JFE Holdings [5411:JP], Japan’s second-largest steelmaker, intends to raise JPY200bn (USD1.37bn) in funding for initiatives aimed at reducing carbon emissions, as reported by Nikkei Asia on September 5. The company plans to raise JPY100bn (USD678m) to JPY120bn (USD814m) through a public share offering, equivalent to nearly 10% of its existing shares. These funds will be allocated to expanding production capacity for electrical steel sheets, a critical component that can reduce energy losses in EV motors and extend the driving range of vehicles. In addition, JFE Holdings will issue a five-year convertible bond to international investors in September, aiming to raise an additional JPY90bn (USD610m). The proceeds will support the construction of a new electric furnace for stainless steel at JFE’s East Japan Works, along with other carbon-reduction initiatives. Electric arc furnaces (EAF) have the potential to reduce carbon dioxide (CO2) emissions by approximately 75% compared to traditional blast furnaces.

JFE’s ambitious goal is to reduce carbon emissions from its steel operations by over 30% by 2030 compared to 2013 levels, which is estimated to require an investment of around JPY1tr (USD6.78bn). In addition to the current fundraising efforts, JFE announced last year its plan to raise JPY30bn (USD262m) through transition bonds. As the first Japanese manufacturer to issue transition bonds, JFE aims to utilize the capital to reduce energy consumption in steel mills and produce steel plates for EVs.

Sources:

https://asia.nikkei.com/Spotlight/Environment/Climate-Change/Steelmaker-JFE-to-raise-1.3bn-for-decarbonization-in-share-bond-sale

https://www.nippon.com/en/news/yjj2023090500826/jfe-holdings-to-procure-210-b-yen-for-decarbonization.html

https://asia.nikkei.com/Business/Companies/JFE-to-become-first-Japan-manufacturer-to-issue-transition-bonds