Japan’s JFE Steel has applied for a government subsidy for decarbonization

Two of the largest integrated steel producers in Japan, Nippon Steel and JFE Steel, have applied for government funding provided through the new Green Transformation Promotion Act (GX) to advance research and development in decarbonizing operations. This is reported by Mysteel Global.

JFE Steel is seeking funds to build a new large electric arc furnace (EAF) to replace blast furnace No. 2 at West Japan Works (Kurashiki). The company expects the EAF to be commissioned during the 2027/2028 fiscal year (starting April 1, 2027).

Blast Furnace No. 2 at the plant underwent a re-lining in 2003. JFE usually performs such maintenance after about 25 years of operation, so the next one is due in 2028. However, JFE Steel hopes that the new electric arc furnace will be operational by then, so the unit can be shut down. West Japan Works currently operates three blast furnaces with a steel output of about 8 million tons per year.

Yoshihisa Kitano, President of JFE Steel’s parent company JFE Holdings, said in June that JFE is developing a high-efficiency smelting technology and building a pilot electric arc furnace to be commissioned in fiscal year 2024/2025.

Kobe Steel, the third largest integrated steelmaker in Japan, is also considering the introduction of electric arc furnaces at Kakogawa Works, but its application for GX financing has apparently been postponed this time.

As GMK Center reported earlier, Nippon Steel has applied for a government subsidy to build new electric arc furnaces. The steelmaker plans to use the state support to switch from blast furnace smelting to large-scale EAF production at its Kyushu Works Yawata Area plant. In addition, the company plans to expand EAF production at Setouchi Works Hirohata Area.

The Japanese government is providing budget support to companies in four target sectors (ferrous metals, chemicals, pulp and paper, and cement) starting in the current fiscal year 2024/2025 for a total of about 484 billion yen ($3.18 billion) over five years. This will be done through the issuance of GX Economy Transition Bonds. The amount of funds requested by the companies was not disclosed.