industrial policy - observation & suggestion · 1958 usiminas was established as a joint...
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Industrial Policy
- Observation & Suggestion -
August 28, 2017
Nippon Steel & Sumitomo Metal Corporation
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Brazilian Economy
Japanese Foreign Direct Investment (FDI) in Brazil
• More than 450 Japanese companies are operating in
Brazil.
• Japan ranks 6th as a foreign investor in Brazil
• Brazil is in the 10th position as a destination of
Japanese FDI.From “Joint Report by the Brazilian National Confederation of Industry -
CNI and the Japan Business Federation- Keidanren” (September 1, 2015)
Prospective
• Brazilian GDP: 1.7% growth in 2018, 2% in 2019 (IMF)
• Japanese FDI in Brazil is expected to continue growing.
• Development of business environment will further
facilitate FDI from Japan.
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Steel Market in Brazil: Growth Potential
Steel Demand by Area (2016CY)
(Source: World Steel Association)
1 China 681
2 USA 92
3 India 84
4 Japan 62
5 S. Korea 57
6 Germany 40
7 Russia 38
8 Turkey 34
9 Mexico 25
10 Italy 24
11 Brazil 18
Even in the downside phase, steel demand in Brazil is
still very large in the worldwide market.
Steel DemandWorld Total 1,515MMT
65
Central & South America
68149CIS
62
Japan
57
132
NAFTA198
Europe
S.Korea
115
ASEAN5,
Other Asia 38
Africa
53
MiddleEast
7Oceania
84
India
China
2017 Forecast
18.4 mil ton(Source: IABr)
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Steel Market in Brazil: Growth Potential
Steel demand per capita is still at a low level.
Population is increasing.
Huge potential for steel demand increase.
(Source: World Steel Association)
0
200
400
600
800
1,000
1,200
1,400
'55 '60 '65 '70 '75 '80 '85 '90 '95 '00 '05 '10 '15
JapanChinaS. Korea
S. Korea:1,114
Japan: 535China: 509
ASEAN5: 134Brazil: 116India: 70
Cf. Steel Demand per Capita(crude steel equivalent)208
229 238
155
116
60
80
100
120
140
160
180
200
100
120
140
160
180
200
220
240
19
931
994
19
951
996
19
971
998
19
992
000
20
012
002
20
032
004
20
052
006
20
072
008
20
092
010
201
12
012
20
132
014
20
15
20
30E
20
50E
Millionpeople
Kg per capita
Population(left axis)
Steel Demand per Capita(crude steel equivalent: right axis)
15%up
Steel Demand per Capita and Population in Brazil
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Global Business Development of
Nippon Steel & Sumitomo Metal Corporation
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ArcelorMittal 95.5
Baowu Steel 63.8
Nippon Steel &
Sumitomo Metal46.5
Hebei Steel 46.2
POSCO 41.2
Shagang 33.3
Ansteel 33.2
JFE 30.3
Shougang 26.8
TATA 24.5
1 Nippon Steel 28.4
2 POSCO 27.7
3 Arbed 24.1
4 LNM 22.4
5 Usinor 21.0
6 Corus 20.0
7 ThyssenKrupp . 17.7
8 Baosteel 17.7
9 NKK 16.0
10 Riva 15.6
11 Kawasaki Steel . 13.0
12 Sumitomo Metal 11.6
21 Bethlehem 9.1
24 LTV 7.4
34 Iscor 5.5
TATA
ArcelorMittal 116.4
Nippon Steel 35.7
JFE 34.0
POSCO 31.1
Baosteel 17.7
TATA 26.5
Angang 23.6
Shagang 22.9
Tangshan Steel . 23.3
U.S. Steel 23.2
Sumitomo Metal 11.6
(Source: World Steel Association)
2000CY World 849
Crude steel production Mil. MT/year
2007CY World1,346 2016CY World 1,630
Who we are.
JV Partner
Strategic Alliance Partner
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32.5
53.2
27.4
NSSMC Company A Company B Company C
62.9966
503
141
NSSMC Company ACompany BCompany C
1,274
R&D Expense (2014)International Patent Application Published : 2010-2014
bn¥Patents
High Grade Steel Strategy
R&D manpower800 Reserchers
Holding 27,000 patents in 70 countries
NSSMC Named a Clarivate Analytics
(former Thomson Reuters) Top 100 Global
Innovator in 2016 for Fifth Consecutive
Year Feb.2017
R&E Center
Futtsu
Amagasaki R&D
Center
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NSSMC’s global supply network
- Various products, countries and partners
*¹ Including projects which will start operation by March 2014
Integrated
steel
works
AutomotiveConstructi
on,
packaging
Railway
partsEnergySteel
sheet
Pipes &
tubes, bars
& wires
Crank-
shafts
China
ASEAN
India
USA
Mexico
Brazil
Middle
East,
Africa
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Major Manufacturing & Sales Bases of NSSMC
Ho Chi Minh
New York
Chicago
Houston
Mexico
Belo Horizonte
Sao Paulo
Sydney
Jakarta
Singapore
Bangkok
Guangzhou
Shanghai
Beijing
New Delhi
Dubai
Dusseldorf
Flat products
Construction usage
Railway, Automotive &Machinery parts
Bar & Wire Rod
Pipe & Tube
Overseas Office
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Nippon Steel & Sumitomo Metal Corporation
in Brazil
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NSSMC’s Business Bases in Brazil
Ipatinga Works(including Unigal)
Cubatao Works
Belo Horizonte (USIMINAS – Headquarters)
VSB
NIBRASCO (Pellet)
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USIMINAS - History
1956 President of Brazil requested Japan to assist
constructing integrated steelworks in MG.
1957 Japan and Brazil signed the agreement for the
joint establishment of a steel company.
(This year is the 60th anniversary.)
1958 USIMINAS was established as a joint venture
between Japan and Brazil.
Equity share: Japan Group 40%, Brazilian Government Group 38%
Construction: Directed by an assigned director of Yawata Steel (now NSSMC)
Construction assistance:518 people were dispatched from Japanese steel companies.
(Companies integrated into NSSMC accounted for 90%, 466 people)
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1966 onwards NSSMC has continued 48-years Technical Assistance to USIMINAS.
1999 USIMINAS and NSSMC established JV
(UNIGAL) producing galvanized steel sheets.
NSSMC has licensed related technology.
No.1 CGL: Start-up in Oct. 2000, Annual capacity 480,000 tons
No.2 CGL: Start-up in May 2011, Annual capacity 550,000 tons
NSSMC has licensed the most advanced technologies related to high grade heavy plate (CLC) to USIMINAS, as the first licensee in the world.
USIMINAS - History
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USIMINAS - Overview
<Ipatinga Works>
– Capacity: Crude Steel 5 million ton /year
Blast Furnace x 3 (885m3 x 2, 3162m3 x 1)
– Products: Heavy Plate, Hot Rolled Steel, Cold Rolled
Steel, Hot Dipped Galvanized Steel
<Cubatão Works>
– Products: Hot Rolled Steel, Cold Rolled Steel
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USIMINAS - Overview
● 2012 Ternium joined a control group of USIMINAS
21.2%
19.9%
4.9%19.8%
11.4%
22.8%
Shareholding of ordinary shares as of July 2017
NSSMC Gr
Ternium Gr
PU (Usiminas Pension Fund)
Others
Control
Group
These 3 entities form a control group of Usiminas.
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Observation - Areas for Consideration
1. Protection of Legitimate Expectation of
Investors (e.g. Fair Competition)
2. Predictable and Timely Administrative
Remedies and Actions
3. Timely Legal Remedies (“Justice delayed is
justice denied.”)
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Suggestion – Possible Solution
EPA: Expected to provide following mechanisms
1. Fair and equal treatment of FDI
2. Bilateral mechanism for governmental and
business community representatives to
discuss issues on how to improve the
business environments in Brazil and Japan
3. Bilateral mechanism for FDI to convey its
concerns about the business environment to
the host state