Coal - New Horizon of Challenges. Shinichi Fujiwara. Nippon Steel Corporation

Transcription

1 The Clean Coal Day Conference in 2011 Coal - New Horizon of Challenges September 6th 2011 Shinichi Fujiwara Director, Procurement: Raw Materials & Machinery Nippon Steel Corporation 1

2 Content Nippon Steel s basic position on Raw Materials procurement Analysis on Coking Coal market Challenges facing procurement and usage of coal 2

3 About Nippon Steel Corporation 3

4 Crude Steel Production Volume 35 million tons p.a. One of the largest steel companies in size JFY2010 Sales: US$ 50.7b Profit: US$ 2.8b 4

5 Advantages of our Products High quality product from its own cutting edge technology 5

6 Marketing Policy Long- term stable relationships with customers Develop high quality products through close communication with customers 6

7 Raw Materials Procurement Volume Coal total : 30 million tons Coking Coal : 26 million tons Thermal Coal : 4 million tons 7

8 Raw Materials Procurement Volume Iron Ore Coking Coal Canada Total Annual purchasing volume Iron Ore 50 mill tons Coal 30 mill tons 4,500 miles (14 days) 80 mill tons Nippon Steel Venezuela Brazil India 4,000 miles (12 days) Australia South Africa Long - term contract fleet : 42 vessels including 5 of the world s largest vessels (300 thousand tons each ) BRAZIL MARU TSUBARA O MARU 12,000 miles (40days) 8

9 Schedule for Business Consolidation Nippon Steel Crude Steel Production (FY2010) About 35 MT April, 2012(target): A Merger Agreement Sumitomo Metal Crude Steel Production (FY2010) About 13 MT June, 2012: Annual Ordinary Shareholder s meeting October 1, 2012: Business Integration (a business holding company ~ emphasis on speed ~) 9

10 Basic position on raw materials procurement 10

11 History of Supporting the Development Indispensability of long term stable supply of raw materials for BF operation Provided support to develop mines, rails and ports since 1960 s Established new coking coal and iron ore mines in Australia and Canada 11

12 Nippon Steel s Investment in Raw Materials Investing mine Iron Ore Coking Coal % NSC investment Stake Canada Elkview 2.5% Annual purchasing volume Iron Ore 50 mill tons (35% ) Coking Coal 26 mill tons (25%) (Purchase ratio from the Mines NSC invests in) Nippon Steel Brazil J.Mendes 70%(USIMINAS) Mozambique Australia Hail Creek 8.0% NIBRASCO 25.4% Revuboe 23.3% Robe River 10.5% Moranbah North 5.0% MBR 2.4% CBMM(Niobium) 2.5% Beasley River 28.2% NSNC (Blending) 80.0% PWCS (Seaport) 3.1% Integra 6.0% Warkworth 9.5% Bulga 12.5% Foxleigh 10.0% 12

13 Support Schemes Development of Carajas Iron Ore Mine and South Yakut - Neryungury Coal Field in 1980 s Project financing schemes arranged with the Japanese Government Long-term off-take contracts by Japanese steel mills 13

14 Basic position on Procurement Same Boat, Same Crew Maintain and expand long term and stable relationship on the basis of trust with suppliers 14

15 New Horizon of Challenges #1 - Response to Geographical Risk 15

16 Trend of World Crude Steel Production 1,400 1,200 1, Brazil, Russia, India China Other than BRICs bn t +1%/year (million metric tons) +5~7%/year bn t bn t

17 Trend of World Seaborne Coking Coal Trade (million metric tons) Est. Japan South Korea India China European Union Brazil Total Import Australia Canada China United States Total Export

18 Overconcentration on Australia Over 65% of total global supply of coking coal from Australia Three once in a hundred years disasters in Queensland since

19 Map of Hard Coking Coal : Existing coal field : New developing coal field Mongol: Tavan Tolgoi Russia: Elga USA: Appalachian Mountains China: Sanxi Province Canada: Rocky Mountains Mozambique: Tete Area Australia: Bowen Basin 19

20 Hard Coking Coal Projects in Mozambique: Coal Mines Revuboe Zambezi Riversdale (100%) Under exploration Non-binding MOU signed by Chinese steel company Wuhan Iron and Steel in Jun 2010 for Wuhan to acquire 40% interests for US$800M. Ownership Talbot Group 58.9% Nippon Steel Corp. 23.3% Nippon Steel Trading 10.0% POSCO 7.8% Resource: 1.1 Billion tonnes (estimated minable resource for open cut: 559Mt) Quality: equivalent to Australian premium hard coking coal Production scale: 5Mtpa met coal Application for mining concession in Nov Commencement of development in 2012 Moatize In June 2011, Rio Tinto took a full control of Riversdale Benga A JV of Riversdale (65%) and Tata (35%) Production startup by end 2011 Full production scale:10mtpa (6Mtpa met coal) 20 Vale (Brazil) Commercial production and shipments through Beira to commence in Oct Production to reach 11Mtpa (8.5Mtpa met coal) in Further expansion under FS together with Nacala-route infrastructure development

21 New Horizon of Challenges #2 - Utilization Technologies of Resources 21

22 Japanese Traditional Business Model Large amount of selective procurement of coking coal from various supply sources all over the world Large amount of low cost logistics with large size vessels 22

23 Price difference between HCC and SSCC (US$/t) Price difference between HCC and SSCC Premium Hard Coking Coal Semi Soft Coking Coal '01 '02 '03 '04 '05 '06 '07 '08 '09 '10/1Q 2Q 3Q 4Q '11/1Q 0 23

24 Trend of Other Commodities Price (USc/DMTU) Iron Ore (Fines) difference Premium fines 200 Lower quality fines (US$/t) Thermal Coal (NC Export 6700GAD) (US$/t) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Copper (LME) (US$/bbl) Oil (OPEC Basket) 24

25 Viewpoints Of Efficient Utilization of Resources 1) Technology for resource saving steel making process 2) Technology to use more universal resources 3) Technology to use lower quality resources 4) Implementation of recycle 25

26 Coke Dry Quenching System (CDQ) 26

27 Dry-cleaned and Agglomerated Precompaction System (DAPS) Fine Coal(30%) (TM 2%) Coal 0.3mm Hot gas Coarse Coal(70%) (TM 2%) Mixed Coal (TM 2%) Agglomerated Coal(30%) Coke Oven 27

28 Trend of Coal Price Premium Hard Coking Coal Semi Soft Coking Coal LV PCI Coal Thermal Coal(6700GAD) (US$/t)

29 Utilisation of Brown Coal by High Efficiency Coal Gasification (ECOPRO ) ECOPRO : Gasification Process with Partial Oxidization and Pyrolysis zones. 1 Re-utilises the Partial Oxidization heat for Pyrolysis and achieves high energy efficiency ( = Low CO2 Generation) The world s best efficiency at 85% Lower CO2 Emission by approx. 10% 2 Process suitable for gasifying low rank coal with higher volatile components, such as Brown Coal. 3 CH4 contained in the gas product enables higher production efficiency of SNG. Pilot Plant (20ton/day) Higher SNG Production Efficiency by approx. 10% Brown Coal ECOPRO Syngas (H2,CO) CCS CO2 Capture Project Scheme of ECOPRO Methanation SNG 反応器 LNG Chemical Chemical Products Synthesis FT Reaction Diesel For Export For Domestic Use Storage : Prefeasibility Study (Supported by Commonwealth Gov., Victorian Gov. and Japanese Gov.) : Demonstration Project : Commercial Project 29

30 Nippon Steel, On the Leading Edge 30