Nippon Steel has identified low carbon initiatives as a high priority for the combined company.
In a blockbuster takeover, Nippon Steel has bought the iconic American producer United States Steel in a $14 billion deal. The combined company will have a global steel output of 86 million tons and is part of Nippon Steel’s program to achieve 100 million tons of global annual production.
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Episode Transcript:
It’s huge news in the primary metals sector: Nippon Steel Corporation’s acquisition of the United States steel Corporation for $14.9 billion is on the biggest corporate takeovers in American history. The deal, consummated with a buyout at a 40% premium to U.S. Steel’s closing share price on December 15, will result in NSC reaching annual total crude steel capacity of 86 million metric tons, with production facilities in Japan, Southeast Asia and India, along with the newly acquired American operations.
From an engineering perspective, NSC is identified three growth areas for the company: the first is energy efficiency, with NSC identifying the technology introduced at U.S. Steel’s Big River complex as innovation that will be shared with NSC operations worldwide. In addition to the advanced production technology, and SCU has identified operational efficiencies and recycling as high value offerings to global operations.
The second factor is NSC’s targeted growth of high-value, high-grade steals, particularly for the automotive and electrical industries. The firm has declared that it will continue to invest in the American technological base that U.S. Steel defined in an initiative called Mined, Melted and Made in America.
And the third, and most technically challenging initiative will be the move toward decarbonization and steel production. U.S. Steel has moved toward a lower carbon footprint as a natural consequence of the company shift toward higher value-added steel products. These can be cost-effectively produced in many mills using electric arc furnaces, with scrap as a basic raw material.
Primary steelmaking, made from iron smelted from or, is still necessary, and the chemical of smelting by necessity generates large amounts of CO2. NSC ‘s working on three advanced technologies which the company feels can achieve carbon neutrality by 2050. Large scale electric arc furnaces all the similar route taken by U.S. Steel, but the company is also investigating hydrogen injection into blast furnaces, and the ultimate form of decarbonization, hydrogen gas has the reactant and fuel for direct iron reduction. The latter offers the possibility of completely eliminating reliance on metallurgical coal for coke, and small-scale commercial experiments has successfully produced steel using this technology.
Making it a cost-effective process depends on two factors: one is the ability to generate large amounts of low-cost hydrogen gas, which suggests electrolysis of water. This will require large amounts of low-cost electric power, but also suggests interesting possibilities for the geography a large steel mill operations: without the need for immediate proximity to bulk shipments of metallurgical coal, future steel mills may be located closer to our generation sources, rather than near navigable waterways and rail links to coal producers.
The other factor is carbon sequestration. If cost-effective technologies to remediate CO2 production at the blast furnace are developed, the economics of hydrogen production may give way to continued use of coal, albeit without a carbon penalty. In any case, NSC has announced that United States steel will continue to operate as a stand-alone company with headquarters in Pittsburgh.
Higher value steels our higher-margin steels, and as environmental regulations tighten, there’s a very real possibility of tariffs or nontariff barriers to importation of conventional coke derived steels from low-cost foreign producers in the future.
The Japanese acquisition of the iconic American steelmaker may guarantee the success of United States Steel for the foreseeable future.
