Measures Against Global Warming

In response to global warming, the Kobe Steel Group promotes rationalization and R&D to reduce energy consumption throughout its operations in an effort to decrease greenhouse gas emissions.

Energy Usage during Manufacturing Processes

In fiscal 2016, the Kobe Steel Group used 214 PJ of energy (equivalent to 5.52 million kl of crude oil).

Of that total, approximately 92 percent was used in the Iron & Steel Business, and approximately 5 percent in Aluminum & Copper.

Energy Use by Business Unit (Includes Group companies)

Energy Use by Business Unit (includes Group companies)

* The Electric Power Business was newly established in fiscal 2016 through merger of the Iron & Steel Business's wholesale power supply (IPP) operations with new head office power supply projects.

CO2 Emissions and Initiatives to Reduce CO2

Emissions from Kobe Steel Businesses

In fiscal 2016, total CO2 emissions for all of Kobe Steel's businesses were 17.6 Mt. Approximately 97 percent came from the Iron & Steel Business, and approximately 3 percent came from the Aluminum & Copper Business.

Emissions for fiscal 2016 decreased by 3 percent compared with the previous year and by 7 percent compared with fiscal 1990.

We engage in ongoing energy-saving initiatives, including improvements to productivity, optimization of equipment and reduction of energy loss.

Kobe Steel Total
CO2 Emission Trends (Preliminary Calculations)

CO<sub>2</sub> Emission Trends (Preliminary Calculations)

* Emission values for fiscal 1990 were calculated for the Aluminum & Copper Business using emissions from fiscal 1995, and for the Machinery Business using emissions from fiscal 1997, as a base.

* As emission factors from purchased power in fiscal 2016 have yet to be announced, results for fiscal 2015 were used.

* Emissions for past years have been recalculated due to revisions to power coefficients, etc.

Iron & Steel Business (Kobe Steel)

The Iron & Steel Business has been pursuing facility and operational improvements.

Emissions for fiscal 2016 decreased by approximately 3 percent compared with the previous year.

In the future, we will continue to implement energy conservation measures and reduce environmental impact, striving to achieve industry targets described in Nippon Keidanren's Commitment to a Low Carbon Society.

Iron & Steel Business
CO2 Emission Trends (Preliminary Calculations)

CO<sub>2</sub> Emission Trends (Preliminary Calculations)

* Preliminary calculations for Iron & Steel Business totals include coke production.

* As emission factors from purchased power in fiscal 2016 have yet to be announced, results for fiscal 2015 were used.

* Emissions for past years have been recalculated due to revisions to power coefficients, etc.

Welding Business

The Welding Business strives for thorough optimization of equipment and reductions to energy loss.

In fiscal 2016 we introduced LED lighting, installed inverters at plants, and carried out other similar, systematic initiatives at all locations.

Emissions for fiscal 2016 decreased by approximately 1 percent compared with the previous year.

In future years, we will continue to pursue additional energy-saving measures and further reduce environmental impact.

Welding Business
CO2 Emission Trends (Preliminary Calculations)

CO<sub>2</sub> Emission Trends (Preliminary Calculations)

* Emissions for past years have been recalculated due to revisions to power coefficients, etc.

Aluminum & Copper Business

The Aluminum & Copper Business has been switching from oil-based fuels to natural gas, as well as striving for greater energy efficiency through improvements to productivity and introduction of highly efficiency equipment.

Improvements made in fiscal 2016 included introduction of highly efficient boilers, LED lighting and fan inverters.

Emissions for fiscal 2016 increased by 3 percent compared with the previous year.

In the future, we will continue to implement energy conservation measures and reduce environmental impact, striving to achieve industry targets described in Nippon Keidanren's Commitment to a Low Carbon Society.

Aluminum & Copper Business
CO2 Emission Trends (Preliminary Calculations)

CO<sub>2</sub> Emission Trends (Preliminary Calculations)

* Emissions for past years have been recalculated due to revisions to power coefficients, etc.

Machinery Business (Kobe Steel)

As demand energy-saving compressors, heat pumps and other products increases, the Machinery Business is striving to optimize equipment, improve productivity, and increase energy efficiency through expert advice from energy-saving consultants.

Emissions in fiscal 2016 decreased by 5 percent compared to the previous year.

In the future, we will continue to implement energy conservation measures and reduce environmental impact, striving to achieve industry targets described in Nippon Keidanren's Commitment to a Low Carbon Society.

Machinery Business
CO2 Emission Trends (Preliminary Calculations)

CO<sub>2</sub> Emission Trends (Preliminary Calculations)

* Emissions for past years have been recalculated due to revisions to power coefficients, etc.

Companywide Initiatives to Support Energy Conservation

Support for Energy-Saving Technologies at Manufacturing Locations and Promotion of HR Training

Heat diagnosis

Thermal diagnosis

Energy conservation study workshop at Fukuchiyama Plant

Energy conservation study
workshop at Fukuchiyama Plant

We pursue energy-saving initiatives at our manufacturing locations to combat global warming and reduce energy costs.

In fiscal 2015 an energy conservation group was established within the MONODZUKURI (Production System Innovation) Planning & Promotion Department, striving to achieve more active energy-saving and increase the level of on-site engineers through expert-led support for energy-saving technologies at business locations (combustion equipment and energy conservation evaluations); energy conservation exchange meetings (to share examples of energy-saving activities and information on energy-saving technologies, etc.); and training in energy conservation.

Regarding evaluation of combustion equipment, thermal diagnoses based on highly detailed measurements were carried for a variety of large and small heating equipment installed at various facilities. An extensive range of new approaches were proposed for further energy savings, with technological guidance provided during implementation.

As of the end of fiscal 2016, proposals to reduce energy consumption by more than 10 percent per piece of equipment—a CO2 equivalent of 9,500 t/yr—were completed for 11 pieces of equipment at eight locations, and are currently being implemented on-site. Additionally, we plan to expand the scope of this activity to Group companies beginning from the second half of fiscal 2017.

Training in energy conservation was introduced in March 2016 for six locations with high energy consumption. Classrooms are established at each location, with that location's actual equipment used as training materials. There are a total of 62 trainees, comprising primarily young staff. After completing the 10-month course in basic technology they proceed to OJT training, during which they can put energy-saving measures into practice as an applied course.

Progress Status of Combustion Equipment Evaluation Energy-Saving Proposals

Business unit Production site Equipment Status
Iron & Steel Kobe Works Continuous heating furnace for steel products Finished
Soaking furnace In progress
Takasago Works Heating furnace for forging Finished
Heating furnace for forging Finished
Reducing furnace In progress
Welding Fukuchiyama Plant Annealing furnace Finished
Ibaraki Plant Drying furnace Finished
Saijo Plant Drying furnace In progress
Aluminum & Copper Moka Plant Soaking furnace Finished
Aluminum melting furnace Finished
Chofu Works Continuous heating furnace for copper sheet Finished
Billet heater Finished
Daian Plant Aluminum melting furnace Finished
Machinery Takasago Works Drying furnace Finished

Energy Conservation in the Logistics Field

Shinzan Maru

Shinzan Maru

From raw materials procurement to product delivery, the Kobe Steel Group aims to conserve energy through the use of optimized and speedy transportation. Ongoing improvements include expanding modal shifts from the use of trucks to the use of rail and ships; increasing loading efficiency; improving transportation efficiency through larger vehicles; and expanding use of roundtrip shipping.

Additionally, in fiscal 2016 construction of the Shinzan Maru, a Kobe Steel iron ore carrier, was completed. The ship was built by Imabari Shipbuilding Co., Ltd. and is operated by Mitsui O.S.K. Lines. The Shinzan Maru is an environmentally friendly, next-generation vessel, equipped with energy-saving technologies such as a more fuel-efficient design and a waste heat recovery system capable of utilizing medium-low heat sources of 70-250°C.

Group Company Initiatives

Individual Kobe Steel Group companies also strive to reduce energy during manufacturing processes and distribution. In addition to the initiatives mentioned below, Group companies also implement a wide array of daily measures to conserve energy, such as turning off lights and regulating air conditioning.

Examples of Initiatives

Company name Location Examples of major initiatives
Sanwa Tekko Co., Ltd. Ama-gun, Aichi Prefecture Switched to LED lighting at plants
Ceratechno Co., Ltd. Bizen, Okayama Prefecture Installed energy-saving hydraulic unit for press
Tesac Wirerope Co., Ltd. Kaizuka, Osaka Prefecture Switched to inverter system for cooling towers
Nippon Koshuha Steel Co., Ltd. Imizu, Toyama Prefecture Updated heat treatment furnace and improved insulation
Hanshin Yosetsu Kizai Co., Ltd. Okayama, Okayama Prefecture Switched to energy-saving coolant pump
Kobelco Power Kobe, Inc. Kobe, Hyogo Prefecture Removed scaling during washing of No. 2 boiler and increased turbine efficiency through improvement of boiler differential pressure
Kobe Wire Products (Foshan) Co., Ltd. Foshan, Guangdong Province, China Reduced use of LPG through waste heat collection
Kobe Aluminum Automotive Products (China) Co., Ltd. Suzhou, Jiangsu Province, China Switched to inverter system for coolant pumps
Wuxi Compressor Co., Ltd. Wuxi, Jiangsu Province, China Installed solar panels on plant roof

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