Sustainability Report 2015 Report Sustainability (April 2014–March 2015) 2014–March (April

Nippon Steel & Sumitomo Metal Corporation Metal & Sumitomo Steel Nippon

http://www.nssmc.com/en/

NSSMC’s Logotype Sustainability Report 2015 Report Sustainability (April 2014–March 2015) 2014–March (April

The central triangle in the logo represents a blast furnace and the people who create steel. It symbolizes steel, indispensable to the advance- ment of civilization, brightening all corners of the world. The center point can be viewed as a summit, reflecting our strong will to become the world’s leading steelmaker. It can also be viewed as depth, with the vanishing point representing the unlimited future potential of steel as a material. The cobalt blue and sky blue color palette represents innovation and reliability.

Image provided by Toyota Motor Corporation Image provided by East Japan Railway Company Image provided by Yamaha Motor Co., Ltd. Image provided by Yamaha Motor Co., Ltd. Sustainability Report

ecoPROCESSecoecoPROCESSPROCESS ecoPRODUCTSecoPRODUCTSecoPRODUCTS ecoSOLUTIONecoSOLUTIONecoSOLUTION

NSSMC and its printing service support Green Procurement Initiatives. Eco-friendly vegetable oil ink is used Printed in Japan for this report. +++ 革新的な技術の開発革新的な技術の開発革新的な技術の開発

eco PROCESSecoPROCESSecoPROCESS ecoPRODUCTSecoPRODUCTSecoPRODUCTS ecoSOLUTIONecoSOLUTIONecoSOLUTION NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 01

Corporate Philosophy Nippon Steel & Sumitomo Metal Corporation Group will pursue world-leading technologies and manufacturing capabilities, and contribute to society by providing excellent products and services. Structure of the Report

Management Principles Editorial policy This Sustainability Report is the 18th since the former 1. We continue to emphasize the importance of integrity and reliability in our actions. Nippon Steel Corporation issued what is the first sus- 2. We provide products and services that benefit society, and grow in partnership with our customers. NSSMC’s Businesses tainability report by a Japanese steel manufacturer, in 3. We pursue world-leading technologies and manufacturing capabilities. 1 1988. The report presents NSSMC’s progress in ecolog- 4. We continually anticipate and address future changes, innovate from within, and pursue unending progress. ical management and details of our various initiatives. We aim at becoming the world-leading steelmaker 5. We develop and bring out the best in our people to make our Group rich with energy and enthusiasm. with comprehensive strengths. p. 2 Period covered Basic Environmental Policy (Established in October 2012) The period covered in the report is fiscal year 2014 Under the principle of “Ecological Management,” NSSMC is committed to contributing to the creation of an environmental-pres- (from April 2014 to March 2015). For some activities, ervation oriented society with lower environmental impact. For this purpose, the company will conduct business activities based the period from April 2015 to June 2015 is included. on the viewpoint of environmental preservation in local communities, which includes the maintenance and improvement of good living environments and the promotion of reduction and recycling of waste. The company will also address challenges on a global Scope of report Basic approach to NSSMC’s scale including response to issues of global warming as well as the maintenance and improvement of biological diversity. • Environmental and social aspects: Activities of 2 environmental management NSSMC and its group companies in Japan and 1. Reducing environmental impacts at every stage of operations (eco process) pp. 10–19 Through three ecos and the development of overseas innovative technology, NSSMC is determined to 2. Offering of environment-oriented products (eco products) pp. 20–23 p. • Economic aspects: The Annual Report for 2015 help resolve challenges for a sustainable society. 6 3. Proposing environmental preservation solutions from a global perspective (eco solution) pp. 24–29 (issued in July 2015) also covers the contents of the 4. Development of innovative technologies pp. 30–31 economic report. 5. Development of a rich environment pp. 28–29 6. Promotion of environmental relations activities pp. 36–39 Reference for guideline • GRI (Global Reporting Initiative) How NSSMC’s corporate “Sustainability Reporting Guidelines Version 4.0” management supports • “Environmental Reporting Guidelines,” by the 3 environmental management Ministry of the Environment We seek for ever-improving operational Global warming management, and to be trusted by society. p. 32 Environmental countermeasures Technological management system Promote initiatives for a low- prowess Enhance the environmental carbon society through the “three management system ecos and innovative technology development” Corporate profile Mid-Term Creation of a recycling- Company name Nippon Steel & Sumitomo Metal Corporation Chairman Shoji Muneoka Cost Environmental Environmental risk President Kosei Shindo based society management Head office 2-6-1, Marunouchi, Chiyoda-ku, Management Capital ¥419.524 billion competitiveness Expand use of resources Tokyo 100-8071, Japan Promote environmental generated in-house Plan (Total number of shareholders: 517,918) load reduction measures Phone: +81-3-6867-4111 Promote zero emission Stock listings FY2015–FY2017 Date of Tokyo, Osaka, Nagoya, Fukuoka, and Sapporo March 31, 1970 Number of Establishment 84,447 (consolidated basis) employees

Mid-Term Management Plan Management Mid-Term Group companies 356 consolidated subsidiaries and Global Environmental and energy solutions Environmental 105 equity-method affiliates response relationship activities Apply the NSSMC Group’s power to environmental Communicate actively on preservation and saving of environmental issues Cover photos: (Top) Muroran Works and Hometown Forest resources and energy (Bottom from left) Toyota Motor Corporation’s “MIRAI”, NSSMC’s titanium foil (p. 26)

Becoming the best steelmaker with world-leading capabilities with world-leading Becoming the steelmaker best JR East’s Hokuriku Shinkansen, NSSMC’s high-speed railway wheel and axle (p. 21) YZF-R1 of Yamaha Motor Co., Ltd., Connecting rod made of NSSMC’s titanium alloy (p. 20) 02 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 03

NSSMC’s Businesses

Based on the long accumulation of technology through steelmaking, the Nippon Steel & Sumitomo The NSSMC Group is steadily progressing in establishing a global business structure that enables it to Metal Corporation (NSSMC) Group operates businesses in five areas: steelmaking, engineering, capture overseas growth markets and to readily respond to customers’ overseas expansion. 1 chemicals, new materials, and system solutions, with the core business being steelmaking. Business

Sales and manufacturing of automotive steel sheet Sales and manufacturing of non-automotive steel sheet Sales and manufacturing of pipes & tubes, and construction materials Sales and manufacturing of railway, automotive & machinery parts Processing and services of bars & wire rods 206.0 billion yen 36.4 billion yen

System solutions business New materials business NSSMC’s Businesses NS Solutions Corporations, etc. Nippon Steel Sumikin Materials Co., Ltd., etc.

North America billion yen 212.7 4,939.2 billion yen Asia Chemicals business Steelmaking and steel Nippon Steel & Sumikin Chemical Co., Ltd., etc. FY2014 fabrication business Sales composition Nippon Steel & Sumitomo Metal Corporation Sales composition by region Nippon Steel & Sumikin Coated Sheet Corporation by business segment Osaka Steel Co., Ltd. Nippon Steel & Sumikin Metal Products Co., Ltd. Nippon Steel & Sumikin Pipe Co., Ltd. % % 5,610.0 Nippon Steel & Sumikin Texeng Co., Ltd. 59 41 Nippon Steel & Sumikin Stainless Steel Corporation billion yen Siam United Steel (Thailand) Japan Overseas National Pipe Company, Ltd. (Saudi Arabia) billion yen Regional composition: 348.6 Standard Steel, LLC (USA) Asia 65% PT Pelat Timah Nusantara, TBK. (Indonesia), etc. North America 11% Engineering and Europe 7% construction business Latin America 7% Nippon Steel & Sumikin Engineering Co., Ltd., etc. Middle East 7% Africa 2% (Adjustment: Elimination 133.1 billion yen) Pacific 1%

47,698 Net sales (consolidated basis) Ordinary profit(consolidated basis) Net income (consolidated basis) Crude steel production volume (consolidated basis) Number of employees (consolidated basis) R&D expenditures (consolidated basis)

(¥ billion) (¥ billion) (¥ billion) (million tons) (¥ billion) 242.7 47.82 48.16 6,000 5,564.2 5,610.0 500 250 214.2 50 47.32 100,000 80 5,512.1 5,516.1 451.7 12.90 45.16 46.03 1,402.4 1,473.3 69.3 70.9 5,083.5 200 12.72 83,515 83,187 84,361 84,447 81,780 22.7 22.8 64.4 693.6 23,007 62.9 400 150 40 80,000 22,597 60.0 361.0 86.0 4,500 100 60 4,389.9 93.1 4.7 4,109.7 4,090.9 34.92 50 58.4 32.44 300 260.3 30 60,000 59,183 60,508 46.6 48.1 0 -7.1 3,000 34.0 40 226.3 203.8 –50 -53.7 200 60.8 20 40,000 –100 -124.5 143.0 87.7 –150 1,500 10.8 20 100 –200 10 20,000 76.9 -133.8 –250 -258.3 0 2010 2011 2012 2013 2014 (FY) 0 2010 2011 2012 2013 2014 (FY) –3000 2010 2011 2012 2013 2014 (FY) 0 2010 2011 2012 2013 2014 (FY) 0 2010 2011 2012 2013 2014 (FY) 0 2010 2011 2012 2013 2014 (FY) NSSMC/NSC1 SMI2 NSSMC/NSC1 SMI2 NSSMC/NSC1 SMI2 NSSMC/NSC1 SMI2 NSSMC/NSC1 SMI2 NSSMC/NSC1 SMI2 1 NSC: Nippon Steel Corporation 2 SMI: Sumitomo Metal Industries, Ltd. 1 NSC: Nippon Steel Corporation 2 SMI: Sumitomo Metal Industries, Ltd. 04 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 05

A Message from Top Management Aiming to Be Ever More Trusted and Relied Upon by Society

NSMMC Group will continue its ongoing efforts to achieve its 1 I would like to start this message by saying that we at Nippon Business Steel & Sumitomo Metal (NSSMC) sincerely regret the great trou- target for fiscal 2020 and to accelerate its efforts for reduction ble and inconvenience caused to those concerned by the Nagoya of CO2 emission with a long-term view of the future. Works power failure accidents and the smoke generation after We keep reminding ourselves that environmental risk the coke fire accident in 2014. We investigated the causes of the management is one of the critical challenges for our sustain- accidents and identified areas for improvement and lessons to be able operations. We comply with laws and regulations, adapt A Message from Top Management learned. Reflecting on those issues, we are sincerely committed to ordinances, bylaws, and standards, and carry out measures to go back to basics, prevent recurrence of similar accidents, and to reduce environmental burden with due consideration to the strive hard to enhance our overall manufacturing bases. condition of each business base. We will keep enhancing our In March 2015, NSSMC announced its Mid-Term capability to address the issues of environmental preservation Management Plan for fiscal 2015-2017. As we are in an environ- in terms of hard and soft aspects. ment which keeps changing, ever more quickly, on a global scale, Desiring to be ever more trusted and relied upon by society, we must go ahead and distinguish ourselves from our competi- we will fulfill our corporate social responsibility (CSR) to con- tors by placing particular emphases on “technology,” “cost,” and tribute to society by carrying out our corporate philosophy. Our “being global.” By doing this we intend to firmly establish our specific CSR concerns include compliance with laws and regula- position as the best steelmaker with world-leading capabilities. tions and risk management in areas of safety, environment, For many years, based on our “Ecological Management,” disaster prevention, among others. We also intend to continue we have been fulfilling our commitment to contribute to the to further enhance the quality of our ecological management creation of a society oriented toward environmental preser- by developing two-way communication with all stakeholders, vation and lower environmental impact, under the principle i.e., local communities, customers, shareholders, investors, of “Basic Environmental Policy.” Under our new Mid-Term researchers, and environmental NGOs. Management Plan, NSSMC will continue to address various This Sustainability Report introduces NSSMC’s progress in environmental issues from the local community level to the ecological management and details of our various initiatives global scale by keeping foremost in our activities the “three mentioned above. We hope that you take a look at it and let us ecos,” namely eco process, eco products and eco solutions, learn from your candid opinions regarding our environmental and the “development of innovative technologies.” The issues and other activities. encompass the maintenance and improvement of good living environments, the promotion of reduction and recycling of Kosei Shindo waste, measures to address global warming, and the mainte- Representative Director and President nance and improvement of biological diversity. Regarding the global climate change issue, 2015 is an important year as the United Nations Climate Change Conference, or COP21, will be held in Paris, to achieve a universal agreement on a new framework to be used from 2020. While the Japanese government is discussing the matter in preparation for the Conference, Japan’s steel industry as well as the business community in general have just organized the Phase II of their initiatives for achieving a Low-Carbon Society with a 2030 target, and have made commitment to society. The 06 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 07

Nippon Steel & Sumitomo Metal Corporation (NSSMC) has strived to introduce new products to society, by always NSSMC makes ecological innovations with the appropriately adjusting to the changing times and making advances in steelmaking technology so as to better satisfy the needs of customers. “three ecos and innovative technology development” We are committed to contribute to the development of society by further improving our advanced technology.

1960’s 1970’s 1980’s 1990’s 2000’s 2010’s Steel supported high Respond to the yen’s sharp Support in the era of concern Support for customer’s Toward becoming the world-leading Energy saving challenge economic growth appreciation for the global environment global expansion steelmaker with comprehensive strengths

• Enhanced dust collection measures • Developed Cokes Dry Quenching (CDQ) • Dry desulfurizing and denitrating sys- • Developed regenerative burners (1996) • Advanced waste water risk manage- • Expansion of usage of biomass Adopted dust collectors and significantly (1976) p. 25 tem using activated carbon p. 17 ment (i.e., installation of waste water resources (2010) ECO PROCESS controlled generation of dust and soot • Developed the Top-pressure Recovery • Energy Center’s introduction of timeta- closing gate) p. 18 The way we manufacture is • Introduced converter furnaces Turbine (TRT) ble demand management of power and • Developed Rotary Hearth Furnace (2000) The milling process time was reduced steam, and a power prediction system “eco-friendly” from 3-4 hours to 30 minutes, raising • Began Pulverized Coal Injection (PCI) productivity by 10 times to a blast furnace ecoPROCESS ecoPRODUCTS ecoSOLUTION Energy saving by more use of low–qual- NSSMC uses world-leading resources ity materials and cut in coke usage and world-leading energy efficiency to A pair of burners alternately heat the Recycled dust and sludge, generated in manufacture steel products and aims to air or absorb the heat in the heating steelmaking process Utilize wood palette for packing, thinned furnace, achieving about 25% energy • Gas Turbine Combined Cycle (GTCC) wood, coffee grounds, and other develop eco-friendly steelmaking pro- • Introduced continuous casting machines The pressure of blast furnace gas is uti- saving power plant exclusively fired using by- resources as coal alternative fuel for Boosted energy efficiency by continuous cesses by+ further improving efficiency. lized to generate power p. 18 product gas (2004) power generation 2 processing of mold-injection, heating, NSSMC’s environmental management Generated more power than by conventional and rolling 革新的な技術の開発 thermal means, using the same amount of fuel

• Adoption of railway wheels and axles • Wires for steel tire cords (1978) • High-tensile steel sheets for automo- • Resin film steel sheet (1994) • SuperDyma® (2000) p. 20 • High-speed railway wheel for heavy freight and powertrain equipment for the Enhanced strengths enabled reduction biles p. 21 • HIAREST steel (1996) • Lead-free galvanized steel sheets for • Establishment of production and shipment ecoPROCESSECOecoPRODUCTS PRODUCTSecoSOLUTION Tokaido Shinkansen trains (1964) p. 21 in wire for tires, • Began manufacturing and sales of tita- • Steel House (1996) fuel tanks (2005) system or 150 meter long rails (2014) What we produce is • Use of steel sheet for consumer durables contributing nium materials (1984) • UStainless steel boiler tube (2007) • HRX19™ stainless steel for high- such as cars, coolers, and color TVs to higher fuel • Ultra-high-tensile steel sheet for pressure hydrogen (2015) p. 27

“eco-friendly” • Oriented electrical steel sheets (1968) economy automobiles • 7% Ni steel plate for LNG tanks NSSMC makes ecological innovations with the “three ecos and innovative technology development” eco eco eco Satisfied requirements for both collision- Slashed the amount of nickel by about PROCESS PRODUCTS SOLUTION • Stainless steel safety and weight-reduction functional- 20% but ensured the equivalent safety We produce and offer eco-friendly ities p. 19 and strength to conventional levels “products” using our world-leading p. 21 NSSMC began production and sales of technological capabilities, thus conserv- outstanding corrosion-resistant, light, Three ecos Three ing resources and energy and thereby and strong titanium Balanced features of seismic resistance, + Began production of Orient Core HI-B™ NSSMC developed corrosion-resistant, • Steel tubes for automobile door impact fire resistance, durability, and thermal contributing towards building a sustain- which is used in transmission/distribution heat-resistance stainless steel with beams (1987) retention able society. transformers and reduces their energy strong adaptability to match design • High-strength wires and steel plates for • Lead-free wire rod (1999) 革新的な技術の開発 loss specifications the Akashi Kaikyo Bridge (1988) p. 19

• Thai Steel Pipe began operation (1965) • “Creation of Hometown Forests” • Began technology transfer of Coke Dry • I/N Tek (U.S.) began operation (1990) • Began waste plastic recycling • Global Superior Energy Performance ecoPROCESS ecoPRODUCTS ecoSOLUTION began (1971) Quenching (CDQ) (1985) p. 25 p. 9 p. 14 Partnership (GSEP; from 2011) p. 24 ECO SOLUTION • Cooperated in construction of Shanghai • ICI (U.S.) began operation (1992) • Public and private collaborative meeting Baoshan Steel (1985) • The Smart Community Creation Project between the Japanese and Indian iron Sharing our “eco-solutions” of Kitakyushu City was launched (1994) and steel industries (from 2011) p. 24

We contribute to the reduction of CO2 ecoPROCESS ecoPRODUCTS ecoSOLUTION emissions and other environmental burdens on a global scale by diffusing our Celebrates 50th anniversary in 2015. • Creation of sea forests Beverly™ Series Supported the development of the auto- (2004) p. 29 Group’s world-class environmental and mobile industry in Thailand, as one of the • Japan-China Steel Industry Advanced energy-saving technologies in Japan oldest Japanese companies to be active The world’s first forest was created by Technology Exchange Meetings in Thailand using the Miyawaki method. pp. 28–29 for EnvironmentalPreservation and + and overseas. • Began operation of the first waste Deng Xiaoping, China’s Deputy Prime Participated in creation of a city under Energy-saving (from 2005) p. 24 direct-melting and resource recovery Minister, visited the Kimitsu Works in the theme of harmonious existence in • Asia Pacific Partnership 革新的な技術の開発 system (1979) 1978 Kitakyushu City, Fukuoka Prefecture (APP; precursor of GSEP; 2006-2011) eco eco eco PROCESS PRODUCTS SOLUTIONBased on the objective of offering to society technologies and prod- • Introduced computer control of blast • Continuous annealing furnace • TMCP (Thermo Mechanical Control • Start development of CO2 separation • SCOPE21 (2013; Nagoya) p. 31 • Completion of the first commercial ucts that contribute to the saving of resources and energy and the furnace operation (1968) Shortened the processing time from 10 Process for plate rolling) (1985) and recovery technologies (2005) days to one day Realized the increased strength and • SCOPE21 (2008; Oita) p. 31 model of CO2 separation and recovery reduction in environmental burden, we are developing innovative • The steel industry’s first online system productivity improvement by meticulous facility (2014; Muroran Works) • COURSE50 (2015; construction of an

Development of began operation (1973) control of rolling and water-cooling advanced technologies from a medium- to long-term perspective. experimental blast furnace) p. 30 Innovative Technologies Innovative

• Opening of the Meishin Expressway (1963) • Japan World Exposition (Osaka Expo’70) (1970) • Opening of the Tohoku and Joetsu Shinkansen Lines (1982) • The United Nations Conference on Environment • FIFA World Cup Korea/Japan (2002) • The Great East-Japan Earthquake and Tsunami (2011) • Opening of the Tokaido Shinkansen Line (1964) • Sapporo Winter Olympics (1972) • The Plaza Accord (1985) and Development (UN Earth Summit) (1992) • The 2005 World Exposition, Aichi, Japan (2005) • Opening of the entire line of the Kyushu • Tokyo Summer Olympics (1964) • Shift to the floating exchange rate regime (1973) • The International Exposition, Tsukuba, Japan (1985) • The Great Hanshin-Awaji Earthquake (1995) • Lehman Shock (Global Financial Crisis) (2008) Shinkansen Line (2011) • The first oil crisis (1973) • Opening of the Seikan Submarine Tunnel (1988) • Consumption rate hike to 5% (1997) • Opening of the Tokyo Skytree (2012) • The second oil crisis (1978) • Opening of the Great Seto Bridge (1988) • Nagano Winter Olympics (1989) • Consumption rate hike to 8% (2014) • Introduction of 3% consumption tax (1989) • Opening of the Hokuriku Shinkansen Line (2015) Major events 08 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 09

NSSMC creates value for society at every stage of NSSMC’s value chain contributes to society the life cycle of steel with its “three ecos.” with its “three ecos”

ecoPROCESS ecoPRODUCTS ecoSOLUTION ecoPROCESS ecoPRODUCTS ecoSOLUTION Transfer of environmental technologies Titanium sheet for aircraft to overseas steelmakers p. 24 + Titanium alloy rods for aircraft engines 革新的な技術の開発

eco eco eco + PROCESS PRODUCTS SOLUTION 革新的な技術の開発

eco eco eco eco eco eco PROCESS PRODUCTS SOLUTION PROCESS PRODUCTS SOLUTION Coke Dry Quenching (CDQ) system CDQ system at Tata Steel, India in Shougang Jingtang Iron & Steel Stable supply of NSSMC’s eco products to its cus- Resource-saving by enhancing the United Co., Ltd. + tomers’ overseas production bases strength of materials and reducing 革新的な技術の開発 their weight Airbus A350XWB eco eco eco ©AIRBUS PROCESS PRODUCTS DemonstrateSOLUTION the equivalent per-

formance with less use of precious ecoPROCESS ecoPRODUCTS ecoSOLUTION ecoPROCESS ecoPRODUCTS ecoSOLUTION rare metals Lightweight steel materials help reduce + Tenigal 2 Saving resources and energy, NSSMC’s environmental management CO2 emissions in transportation + 革新的な技術の開発 (Mexico) eco eco eco and reduce CO2 emissions at PROCESS PRODUCTS SOLUTION I/N Tek, I/N Kote 革新的な技術の開発 Steel production at the world’s top-class eco eco eco PROCESS PRODUCTS SOLUTION (U.S.) the point of use of products ecoPROCESS ecoPRODUCTS ecoSOLUTION energy efficiency p. 12 AM/NS Calvert (U.S.) + 革新的な技術の開発 Transportation eco eco eco Raw High-tensile steel for automobiles PROCESS PRODUCTS SOLUTION eco eco eco pp. 7, 19, 21, 23 materials PROCESS PRODUCTS SOLUTION Provide high-strength steel materi- NSSMC’s value chain contributes to society with its “three ecos” + als most suitable to exploration ecoPROCESS ecoPRODUCTS ecoSOLUTION 革新的な技術の開発and transportation of raw materials eco eco eco PROCESS PRODUCTS SOLUTION Theoretically infinite + recycling pp. 22, 23 Steelmaking Usage 革新的な技術の開発

eco eco eco Creation of hometown PROCESS PRODUCTS SOLUTION forests in steelworks pp. 28–29 ©Volvo

Abrasion resistant steel plate Use steel slag, by-products of Production of industrial products ABREX™ p. 21 steelmaking for materials for eco eco eco Disposal cement, broken–up pieces of Improved fuel economy by lighter PROCESS PRODUCTS SOLUTION pavement, etc. transportation equipment Even after the product finishes its + life, its steel material continues 革新的な技術の開発 to be valuable and useful

ecoPROCESS ecoPRODUCTS ecoSOLUTION

Rails for Shinkansen Tokyo Gate Bridge Supply power to society ecoPROCESS ecoPRODUCTS ecoSOLUTION ecoPROCESS ecoPRODUCTS ecoSOLUTION eco eco eco by power generation, PROCESS PRODUCTS SOLUTION Forestry path Supply steel materials that make it using by-product gas + Offshore wind power generation Provide steel materials most suit- + easy for customers to process, KATAMA™ SP The NSSMC Group’s 革新的な技術の開発 pp. 14, 20 革新的な技術の開発 + able for LNG carriers and carriers Railway wheels and axles p. 21 weld, and work on materials, and power generation eco eco eco 革新的な技術の開発 eco eco eco PROCESS PRODUCTS SOLUTION for raw materials, contributing to capacity is equivalent to PROCESS PRODUCTS SOLUTIONsave production processes eco eco eco PROCESS PRODUCTS SOLUTIONmarine safety and enhanced fuel the 6th highest of economy Japan’s 10 electric Germany’s Inter-City-Express North America freight railway (ICE) Train ©Deutsche Bahn AG • NSGP™-1 power companies • Steel with resistance to high cracks p. 11 • NSafe®-Hull

Less CO2 emission by promoting the Prepainted VIEWKOTE® steel sheet modal shift (from truck carrier to coastal shipping and railroad carrier) p. 12 ecoPROCESS ecoPRODUCTS ecoSOLUTION

+ Creation of sea forests by 革新的な技術の開発utilizing steel slag

eco eco eco p. 29 PROCESS PRODUCTS SOLUTION Recycling 10 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 11

eco eco eco PROCESS ECOPRODUCTS PROCESSSOLUTION (The way we manufacture is “eco-friendly”) + 革新的な技術の開発 NSSMC uses iron ore mined overseas, coal as an iron ore reductant, In addition, among electricity used in steelworks, 90% of self- ecoPROCESS ecoPRODUCTS ecoSOLUTION Recycling and environmental aspects of energy and natural resources and scrap generated by society as its main raw materials for steel generated power was fueled by recovered waste heat and by-product production. By-product gases, such as coke oven gas generated by gas. 90% of water used for cooling and cleaning products and manu- Nippon Steel & Sumitomo Metal Corporation (NSSMC) is committed to reduction of the environmental burden created by pro- dry distillation of coal in the coke manufacturing process and blast facturing equipment is repeatedly re-used. duction activities and manufacturing processes. furnace gas generated from blast furnaces, are fully utilized as fuel We make continuous efforts in all processes to not waste limited resources and energy. gas for steel heating furnaces or energy sources for power generation plants on the premises of steelworks.

Use of reclaimed Evaporation Efficient use of Power generation by in-house Efficient use of by use as and recycled water cooling water, by-product gases generated energy recovered waste energy etc. ENERGY Reclaimed and recycled By-product gases generated Electricity generated by recovered Recovered waste energy water represents in the steelworks are waste energy and by-product gases represents represents Fuels RECYCLING OF ENERGY By- Fossil fuels Industrial 90% 100% 90% 87% 102 thousand kl product water of the water used gases used as internal of in-house power generation of steam used as heat sources 2 in the steelworks energy source within the steelworks NSSMC’s environmental management

Electricity Purchased power Iron ore Blast furnace gas 5.27 billion kWh Limestone (By-product gas) Converter gas (By-product gas)

Industrial water Steel Raw water Slabs sheet 0.62 billion m3 Sintering facilities OUTPUT ECO PROCESS Pipe Steel products RESOURCES INPUT Continuous casting Reheating furnace Hot rolling, cold rolling Converter Bloom (crude steel) Blast furnace slag Facilities Steel Blast furnace (By-product) plate Steelmaking slag Coke oven gas 44.96 Iron ore (By-product) (By-product gas) Boundary million tons 68.18 million environmental Beam tons Billet (non-consolidated) preservation forest Coke oven Wire Air rod Coal 46.5 km 29.10 million tons Coal Hot stove Electric furnace Green area Annealing furnace 919 ha By-products from other industries In-company use 29% Purchased Scrap Waste plastics scrap Recycling rate of Cement industry and generated External use Sales or commissioned recycling other industries 210,000 tons RECYCLING OF RESOURCES in-company by-product 99% 70% Waste tires Re-use Final disposal 80,000 tons By- Waste 3.85 products 1% 0.23 million tons million tons * Numbers represent fiscal 2014 performance 26.05 million tons Electricity generated by recovered waste energy and by-product gases represents 90% of in -house power generation Energy inputs Emissions Resource recycling rate p. 15 When one ton of iron is produced, the amount of by-products Electricity consumed within the NSSMC Group generated exceeds 600 kg, but the steel slag, dust, and sludge are NSSMC’s share in Japan’s NSSMC’s share in Japan’s total final disposal of 99% 99% 99% total energy input (FY2013) industrial wastes (FY2012) 94% 96% 84% 16% reused in-house as raw materials, or are used by society or other NSSMC 5% NSSMC 2% NSSMC’s resource corporations as raw materials for cement, construction materials, and recycling rate Electricity generated by the Group Purchased Steel industry 10% electricity so forth. These efforts have resulted in the achievement of a very high 53% 55% 40% % recycling rate of approximately 99%. Steel industry 45% 60 4%1 Total 38% 37% We are also engaged in the recycling of various types of by- energy input Final disposal Electricity supplied to the Fiscal 2014 performance local community products generated by society or other industries by utilizing our (21,973 PJ) (13.10 million) Recycling rate of industrial 15 P: Peta = 10 wastes of all industries steelmaking processes that are carried out at high temperature and high pressure. In recent years, we have been actively recycling waste NSSMC internally generates 84% of the electricity it uses. 1990 1995 2000 2010 2012 2014 (FY) plastics, waste tires, and other waste materials. NSSMC supplies 40% of internally-generated electricity in the local community. Source: “General Energy Statistics” by the Agency for Natural Source: “Annual Report on the Environment in Japan Source: “Annual Report on the Environment in Japan Resources and Energy JISF (Japan Iron and Steel 2015” by the Ministry of the Environment 2015” by the Ministry of the Environment Federation) 1 Estimate 12 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 13

Achieved the world’s top-class energy efficiency The most effective measure against global warming is energy Global warming countermeasures From the time of the first oil crisis until around 1990, NSSMC inten- conservation, and therefore NSSMC is striving to improve energy sively promoted continuous processing, exhaust heat recovery, and efficiency by using energy generated in steelmaking processes, includ- Nippon Steel & Sumitomo Metal Corporation (NSSMC) promotes energy conservation and CO2 emissions reduction throughout the entire other measures, all to enable significant energy conservation. This ing power generation through use of by-product gas or exhaust heat supply chain: manufacturing, transportation, and final use of products. We also actively work at innovative technology development and has led to NSSMC and Japan’s steel industry as a whole achieving the recovery, or by reusing waste plastics and discarded tires. As a result transfer of established technology to our overseas operations, helping them to contribute to CO reduction over the medium- and long-term. 6 2 world’s top-class energy efficiency.➝ Graphic A of these efforts, the NSSMC and affiliated electric furnace companies consumed 1,100 PJ of energy and emitted 96 million tons (prelimi- 5 nary) of CO2 in FY2014. l Achieved the world’s top-class energy efficiency Continue CO2 emission reduction by Japan’s steel industry invested ¥3 trillion in plant and equipment in the 1970s and 1980s and realized 20% energy saving. implementing the three ecos 6 Affiliated electric furnace and other companies: Osaka Steel Co., Ltd., Godo Steel, Ltd., From 1990 to 2012, ¥18 trillion was invested to achieve 10% energy saving. Nippon Steel & Sumikin Stainless Steel Corporation, Nakayama Steel Works Ltd., Nippon Coke & Engineering Co., Ltd, three Cooperative Thermal Power Companies (Kimitsu, Tobata Based on the 31.7 billion metric tons of CO2 emissions from world- and Oita), and two Sanso Centers (Nagoya and Oita) l Continue CO2 emission reduction by implementing the three ecos wide fossil fuel combustion in 2012, Japan’s product emissions rep- Following the Voluntary Action Plans, the industry is now participating in the Action Plans for the Realization of a Low-Carbon Society. resent 3.9% of global CO emissions from combustion of fossil fuels. 2 Promote innovative technology development Japan also accounts for 27% of worldwide greenhouse gas emission, 2 l Work to achieve further CO2 emission reduction through In addition to promoting the three ecos, the industry has worked at NSSMC’s environmental management according to estimates by the International Energy Agency in 2010. development of innovative technology ecoPROCESSecoPROCESSecoPROCESS ecoPRODUCTSecoPRODUCTSecoPRODUCTS ecoSOLUTIONecoSOLUTIONecoSOLUTION developing the innovative steelmaking process (COURSE50) from a According to the latest data available, Japan’s CO2 emissions from The industry aims at technological development for about 30% CO2 emission reduction, medium- to long-term CO2 emission reduction perspective. From 2023 fossil fuel combustion amounted to 12.4 billion metric tons in 2013 by adoption of an innovative steelmaking process (COURSE50). onward, under the Action Plans for a Low-Carbon Society, the global and the industrial segment accounted for roughly one-third of that. As +++ warming countermeasures will be steadily implemented on the basis l Work to achieve further CO2 emission reduction by raising efficiency in logistics a member of the Japan Iron and Steel Federation, NSSMC has been 1 革新的な技術の開発革新的な技術の開発革新的な技術の開発 of the three ecos and COURSE50. Maintain and further improve NSSMC’s high modal shift ratio of 95.7%; improve transportation playing a part in CO2 emission reduction of the industrial segment

efficiency by using larger vessels (changing from 700 tons to 1,500 ton vessels) in domestic coastal ECO PROCESS ecoecoeco ecoecoeco ecoecoeco through implementing “eco processes,” and introducing “eco prod- transport and taking other measures; and improve fuel economy by introducing energy-saving PROCESSPROCESSPROCESS PRODUCTSPRODUCTSPRODUCTS SOLUTIONSOLUTIONSOLUTION ucts” and “eco solutions” in Japan and overseas.➝ Graphic B timetable management, lightweight vehicles, etc. In the Voluntary Action Plans up to FY2012, energy consumption Japan Iron and Steel Federation’s Action Plans for a Low-Carbon Society (“Three ecos and innovative technology development”) Graphic C l Promote energy saving efforts in offices Logistics sector’s ton-kilometer achievements for FY20142 for FY2008 through FY2012 was reduced by 11.1% relative to the and at home FY1990 level (CO2 emission was reduced by 11.2%), achieving partici- Eco process Eco products Eco solution Transportation quantity: Million A policy of lights-out during lunch breaks, a business-casual dress 10,000 tons/year ton-kilometers/year pants’ goals. From FY2013 on, NSSMC has been participating in the Aim at improving Contribute to emission Contribute to world- code during summer, eco-no-working days, etc. has been imple- CO2 emission energy efficiency reduction when steel wide energy reduction Ship 2,010 (55%) 10,775 (87%) Action Plans for the Realization of a Low-Carbon Society for further reduction materials are used in by technology transfer mented in offices. So as to encourage employees make energy-saving plans final products and diffusion Railway 6 (0%) 38 (0%) CO2 reduction by means of the three ecos. The industry-wide efforts efforts at home and actually reduce emissions, keeping records in a Phase I are made to achieve the Phase I goal of CO reduction of 5 million 5 million tons7 33 million tons 70 million tons Household Energy Diary has Truck and trailer 1,620 (45%) 1,530 (13%) 2 Fiscal 2020 been promoted. 3,636(100%) 12,343(100%) tons by FY2020 by fully implementing state-of-the-art technologies. Total Phase II 7 Fiscal 2030 9 million tons 42 million tons 80 million tons 1 Modal shift rate: A modal shift indicates the domestic freight transport shift from truck ➝ Graphic C carrier to coastal shipping and railroad carrier as a countermeasure against global warming. A modal shift rate is a percentage of cargo volume transported over a distance Development of innovative steelmaking processes (COURSE50) P30 of 500 km and more by rail or sea (including ferry) (as defined by the Ministry of Land, Infrastructure, Transport and Tourism). 2 Ton-kilometer: Total sum of the weight of load (ton) transported multiplied by transport 7 The target reductions in CO2 emission volume are based on a certain crude steel production https://www.kankyo-kakeibo.jp/ (only in Japanese) distance (km) assumption.

NSSMC’s changes in energy consumption NSSMC’s energy-derived CO2 emissions Energy efficiency in steelmaking by country (2010) Graphic A Breakdown of CO2 emissions from fossil fuel combustion Graphic B

3 (GJ/ton) (PJ ) (GJ4/t) (Million tons of CO2) (t–CO2/t) 35 Global: 31.7 billion tons Japan: 1.24 billion tons 1,200 25 97 2.3 (2012) (FY2013) New Zealand 96 2.2 31.1 Energy conversion 1,100 24 30.3 0.1% 8.2% Industries 34.7% 30 Other 28.7% 95 2.1 28.3 28.3 Australia 27.7 28.2 1,000 23 26.8 1.2% 94 2.0 25.7 Canada 1.7% China 26.0% 900 22 25 23.8 Global Japan’s 93 1.9 22.9 CO2 emission CO2 emission

Energy efficiency in steelmaking efficiencyEnergy in breakdown breakdown 0 2010 2011 2012 2013 2014 (FY) 0 0 2010 2011 2012 2013 2014 (FY) 0 by country by sector (Preliminary)5 U.S.A. 16.0% 20 UK

USA Japan

Crude steel 4,931 4,675 4,725 4,922 4,825 India Brazil China Korea South Japan Russia Energy consumption (left scale) Energy consumption per ton of crude steel (right scale) production (10,000 tons/year) France 3.9% Germany Residential 3 PJ indicates peta-joules (1015 joules). CO2 emissions related to energy sources (left scale) EU 11.0% Comparison when Japan is assumed to be 100 Russia 5.2% 16.3% Commercial/other A joule is a unit of energy, or amount of heat. CO emissions per ton of crude steel (right scale) 2 Transportation 18.2% 22.6% 9 100 104 112 117 121 123 124 124 132 136 India 4 GJ indicates giga-joules (10 joules) 6.2% 5 A provisional value based on the assumption that the CO2 level in a unit of purchased Source: International Comparisons of Energy Efficiency (Sectors of Electricity Generation, Iron electricity in FY2014 is the same as in FY2013. and steel, Cement), RITE, 2010 (The Japanese translation and numerical values were Source: Prepared by NSSMC based on the data Source: Ministry of the Environment provided by the Japan Iron and Steel Federation.) from the IEA 14 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 15

Hikari Works1. This enables us to recycle all internally-generated dust. Contributing to creation of a recycling-oriented society Recycling of waste plastics and waste tires In March 2009, we obtained special approval for RHF under the Waste NSSMC recycles 100% of plastic containers and packaging and all Disposal Act to carry out recycling of externally-generated dust as well. discarded tires by using them in the steelmaking processes. Nippon Steel & Sumitomo Metal Corporation (NSSMC) not only works for the realization of zero emissions and low environmental impacts, and recycling of in-house waste, but also is actively engaged in recycling of by-products generated by society or 1 Hikari Works: Transferred to Nippon Steel & Sumikin Stainless Steel Corporation. other industries, by utilizing its iron-making process. By-products and Recycling making process, steel slug products are designated as a “designated Promotion of in-house zero emissions Amount generated Recycling rate By-products generated and the amount finally disposed procurement item” under the Green Purchasing Law, and included in By-product Process of generation (wet weight – million tons) Recycling application FY2013 FY2014 FY2013 FY2014 In the iron-making process, over 600 kg of by-products are generated the Common Specifications for Civil Engineering Work compiled by the Blast furnace slag Components other than iron melted in blast furnace 13.47 13.46 Blast furnace cement, fine aggregate, road base, etc. 100% 100% Ministry of Land, Infrastructure, Transport and Tourism. for every ton of iron produced. In FY2014, NSSMC produced 44.96 Steelmaking slag Substances other than steel generated in the steelmaking process 6.26 6.28 Road base, civil engineering materials, fertilizer, etc. 99% 99% million tons of crude steel and generated 26.05 million tons of by- Dust Fine dust collected with a dust collector 3.58 3.38 Raw materials for use in-house and also zinc refining 100% 100% Recycling of dust and sludge Water treatment sludge, residue from plating solution, road products. The majority of these by-products were recycled inside and Sludge 0.60 0.39 Raw materials for in-house use 93% 90% cleaning sludge 2 outside the company. Approximately 230,000 tons were ultimately To recycle the dust and sludge generated in the iron manufacturing NSSMC’s environmental management Coal ash Ash from coaled-fired power plants 0.54 0.53 Cement raw materials 100% 100% process to be used as raw materials, NSSMC operates a dust reduction disposed, making our recycling ratio reach 99%. Waste furnace materials Refractories from steelmaking facilities and furnace facilities 0.32 0.28 Reuse, road base, etc. 74% 71% kiln (RC: Resource circulating oven) at Kashima Works and a rotary Others Scale, etc. 1.72 1.73 In-house use, others 98% 96% hearth reduction furnace (RHF) at Kimitsu Works, Hirohata Works, and NSSMC’s final disposal amounts Total 26.49 26.05 Total recycling rate 99% 99%

(Wet 10,000 tons/y) 100 Thermal decomposition enables 100% effective 85.9 re-use of plastics Point! Unlike burning, thermal decomposition enables 100% effective use of plastic products. ECO PROCESS 80 Households NSSMC

60 50.7 Use plastic products Recycle back to households Light oil Used as plastic and other chemical raw materials in a FY2015 Target: as plastic products 35.8 Oil % Tar 40 31.1 33.0 40 chemical plant 22.7 22.5 20 Thermal decomposition Plastic bags, plastic wrap Pre-treatment process 0 2000 2010 2011 2012 2013 2014 (FY) process (coke oven) Bottles, tubes Trays, packages, cups Remove metals and other Coal is put into a coke Recycling of steel slag extraneous materials from Sort, and discard oven chamber and car- Steel slag is almost entirely utilized. Approximately 70% of blast plastic transported from unusable materials bonized in a superheated Container packages Electronic materials Paints Plastic pellets Tennis rackets furnace slag is used for cement, while steelmaking slag is used municipalities, crush plastic atmosphere free of oxygen for materials for road bases, civil engineering work, fertilizer, soil and used in entirety to After being cooled, the coke is put in a blast furnace improvement, etc. For example, Calcia modified soil, a mixture of produce tar and light oil, Coke 20% and is used as an iron ore reducing material. steelmaking slag and dredged soil, has the beneficial effects of Municipalities coke, and coke oven gas. Steel Continuous sheet improving the strength and inhibiting the elution of phosphorus, the Collect and store plastic casting Pipe generation of hydrogen sulfide, etc. in dredged soil. It has also been products Secondary crushed plastic, Oxygen Heat Coke treatment after being sorted and with Steel used to improve the marine environment, including restoration of sea- Collect and sort plastic Hot rolling Surface non-plastic materials removed plate weed beds and creation of wetlands and tideland. NSSMC’s pavement products collected treatment Beam from households materials, KATAMA™ SP, taking advantage of characteristics of steel Blast furnace Converter Wire Iron ore slag, are used for forest roads and farm roads, as well as for weed rod preventive pavement to be installed near mega-solar panel installa- tions and other locations. Coke oven “Blast furnace cement,” a mixture of pulverized blast furnace slag Coke oven gas 40% and ordinary Portland cement, contributes to a 40% reduction of CO2 Agglomerated plastic solidi- Fuel gas which mainly contains hydrogen and methane fied and formed with heat emissions during manufacturing, since the cement-making process can generated by friction The coke oven gas is used as energy at a thermal power plant within a steelworks. Power plant be omitted. It also exhibits superior long-term strength and is regis- Compress and package plastic tered as an Eco Mark product. Due to the effects of reduction in mining of natural crushed stone and less energy consumption in the cement 16 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 19

Topics Steelmaking manufactures tons of steel with dimensions measured in microns and nanos

Visitors to steelworks may be surprised by the gigantic pro- characteristics is based on the analysis technology that Promotion of environmental risk management duction facilities and products. Despite such largeness, steel- explores the nature of materials. making is controlled in units of microns and nanos. At our research institutes, structural change of materials NSSMC is promoting management of environmental risk with the aim of continually enhancing preservation of the environment As the metallic structure of steel changes by the tem- caused by external great force, heat, or other stress factors in various regions, with due consideration of environmental risks, which differ by each steelworks and factory, and with due perature and the speed of change in temperature, finely- are observed and measured by using electronic microscopes consideration to compliance with Japan’s Air Pollution Control Act and other regulations. We also are engaged in reducing envi- tuned temperature control is necessary for us to be able and other devices. A variety of materials can be designed by ronmental risk throughout the Group. to produce the quality of materials our customers require. predicting changes on those materials. Based on such basic Production method and know-how to bring out such diverse research, we can come out with products having the charac- Activities for reducing environmental risks Soil risk management teristics required by our customers. Atmospheric risk management We are taking appropriate measures in compliance with the Soil As such, NSSMC also analyzes possible internal changes In order to reduce emissions of sulfur oxides (SOx) and nitrogen Contamination Countermeasures Act, guidelines issued by the in steel during the manufacturing process, making best use oxides (NOx), NSSMC is taking measures such as using low-sulfur Ministry of the Environment, local government ordinances, and so on. of its world-class facilities and know-how, and manufacture fuel, adopting low NOx generating burners and installing effective We report to the local government when performing landform modi- many tons of eco products to specifications in units of microns One hot coil is as long 2 equipment, including equipment that reduces SOx and NOx emissions. fication work such as excavation which is required to be reported. We as 1,000 meters. and nanos. NSSMC’s environmental management To curb emissions of soot and dust generated from factories and raw conduct pollution surveys when needed. Visit to steelworks material yard, we try to enhance their collection by installing dust col-

lectors and prevent scattering of particles by installing windscreens Chemical substances discharge control Case of Akashi Kaikyo (Strait) Bridge Subjects in microns and and sprinklers, based on air pollution risk analysis through scientific Comprehensive control of discharge nanos are observed by simulation. We also conduct constant monitoring and regular patrols NSSMC appropriately manages and tries to improve the production, The Akashi Kaikyo Bridge, the longest suspension bridge in Japan (4 km in an electron microscope. to ensure that no abnormal emissions are released outside. length), has been realized by NSSMC’s high-strength steel cables, which was handling, and discharge or disposal of chemical substances in accor- ECO PROCESS developed by using the analysis technology at the level of microns and nanos. dance with the PRTR Act1, Chemical Substance Control Law2, Volatile Water quality risk management Organic Compounds (VOC)3 voluntary management, and other laws Cable used in the Akashi Kaikyo Bridge NSSMC uses approximately 6.2 billion m3 of freshwater a year at all concerning the management of chemical substances as well as fol- Cross-section view of the cable The wire viewed by of our steelworks and factories combined. Approximately 90% of lowing the voluntary management procedures set by the Japan Iron an electron scanning The wire viewed by microscope this is re-circulated or reused. We try not to waste precious water an electron scanning The wire viewed and Steel Federation (JISF) and NSSMC. microscope by a field ion 5.23 mm 5.23 resources, and to control wastewater discharge. To achieve this, 59.58 mm microscope NSSMC also took the lead to promote use of alternatives to steel- 67.99 mm we make daily efforts to maintain and improve the performance of 127 wires/strand making materials and equipment that contain hazardous materials 1,122 mm 290 strands/cable wastewater treatment equipment, and the inspection and control of such as asbestos and polychlorinated biphenyl (PCB). We have been 1 µm 100 nm 20 nm wastewater quality. replacing or disposing of possibly risky parts and materials, according In consideration of the importance of preventing water pollu- to handling standards that ensure safety. km (103 m) m (1 m) mm (10-3 m) µm (10-6 m) nm (10-9 m) tion, we have installed devices such as detectors, control valves, and 1 PRTR Act: An abbreviated name of the Act on Confirmation, etc., of Release Amounts of emergency water storage pits. We also strive to check, repair, and Specific Chemical Substances in the Environment and Promotion of Improvements to the Management Thereof. PRTR stands for Pollutant Release and Transfer Register. maintain equipment in order to prevent water pollution, and to train 2 Chemical Substance Control Law: An abbreviation of the Law Concerning the Examination and Regulation of Manufacture of Chemical Substances. our personnel in methods of checking of operations and controlling 3 Volatile organic compounds (VOC): Organic chemical compounds emitted into the Case of high-tensile-strength steel materials work procedures. atmosphere in the form of gases, which are considered to be the source of undesirable airborne particles and photochemical oxidants, which became subject to control under the Air Pollution Control Act of 2004, as amended. Steel sheets for automobiles are required to be light for better

fuel economy and reduction of CO2 emission, and at the same

time to be strong enough to ensure the safety of passengers in Maxima adopted NSSMC’s 1.2 Gigapascal (GPa) ultrahigh-tensile-strength Emission of SOx and NOx NSSMC’s water consumption VOC high-formability steel (excluding power generation facilities) case of a collision. The materials also need to be superior in work- 6 3 Image provided by Nissan Motor Co., Ltd. (10 Nm ) (t/year) ability, such as to be rolled out or pressed, 100 Seawater Freshwater 2,000 in keeping with the design of the car body. 82 22.2% 77.8% Working in microns to develop the new material (6.2 BN m3/year) 1,568 In order to control the temperature-caused 80 1,500 differences in steel’s crystalline structure, Conventional material: 1.2 GPa Newly developed material: 1.2 GPa ultrahigh-tensile- high-tensile-strength steel sheet strength high-formability steel sheet (Example) FY2014 Target: 1,098 60 temperature control in the heat treatment Image of structure Raw 7.9 1,000 process of steelmaking must be precise. By Image of structure 41 3 Recycled water BN m /year 745 734 730 728 40 (176 m3/ton)4 water blending soft crystalline texture and hard 28 28 28 7.9% 26 69.9% crystalline texture in a balanced manner, 500 20 11 11 11 12 we have developed strong high-tensile steel with high formability. 5 micron 5 micron 0 1973 1975 2011 2012 2013 2014 0 2000 2011 2012 2013 2014 (FY) 4 Water usage for 1 ton crude steel production (FY) SOx emission NOx emission Graph legends Hard texture A Soft texture Hard texture B 17 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 18

Environmental measures at steelworks NSSMC is implementing a variety of environmental measures against the range of risks inherent to each of its steelworks and manufacturing sites. In addition, many steelworks have been working on the “Creation of Hometown Forests” to preserve

the natural environment. Wakayama Works Kimitsu Works Osaka Steel Works Sakai Area Nagoya Works Tokyo Area Local environmental activity Employees clean steelworks vicinity.

Raw material yards Upstream operation (iron and steelmaking) Downstream operation (rolling; heat treatment; surface treatment)

Prevention of scattering of materials Prevention of scattering of dust; desulfurization and denitrification Water purification; prevention of abnormal waste water

Amagasaki Works 2 NSSMC’s environmental management

Kashima Works

Electric dust collectors Dust collectors with bag filters Wet type desulfurization Waste water coagulating sedimentation Pressurized flotation system Coal yard operations Water spraying in coal yards Dust generated in the burning process is collected by equipment treatment equipment Floating oil is removed by tiny bubbles The surface of coal piles is pressed to Water is sprayed on piles of iron ore and two types of dust collectors (electric or with bag filter), The wet desulfurization Fine undissolved matter is coagulated formed by released air. method enables SOx in into bigger masses by chemical treatment, ECO PROCESS Hirohata Works restrain the scattering of coal fines. coal to restrain the scattering of raw depending on the characteristics of the dust (i.e., particle size materials. distribution, emission gas concentration.) emission gas to be eliminated. permitted to settle, and is removed.

Yawata Works Naoetsu Works

Raw materials Sintering facility Coke oven Blast furnace Converter Hot strip mill, cold rolling mill

Kamaishi Works

Active coke dry type Sprinkler trucks Road cleaning trucks Filtration equipment (secondary Waste water automatic monitoring Kokura Area Rainwater tank (for spraying) Windbreak net at yards desulfurization equipment These trucks spray water on the road and empty lots or clean treatment) equipment Rainwater is not wasted but used for A windbreak net is installed to reduce the The dry desulfurization and the road within works to restrict the secondary scattering Undissolved residues in the treated waste The water quality of waste water is spraying in coal and ore yards. strength of wind and restrain the scattering denitrification methods, using of dust. water are filtered by a sand layer and automatically monitored. of raw materials. active coke, enables SOx and NOx removed. in emission gas to be eliminated. Oita Works

Muroran Works

Quay walls and sea banks are Smoke and soot measuring Activated sludge treatment Low NOx regenerative burners Measurement of waste Waste water closing gate regularly check from the land equipment equipment Burners featuring reduced water quality Waste water flow is shut in and the sea side and repaired, as Smoke and soot are regularly Organic matter is decomposed levels of NOx generation and Water is regularly collected case of trouble. required. measured in compliance with and eliminated by bacteria. outstanding fuel savings have and the regulated contents the laws and regulations. been installed. are measured.

Quay wall water leakage management In cooperation with local Hikari Area residents, employees clean the nearby beach. 20 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 21

ecoPROCESS ecoPRODUCTS ecoSOLUTION High-tensile-strength ECO PRODUCTS (What we produce is “eco-friendly”) steel materials (Steel sheet; Transportation and construc- + tion machinery) 革新的な技術の開発 High-tensile-strength steel materials for eco eco eco automobiles help overcome two challenges: PROCESS PRODUCTS SOLUTION Titanium alloy connecting rods NSSMC’s eco-friendly products help reduce environmental burden improvement in fuel efficiency by reduction of of supersport motorcycles vehicle body weight, and ensuring the safety Our Group’s products, having advanced or highly specialized functions, technological (Titanium and stainless steel; Transportation of passengers at the time of a collision. These and construction machinery) materials are also superior in workability. capabilities, and reliability, are used in diverse areas including energy, transportation and construction equipment, and household products. They typically help our custom- NSSMC’s proprietary Al-5%, Fe-1%, Ti-based alloy contributes to weight reduction of the connecting ers become more efficient while making their products lighter or lengthening product rod, which converts reciprocating motion of the piston into rotating motion of the crankshaft, and life. That translates into the saving of resources and energy, and into a reduction in CO2 to smarter use of precious resources. Wheelsets (wheels and axles) ABREX™ Series abrasion- emissions at the point of use at our customers, thereby contributing to lessening the for high-speed railways resistant steel plate Drop impact test (the middle two products environmental burden. (Railway, automotive, & machinery parts; are high-tensile-strength steel materials) (Steel plate; Transportation and con- Transportation and construction machinery) struction machinery)

NSSMC manufactures almost all wheels The ABREX™ Series abrasion-resistant steel and axles used by railways in Japan. We are plate is 5-6 times harder than ordinary steel and wears out less. It is eco-friendly and 2

pursuing weight reduction by developing hol- NSSMC’s environmental management Courtesy of Yamaha Motor Co.,Ltd. low axles, for example, and contributing to enables extension of the maintenance cycle of energy conservation in railway transport. machinery and weight reduction of the product Corrosion-resistant for which it is used. SuperDyma™ galvanized sheets (Steel sheet; Living) External-dimension constant H-shape (Hyper-Beam) SuperDyma™ is highly corrosion-resistant and (Building materials; Living)

lasts four times longer than conventional prod- ECO PRODUCTS ucts. As coating and painting on cut-end surfaces NSSMC’s VETM/NSYPTM345B is a high-perfor- ©Volvo are unnecessary, all such costs are eliminated. The mance steel for use in construction. It makes sheets weigh less, and are an eco-friendly building structural design with increased earthquake material well suited for various applications. resistance possible. Weighing about 5% less than the comparable conventional steel, it is also economically efficient. This steel is contributing Permanent magnet-type to Japan’s National Resilience Initiatives, specifi- retarder cally for the enhancement of social infrastructure. (Railway, automotive, & machinery parts; Transportation and construction machinery)

NSSMC’s permanent magnet-type retarder is Exterior material of the new Kobe plant of Rock Low noise gear units installed as the auxiliary brake system on many heavy-duty trucks and buses. Once the retarder Field, Co., Ltd. (Railway, automotive, & machinery parts; Transportation and construction machinery) is installed, the frequency of accelerating or decelerating of the speed decreases, which results in better fuel efficiency, while the fre- NSSMC’s gear units have reduced the level quency of applying the foot brake decreases, of noise by about 10 decibels compared to reducing brake dust caused by abrasion. conventional products. This was achieved by raising the precision of the meshing of gears, which resulted in reducing noise-producing vibration.

Steelmaking slag (KATAMA™ SP) Ring gears (Steel slag and cement; Living) (Bar and rod materials; Transportation and construction machinery) Ni-7% steel sheet for KATAMA™ SP is a roadbed material that features LNG storage tanks sufficient strength for use as paving, and that can Better fuel economy is achieved when the automobile (Steel plate; Energy) be placed simply by compaction with water. As this engine rotates slowly with strong torque. In coopera- material tends not to be depleted by rainfall and tion with an automaker, NSSMC has developed a light- Steel sheet for storage tanks needs to have resists formation of ruts, it can help decrease main- weight, high-strength ring gear that can withstand the high fracture resistance and strength under tenance repair and other related costs. strong forces involved in generating such torque. extremely low temperature conditions. For this reason, steel that contains a higher percentage of nickel has been used for many years. The new Ni-7% steel has slashed the amount of nickel KATAMA™ SP needed by about 20% but ensures performance equivalent to that of conventional steel.

Forestry path 22 NIPPON STEEL&SUMITOMO METAL CORPORATION SustainabilityReport2015 fulfill their lives, many of the non-steel materials are discarded, discarded, are materials non-steel the of many lives, their fulfill of car bodies is desired more and more. and more desired is bodies car of reduction weight requirements, and needs various satisfy to order In heavier. become to tend automobiles components, electrical of performance improved and safety enhanced of pursuit In measure. important an is body car the of reduction weight electrification, automotive and engines of efficiency enhanced for technology powertrain to addition In vehicles. of efficiency fuel improving by burden environment reduce to aim Automakers vehicles of cycle Life unutilized waste. with overloaded be eventually will earth the recycled, be not could vehicles these for materials the If future. the in discarded be will and world the in year each manufactured are vehicles million 90 Around Coal Iron ore living. our support steel of made products industrial Automobiles, appliances, electric buildings, bridges, and various other Each such industrial product has its service life. After they they After life. service its has product industrial such Each

Resource extraction according making Car specifications to environmental LCA-based Steel be reborn many times in whatever can form Natural materials Natural

Materials production resources Material

Parts production Vehicle assembly Fuel resources Blast furnace

Use Driving

Maintenance

Recycling Steelmaking process

Disposal Electric furnace tion by higher fuel efficiency. The amount of CO amount The efficiency. fuel higher by tion als for vehicles need to be evaluated not only in terms of the level of CO of level the of terms in only not evaluated be to need vehicles for als materi However, driving). while emission gas greenhouse of (reduction efficiency fuel of improvement the for bodies car for adopted been have steel than lighter are which rials mate other and (CFRP) plastic reinforced fiber carbon plastic, aluminum, years, recent In “closed loop recycling.” is called recycling of type This products. steel new as reborn and scrap as recycled are materials steel way. contrast, In a limited in recycled or efficiency, economic or quality in problems to due namely from material manufacturing to disposal of the vehicle, needs to be considered. be to needs vehicle, the of disposal to manufacturing material from namely (kg CO (kg CO of amount the of Comparison or ordinary steel and equivalent automotive materials (for car bodies) car (for materials automotive equivalent and steel ordinary or recycled over and over again. recycled be can materials steel all as society arecycling-oriented of creation of weight (median) unit per emission Amount of CO of Amount (estimates) (kg) materials of Weight 1,000 1,500 2,000 2,500 500 0 Steel materials can be said to be precious eco-materials for the the for eco-materials precious be to said be can materials Steel 2 e) 2 Converter

Ordinary Ordinary 100 steel 230 2.3 High-tensile Manufacturing process of industrial products steel 173 2.3 75 2 emission in manufacturing of materials Aluminum 11.3 2 757 emission for the entire life of a vehicle, avehicle, of life entire the for emission 67 Magnesium 2,300 46.0 50 2 emission reduc CFRP 22.0 990 45 - - -

Steel ➝ rial manufacturing. CO of amount the reduce steel to materials lightweight alternative technique, LCA the on Based internationally. adopted been has life, aproduct’s of stages all for impacts environmental assess to atechnique (LCA), Assessment” Cycle “Life Thinking.” Cycle “Life called is This CO lightened, is body vehicle the If Viewpoint based only on vehicle requirements fuel efficiency is scrap. materials steel furnace electric all almost for material main sole the scrap, and resource, is anatural which ore, steel material is recycled material, whereas the converter furnace furnace converter the whereas material, is recycled material steel CO High Low 2 emissions How about CO about How and recycling?and conventional steel sheet Some people tend to mistakenly think that electric furnace furnace electric that think mistakenly to tend people Some While converter furnace steel materials are mainly made of iron iron of made mainly are materials steel furnace converter While Car body made of of made body Car many times over. times many product, anew as reborn be to material raw original as process steelmaking the to back returns scrap Steel life. its ends product steel the if even end not does steel of life The closed loop recycling Infinite CO 2 emissions when vehicle is driven is vehicle when emissions 2 resulting from material manufacturing material manufacturing from resulting Use High tensile strength 2 emission in driving but emit more CO more emit but driving in emission car body 2 emissions can be reduced be can emissions Lightweight and other Lightweight material car body car material Heavy Light Vehicle body body Vehicle 2 during mate weight End-of-life of industrial products - Prepared based on data published by WorldAutoSteel (automotive group of the World Steel Association) Steel World the of group (automotive WorldAutoSteel by published data on based Prepared weight alternative materials are used. tion of steel in use also results in less CO less in results also use in steel of tion materials of recycling and facture manu the including cycle, life entire the consider to necessary is it efficiency), fuel (vehicle stage driving the to addition In strength steel, the lighter car body results in less CO less in results body car lighter the steel, strength high- high-tensile thinner to steel ordinary from changed is material body car the If new product. a as reborn be to and scrap as collected be to resources recyclable are materials, those of both including products, Steel material. steel furnace converter the in is used scrap fact, In is not. material steel of reduction in CO in reduction of Consideration from manufacturing to material recycling CO High Low 2 emissions conventional steel sheet Car body made of of made body Car CO 2 Materials unsuitable for recycling for unsuitable Materials Finite recycling ultimately must be disposed. and sustainable entirely not are but impact reduction load environmental certain with reused Materials are effectively emissions when vehicle is driven is vehicle when emissions 2 (Converting waste materials emission for the entire life cycle can be more than when other light other when than more be can cycle life entire the for emission (energy-from-waste) NIPPON STEEL&SUMITOMO METAL CORPORATION SustainabilityReport2015 into new materials) Thermal recycling Fuel substitution Fuel substitution Downcycling High tensile strength car body 2 emission in manufacturing. Hence the amount amount the Hence manufacturing. in emission CO 2

emissions at time of manufacturing of time at emissions 2 emission in driving and the reduc the and driving in emission Lightweight and other Lightweight material car body car material 1 Includes material recycling effects. End-of-life of Disposal materials - 1 - -

ECO PRODUCTS ECO NSSMC’s environmental management environmental NSSMC’s 2 24 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 25 eco eco eco PROCESS PRODUCTS SOLUTION ECO SOLUTION (Sharing our “eco-solutions”) + 革新的な技術の開発 confirmation that their steelmakers are Climate Action members. methods. This marked the first step ecoPROCESS ecoPRODUCTS ecoSOLUTION Technical cooperation and technology transfer promoted on a worldwide scale Efforts to standardize these calculation methods as ISO have been forward in greatly facilitating the spearheaded by the Japanese steel industry. This had resulted in inter- global sectoral approach sought With the understanding that the transfer of Japan’s advanced energy-saving technologies overseas can be one of the most national standardization of the procedure as ISO14404 “Calculation by the steel industry. NSSMC is effective ways to globally reduce CO2 emissions, Nippon Steel & Sumitomo Metal Corporation (NSSMC) is participating in many method of carbon dioxide emission intensity from iron and steel pro- promoting diffusion of ISO14404 energy-saving and environmental initiatives in Japan and overseas. For example, we work with the World Steel Association, the duction” in March 2013. It has enabled steelworks not participating in through the initiatives taken by Climate Action member certificate Global Superior Energy Performance Partnership (GSEP), and directly with countries such as China and India. the World Steel Association to calculate CO2 intensity using universal Japan and India, Japan and Southeast Asia, and other relations.

Contribute to reduction of CO2 emission on a Multinational and bilateral collaboration As a member of the Japan Iron and Steel Federation, NSSMC is partic- worldwide scale Coke Dry Quenching (CDQ): system and features Japan’s steel industry, including NSSMC, plays a leading role in the ipating in multinational Global Sectoral Approach1, a worldwide initiative to preserve the and bilateral projects Hot coke made in the coke oven is transported in a bucket to the CDQ can be fully recycled by being quenched and circulated back to the environment and conserve energy based on technologies accumu- for energy saving, in equipment where it is injected from its top part down to the cham- chamber. By not using water as a cooling medium, the CDQ method cooperation with the 2

lated in the steelworking industry. Japan’s steel industry can contrib- NSSMC’s environmental management ber. The coke is quenched with inert gas, while the hot gas (approx. raises the strength of the coke and contributes to stable operation of ute to reduction of CO emission on a worldwide scale by transferring Japanese government. 2 950°C) from the exhaust heat is collected, and transferred to the the blast furnace, an increase in tapping quantity, and reduction in its advanced energy-saving technologies to emerging countries boiler where it generates steam for power generation. The hot gas consumption of the reducing agent. where there is the potential to improve energy efficiency. The reduc- The Japan-India Public and Private Collaborative Meeting

tion effects of CO2 emission by transfer of Japanese steelmakers’ Standardization of methods to calculate CO2 energy-saving technologies have amounted to around 50 million tons emission Crane in total. This is equivalent to 4% reduction in Japan’s annual CO2

NSSMC also participates in the Climate Action Program of the World ECO SOLUTION emission. Japan’s steel industry, including NSSMC, is working on vari- Steel Association, which uses universal methods to calculate and Insertion device ous projects to introduce Japan’s advanced technology in this area to report on the CO2 emitted by steelworks. We have been selected as a other countries. Climate Action member. Recently, quite a few customers have sought

Country/region Year of launch Major activities and topics in fiscal 2014 China 2005 Exchange between experts on advanced technologies for energy saving and environmental preservation Pre-chamber Exchange among public and private steel-related parties India 2011 Prepared the List of Energy-Saving Technologies suitable for India NSSMC’s briefing on the method to calculate CO emission in Delhi, in March 2015 2 Power GSEP’s Steel Section Working Group (with Japan as the chair) Cooling U.S., EU, China, India, and generation 2011 Discussion on steelworks energy issues with public and private participants of various countries chamber Boiler South Korea NSSMC’s briefing on ISO14404-based energy management in Paris, in September 2014 First dust catcher Exchange among public and private steel-related parties ASEAN 2013 Prepared the List of Energy-Saving Technologies suitable for ASEAN CDQ Evaluation of NatSteel’s steelworks in Singapore Sub-economizer (Heat exchanger) Coke 1 Global Sectoral Approach is a method to help solve global warming problems by seeking CO reduction potential based on sector-specific technologies and adopting the world’s best energy-saving 2 Bucket technologies. Ejection device Inert gas

Second dust Gas circulation catcher blower Overseas steel industry’s CO2 emission reduction effects by introducing Japan’s energy-saving equipment (fiscal 2013, JISF)

By-product gas VOICE

The steel industry in India is undergoing rapid development, building new steel works and introducing new equipment with Iron ore Sintering plant Top Pressure 10.73 Recovery the aim of 300 million tons of crude production by 2025. At the same time, we are facing serious environmental issues such Sinter 58 Oxygen Converter 7.92 Heat recovery Turbine (TRT) 0.88 Gas collection as air and water pollution. In such an environment, the NSSMC Group is contributing to the industry by introducing the CDQ 21 Power generation 6 facility project and other eco-friendly technology to India. When I visited the Kimitsu Works in Japan, I was impressed with how by- Pig iron Steel product gases and waste heat are used for energy saving. Blast Converter Environmental conservation is indispensable in sustainable development of the steel industry. Serving as an intermedi- furnace 14.92 Coke GTCC ary between Japan and India, I am determined to contribute to energy saving and environmental improvement of the Indian Coke oven Coal Oxygen Converter 0.85 by-product 45 Amit Gupta steel industry. Gas waste heat gas fired 7 Senior Manager CDQ collection 15.33 Nippon Steel & Sumitomo Metal CO2 reduction 87 (million tons per year) India Private Limited Number of Total 50.62 million tons per year units 26 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 27

HRX19™ is therefore the most appropriate material for high- Contributing to a Hydrogen-Based Society Materials needed for a hydrogen-based society infrastructure such as hydrogen stations pressure hydrogen pipes and can be used for pipes in hydrogen stations, dispensers, and fuel cell vehicles. NSSMC is committed to The NSSMC Group provides advanced materials for the realization of a hydrogen-based society Stainless steel for high-pressure hydrogen environments, HRX19™ — a revolutionary product for a providing steel materials to help accelerate the construction of infra- Hydrogen-Based Society structure needed for the realization of a hydrogen-based society. Advanced materials for fuel cell vehicles Toyota Motor Corporation launched the Mirai, its first fuel cell vehicle Diffusion of eco-friendly fuel-cell vehicles requires certain infra- Provide hydrogen stations (FCV) that runs on hydrogen instead of gasoline, and construction of structure, including hydrogen stations, to be established. NSSMC Nippon Steel & Sumikin Pipeline & Engineering Co., Ltd. in the NSSMC the first hydrogen stations for fueling FCVs began. Progress has been and Nippon Steel & Sumikin Stainless Steel Pipe Co., Ltd. (NSSMC’s Group has entered the hydrogen station construction business. made recently toward the realization of a hydrogen society fully-owned subsidiary), have jointly developed a stainless steel for The company has contributed to the establishment of energy A fuel cell is a device that converts the chemical energy from a high-pressure hydrogen environments, HRX19™, that has already infrastructure such as natural gas pipelines and LNG plants for over fuel into electricity through a chemical reaction of positively charged been used for pipes, joints, and valves in the high-pressure hydrogen 50 years. In the field of hydrogen infrastructure as well, it has experi- hydrogen ions with oxygen in the air. A fuel cell vehicle uses a fuel cell environments of hydrogen stations. ence in constructing a hydrogen station at the 2005 World Exposition 2 to power its on-board electric motor. As a fuel cell vehicle emits only NSSMC’s environmental management As hydrogen is a in Aichi, Japan, and in constructing the first hydrogen pipelines in water but no CO while running, it is considered a promising, ultimate 2 Toyota Motor’s Mirai fuel-cell vehicle small molecule, it can be Japan for the Kitakyushu Hydrogen Town project. In addition to these eco-friendly vehicle. Image provided by Toyota Motor Corporation introduced into the metal advanced engineering achievements, the company formed an alli- where it can cause brit- ance with U.S.-based Air Products and Chemicals, Inc.—the world’s Electrolysis of water However, fuel cells are located in highly corrosive environments tleness and a tendency leading company in the supply of hydrogen—in February 2014, and Electricity Hydrogen and require materials with high corrosion resistance. Using an unusu- for fracture to occur. In will contribute to the realization of a hydrogen society through the ally versatile material, that has outstanding lightness, strength, and a high-pressure environ- construction of hydrogen stations with excellent safety and reliability. ECO SOLUTION corrosion resistance, NSSMC has developed a method of manufactur- ment, this issue becomes Oxygen Water ing special rolled titanium foil to cope with the corrosion. Our material Left: Conventional SUS316L stainless steel pipe more problematic. By Evaluation technology used in high-pressure has been adopted for fuel cell parts (the parts that make up the cells Middle and right: HRX19™ stainless steel pipe blending additives to hydrogen gas environments inside the fuel-cell stack) of the Mirai fuel cell vehicle produced by Fuel cell (reverse reaction to the electrolysis of water) stainless steel and developing a certain heat treatment method during Nippon Steel & Sumikin Technology Co., Ltd. in the NSSMC Group Toyota Motor Corporation. manufacturing, HRX19™ overcomes the problem of embrittlement also support the realization of a hydrogen-based society by engaging Hydrogen Electricity Just like an electric vehicle and a hybrid vehicle, a fuel cell vehicle and both made a longer product life possible and improved the safety in the business of evaluating materials used in hydrogen stations and is powered by a motor, a device that converts electrical power to of pipes for hydrogen stations. fuel cells, through tensile tests, fatigue tests, and other tests in high- motive force. NSSMC’s electromagnetic steel sheet is used in the Moreover, HRX19™ is approximately twice as strong as con- Oxygen pressure hydrogen gas environments. Water motor core and contributes to world-class efficiency of this part. Our ventional SUS316L stainless steel, enabling the design of thinner electromagnetic steel sheet has also been adopted for Toyota’s Mirai pipe walls even for high-pressure hydrogen environments, and for Basic structure of a fuel cell vehicle fuel cell vehicle. pipes to be made with greater inside diameters, resulting in larger In addition to components that are used specifically in FCVs, such Fuel cell vehicle (FCV) capacity and shorter hydrogen filling times. Furthermore, it is light- as the above, other NSSMC materials are used in FCVs. They include weight and provides the additional merit of reducing CO2 emission

Motor our high-tensile high-strength steel sheets that help reduce automo- while transported. Battery* bile weight while ensuring collision safety performance. Moreover, welding can be done to HRX19™, whereby a contribution is made to reduction of construction and maintenance costs. FC Hydrogen tank This is in sharp contrast to the case of stack SUS316L which requires coupling pipes FC stack + Hydrogen tank with screws, and requires hundreds of *Auxiliary battery Source: Prepared by the Agency for Natural Resources and Energy joints and a large number of construction processes to build one hydrogen station.

Fuel-cell stack NSSMC’s titanium foil Motor Electromagnetic steel sheets used in Nippon Steel & Sumikin Pipeline & Engineering’s hydrogen station Fatigue test Image provided by Toyota Motor Corporation Image provided by Toyota Motor Corporation motor cores 28 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 29

“Creation of Hometown Forests” “Creation of Sea Forests” Creation of Hometown Forests and Creation of Sea Forests Reproducing a forest similar to a nearby grove of the Implemented in 35 spots in Japan to improve sea village shrine in steelworks desertification In order to realize a sustainable society, companies have to take effective initiatives to live in harmony with nature. Among eco-solutions that We have carried out the “Creation of Hometown Forests” projects at Sea desertification, a problem of the sea bed losing ability to support the Nippon Steel & Sumitomo Metal Corporation (NSSMC) Group provides, “Creation of Hometown Forests” and “Creation of Sea Forests” our steelworks and factories in Japan under the guidance of Dr. Akira life due to a decline in kelp, brown seaweed, and other varieties of are two ongoing activities, which we believe are well representing our policy initiatives in this regard. Let us provide an update on both. Miyawaki, director of the Japanese Center for International Studies in seaweed, is happening along about 5,000 km of the sea shore in Ecology (professor emeritus of Yokohama National University), with the various parts of Japan. To offset a part of the decline in the supply of Some animal inhabitants of the Hometown Forests aim of facilitating harmonious coexistence between nature and humans. iron from nature, which is said to be one of the causes for sea deserti- This project comprises research on the natural vegetation inherent to a fication, NSSMC has developed “Beverly® Series,” iron supply units Muroran Ezo deer, Ezo red fox, Ezo squirrel, Eagle, buzzard, magpie Kamaishi Moon bear, Japanese serow, deer, hare, black-tailed gull certain area in a nearby grove associated with a historical shrine, careful composed of steel slugs, humus, and soil and steel slag and has been Naoetsu Japanese dace, carp Hokkaido (Mashike) selection of suitable trees, growth of their saplings in pots, and planting promoting regeneration of seaweed beds by use of these units. Kashima Pheasant, shrike, duck Buzzard them in designated places by local residents and our employees. Tokyo Raccoon, spot-billed duck Hokkaido (Yoichi) This was the first project by a private com- Kimitsu Bulbul, pheasant, little tern, swallow, egret 2 Nagoya Raccoon, Pheasant, bulbul, shrike, swallow, great tit pany in Japan to create a forest that harmonizes NSSMC’s environmental management Osaka Weasel, starling Hokkaido (Suttu, Shakotan) with the local scene and is based on an ecologi- Muroran Works cal approach. This is one way we try to raise Installing iron supply units Hokkaido (Muroran) Bulbul Great tit the awareness of our employees regarding the Hokkaido (Hakodate) Aomori (Ooma, Kazamaura) environment. At present, our forests in aggre- Deserted sea bed Dr. Miyawaki (right) teaches gate have grown to total around 900 hectares tree-planting to new employees.

(about the size of 190 Yankee Stadiums). ECO SOLUTION

White-tailed skimmer Kamaishi Works Conserving biodiversity and sequestering CO2 Japanese dace Wild birds such as bulbuls and eagles gather and animals such as Ezo 51 species of birds Black-tailed gull red fox and deer visit the forests we make and maintain at our steel By mixing with humus, the iron eluted from steel slugs is prone works sites across Japan. Wild birds and animals inherent to the land to be absorbed by plants without becoming oxidized. return to the forests. Thus, the “Creation of Hometown Forests” helps After one year, kelp is flourishing at Mashike Gray heron Pheasant Town in Hokkaido conserve biodiversity, and sequester CO2. Naoetsu Works Kyoto (Miyazu, Maizuru)

Iron protects and nurtures living creatures Kimitsu Works Kashima Works (Tokyo Area) Fukuoka (Kitakyushu, Nagoya Kimitsu Works Little tern Fukutsu, Amagasaki Works Iron is believed to energy needed to stay alive. Thus breathing is indispensable for living. Hirohata Works Fukuoka) Works Osaka Steel Works Chiba account for one-third Iron plays two central roles for this purpose. (Hota, Tateyama) Wakayama Works (Sakai Area) of the earth’s weight. The first role is transportation of oxygen through our body. A Yawata Works Wakayama Works Tokyo (Miyakejima) (Tobata Area, Kokura Hyogo (Himeji) It is iron that forms the large portion of iron in the human body is in hemoglobin in the blood. Area, Yawata Area) Oita Works Mie (Shima) earth’s core and creates Hemoglobin, which mainly contains iron, carries oxygen from the lungs to (Hikari Area) Oita Works Wakayama Raccoon a gigantic magnetic the rest of the body. (Tanabe, Kushimoto, Yura) field. This magnetic field The second role is to efficiently transport electrons for produc- is a protective barrier ing energy. We humans are powered by energy, which is created by Geomagnetic field Kochi Duck Oita (Himeshima, The geomagnetic field made of iron deflects harmful against the solar wind receiving electrons via iron ions and gradually carry out oxidation- (Susaki, Muroto) Nagasaki Saiki, Kunisaki) cosmic radiation and has thereby ensured that the and pushes away a con- reduction reactions. Bulbul (Seihi, Segawa, Matsuura, surface of the earth is a safe environment for living Iki, Isahaya, Sasebo) creatures. tinuous flow of charged That is why we could say that iron protects and nurtures living crea- Miyazaki (Nobeoka) Source: ESA & NASA particles in the solar tures on the face of the earth. Wakayama Raccoon, marten, bulbul, tiger keelbuck wind, particles which are Sakai Duck harmful to life forms. One thesis goes that our planet full of diverse cre- Amagasaki Squirrel, lizard, killifish, white-tailed skimmer ations exist thanks to the gigantic magnetic field created by iron. Kagoshima Hirohata Buzzard, shrike, Oriental turtle dove, bulbul, starling, Bunting (Tanegashima, Kirishima) Iron plays a central and indispensable role in many indispensable Iron in the body Hikari 51 species of birds An adult male of 60 kg weight has 4 g of iron in the Whooper swan Kokura Gull, Japanese wagtail, Graphium sarpedon functions for living matter, such as breathing, photosynthesis, synthetic body, about two-thirds of which is contained in hemo- Creation of Hometown Forests Yawata Weasel, silky fowl, gray heron, Japanese cormorant DNA, and nitrogen fixation. For example, we breathe oxygen to stay globin within the red blood cells. The remaining one- third is mainly stored in the liver and the spleen for use Creation of Sea Forests Oita Whooper swan, kingfisher, killifish, mayfly, firefly alive. The chemical reactions of the nutrients and oxygen produce the in case of a shortage. 30 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 31

Innovative technical development R&D group of approximately Total number of patents held 800 researchers Approximately 25,000 patents issued in around 70 countries

Next-generation coke-making technology blocking oxygen down), and heat collection. During the coal preheat- Research & development for global warming prevention (“SCOPE 21”) ment process, the rapid preheating enables to improve coke quality, shorten coke-making time, achieve high energy-saving effects, and With the aim of preventing global warming, Nippon Steel & Sumitomo Metal Corporation (NSSMC) is taking on a challenge in Coke, which is carbonized coal, is indispensable in production of steel materials. As raw materials for coke, high-quality caking coal has long ultimately contribute to CO2 reduction. NOx (nitrogen oxides) in the the form of the “CO2 Ultimate Reduction in Steelmaking Process by Innovative Technology Project,” in addition to making efforts been used. However, for this type of caking coal used in steelmaking exhaust gas in the coke oven can also be reduced by 30%, further to reduce CO2 by further improving its world’s highest energy efficiency. there are very low reserves and they are in limited areas of the world, improving environmental conditions. compared to general coal used as fuel. Thus, we are facing a credible We began operation of the first commercial model that fully embodies the innovative environmental technology “SCOPE 21” at The COURSE 50 Project (Technological while low-temperature exhaust heat recovery verification tests were threat of a surge in price of the coal. our Oita Works in May 2008. Based on this experience, the second Development and Innovative Steelmaking Process) conducted at Kashima Works, among others. These tests played a “SCOPE 21” is the next-generation coke-making technology commercial model began Since FY2008, four blast furnace steelmakers including us, and substantial part in obtaining desired research results of Phase 1. developed as a national project to better address resource problems operation at our Nagoya Nippon Steel & Sumikin Engineering, have been working on the “CO In Phase 2 (FY2013 to FY2017), which began in FY2013 as a and open up great potential. For the first time in the world, this tech- 2 Works in June 2013. Both Ultimate Reduction in Steelmaking Process by Innovative Technology project sponsored by NEDO (New Energy and Industrial Technology nology has enabled the raising of the blending ratio of poor-coking models have been operating for Cool Earth 50 (COURSE 50) Project” which is aimed at develop- Development Organization) in preparation for commercialization in 2030, coal up from 20% as in the conventional method to 50%. This is a 2 smoothly up to the present. NSSMC’s environmental management we are verifying technologies to reduce CO2 emissions from a blast fur- promising innovative technology that can contribute to the stable sup- ing dramatically new CO2 reduction technology. Its goal is to develop nace in a comprehensive manner. We are leading R&D efforts mainly in ply of energy in the future. technology to reduce CO2 emissions in the steelmaking process by 30% through technology that reduces iron ore using hydrogen ampli- the research on a test blast furnace which aims for establishing reaction There are three basic processes in the SCOPE21 technology: SCOPE 21 (Oita No.5 coke oven) control technologies that maximize effects of hydrogen reduction, as coal pretreatment, carbonization (destructive distillation of coal by fied coke oven gas to curb CO2 emissions from blast furnaces as well as technology that uses hitherto-unused exhaust heat to separate and well as in the additional verification tests that target advanced hydrogen amplification of the coke oven gas and in research on highly-efficient recover CO2 from blast furnace gas. Next generation coke-making technology

“SCOPE21”: Structure and Features Innovative TechnicalDevelopment Regarding iron ore hydrogen reduction technology, by FY2012, heat exchangers. (The test blast furnace is being constructed by incorpo- 1 2 3 we comprehended hydrogen reduction characteristics at a laboratory rating individual element technol- Pretreatment process Carbonization process Coke discharging and heat bench level, participated property eluicidation and performance quali- ogies that were acquired during collecting processes fication tests of the hydrogen reduction process at a test blast furnace the Phase 1 and is scheduled to Coal pretreatment equipment Coking chamber Coke dry quenching (CDQ) equipment start operation for the main test in Sweden, and conducted verification tests of hydrogen amplification Main technology Main technology Main technology in FY2016 at the Kimitsu Works. of coke oven gas at Kimitsu Works. With regard to CO2 separation Coal Rapid preheating Steaming Dry quenching Coke The additional verification test is Good-coking (high- and recovery technologies, verification tests of CO2 separation and grade) coal Energy-preservation recovery from blast furnace gas were conducted at Kimitsu Works, conducted in the Muroran Works) CAT30 (CO2 absorption and separation tower) effects Improve caking property of Convey coal to red-hot coke Improve quality of coke 100,000 KL/year Poor-coking (low- low-grade coal oven in a short time grade) coal See p. 25

Technological Development and Innovative Steelmaking Process “COURSE 50”: Structure and Features Higher productivity 12 CDQ heat collecting 40 Gas treatment Blending ratio of poor-coking coal Reduction of NOx emissions by adopt- Reduction of CO2 emissions by Improved coke quality 32 Reduction in heat quantity ing low-NOx combustion structure collecting heat Breakdown Coke oven Coke oven gas 20% 50% by carbonizing 16 30% 135,000 tons per year (Thousand KL/year) New technology Coke Waste heat (sensible heat) Hydrogen Reduced iron amplification VOICE Blast furnace gas

The Environment Research Lab. in the Advanced Technology Research Laboratories is the only research division at NSSMC H 2 with the name “environmental.” It promotes research on fundamental technologies that support various endeavors to

Hydrogen reduce the impact of steel works on the environment and also promotes the development of new products in the environ- New New Oxygen technology technology H2 mental and energy fields for engineering businesses and chemical businesses. The former supports steelmaking processes CO2 separation and recovery that are the most environmentally friendly in the world through fundamental research on highly efficient waste water Chemical absorption method, etc. Iron ore hydrogen reduction treatment technology, technology to measure air pollution substances, and technology to reduce the amount of these sub- Absorbing liquid + CO2 Absorbing liquid/CO2 (separated) Shaft furnace, etc. Iron oxide + Hydrogen Iron + Water stances emitted, technology to make use of slag, a by-product of the steelmaking process, in fertilizer and other products, Heating (using recovered waste heat) CO and technology to convert steel by-product gases to hydrogen and convert carbon dioxide to useful chemical products. Pig iron Blast 2 Other project furnace Hitoshi Dohnomae The latter entails the development of products that will be key to the realization of an energy-saving society with reduced General Manager, environmental impacts, such as catalyst materials that convert fuel gas to liquid fuel, electrode materials for fuel cells and Environment Research Lab. lithium-ion batteries, and materials that selectively adsorb oxygen. Chemistry-related researchers that specialize in fields Reduced iron Advanced Technology Research Laboratories, Technical Research such as biochemistry, organic chemistry, inorganic chemistry, catalytic chemistry, and electrochemistry are pursuing leading- & Development Bureau edge research and development based on theories and principles. Converter CO2 storage 32 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 33 Environmental Governance

Environmental accounting For saving of energy, measures were taken to improve the effi- Promotion of environmental management Philosophy of environmental accounting ciency of heating furnaces as well as overall energy-saving measures NSSMC has adopted environmental accounting to be used as guidelines in each manufacturing process. Nippon Steel & Sumitomo Metal Corporation (NSSMC) has built an environmental management system that includes not only for corporate activities, and to accurately track the environmental costs Among the environmental preservation costs, atmospheric its own steelworks and factories, but also its group companies in Japan and abroad. Activities to reduce environmental risks are and effects. The iron and steel industry is an equipment-intensive industry. prevention costs including measures to prevent dust generated at promoted by combining internal and external audits and following the plan-do-check-act (PDCA) cycle. We have achieved environmental preservation and energy conservation steelworks accounted for the largest share. We also promote in-house by installing environmental-friendly equipment such as dust collectors and recycling to reduce expenses on waste disposal.

Environmental management system improving the efficiency of production equipment. Costs of environmental preservation are quantified by adding the costs of capital investment Effects of environmental preservation Board of Directors (Reporting) associated with environmental measures, energy-saving measures, and It is difficult to quantify environmental preservation effects in monetary Management Committee Group Companies recycling measures to expenses incurred to preserve the environment. terms, since such calculation would require many assumptions. Therefore, (Deliberation on important issues) Environmental conference participated in by affiliates environmental preservation performance is reported as effects vs. costs (twice per year) From the group companies Environmental preservation costs of taking environmental measures in this report and on our website. Head Office (as of April 2015) Steelworks + Head Office Environmental in Japan, NSSMC has Affairs Division Collaboration For example, reduction in energy consumption is shown under “pro- identified companies (65 Capital expenditures for environmental preservation amounted 17.3 Steelworks liaison meeting companies) with certain Environmental Management Committee (4 times per year) billion yen in total for FY2014: 12.8 billion yen for investment in motion of measures against global warming.” Water consumption volume (twice per year) environmental burdens and Chairperson: Environmental Executive Vice President Environmental Environmental RE (Research and holds meetings for those equipment for environmental measures and 4.5 billion yen for invest- and reductions in water consumption and various resources spent are Committee members: Executive vice presidents, general group leader Engineering Center) companies twice a year. managing directors, directors, general managers manager meeting meeting In the meetings, the latest ment in energy-saving equipment. The aggregate amount accounted shown under “water quality risk management” and “energy and mate- (twice per year) (twice per year) trends of environmental laws rial balance,” respectively. For atmospheric substances, SOx and NOx Resource Recycling Subcommittee and regulations are studied, for approximately 6% of the total cost of equipment investment. Steady implementation of voluntary action plans cases of environmental Chairperson: Managing Director As a part of the enhancement of On the expenses side, environmental expenses were 89.9 billion yen emissions are shown; for water quality and soil, individual performance Steelworks initiatives are reported, and (Technical Administration & Planning) governance, NSSMC ensures to reduce risks Subcommittee members: Managing directors, related to fall dust, wastewater, and waste other information is shared in total and included 46.2 billion yen for atmospheric prevention costs and indicators are used; for hazardous chemical substances, actual reduction with the goal of reducing directors, general managers by establishing a conference attended by volume of substances such as dioxins, benzene, and VOCs are stated; and experts for each of these areas. environmental risks. 11.8 billion yen for water contamination prevention costs. In addition, 9.2

NSSMC effectively follows the management technologies) IT of (Utilization Technical Administration billion yen was spent as environmental research and development costs. for waste products, reduction in final disposal volume is stated. cycle of PDCA, primarily through the work of & Planning Division Environmental Information Foundation Information Environmental EU/ Korea/ NSSMC will continue efforts to improve accuracy in environmen- the Environmental Management Committee, As environmental measures, we invested in preventive measures Arcelor Mittal POSCO which meets twice a year, to promote for dust emissions, visual smoke emitted from steelworks chimneys, tal accounting and use it as a management benchmark to effectively 3

improvement. Management Sales Divisions Japan Iron abnormal water discharge from drain outlets, and leakage of water invest in equipment and attempt to further preserve the environment Worldsteel and Steel Federation from the revetments and quay walls at steelworks. and conserve energy.

Annual environmental management cycle Environmental preservation costs (billion yen)

FY2014 Environmental Governance Item Definition In accordance with the international standard ISO 14001, NSSMC has built an Capital investment Expense environmental management system, with each steelwork or facility general Dust collection equipment running costs, maintenance costs, exhaust gas desulfurization and denitration Countermeasures against air pollution 11.6 46.2 Once a year: ISO14001 audit treatment, raw materials yard dust preventive measures costs, etc. Total Once a year: In-house environmental audit manager serving as the responsible person. Each year, in addition to an Pollution Prevention Costs Feb. through Mar.: Operational audit internal auditing of each steelworks or facility and a management review by Countermeasures against water Electricity charges incurred for treatment of waste water discharged from steelworks, chemical costs, main- 12.8 Feb. and Aug.: Environmental Management pollution tenance costs, working expenses (excluding expenses required for treatment of circulated water) 1.2 11.8 Committee its general manager, each steelworks or facility and factory is audited by the Mar. and Sep.: Group Companies Environmental Head Office Environment Department. Global Warming Prevention Costs Energy saving measures Running costs and maintenance costs of energy-saving facilities 4.5 3.3 Executed in each steelmaking division Conference (steelworking facilities) and other business Jul.: Publication of the Sustainability Environment officers of other steelworks and facilities also participate in Treatment of by-products and indus- Expenses incurred in landfill work, incineration, and treatment of by-products and industrial waste commis- − 9.2 segments Report these audits to cross-check. In addition, periodical reviews are conducted by trial waste sioned to third parties Costs of Recycling Resources the ISO certification agency. Treatment of general waste from Expenses incurred in the treatment of general waste from business activities DO business activities − 0.7 (Implementation) CHECK For the group companies including those overseas, a direct interview (Audit) is conducted by a member of the Head Office Environment Department Construction of EMS and acquisition Expenses required for the construction and maintenance of EMS − 0.03 to improve management levels. This is part of the corporate governance of ISO14001 certification Environmental Management Monitoring and measurement of conducted by the Head Office Internal Control/Audit Department. Expenses required for monitoring air, water, etc., at steelworks − 1.0 Activities Cost environmental loads Personnel expenditures related to Personnel expenditures for employees in charge of environmental matters environmental measures − 2.6 Development of eco products R&D costs (including personnel costs) for environment-friendly steel products − 4.4 PLAN ACTION NSSMC regards environmental management as an important basis for our (Improvement Research and Development Total (Planning) Development of products which have business and continuously provides environmental education to each rank of Development costs (including personnel costs) required for measures for by-products and energy conserva- activities) Costs low environmental impact during − 4.8 9.2 Feb. and Aug.: Environmental new employees, mid-career engineers, and managers on the subject of basic tion technology during manufacture Management Committee Once a week: Management meeting manufacture Feb. and Aug.: Environmental Management Mar.: Drawing up plans environmental policies, medium-term environmental management plans, Greening, supporting environmental Expenses required for creating green areas at steelworks, environmental publicity, and participation in Committee Social Activity Costs Mar. and Sep.: Group Companies environmental compliance, etc. In addition, seminars on the environment are organizations, and advertising exhibition − 2.2 Environmental Conference led by the general manager of the Head Office Environment Department at Payments to health damage prevention businesses specified by the Law Concerning Pollution-Related Other Environmental Costs SOx levy − 3.7 all steelworks and facilities. We encourage our employees to acquire national Health Damage Compensation and Other Measures qualifications, such as those of pollution prevention managers and energy Total 17.3 89.9 managers, as well as to take ISO 14001 internal auditor training. Reference: Net income (consolidated basis) 214.2 34 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 35 Corporate Governance

Targets and achievements in FY2014 Corporate governance structure

After achieving goals of its voluntary action plan (FY2008 to FY2012) on measures against global warming, Nippon Steel & Sumitomo Metal In line with its Corporate Philosophy, Nippon Steel & Sumitomo Metal Corporation (NSSMC) aims to building a dynamic NSSMC Group. To Corporation (NSSMC) are committed to continue working on energy saving to achieve the goals in the context of action plans for a low-carbon society. that end, we have adopted a “Company with Audit and Supervisory Board” corporate governance system and have introduced an executive With the aim of creating a recycling-oriented society, we made efforts to reduce the volume of final disposal through increased recycling office system to ensure the proper execution of business activities and clarify responsibilities for the results of each business unit/division. of by-products. With regard to environmental risk management, the management cycle is efficiently implemented with the Environmental The Board of Directors adequately and swiftly makes decision regarding the Company’s important business activities and oversees the Management Committee at the core of its efforts, raising the level of environment management of the entire group. Eco products and eco solu- execution of duties by Directors, while the Audit & Supervisory Board Members oversees the execution of duties by Directors from the position of tions were successfully developed and offered to the market in an active manner. maintaining integrity, objectivity, and independence. By doing this, we seek to ensure management’s efficiency, soundness, and transparency, and [Evaluation legend] : Overachieved, : Largely achieved, : Not achieved enhance our corporate governance with the ultimate aim of achieving sustainable improvement in corporate value and being trusted by society. Medium-Term Environmental Management Plan Pages or Achievements in FY2014 (by NSSMC and some group companies) Evaluation (from FY2013 to FY2014) website - - Enhance and promote an environmental management •Thoroughly implemented the NSSMC Group Guidelines on atmospheric air, water, and waste materials 16, 32 Corporate governance structure and internal control system system •Regularly held meetings of groupwide issue-based working groups Conduct environmental management in coordination •Regularly held the environmental conference of group companies to enhance their ability to with group companies respond to environmental risks 32 General Meeting of Shareholders •Sequentially conducted hearings on environmental issues to group companies in Japan and overseas tal management tal Enhancement and pro and Enhancement motion of environmen of motion Renew ISO 14001 certification •Muroran, Kamaishi, Osaka Steel, Wakayama (Sakai Area), and Oita Works had respective certifications renewed 32, WEB 1) Eco process: enhance efficiency of natural resources and energy •¥4.5 billion invested in energy saving 33 Board of Directors (12 Directors and 2 Outside Directors) Audit & Supervisory Board (3 Statutory and 4 Outside Audit & Supervisory Board Members) 2) Eco products: Develop products that help preserve •Became ready to manufacture and ship the world longest 150-meter railway rails 7, 21, natural resources and energy Executive decisions are determined by the Board of Directors after matters have Outside Audit & Supervisory Board Members, who have vast experience and deep •The 7% Ni Steel for LNG tanks was adopted to build the LNG tank for shale gas imported from Canada WEB been discussed by the Corporate Policy Committee, a group that includes participa- insight in fields such as accounting, corporate management, as well as legal, public 3) Eco solution: Internationally contribute through over- •Participated in a national research project for transfer of energy conservation technology to India and 24 tion by the Chairman, the President, Executive Vice Presidents, and other members. administration, and fiscal affairs provide their opinions at meetings including those seas transfer of CO2 reduction technologies ASEAN countries and contributed to the development of a master plan for feasible technology transfer Outside Directors, who have vast experience and deep insight in fields such of the Board of Directors and the Audit and Supervisory Board. They also perform 3 Promotion of global global of Promotion 4) Advance development of innovative technologies for •Began constructing the 10 m experimental blast furnace as planned for the development period up to FY2017 as corporate management, international affairs, and the economy, contribute auditing activities including research on corporate operations and the status of 30 warming countermeasures warming CO2 reduction on a longer-term basis to decision making from their diverse perspectives on NSSMC and thereby assets, contributing to NSSMC’s sound and fair management. Reduce the final disposal volume of by-products by •Recycled 99% of the 26.05 million tons of the by-products generated enhance the overseeing function of management, by providing their opinions Outside Directors and Outside Audit & Supervisory Board Members have been 330,000 tons by 2015 •The final disposal volume was 230,000 tons/y in FY2014, maintaining a decreasing trend, and 10, 14 and exercising voting power from their independent status at the Board of filed as “independent directors/auditors” with each financial exchange in Japan and exceeded the target value ahead of schedule. Directors and other meetings. have been accepted as such. Promote the effective use of waste plastics and discarded tires •About 210,000 tons of waste plastics were recycled (corresponding to about 30% of the nationwide recycling level) Participation in oriented society 14, 15 creating a recycling-creating a from the viewpoints of recycling and CO2 emission reduction •About 80,000 tons of discarded tires were recycled (corresponding to about 10% of the nationwide recycling level) Reduce environmental risks of the air, water, soil, etc. •¥12.8 billion capital expenditures as environmental measures 33 3 Maintain and enhance preservation of the local •Smoke was generated by the overall power failures and fire accident at Nagoya Works Corporate Policy Committee Representative Director and Chairman Representative Director and President Management 5, WEB environment Benzene: Voluntary reduction based on national volun- •Achieved the self-management target for emissions (102 tons/y). The amount of benzene emission tary management plan (168 tons/y) picked up due to the effects of the Great Earthquake of March 2011 but has returned to a WEB Directors, Executive Officers, Responsible divisions Companywide Committees downtrend since 2013 due to progress in implementing measures. and General Managers in Charge 19 Companywide Committees, each with its own objective, are estab- Dioxins: Voluntary reduction based on Japan Iron and •Achieved the voluntary target (5.3 g-TEQ/y) set by the Japan Iron and Steel Federation WEB lished as deliberative body to hash out designated themes before the Steel Federation guidelines (16.1 g-TEQ/y) Corporate Policy Committee and the Board of Directors embark on Promote control of specified chemical substances in •The amounts discharged were 497 tons/y to the atmosphere and 40 tons/y to public waters; the Compliance education accidents WEB decision-oriented discussions. Risk Management Committee accordance with the PRTR Act amount transferred outside the worksites was 6,615 tons/y “We continue to emphasize the importance of VOC: Voluntary reduction (1,098 tons/y) •Continuously achieved the voluntary emission target (728 tons/y) 16 integrity and reliability in our actions.” This is

Environment management jointly with group •Sequentially conducted hearings on environmental issues to group companies in Japan and overseas the first principle we stated in the Management Environmental Governance 32, WEB Internal Control & Audit Division companies Principles. Through messages from top man-

Understand the trend of law revision and appropriately •Dealt with the revision of the Basic Plan for Proper Treatment of PCB Waste and the Act for agement, periodic legal training programs, Company) (Auditing Initiatives for prevention of environmental environmental of prevention for Initiatives deal with it Rationalized Use and Proper Management of Flurocarbons 16 and other activities, we make certain that all ® employees fully understand NSSMC’s basic Whistleblower system Environmental Engineering and construction business •Completed construction of the 1st commercial ESCAP , energy-saving CO2-absorbing equipment policy of ensuring fair management. ™ WEB contribution •The STAN-package for standardized buildings was adopted for Lawson Farm Akita’s plant farm We have prepared original written materials Structure of internal consulting and internal report systems through busi- ® for our employees to conduct fair and appropri- ness in each Chemical business •Began sample supply of the polarized carbon materials ESCARBON , which raises power generation efficiency of fuel-cell vehicles WEB ate business. We also conduct educational Consulters and Informers1 (whistleblowers) sector programs and e-Learning programs for each Accounting AuditorsAccounting System solutions business •Contributed to energy saving by expansion of cloud business with the latest data center as its core Corporate Governance WEB rank of employees to cultivate their strong New materials business •Introduced the repair and reinforcement construction method using the carbon fiber sheet in Investigation Requests for WEB awareness on compliance. Report Japan and overseas and responses advice or report Contribute to national resilience and infrastructure develop- •Promote use of the non-frame method in Japan and overseas Internal controls and risk ment with consideration to the natural environment and the WEB management system (e-mail, posting, (e-mail, posting)

solution business solution scenery The status of internal controls and the risk telephone, facsimile) Accelerate contribution to the environment and energy sav- •Continuously received orders for 6 CDQ units in China (87 units on an accumulated basis for orders from overseas) management system are regularly confirmed ing overseas by using the Group’s advanced technologies •Supplied long-life rails with superior resistance to wear and abrasion to a freight-only railway 25, WEB through the Risk Management Committee, company in India, making it the first order of its kind in the country chaired by the Executive Vice President in Compliance Compliance ™ charge of Internal Control & Audit. Development of environmental and energy energy and environmental of Development Contribute to recycling of resources by expanding use •Developed new pavement material KATAMA SP Consulting Room Hotline 8, 14, 20 of steel slag and other steel by-products Each division and Group company is (Internal consulting desk) (Law offices) Appropriately and timely disclose environmental informa- •Further improved the Environment & CSR section of NSSMC’s corporate website encouraged to take initiatives and share infor- WEB tion and actively communicate to be trusted in society mation about risk management among NSSMC 1 Employees of group companies, temporary workers, employees of contractors, Steadily enhance environmental relation activities •Participated in Eco Products 2014 with the theme of “the NSSMC Group contributes to energy- and its Group companies through regular suppliers, and their families through exchanges and dialogues with stakeholders creation and energy-saving with its three ecos” 37 meetings and other means. Create hometown forests by planting trees and sea forests by •NSSMC’s “Creation of Hometown Forests” received the Good Life Award Judging Committee’s Special Award 28, 29, restoring seaweed beds as for contributing to local communities •In the “Creation of Sea Forests,” spread efforts to restore seaweed beds across the country (35 locations) 37 Employees Enhance training of environmental staff and thorough •Conducted environmental education tailored to the local community’s conditions at respective

relation activities relation awareness of environmental compliance for each career steel works and other plants level, from workers in steelworks to managers •Conducted environmental recurrent training to respective environmental staff WEB Promotion of environmental environmental of Promotion •Prepared a booklet of easy-to-understand case examples on what should not be done Group companies Employees 36 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 37 Social Report

At NSSMC, we aim to become a company trusted by all stakeholders responsibilities as a member of society. We are also actively promot- Nippon Steel & Sumitomo Metal Group and its stakeholders including our customers, suppliers, and local communities at all times, ing environmental activities with various organizations in local and and endeavor both to offer our shareholders and investors sufficient international communities. The NSSMC Group treasures its partnership with all its stakeholders and aims to improve its corporate value by enhancing its opportunities for communication and to ensure timely disclosure of In particular, we find it important to make young people and relationships with them through better exchanges and communication. information. We also strive to create workplaces in which employees their teachers, who are fostering future generations, understand and can work with pride and enthusiasm. appreciate the importance of “monodzukuri (product manufacturing)” NSSMC will continue to make social contribution activities that and our various initiatives on environmental issues. Collaboration with an NPO, “Mori wa Umi no Koibito” are closely tied to local communities, and fulfill our corporate social

Since1989, Mr. Shigeatsu Hatakeyama, a fisherman cultivating oysters and scallops in Kesennuma City, Miyagi Prefecture, and the Diverse communication activities leader of the NPO, “Mori wa Umi no Koibito” (which literally means Participation in Eco-Products 2014 “The forest is longing for the sea, the sea is longing for the forest”), along with his fellow fishermen, commenced Mori“ wa Umi no In December 2014, NSSMC exhibited products and technolo- Koibito” campaign to plant trees in the vicinity of the upper reaches gies at Eco-Products 2014, the largest ecological exhibition in of the Okawa River, which flows into Kesennuma Bay. In June 2015, Contribute to materializing a sustainable Japan, which was held at Tokyo Big Sight (Tokyo International approximately 1,500 students and others, including employees of Exhibition Center). Our presentations showed how we our Group, joined their tree-planting festival. society through corporate activities addressed environmental and energy issues through our focus on three ecos, and attracted the attention of many visitors.

Internship programs We work jointly with various Environmental conservation in local communities organizations and NGOs in 227 students (FY2014) Japan and abroad on environ- External We endeavor to closely communicate Environmental conservation mental activities. organizations with our customers and our suppliers We have been offering internship opportunities at steel- and NGOs of raw materials and equipment, and agreements works and research centers to students to help them ensure that environmental and social Suppliers Each of our steelworks in Japan has concluded an environ- learn about our business and gain some work experience. concerns are addressed at all levels of our supply chain from procure- mental conservation agreement (anti-pollution agreement) 3 and an agreement for the greening of plant sites with their Management We participate in person-to person ment and production to sales. local municipality. We work hard to fully comply with these exchanges and collaborate with Students agreements, in order to ensure environmental conservation Community-based educational support young people and their teachers with and in the local communities. regard to our “product manufactur- teachers Providing education on the ing” and environmental initiatives. environment and manufacturing • Automobiles Awards from external organizations NSSMC hosts a number of programs in its steelworks • Energy and natural Social Report nationwide and nearby elementary and junior high resources NSSMC’s technological advances and schools, such as “tatara ironmaking1” demonstra- • Electric, shipbuild- NSSMC Group response to needs of our customers have tions, workshops, and lectures ing, and aircraft Steel been highly evaluated and we have received in classroom. Contribute to build a sustainable Customers • Construction and society with its three ecos and Products civil engineering various awards from many organizations. 1 Tatara ironmaking is a traditional innovative technological development • Industrial machin- Japanese method of making iron NSSMC’s “Creation of Hometown that uses iron sand as the source ery and railway Forests” received the Good Life Award material. A bellows is used to help • Can manufacturing, Judging Committee’s Special Award in burn charcoal to make iron. etc. March 2015. In our Investor Relations (IR) activities we strive for timely disclosure of information, to improve our IR Mecenat briefings, dialogues, and other Shareholders opportunities to interact with our and Kioi Hall shareholders and investors. investors We pursue various personnel poli- Number of shareholders cies, based on fair treatment of per- The Nippon Steel & Sumitomo sonnel, to ensure that our employees Metal Arts Foundation operates the Employees work consistently with pride, motiva- Kioi Hall (in Chiyoda-ku, Tokyo), 520,000 tion and vitality. where it holds classical concerts shareholders Local We are implementing various by Kioi Sinfonietta Tokyo. The We carry out environmental protection communities health and safety measures so that foundation also helps popularize We invite shareholders to take tours of our steel- activities which match the needs and char- employees of our company, group traditional Japanese music by using works in various locations and attend IR briefings acteristics of local communities, and engage companies, and business partners the Kioi Hall’s small hall exclusive in major cities in Japan, so that they can better in environmental activities with various can do their jobs in safe and secure for Japanese music performance, a understand our business. stakeholders in our local communities. workplaces. rare type of hall even in Japan. 38 NIPPON STEEL & SUMITOMO METAL CORPORATION Sustainability Report 2015 Third-party opinion Overview of the communication tools

Sustainability Report 2015

Easy-to-understand brochure on Brochure on the compact Brochure on the overall businesses environmental initiatives overview of the company and management for investors

Each double-page spread has a link to the website for further details. Brochures

Yuko Sakita Sustainability Report 2015 Company Brochure Annual Report 2015 1, 2 (Book form and PDF file)1 (Book form and PDF file)1, 2 Journalist and environmental counsellor (Book form and PDF file)

Overall report ment and drive the attainment of worldwide targets, such as Japan’s Details on environmental initiatives Details on the following Details on business and subjects management I have read the Sustainability Report of Nippon Steel & Sumitomo pledged draft target of a 26% reduction in CO2 emissions in 2030 Metal Corporation (NSSMC) published three years after the merger. compared to fiscal 2013. Furthermore, Japan aims to ratify the Mina- • Products • Research & Owing to the advance of global industrialization, the need for the mata Convention on Mercury and the steel industry is not subject to the Development • About NSSMC development of community infrastructure is high in each country and convention, but I expect that it will continue to conduct monitoring. Website • Recruiting steel demand is growing. This is an industry that consumes a large As regards eco products, products that use high-performance steel information amount of energy, and as a business operator with a large environmental materials play a useful role in mitigating environmental impacts. For http://www.nssmc.com/en/csr/ http://www.nssmc.com/en/ir/ http://www.nssmc.com/en/ impact that includes CO2, NSSMC aims to contribute to the reduction of example, the Osaka Steel Works, which I visited, produces 100% of wheels

CO2 emissions worldwide through world-leading energy efficiency tech- and axels for domestic railways, and contributes to the increased efficiency nologies and high-quality steel materials. I highly commend the accuracy of rail transportation in Japan through weight reduction and other factors. Various reports Various reports for shareholders1 2 of NSSMC’s point of view as “the world-leading steelmaker with compre- Moreover, in Japan the roles of blast furnaces that use iron ore, • PR brochures “Quarterly Magazine: NSSMC” • Fact Book • Picture book “A New Story About Iron”2 • Financial Results hensive strengths,” as outlined in the Message from Top Management. which is a natural resource, and scrap as the main materials, and electric • Technical articles and technical reports1 • Securities Reports • Corporate Governance Reports This report communicates corporate activities related to the envi- furnaces that use only scrap as the main material have been divided, and Picture book • Reports for Shareholders ronment and society to various stakeholders, and making use of it is the eco products that are generated by each process have realized “A New Story About Iron” (only in Japanese) important for citizens, society and investors as well as operating com- energy saving and a reduction in CO2 emissions over the entire life cycle. munities and employees. It initially presents negative information as well The provision of high-quality steel materials such as high tensile

and illustrates in an easily understandable way overall business activities strength steel enhances the fuel consumption and safety of automo- publications Other by categorizing them into “the three ecos (eco process, eco products and biles, while titanium alloy parts in sports bikes reduce the use of rare

eco solution) + innovative technology development” as the value chain. In metals. Furthermore, as part of initiatives aimed at the hydrogen PR brochures addition, I believe it was carefully prepared with the aim of disseminating society, which will become invigorated leading up to the 2020 Tokyo “Quarterly Magazine: NSSMC” Fact Book 2015 (only in Japanese) information and providing communication. For example, it not only quanti- Olympics, NSSMC has developed stainless steel for use in high-pressure 1 PDF files are available for downloading from the website. fies the energy efficiency and 2CO emissions volumes of overall operations hydrogen environments. In these ways and others, I feel that NSSMC is 2 Printed copies are available upon request from the website. but also the lifetime environmental impact of products based on LCA. solidly undertaking the long-term development of technologies as well. Environmental report Coexistence with society In the case of the “eco process,” which endeavors to reduce environ- NSSMC is also striving for coexistence with regional communities mental impacts in the process of manufacturing, the power self-suffi- that emphasizes biodiversity through such initiatives as the “Creation Nippon Steel & Sumitomo Metal Corporation ciency rate is 84%, the rate of use of waste heat in steam generation of Hometown Forests,” a program to create greenery around steel Sustainability Report 2015 is 87%, the rate of use of by-product gases is 100%, the rate of use works, and the “Creation of Sea Forests,” which regenerates seaweed of water circulation is 90%, and 99% of by-products generated from beds. I therefore feel respect for NSSMC’s strong motivation to con- Environmental Affairs Division input resources are recycled, while only 1% of slag and brick dust, tribute to society. Nippon Steel & Sumitomo Metal Corporation which are difficult to recycle, is finally disposed of. The report indi- Now that we are facing mounting social issues such as regional revi- 2-6-1, Marunouchi, Chiyoda-ku, Tokyo 100-8071, Japan cates that production processes are thoroughly managed based on talization due to the low birth rate and aging society as well as the excess Phone: +81-3-6867-2566 Fax: +81-3-6867-4999 low carbon, cycles and environmental risk reduction. concentration of cities, there are various measures aimed at the realiza- As a business operator that accounts for 5% of the total energy tion of a sustainable future that I would like to see mentioned, such as http://www.nssmc.com/en/ used throughout Japan, NSSMC is striving to undertake voluntary the passing on of technology to the next generation and the establish- initiatives to counter global warming. However, I hope that that it will ment of a good working environment for women. In the area of social ©2015 NIPPON STEEL & SUMITOMO METAL CORPORATION. more aggressively promote COURSE50 innovative technology develop- reports as well, I hope that NSSMC will further drive industrial sectors. All rights reserved.