Japan steelmaker Nippon Steel [5401:JP] announced on January 21 that it will buy two electric arc furnace steelmakers in Thailand, G Steel [GSTEEL:TB] and GJ Steel [GJS:TB], for a total of USD763m, as reported by Nikkei Asia on the same day. The Japanese company seeks to expand its business in Southeast Asia and reduce its carbon emissions through the deal. Compared with the blast furnace Nippon Steel relied on, the two Thai steelmakers’ electric furnaces emit less carbon dioxide. Furthermore, the Japanese company plans to collect the rest stake of G Steel and GJ Steel from other shareholders and amalgamate the two target companies into a wholly-owned subsidiary.

Nippon Steel could raise its global output capacity of crude steel to 69m tons after acquiring the two steelmakers, which have 3m tons of capacity in total. In March 2021, the Japanese steelmaker disclosed its goal of hitting 100m tons of production capacity by acquiring the integrated steel mills in China and the Association of Southeast Asian Nations (ASEAN) countries. Nippon Steel also plans to increase investment to grow its businesses, such as its magnetic steel sheets production whose profit has beaten expectations amid the strong global demand for steel products. The company expects a rise in global demand for magnetic steel sheets amid the decarbonization trend, as such material is indispensable for electric vehicle (EV) manufacturing and power generation.

Sources:

https://asia.nikkei.com/Business/Business-deals/Nippon-Steel-to-buy-Thai-steelmakers-in-772m-deal

https://www.reuters.com/markets/deals/nippon-steel-talks-buy-steel-mill-southeast-asia-executive-2021-11-29/

https://www.reuters.com/business/nippon-steel-sues-toyota-baoshan-patent-infringement-2021-10-14/