other components of equity to
profit or loss.

(11) Impairment of non-financial assets
		

		

		

113

		
		

(ii) Defined contribution plans
Expenses related to defined contribution plans arerecognized as expenses in the period in which theemployees provide the services.

				(i) Defined benefit plans
Defined benefit plans are any retirement benefit plansother than defined contribution plans. For each separate plan, the defined benefit obligation is calculated
by estimating the future benefits earned as compensation for services provided by employees in previous
and current fiscal years, and discounting that amountto the present value. The fair value of plan assets isdeducted from the result of that calculation. The discount rate is determined with reference to the market
yields of high-quality corporate bonds that are denominated in the same currency as the expected benefit
payment and that have approximately the same maturity as the Group’s defined benefit obligation.
 If a retirement benefit plan is revised, costs related
to the variable portion of benefits related to employees’ past service are immediately recognized in profit
or loss.
 The Group recognizes changes in net defined
benefit liability (asset) due to remeasurement in othercomprehensive income and immediately transfers theamounts to retained earnings.

			 etermine the transaction price
Step 3: D llocate the transaction price to a distinct
Step 4: A
performance obligation of the contract
 ecognize revenue when the performance
Step 5: R
obligation is fulfilled (or as it is fulfilled).

(13) Share-based payment
		

		

		

The Company has instituted share-based payment
plans through which a portion of the compensation of
directors (excluding outside directors) and executive
officers (excluding non-residents under income taxlaw) of the Company and its operating companies isprovided in the form of cash-settled share-based
payments and equity-settled share-based payments
through employee stock ownership plans. The Group’s
objective is to establish a clear link between compensation and the Group’s operating performance andequity value and encourage the sharing of value withshareholders, thereby creating a greater incentive tocontribute toward enhancing shareholder value overthe medium and long term.
 For equity-settled share-based payments, compensation for services received is measured with reference to the fair value of Company shares granted.
The calculated consideration for services is recognized as an expense, and the same amount is recognized as an increase in equity.
 For cash-settled share-based payments, the fairvalue of the amount paid is recognized as a liability,
and changes in the fair value of the liability are recognized in profit or loss over the period up until an
unconditional right to compensation is established.

(12) Post-employment benefits
		
		

			
			

(14) Provisions
				Provisions are recognized when the Company has apresent obligation (legal obligation or constructive
obligation) resulting from past events, it is likely thatan outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation canbe made.
 If the impact of the time value of money is material,
provisions are measured at a discounted amount calculated using a discount rate that reflects the risks
specific to the liability.

(15) Revenue
With the exception of interest, dividend income, etc.,
under IFRS 9 Financial Instruments, the Group uses
the following five-step approach in recognizing revenue that reflects the amount of consideration towhich the Company expects to be entitled in
exchange for the transfer of goods and services
to customers:
			 Step 1: Identify the contract with the customer
			 Step 2: Identify the performance obligations in thecontract		With respect to sales of steel products, etc., in thesteel business, revenues are mainly recognized at the
point of shipment, when the customer assumes thesignificant risk and economic value of ownership of
the product being physically transferred and the rightto receive payment is confirmed. Consideration fortransactions is received mainly within one year fromthe fulfillment of performance obligations andincludes no significant financing components.
		  With regard to construction contracts, etc., in theengineering business, the Group mainly estimates the
progress of fulfilling performance obligations, and revenue is recognized over a fixed period based on the
degree of progress. Consideration for transactions ismainly received in phases during the contract term
separately from the fulfillment of performance obligations, and the remaining amount is received after afixed period from the fulfillment of all performanceobligations. Consideration for certain transactions
includes significant financing components. A costbased input method is used for performance obligations fulfilled over time in order to recognize revenue.
The cost-based input method excludes the effects ofany inputs that do not depict the Group’s performancein transferring control of goods or services to the customer. When a cost incurred is not proportionate toprogress, the Group’s performance is faithfully
depicted by adjusting the input method to recognize
revenue only to the extent of that cost incurred.
		  With respect to sales of steel products, etc., in the
trading business, revenues are mainly recognized at
the point of delivery to the customer, when ownershiprights and physical ownership of the product arephysically transferred to the customer and the significant risk and economic value associated with ownership and the right to receive payment is confirmed. In
addition, for certain transactions in the trading business, the Company has the responsibility to carry out
work as an agent. Consideration for transactions isreceived mainly within one year from the fulfillment of
performance obligations and includes no significant
financing components.
			 Revenue is measured at the amount that deducts
price reduction and rebates, etc., from the promisedvalue in the contract with the customer.
			 When the Group is engaged in a transaction as aparty to the transaction, revenue is presented as thetotal consideration received from the customer. When
the Group is engaged in transactions as an agent for athird party, revenue is presented as a fee, calculated
as the total amount of consideration received fromthe customer minus the amount collected for thethird party.
(16) Business profit				Business profit is profit before income taxes excluding
financial income and one-time items of materially significant value. It is a benchmark indicator of theCompany’s consolidated earnings.

(17) Finance income and costs		Finance income consists mainly of interest income,and finance costs consist mainly of interest
expenses. Interest income is recognized as income
when incurred using the effective interest method.
Interest expense is recognized as an expense whenincurred using the effective interest method.

114(18) Dividend income				Dividend income is recognized in profit or loss when
the right to receive the dividend is established.
 Of the shares and investments held by the Group,
dividends received on those held for the purpose of
facilitating business transactions are included inother income.

(19) Income taxes		Income tax expense consists of current tax expenseand deferred tax expense. These items are recognized in profit or loss except when they arise fromitems that are directly recognized in other comprehensive income or equity and when they arise frombusiness combinations.
			 Current tax expense is measured in an amountthat reflects the amount the Company expects thetax authorities to refund or expects to pay to the tax
authorities. The tax rate and tax law used to calculate
the amount of tax are those that are enacted or substantively enacted at the end of the reporting period.
		  Deferred tax assets and deferred tax liabilities arerecognized for temporary differences, which are thedifferences between the carrying amounts and tax
bases of assets and liabilities, and for unused tax
losses carryforwards and unused tax credits. They
are determined at the tax rate estimated for theperiod when the asset is realized or the liability is­ ­settled, based on the tax rate and tax law that areenacted or substantively enacted at the end of thereporting period.
		  Deferred tax liabilities are recognized for taxable
temporary differences excluding the following:			 • T
 emporary differences arising from initial recognition of goodwill			 • T
 emporary differences resulting from the initialrecognition of an asset or liability in a transaction that is not a business combination and does
not affect accounting income or taxable income

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

For property, plant and equipment and intangible
assets, if there is any indication at the end of eachreporting period that an asset may be impaired, theasset is assessed based on its recoverable value,
being the higher of fair value less costs to sell and its
value in use; if the carrying value of the asset exceeds
its recoverable value, then the asset is impaired and iswritten down to its recoverable value.
 Goodwill, intangible assets with indefinite useful
lives, and intangible assets not yet available for use
are tested for impairment annually or whenever anindication of impairment exists.
 Impairment losses recognized on assets otherthan goodwill in previous years are assessed at theend of each reporting period to determine whether
there is any indication that the recognized impairment
loss may no longer exist or may have decreased. If any
such indication exists, the recoverable amount is estimated, and if the recoverable amount exceeds the
carrying amount of the asset or the cash-generating
unit to which the asset belongs, an impairment reversal is recognized and the carrying amount is increased
to the recoverable amount subject to the condition
that the carrying amount of the asset may not exceed
the carrying amount (net of accumulated depreciation or accumulated amortization) that would havebeen determined had no impairment loss been previously recognized. Impairment losses recognized on
goodwill are not reversed in subsequent periods.

			

		

115

		

D
 eferred tax assets are recognized for deductible
temporary differences, unused tax losses carryforwards, and unused tax credits, but only to the extent
that it is probable that future taxable income will beavailable against which the deductible temporary difference, etc., can be utilized, except when the
deductible temporary difference, etc., results from theinitial recognition of an asset or liability in a transaction that is not a business combination and does notaffect accounting income or taxable income at thetime of the transaction.
 Deferred tax assets are recognized for deductible
temporary differences arising from investments in
subsidiaries and associates, and interests in joint
arrangements, only when it is probable that the temporary difference will reverse in the foreseeable futureand it is probable that taxable income will be available
against which the deductible temporary difference
can be utilized.
 Deferred tax assets and deferred tax liabilities areoffset only when there is a legally enforceable right tooffset income taxes payable and income taxes receivable and either of the following criteria is met:

			

			

• The deferred tax assets and the deferred tax liabilities relate to income tax levied on the same
taxable entity by the same tax authority• The deferred tax assets and deferred tax liabilities relate to income tax levied on separate taxable entities by the same tax authority, and thetaxable entities intend to settle income taxes
receivable and income taxes payable on a net
basis or realize the assets and settle the liabilities simultaneously.

The Company has applied consolidated tax reporting.
(20) Equity				(i) Share capital and capital surplus
Capital paid in by shareholders is recognized in sharecapital or capital surplus.

				(ii) Treasury shares
When treasury shares are acquired, the consideration
paid, including direct transaction costs, is recognized
as contra equity.

(21) Earnings per share Basic earnings per share are calculated by dividing
profit attributable to owners of parent by the weighted
average number of common shares on issue during the
fiscal year.
 Diluted earnings per share are calculated by adjustingfor the impact of all dilutive potential shares.

4. Significant Judgements, Accounting Estimates, and Assumptions
In preparing the consolidated financial statements, theGroup makes judgments, accounting estimates, andassumptions that affect the application of accounting
policies and the amounts of assets, liabilities, income, andexpenses. These estimates and assumptions are basedon management’s best judgments reflecting historicalexperiences and various factors that are believed to bereasonable under the circumstances. By their nature,
however, actual results may differ from the estimates andassumptions.
		 The estimates and underlying assumptions arereviewed on an ongoing basis. The effects resulting fromrevisions of these estimates are recognized in the period
in which the estimates are revised and in future periods
affected by the revision.
 Additionally, while performance for the fiscal year
ended March 31, 2021 was affected by COVID-19,
accounting estimates were made on the assumption that
impact on the fiscal year ending March 31, 2022 will belimited.

	Judgments made in applying accounting policies thathave a significant effect on the consolidated financial
statements are mainly as follows:		 • Scope of subsidiaries, associates, and joint arrangements (Note “3. Significant Accounting Policies”)		 • Revenue recognition (Note “3. Significant
Accounting Policies”)		 • Leases (Note “3. Significant Accounting Policies”)
	Information on accounting estimates and assumptions
that may have a significant effect on the consolidated
financial statements is as follows:• Valuation of inventories (Note “3. Significant Accounting
Policies” and Note “9. Inventories”)
		 Inventories are measured at cost. However, if net realizable value is lower than cost at the end of the reporting
period, inventories are measured at the net realizablevalue and the difference between cost is recognized incost of sales in principle. Furthermore, for idle inventories outside the operating cycle, net realizable value andother items are determined by reflecting future demand

and market trends. A significant decline in net realizablevalue due to worse-than-forecast market environment
may cause losses.
• Impairment of non-financial assets (Note “3. Significant
Accounting Policies” and Note “16. Impairment of Nonfinancial Assets”)
		 T he Group tests property, plant and equipment, goodwill, and intangible assets for impairment in accordancewith Note “3. Significant Accounting Policies.” In determining recoverable amounts in impairment tests,
assumptions are made for future cash flows, discountrates, and other items. Although these assumptions are
determined based on management’s best estimatesand judgments, they may be affected by uncertainchanges in economic conditions in the future and otherfactors. If a revision is necessary, it may have a significant effect on the consolidated financial statements.
• Recoverability of deferred tax assets (Note “3.
Significant Accounting Policies” and Note “19. Income
Taxes”)
		 D
 eferred tax assets are recognized only to the extent
that it is probable that future taxable income will beavailable against which the deductible temporary differences can be utilized. In judging the probability of taxable income, the timing and amount of taxable income
are estimated based on the business plan. Althoughsuch estimates are made based on management’s best
estimates, they may differ from actual results due touncertain changes in economic conditions in the futureand other factors.
• Valuation and accounting for provisions (Note “3.
Significant Accounting Policies” and Note “23.
Provisions”)
		 P rovisions are measured based on the best estimatesof the expenditures expected to be required to settle
the obligations in the future on the reporting date. The
expenditures expected to be required to settle the obligations in the future are determined by comprehensively taking into account future possible results. Sinceassumptions which are used for measuring these provisions may be affected by uncertain changes in economic conditions in the future and other factors, they
involve the risk of causing a significant modification on
the measurement of provisions prospectively.

• Measurement of defined benefit obligations (Note “3.
Significant Accounting Policies” and Note “24. Postemployment Benefits”)
		 With respect to defined benefit corporate pension
plans, the net amount of defined benefit obligations
and fair values of plan assets are recognized as liabilities or assets. Defined benefit obligations are determined based on actuarial assumptions which include
the estimates of discount, retirement, mortality, andsalary increase rates. These assumptions are determined by comprehensively taking into account all available information, such as market trends in interest rate
fluctuations. Since these actuarial assumptions may beaffected by uncertain changes in the economic environment in the future, social trends, and other factors,
they involve the risk of causing a significant modification on the measurement of defined benefit obligations
prospectively.
• Matters related to financial instruments (Note “3.
Significant Accounting Policies” and Note “38. Financial
Instruments”)
		 The Group uses significant unobservable inputs formeasuring the fair values of specified financial instruments. Unobservable inputs may be affected by future
uncertain changes in economic conditions and otherfactors. If a revision is necessary, it may have a significant effect on the consolidated financial statements.
• Contingencies (Note “41. Contingent Liabilities”)
		 For contingencies, items that may have a significant
effect on future businesses are disclosed after taking
into account all available evidence as of the reporting
date and considering the possibility and financial effectof the contingencies.

116

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

		at the time of the transaction• Taxable temporary differences arising frominvestments in subsidiaries and associates,
and interests in joint arrangements, when the
Company is able to control the timing of thereversal of the temporary difference and it isprobable that the temporary difference will notreverse in the foreseeable future.

5. New IFRS Standards Not Yet Adopted

Fiscal year ended March 31, 2021


There are no IFRS standards and interpretations newly established or amended by the approval date of the consolidated
financial statements that the Group has not yet adopted and that have a significant effect.

Steel

6. Segment Information

		
		

117

Revenue from external customers

The Group organized under JFE Holdings executes commercial activities through three operating companies—JFE SteelCorporation, JFE Engineering Corporation, and JFE Shoji Trade Corporation—in accordance with the characteristics oftheir respective businesses.
 Consolidated reportable segments, one for each operating company, are characterized by their constituent products
and services. There are no business segments which were consolidated for reporting.
 Each segment has its own respective products and services. The steel business produces and sells various steel
products, processed steel products, and raw materials, and provides transportation and other related businesses suchas facility maintenance and construction. The engineering business handles engineering for energy, urban environment,
steel structures and industrial machines, recycling, and electricity retailing. The trading business purchases, processes,
and distributes steel products, raw materials for steel production, nonferrous metal products, and food, etc.

Intersegment revenue   Total
Segment profit (loss)

The accounting treatments for the Group’s reportable segments are the same as those described in Note “3. Significant
Accounting Policies.”		  The Group assesses segment performance on the basis of segment profit. Segment profit is profit before tax
excluding one-time items of a materially significant value.
			 Intersegment transactions are based on market prices and the like.

(million yen)

Steel

Engineering

Trading

Total

2,311,251

498,629

919,8363,729,717

Adjustments(Note)

Amountrecorded inconsolidated
financialstatements—

3,729,717

370,098

13,666

164,301

548,065(548,065)—

2,681,350

512,295

1,084,137

4,277,783(548,065)

3,729,717(8,783)

23,11827,016

41,351(15,998)

25,353

Impairment losses(238,826)

Profit before tax(213,473)

Segment assets

3,836,847

465,734

756,141

5,058,723(412,602)

4,646,120

Depreciation and amortization

209,031

13,302

10,244

232,578(1,000)231,577

Other items
Impairment losses(233,144)(356)(5,325)(238,826)—(238,826)

Finance income

1,437

140

1,354

2,932

(205)

2,727

Finance costs(11,721)(697)(3,492)(15,910)636(15,273)

25,518477

558

26,554(17,772)

8,782

Investments accounted for using equity method

289,406

11,562

14,909315,878

20,162

336,040

Capital expenditures

362,741

11,892

17,986392,621(1,265)391,356 Share of profit of investments accounted
for using equity method

813,443

3,227,285—

10,842

119,066

446,192(446,192)—

2,255,216

485,750

932,510

3,673,477(446,192)

3,227,285(65,461)

24,07320,098(21,289)(4,118)(25,408)

Note: Adjustments are as follows:		• Adjustments to segment profit (loss) include corporate profit not allocated to a reportable segment: 48,548 million yen, eliminationof dividend income from each reportable segment: (48,365) million yen, and share of profit of investments accounted for using equity
method related to Japan Marine United Corporation: (17,995) million yen; elimination of other intersegment transactions: 1,813
million yen. Corporate profit is profit of the Company.
		• Adjustments to segment assets: Corporate assets not allocated to a reportable segment: 49,450 million yen and elimination ofintersegment receivables and payables, etc.: (462,053) million yen. Corporate assets are assets of the Company.

3,227,285

28,021(7,544)

Loss before tax(4,930)

Segment assets

3,864,262

478,146717,2705,059,679(404,707)

4,654,972

211,645

14,62911,065

237,340(987)

236,353(7,544)

Other items
Depreciation and amortization
Impairment losses(6,351)(59)(1,133)(7,544)—

Finance income

689

171

1,000

1,861

(174)

1,686

(11,880)(838)(2,053)(14,772)588(14,184)

16,873277

671

17,822(3,582)

14,239Investments accounted for using equity method

312,476

11,903

17,144

341,525

13,717355,242

Capital expenditures

308,384

22,358

12,798343,540(1,145)342,395 Share of profit of investments accounted for using equity method

Note: Adjustments are as follows:		• Adjustments to segment profit (loss) include corporate profit not allocated to a reportable segment: 9,334 million yen, elimination ofdividend income from each reportable segment: (8,847) million yen, and share of loss of investments accounted for using equity
method related to Japan Marine United Corporation: (4,136) million yen; elimination of other intersegment transactions: (469) million
yen. Corporate profit is profit of the Company.
		• Adjustments to segment assets: Corporate assets not allocated to a reportable segment: 103,726 million yen and elimination ofintersegment receivables and payables, etc.: (508,433) million yen. Corporate assets are assets of the Company.

(3) Information about the categories of products and services

Revenue

Segment profit (loss)

474,908

316,283

The information is the same as information on reportable segments.
(4) Information about revenue from external customers by geographical areas
The information is provided in Note “27. Revenue.”(5) Information about non-current assets (excluding financial assets, retirement benefit asset, and deferred tax
assets) by geographical areas

(million yen)

As of March 31, 2020

As of March 31, 2021

Japan

1,828,061

1,898,718

Other160,416

159,636

1,988,478

2,058,355   Total
Note: Non-current assets are based on the geographical location of each company of the Group.

(6) Information about major customers
T he information is not provided as there is no external customer that accounts for 10% or more of consolidated revenue of
the Group.

118

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Fiscal year ended March 31, 2020

Intersegment revenue

1,938,933

Impairment losses

Finance costs		   Total

Trading

Profit on sales of fixed assets(2) Information on reportable segments

Revenue from external customers

Total

Adjustments(Note)Engineering

Revenue(1) Overview of reportable segments
		(million yen)Amountrecorded inconsolidated
financialstatements

7. Cash and Cash Equivalents

Other financial assets are stated as net of allowance for doubtful accounts in the consolidated statement offinancial position.

The breakdown of cash and cash equivalents is as follows:

Cash and bank deposits with maturities of three months or less
Deposits paid   Total(million yen)

As of March 31, 2020

As of March 31, 2021

86,679142,40425

12

86,704142,416

Cash and cash equivalents are classified as financial assets measured at amortized cost.
 The balance of cash and cash equivalents reported in the consolidated statement of financial position as of March 31,
2020 and 2021 is consistent with that reported in the consolidated statement of cash flows.

8. Trade and Other Receivables

119	The issuers and fair values of major equity financial assets measured at fair value through other comprehensive income areas follows:(million yen)

As of March 31, 2020

As of March 31, 2021

Notes and accounts receivable–trade639,997

716,893

Other

39,67237,012

Allowance for doubtful accounts(1,570)(2,080)678,098

751,824

17,814

Central Japan Railway Company

14,316

Toyota Motor Corporation

11,193Isuzu Motors Limited

10,325Formosa Ha Tinh (Cayman) Limited

9,213

Formosa Ha Tinh (Cayman) Limited

17,218Central Japan Railway Company

13,680

Dongkuk Steel Mill Co., Ltd.

11,124

Isuzu Motors Limited

10,297

Sumitomo Realty & Development Co., Ltd.

6,210

As of March 31, 2021

442,257

378,785

Work in progress

47,41939,436

Raw materials and supplies

382,925

367,409   Total

872,602785,632

Inventories recognized as an expense in cost of sales for the fiscal years ended March 31, 2020 and 2021 amounted to2,800,612 million yen and 2,396,972 million yen, respectively.

10. Other Financial Assets In order to promote the efficiency of held assets and to use them effectively, the Group has sold (derecognized) equity
financial assets measured at fair value through other comprehensive income.
 The fair value and accumulated gains or losses recognized in other comprehensive income at the time of sale areas follows:(million yen)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fair value

23,502

128,281

Accumulated gains or losses recognized in other comprehensive income

8,188

38,01011. Other Assets and Liabilities
 he breakdown of other current assets, other non-current assets, other current liabilities, and other non-current liabilities isT
as follows:(1) Other current assets and other non-current assets
(1) The breakdown of other financial assets is as follows:(million yen)

As of March 31, 2020

120

As of March 31, 2021

Financial assets measured at amortized cost
Lease receivables (non-current)

25,021

24,135

Other

21,06835,580

(552)

(655)

45,53759,059Derivative assets

26,843

28,238

Other

3,874

3,871

30,71832,109219,561

160,405

6,494

6,290

(million yen)

As of March 31, 2020

As of March 31, 2021

Construction scaffolding materials

22,676

21,964

Other

100,680

72,012   Total

123,357

93,977

Current assets

108,410

79,430Non-current assets

14,946

14,547   Total

123,357

93,977

As of March 31, 2020

As of March 31, 2021

Accrued expenses

156,906

153,613

Other

62,03563,284   Total

218,941

216,897

210,543

208,510

Financial assets measured at fair value through profit or loss    Subtotal
Equity financial assets measured at fair value through other comprehensive income
Equity securities
Investments in capital(2) Other current liabilities and other non-current liabilities    Subtotal

226,055

166,696

Current liabilities   Total

302,311257,865

Non-current liabilities

6,307

13,359   Total

Current assets
Non-current assets

296,004

244,505   Total

302,311257,865(million yen)

8,398

8,387

218,941

216,897

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

(million yen)

As of March 31, 2020    Subtotal

As of March 31, 2021

 quity securities and investments in capital are held mainly for the purpose of maintaining and developing the Group’s busiE
ness. Therefore, they are designated as equity financial assets measured at fair value through other comprehensive income.

Merchandise and finished goods

Allowance for doubtful accounts(million yen)

Issuers

9. Inventories
The breakdown of inventories is as follows:

As of March 31, 2020

TAIYO NIPPON SANSO CORPORATION

Trade and other receivables are stated as net of allowance for doubtful accounts in the consolidated statement offinancial position.
Trade and other receivables are classified as financial assets measured at amortized cost.

(million yen)

Issuers

The breakdown of trade and other receivables is as follows:   Total(2) Equity financial assets measured at fair value through other comprehensive income13. Goodwill and Intangible Assets

12. Property, Plant and Equipment(1) Movement of goodwill and intangible assets

The movement of carrying amount for property, plant and equipment during the year is as follows:		

Fiscal year ended March 31, 2020
(million yen)

Other

Total

49,209380,524

122,185

54,496

1,835,229

—

—

—

—

(47,819)(47,819)

385,098

843,715

49,209380,524

122,185

6,676

1,787,409

Acquisition

48,308250,184

19,537

5,569

10,4802,559

336,639

Sale or disposal

Sale or disposal(1,125)(3,959)(148)(1,298)(2,645)(3)(9,181)

Amortization

Balance at the beginning of
the year (modified)121

Tools, furnitureand fixtures

385,098

843,715

—



Land

Adjustments due to applicationof IFRS 16

Machinery andvehiclesFiscal year ended March 31, 2020

Construction inprogress

Balance at the beginning of the year

Buildings andstructures

The movement of carrying amount for goodwill and intangible assets during the year is as follows:

Depreciation(27,040)(136,832)(17,559)(24)—(1,877)(183,334)

Impairment losses(67,196)(145,517)(5,453)(37)(10,055)(76)(228,336)

688

5,758

555

3,925

3,604

22

14,553

338,734

813,348

46,141

388,658

123,568

7,300

1,717,751 Exchange differences on translation of foreign
operations, etc.
Balance at the end of the year

Balance at the beginning of the year

(million yen)

Goodwill

Software

Other

Total

4,445

74,052

8,514

87,012

—

—

(30)

(30)

4,445

74,052

8,484

86,982

6,209

32,427

1,073

39,711—(1,475)(5)(1,481)—(20,281)(355)(20,636)

Adjustments due to application of IFRS 16
Balance at the beginning of
the year (modified)Acquisition(4,043)(4,946)(1,302)(10,292) Exchange differences on translationof foreign operations, etc.

Impairment losses

(114)

1,276

(146)

1,016

Balance at the end of the year

6,497

81,054

7,747

95,299Goodwill

Software

Other

Total

Fiscal year ended March 31, 2021


Fiscal year ended March 31, 2021
(million yen)

Buildings andstructures

Balance at the beginning of the year
Sale or disposal

LandConstruction inprogress

Other

Total

388,658

123,568

7,300

1,717,751

Sale or disposal—(1,300)(3)(1,303)

16,827

1,174(2,341)

1,872

275,612

Amortization—(21,866)(355)(22,221)

Impairment losses

(221)

(964)

(1,798)(13)(6,118)(16,487)(25)—(1,894)(185,051)

Impairment losses(1,434)(5,232)

(220)

(526)

(29)

—

(7,442) Exchange differences on translation of foreign
operations, etc.

(3,107)(16,599)

503

(726)

(1,917)(600)(22,447)

Balance at the end of the year

344,815

869,20946,542

387,590

117,481

6,663

1,772,303

Notes: 1. Depreciation of property, plant and equipment is included in “Cost of sales” and “Selling, general and administrative expenses” in the consolidated statement of
profit or loss.
		
2. Acquisition of construction in progress represents an increase due to new acquisition, net of transfers to each item of property, plant and equipment.

The cost, accumulated depreciation, accumulated impairment losses, and carrying amount of property, plant and equipment
are as follows:(million yen)

Buildings andstructures

Machinery andvehiclesTools, furnitureand fixtures

Land

Construction inprogress

Other

Total

1,861,064

6,177,132

198,409412,364

135,450

16,9508,801,372(1,522,330)(5,363,784)(152,268)(23,706)(11,882)(9,649)(7,083,621)

338,734

813,348

46,141

388,658

123,568

7,300

1,717,751

1,890,019

6,286,086

202,399

410,263

122,588

17,901

8,929,258(1,545,203)(5,416,876)(155,857)(22,672)(5,106)(11,238)(7,156,954)

344,815

869,20946,542

387,590

117,481

6,663

1,772,303

As of March 31, 2020

As of March 31, 2021

Carrying amount

29,463

46,141(2,477) Accumulated depreciation andaccumulated impairment losses

95,299414

813,348(139,298)

Cost

7,747

29,048219,469(642)

Carrying amount

81,054—

38,611(27,346) Accumulated depreciation andaccumulated impairment losses

6,497

Acquisition

338,734

Depreciation

Cost

Balance at the beginning of the year

(million yen)

—

(34)

(61)

(95)

 Exchange differences on translationof foreign operations, etc.

(296)

442

(31)

114

Balance at the end of the year

6,200

87,344

7,711

101,256

Note: Amortization of intangible assets is included in “Cost of sales” and “Selling, general and administrative expenses” in the consolidated
statement of profit or loss.

		 he cost, accumulated amortization, accumulated impairment losses, and carrying amount of goodwill and intangibleT
assets are as follows:(million yen)

Goodwill

Software

Other

Total

Cost

10,540364,810

23,970399,321

Accumulated amortization andaccumulated impairment losses(4,043)(283,756)(16,222)(304,022)

Carrying amount

6,497

81,054

7,747

95,299Cost

10,244

389,962

25,051

425,258

Accumulated amortization andaccumulated impairment losses(4,043)(302,618)(17,340)(324,002)

6,200

87,344

7,711

101,256

As of March 31, 2020

As of March 31, 2021

Carrying amount(2) Research and development expenses
		 esearch and development expenses recorded in “Cost of sales” and “Selling, general and administrative expenses” forR
the fiscal years ended March 31, 2020 and 2021 amounted to 38,716 million yen and 36,205 million yen, respectively.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Acquisition

Machinery and Tools, furniture
vehiclesand fixtures122

14. Lease Transactions

		(1) Lease transactions as a lessee				 he Group leases machinery, ships, buildings, and other assets as a lessee. Certain lease arrangements include renewal
T
options, but no significant lease arrangements include escalation clauses. In addition, there are no material restrictions(such as restrictions related to additional borrowings and additional leases) imposed by the lease arrangements.

(million yen)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Depreciation of right-of-use assets
Buildings and structures

10,848

11,174

Machinery and vehicles

11,577

11,999Tools, furniture and fixtures

2,105

2,631

Land

1,155

1,256

Other

948

1,029

26,63528,090

639

583

4,034

4,316

   TotalInterest on lease liabilities
Expense relating to short-term leases
Expense relating to leases of low-value assets

835

769

Income from subleasing right-of-use assets

1,388

1,587

Total cash outflow for leases

48,11350,597

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

984

919

As of March 31, 2020

As of March 31, 2021

Finance income on the net investment in the lease(iv) Maturity analysis of lease payments receivable(million yen)

Within one year

7,565

6,951

Later than one year and within two years

5,622

5,885

Later than two years and within three years

3,749

4,111

Later than three years and within four years

3,364

5,276

Later than four years and within five years

4,832

7,839

Later than five years

16,404

10,389   Total

41,53840,453

Unearned finance income

5,813

6,407

Net investment in the lease

35,724

34,045

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

15. Investment Properties(1) Movement of investment properties		

The movement of carrying amount for investment properties is as follows:(ii) Disclosure on the breakdown of the carrying amounts of right-of-use assets

(million yen)(million yen)

As of March 31, 2020

As of March 31, 2021

59,42558,158

Buildings and structures

32,77540,711

Acquisition

251

728

Machinery and vehicles

52,13951,824

Reclassification from property, plant and equipment

451

982

Tools, furniture and fixtures

3,528

5,554

Reclassification to property, plant and equipment

(265)

(155)

Land

11,145

11,271

Depreciation

(971)

(989)

Other

2,732

2,576

Impairment losses

(4)

(5)

102,322

111,938

Sale or disposal

(728)

(409)

   Total

Right-of-use assets for the fiscal years ended March 31, 2020 and 2021 increased by 20,944 million yen and 36,591 million
yen, respectively.
(2) Lease transactions as a lessor
		

The Group leases buildings and other assets as a lessor and receives security deposits as a risk management strategy.

		(i) Income from operating leases

Balance at the beginning of the year

Balance at the end of the year

58,15858,310

Cost (balance at the beginning of the year)

132,849

127,821

Accumulated depreciation and accumulated impairment losses(balance at the beginning of the year)(73,424)(69,662)

Cost (balance at the end of the year)

127,821

128,205

Accumulated depreciation and accumulated impairment losses(balance at the end of the year)(69,662)(69,894)(million yen)

Lease income

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

10,698

11,355(2) Fair values		The carrying amount and fair value of investment properties are as follows:(million yen)

As of March 31, 2020

		(ii) Maturity analysis of non-cancelable operating lease payments

Within one year

(million yen)

As of March 31, 2020

As of March 31, 2021

1,179

1,238

Later than one year and within two years

976

1,225

Later than two years and within three years

963

1,225

Later than three years and within four years

963

1,159

Later than four years and within five years

896

961

Later than five years

2,658

1,828

   Total

7,636

7,638

124

Investment properties		

As of March 31, 2021

Carrying amount

Fair value

Carrying amount

Fair value

58,158

136,545

58,310137,251

 he fair value of investment properties is principally based on the real estate appraisal values provided by independentTlicensed real estate appraisers.
		  T he fair value hierarchy of investment properties is categorized within Level 3 because unobservable inputs
are included.
			 Fair value hierarchy is described in Note “38. Financial Instruments.”

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

		(million yen)		(i) Disclosure on profit or loss and cash outflow for leases

123(iii) Income from finance leases(3) Income and expenses arising from investment properties		

Rental income and direct sales expenses arising from investment properties are as follows:(million yen)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Rental income

10,698

11,355

Direct sales expenses arising from investment properties which generated income

3,223

3,104

40

20

Direct sales expenses arising from investment properties which did not generate income

16. Impairment of Non-financial Assets
When the Group assesses whether there is an indication that non-financial assets may be impaired, in principle, the assets
are classified as idle assets, leased assets, assets for various projects and assets for business use, and then those classified assets are grouped by the smallest unit that generates independent cash flows.

125

(million yen)Segment

Steel businessCash-generating unit

East Japan Works (Chiba)

East Japan Works (Keihin)

Type

Fiscal year ended March 31, 2021
The carrying amount was reduced to the recoverable amount mainly for idle assets, and the reduction was recorded as an
impairment loss. Impairment losses in the consolidated statement of profit or loss totaled 7,544 million yen, consisting of
5,232 million yen of machinery and vehicles and 2,311 million yen of buildings and structures. The recoverable amount of
the business assets was primarily determined at their expected disposal price.

17. Subsidiaries

126
Details of Relationship

Name

Address

90,243

Buildings and structures

42,813

Construction in progress and other

13,595

Total

146,652

Machinery and vehicles

55,565

Buildings and structures

24,260Construction in progress and other

5,941

Total

85,766

 The recoverable amount is determined at value in use, and the value in use is determined by discounting future cash
flows based on a management-approved five-year-or-less business plan and a subsequent growth rate to the present value
at a pre-tax discount rate. Major assumptions used for calculating the value in use include crude steel production, shipments, selling price, iron ore and coking coal prices, future capital expenditures, pre-tax discount rate, and growth rate. The
crude steel production, shipments, selling price, iron ore and coking coal prices, future capital expenditures, and other items
are estimated based on observable market prices, past trends, and management’s forecasts, and reflect the risks specific to

Main Business Operations

Votingshares(%)

Business
loans

Other

(Consolidated subsidiaries)[Steel business]
100.0

Yes

Yes

Conclusion of contract
related to business management. Lease of buildings from the company

Manufacture and sale of shaped
steel and rebar products

100.0(100.0)———JFE Chemical Corporation

Taito-ku,Tokyo

Manufacture and sale of chemical
6,000
products

100.0(100.0)Yes——

JFE Metal Products &Engineering, Inc.

Minato-ku,
Tokyo

5,000

Manufacture, processing, and saleof secondary steel products

97.4(97.4)———JFE Galvanizing & CoatingCo., Ltd.

Shinagawa-ku,
Tokyo

5,000

Manufacture, processing, and saleof secondary steel products

100.0(100.0)———GECOSS Corporation*2

Chuo-ku,
Tokyo

4,397

Rental and sale of temporary construction materials

62.0(62.0)———

JFE Logistics Corporation

Chiyoda-ku,
Tokyo

4,000

Various transportation and warehousing businesses

89.2(89.2)———JFE Container Co., Ltd.*2

Chiyoda-ku,
Tokyo

2,365

Various transportation and warehousing businesses

59.6(59.6)———JFE Civil Engineering &Construction Corporation

Taito-ku,
Tokyo

2,300

Contracting for civil engineering and 100.0
construction works(100.0)Yes——

JFE Mineral Company, Ltd.

Minato-ku,
Tokyo

Manufacture, processing, and saleof mineral products, and manufac2,000
ture and sale of iron and steel slag
and functional materials

100.0(100.0)———

JFE Life Corporation

Taito-ku,
Tokyo

2,000

Real estate, insurance agency andvarious service businesses

100.0(100.0)—Yes—

JFE Plant Engineering Co., Ltd.

Taito-ku,Tokyo

Manufacture and sale of machineryand equipment, and contracting forelectrical construction, telecommu- 100.0
1,700
nications construction, equipment(100.0)management, and construction
works

—

—

—

JFE Systems, Inc. *2

Minato-ku,
Tokyo

1,390

67.7
(67.7)———

Mizushima Ferroalloy Co., Ltd.

Kurashiki,
Okayama

1,257 Manufacture and sale of ferroalloy

100.0(100.0)———

JFE Pipe Fitting Mfg. Co., Ltd.

Kishiwada,
Osaka

958

Manufacture and sale of steel pipe
joints86.6(86.6)—Yes—

JFE Kozai Corporation

Chuo-ku,Tokyo

Shearing and fusing of steel plates/
488
sheets, and sale of steel materials

100.0(100.0)—Yes—

Manufacture and sales of electric
resistance welded steel pipes

100.0(100.0)—Yes—

450 Manufacture and sale of ferroalloy

100.0(100.0)—Yes—

JFE Steel Corporation*

Chiyoda-ku,
Tokyo

Manufacture and sale of steel
239,644
products

JFE Bars & Shapes
Corporation*1

Minato-ku,
Tokyo30,0001, 3AmountMachinery and vehicles

Paid-In Capital(Millions of yen)Concurrent
holding of
directorposition, etc.

JFE Welded Pipe Manufacturing Chuo-ku,
Co., Ltd.
Tokyo
JFE Material Co., Ltd.

Imizu,
Toyama450

Development and sale of various
computer systems

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Fiscal year ended March 31, 2020
Major impairment losses are as follows:
JFE Steel Corporation, a consolidated subsidiary of the Company engaged in the steel business, faces an unprecedented
difficult business environment including a decline in demand for steel primarily in the manufacturing sector caused by the
U.S.–China trade friction, soaring material prices due to China’s growing crude steel output, and increases in auxiliary andother materials and logistics costs. Over the medium to long term, a decline in demand is anticipated in the Japanese market
against the backdrop of the decreasing population. Moreover, overseas markets will become increasingly competitive due toexpansion in steel production capacity in emerging nations and an increase in exports from China given a decline in domestic
demand. In such a climate, JFE Steel has endeavored to improve its works and manufacturing bases in Japan and strengthen
manufacturing capabilities by positioning them as key measures under the Medium-Term Business Plan. However, it isexpected that a significant amount of investment must be made to renovate aged facilities over a long period.
 In consideration of these structural changes in the environment, JFE Steel strives to focus business resources thoroughly and selectively on products and areas that are competitive with a view to maintaining and increasing its competitive
advantage in the global market and aiming to become a streamlined, resilient company. For that purpose, JFE Steel decided
to shut down a blast furnace at the East Japan Works which is heavily burdened with fixed costs and implement structuralreforms toward establishing an optimal production system in Japan. On the premise of the structural reforms to be implemented at Chiba and Keihin under the East Japan Works, JFE Steel calculated future cash flows of both sites in light of thecurrent difficult business climate. As a result, the recoverable amounts were lower than the carrying amount of businessassets owned by the East Japan Works. Therefore, the carrying amount was reduced to the present value of future cash
flows of 350,983 million yen (Chiba: 131,151 million yen, Keihin: 219,831 million yen), and the amount of decrease of
232,418 million yen (Chiba: 146,652 million yen, Keihin: 85,766 million yen) was recorded as impairment losses.
		 Major assets for which impairment losses were recognized are as follows:

the cash-generating unit. The growth rate is determined at 0.0% by taking into account the long-term average growth rateof the market or country to which the cash-generating unit belongs. Moreover, the pre-tax discount rate is determined at
4.6% and 4.3% for Chiba and Keihin under the East Japan Works, respectively, based on the weighted-average cost of capital of the cash-generating unit.
 Additionally, due to an economic slowdown caused by COVID-19, a significant decline in demand for steel materials was
anticipated in Japan and overseas at the end of the fiscal year ended March 31, 2020. Accordingly, future cash flows were
calculated on the assumption that such effect will continue for approximately six months.

Details of Relationship

Name

Paid-In Capital(Millions of yen)

Main Business Operations

Votingshares(%)

Business
loans

Other
Name

JFE Precisions Co., Ltd.

Higashi-ku,
Niigata450

Manufacture and sale of formed and 100.0
fabricated materials(100.0)—Yes—

JFE Techno-Research
Corporation

Chiyoda-ku,
Tokyo

100

Material analysis, environmental
research, technical information surveys and support for intellectual
properties

100.0(100.0)———JFE East Japan GS Co., Ltd.

Kawasaki-ku,
Kawasaki

100.0(100.0)——JFE Steel Australia Resources
Pty. Ltd. *1

Brisbane,
Australia

Millions of AUD Investments in coal mines and the
460 iron ore mining business in Australia

100.0(100.0)—Philippine Sinter Corporation*1

Manila,The Philippines

Millions of PHP Manufacture and sale of sintered
1,881 ore

100.0
(100.0)Bekasi,Indonesia

Manufacture and sale of cold-rolled
Millions of USD
and hot-dip zinc galvanized steel
139
products

100.0(100.0)PT. JFE Steel Galvanizing
Indonesia

127

Address

Details of Relationship

Concurrent
holding of
directorposition, etc.

50 Various service businesses

Other

—

Yes

—

JFE Shoji Electrical Steel Co.,Ltd.

Kita-ku,
Osaka

400

Processing and sale of electromagnetic steel sheets

100.0(100.0)———JFE Shoji Kohnan Steel Center
Co., Ltd.

Higashinada-ku,
kobe

250 Processing and sale of steel sheets

100.0(100.0)

—

—

—

—

JFE Shoji Coil Center
Corporation

Kanazawa-ku,
Yokohama

230 Processing and sale of steel sheets

85.7(85.7)

—

Yes

—

—

—

K&I Tubular Corporation

Chiyoda-ku,
Tokyo

50

Export/overseas trade of specialty
pipes/tubes

60.0(60.0)

—

—

—

—

—

—

Zhejiang JFE Shoji Steel
Products Co., Ltd.

Pinghu,China

Millions of CNY
Processing and sale of steel sheets
181

97.9
(97.9)

—

—

—

—

—

—

VEST Inc.

Los Angeles,
United States

Millions of USD Sale and manufacture of welded
5 steel pipes

100.0(100.0)———

Dongguan JFE Shoji Steel
Products Co., Ltd.

Dongguan,
China

Millions of CNY
Processing and sale of steel sheets
90

100.0
(100.0)———JFE Shoji Steel America, Inc.

Los Angeles,
United States

Millions of USD
Processing and sale of steel sheets
6

100.0(100.0)———Central Metals (Thailand) Ltd.

Samut Prakan,
ThailandMillions of THB
Processing and sale of steel sheets
240

100.0
(100.0)———JFE Shoji (Hong Kong) Ltd.

Hong Kong,
China

Export/import and domestic trade of
100.0
Millions of USD
steel products, chemical products,(100.0)
1
etc.

—

—

—

JFE Shoji (Thailand) Ltd.

Bangkok,ThailandExport/import and domestic trade ofMillions of THB steel products, raw materials for
100.0
20 ironmaking/steelmaking, various(100.0)equipment and materials, etc.

—

—

—

JFE Shoji (Shanghai) Co., Ltd.

Shanghai,
China

Export/import and domestic tradeof steel products, raw materials
Millions of CNY
for ironmaking/steelmaking, non3
ferrous metal products, chemical
products, etc.

100.0
(100.0)———Cogent Power Inc.

Burlington,
CanadaMillions of CAD Processing and sale of electromag0 netic steel sheets

100.0(100.0)———Millions of USD Business management, etc. of­­ 0 ­subsidiaries in the United States

100.0(100.0)

—

—

—

—

—

Thai Coated Steel Sheet
Co., Ltd.

Bangkok,ThailandMillions of THB Manufacture and sales of electro2,206 galvanized steel products

81.4(81.4)———

Nova Era Silicon S.A.

Belo Horizonte,
BrazilMillions of BRL
Manufacture and sale of ferroalloy
137

100.0
(100.0)———126 other companies[Engineering business]

JFE GROUP REPORT 2021

100.0

Yes

Yes

Conclusion of contract
related to business
management

64.0(64.0)———JFE Engineering Corporation*1

Chiyoda-ku,
Tokyo

J&T Recycling Corporation

Tsurumi-ku,
Yokohama

650 Total recycling business

JFE Project One Co., Ltd.

Mihama-ku,
Chiba

Design, construction, and mainte450 nance of oil refining, petrochemical,
and energy-related plants

100.0(100.0)———

Asukasoken Co., Ltd.

Shinagawa-ku,
Tokyo

356

Gas pipe burial and gas facility construction works

57.2(57.2)———JFE Technos Co., Ltd.

Tsurumi-ku,
Yokohama

301 Machinery and facility maintenance

100.0(100.0)———JFE Environmental Service
Corporation

Tsurumi-ku,
Yokohama

Operation, maintenance, and man97 agement of waste processing facilities, water treatment facilities, etc.

100.0
(100.0)———Urban Energy Corporation
AnyTechTsurumi-ku,
Yokohama

50 Electricity retailing business

100.0(100.0)———Duisburg,Germany

Construction and maintenance ofThousands
waste power plants, biomass powerof EUR
plants, waste heat recovery power
1,300
plants, etc.

100.0
(100.0)———Los Angeles,
JFE Shoji America Holdings Inc.
United States
JFE Shoji America, LLC

Los Angeles,
United States

Export/import and domestic trade of
100.0— steel products and raw materials for(100.0)ironmaking/steelmaking

—

—

—

Kelly Pipe Co., LLC

San Francisco,
United States— Sale of steel pipes

100.0(100.0)

—

—

—

25.0
(25.0)———

81 other companies(Equity-method affiliates, etc.)[Steel business]

64 other companies[Trading business]
Domestic and export/import tradeof steel products, raw materials forironmaking/steelmaking; non-fer14,539 rous metal products; chemical products; petroleum products; andvarious equipment and materials,
etc.

100.0

Chiyoda-ku,
Tokyo

Sale of construction material products and equipment and materials
for civil engineering; metallic pro1,500
cessing business; civil engineering/
construction works; and various
other works

100.0(100.0)JFE Shoji Electronics
Corporation

Chiyoda-ku,
Tokyo

Sale of semiconductor products andsale, installation, and maintenance
100.0
1,000 of device assembling and inspection(100.0)equipment for electronic components, etc.

—

Kawasho Foods Corporation

Chiyoda-ku,
Tokyo

Domestic and import/export trade of 100.0
1,000
various foods(100.0)

—

Yes

—

Yes

—

Yes

—

Conclusion of contract
related to business
management

—

—

—

Japan-Brazil Niobium
Corporation

Chiyoda-ku,
Tokyo37,272

Setouchi Joint Thermal Power
Co., Ltd.

Fukuyama,
Hiroshima

5,000 Thermal power generation business

50.0(50.0)———

Shinagawa Refractories Co.,
Ltd.* 2

Chiyoda-ku,
Tokyo

Manufacture and sale of various
3,300 refractories, and contracting for furnace construction work

34.1
(34.1)———

Nippon Chuzo K.K.*2

Kawasaki-ku,
Kawasaki

2,627

Manufacture and sale of cast steel
products, etc.

34.0
(34.0)———

Nippon Chutetsukan K.K. *2

Kuki,
Saitama

1,855

Manufacture and sale of cast-ironpipes, etc.

30.0
(30.0)Yes——NKK Seamless Steel Pipe K.K.

Kawasaki-ku,
Kawasaki

1,595

Manufacture and sale of seamlesssteel pipes

49.0(49.0)Yes——

EXA Corporation

Nishi-ku,
Yokohama

1,250

Development and sales of various
computer systems

49.0(49.0)———

K.K. JFE Sanso Center

Fukuyama,
Hiroshima

Manufacture and sale of oxygen
90gas, nitrogen gas, argon gas, etc.

40.0
(40.0)

—

—

—

50.0
(50.0)———

Guangzhou JFE Steel Sheet
Co., Ltd.

Guangzhou,
China

Investment in niobium mining in
BrazilManufacture and sale of cold-rolled
Millions of CNY  
and hot-dip zinc galvanized steel
3,191
sheets128

JFE GROUP REPORT 2021

100.0
(100.0)—JFE Shoji Steel Construction
Materials Corporation

Businessloans

Sale of steel pipe and pipe material
products

100.0(100.0)Chiyoda-ku,
TokyoVotingshares(%)

500

Millions of THB Manufacture and sale of hot-dip
4,362 zinc galvanized steel products

JFE Shoji Corporation*1, 4Main Business Operations

Chiyoda-ku,
Tokyo

Rayong,ThailandStandardkessel Baumgarte
Holding GmbH

Paid-In Capital(Millions of yen)

JFE Shoji Pipe & Fitting
Corporation

JFE Steel Galvanizing(Thailand) Ltd.

10,000 Engineering business

Address

Concurrent
holding of
directorposition, etc.

Details of Relationship

Name

129

Address

Paid-In Capital(Millions of yen)

Main Business Operations

Votingshares(%)

Concurrent
holding of
directorposition, etc.

Business
loans

Other

8.

• VEST Inc. is listed as an important subsidiary from the consolidated fiscal year under review.
• Mitsui E&S Plant Engineering Inc. became a consolidated subsidiary of JFE Engineering Corporation via the acquisition of shares on April 1,
2021. On the same date,• Mitsui E&S Plant Engineering Inc. changed its corporate name to JFE Environment Technology Co., Ltd.
*5 The other 20 equity-method affiliates in the trading business include three consolidated subsidiaries and one equity-method affiliate of thesteel business.

Nucor-JFE Steel Mexico,
S. Der. L. Dec.V.

Silao,
MexicoMillions of USD Manufacture and sale of hot-dip
361 zinc galvanized steel sheets

50.0(50.0)———

BaoWu JFE Special SteelCo., Ltd.

Shaoguan,
China

Millions of CNY Manufacture and sale of specialty
1,372 steel rods

50.0
(50.0)———

Thai Cold Rolled Steel Sheet
Public Company Limited.

Bangkok,ThailandMillions of THB Manufacture and sale of cold-rolled
4,816 steel sheets

36.0(36.0)———

California Steel Industries, Inc.

Fontana,
United States

Millions of USD Manufacture and sale of steel
40 products

50.0(50.0)———JSW Steel Ltd.

Mumbai,India

Ten millions of Manufacture and sale of steel
INR 301 products

15.0(15.0)———

Inner Mongolia Erdos EJM
Manganese Alloys Co., Ltd.

Ordos,
China

Millions of CNY
Manufacture and sale of ferroalloy
232

24.5
(24.5)

—

—

—

		
		
		
		

Bohai NKK Drill Pipe Co., Ltd.

Cangzhou,
China

Processing, manufacture, and sale
Millions of CNY
of drill pipes and drill pipe
129
accessories

28.3(28.3)

—

—

—

		

29.9
(29.9)—

18. Investments Accounted for Using Equity Method(1) Material associates

28 other companies[Engineering business]
Iwate Geothermal Power Co.,Ltd.

Hachimandaira,
Iwate

2,626

Geothermal power generation
business

JP Steel Plantech Co.

Kohoku-ku,
Yokohama

Design, manufacture, and installa1,995
tion of steelmaking machinery, etc.

34.0
(34.0)

—

—
—

—
—

9 other companies[Trading business]
Hanwa Kozai Co., Ltd.

Yodogawa-ku,
Osaka

47.9
(47.9)MOBY Corporation

Ichikawa,
Chiba

Processing and sale steel plates for
211
containers

20.0(20.0)———

Ohmi sangyo Co., Ltd.

Taisho-ku,
Osaka

100 Processing and sale of steel sheets

35.7(35.7)———Taisho-ku,
Osaka

60 Processing and sale of steel sheets

30.7(30.7)———

Design, manufacture, sale, installation, repair, and maintenance ofships, naval vessels, and marine
structures, etc.

35.0

Yes

—

—

OSAKA KOWAZ Inc.
20 other companies*

—

—

—



(million yen)

As of March 31, 2020

Current assets

As of March 31, 2021

572,156

426,411

Non-current assets

1,362,946

1,393,517

Total assets

1,935,102

1,819,928

Current liabilities

773,634

576,718

Non-current liabilities

600,415717,355

Total liabilities

1,374,049

1,294,074

Total equity

561,052

525,854568,768

534,047(7,715)(8,193)Equity attributable to owners of parent
Non-controlling interests

5[Other business]
Japan Marine United

Nishi-ku,
Yokohama

57,500

Notes:
1. *1 Falls under category of a specified subsidiary
2. *2 A securities report has been submitted
3. The figures in parentheses of “voting shares” are voting shares that are indirectly held and are included in the percentage of voting rights.
4. *3 Net sales of JFE Steel Corporation account for over 10% of the Group’s consolidated revenue.
Principal information on profits and losses, etc. (JGAAP)	  Net sales 	¥1,557,031 million
	  Ordinary loss ¥94,209 million
	  Net loss
¥33,130 million
	  Net assets¥741,454 million
	  Total assets ¥2,875,872 million
5. *4 Net sales of JFE Shoji Corporation account for over 10% of the Group’s consolidated revenue.
Principal information on profits and losses, etc. (JGAAP)	  Net sales¥1,024,895 million
	  Ordinary income¥12,763 million
	  Net income¥11,653 million
	  Net assets¥130,747 million
	  Total assets ¥365,543 million
6. Equity-method affiliates includes joint operations.
7. Changes in affiliate companies• Baosteel Special Steel Shaoguan Co., Ltd. changed its corporate name to Baosteel Special Steel Shaoguan Co., LTD. on December 10, 2020.
• Iwate Geothermal Power Co., Ltd. is listed as an important equity-method affiliate from the consolidated fiscal year under review.
• JFE Shoji Usuitakenzai Corporation merged with JFE Shoji Steel Construction Materials Corporation on April 1, 2020, with JFE Shoji Steel
Construction Materials Corporation as the surviving company.ss• JFE Shoji Trade (Hong Kong) Ltd., changed its corporate name to JFE Shoji (Hong Kong) Ltd. on April 1, 2020.
• JFE Shoji Trade America LLC changed its corporate name to JFE Shoji America LLC on April 1, 2020.
• JFE Shoji Trade Thailand Ltd. changed its corporate name to JFE Thailand Ltd. on May 5, 2020.

130(million yen)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Revenue

864,848

767,122

Profit58,20353,389Other comprehensive income(4,071)

8,859

Comprehensive income

54,132

62,248 An adjustment between the amount of equity attributable to owners of parent in the above condensed consolidated
financial statements and the carrying amount of interests in JSW Steel Limited and the fair value of interests in JSW Steel
Limited are as follows:(million yen)

Equity attributable to owners of parent
Ownership interest (%)
Equity attributable to the GroupAs of March 31, 2020

As of March 31, 2021

568,768

534,047

15.0

15.0

85,31580,107

Consolidation adjustment

1,920

6,408

Carrying amount of interests in JSW Steel Limited

87,23586,515

Fair value of interests in JSW Steel Limited

77,420258,175		 Dividends received from JSW Steel for the fiscal years ended March 31, 2020 and 2021 were 2,335 million yen and
1,062 million yen, respectively.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Processing and sale of stainless[steel] products

1,076

JSW Steel Limited
JSW Steel, located in Mumbai, India, engages primarily in manufacture and sales of steel products.
 The condensed consolidated financial statements of JSW Steel are as follows.
 For JSW Steel, provisional financial statements are prepared based on December 31 as the reporting date because
local legislation imposes restrictions on when certain information becomes available to the Company.
 However, in the accompanying notes, the condensed consolidated financial statements of JSW Steel that werealready released at the end of each fiscal year are disclosed. Accordingly, financial information as of September 30 isstated in the statement of financial position, and financial information for the first nine months of the reporting period
ended December 31 is stated in the statement of profit or loss and the statement of comprehensive income.

(2) Immaterial associates and joint ventures				The breakdown of changes in net deferred tax assets (liabilities) is as follows:

The carrying amount of investments in immaterial associates and joint ventures is as follows:(million yen)(million yen)

As of March 31, 2020

As of March 31, 2021

Associates

114,017

128,887

Joint ventures

134,787

139,840

Balance at the beginning of the year
Adjustments due to application of IFRS 16
Balance at the beginning of the year (modified)Deferred tax expense Financial information on immaterial associates and joint ventures is as follows, which represents the amounts attributable to the Group based on the Group’s interest in those associates and joint ventures.
(million yen)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

131

(9,193)(45)

Other comprehensive income

4,110

13,750Comprehensive income(5,083)

13,705   Effective portion of cash flow hedges  Net change in fair value of equity instruments designated as measured atfair value through other comprehensive income   Remeasurements of defined benefit plans

4,725

4,963

Other
Balance at the end of the year		Joint ventures
ProfitOther comprehensive income
Comprehensive income

(17)

46

4,707

5,009

37,13736,676

Deferred tax assets
Impairment losses
Retirement benefit liability

38,51036,295

Unused tax loss carryforwards

11,942

13,878

Accrued bonuses

13,454

13,426

Accrued expenses

10,326

9,989

Other

47,43136,441

158,803

146,708

28,921

23,403Retained earnings of subsidiaries and associates

14,223

18,670Reserve for tax purpose reduction entry of non-current assets

6,605

6,526

Total deferred tax assets
Deferred tax liabilities Net change in fair value of equity instruments designated as measured atfair value through other comprehensive income

17,846

19,684

Total deferred tax liabilities

Other

67,596

68,285Net deferred tax assets

91,20778,422

91,20739,7474,552

19(1,316)

13,799(11,470)

2,070(5,089)

1,953

538

91,20778,422

 Deductible temporary differences and unused tax loss carryforwards for which deferred tax assets are not recognized in the consolidated statement of financial position are as follows:132

As of March 31, 2021

Deductible temporary differences

340,667

347,458

Unused tax loss carryforwards

366,250

414,328		 Unrecognized deferred tax assets for the above deductible temporary differences were 104,328 million yen and
106,425 million yen as of March 31, 2020 and 2021, respectively. Unrecognized deferred tax assets for the above
unused tax loss carryforwards were 16,243 million yen and 21,709 million yen as of March 31, 2020 and 2021,
respectively.

		 The breakdown by expiration date of unused tax loss carryforwards for which deferred tax assets are not recognizedin the consolidated statement of financial position is as follows:(million yen)

As of March 31, 2020

As of March 31, 2021

108,151

Year one

109,540

Year two to year five

115,379

76,886Later than five years

140,447

226,774

No specified expiration date   Total

		

		

		

		

882

2,515

366,250

414,328

 Taxable temporary differences arising from investments in subsidiaries and associates for which deferred tax liabilities were not recognized as of March 31, 2020 and 2021 amounted to 50,023 million yen and 62,727 million yen,respectively.
 Deferred tax liabilities are not recognized for such temporary differences, where the Group is able to control thetiming of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in theforeseeable future.
 Deferred tax assets of 131,818 million yen and 124,021 million yen were recognized as of March 31, 2020 and
2021, respectively, for taxable entities that incurred net loss in the current or previous period, and whose recoverabilityof deferred tax assets depends on future taxable income.
 In assessing the recoverability of deferred tax assets, the Group considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies.

(2) Income tax expense		The breakdown of income tax expense is as follows:(million yen)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

18,685Current tax expense

19,564

Deferred tax expense(39,747)(4,552)   Total(20,183)

14,133

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

(million yen)

As of March 31, 2021—

33,617(million yen)

The breakdown of deferred tax assets and deferred tax liabilities by major cause of accrual is as follows:
As of March 31, 2020

91,207558

As of March 31, 2020

(1) Deferred tax assets and deferred tax liabilities

33,059

19. Income Taxes		

Fiscal year ended
March 31, 2021

Deferred taxes on items of other comprehensive income

Associates
ProfitFiscal year ended
March 31, 2020

(3) Reconciliation of effective tax rate
		(Note 2) Terms and conditions of issuance of bonds are summarized as follows:

The breakdown by major cause of a difference between the effective statutory tax rate and the burden ratio of corporation tax, etc., after application of tax effect accounting is as follows:





(%)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

30.0

30.0

(0.6)

(9.9)

Effective statutory tax rate
(Reconciliation)
Items permanently not tax-deductible, such as entertainment expenses
Items permanently not taxable, such as dividend income

0.3

6.7

(21.8)(242.7)

Share of profit (loss) of investments accounted for using equity method

1.2

86.6

Retained earnings of subsidiaries and associates(1.4)(90.2)

Other

1.8(67.2)

Burden ratio of corporation tax, etc., after application of tax effect accounting

9.5(286.6)

Changes in valuation allowance

133
20. Trade and Other Payables
The breakdown of trade and other payables is as follows:(million yen)

As of March 31, 2020

As of March 31, 2021

Notes and accounts payable–trade

477,048436,211

Accounts payable–other

80,20460,784   Total

557,252

496,995

21. Bonds Payable, Borrowings, and Lease Liabilities(1) The breakdown of bonds payable, borrowings, and lease liabilities is as follows:


Issue

Date of issuance

As ofMarch 31, 2020

As ofMarch 31, 2021

Interest rate(%)

Collateral

Redemption date

The Company

The 17th
unsecured bondJune 8, 2011

30,52430,183

1.326

None

June 8, 2021

The Company

The 21st
unsecured bondMarch 13, 2014

9,978

9,983

0.804

None

March 13, 2024

The Company

The 22nd
unsecured bondSeptember 19, 2014

19,955

19,965

0.703

None

September 19, 2024

The Company

The 23rdunsecured bondMay 23, 2017

9,980

9,989

0.090

None

May 23,  2022

The Company

The 24th
unsecured bondMarch 1, 2018

9,972

9,982

0.110

None

March 1, 2023

The Company

The 25th
unsecured bondMay 21, 2018

20,168

20,117

0.260

None

May 21, 2025

The Company

The 26th
unsecured bondNovember 22, 2018

9,966

9,975

0.150

None

November 22, 2023

The Company

The 27th
unsecured bondMay 27, 201929,89929,923

0.170

None

May 27, 2024

The Company

The 28th
unsecured bondMay 27, 2019

9,959

9,965

0.260

None

May 27, 2026

The Company

The 29th
unsecured bondMay 27, 2019

19,90919,919

0.365

None

May 25, 2029

The Company

The 30th
unsecured bondSeptember 20, 2019

9,959

9,968

0.120

None

September 20, 2024

The Company

The 31st
unsecured bondSeptember 20,  201929,88629,904

0.250

None

September 18, 2026

The Company

The 32nd
unsecured bondSeptember 20, 2019

19,906

19,916

0.320

None

September 20, 2029

The Company

The 33rdunsecured bondJuly 14, 2020—

19,943

0.050

None

July 14, 2023

The Company

The 34th
unsecured bondJuly 14, 2020—

29,895

0.250

None

July 14, 2025

The Company

The 35th
unsecured bondJuly 14, 2020

—

9,950

0.470

None

July 12, 2030

Total

—

—

230,066

289,584———(million yen)

As of March 31, 2020

As of March 31, 2021

Short-term borrowings (Note 1)

123,505

125,816

Current portion of long-term borrowings (Note 1)

122,846

72,151

Bonds due within one year (Note 2)(2) Assets pledged as collateral and corresponding secured obligations
		

Assets pledged as collateral—

30,183

Commercial papers

88,999—Bonds payable (Note 2)

230,066

259,401

1,097,012

1,159,012

Cash and cash equivalents

852

842

151,877

159,573

Trade and other receivables

10,3007,921

1,814,308

1,806,139

Property, plant and equipment

12,644

10,783Long-term borrowings (Note 1)
Lease liabilities   Total
Current liabilities

376,473

277,027

Non-current liabilities

1,437,835

1,529,112   Total

1,814,308

1,806,139				 onds payable, borrowings, and lease liabilities are classified as financial liabilities measured at amortized cost.
B Bonds payable and borrowings are not subject to financial covenants that have significant effects on the financing
activities of the Group.

(Note 1) The weighted average interest rate and repayment date for the balance of borrowings as of March 31, 2021 are
as follows:(%)

Repayment date

Short-term borrowings

1.30

—

Current portion of long-term borrowings

0.54

—

Long-term borrowings

0.71

April 2, 2022 to March 22, 2078

(million yen)

As of March 31, 2020

Right-of-use assets
Investments accounted for using equity method
Other financial assets (non-current)   Total		

As of March 31, 2021

161

159

2,332

2,307

679

802

26,97022,815

As of March 31, 2020

As of March 31, 2021

10,351

9,434

Note: Industrial foundation’s assets of property, plant and equipment as mortgage

Property, plant and equipment(million yen)134

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Trade and other payables are classified as financial liabilities measured at amortized cost.

(million yen)Company name		

In addition, shares of consolidated subsidiaries have been pledged as collateral.



As of March 31, 2020

As of March 31, 2021

553

649

As of March 31, 2020

As of March 31, 2021

164

128

Shares of consolidated subsidiaries
(book value posted on the non-consolidated financial statements ofthe consolidated subsidiaries)		

Corresponding secured obligations

(million yen)

Trade and other payables
Bonds payable, borrowings, and lease liabilities (current)

960

1,006

Bonds payable, borrowings, and lease liabilities (non-current)

12,427

12,309   Total

13,552

13,444As of March 31, 2020

As of March 31, 2021

559

559

		

24. Post-employment Benefits he Group has adopted mainly retirement lump-sum payment plans, defined benefit pension plans, and defined contributionTpension plans. Retirement lump-sum payment plans and defined benefit pension plans are exposed to general investment
risk, interest rate risk, inflation risk, and other risks. However, the Group determines that those risks are immaterial.
 The defined benefit pension plans are operated by corporate pension funds legally separated from the Group. The corporate pension funds and pension fund trustees are required by laws and regulations to act in the best interests of the plan
participants, and are responsible for managing the plan assets in accordance with the designated policies.

Note: Those corresponding to the industrial foundation’s assets in the above obligations



135

Provision for loss on specified business A provision for loss on specified business is provided for possible losses on a certain specific business of industrial waste
disposal at an estimated amount of losses to be incurred from the following fiscal year onwards.
 These expenses are expected to be paid primarily after one year; however, the timing of the payment is subject tochange due to future business plans and other factors.

(million yen)(million yen)

Bonds payable, borrowings, and lease liabilities (current)
Bonds payable, borrowings, and lease liabilities (non-current)

5,574

5,014

   Total

6,133

5,574

(1) Reconciliation of defined benefit obligations and plan assets		 he reconciliation of the defined benefit obligations and plan assets to the retirement benefit liability and asset recogTnized in the consolidated statement of financial position is as follows:(million yen)

As of March 31, 2020

22. Other Financial Liabilities
The breakdown of other financial liabilities is as follows:(million yen)

As of March 31, 2021

Deposits received

85,377

81,320Other

14,713

48,218100,090

129,538

Financial liabilities measured at amortized cost    Subtotal
Financial liabilities measured at fair value through profit or loss
Derivative liabilities

Funded defined benefit obligations

197,765

190,721

Plan assets(125,241)(133,600)    Subtotal

72,524

57,120Unfunded defined benefit obligations

55,272

61,906   Total

127,796

119,027

Amounts recognized in the consolidated statement of financial position
Retirement benefit liability

143,316

141,186Retirement benefit asset(15,520)(22,159)

Net defined benefit liability (asset) recognized in
the consolidated statement of financial position

127,796

119,027

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

5,621

2,715

   Total

105,712132,253

Current liabilities

89,46586,836

		Non-current liabilities

16,24645,417

   Total

105,712132,253

23. Provisions
The breakdown and movement of provisions are as follows:
Fiscal year ended March 31, 2021
Provision for loss on
specified business

Other provisions

10,161

28,087

38,248604

10,808

11,412

Interest expense incurred over the discount period

144

(0)

143

(2,729)(8,431)(11,160)

Decrease due to reversal—(3,078)(3,078)Exchange differences on translation of foreign operations, etc.

—

59

59

8,180

27,44435,624—

11,518

11,518Non-current liabilities

8,180

15,925

24,105   Total

8,180

27,44435,624

Balance at the end of the year

(million yen)

Balance at the beginning of the year

254,878

253,037

Current service cost

14,842

15,344

Interest expense

1,502

1,545

Actuarial losses arising from changes in financial assumptions
Experience adjustments

Total

Increase during the year

Current liabilities

The movement of defined benefit obligations is as follows:

Actuarial losses arising from changes in demographic assumptions(million yen)

Decrease due to intended use(2) Reconciliation of defined benefit obligations

Remeasurements

Balance at the beginning of the year

As of March 31, 2021

Past service cost
Benefits paid
Exchange differences on translation of foreign operations, etc.
Balance at the end of the year

		

615

(1,311)(2,215)(2,240)

540

3,808

70

(1,228)(18,605)(16,309)

1,408

(19)

253,037

252,627

The weighted average duration of defined benefit obligations is as follows:(years)

Weighted average duration

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

11.0

10.9

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

As of March 31, 2020136

(3) Reconciliation of plan assets		(6) Defined contribution pension plans

The movement of plan assets is as follows:		(million yen)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

137,259

125,241

758

747

Balance at the beginning of the year
Interest income
Return on plan assets (excluding interest income)(8,055)

17,467

2,201

2,297

Benefits paid

(8,809)(12,010)

Effects of business combinations and disposals

2,025

—

Exchange differences on translation of foreign operations, etc.

(138)

(143)

125,241

133,600

Balance at the end of the year

137

		

		

		
		

		
		

The breakdown of the total plan assets by major category is as follows:With
quoted market
price in an
active market

With no quoted
market price in an
active market

Total

With no quoted
market price in an
active market

35,998(i) Authorized shares
The number of authorized shares as of April 1, 2019, March 31, 2020, and March 31, 2021 was 2,298,000 thousand
common shares.

Total

Equity instruments

Number of issued common shares (thousand shares)

614,438

Increase (decrease)—

As of March 31, 2020

614,438

Increase (decrease)—

As of March 31, 2021

614,438

47,741

268

48,00953,241

378

53,620Foreign stocks

6,017

698

6,715

8,490

1,024

9,515

Domestic bonds

16,043

3,003

19,047

13,6103,685

17,295

Foreign bonds

2,965

2,218

5,184

3,082

2,265

5,347

Cash and deposits

5,185

—

5,185

9,356

—

9,356

As of April 1, 2019

Life insurance general accounts—

39,431

39,431—36,75936,759As of March 31, 2020

38,601

Other

—

1,667

1,667

—

1,705

1,705

As of March 31, 2021

38,646

77,95347,288125,241

87,78145,818

133,600

Note: All the shares issued by the Company are non-par value common shares that have no restrictions on the rights.

(2) Treasury shares   Total				

Number of shares (thousand shares)

Major actuarial assumptions are as follows:(%)

As of March 31, 2020

Discount rate
Anticipated rate of salary increase

As of March 31, 2021

Mainly 0.6

Mainly 0.6

Mainly 0.9 to 3.0

Mainly 0.8 to 2.8

Note: The sensitivities of defined benefit obligations due to changes in the discount rate as of each fiscal year are as follows. Each of thesesensitivities assumes that other variables are held constant; however, they do not always change independently. Negative figuresindicate a decrease in defined benefit obligations, while positive figures indicate an increase.
		
The Group does not expect any significant changes in the anticipated rate of salary increase.
(%)

Change in assumptions

Discount rate

As of March 31, 2020

As of March 31, 2021

Increase by 0.5%

(12,580)(11,827)

Decrease by 0.5%

13,616

12,76938,590Note: Treasury shares as of March 31, 2020 and 2021 include the Company shares held in trust accounts for employee stock ownership plans.

 The Group’s management policy for the plan assets is to secure stable returns in the medium and long term forensuring future payments of defined benefit obligations pursuant to internal regulations. Specifically, the target rate of
returns and the asset mix ratio by investment asset class are determined within the acceptable risk range every fiscal
year, and the plan assets are managed with the asset mix ratio maintained.

(5) Actuarial assumptions
		

The movement of the number of treasury shares is as follows:(3) Capital surplus and retained earnings
		 nder the Companies Act of Japan, at least one-half of the proceeds from issuance of shares shall be credited to shareU­capital, while the remainder of the proceeds shall be credited to capital reserves included in capital surplus. In addition,
the Companies Act of Japan provides that one-tenth of the dividends of retained earnings shall be appropriated as capital reserves or as retained earnings reserves until their aggregate amount equals one-quarter of share capital.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Domestic stocks
Debt instruments

138(ii) Fully paid and issued shares
The movement of the number of issued shares is as follows:

As of April 1, 2019

As of March 31, 2021
With
quoted market
price in an
active market

36,203 The above amounts include contributions to employees’ pension insurance based on Japan’s Employees’ Pension
Insurance Act.

(million yen)

As of March 31, 2020

Fiscal year ended
March 31, 2021

(1) Share capital

The Group expects to contribute 2,221 million yen to its defined benefit plans in the fiscal year ending March 31, 2022.



Fiscal year ended
March 31, 2020

25. Equity and Other Equity Items(4) Major breakdown of plan assets
		(million yen)Contributions to the defined contribution pension plans

Remeasurements
Contribution to the plan by employer

Contributions to the defined contribution pension plans are as follows:26. Dividends		(1) Amounts of dividends paid		(million yen)

SteelBusinessEngineering
Business

Trading BusinessElimination ofintersegment
revenueJapan

1,500,177

439,083

424,070(193,350)

2,169,980

Other755,039

46,667508,440(252,842)

1,057,304   Total

2,255,216

485,750

932,510(446,192)

3,227,285
2,560,804

Fiscal year ended March 31, 2020
Date of resolution

Ordinary General Meeting of Shareholders
held on June 21, 2019

Type of share

Total amount of dividends(million yen)

Dividend per share(yen)

Record date

Effective dateCommon stock

28,83150

March 31, 2019

June 24, 2019

Note: The total amount of dividends of 28,831 million yen includes dividends of the Company shares held in trust accounts for employee stock
ownership plans of 30 million yen.
Date of resolution

Type of share

Total amount of dividends(million yen)

Dividend per share(yen)

Record date

Effective date

Board of Directors’ Meeting
held on November 12, 2019

Common stock

11,53220

September 30, 2019

December 6, 2019

Note: The total amount of dividends of 11,532 million yen includes dividends of the Company shares held in trust accounts for employee stock
ownership plans of 11 million yen.

139

Fiscal year ended March 31, 2021



		
		

Fiscal year ended March 31, 2021
There is no applicable item.

(2) Of the dividends for which the record date belongs to the fiscal year, those dividends for which the effective
date will be after the end of the fiscal year
Fiscal year ended March 31, 2020
There is no applicable item.

				

RegionTransfer of goods or services
At a point in time

2,050,372

4,046

932,477(426,091)

Over time

204,844481,70432(20,100)

666,480   Total

2,255,216

485,750

932,510(446,192)

3,227,285(2) Contract balances

As of March 31, 2020

As of March 31, 2021

Receivables from contracts with customers

718,931639,997

716,893

Contract assets

124,039

142,075

101,282

Contract liabilities

59,06044,81343,038				Common stock he amount recognized as receivables that was included in the opening balance of contract assets was 85,824 millionT
yen and 110,985 million yen as of March 31, 2020 and 2021, respectively.
 The amount recognized as revenue that was included in the opening balance of contract liabilities was 45,878 million
yen and 37,770 million yen as of March 31, 2020 and 2021, respectively.

(3) Remaining performance obligations

Total amount of dividends(million yen)

Source of funds
for dividends

Dividend per share(yen)

Record date

5,765

Retainedearnings

10

March 31, 2021

Effective dateJune 28, 2021

Note: The total amount of dividends of 5,765 million yen includes dividends of the Company shares held in trust accounts for employee stock
ownership plans of 5 million yen.

(million yen)Transaction price allocated to performance obligations that are unsatisfied
or partially unsatisfied as of the end of the fiscal year

As of March 31, 2020

As of March 31, 2021

932,447

959,342

Expected timing of revenue recognition
Within one year

377,370

345,029

Over one year

555,076

614,313

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Employee benefit expenses

136,824

133,846

Product shipping-related expenses

92,05675,38727. Revenue(1) Disaggregation of revenue		

28. Selling, General and Administrative Expenses

Fiscal year ended March 31, 2020

The breakdown of selling, general and administrative expenses is as follows:(million yen)

SteelBusinessEngineering
Business

Trading BusinessElimination ofintersegment
revenueJapan

1,780,582

473,539

504,159(231,157)

2,527,123

Other

900,767

38,756579,977(316,908)

1,202,594   Total

2,681,350

512,295

1,084,137(548,065)

3,729,717
3,023,105

Transfer of goods or services
At a point in time



Total

Region2,456,287

4,205

1,084,075(521,463)

Over time

225,062

508,09062(26,602)706,612   Total

2,681,350

512,295

1,084,137(548,065)

3,729,717

140

Provision of allowance for doubtful accounts(million yen)

120

463

Other

127,991

114,359   Total

356,992

324,057

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Ordinary General Meeting of Shareholders
held on June 25, 2021

Type of share(million yen)

As of March 31, 2019

Fiscal year ended March 31, 2021
Date of resolution

Total

29. Employee Benefit Expenses

31. Other Income

Employee benefit expenses are as follows:

The breakdown of other income is as follows:(million yen)

Employee benefit expenses

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

492,785

480,417

Employee benefit expenses include salaries, bonuses, legal welfare expenses, and retirement benefit expenses, and arerecorded in “Cost of sales” and “Selling, general and administrative expenses.”

30. Share-based Payment

141

Expenses recognized for the plan as “Selling, general and administrative expenses” in the consolidated statement of profit orloss are as follows:

Fiscal ear ended
March 31, 2021

Equity-settled

54

13

Cash-settled

(16)

28

   Total

37

41

The carrying amount of liabilities for the plan is as follows:(million yen)

Other non-current liabilities

As of March 31, 2020

As of March 31, 2021

21

44

The number of points granted and the weighted-average fair value of points at the grant date for the equity-settled portionof the plan are as follows:
Fiscal year ended
March 31, 2020

Fiscal ear ended
March 31, 2021

Number of points granted (points)

29,88018,900Weighted average fair value of points at the grant date (yen)

1,867

743

Note: The fair value of points granted approximates the share price at the grant date, and thus represents the share price at the grant date.

Fiscal ear ended
March 31, 2021

Dividend income
Equity financial assets measured at fair value through other comprehensive income
Rental income
Gain on sale of investments in subsidiaries

9,478

5,492

6,765

6,727

80

—

Other

14,493

13,562   Total

30,81825,782

 he breakdown of dividend income from equity financial assets measured at fair value through other comprehensive incomeT
is as follows:(million yen)

Fiscal year ended
March 31, 2020

Fiscal ear ended
March 31, 2021

Financial assets derecognized during the year

650

2,976

Financial assets held as of the reporting date

8,828

2,515

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

142

32. Other Expenses
The breakdown of other expenses is as follows:(million yen)

Loss on retirement of fixed assets

20,251

20,760Other

20,072

22,633   Total

40,32343,394

33. Profit on Sales of Fixed Assets
Fiscal year ended March 31, 2021
Profit on sales of fixed assets resulted primarily from the sale of land and buildings in Aiko-gun, Kanagawa Prefecture.

34. Finance Income and Finance Costs(1) Finance income(million yen)

Fiscal year ended
March 31, 2020

(million yen)

Fiscal year ended
March 31, 2020

		The breakdown of finance income is as follows:(million yen)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Interest income
Financial assets measured at amortized cost

2,727

1,686

   Total

2,727

1,686

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

The Company has instituted a share-based payment plan through which a portion of the compensation of directors (excluding outside directors) and executive officers (excluding non-residents under income tax law) (hereinafter referred to collectively as the “Directors/Officers”) of the Company and its operating companies is provided in the form of employee stock
ownership plans. The Group’s objective is to establish a clear link between compensation and the Group’s operating performance and equity value and encourage the sharing of value with shareholders, thereby creating a greater incentive to­ ontribute toward enhancing shareholder value over the medium and long term.
c The plan is a compensation plan whereby shares in the Company are acquired through a trust funded by cash contributed by the Company, and the Company’s shares and an amount of cash equivalent to the market price of the Company’s
shares (hereinafter referred to as the “Company’s Shares”) are provided through the trust to the Directors/Officers, pursuant
to the Stock Grant Regulations for Officers established by the Company and its operating companies.
 The Company’s Shares are granted to the Directors/Officers, in principle, upon their retirement.
		 Compensation under the plan is granted to the Directors/Officers as consideration for their execution period of
duties, provided the Directors/Officers have been in office for at least a month during the period specified as follows(the “Execution Period”):•  Directors of the Company: From the date of the Ordinary General Meeting of Shareholders of the Company for the­respective year to the date of the Ordinary General Meeting of Shareholders of the Company for the following year•  Others: From April 1 of the respective year to March 31 of the following year	The Company and its operating companies calculate points equivalent to the performance-linked portion and the servicelength portion for each Execution Period and grant them to the Directors/Officers.
 The points granted for each Execution Period are accumulated until retirement, and the number of the Company’s
Shares is calculated by converting the accumulated points as “one point = one share.” Part of the plan that provides the Company’s Shares is accounted for an equity-settled share-based payment transaction while part of the plan that provides cash is accounted for a cash-settled share-based payment transaction.

36. Earnings per Share(2) Finance costs		The breakdown of finance costs is as follows:(1) Basic earnings per share and diluted earnings per share

(million yen)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Interest expenses
Financial liabilities measured at amortized cost
Other
Other
   Total

14,325

13,701

161

143

786

339

15,273

14,184

Fiscal year ended
March 31, 2020

Basic losses per share (yen)(343.39)(37.98)

Diluted losses per share (yen)(343.39)(37.98)(2) Basis for calculation of basic earnings per share and diluted earnings per share
Fiscal year ended
March 31, 2020

Loss attributable to owners of parent (million yen)

143

Loss used in calculation of basic earnings per share (million yen)

The amount arising during the year, reclassification adjustments to profit or loss, and tax effects for each component ofother comprehensive income are as follows:(million yen)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Remeasurements of defined benefit plans
Amount arising during the year   Before tax effects(7,045)

17,109(7,045)

17,109  Tax effects

2,070(5,089)   Remeasurements of defined benefit plans(4,975)

12,020Net change in fair value of equity instruments designated as measured atfair value through other comprehensive income
Amount arising during the year

58,221(62,943)

58,221  Tax effects

13,799(11,470)  Net change in fair value of equity instruments designated as measured atfair value through other comprehensive income(49,143)

46,751

Amount arising during the year

(3,080)(607)

Reclassification adjustments—(1)

Exchange differences on translation of foreign operations   Before tax effects  Tax effects   Exchange differences on translation of foreign operations(3,080)

(609)

—

—

(3,080)(609)

Effective portion of cash flow hedges(21,868)——(197,744)(21,868)——

Loss used in calculation of diluted earnings per share (million yen)

Profit adjustments (million yen)

(197,744)(21,868)

Weighted average number of common shares used in calculation ofbasic earnings per share (thousand shares)

575,854575,829——575,854575,829

Impact of dilutive potential common shares   Share—based payments (thousand shares)
Weighted average number of common shares used in calculation ofdiluted earnings per share (thousand shares)

Notes: 1. The Company shares held in trust accounts for employee stock ownership plans are included in treasury shares, which are excluded
from the calculation of the weighted average number of shares used in the calculation of basic earnings per share. The weighted
average number of treasury shares excluded from the calculation of basic earnings per share for the fiscal years ended March 31,
2020 and 2021 is 589,000 and 567,000, respectively.
		
2. Share-based payments for the fiscal years ended March 31, 2020 and 2021 (118,000 and 107,000 shares, respectively) have areverse dilution effect and are not included in the calculation of diluted earnings per share for these fiscal years.

37. Supplemental Information to the Consolidated Statement of Cash Flows
Movement of liabilities arising from financing activities
		 Fiscal year ended March 31, 2020
(million yen)

Liabilities arising from financing activities

Opening balance

Changes fromfinancing
cash flows

Non-cash changes
Increase due to
new leases

Closing balance

Other

Short-term borrowings

135,601(11,500)—(595)

123,505

Current portion of long-term borrowings

103,371(102,865)—

122,340

122,846

Amount arising during the year286

15,966

Commercial papers

83,000

5,999

—

—

88,999Reclassification adjustments(350)(2,977)

Bonds payable

109,706

120,000—360

230,066

1,040,824

181,569—(125,380)

1,097,012

157,087(42,603)36,377

1,016

151,877

1,629,591

150,599

36,377(2,259)1,814,308   Before tax effects(63)

12,989Long-term borrowings  Tax effects

19(1,316)

Lease liabilities   Effective portion of cash flow hedges(44)

11,673   Total

Share of other comprehensive income of investments accounted for using equity method
Amount arising during the year

(8,659)Reclassification adjustments

20

13,773(1,314)   Share of other comprehensive income of investments accounted for using equity method(8,638)12,459Total other comprehensive income(65,882)

82,295144

Note: “Other” in non-cash changes mainly includes the transfer of long-term borrowings due within one year to current portion of long-termborrowings due within one year to current portion of bonds.

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

(62,943)   Before tax effects

Fiscal year ended
March 31, 2021

(197,744)

Amount not attributable to common shareholders of parent (million yen)

35. Other Comprehensive Income

Fiscal year ended
March 31, 2021

		

Fiscal year ended March 31, 2021

(million yen)

Liabilities arising from financing activities

Opening balance

Non-cash changes

Changes fromfinancing
cash flows

Increase due to
new leases

Closing balance

Other

Short-term borrowings

123,505

3,396—

Current portion of long-term borrowings

122,846(123,234)—

72,53972,151———30,18330,183

Commercial papers

88,999(88,999)———

Bonds payable

230,066

60,000—(30,665)

259,401

1,097,012

132,486—(70,486)

1,159,012

Current portion of bonds

Long-term borrowings

125,816

151,877(44,927)

51,942681

159,573

1,814,308(61,279)

51,942

1,168

1,806,139

Lease liabilities   Total(1,084)(ii) Maximum exposure to credit risk
Other than undrawn loan commitments and guaranteed obligations, the Group’s maximum exposure to credit risk is the
carrying amount of financial assets less impairment losses in the consolidated statement of financial position.
			 The maximum exposure to the credit risk of loan commitments and financial guarantee contracts is as follows:
		
		



(million yen)

As of March 31, 2020

Loan commitments

1,456

3,215

Financial guarantee contracts

52,27553,061

		(iii) Movement of allowance for doubtful accounts

(million yen)

Fiscal year ended March 31, 2020
Allowance for doubtful accounts
measured at an amount equal to
12-month expected credit losses

Note: “Other” in non-cash changes mainly includes the transfer of long-term borrowings due within one year to current portion of long-termborrowings and the transfer of bonds payable due within one year to current portion of bonds.

145

38. Financial Instruments(1) Capital management		The Group’s capital management principle is to enhance capital efficiency and ensure sound financial conditions in orderto achieve sustainable growth and the medium- to long-term improvement of corporate value.
			 The Group’s major indicators for capital management are as follows:
As of March 31, 2020

As of March 31, 2021

(11.1)%(1.3)%

D/E ratio *2

96.4%

93.2%

Debt / EBITDA multiple *4

6.7x

8.1 x

Notes: 1. *1 ROE = Profit attributable to owners of parent / Equity attributable to owners of parent		
2. *2 D/E ratio = Bonds payable, borrowings, and lease liabilities / Equity attributable to owners of parent
For debt with an equity component*3, a portion of its issue price is deemed to be equity attributable to owners of parent, asassessed by rating agencies.
		
3. *3 Debt with an equity component (subordinated loans)(million yen)

Borrowing dateAmount borrowed

Assessment of equity content

Amount deemed to be equity

June 30, 2016

200,000

25%

50,000March 19, 2018

300,000

25%

75,000		

4. *4 Debt / EBITDA multiple = Bonds payable, borrowings, and lease liabilities / EBITDA
EBITDA: Business income + Depreciation and amortization

			
			

These indicators are monitored as necessary and appropriate.
The Group is not subject to material capital regulation.

Balance at the beginning of the year

81

894

Increase during the year

46

282

229

Decrease during the year (intended use)

(0)

(2)

(102)

Decrease during the year (reversal)

(58)

(328)

(76)

Other

(6)

52

22

Balance at the end of the year

62

898

1,161

		

T
 he Group is exposed to financial risks (credit risk, liquidity risk, foreign exchange risk, interest rate risk, and market pricefluctuation risk) in the course of business activities. In order to mitigate these risks, the Group conducts risk management under certain policies. The Group uses derivative transactions to avoid or mitigate the risks described later anddoes not use them for speculative purposes.

(3) Credit risk				(i) Credit risk managementT rade receivables held by the Group are exposed to the credit risks of customers. To manage such risks, each companyof the Group conducts regular reassessments of the financial standing of business partners.
		 The Group does not have excessive concentration of credit risk on any particular counterparty.

		

1,089



146

(million yen)

Fiscal year ended March 31, 2021
Allowance for doubtful accounts
measured at an amount equal to
12-month expected credit losses

Lifetime expected credit losses
Allowance for doubtful accounts
for trade receivables, contract
assets, and lease receivables

Allowance for doubtful accounts
for credit-impaired financial assets

Balance at the beginning of the year

62

898

1,161

Increase during the year

82

270

1,421

Decrease during the year (intended use)

—

(17)

(105)

(48)

(340)

(652)

Other

0

(0)

3

Balance at the end of the year

96

810

1,828

Decrease during the year (reversal)

Note: An increase during the year and decrease during the year (reversal) in allowance for doubtful accounts for trade receivables, contract assets, and lease receivables (lifetime expected credit losses) resulted from an increase and decrease in trade and other receivables mainly due to sale and collection.

		(2) Basic policy on financial risk management

Lifetime expected credit losses
Allowance for doubtful accounts for
Allowance for doubtful accounts for
trade receivables, contract assets,credit-impaired financial assets
and lease receivables(iv) Carrying amounts (before deducting allowance for doubtful accounts) of financial assets and receivables forwhich allowance for doubtful accounts is provided

(million yen)

As of March 31, 2020

As of March 31, 2021

Financial assets with allowance for doubtful accounts measured at
an amount equal to 12-month expected credit losses

33,64940,427

Trade receivables, contract assets, and lease receivables

817,203851,091

1,180

1,840

Credit-impaired financial assets				(v) Analysis of credit risk
Credit risk ratings are almost similar among financial assets with allowance for doubtful accounts measured at an amountequal to 12-month expected credit losses.
		 Past due information on trade receivables, contract assets, and lease receivables is as follows:

Not past due(million yen)

As of March 31, 2020

As of March 31, 2021

800,830

842,435

Past due within 30 days

8,351

5,674

Past due between 30 days and 90 days

3,703

1,356

Past due over 90 days

4,318

1,625

817,203851,091   Total

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

ROE *1

As of March 31, 2021

(4) Liquidity risk
		
		
		

		

		
		

(i) Liquidity risk management
Liquidity risk is the risk that the Group may become unable to meet its payment obligations on their due date, including
for trade payables and borrowings, owing to deterioration in the financing environment and other factors.
 The Group raises the necessary funds mainly through bank loans and the issuance of commercial papers and bonds,
taking into consideration the stability and cost of funds, while the due dates of those obligations are managed so as to
avoid concentration of payments in view of the liquidity risk. In addition, the Group manages the funds of the domestic
Group companies intensively and efficiently in an attempt to mitigate the liquidity risk.
 The Group is also maintaining sufficient liquidity by setting commitment lines with financial institutions (500,000 million yen at the end of the fiscal year ended March 31, 2021).

		
		

		



(million yen)

147

Betweenthree years andfour years

Betweenfour years andfive years

Contractual cashflows

Withinone year557,252

557,252

557,252

—

—

—

—

—

1,662,431

1,740,217

368,367

195,499

315,113

92,323

133,332

635,581Overfive years				

Non-derivative financial liabilities
Trade and other payables
Bonds payable and borrowings
Installment payables
Lease liabilities    Subtotal
Derivative financial liabilities   Total

4,000

4,018

1,509

1,506

1,002

—

—

—

151,877

157,373

41,914

39,226

17,286

11,413

10,74536,7872,375,561

2,458,862

969,045236,232

333,401

103,736

144,077

672,368

5,621

(125)

1,590

(319)

(308)

(336)

(386)

(365)

2,381,183

2,458,736

970,635

235,913333,093

103,399

143,691

672,003



Betweenone year andtwo years

		
		

		

BetweenBetweenBetweentwo years and three years and four years andthree years
four years
five years

Carrying
amountContractual
cash flows

Withinone year496,995

496,995

496,995

—

—

—

—

—

1,646,565

1,694,217

271,388353,890

137,342

145,019

117,459

669,117

Over
five years(million yen)

Impact on profit before tax

37,50038,048

4,199

3,716

15,991

2,072

12,067—

Lease liabilities

159,573

162,465

49,48433,043

21,20916,668

16,79025,2682,340,635

2,391,727

822,068

390,650

174,544

163,760

146,316

694,386

2,715

2,104

1,376

291

70

143

221

1

2,343,351

2,393,831

823,445

390,942

174,614

163,903

146,538

694,387

Derivative financial liabilities   Total(5) Foreign exchange risk				

(6,783)Fiscal year ended
March 31, 2021

(6,435)(7) Share price fluctuation risk

Installment payables(i) Foreign exchange risk management
Financial instruments denominated in foreign currencies held by the Group are exposed to foreign exchange rate fluctuation risk. Hedge transactions, including forward exchange contracts, are entered into as necessary for the net balanceof foreign currencies received from exports of products, etc., and foreign currencies paid for imports of raw materials,
etc., under transactions denominated in the relevant foreign currencies.

148(ii) Interest rate sensitivity analysis
The financial impact on profit before tax in the case of a 1% increase in interest rate for financial liabilities with floatinginterest rates held by the Group at the end of each fiscal year is as follows. The analysis is based on the assumption that
all other variables are held constant.
 The sensitivity does not include borrowings with floating interest rates which are converted to fixed rates by derivative transactions, including interest rate swap agreements.
Fiscal year ended
March 31, 2020

Non—derivative financial liabilities    Subtotal(462)(i) Interest rate risk management
Bonds payable and borrowings with floating interest rates held by the Group are exposed to interest rate fluctuation risk.
Hedge transactions, including interest rate swaps, are entered into for certain bonds payable and borrowings to copewith interest rate fluctuations and to reduce interest rate payments.

(million yen)

Bonds payable and borrowings

(496)



As of March 31, 2021

Trade and other payables

U.S. dollar

Fiscal year ended
March 31, 2021				(i) Share price fluctuation risk management
Equity instruments (stock) held by the Group are exposed to market price fluctuation risk. Most of the equity instruments are equities of the companies with which business relationships are maintained, and the fair values of such equities are regularly monitored.

				(ii) Share price fluctuation sensitivity analysis
The financial impact on other comprehensive income (before tax) in the case of a 1% decrease in quoted price for eachfinancial instrument (stock) with an active market held by the Group at the end of each fiscal year is as follows.

(million yen)

Fiscal year ended
March 31, 2020

Impact on other comprehensive income (before tax)

(1,694)

Fiscal year ended
March 31, 2021

(974)

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

		

Currency

Fiscal year ended
March 31, 2020

(6) Interest rate risk

BetweenBetweenone year and two two years andthree years
years(million yen)

Impact on profit before tax(ii) Financial liabilities (including derivative financial instruments) by maturity date
As of March 31, 2020
Carrying
amount(ii) Foreign exchange sensitivity analysis
The financial impact on profit before tax in the case of a 1% appreciation of Japanese yen against foreign currencies forfinancial instruments held by the Group at the end of each fiscal year is as follows. The analysis is based on the assumption that all other variables are held constant.
 The sensitivity does not include the effects of translating financial instruments and the assets and liabilities of foreign operations denominated in the functional currency into the presentation currency.

(8) Carrying amounts and fair values of financial instruments		

As of March 31, 2020

Long-term borrowings
Bonds payable

		
		
		
		
		

As of March 31, 2021

Carrying amount

Fair value

Carrying amount

Fair value

1,097,012

1,104,809

1,159,012

1,164,546——

30,183230,066

229,226

259,401

Bonds due within one year149

As of March 31, 2021
Level 1(million yen)—

28,238—28,238

—

3,871

—

3,871

259,748 Equity financial assets measured at fair value throughother comprehensive income
97,475—62,929160,405

—

—

6,290

6,290

97,475

32,10969,220198,805   Derivative liabilities

—

2,715

—

2,715

   Total

—

2,715

—

2,715

 he fair value of financial assets and financial liabilities measured at amortized cost excluding long-term borrowings,
Tbonds due within one year, and bonds payable are not included as they are close to their carrying amount.
 Financial instruments measured at fair value on a recurring basis are also not included as the fair value and the­ arrying amount are equal.
c The fair value of long-term borrowings is determined by discounting the total of principal and interest to present
value with the estimated interest rate on a similar new loan.
 The fair value of bonds due within one year and bonds payable is based on market prices.
 Long-term borrowings, bonds due within one year, and bonds payable are categorized as Level 2 within the fairvalue hierarchy.

As of March 31, 2020

JFE GROUP REPORT 2021

(million yen)

Level 1

Level 2

Level 3

Total

Financial assets  Derivative assets—

26,843—

26,843  Other

—

3,874

—

3,874

 Equity financial assets measured at fair value throughother comprehensive income  Investments   Total  Investments   Total
Financial liabilities
Financial liabilities measured at fair value through profit or loss

		
		
		

• Equity securities and investments
Listed equity securities are categorized within Level 1 as their fair value is determined based on the market price.
 Unlisted equity securities and investments in capital are categorized within Level 3 as their fair value is determinedusing the comparable peer company analysis or other appropriate valuation techniques, where one or more significant
inputs are not based on observable market data. The major significant unobservable input is a discount for illiquidity.
The fair value decreases as a discount for illiquidity due to unlisted nature increases. A 30% illiquidity discount has
been applied.

				• Derivative assets and derivative liabilities
Derivative transactions, such as forward exchange contracts and interest rate swaps, are categorized within Level 2 astheir fair value is determined based on the quoted prices from counterparty financial institutions.

		The fair value of financial instruments categorized within Level 3 is determined by each Group company which directly
holds the relevant equity securities and other instruments, in accordance with the valuation policy and procedures forfair value measurements established by the Group. The results of fair value measurements are approved by an appropriate responsible person.

		The movement of financial instruments measured at fair value on a recurring basis that are categorized within Level 3 forthe fiscal years ended March 31, 2020 and 2021 is as follows:

Financial assets measured at fair value through profit or loss  Equity securities  Equity securities

169,472—

50,089219,561

—

—

6,494

6,494

169,472

30,71856,583

256,774

Financial liabilities
Financial liabilities measured at fair value through profit or loss   Derivative liabilities

—

5,621

—

5,621

   Total

—

5,621

—

5,621

(million yen)

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Balance at the beginning of the year

64,201

56,583

Other comprehensive income (Note)(8,229)10,043Acquisition

1,722

2,733

Sale

(79)

(68)

Other

(1,031)(72)

Balance at the end of the year

56,583

69,220Note: The amount is included in “Net change in fair value of equity instruments designated as measured at fair value through other comprehensive income” in the consolidated statement of comprehensive income.

150

JFE GROUP REPORT 2021

		Financial assets measured at fair value through profit or loss  Other

		


		
		

Total

30,069 he fair value hierarchy of financial instruments measured at fair value on a recurring basis after initial recognition is catT
egorized into the following three levels depending on the observability and materiality of inputs used in themeasurement.
Level 1: Fair value measured using market prices in active markets for identical assets or liabilities
Level 2: Fair value measured using observable inputs other than those categorized within Level 1, either directly or
indirectly
Level 3: Fair value measured using significant unobservable inputs.
 When two or more inputs are used for the measurement of fair value, the level of fair value measurement is determined based on the lowest level input that is significant to the entire measurement.
 Transfers between levels of the fair value hierarchy are determined at the end of each fiscal year.
 There were no transfers between Level 1 and Level 2 for the fiscal years ended March 31, 2020 and 2021.

				Level 3  Derivative assets(9) Fair value hierarchy of financial instruments
		Level 2Financial assets

(10) Derivative transactions and hedging activities
		



151

		
		
		

Derivative transactions used by the Group carry risks of market price fluctuations in the future, including that of currencies, interest rates, etc. The Group uses derivatives that are only based on actual demand, such as export and importtransactions, and bonds payable and borrowings. Accordingly, these risks are limited within the scope of loss of opportunity gains. Furthermore, as the Group only conducts derivative transactions primarily with financial institutions with highcredit ratings, the risk of failure to perform contracts due to bankruptcy of the counterparty, etc., is considered to beclose to non-existent. The Company has established the internal rule on derivative transactions, and conducts transactions related to derivatives pursuant to the rule. On each actual transaction, the Company conducts a transaction upon
authority by the Corporate Officer for Finance pursuant to the rule stated above. Balances, market prices, and losses/
gains on valuation of derivatives are to be reported to the management council regularly. The consolidated subsidiaries
also conduct derivative transactions pursuant to the respective internal rules.
 If the risk management objective for a hedging relationship is altered, the application of hedge accounting is
discontinued.
(i) Fair value hedges
The Group uses interest rate swaps primarily to hedge the fluctuation risk of the fair value of bonds payable and borrowings, and designates those interest rate swaps as fair value hedges.
 The amount recognized in profit or loss for the hedge ineffectiveness portion and the portion excluded from theassessment of hedge effectiveness was immaterial for the fiscal years ended March 31, 2020 and 2021.

		(iii) Fair value of hedging instruments to which hedge accounting is applied(million yen)

As of March 31, 2020
AssetsAssets

As of March 31, 2020

1,035

—

Option contracts

15,26516,301

Forward exchange transactions
Interest rate swap transactions    Subtotal

Interest rate swap transactions

Commodity futures transactions

Within one year

20,00050,00030,00020,000—27,265—27,265

Forward exchange transactions

99,028

7,366

119,626

3,121Interest rate swap transactions

12,993

123,734

11,987

117,749

Cross-currency interest rate swap transactions

22,86889,626

7,727

81,899Commodity futures transactions

6,066

—

23,908—			 The average forward exchange rate of major currencies under forward exchange transactions and the average paidinterest rate under interest rate swap transactions and cross-currency interest rate swap transactions are as follows:
As of March 31, 2020

As of March 31, 2021

Cash flow hedges
109.02 yen

107.75 yen  Euro124.09 yen

123.55 yen

0.29%

0.25%

101.88 yen

100.94 yen

0.28%

0.38%

Interest rate swap transactions   Receive floating / pay fixed
Cross-currency interest rate swap transactions   U.S. dollar   Receive floating / pay fixed				(v) Carrying amount of hedged items in fair value hedges and accumulated amount of fair value hedge
adjustments
As of March 31, 2020
(million yen)Line item of the consolidated
statement of financial position

—

9,702

—

Interest rate swap transactions—

10,058—

Bonds payable, borrowings,
and lease liabilities

Option contracts

Other financial assets

516

1,198

2,944

318

—

1,341

389

850

9,348

2,965

9,535

802

215

43

5,088

—

5,549

17,958

1,971   Total

26,382

5,549

28,016

1,971

 he fair value of the hedging instrument as an asset is recognized in “Other financial assets (current assets)” and “OtherT
financial assets (non-current assets)” in the consolidated statement of financial position. The fair value of the hedging
instrument as a liability is recognized in “Other financial liabilities (current liabilities)” and “Other financial liabilities (noncurrent liabilities)” in the consolidated statement of financial position.

152

Forward exchange transactions   U.S. dollar—

10,081

Over one year

Cash flow hedges355    Subtotal		Over one year

Option contracts

Liabilities

Cash flow hedges

Cross-currency interest rate swap transactions

Within one year

Fair value hedges

Fair value hedges
Interest rate swap transactions(million yen)

As of March 31, 2021

As of March 31, 2021

Liabilities

(iv) Notional amount and average price of hedging instruments to which hedge accounting is applied
The notional amount of hedging instruments to which hedge accounting is applied		Including accumulated amount offair value hedge adjustments

Carrying amount
AssetsLiabilities

AssetsLiabilities—

71,035

—

1,035

9,213

—

(18,052)—

As of March 31, 2021

(million yen)Line item of the consolidated
statement of financial position

Interest rate swap transactions

Bonds payable, borrowings,
and lease liabilities

Option contracts

Other financial assets

Including accumulated amount offair value hedge adjustments

Carrying amount
AssetsLiabilities

AssetsLiabilities—

50,355—355

17,218—(10,047)—

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

		 (ii) Cash flow hedges		The Group uses forward exchange contracts and interest rate swaps primarily to hedge the fluctuation risk of the cash
flows associated with foreign exchange fluctuations in foreign currency-denominated transactions and interest rate
fluctuations in borrowings, and designates such derivative transactions as cash flow hedges.
		  The amount recognized in profit or loss for the hedge ineffectiveness portion and the portion excluded from theassessment of hedge effectiveness was immaterial for the fiscal years ended March 31, 2020 and 2021.

		
		

		
		


(vi) Other components of equity and gains or losses on hedging instruments of cash flow hedges
Fiscal year ended March 31, 2020
Cross-currency
Forward exchange Interest rate swap
Commodity futures Commodity collar
interest rate swap
transactionstransactionstransactionstransactionstransactions

Balance at the beginning of the year

58

Hedging gains or losses recognized inother comprehensive income(1,424)

(386)

—

(2)

39. Related Parties(1,755)

331

48

(73)

(1)

200

 Reclassification adjustments
to profit (Note)

162

154

(562)

—

—

(245)

 Reclassification amount to cost of
non-financial assets

(118)

—

—

43

3

(71)

(2)

(938)

(900)

(30)

—

(1,871)		

Fiscal year ended March 31, 2021

(million yen)

Cross-currency
Forward exchange Interest rate swap
interest rate swap
transactionstransactionstransactions

153
Balance at the beginning of the year

Commodity
futurestransactions

Commodity collartransactions

Total

(2)

(938)

(900)

(30)

—

(1,871)

2,429

226

2,499

8,602

—

13,757 Reclassification adjustments
to profit (Note)

(647)

118

(1,555)——(2,084) Reclassification amount to cost of n
on-financial assets

(619)

—

—

(7,251)—(7,871)

Balance at the end of the year

1,160

Hedging gains or losses recognized inother comprehensive income

(592)

42

1,319

—

1,930

(11) Transfer of financial assets		A s of March 31, 2020 and 2021, trade receivables transferred without satisfying conditions for derecognition of financial assets of 6,241 million yen and 6,150 million yen were recognized in “Trade and other receivables,” respectively, andthe amounts received due to the transfer of 6,241 million yen and 6,150 million yen were recognized in “Bonds payable,borrowings, and lease liabilities,” respectively.
 With regard to these trade and other receivables, the Group will assume the payment obligations in case the drawerof the notes or the debtor fails to make payment. For this reason, it has been determined that the Group holds almost allof the risks and rewards related to ownership of the transferred assets.

Compensation and bonuses

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

1,523

1,452

Share-based payment

41

24

Post-employment benefits

3

—

1,569

1,476

As of March 31, 2020

As of March 31, 2021

239,716

209,761   Total

40. Commitments
Commitments for the acquisition of assets after the reporting date are as follows:(million yen)

Acquisition of property, plant and equipment

154

41. Contingent Liabilities(1) Guarantees of obligations
		Guarantees for borrowings from financial institutions to companies other than subsidiaries are as follows:(million yen)

Joint ventures
Associates

As of March 31, 2020

As of March 31, 2021

15,146

18,274

938

900

Other

26,86923,673   Total

42,95342,848In addition to the above, guarantees of obligations that may arise in the future for associates are as follows:(million yen)

Guarantee limit for associates(2) Litigation, etc.
		

There is no applicable item.

42. Subsequent Events
There is no applicable item.

As of March 31, 2020

As of March 31, 2021

9,322

10,213

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

Note: Major line items for reclassification adjustments in the consolidated statement of profit or loss for the fiscal year ended March 31, 2020 are“Other expenses” for forward exchange transactions and “Finance costs” for interest rate swap transactions and cross-currency interest rate
swap transactions.

Major line items for reclassification adjustments in the consolidated statement of profit or loss for the fiscal year ended March 31, 2021
are “Other income” for forward exchange transactions and “Finance costs” for interest rate swap transactions and cross-currency interest
rate swap transactions.

		(million yen)

Total

(104)

Balance at the end of the year

Compensation for key management personnel is as follows:(million yen)

Other				(Significant lawsuits, etc.)
There is no applicable item.

		(Quarterly information for the fiscal year ended March 31, 2021)
Three months ended
June 30, 2020

Six months ended
September 30, 2020

Nine months ended
December 31, 2020

Fiscal year ended
March 31, 2021

Revenue (million yen)743,900

1,492,294

2,318,467

3,227,285

Loss before taxes (million yen)

(50,440)(120,788)(70,655)(4,930)Loss attributable to ownersof parent (million yen)

(39,197)(105,712)(69,677)(21,868)

Basic losses per share (million yen)

(68.07)(183.58)(121.00)(37.98)Three months ended
June 30, 2020Three months ended
September 30, 2020Three months ended
December 31, 2020Three months ended
March 31, 2021

(68.07)(115.51)

62.58

83.03

(Cumulative period)(Accounting period)

Basic earnings (losses) per share (yen)

155

156

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

157

158

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

159

160

JFE GROUP REPORT 2021

JFE GROUP REPORT 2021

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URL: https://www.jfe-holdings.co.jp/en/

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