Nippon Steel announces acquisition of Thai steelmakers

Leading Japanese steelmaker Nippon Steel has confirmed it will acquire controlling stakes in G Steel and GJ Steel of Thailand to make them subsidiaries.

The acquisition was signalled last month, when Nippon Steel executive vice president Takahiro Mori said the firm is in talks to buy an integrated steel mill in Southeast Asia, Kallanish notes. However, Nippon Steel denied news of the acquisition in mid-December.

On 21 January, Nippon Steel entered into a share purchase agreement with funds managed by Ares SSG, currently the largest indirect shareholder in G/GJ Steel. Ares Management in the US owns around 50% of G Steel and 40% of G J Steel. The deal with Ares SSG is expected to be completed in February 2022, at a cost of $419 million. In addition, Nippon is also planning to purchase equity from other shareholders, at an estimated cost of $344m.

G Steel and GJ Steel are the only integrated flat steel producers in Thailand with facilities including electric arc furnaces and hot strip mills, supplying hot-rolled steel sheet for general purposes. The two steelmakers have a 1.58 million tonnes/year and 1.5m t/y steel capacity respectively, with hot rolled coil for construction and pipemaking as the main products.

As Nippon is using blast furnaces to produce over 90% of its steel, the acquisition is expected to help the company compete with other EAF steelmakers. Because of technical difficulties, EAFs are still the main way for steel companies to significantly reduce carbon emissions before hydrogen smelting becomes viable. Meanwhile, Nippon plans to boost its global crude steel capacity to 100m t/y by acquiring steel plants in Thailand and India (see Kallanish passim).

Kallanish Asia