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Mozambique’ s Role in Japan’s Steel Growth

November 20th 2012

Yasushi Aoki General Manager, Raw Materials Development

Nippon Steel & Sumitomo Metal Corporation 1

© 2012 NIPPON STEEL & SUMITOMO METAL CORPORATION All Rights Reserved.


Contents

2

Current Situation of Japanese Steel Industry

Strategic Responses Taken by NSSMC

Why Mozambican Coal ?

Our Approach to Mozambican Coal

Expectation for Mozambican Coal

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Current Situation of Japanese Steel Industry

3

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Current Situation of World Steel Industry

World Steel Industry is Financially Affected by Slowdown in World Economy  European Debt Crises  Slowdown in Chinese Economy  “Fiscal Cliff” in US

4

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Steel Output and Financial Result of JSM billion yen

million ton

Financial Crisis

1,600

160

1,400

140

Earthquake ?

1,200 1,000

100

800

80

600

60

400

40

200

20

0

0 '03

'04

'05

'06

'07

'08

'09

'10 1st half

'10 2nd half

'11 1st half

'11 2nd half

'12 1st half

Annualized basis

5

120

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'12 2nd half

(Forecast)


Strong Japanese Yen vs US$

Yen RMB Euro Won

(Jan 2006 = 100)

© 2012 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada.

6

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Domestic Steel Demand & Export Ratio in Japan Export Ratio (Direct + Indirect)

Export Ratio (Direct only)

7

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Steel Trade in Korea & China (Importer → Exporter ) Steel Export

million ton

Steel Import

80

80

Korea

China

60

60

40

40

20

20

0

0 2002

'03

'04

'05

'06

'07

'08

'09

'10

11

2002

'12 e

-20

-20

-40

-40

8

Net Export Quantity

Steel Import

Steel Export

million ton

Net Export Quantity

'03

'04

'05

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'06

'07

'08

'09

'10

11

'12 e


Impact of Exports from China & Korea Japan

Steel Export from Japan

Korea

Steel Export from Korea Steel Export from China

China

% : Increase-decrease rate of Steel Export Volume for 12 months from Mar. 2011 Feb. 2012 to Mar. 2010 - Feb. 2011 (MT / 12 months, %) Importer Total China

Export Volume China

Increasedecrease rate

Exporter

Export Volume Korea

Increasedecrease rate Export Volume

Japan

Increasedecrease rate

Korea

Japan

ASEAN5

Others

48.08

10.19

0.90

7.08

29.92

+18%

+20%

+26%

+31%

+14%

29.13

4.00

3.65

5.46

16.02

+15%

+6%

+29%

+40%

+8%

40.18

6.62

8.55

9.15

15.87

-8%

-13%

-20%

-5%

+1%

(Source: Statistics of China, Korea, Japan)

9

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Mid-Long Term World Steel Demand World Total

2009

2010

2011

2012(f)

2013 (f) (Unit: Billion ton)

1.14

1.29

1.37

1.42

1.49

China : + 4.0% Developed countries : +1.1% Developing countries : +4.6%

China : + 4.0% Developed countries : +1.1% Developing countries : +4.6%

c .f. Ch in a - St e e l Co n su m pt io n Gr o wt h Rat e an d Valu e o f Elast ic it y o f GDP

2000 2001 Steel Consumption Growth Rate GDP Growth Rate Value of Elasticity of GDP

1.4% 8.4% 0.2x

27.1% 8.3% 3.3x

2002 21.1% 9.1% 2.3x

2003 25.7% 10.0% 2.6x

2004

2005

14.7% 10.1% 1.5x

2006

26.0% 10.4% 2.5x

8.7% 11.6% 0.7x

2007 2008 2009 11.9% 13.0% 0.9x

2.9% 9.6% 0.3x

26.1% 9.2% 2.8x

2010 2011 5.1% 10.4% 0.5x

2012 2013 Forecast Forecast

5.8% 9.2% 0.6x

4.0% 8.0% 0.5x

4.0% 8.5% 0.5x

(source : Steel Consumption - WSA, GDP Growth Rate -IMF) 1.8

China

1.60

Developed Countries Developing Countries

1.15

(Unit: Billion ton) 0.76 0.12

0.78 0.16

0.98 0.83 0.19

0.89 0.24

0.28

0.4

0.37

0.37

0.37

0.4

0.24

0.25

0.27

0.28

0.3

1.06

0.35

0.39

0.32

0.38

0.43

0.34

1.23

0.42

1.20

1.29

1.37

1.14 0.58

0.432

0.62

1.42

0.645

1.49

1.4

0.73

0.654

0.39 0.25

0.38

0.38

0.34

1.2

1

0.55 0.43

1.6

0.8

0.32

0.39

0.4

0.41

0.43 0

0.6 0.4

0.39

0.36

0.38

0.42

0.44

0.2 0

2000

10

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011 2012(f) 2013(f)

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2015(f)


Strategic Responses Taken by NSSMC

11

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Strategy & Measures of NSSMC Targeting Global Production Capacity : 45 → 60 to 70 mil tons

Globalizing the Steel Business

NSSMC Utilizing Advanced Technologies Product Development Manufacturing Technologies

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Improving Cost Competitiveness Synergies JPY 150bn per annum Reduce Costs Constantly

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Global Supply Network of Steel Sheets for Cars 2,285

North America

2,178 1,983 2,113 1,706

1,336

(Sources: Public Information, NSSMC Data) 1,078

983 1,079

722

USA I/N Tek I/N Kote

2007 2008 2009 2010 2011

Europe ArcelorMittal/ Cross License of Technology

<Nippon Steel & Sumitomo Metal> Domestic and Abroad CGL/CAPL Production Capacity in Total: around 15 mil tons <Domestic: 8.5 mil tons/Abroad: 6.8 mil tons> *Equity Basis: around 3 mil tons

China BNA 50%

Nippon Steel & Sumitomo Metal

[Cold Roll 2.2 mil tons / CAPL 0.95 mil tons / CG 1,826 1,842 1.25 mil tons] 1,379 888 930

Thailand SUS

[CG 0.5 mil st / EG 0.45 mil st]

Mexico TENIGAL

Under Construction

52% 2007 2008 2009 2010 2011

Nippon Steel & Sumikin 100% Galvanizing (Thailand) Co., Ltd.

[CG 0.36 mil tons] Operation(2013) Number of Cars 164 148 New Cold Roll Line[0.6 mil ton]Operation(2013) Produced 129 139 100 356 394 (Actual・ 225 233 264 Estimates)Million Cars 2007 2008 2009 2010 2011

13

Brazil UNIGAL

Thailand 49%

49%

New CGL Line [0.4 mil ton] Operation (2013) 234 268 210 217 156

2007 2008 2009 2010 2011

India JV with Tata

50%

[Cold Roll 1.7 mil st / CAPL 1.2 mil st]

[Cold Roll 1 mil ton]

In Operation

40%

2007 2008 2009 2010 2011

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30%

[CG 0.48 mil ton] #2CGL[0.55 mil ton]Expansion(2011)

South America

370 394 378

419 433

2007 2008 2009 2010 2011


Global Supply Network of Steel Products for Construction To Capture the Demand Expected to Grow in Developing Countries

Supply of CRC 0.28 mtpa

U.A.E AGIS

Nippon Steel & Sumitomo Metal

USA

Western Tube & Conduit

Supply of CRC 0.5-0.6mtpa

(ERW Pipe , Steel Pipe for Fences)

20%

(HGI )

South East Asia/ U.S.A

Supply of HRC 0.15 mtpa

NS Bluescope Coated Products

50%

NIGERIA MRM

(HGI/ PPGIC, Other Products for Construction)

10%

(CRC)

Malaysia Supply of CRC 0.15 mtpa

South Africa Safal Steel (HGI/ PPGI)

14

N-EGALV 50.1% YKGI 10% 7%

(EG) (HGI/ PPGI)

Supply of CRC : 0.08mtpa Supply of CRC : 0.15mtpa

Vietnam CSVC NPV PEBSB

30% 51% 12%

95%

(CRC) (Steel Pipe Pile, Sheet Pile) (Steel Sheet for Fabrication )

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Global Deployment : Energy & Resources We will respond to growing steel demand in energy industry by combining existing technologies of NSC and SMI. Domestic Production As a supply and development hub of leading and high-end products, we seek for synergy effect in technology.

(Products) • • •

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High-end OCTG/Line Pipe X120 High Strength large-diameter tube High quality slabs for marine structures

Overseas Production As VSB・USIMINAS・NPC main hubs, we supply energy industries in growing areas. Investment Ratio:VSB/39%, USIMINAS/28%, NPC/33%)

(Products)

• OCTG/Line Pipe • High quality slabs

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Strategy & Measures in Raw Materials Technological & Operational Challenge for Usage of Coal (Q1 JFY2010 = 100) 140 130 120

PCI Ratio Coke ratio Reducing Agent Ratio Semi Soft Ratio

110

100 90 80 Q1

Q2

Q3

JFY2010

16

Q4

Q1

Q2

Q3

JFY2011

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Q4


Investment in Raw Materials Assets Self Sufficiency of Iron Ore Ratio:approx. 25% (Total Volume:68MT)

Elkview

Self Sufficiency of Coal Total Procurement Volume (FY2010)

Ratio:approx. 20% (Total Volume:32MT)

2.5% Canada

* USIMINAS

Mines with long-term contracts or investments

Iron ore

MUSA

70%*

NIBRASCO

31.4%

CBMM

2.5% Brazil

Revuboe

23.3%

(under exploration)

(planned)

Mozambique

Coal Other alloy

% Investment %

17

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Hail Creek

8.0%

Moranbah North

5.0%

Warkworth

9.5%

Integra

6.0%

Bulga

12.5%

Foxleigh

10.0%

Robe River

14.0%

Beasley River

37.6%

Australia


Why Mozambican Coal ?

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Trend of Seaborne Coking Coal Trade 2011 Est.

2012 Est.

55

67

66

65

23

22

27

32

34

24

28

28

30

34

37

3

3

3

31

35

25

37

45

45

46

45

36

44

45

41

13

13

13

15

16

13

14

18

13

190

195

200

198

214

220

210

253

253

262

100%

107

113

116

122

125

138

135

136

155

131

162

62%

28

25

24

25

26

23

25

25

21

27

27

31

6

13

14

17

13

11

9

5

5

1

1

4

1

47

30

18

14

15

19

19

22

27

36

31

51

65

58

180

178

190

187

190

195

200

198

214

220

210

253

253

262

1990

1995

2000

2001

2002

2003

2004

2005

2006

2007

Japan

69

65

60

57

66

68

68

69

67

66

67

68

South Korea

8

11

17

20

21

20

21

21

21

21

22

India

2

6

9

11

13

13

14

16

20

22

China

0

0

0

0

0

0

3

5

5

European Union

62

62

59

60

51

46

46

44

Brazil

8

10

11

11

14

12

13

167

171

180

178

190

187

Australia

49

58

74

99

106

Canada

22

27

29

28

China

3

3

7

United States

55

58

167

171

Total Import

Total Export

19

2010

2008 2009

1985

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25%

28%

100%


Map of Hard Coking Coal ●: Existing coal field

Mongol: Tavan Tolgoi

China: Shanxi Province

Mozambique: Moatise Region 20

Russia: Elga

★: New developing coal field

USA: Appalachian Mountains

Canada: Rocky Mountains

Australia: Bowen Basin

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Advantages of Mozambican Coal

 “Premium” Hard Coking Coal  Access to the Coast

♦ Great Opportunity to Establish a Firm Presence in the Seaborne Market 21

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Our Approach to Mozambican Coal

22

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Minas de Revuboè, Limitada Revuboè Tete

Nacala

Moatize

Beira

23

Ownership Talbot Group 58.9% NSSMC Group 33.3% POSCO Group 7.8% Target Start up Operation 2015 or after Ramp up to 5 million tons p.a.

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Expectation for Mozambican Coal

24

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Expectation for Mozambican Coal

 Maintain & Improve Competitiveness is the key

 Timely Development of Rail & Port ex. Installment of Nacala Route  Human Resource Development

 Fair & Open Policy 25

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Support by Japanese Government  Japanese Government is Ready to Support Mozambican Coal  Joint Statement by METI / MIREM (Oct.29, 2012) 

5 Year Development Plan for Mozambican Coal Industry ◆ Human Resources Development Programs

◆ Geological Research ◆ Master Plan for Coal Development & Usage

 Financial Support by JBIC on Infrastructure Development can be expected 26

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Let’s work together to build a new & successful model ! Muito Obrigado !

27

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Profile for clinton Zahmel

Yasushi Aoki's presentation  

Coaltrans 2012 in Maputo - presentation by Yasushi Aoki, Nippon Steel & Sumitomo Metal Corporation

Yasushi Aoki's presentation  

Coaltrans 2012 in Maputo - presentation by Yasushi Aoki, Nippon Steel & Sumitomo Metal Corporation

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