Japan’s largest steelmaker will deploy ¥868.7 billion ($6 billion) across three domestic plants to expand electric arc furnace capacity by fiscal 2029, marking its most substantial domestic investment in cleaner steel production technology.
The bulk of spending—¥630 billion—targets a new electric furnace at the Kyushu facility, while additional investments will expand and restart operations at Setouchi Works and Yamaguchi Works. The initiative will add 2.9 million metric tons of annual production capacity.
Tokyo will subsidize up to ¥251.4 billion of the project, representing roughly 29% of total costs—a significant public backing that underscores Japan’s industrial decarbonization priorities. Electric arc furnaces produce steel using scrap metal rather than coal-intensive blast furnaces, reducing carbon emissions substantially.
The timing proves strategic as Nippon Steel continues its protracted bid for U.S. Steel, with President Trump expected to address that acquisition during a plant visit. The company recently achieved a 43% carbon emission reduction in test furnaces, positioning itself as a technology leader in steel decarbonization.
Yet critics question whether the investments represent genuine transformation or incremental improvements. Environmental groups note Nippon Steel has achieved meaningful emission reductions primarily through facility shutdowns rather than technological breakthroughs. The company still operates ten blast furnaces domestically, with conversion timelines extending to 2050.
The substantial government support raises questions about taxpayer-funded industrial subsidies while steelmakers face mounting pressure to abandon carbon-intensive production methods.
