Environmental Report 2001 (April 2000 March 2001) ENVIRONMENTAL. Nippon Steel Corporation

Transcription

1 Environmental Report 2001 (April 2000March 2001) N I P P O N S T E E L ENVIRONMENTAL R E P O R T Nippon Steel Corporation

2 CONTENTS 1 Toward Environmental Protection/On the Issue of the Environmental Report FY Environmental Management Policy 4 Milestones in the History of Environment and Energy Concerned with Nipppon Steel 6 Steel Production Processes, and Resource, Energy and Environmental Aspects 8 Initiatives for Preservation of the Global Environment 12 Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources Measures for Reducing Environmental Impact Contributions through Products Contributions through Engineering Environmental Accounting Research and Development Environmental Communication Environmental Management System Profile of Nippon Steel Editorial Policy Nippon Steel published its environmental report for the first time in the Japanese steel industry in 1998, and the Environmental Report FY 2001 is the fourth issue. This issue describes Nippon Steel s environmental protection activities related to its steel production, engineering, urban development and new material divisions. This report uses data from FY 2000 (April 1, 2000 to March 31, 2001) and some of the data after April 2001 as well. This report is edited and prepared by generally following the guidelines of the Ministry of the Environment and the Global Reporting Initiative (GRI) guidelines. This report tabulates and analyzes Nippon Steel s environmental performance results at the end of each March and will be published annually. Improvements for This Fiscal Year The Environmental Report FY 2001 is prepared with emphasis placed on legibility so that readers can easily understand the environmental initiatives in the steel industry. We are marking efforts to raise the disclosure level of new topics as well as continuing articles and data while emphasizing their continuity. Representative improvements made in terms of content are: qthe overall environmental load in each business and process is clearly described. wthe history of Nippon Steel s environmental initiatives is organized in an easy-to-understand manner. enippon Steel s environmental activities closer to our readers are presented as environmental communications. Among improvements made in terms of expression are: qterms are described on each page so that the reader can more readily understand them. wthe design of the report, including the cover, has been renewed.

3 Toward Environmental Protection Toward Environmental Protection Recent environmental problems cover an extremely wide spectrum of subjects from addressing the prevention of global warming through building a recycling oriented society and meeting the demand of customers for eco-products to complying with the regulation of chemical substances. As these environmental issues are deeply concerned with all aspects of industrial activities and our daily lives, the perception that the twenty-first century is the age of the environment is rapidly gaining acceptance among the people of the world. Steel is an extremely recyclable material. Since steel products and by-products are excellent in terms of the reduce, reuse and recycle principle, it is no exaggeration to say that the steel industry itself is a typically recycling-based industry. Against this background, Nippon Steel established the Environmental Management Office in 1970 when it was inaugurated, and has since then taken environmental protection as its basic management policy. We have taken initiatives in energy conservation in our production processes, effective utilization of our by-products, reduction of our environmental impact substances, and greening of the areas in and around our steelworks, and have achieved clear-cut results in our endeavors. To solve the environmental problems of ever increasing complexity, it is of utmost importance not only to make steady efforts every day, but also to accomplish radical breakthroughs by technology development. To this end, Nippon Steel will make greater contributions to the protection of the environment and the effective utilization of recycled resources by combining all forces of the steel production, engineering, research and development and other related divisions and by making full use of existing steel production processes and new technologies. Taking public relations (PR) and investor relations (IR) one step futher, we will also carry out positive activities for environmental relations (ER) to deepen the mutual understanding of local residents, customers, stockholders and others concerned by environmental communications. Through these activities, Nippon Steel will achieve higher corporate value and contribute to the establishment of a recycling oriented economic society with lower environmental load. We ask for your understanding and support of our environmental initiatives as in the past. On the Issue of the Environmental Report FY 2001 Amid mounting calls for the disclosure of environmental information by companies, Nippon Steel has been publishing its environmental report since 1998 to give readers an overview of its wide-ranging environmental protection activities. The Environmental Report FY 2001, the fourth issue, has been substantially revised by taking into account the environmental trends and the opinions of our readers to better inform them of our environmental protection activities. More specifically, the flow of our energy and by-products and the changes in our environmental initiatives since our foundation are introduced so that the reader can understand the overall picture at a glance. Given the rapid changes in the environmental situations these days, pages are added to introduce our initiatives for building a recycling oriented society, our eco-products and environmental plants, and our environmental communications, including our social contributions. Today, Nippon Steel is recognized as one of the world s most environmentally advanced companies thanks to its overall environmental performance and has been given an AAA environmental rating by Innovest Strategic Value Advisors of the United States. Since April of this year, Nippon Steel has intensified its environmental relations (ER) activities to let people outside of the company know more about its environmental protection activities. The issue of this Environmental Report is positioned as part of these activities. We cordially ask you to understand our environmental protection initiatives and let us have your frank opinions. Chairman Takashi Imai (left) and President Akira Chihaya Takashi Imai Chairman Akira Chihaya President Toshio Yonezawa Managing Director (Environment) Environmental Report Toward Environmental Protection On the Issue of the Environmental Report FY 2001

4 Environmental Management Policy Nippon Steel is conducting its business activities under the following basic principles of environmental management policy: Environmental Management Policy Nippon Steel conducts its business activities with the aim of contributing to the structuring of an environmentally-oriented society and environmental preservation on a global scale and of realizing a society permitting sustainable development with low environmental impact in the 21st century. Basic Policy Medium Term Management Plan Contributions to the establishment of a society committed to environmental preservation Recognizing Environmental Preservation as one of the basic principles underlying the company s business management, and continuing solidly from what has been achieved to date by company-wide drives, Nippon Steel will aggressively tackle a broad spectrum of tasks, such as global warming, waste reduction and recycling for the structuring of a recycling-oriented society, and easing of environmental impact of new substances. In the conduct of its business, Nippon Steel will also firmly keep in sight the needs to maintain harmony with nature s ecosystems, to preserve and improve people s living environments, and to preserve the environment on a global scale, thus contributing to the structuring of a recycling-oriented society. Reducing environmental impact at every stage of operations At every stage of operationsfrom procurement of raw materials and equipment to production, R&D, and transport, usage and disposal of productsnippon Steel will strive to reduce environmental impact primarily through voluntary efforts, in cooperation and collaboration with customers and other industries, while seeking to maintain communications with society. While the company endeavors to reduce environmental impact, through production and engineering of products, individual employees will be keenly aware of the importance of environmental issues and actively involved in environmental protection of communities and regions. International contribution through initiatives for environmental preservation on a global scale Utilizing the long experience in technical cooperation in steelworks construction and other projects overseas, Nippon Steel will seek to make international contributions through the transfer of technologies which contribute to environmental preservation, energy-saving and conservation of resources, thus contributing to the structuring of a recycling-oriented society. Initiatives for preservation of the global environment To promote, as the central pillar of the company s measures against global warming, voluntary action programs for energysaving in production processes. To undertake various projects for reduction of CO2 emissions in developing countries and elsewhere and to transfer technologies for environmental measures. Initiatives for structuring of recycling-oriented society To make maximum utilization of by-products as resources and to minimize generation of wastes from production processes. To promote conservation and recycling of resources by effectively utilizing by-products which are generated in other industries and society. Initiatives for contribution, through products and engineering, to environmental preservation, energy saving and conservation of resources. To vigorously develop and market eco-products meeting needs and requirements of steel-using sectors with due consideration of life cycle assessment (LCA). To reduce environmental impact in society by offering plant technologies having environmental-preservation and energy-saving advantages, both in Japan and elsewhere in the world. Initiatives for reducing environmental impact To properly respond to new environmental regulations against harmful contaminants and specified chemical substances, in addition to the existing environmental measures concerning air, water, soil, etc. To carry out environmental-preservation activities, through the vigorous and extensive exercise of voluntary controls, in every phase of the production processes. Results of FY 2000 Activities Nippon Steel reviewed its basic environmental management policy in FY 2000, incorporated concrete measures in its medium-term environmental management plan, and is now implementing them. In FY 2000, we achieved the following results from our environmental protection activities. Global environmental protection initiatives Recycling oriented society building initiatives Environmental contributions through products and engineering Environmental impact reduction measures Medium-term environmental management plan Implement energy-saving measures in production processes according to voluntary action plan. Promote global environmental protection through transfer of environmental control and other technologies. Improve recycling ratio of by-products in source manufacturing processes and pursue minimization of waste. Promote conservation and effective utilization of resources, including reutilization of by-products generated in other industries. Positively develop and market lowenvironmental impact products (eco-products). Provide customers in and out of Japan with environmental protection and energy-saving plant technologies. Positively comply with new environmental regulations for hazardous pollutants and specific chemical substances in addition to environmental protection of air, water and soil. Implement environmental protection activities in all production processes. Priority target FY 2000 results Page To reduce energy-derived CO2 emissions, achieve an energy saving of 4.4% by 2010 with 1995 as the base year. Aim at 2% reduction as interim target for Find projects that may lead to CDM and JI, or two Kyoto Mechanisms. Reduce amount of by-products to be landfilled by 75% by 2010 compared with 1990 (final disposal amount set at 100,000 tons per year for Nippon Steel). Reduce generation of by-products and effectively utilize slag and dust. Establish system for steel industry to accept 1 million tons of plastic waste by 2010 to effectively recycle and utilize them and to reduce CO2 emissions. Increase sales of eco-products to automotive, household and social capital areas. Creation and positive development of environmental business Environmental plants Energy-saving plants Soil and groundwater remediation Low-environmental impact construction method and others Air environmental protection Benzenes: Achieve new voluntary plan from 2001 (reduce benzene emissions 50% by 2003). Dioxins Achieve voluntary reduction target of Japanese Iron and Steel Federation (reduce dioxin emissions by 30% by 2002 compared with 1997). Promote control of specific chemical substances. Continue to maintain environmental management system. Renew ISO certification. Promote environmental communications. Energy consumption was reduced by 0.6% from Coke drying quenching (CDQ) equipment model project was launched in China. Recycling ratio of 99% was accomplished for by-products internally generated, and amount of final disposal was steadily reduced to 148,000 tons per year compared with target of 100,000 tons per year. Slag: Blast-furnace slag was utilized 100% and BOF slag was utilized 96%. Dust: Reduced final disposal by introducing RHF plant at Kimitsu and Hirohata. Sludge: Effective utilization was promoted by use of RHF plant. Nagoya and Kimitsu Works started operation of equipment for disposing of plastic waste in coke ovens. New eco-products in FY 2000: Plate steel with increased weld strength and Super Dyma Sales of direct waste melting and recycling systems were increased. Orders for coke dry quenching (CDQ) equipment were received from POSCO of South Korea, and the equipment is now under construction. Orders were received for construction of cogeneration and district heating and cooling plants in Roppongi Hills project. Contracts for soil and groundwater remediation were concluded with IT of the United States and Kurita Water Industries of Japan, and full-fledged entry in this field was launched. Approval of Minister of Construction was obtained for allowable bearing capacity of Eco-Piles as foundation piles. Benzenes: Voluntary action plan of Japanese Iron and Steel Federation was continued, and replacement of coke oven doors was completed. Monitoring continued. SOx, NOx and dust: Sintering main waste gas dust collectors were replaced, sintering environmental dust collectors were installed, and yard water spraying was intensified. Dioxins: Periodic measurement was performed as prescribed by law, and dioxin emissions were steadily reduced under voluntary control plan. PCB: Actual situation was determined, and storage amount was inspected and confirmed. PRTR: Preliminary survey was conducted. Report system was put in place. Internal environment audits were conducted at Yawata, Nagoya, Hikari and Futtsu. Kimitsu Works: Renewal audit was completed. Fourth environmental report was published. Environmental information was transmitted through intranet. Environmental advertisements were presented Environmental Management Policy 2 Environmental Report 2001 Environmental Report Environmental Management Policy

5 Milestones in the History of Environment and Energy Concerned with Nippon Steel Nippon Steel has implemented energy and environmental control measures by fully understanding the changes of the times. In the early 1970s, laws and regulations were enacted to counter pollution problems. Nippon Steel established the Environmental Management Office immediately, and concluded local agreements incorporating pollution control measures, invested in pollution control measures, and carried the measures out. After the first oil crisis, Nippon Steel undertook many energy-saving measures, including process connection, optimum operation and waste heat recovery. The environmental control measures and energysaving technologies developed through these activities are still at the world s highest levels. The 1990s became the age of global environmental problems brought about by global warming, wastes and hazardous chemical substances. Nippon Steel fully recognizes the roles to be played by the steel industry and is pushing ahead with the implementation of environmental measures. Milestones in the History of Environment and Energy Concerned with Nipppon Steel Crude Steel Production 40 million tons 20 million tons Figures before 1969 are the sum of Yawata Steel and Fuji Steel. Environmental Pollution Problem Energy Problem Global Environmental Problem (Global Warming, Ozone Layer-Depletion, Acid Rain, etc.) Problem of Disposal, Recycling of Resources 0 Characteristic of Steel Industry Rehabilitation after the War Rationalization Coastal integrated steel works Large-scale and high productivity Expansion of Capacity Larger scale BF Steady Growth Integration, modernization Multiple Business Management Strengthening of the competitiveness of the steel business Consolidated Business Management Expanding production capacity and improving productivity Introducing larger scale BF with higher pressure etc. Improving productivity and yields Reducing the number of steps in the process and linking them together (Continuous casting, HCR/CC-DR, etc.) Process innovation (continuous hot strip operation, thin slab caster) Initiatives for Environmental Affairs 70: Yawata Steel and Fuji Steel merged to form Nippon Steel Corporation Establishment of the Environmental Pollution Control Committee Establishment of the Environmental Management Office in the Equipment Department at Head Office 71: Reorganization of the Environmental Management Office to the 73 88: 1st - 3rd initiatives for energy conservation Environmental Management Department Formulation of the Environmental Equipment Plan 72: Establishment of the Environmental Management Basic Policy 73: Establishment of the NOx Control Committee 91: Reorganization of the research and development system and establishment of the Heat-Fluid Processing and Environment Research Center 92: Announcement of The Statement of IISI Environmental Principles (International Iron and Steel Institute: IISI) 93: Institution of the Action Directive Concerning the Environment 96: Establishment of Environmental Management Policy Institution of the Voluntary Action Program for Environmental Protection by Steelmakers (Japan Iron and Steel Federation) Nagoya Works granted ISO14001 certification 97: Establishment of the Environmental Plant & Waterworks Division and the Energy Facilities Engineering Division 98: Reorganization of the Environmental Management Department to the Environmental Affairs Division Establishment of the Environment Management Committee Start of the publication of the Environmental Report PRTR investigation report Establishment of the guideline for controlling the generation of dioxins from sintering machines 99: Reorganization of the environmental business sector of the Environmental Plant & Waterworks Division basedon individual functions PRTR investigation report (the second report) 00: Acquisition of ISO certification in all works Amendment of Environmental Management Policy Addition of waste treatment/recycling business to the articles of incorporation Domestic Environmental Law and Legislation Air Water Waste 62: Soot and Smoke Regulation Law 67: Legislation of the Basic Law for Environmental Pollution Control 71: Foundation of the Environment Agency 73: Legislation of the Pollution Related Health Damage Compensation Law 68: Air Pollution Control Law 70: Legislation of the 14 laws related to environmental pollution including the amendment of the Basic Law for Environmental Pollution Control 90: Formulation of the Action Program to Arrest Global Warming 93: Legislation of the Basic Environment Law 94: Establishment of the Basic Environment Plan 91: Institution of the Keidanren Global Environment Charter Legislation of the Law for Promotion of Utilization of Recyclable Resources 95: Recycling of Containers and Packaging Law 96: JIS standardization of the Environmental Management System 97: Settlement of the greenhouse gas reduction target of Japan (6% reduction) Legislation of the Environmental- 00: Impact Assessment Law Amendment of Basic Environment Plan Legislation of the Basic Law for Establishing the Recycling- Based Society and six laws Full Enforcement of Recycling of Containers and Packaging Law 98: Legislation of the Law Concerning the Promotion of Measures to Cope with Global Warming Legislation of the Law for Recycling of Specific Types of Home Appliances 99: PRTR Law Legislation of the Law Concerning Special Measures against Dioxins Full enforcement of the Environmental-Impact Assessment Law Settlement of the Basic Guidelines on Measures to Tackle Global Warming Problem of Energy Supply and Demand Energy Supply and Demand Timeline Oilless Operation Electricity Generated by Recovered Waste Energy 73: The first oil crisis 79: The second oil crisis Legislation of the Law Concern- ing the Relational Use of Energy Business of Independent Power Producer Effective Use of Waste Plastics in Coke Oven Voluntary Action Program and Annual Follow-up by MITI with Publication 98: Amendment of Energy Saving Law World Wide Developments in the Environmental Field 72: United Nations Human Environment Conference (Stockholm) 70: Foundation of the Environmental Protection Agency (EPA) in the U.S.A. 87: Adoption of the Montreal Protocol 88: Establishment of the Intergovernmental Panel on Climate Change (IPCC) 92: Adoption of the Framework Convention on Climate Change Earth Summit (Rio de Janeiro) 89: The Basel Convention on the Regulation of Transboundary Movement and Disposal of Hazardous Waste 98: COP4 (Buenos Aires) 99: COP5 (Bonn) 95: COP1 (Berlin) 00: COP6 (Hague) 96: COP2 (Geneva) 97: COP3 (Kyoto) Milestones in the History of Environment and Energy Concerned with Nipppon Steel 4 Environmental Report 2001 Environmental Report Milestones in the History of Environment and Energy Concerned with Nipppon Steel

6 Steel Production Processes, and Resource, Energy and Environmental Aspects The Japanese steel industry uses as main raw materials iron ore mined overseas, scrap generated in society, and coke as iron ore reductant. Nippon Steel effectively utilizes almost 100% of by-product gases from steel production, also recovers waste heat, and manufactures steel products with a high energy efficiency of up to 60%. As far as water resource is concerned, over 90% of water used in cooling products and production facilities is recycled and reused. The by-products from steel production are effectively utilized as resources with a high recycling ratio. The by-products generated in other industries are utilized as raw materials and fuels. The slag, dust and sludge generated in steelmaking are reutilized as raw materials within the company, and are effectively utilized as cement raw materials or road base course materials in other industries. The recycling ratio of by-products already amounts to 99%. Steel Production Processes, and Resource, Energy and Environmental Aspects Discharged gas Waste water Evaporation Fuel gas 60% 40% Fuel (Fossil fuels: million kl) Recycling of water 90% *1 Electricity generated by recovered waste energy Power plant By-product gas 100% 15% 70% Recovered Electricity Byproduct gas Industrial water Recycling of Energy Energy Electricity (Purchased power: 2.21 billion kwh)) Iron ore Limestore Coal Industrial water (Raw water: 410 million m 3 ) INPUT Resources Iron ore (42.82 million t) Steel Production Facilities LDG Coke oven (By-product gas) Basic oxygen furnace LD slag (Byproducts) Sintering macine Electric arc furnace COG Continuous casting Sintered ore Reheating furnace Coke Air Hot stove Hot rolling Cold rolling Coal (20.98 million t) BFG (By-product gas) Burst furnace BF slag (Byproducts) Annealing furnace Company-owned green areas 733ha Boundary environmental preservation forests 40.6km By-products generated by other industries (Waste plastics etc.) Recycling of Energy Internal recovery scrap (1.7 million t) Recycling rate 99% By-products (15 million t) 32% Cement industries Others Sale 67% Ex. Slag: 10.6 million t Waste 1% Final disposal (Dried weight) 148 thousand t Material and Energy Inputs Nippon Steel s share in Japan s total material input (FY 1999) Sources: FY 2001 Environmental White Paper, Ministry of the Environment, and Monthly Iron and Steel Statistics Report, Ministry of Economy, Trade and Industry Nippon Steel s share in Japan s total energy consumption (FY 1998) Source: General Energy Statistics, Agency of Natural Resources and Energy *2: Amount of materials, including natural materials mined, required for socioeconomic activities Emissions Nippon Steel 3% Steel industry 18% *2 Total Material Input (2 billion tons) Nippon Steel s share in final disposal amount of industrial waste (FY 1998) Final Disposal (58 million tons) Nippon Steel 1.2% Steel industry *3 7% Source: Emissions and Treatment Conditions of Industrial Wastes (FY 1998 Results), Ministry of the Environment *3: Estimated value Energy Consumption (15,156PJ) P: Peta=10 15 Nippon Steel s share in Japan s total SOx and NOx emissions from fixed sources (FY 1997) SOx Nippon Steel 3% Steel industry 10% SOx (232 million Nm 3 ) NOx (418 million Nm 3 ) NOx Nippon Steel 4% Steel industry 11% Nippon Steel 4% Steel industry 13% Source: FY 1998 Air Pollutant Emission General Survey, Ministry of the Environment *1: Electricity generated by recovered waste energy High-temperature waste heat from blast furnaces, coke ovens and BOFs is recovered on an individual equipment basis and effectively utilized to generate electricity. Combined with electricity generated by burning by-product gases at power plants, this electricity provides 85% of the power requirements of steelworks. The remaining 15% of electricity is purchased from outside. Steel Products OUTPUT Crude steel: million t Purchased scrap Recycling Rate of Raw Material 97.4% 98.2% 99.1% 38.2% 37.3% Nippon Steel 42.1% Recycling rate of industral waste in all industries Energy Efficiency 60 % Steel making process 40 % Power generation facilities Source: FY 2001 Environmental White Paper, Ministry of the Environment Source: Electric Utilities Handbook (FY 2000) Steel Production Processes, and Resource, Energy and Environmental Aspects 6 Environmental Report 2001 Environmental Report Steel Production Processes, and Resource, Energy and Environmental Aspects

7 Initiatives for Preservation of the Global Environment Nippon Steel, fully aware of the gravity of global warming, depletion of the ozone layer and other issues, and the important need for environmental preservation on a global scale, is actively executing energy-saving measures not only in conformity with relevant legislation but also according to the voluntary action program of the Japanese steel industry. Environmental Preservation Initiatives for Preservation of the Global Environment Improvements in Production Processes to Combat Global Warming Since the first oil crisis, Nippon Steel has been aggressively implementing energy-saving measures, such as improvements in operations, the elimination of processes and the recovery of waste energy, and in doing so, has achieved a remarkable reduction in unit energy consumption of more than 20%. Nippon Steel fully recognizes the importance of preventing global warming and the need for greater energysaving measures (namely, the reduction of CO2 emissions). Looking ahead to the future, Nippon Steel is targeting a 4% reduction in energy consumption by the year 2010, from the base line of 1995, by putting into place energy-saving measures in compliance with goals set by the Voluntary Action Program for Environmental Protection. Specifically, Nippon Steel has set a goal of reducing energy consumption by 4.4% by the final year (2010). From 1996 to 1998, Nippon Steel showed progress, complying for the most part with the Voluntary Action Program as a whole, by means of investments in equipment and energy-saving improvements in operations, in spite of increased use of energy attributable to a growing trend in the demand for higher value-added products. Performance Results of Energy Savings after the First Oil Crisis (1973) (until 1995) Note: Setting the standard year to 1973, evaluation was made for the other years by adjusting conditional factors such as production amount, etc., to the standard year. Note: Setting the standard year to 1995, the reduction rate for each year was evaluated based on the energy consumed per crude steel ton; the conditional factors such as production amount were adjusted to the standard year Energy consumed per crude steel ton (Unit: million Kcal/ton) Performance Results of Energy Savings on and after the Standard Year (1995) and Goals Standard year Intermediate goal (Unit: %) 4.4 Goal Performance Results of Energy Savings on and after the Standard Year (1995) and Goals Standard year Crude oil equivalent (Unit: million Kl) Intermediate goal Goal Major Factors Responsible for Recent Savings in Energy Examples of Improvements in Equipment Measures for recovery of waste energy increase the efficiency of CDQ plants, improvement of TRT equipment, waste heat recovery at cooler in sintering plant Improvement in efficiency of production facilities reliance on more efficient in-house power plant, use of more efficient oxygen facilities, coal moisture control system, blast furnace blower, regeneration burners for reheating furnace. Process innovation hot metal desulfurization at converter, continuous hot-rolling operation Recycling facilities dust recycling plant, waste plastic treatment plant Examples of Improvements in Operations Reduction in power consumption of dust collectors, controlling the number of running pumps at water facilities Improving energy saving activities (reducing the consumption of steam, diagnosing the combustion furnace operation) Regarding Greenhouse Gases Other than CO2 (CH4, N2O, HFC, PFC and SF6) At the Third Conference of Parties to the United Nations Framework Convention on Climate Change held in Kyoto (COP3), in addition to CO2, five gases including methane were targeted for reduction as substances having a large greenhouse effect. Of these gases, methane (CH4) and nitrous oxide (N2O) are still being emittedalthough in extremely small amountsand Nippon Steel is currently working on research and development to reduce such emissions. The remaining three gases, including substitutes for chlorofluorocarbons (CFCs) such as HFC, are used as a refrigerant for air conditioners in plants and in gas shutoff devices for power supply equipment, Performance Results of the Reduction of Ozone Layer Depleting Substances and are not currently being discharged into the air because of Nippon Steel s effective use of control measures, including those to prevent leakage. As of the end of 1995, the use of specified chlorofluorocarbon gas and other ozone-depleting substances, which were formerly in use as detergents, solvents, etc., has been totally discontinued at Nippon Steel. [ Reference ] Voluntary Action Program of the Japanese Steel Industry on Measures against Global Warming The steel industry consumes about 11% of the total energy consumption in Japan, or about 15% if we look at CO2 emissions, since coal is involved. The steel industry has been addressing the issue of improving energy efficiency and has achieved about 20% in energy savings from the first oil crisis to the present time. To promote further savings (that is, reduction of CO2 emissions) in order to prevent global warming, the industry has worked out a Voluntary Action Program. According to the program, a goal of 10% reduction in energy reduction has been established by the year 2010 starting from the base line of In addition, a further 1.5% reduction in energy consumption has been projected by the program through the substitution of waste plastics in blast furnace operations and this, in return, requires a more efficient means of collecting the waste materials used. Since the steel industry has already realized energy savings of approximately 6% between 1990 and 1995, hereafter, starting from the base line of 1995, each company inside the steel industry must reduce energy consumption by about 4% by In their attempt to reach this goal, steel makers will continue their focus on technical innovations and will aggressively apply the best available technologies, such as the development and introduction of advanced coke ovens. They will keep their commitment to supplying high quality products while at the same time maintaining the highest energy efficiency and lowest environmental impact in the world % 1.5% 4% Performance Results of Energy Savings and Goals in the Steel Industry 5.7% (2.7) % (3.1) Achievements until % (4.3) % 1.5% (0.7) 10.5% (5.0) (Unit: %) Crude oil equivalent (Unit: million Kl) Future goals Additional efforts CO2 Reductions in the Steel Industry (Preliminary calculation) Additional efforts CO2 emissions (Unit: million ton-c) Initiatives for Preservation of the Global Environment 8 Environmental Report 2001 Environmental Report Initiatives for Preservation of the Global Environment

8 Initiatives for Preservation of the Global Environment Environmental Preservation Initiatives for Preservation of the Global Environment Measures to Improve Logistics The transportation sector alone consumes about 24% of total energy consumption in Japan. Thus the adoption of energy-saving measures to reduce CO2 emissions generated by this sector is a vital concern. Nippon Steel delivers more than 26 million tons of steel products to its customers each year, including those marked for export, and is working hard to reduce environmental impact related to the delivery process. In order to reduce transport distances to customers, we are working hard to push for OEM with other steelmakers and direct delivery to customers. To improve loading rates, we are transporting steel products jointly with other steelmakers. For modes of transport, we now mainly use ships with relatively small environmental impact (such as small steel vessels and ferry barges) and have already started shifting from road to rail transport. Regarding physical distribution systems, in sea transport, we have developed and begun operating the coaster-navigation network system that combines vessel-navigation information and berth information at loading and unloading ports, with good results in efficiency. Overland also, our transport system, designed for improved efficiency in running vehicles, networking cargo information and vehicle information, became operational in September Each steelworks is making positive effort to transport raw materials by conveyor, recycle by-products within source processes and send products directly to customers, thereby reducing the overall transport volume. In the past three years, Nippon Steel s steelworks have succeeded in cutting down their monthly internal transport volume of iron ore, coal, scrap and materials other than products by about 20%. To reduce further the number of transport vehicles used, such measures are implemented as improving the loading rate, increasing the size of transport vehicles and introducing a vehicle dispatch control system. The vehicle dispatch control system also helps to achieve more efficient vehicle operation control. The usage of ship loading materials is reduced by employing steel band lashing and simplifying product packaging. Inside its business offices, too, Nippon Steel is making company-wide efforts for greater energy savings by improving efficiency in the flow of materials and by use of cars with lower fuel consumption and less environmental impact. Initiatives for Improvement in Logistic Efficiency through Use of Information Technology (IT) Nippon Steel is improving the operation efficiency of vehicles by using them on their return trips after product delivery for carrying not only heavy cargo such as steel products and steel fabrication products, but also recycling materials like PET bottles and waste plastics. Especially concerning the transport of steel products by vehicles on their return trips, we built the steel industry s first system (dubbed Scrum-net) for seeking cargo and vehicles utilizing information technology (IT). The Scrum-net system allows Nippon Steel to make efficient use of vehicles on return trips to steelworks. The scope of the Scrum-net system will be expanded to cover companies in the Nippon Steel Group as well as customers for enhanced vehicle operation efficiency. Example of system for enhancing logistic efficiency Consuming area Steel shipment Steelworks Return transport West Japan (Recycling materials) Loaded vehicle Empty vehicle Consuming area Steel shipment Steelworks East Japan Return transport (Recycling materials) Change in Vehicle Transport Volume of Bulk Materials within Steelworks (kt/m) Bulk materials include iron ore, coal, coke, scrap and other miscellaneous materials. 4,000 3,500 3,000 2,500 2,000 1st half 2nd half 1st half 2nd half 1st half 2nd half 1st half 2nd half of 1997 of 1997 of 1998 of 1998 of 1999 of 1999 of 2000 of 2000 Examples of Environmental Impact Reduction Measures Including Energy Savings in Logistics Improvement perspective 1. Reduction of transport distance 2. Improvement of loading rate 3. Selection of transport means 4. Improvement of transport system Coastal transport by the efficient use of GPS Improvement of operation efficiency by network systems Improvement of operation efficiency and the reduction of idling by truck allocation management systems 5. Use of clean sources of power and promotion of energy conservation 6. Reduction in transport volume within steelworks 7. Reduction in number of vehicles used for delivery 8. Reduction in usage of consumable materials Example Reduction of transport distance to customers by OEM with other steelmakers Cooperative transport with other steelmakers Shift from trucks to containers Application of RORO vessels and ferries Use of electricity as clean energy by switch from diesel vehicles to AGVs Elimination of mill building illumination by full automation of cranes Reduction in vehicle transport by use of conveyors Utilization of by-products within source processes Direct transport (elimination of temporary storage and direct shipment to customers) Improvement in vehicle operation efficiency by utilization of vehicle dispatch control system Increase in capacity of transport vehicles Reduction in usage of shipping materials and their recycling Simplification of packaging with paper or vinyl Scrum-net screen Initiatives on Energy Savings, Conservation of Resources and Green Purchasing in Offices In addition to its efforts involving production processes, Nippon Steel is working in offices throughout the company (such as company headquarters, laboratories, and offices at plant locations) to make each employee aware of the importance of environmental preservation. At the business office level, the company is also working to achieve greater energy savings, conservation of resources, recycling and the purchase of environmentally sensitive office products and materials, such as recycled paperall with a view toward reducing environmental impact. In purchasing office supplies, we have set guidelines for buying environmentally sound goods on a green buying drive, already making preferential purchases of recycled articles and water-soluble paints. Examples Replacement of fluorescent lamps to energy saving bulbs Utilization of hybrid vehicles, etc. Utilization of the unused side of once-used paper Use of recycled paper for printing and name cards Preferential use of water-soluble paints Procurement of energy saving office machines Enhancement of room temperature control and introduction of no necktie in summer Sorted recovery of recyclable waste Preferential purchase of goods with ecology marks Initiatives for Preservation of the Global Environment 10 Environmental Report 2001 Environmental Report Initiatives for Preservation of the Global Environment

9 Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources In Japan, against the background of the alarmingly short capacities of waste disposal systems, the need for recycling brought on by the scarcity of resources, and global environmental issues that are rapidly becoming apparent, the Basic Law for Establishing a Recycling-Oriented Society has been enacted, laying down the basic principles for the establishment of a recycling-oriented society, followed by related laws. On its part, Nippon Steel is attempting to recycle not only the by-products from its own production processes, but also the by-products from other industries and waste materials from surrounding communities. Contributions to Recycling Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources Recycling of Steel Products About 800 million tons of steel products are manufactured per year in the world. They are used in buildings, roads, bridges, railways, automobiles and electric appliances, among other things, and are accumulated in society. This accumulation of steel products is estimated at about 12 billion tons throughout the world. Steel at the end of its product service life is recovered and reused as raw material for new steel products. Steel scrap contains impurities. Two types of recycling systems are established to suit the impurity content of steel scrap. Steel is produced from iron ore as a main raw material in one system and from steel scrap as a main raw material in the other system. Steel recycling and reproduction system Iron ore 500 million tons/year [Iron equivalent] Steel products Reproduction mainly from steel scrap 300 million tons/year Production mainly from iron ore [Pig iron and reduced iron] 500 million tons/year 800 million tons/year Recovery of steel scrap 300 million tons/year Accumulation of steel in the world 12 billion tons Recycling of By-Products Approximately 40 million tons of by-products are generated each year from steelmaking processes in Japan. Of these, slag accounts for about 90% and, if dust and sludge are included, the figure is more than 99%. If we look at the slag which accounts for most of the by-products generated, we can say that 100% of blast furnace slag is reusedmainly as raw material for cement, material for roadbeds, and aggregates as a substitute for sandwhile 96% of BOF slag is used in its recycled form as a resource for civil construction, soil stabilization and the construction of roadbeds. As for dust and sludge, as a result of technological developments in promoting in-house reuse as a source of raw material and the use of dust and sludge in refining zinc, the recycling rate has improved greatly and has now reached about 90%. To summarize, because of intensive recycling efforts for by-products, such as slag, dust and sludge, as of 1999 Nippon Steel has already realized a recycling rate of more than 98%. The recycle law and other laws require producers to control generation of by-products on a scheduled basis and to accelerate recycling measures. In the future, the company will aim at increasing the rate of recycling still further, setting for itself the challenging target of a 75% reduction in the amount of residual unrecycled waste by the year 2010, compared to the base line of R&D will focus, among other targets, on improving the quality of stainless steel slag and on developing technologies for removing zinc from dust and sludge. Trends of By-Products Recycling (Unit: %) (Target) 99 Trends in Amount of Final Disposal (Unit: million tons/year) Recycling of Steel Cans To promote the recovery of used cans, the steel industry in Japan is engaged in various activities, such as the donation of equipment to local governments for sorting recycled used cans, providing financial support to recycling facilities, conducting campaigns for a cleaner and more beautiful country, and public recognition of the outstanding efforts of voluntary organizations working for a cleaner environment. The steel industry has Trends in the Recycling Rate of Steel Cans in Japan Source: Japan Steel Can Recycling Association (Unit: %) (Target) 85 promoted such activities with the aim of increasing the rate of recycling to 75% by the year Actually, the recycling rate reached 80% in 1997, a full three years before the target date. Moreover, since the results for FY2000 exceeded the 84.2% achieved in the prior year, the industry will attempt to push for even greater efforts in recycling by setting a new target of 85% Recycling of Slag The main components of slag, a by-product of steel production, are lime (CaO) and silica (SiO2), containing no other organic substance. For this reason, for the purposes of conservation of resources and energy, approximately the entire quantity of slag generated is recycled as cement material and road subbase material, and for soil improvement and many other uses. BF slag, accounting for most of the slag generated, consists of impurities separated from the reduced iron ore and the ash from limestone and coke, and about 300kg per ton of pig iron is produced. About 60% of BF slag is used for cement, making it possible to cut about 40% of the total energy needed for cement manufacture (Target) Performance Results of Recycling of Slag in Nippon Steel (Unit: %) Others 2.1% Internal recovery Concrete 7.5% 8.8% FY2000 Slag Recycling Rood M ton/y subbase 14.0% Civil application Soil improvement 14.2% 4.4% Cement 47.3% Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources 12 Environmental Report 2001 Environmental Report Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources

10 Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources Contributions to Recycling Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources Blast Furnace Cement Molten blast furnace (BF) slag, when quenched with water, becomes water-granulated slag having hydraulicity. This water-granulated slag, when pulverized and mixed with Portland cement, makes BF cement. BF cement is made by substituting BF slag for about 45% of Portland cement, thus conserving lime resources. BF cement can also cut about 40% of the energy required in cement manufacture and the corresponding CO2 emissions. BF cement, having excellent long-term strength and small heat of hydration, is effective against temperaturecracking in large structures. Moreover, its outstanding durability against salt damage and alkali aggregate reactions in coastal structures has been well demonstrated. BF cement, awarded the ecology mark, is making a substantial contribution to protection of the global environment through conservation, energy saving and CO2 reduction. Recycling of By-Products, etc., Generated by Other Industries Nippon Steel has become a major contributor to recycling and waste reduction efforts by extending use in the manufacture of iron and steel beyond the by-products of its own operations to the active utilization of byproducts generated by other industries and discarded items recovered from communities. For example, the sludge resulting from paper-making processes and the dross generated in the production of aluminum are used as heat-insulating materials and as chemical agents in refining steel; the nickel catalysts used in oil refining and food processing are recycled as raw materials in the manufacture of stainless steel, and the iron powder collected as a residue in the waste acid recovery process in the manufacture of semiconductors is also used as raw material for steel making. Trends of BF cement sales 25 (%) The rate of BF cement usage 20 BF cement sales amount (million tons) Other industries Waste nickel catalyst Waste tires Waste etching liquor Waste plastics Sludge incinerated fly ash Iron scrap Aluminum dross Waste steel cans Steel industry Recycling within steel material production processes Recycling in other industries Construction material Zinc Cement Steel powder Fertilizer Magnetic material Soil improvement material Low environmental impact products (Commodities which are free from hazardous substances) Recyclable commodities CO2 Emission and Comparison of Fuels Consumption Portland cement (A) BF cement (B) (A) (B) CO2 Emission (carbon eq.) 207kg 122kg 85kg Fuel consumption Lime Fuel (coal eq.) Electricity 1,049kg 592kg 457kg 110kg 104kWh 63kg 88kWh 47kg 16kWh (Source: Nippon Slag Association) Recycling of Waste Tires Nippon Steel has begun to recycle waste tires, and started to use them as a partial substitute for scrap iron and coal in the scrap melting furnace at the company s Hirohata Works from When waste tires are crushed and fed into the scrap melting furnace, the steel cords contained in the tires are melted and recycled as high quality steel and the heat-generating properties of carbon derived from the melted tires aid in the melting process as a substitute for coal. In addition, exhaust gas formed during the same process is used in another downstream process of steel making. Dust Recycling Plant (Kimitsu Works) Recycling of Dust and Sludge Nippon Steel has already been recycling and selling 95% of the dust generated within its steelworks. To further increase the rate of recycling of dust generated by blast furnaces (BFs) and basic oxygen furnaces (BOFs) at the steelworks, we have introduced the rotary-hearth type reduction furnace and established a technology to manufacture highstrength reduced-iron pellets to be recycled in the steel process. This reduction furnace has solved the technical difficulty of zinc content of BF and BOF dust and now made total recycling possible. We plan to recycle the separated and recovered zinc as a zinc material. Using this method, effective utilization of works-generated iron-bearing dust and sludge has started at Kimitsu Works and Hirohata Works. As the next step, we are planning to achieve higher rates of recycling of sludge by the same method. Trends in the Recycling of Waste Tires Waste Tires in Japan (Unit: million tons/year) Recycling at Nippon Steel (Unit: million tons/year) Nippon Steel 6% Results of Recycling of Waste Tires (Unit: %) Export 9% Material recycling 19% Waste 12% Recycling Amount in M ton/y Fuel for cement 35% 11% Source: Japan Tire Recycling Association Paper industry (using at boiler plant) Tire industry (using at generator plant) 5% Metal smelting 3% Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources 14 Environmental Report 2001 Environmental Report Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources

11 Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources Contributions to Recycling Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources Recycling of Waste Plastics The effective use of waste plastics, which is one of the activities covered by the steel industry s Voluntary Action Program, has the effect of reducing the consumption of energy, contributing to CO2 reduction and the widespread recycling of resources. The law which promotes the collection and sorting of containers for recycling (the Recycling of Containers and Packaging Law) went into full effect in April As a result, we can expect a sharp rise in the recovery and sorting of plastic containers and packaging discarded from households. Nippon Steel has already gone through numerous experiments on the effective use of waste plastics in coke ovens, as well as in the blast furnace, and with promising results. Recently, an application for their use in coke ovens was approved by the government as a chemical recycling technology with great potential for promoting the utilization of recyclable resources. Nippon Steel has begun the task of implementation in At Nagoya Works and Kimitsu Works, the waste plastics re-commercializing systems came on stream in October and November, 2000, respectively. The systems each have a capacity of 40,000 tons/year. This technology is incorporated as additional initiative in the voluntary action plan of Japan s steel industry concerning the global warming issue and is expected to progress further. Pyrolysis process (coke oven) In the coking chambers of the coke oven, the waste plastics are heated to about 1,200 C in an oxygen-free condition and pyrolyzed. The charged plastics are pyrolyzed at 200 C to 450 C, generate high-temperature gas, and are completely carbonized at 500 C. Hydrocarbon oils and coke-oven gas are refined from the hightemperature gas generated by pyrolysis, and the residue is recovered as coke. Schematic View of Coke Oven Tar and light oil, coke oven gas collecting pipe Charging hole Combustion flue High temperature gas Structional Drawing of Inside of Coke Oven Combustion flue Combustion flue Enlarged diaphragm Decomposed by heat Heating Flowchart of Waste Plastic Treatment Plastic containers and packaging discarded from households Households Coke oven Coking chamber Regenerator Heating Coking chamber Heating Coal and plastic Softening and cohesive zone Coke Brick wall Collecting waste plastics Materials for plastic Chemical plant Plastic recycling Coal Desalization Granulation Cleaning Volume reduction Pre-treatment Municipality Nippon Steel Example of utilization for re-commercialization The hydrocarbon oil is utilized as chemical feedstock for container and packaging resins, electronic materials and paints, the coke as iron ore reductant, and the coke-oven gas as fuel at the steelworks. Of the waste plastics treated by the pyrolysis process, 40%, 20% and 40% are reused as hydrocarbon oil, coke and cokeoven gas, respectively. Tar and light oil Re-commercializing plant Application plant Coke oven gas Power plant Coke oven furnace Cokes Blast furnace Steel products Tar and light oil 40 % 20 % Refined at chemical plant Light oil Styrene resin Benzen Resin pellet Container Cokes Using as a reducing agent of iron ore at blast furnace after collecting waste heat energy. Fe2 O3+ 3 /2C 2Fe+ 3 /2CO2 40 % Coke oven gas Using at in-house power plant Toluene Xylene Cokes Ore Waste plastics received from local governments Crushed waste plastics Granulated waste plastics Plastic pretreatment process In the pretreatment process, steel, aluminum and other metals, glass, sand and gravel, and other foreign matter are removed from plastics transported from local governments. The waste plastics are then crushed, purified of polyvinyl chloride (PVC), reduced in volume, and shaped so that they can be charged into coke ovens. Tar Dye Benzen, Toluene, Xylene Carbon black Pitch coke Coal tar enamel Phenol Tennis racket Pitch coke Paint Electronic parts Oxygen Continuous casting Converter Rolling Steel products Heat and surface treatment Power plant Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources 16 Environmental Report 2001 Environmental Report Initiatives for a Sustainable Society Based on Total Recovery and Recycling of Resources

12 Measures for Reducing Environmental Impact Nippon Steel endeavors not only to comply with those laws which guard against pollution (for example, of air and water), but also at every stage of production, to encourage and promote the use of measures designed to protect the environment: preservation of clean air, soil conservation, preservation of clean water, elimination of particulate matter, ensuring a healthy work environment, and appropriate action to guard against the introduction of new substances with the potential for adverse environmental impact. Environmental Burden Reduction Measures for Reducing Environmental Impact Environmental Preservation of Air To further reduce the SOx (sulfur oxides), NOx (nitrogen oxides) and particulate matter generated during combustion, Nippon Steel employs a variety of measures: reduction of fuel consumption, use of clean fuels such as LNG, LPG, and coal with lower sulfur content, optimization of the air-to-fuel ratio, installation of low NOx burners, and installation of waste gas treatment facilities, among others. As a result of these measures, Nippon Steel has seen a reduction in SOx of about 85% and in NOx about 40% from 1973 levels, and is committed to still further reductions in the future through improved operational technology and technical innovation. Desulfurizing System of Coke Ovens The gas generated in coke ovens is reused as a fuel in downstream operations after conversion to clean fuel by removal of its sulfur content. Trends in SOx Emissions Waste Gas Treatment System of Sintering Machine The sintering plant of Kimitsu Works has introduced the movable electrode type electric dust collector, contributing to soot and dust emission control. (Unit: 10 6 Nm 3 ) Comparison of SOx Emission (Emission per crude steel ton) China (1993) 25kg/ton Nippon Steel (from 1993) about 0.7kg/ton Nippon Steel has already achieved the reduction of SOx emission in 1993, which is the same amount in Environmental Preservation of Water Nippon Steel reuses about 90% of its intake of river water by recycling and has reduced the effluents discharged into public waterways to an amount which is almost negligible. Moreover, it is making an effort to ensure against the future pollution of public watercourses in the vicinity of each plant by its close attention to the treatment and appropriate control of COD unit consumption and by working toward still greater efficiency in its operations. In the future, Nippon Steel will continue to promote R&D vigorously and to maintain strict compliance with new legislation in this area, such as some of the new, more stringent regulations on effluent quality standards. Trends in Chemical Oxygen Demand (COD) (Example of the Kimitsu Works: Setting 1986 as the standard year, COD per ton of steel material for each year was indexed and evaluated.) Soil Conservation Raw water It has cleared the target value and maintained a stable value since Consumption of Water at All Steel Works (FY 2000, not including power plants) Sea water 19.8% In accordance with the Environmental Quality Standards on Soil Pollution and the Directive on the Investigation and Adoption of Countermeasures against Soil and Ground Water Pollution and related Application Standards published by the Environmental Agency (Japanese equivalent of EPA), Nippon Steel is making surveys of soil and ground water and is conducting research on measures to protect them from pollution % 4.82 B m 3 /Y (166.6m 3 /ton) Recycled water 89.2% Fresh water 80.2 % Reduction/Elimination of Particulate Matter Trends in NOx Emissions (Unit: 10 6 Nm 3 ) Integrated steel plants with blast furnaces such as those at Kimitsu, Nagoya, Yawata and Oita, where large amounts of coal and iron ore are handled, have been trying to reduce the amount of particulate matter by installing dust collectors in facilities which generate soot and smoke and by placing sprinklers in the yards. Recently, they have seen a steady reduction in the amount of particulate matter as a result of improved methods of spraying and the introduction of special conveyors. In addition, each of the plants is working hard to achieve early detection and prevention of malfunction in dust collector equipment, as well as abnormal occurrences of dust generation in the yards. Trends in the Precipitated Amount of Particulate Matters around a Steel Mill (Example of the Yawata Works) Enhancement of sintering plant dust collection Measures for Reducing Environmental Impact 18 Environmental Report 2001 Environmental Report Measures for Reducing Environmental Impact

13 Measures for Reducing Environmental Impact Environmental Burden Reduction Measures for Reducing Environmental Impact Improving the Work Environment Nippon Steel has implemented a variety of measures to improve the work environment. For example, base isolators are installed in the foundations of control pulpits and other facilities to prevent production-induced vibration from causing discomfort to workers and damaging equipment. The air flow and temperature distribution in the works buildings are accurately predicted, and ventilating and dust collecting equipment are optimally arranged to improve the indoor environment. As far as noise is concerned, Control pulpit with base isolators Trends of the Door Leakage Index (Target) 10 Base isolators between columns and foundation sound propagation is predicted, and appropriate noise reduction measures are implemented. Coping with the Environmental Impact of New Substances Among the 22 substances designated by the Ministry of the Environment as Hazardous Air Pollutants Requiring Priority Action, benzene, trichloroethylene, tetrachloroethylene and dioxin were specified as designated substances under the Air Pollution Control Law in 1997 and subjected to the emission standards of the law. For dioxins, the Law Concerning Special Measures against Dioxins was established in 1999, and new standards are now applied to restrict their use. The Law Concerning Reporting, etc., of Releases to the Environment of Specific Chemical Substances and Promoting Improvements in Their Management came completely into force in 2001, and 354 substances were designated as Class 1 specific chemical substances. In 2001, the Law Concerning Special Measures for Promotion of Appropriate Disposal of PCB (polyvinyl chloride biphenyl) Wastes was promulgated to tighten the storage and management of PCB wastes. Nippon Steel not only observes the standards specified in the laws, but is also proactively working to reduce the usage of environmental load substances in coordination with the Japanese Iron and Steel Federation. Benzene and Volatile Organic Compounds The Japanese Iron and Steel Federation has worked out a voluntary control plan for benzene and is engaged in activities to reduce the Door Leakage Index (an index which measures fume and gas leakage from coke oven doors) to no more than 10 (on a scale of zero to 100) by the end of the 1999 fiscal year. This voluntary action plan continued to achieve the target in FY 2000 as well. Nippon Steel formulated a new voluntary action plan for FY 2001 and set the goal of reducing the company s emissions of 288 tons in FY 1999 by 50% in FY The Muroran Works, whose region is designated, has made its own plan to cut down benzene emissions to 20 tons or less, and is working toward that target. Nippon Steel is grappling with the task of reducing emissions of volatile organic compounds (VOCs) like tetrachloroethylene and dichloromethane in washing and other processes in coordination with the voluntary action plan of the Japanese Iron and Steel Federation. Dioxins The Law Concerning Special Measures against Dioxins was established in July In the steel industry, waste incinerators, steelmaking electric arc furnaces and sintering machines came under the coverage of the law. The dioxin emission standards were set for these facilities and enforced in January The Japanese Iron and Steel Federation developed voluntary measures for dioxin emissions from sintering machines (guidelines by industry) in September 1998, and established the goal of cutting sintering machine dioxin emissions by 30% in 2002 compared with In accordance with these guidelines, Nippon Steel is working hard to keep dioxin emissions within a target value of not more than 1.0 ng-teq/nm 3. Country-Wide Dioxin Emissions of Exhaust Gases (WHO-TEF<1998>) General waste incineration facilities Industrial waste incineration facilities Non-regulated small-sized waste incinerators Electric furnaces for steelmaking Sintering processes for ironand steelmakers Total (Incl. others emissims) ,550 1, ~ ,310~3,570 1, ~ ,620~2,820 Unit: g-teq/year Government estimate Amounts of Five Specified Chemical Substances Released and Transfer Chemical substances Surveyed in 2000 Manganese and its compound Chromium compound (exc. Hexavalent (CrVI)) Nickel compound Benzen Toluene Sum Total 1, " " " 9,067 5, ,304 15,778 Dioxin Emissions from Sintering Processes (Unit: ton) (Unit: g-teq) (Target) Determining the Emission of Specific Chemical Substances into the Environment and Imposition of Stronger Environmental Controls (the PRTR* Law) In July 1999, the Law Concerning Reporting, etc., of Releases to the Environment of Specific Chemical Substances and Promoting Improvements in Their Management (PRTR Law) was established, making it obligatory to report the FY 2001 releases. Nippon Steel has actively participated in the investigation activities of the Japanese Iron and Steel Federation, and is making efforts to reduce the amounts of specified chemical substances released and transferred. The FY 2000 investigation was carried out according to the investigation method of the Japanese Iron and Steel Federation that was revised for the chemical substances subject to the PRTR Law. Nippon Steel s total amount of designated chemical substances released and transferred was put at 15,778 tons. Of this total, 9,067 tons of manganese and its compounds, 5,239 tons of chromium compounds (other than hexavalent chromium), and 545 tons of nickel compounds were accounted for by the landfill of ironmaking and steelmaking slag and other waste materials of low environmental load. This situation will be improved by recycling more slag in the company s plan to reduce the amount of final disposal. Measures for Reducing Measures for Reducing 20 Environmental Report 2001 Environmental Impact 21 Environmental Report 2001 Environmental Impact

14 Contributions through Products Contributions through Products Steel products have excellent recyclability and are also produced by manufacturing processes with very low environmental impact. Even in use, steel products, which are energy-saving, resource-conserving and free from harmful substances, are helping reduce environmental impact. Nippon Steel, by the positive development and marketing of products with low environmental impact ( eco-products ) to meet the needs of various demand sectors, is contributing to environmental preservation and control. Contributions through Products Contributions through Products Steel Products with Low Environmental Impact The basic principle underlying the development of products with low environmental impact ( eco-products ) is the minimization of environmental impact in all the phases of the life cycle of steel, from extraction of raw materials to manufacture, fabrication and assembly, usage and disposal, thus making a contribution to environmental improvement in each phase. 1. In the stages involved in the manufacture of steel products (from raw materials to production): to manufacture by ecological processes which save energy and have low environmental impact. 2. In the stage of fabricating steels into products: to contribute to the improvement of customers manufacturing processes through process elimination, etc. 3. In the use of steel-using products: to realize weight reduction, high efficiency and long life. 4. At the stage of disposal of steel-using products: to contain no harmful substances with environmental impact. Also, to make and offer steel products which are easy to re-utilize at the stage of recycling. Nippon Steel has accomplished a variety of technology innovations to make steel products in its manufacturing processes with low energy consumption and environmental load. We will not only continue to improve our manufacturing processes, but also positively ship to the markets the eco-products that meet the requirements of consumers in various sectors for energy conservation, waste reduction and hazardous substance elimination, among other purposes. In FY 2000, Nippon Steel marketed sheet steel with improved corrosion resistance (trade named Super Dyma) and plate steel with high weld strength as new eco-products. Area of demand Automobiles Containers Objective CO2 reduction and energy savings Achievement of CO2 reduction and energy savings through the higher efficiency of production processes and products Weight reduction and safety improvements High strength steel sheets High strength rods and wires Higher efficiency of the motors for exclusive use in hybrid vehicles High efficiency grain-non-oriented electrical steel sheets Weight reduction of materials for cans Ultra-thin tinplate, polypropylene-laminated steel sheets Measures for recycling and waste reduction Longer life due to better resistance to corrosion, better performance of steels Reduction of steel material production and waste due to longer life High corrosion resistant surface treated steel sheets Environmental preservation and improvement of the environment No environmental impact, with no hazardous chemical substances Measures against noise and vibrations Vibration restraint steel sheets Improvement of exhaust gas purifying capacity Heat resistant stainless steels No environmental impact substances Lead-free coated steel sheets for fuel tanks Measures against hormone-disrupting substances Polypropylene-laminated steel sheets Representative eco-products used in automobiles To counter the global environmental problems, Nippon Steel has tackled the development of automotive materials for weight reduction with many results. High-tensile strength steel sheets and high-strength steel parts High-tensile strength sheet steel is high in tensile strength, weldability, toughness and formability, and allows section thickness reduction and weight reduction of automobiles. Conventional high-tensile strength steel is high in strength, but is hard and difficult to form. Nippon Steel has developed a new type of high-tensile strength sheet steel that is soft before working and is hardened by working. Its microstructure is transformed by the deformation energy of the working operation. The new high-tensile strength sheet steel High-tensile strength steel sheets and high-strength steel parts used in automobiles TS (N/mm 2 ) Mild steel 340~ ~ ~ ~1270 BH steel sheet Ultrahigh-tensile strength steel sheet Ultrahigh-strength steel tube TRIP steel sheet 400~ ~ Body Suspension High-strength steel tube BH steel sheet High-strength inductionhardenable steel sheet TRIP steel sheet High-tensile strength bakehardenable (BH) steel sheet High-strength suspension spring steel High-strength steel bar High-tensile strength steel sheet for wheels features not only excellent press formability, but also a greatly enhanced ability to absorb impact energy, contributing to weight reduction and safety enhancement of automotive structural parts. Engine, transmission and suspension parts are increased in strength to achieve greater automobile weight savings on the whole. An example is suspension springs. Nippon Steel has developed high-strength suspension spring steel that combines high strength with high corrosion resistance, a feat difficult to achieve in the past. Fuel tank sheet steel Conventional fuel tanks are made of steel sheet with a coating containing lead. To mitigate the concern about environmental pollution resulting from the lead contained in automobile scrap, Nippon Steel has developed aluminumcoated steel and tin-zinc coated (Eco coat-t) steel, and supplies them as new lead-free materials for fuel tanks. Electric motor materials Electric and hybrid cars are emerging as the main players in drives for fuel mileage improvement and energy conservation. The drive motors of these vehicles must run with lower energy and fuel consumption while delivering the required torque. Nippon Steel has succeeded in developing a more efficient, electrical sheet steel for the cores of these motors, thereby contributing to the diffusion of hybrid vehicles. This new electrical sheet steel is widely utilized as the motor material of electric appliances and has greatly contributed to the energy conservation of society as a whole. Household electric appliances and electrical machinery Electric power and energy Buildings, civil engineering and others Improvement of motor efficiency High efficiency grain-non-oriented electrical steel sheets Improvement of formability Lubricant film treated steel sheets Elimination of painting process Pre-painted steel sheets Improvement of electric power generation efficiency Steel pipes for high temperature boilers Improvement of transformer efficiency High efficiency grain-oriented electrical steel sheets Improvement of construction efficiency Steels for high weld-heat input Hyper beam (H-sections with constant outside dimensions) Measures for electric power generation with refuse-derived fuel High corrosion resistant steel pipes for boilers Life span extension, improvement of durability and reliability High strength structural steel High tensile strength steel wires Corrosion resistance Marine weather resistant steels High corrosion resistant steel sheets Titanium-clad steel sheets Measures for the recycling of vehicles Vehicles made of stainless steels No environmental impact substances Chromate-free galvanized steel sheets Lead-free coated steel sheers (Sn-Zn, 3-layer plated) Measures against noise, measures for magnetic shields High efficiency electrical steel sheets Vibration absorbing stainless steel sheet Measures for clean energy Corrosion resistant heavy plates for smokestacks Measures against environmental pollution Environmentally-friendly oil-well pipes Environmental preservation (surplus soil, noise, vibrations, etc.) Sound absorbing panels, steel framed houses Gantetsu pile method Non-environmental impact substances Substitution for polyvinyl chloride laminated steel sheets Improvement of safety against marine collisions HIAREST steels (steels with high crack arrestability) (Source: Nippon Steel Technical Report No. 371 (1999), Environmentally-Friendly Steel Products) Representative eco-products used in homes Prepainted steel sheet for household electric appliances Nippon Steel s prepainted steel sheet (trade named Viewcoat) is used in washing machines, refrigerators and air-conditioner outdoor units. Nippon Steel paints Viewcoat with the color specified by each customer, so that the customer can eliminate the painting process after fabrication and assembly. Prepainted on a dedicated painting line, Viewcoat excels in paint film quality, minimizes paint loss and greatly reduces the total environmental load because all possible environmental control measures are taken for disposal of organic solvents, treatment of waste gas and prevention of bad odors, among other things. General household electric appliance manufacturing process Material Oiling Forming Degreasing Drying Manufacturing process with Viewcoat Material Forming Painting Assembly Assembly Contributions through Products 22 Environmental Report 2001 Contributions through Products 23 Environmental Report 2001

15 Contributions through Products Contributions through Products Contributions through Products Chromate-Free Galvanized Steel Sheet Although a treatment containing chromium is typically applied to galvanized steel sheet because of its ability to secure the adhesion of coated films during the coating process, Nippon Steel, prompted by its awareness of the potential for environmental pollution, has acted quickly to develop an alternative treatment that does not require chromium. Galvanized steel sheet treated by this method is non-polluting and exhibits the same superior corrosion-resistant properties. It is used mainly for electrical appliances. Trends for Thickness of Steel Can Material Drawn and ironed 2-piece can (350ml) Width of excavation 0.2 Welded 3-piece can (200ml) 0.29 Concrete NS-BOX Schematic view of continuous steel diaphragm walls (NS-BOX) Example of NS-BOX execution (Unit: mm) PET laminated sheet for 2-piece can (350ml) Reduction of Thicknesses of Can-making Materials Steel cans for containers are far ahead of the rest of container materials in terms of recycling ratio. With reduced sheet thicknesses, steel cans also contribute to resources conservation and energy saving. Materials for beverage cans must satisfy rigorous quality requirements for food containers. Particularly in the case of two-piece cans, which require a very high level of cold formability in can-making, how to obtain thinner sheet materials was an important task. In 2000, Nippon Steel successfully reduced sheet thickness to 0.19mm for steel cans and to 0.18mm for PET laminated cans, realizing the world s lightest steel cans. This means a 15% weight reduction (from the level in 1997) of 350ml cans. Representative eco-products used in society In the fields of social capital like bridges and houses, Nippon Steel supplies many eco-products by adroitly combining the green and recycle characteristics of steel with the formability, quality, uniformity and other material properties of steel. Continuous steel diaphragm walls Nippon Steel s continuous steel diaphragm walls (trade named NS-BOX) are used as the walls of underground structures in cities. Their small thickness allows the amount of construction surplus soil to be reduced. The NS-Box method obviates the need for concrete reinforcement and ensures continuous diaphragm wall construction to be completed in a small space within a short period of time. Especially in urban areas, this continuous steel diaphragm wall construction method helps to alleviate traffic congestion and reduce the environmental impact of construction projects. Steel houses Nippon Steel long thought about building safe and comfortable houses by making most of its elementary technologies for steel materials and members. This effort has culminated in the steel house jointly developed by six steelmakers and the Kozai Club. The steel house is based on the two-by-four wooden house principle with the wooden framing replaced by cold-formed steel framing. The steel house construction method uses shapes cold formed from zinc-coated steel sheet with high corrosion resistance. These steel shapes change little in characteristics with elapse of time and excel in durability. The external insulation method that seamlessly covers the entire house with insulating material is a standard insulation method for the steel house. This insulation system achieves energy conservation with excellent air tightness and insulation properties and good air conditioning efficiency. The use of recyclable steel also contributes to forest resource conservation. Nippon Steel is also striving to develop and market house structural members made of steel that render termite control treatment unnecessary. Other Low Environmental Impact Products In addition to steel products, pulverized blast furnace slag (by itself and as raw material in the manufacture of cement) has been approved as an eco-mark commodity from the point of view of effective use of resources. Due to their excellent corrosion-resistant properties, titanium products produced by Nippon Steel are used as building materials for roofing, external walls, etc., and enjoy longer lives than more conventional building materials. They are also used for marine structures since they exhibit distinctly superior corrosion resistanceeven in a marine atmosphere. In addition, Nippon Steel is working on the application of high corrosion-resistant stainless steel foil in the manufacture of catalytic converter honeycombs for automobile exhaust gas catalysts and its use is resulting in cleaner exhaust gases. Cross Tokyo Bay highway: Piers made of titanium-clad steel LCA (Life Cycle Assessment) Initiatives LCA Study for Steel Products (System Boundary) Earth Iron ore and coal mining Pellet making Alloy making plant Refractories plant Transportation Air Emission Catalytic converter honeycomb made of stainless steel foils LCA is a quantitative method for evaluation of environmental impact of products and services in terms of life cycle, at all the stages involved from extraction and transport of raw materials, manufacture of materials, assembling, use and recycling to disposal. In the case of steel products, we have achieved concrete results in environmental improvement and energy saving at the stage of materials manufacture at steelworks. Nippon Steel, as the representative of the Iron and Steel Federation of Japan, has been participating in the IISI (International Iron and Steel Institute) LCA study, which started in Also, since 1998, we have taken part in the METI (Ministry of Economy, Trade and Industry) LCA project, working to establish a reliable method and gathering data. At present, sorting of data on steel sheet and plate, sections and other steel products, totaling 12 items, has been completed. Gathering of data on more product items and a study on the utilization of LCA data are now under way. Steel works Coke making plant Sintering plant Blast furnace Steel making plant Rolling mill Power plant Boiler Oxygen making plant Final disposal Recovered electricity By-product gas Electricity Slag BTX Tar, BTX Oxide metal powder Steel products By-product subtraction system Power plant Cement plant Chemical plant Ferrite materials Sea, river, lake, pond Disposal Use, store Steel scrap Example of steel house erection Contributions through Products 24 Environmental Report 2001 Contributions through Products 25 Environmental Report 2001

16 Contributions through Engineering Expanding on the technologies that it has developed over the years, Nippon Steel is currently marketing its engineering knowhow in diverse kinds of environmental fields. By providing its clients with plants and technologies geared toward energy savings and environmental preservation, it is contributing to a reduction in environmental impact in countries around the world. The company is also contributing to the realization of a sustainable society, where the products of manufacture are returned to future manufacturing processes as raw materials, and to minimal environmental impact, by expanding its technologies and applying them in increasingly wider areas, including waste treatment, water treatment and urban energy utilization. Plants Geared toward Environmental Preservation Direct waste melting and recycling system Twenty units of the direct waste melting and recycling system that applies blast furnace technology are already in operation in Japan. The system melts together a variety of refuse, including incombustible materials, stably at a high temperature of over 1,700 C, and the amount of waste landfilled is thus sharply reduced. The generated Drying and pre-heating zone (300 C 400 C) Pyrolysis zone (300 C 1000 C) (Medium temperature reduction atmosphere) Burning and melting zone (1700 C 1800 C) (High temperature reduction atmosphere) Molten residues Waste Waste gas treatment equipment Cokes Lime stone Air Air +O2 Pyrolysis gas User Kamaishi City Ibaragi City (No.1 plant) Ibaragi City (No.2 plant) Iryu Health Facilities Association Kagawa Eastern Cleaning Facilities Association Iizuka City Ibaragi City (No.1 plant replacement) Itoshima District Fire Fighting & Welfare Facilities Association Kameyama City Akita City Takizawa Village Makimachi and Three Other Communities Health Association Narashino City Kazusa Clean System Co. Kagawa Eastern Cleaning Facilities Association Toyokawa Houhan Health Association Kouchi Western Cleaning Facilities Association Tajimi City Oita City Koga city and one other city, 4 towns Secondary combustion zone: 900 C 950 C Main combustion zone: About 1050 C Location Kamaishi, Iwate Ibaragi, Osaska Ibaragi, Osaska Tatsuno, Hyogo Nagao, Kagawa Iizuka, Fukuoka Ibaragi, Osaska Shima, Fukuoka Kameyama, Mie Kawabe, Akita Takizawa, Iwate Nishikamahara, Niigata Narashino, Chiba Kisarazu, Chiba Nagao, Kagawa Toyokawa, Aichi Nakamura, Kouchi Tajimi, Gifu Oita, Oita Koga, Fukuoka molten residues (slag and metal) can be recycled as construction materials, and the recovered energy can be utilized for heating swimming pools and other welfare facilities. The direct waste melting and recycling system is an excellent environmentallyharmonized facility that reduces the emission of dioxins and other hazardous gases because it disposes of waste at high temperatures. Capacity 50 tons/day 2 systems 150 tons/day 3 systems 150 tons/day 2 systems 60 tons/day 2 systems 65 tons/day 2 systems 90 tons/day 2 systems 150 tons/day 1 system 100 tons/day 2 systems 40 tons/day 2 systems 200 tons/day 2 systems 50 tons/day 2 systems 60 tons/day 2 systems 67 tons/day 3 systems 100 tons/day 2 systems 65 tons/day 1 system 65 tons/day 2 systems 70 tons/day 2 systems 85 tons/day 2 systems 129 tons/day 3 systems 80 tons/day 2 systems Start of operation September 1979 August 1980 April 1996 April 1997 April 1997 April 1998 March 1999 April 2000 April 2000 April 2002 (Planned) December 2002 (Planned) April 2002 (Planned) April 2003 (Planned) April 2002 (Planned) April 2002 (Planned) April 2003 (Planned) April 2003 (Planned) April 2003 (Planned) April 2003 (Planned) April 2003 (Planned) Electric arc furnace waste gas control equipment Nippon Steel has continued research and development work for the past few years in view of the imminent regulation of dioxins in the waste gas of electric arc furnaces. The emission characteristics of dioxins and the characteristics of their removal by waste gas pyrolysis and rapid cooling equipment, waste gas air-cooling equipment (called the trombone gas cooler) and resin and bag filters have been clarified as a result. These technologies have been combined to establish the technology of efficiently removing dioxins. This new technology overcomes the many constraints attendant on its application to existing electric arc furnaces, and provides an optimum dust collection and environmental control system. Facilities Designed for Energy Savings Roppongi Hills Contributions through Engineering Coke dry quenching (CDQ) equipment From environmental and energy-saving considerations, CDQ equipment has been introduced both in Japan and overseas. Since the equipment began operating at the coke plant of the Yawata Works for the first time in Japan in 1976, Nippon Steel has built 39 units of CDQ equipment at its own plants and elsewhere in Japan and around the world. These units account for about 40% of the CDQ equipment existing in the world. In 1999, Nippon Steel delivered a 180-t/h CDQ unit to the Kwangyang Coke drying quenching (CDQ) equipment Works of Pohang Iron & Steel Co., Ltd. (POSCO) of South Korea. In 2000, orders for two CDQ units, one for the Kwangyang Works and the other for the Pohang Works, were received from POSCO. They are now under construction. In May 2001, Nippon Steel completed the construction of a 65-t/h CDQ unit at Beijing Shougang Corporation in China. The new facility is smoothly operating now (see page 34). Provision of energy solutions In the energy engineering business, Nippon Steel has promoted the construction of plants that produce both heat and electricity. The company has abundant results in the construction of energy-saving plants, such as electric power plants for independent power producers (IPPs), district heating and cooling systems, cogeneration systems and ice heat storage systems. In the steel business, Nippon Steel supplies 85% of its electricity requirements from power plants at its steelworks, and operates cooperative power plants at Oita, Kimitsu and Sakai, and independent power plants at Yawata, Hirohata and Kamaishi. The company thus has rich experience in the operation and management of electric power plants. Making use of this rich experience, Nippon Steel won a contract for the large project of constructing an onsite energy supply system by combining a private power generation system with a district heating and cooling system in the Roppongi Hills redevelopment project in Tokyo. The on-site energy supply system achieves energy conservation by the optimum operation of private power generation, reduction of transmission loss by on-site power generation, and district heating and cooling by cogeneration. Use of city gas as fuel also reduces CO2 emissions. Nippon Steel is now preparing the project for a scheduled completion in Nippon Steel will continue to provide cities with optimum energy solutions like the on-site energy supply system. Energy Supply System in Roppongi Hills Supply unit Offices City gas Backup power supply Hotels Theaters Boiler Water Gas tubine: 6,000kW x 6 units Power receiving facilities Power supply facilities 36,500kW Steam header Generator 500kW x 1 unit Power Steam Water Combined urban area (offices, apartments) Boiler Water City gas Steam header Broadcasting center Mori building Cooling tower District heating and cooling system 240,511MJ/h (19,000AT) Source: Roppongi Roku Chome Urban Development Union Contributions through Engineering Contributions through Engineering 26 Environmental Report 2001 Contributions through Engineering 27 Environmental Report 2001

17 Contributions through Engineering Contributions through Engineering Contributions through Engineering Soil and groundwater purification Nippon Steel has perceived soil and groundwater contamination as a serious problem leading to environment destruction, has participated in the foundation of the Geo-Environmental Protection Center, a public service corporation established for soil and groundwater remediation, and has developed and commercialized the colloidal iron powder solution injection method and in-situ electro-osmosis method, among other technologies. In March 2001, Nippon Steel concluded business tie-up contracts with IT of the United States, the world s largest company in the field, and with Kurita Water Industries Ltd. to augment the advanced technology of treating all pollutants, including difficult-to-decompose substances like polychloride biphenyl (PCB) and dioxin. The company also established a soil environment group in the Environmental Plant & Waterworks Division and deepened its coordination with the group companies. A system was thus put in place for performing contamination investigation, purification proposal and purification work. Nippon Steel will combine all efforts to conduct research and development on the expansion of its technology menu and to contribute to the protection of the environment through its soil and groundwater remediation business. Low-environmental impact construction method In the civil engineering and construction sector, foundation piling methods with low noise and vibration and without surplus soil are demanded under the social circumstances of mounting calls for a more comfortable living environment and diminishing availability of industrial waste disposal sites. Such piling methods are also in demand from the standpoint of construction cost reduction. Eco-Pile is highlighted as a new foundation method to meet these social and economic needs and solve the problems of existing piling methods. The NS Eco-Pile method that drives steel pipe piles with tip blades into the ground by rotation obtained the approval of the Minister of Construction concerning the allowable bearing capacity of foundation piles in May In the civil engineering sector, it acquired the general civil engineering method and technical review certification of the Japan Institute of Construction Engineering in March From the standpoint of expansion in the application scope of steel pipe piles as foundation piles, Nippon Steel will positively work to increase the sales of steel pipe piles not only in the civil engineering area, but also in the building construction area. Column: Environmental design technology Nippon Steel has enhanced plant construction-specific technology through solution of problems caused in equipment construction projects, and has achieved such results as equipment cost reduction. In recent years, Nippon Steel has applied these specific technologies to the environmental field, advanced the technologies of environmental design related to air flow, dust and vibration, seismic design, and structural degradation diagnosis, among other things, and carried out engineering with augmented simulation technology, thereby greatly contributing to environmental protection in and out of the company. NS Eco-Pile Pile driving by conventional construction methods In-situ electro-osmosis Water pumping and aerating equipment Computer Simulation for Preventing Dust Emission (Schematic view of analysis model) Blowing pile Flow chart of soil remediation by colloidal iron powder (CI) solution injection method CI solution Pumping Sea North Mound 3m 15m Wind break wall Raw-materials yard Wind break wall Waste channel South CI stock solution tank truck Water Added reagent Transport Pump Pump CI stock solution Injection solution adjustment receiving tank (dilution) tank Purification work site Purifying solution Pollution source Injection hole Ground surface 40m 140m 250m (Result of computer simulation) 800m 420m Driving and filling pile Schematic view of NS Eco-Pile Ground injection Colloidal iron powder solution injection method: Water solution in which iron powder with average particle diameter of 0.6 µm is dispersed is injected or permeated into ground to render contaminated soil harmless by decomposing organic chlorides into safe iron oxide and ethylene. Raw-materials yard Wind break wall Wind break wall Wind break walls can be installed in appropriate positions to inhibit dust emissions. Wind Fast Slow Contributions through Engineering 28 Environmental Report 2001 Contributions through Engineering 29 Environmental Report 2001

18 Environmental Accounting By the implementation of various capital investment programs, Nippon Steel has energetically carried through radical measures for environmental improvement. Those investments have been classified into the sum total of investments in environmental-control and energy-saving equipment, and the respective results of the investments have been published in terms of actual emission volume, etc. In addition, we have now comprehensively acounted for all of the environmental preservation costs involved in our business activities and computed the classified total of environmental preservation costs. Environmental Investments and Expenses The quantitative computation of environmental preservation costs has been undertaken, focusing on the steel business, making reference to For the Establishment of the Environmental Accounting System (2000 Report) issued by the Environment Agency. The sum total of environmental investments, which weigh heavily in environmental measures, and energy-saving investments are likewise stated in the same manner as before. As regards effects in the aspect of environmental preservation, those which can be expressed in numerical values as environmental performance are listed individually as the results of environmental preservation activities, such as actual emission volumes of SOx, NOx, dioxin, etc., and actual energy savings made. Nippon Steel s environmental preservation costs for FY2000 are: 32.1 billion for environment-related capital investments and 51.6 billion for expenses for environmental preservation. Environment-related capital investments account for about 24% of the total amount of capital investments. Of the expenses, air-pollution prevention cost, which claims the largest share, is a sum total of electricity expenses needed for the operation of the environmental dust collectors for keeping up air quality in the vicinity of the steelworks, expenses for equipment maintenance and repairs, etc., amounting to 24.8 billion a year. Water-pollution prevention cost is a sum total of expenses needed to meet the water-quality standard prescribed for the effluent from the steelworks in the environmental preservation agreement, etc. Also, expenses for R&D for new low environmental impact products (eco-products), typically products containing no harmful substances, occupy 16% of the total amount of money poured into R&D. Nippon Steel, while maintaining the existing environmental-measure equipment, will also take necessary measures to further improve the environment in the ongoing effort toward environmental preservation of society as a whole. Environmental Investments and Expenses Pollution Prevention Global Environmental Protection Resource Circulation Environmental Management Activities Items (Unit: million yen) Countermeasures for air pollution Countermeasures for water pollution Energy saving Treatment of by-products, final disposal Treatment of waste disposal EMS, Acquisition of ISO14001 certification 1999 Investment Expense 13, , ,300 10, , Investment Expense 6, ,300 4,800 24,800 10,100 1,100 2, The Aggregated Amount of Environmental Investments (Unit: billion yen) ~ Environmental Accounting Investments Geared toward Improving the Environment During the first half of the 70 s, in a serious attempt to improve the environment, Nippon Steel implemented allout, radical anti-pollution measures against a wide range of pollutants (air, water, noise, etc.), with investments of more than 100 billion. Recently, Nippon Steel has been making investments for enhancing the functions of environmental-measure equipment, renewing dust collectors and improving the work environment for coke-oven operators. Capital investments have also been made in recycling in order to convert by-products into resources and to minimize waste. For further emission control of other environmental impact substances, positive investments will continue to be made. Typical Examples of Environmental Investments ( ) Measures against the dust from the cooling systems of sintering machines Renewal of sintering machine dust collectors Installation of waste water denitrification treatment systems Improvements to the work environment near coke ovens Investments Focused on Energy Savings Since the oil crisis, Nippon Steel has been actively adopting energy-saving measures, such as improvements in energy efficiency and recovery of waste heat, and, at a cost of 400 billion to date, has obtained remarkable results. During the 1990 s, improvements in energy efficiency reached their highest level, while the efficiency of investments in waste-heat recovery and operational improvements has become relatively small. In the future, in order to realize the kind of breakthrough savings in energy which are needed to prevent global warming, it will be essential to replace old equipment at the end of its useful life with more energyefficient equipment (such as the introduction of more efficient power-generating facilities in the private sector). Nippon Steel understands this and is committed to making whatever timely investments are needed to cope with this new situation. Environmental Accounting Environment observation Personnel expenditures 600 2, ,900 The Aggregated Amount of Energy Savings Investments (Unit: billion yen) Research and Development Social Activities Other R&D for eco-products R&D for low environmental impact steel making process Increasing the greenery, advertisement SOx levy Total 57,800 2,700 2,400 1,500 4,800 49,800 32,100 1,900 2,400 1,600 4,100 51, Typical Examples of Energy Savings Investments ( ) Installation of high efficiency power generators Coal moisture control systems Installation of regeneration burners in steel material reheating furnaces, improvement of the efficiency of oxygen systems Environmental Accounting 30 Environmental Report 2001 Environmental Accounting 31 Environmental Report 2001

19 Research and Development Nippon Steel is carrying out research and development activities according to its long-term environmental management program. Environmentally-friendly steel products are developed, and basic research is also undertaken about energy conservation as a global environmental issue, about generation reduction and effective utilization of by-products and wastes for establishing a recycling oriented society, and about trends in environmental regulations. Research & Development Research and Development Development of next-generation cokemaking plant For the purpose of energy conservation in steelmaking, Nippon Steel is involved in the national research and development project, SCOPE21, of the Center for Coal Utilization Japan (CCUJ) for the development of nextgeneration cokemaking equipment as one of the basic processes for steel production. The R&D program targets the following: 1. Coal is rapidly heated to substantially improve softening and melting characteristics and triple productivity. As a result, the next-generation coke plant is decreased in size and increased in efficiency, and achieves an Schematic View of Next-Generation Coke Making Plant Conventional style Carbonization oven Development of hydrogen production technology by utilization of chemical energy conversion Nippon Steel is developing the technology of utilizing thermal energy to an advanced degree as part of a search for the technology of utilizing the waste heat generated in steelmaking. Thermal energy is combined with chemical substances through chemical reactions to produce clean and light chemical energy, mainly composed of hydrogen. This principle heats high-pressure air with waste heat of 800 to 950 C generated in steelmaking, permeates and separates oxygen from the heated high-pressure air with a ceramic membrane for separation, and reacts the oxygen with the methane contained in LNG and COG to extract hydrogen. Nippon Steel has developed a catalyst that does not deteriorate in performance in the poor environment required for the reaction of separating hydrogen, and has also succeeded in greatly improving the oxygen transmission rate of the oxygen separating ceramic membrane as a result of material development. Based on these two basic technologies for hydrogen production, a five-year national project was launched in 2001 for developing the technology of producing hydrogen by the advanced utilization of waste heat and byproduct gases in the steel production processes. Crystal Structure of Electrolytic Solid and Principle of Oxygen Ion Penetration High oxygen potential A CDQ CDQ Ceramic catalyst B Carbonization oven Coal feeder Coke guide car Transport Transport of oxygen void Transport of oxygen ion Metalic atom of ceramic Oxygen atom Rapid heating equipment Oxygen void Dry classifying Pusher Low oxygen potential energy saving of 20%. 2. Under this principle, the percentage of poorly coking coal in the coal charge can be increased from 20% to 50%, and coal resources can be effectively utilized with less impact on the environment. 3. The closed compact carbonization oven reduces NOx and SOx emissions by 30% and 10%, respectively. A clean environment without smoke, odor and dust is also realized. A pilot plant is now under construction at Nippon Steel s Nagoya Works, and is scheduled to start in March 2003 and full-fledged test operation in June Source gas (LNG, COG) Electrolytic solid Oxygen separating unit O2 Reactor 1 Example of reaction: CH4+ 2 O2 2H2+CO Heated air Waste heat and pressure recovery system Steam Regenerator (Heat recovery) Water gas sift reactor CO+H2O H2+CO2 Compressed air CO2 abosrption tower Hydrogen supply Development of light-gauge, low-core loss electrical steel sheet The energy conservation regulation of household electric appliance motors, such as air conditioner and refrigerator compressor motors, is promoted by adoption of a so-called Top Runner Program, and demand is mounting for the efficiency enhancement of motors. Nippon Steel has developed and supplies a nonoriented electrical sheet steel as material capable of meeting the requirement. The nonoriented electrical steel sheet features improved magnetic flux density and reduced core loss. The new material is finding increasing applications in various motors, including those of electric vehicles. The core loss of motors can be reduced by thinning the electrical steel sheet used to make their cores. Nippon Steel has succeeded in cutting down this core loss by as much as 25% by making the most of metallurgical improvement. The light-gauge, low-core loss electrical steel sheet is expected to contribute greatly to energy conservation. Development of advanced water treatment technology An example of Nippon Steel s latest water treatment technology is the accelerated oxidation technology that uses a chemical oxidant like ozone or hydrogen peroxide water in combination with photochemical reaction with ultraviolet light or photocatalyst. OH radicals of strong Nippon Steel Style Accelerated Oxydation Technology Photocatalyse Ultraviolet light Ozone OH radicals Hard-to-dissolve material Application for chemical substances dissolution Application for disinfection technology Cryptospodium Electrical steel sheet for iron core of moter Performance of Light-Gauge, Iron Core Loss Electrical Steel Sheet (W10/400/kg) 20HTH HTH HTH1000 (Conventional) Grade oxidizing power are produced in water and used to decompose substances difficult to decompose by conventional chlorine disinfection or to perform sterilization. Among typical application examples are decomposition of dioxin in waste water and destruction of cryptospodium, a pathogenic parasite, in potable water. Application of the accelerated oxidation technology utilizing OH radicals is considered promising in these treatments. The technique of simply measuring the generation rate of OH radicals and the method of quantitatively judging the destruction of cryptospodium are already established as Chlorination required for the practical application of the accelerated oxidation technology. Accelerated oxidation technology that makes effective use of OH radicals will be soon employed extensively. Research and Development 32 Environmental Report 2001 Research and Development 33 Environmental Report 2001

20 Environmental Communication Nippon Steel is carrying out various environmental communication activities to upgrade its environmental protection activities and have its environmental protection initiatives widely understood by international and local communities with the view of forming partnerships with the international and local communities. Environmental Communication Environmental Communication International Contributions Overseas Technical Cooperation Nippon Steel has a long history of technical cooperation with steel companies outside Japan, which has involved making use of whatever energy saving technologies have been available at the time. As the company looks to the future, we will continue to contribute to environmental protection on a global scale by the transfer of environmental protection technologies to developing countries, and by various ongoing projects for reducing CO2 emissions and other deterrents to a healthy environment. At present, Nippon Steel is an active participant in the Model Projects for Improving Energy Consumption Efficiency, the Green Helmets Projects (involving the dispatch of experts) and the Environmentally-Friendly Model Projects sponsored by the New Energy and Industrial Technology Development Organization (NEDO). To cite a few examples, Nippon Steel has been involved in providing energy saving technologies to China, including hot stove waste-heat recovery systems, coal moisture control systems, coke oven dry quenching systems, BOF waste-gas recovery systems and various environmental protection technologies including coke oven gas desulfurizing systems. Furthermore, Nippon Steel is an active participant in activities implemented jointly (AIJ) as measures against global warming. The coke dry quenching system model project in China was positioned as an AIJ project by the governments of both Japan and China. The AIJ project was launched in March 2001 and is expected to achieve energy saving of 35,000 kl (crude oil equivalent) per year. Commissioned by NEDO to conducted exploratory and feasibility studies that might lead to projects of the Kyoto Mechanism, Nippon Steel made basic investigations into steelworks energy saving in Russia and China in FY 1998, in Russia, China and Poland in FY 1999, and in Kazakhstan in FY In addition to these special projects, Nippon Steel has shared its environmentally sensitive and energy saving technologies with various countries around the world, always with careful regard for the circumstances of each such country. Among the activities involved are the dispatch of specialists (for example, the dispatch of environmental advisers to the Central Research Institute of the Iron and Steel Industry of China), the instruction of trainees, on-site fact-finding, seminars, and technology exchange meetings. NEDO s Environmentally-Friendly Model Projects a Anyoh Iron & Steel Co. / Desulfurizing System of Coke Ovens NEDO s Model Projects for Energy Conservation b c d e Shoudu Iron & Steel Co. / Coke oven dry quenching system (1996) Raiwu Iron and Steel Co. / Blast furnace hot stove waste-heat recovery system (1993) Chongqing Iron & Steel Co. / Coal moisture control system (1993) Handan Iron & Steel General Works / Prevalent type blast furnace hot stove waste-heat recovery system (1998) f Maanshan Iron & Steel Co. / BOF waste-gas recovery system (1998) Examples of Feasibility Studies for the Promotion of NEDO s Joint Implementation g China, Sainan Iron & Steel Co. / Coal moisture control system(cmc) h Russia, Sebestarly Iron & Steel Combine / Basic investigation on energy savings i Kazakhstan, Karaganda Works/Basic investigation on energy savings (2000) 4 Europe and the Middle and Near East 3 Africa 6 72 Results of Technical Cooperation (48 countries, about 159 companies/1,194 projects) h i 6 Asia g b e c d a 7 f Number of companies Number of projects North America South America Environmental afforestation project in China The Japan Federation of Economic Organizations (Keidanren) has started a tree planting project in Changshou-xian, Chongqing. Nippon Steel, Oji Paper, Mitsui, Obayashi and Toyota are major Japanese participants in the project. In the summer of 1998, cities along the Changchiang River were severely damaged by floods. Chairman Takashi Imai of Keidanren agreed with President Jiang Zemin of China on the promotion of environmental afforestation as a joint project of Japan-China cooperation. This culminated in the Changshou-xian tree planting project. China s forest coverage is a mere 13% now. Afforestation is greatly effective in preventing flooding, fixing carbon dioxide responsible for global warming, and preventing desertification. Commemorative tree planting ceremony in Changshou-xian, Chongqing, on March 2000 As a major member of Keidanren s afforestation committee, Nippon Steel has engaged itself in the survey of candidate sites and the formulation of the project implementation scheme. Keidanren is planning to plant poplars, oaks, and fruit trees on about 600 hectares of land with the cooperation of local people and Japanese volunteers during the next five years. Nippon Steel will proactively participate in the environmental protection of China and the promotion of Japan-China friendship by making use of its afforestation expertise acquired over many years. Conclusion of global strategic alliance agreement with Usinor Upon conclusion of a global strategic alliance agreement, Usinor Nippon Steel and Usinor of France have entered into world-scale cooperative relations to improve response to the requests of customers, make efficient use of management resources, and strengthen research and development capabilities. Specifically, the two companies will promote cooperation and joint development in the automotive steel sheet area, cooperate in the container and stainless steel sectors, join forces in purchasing, and together tackle environmental problems. Environmental meeting of executives of the two companies Nippon Steel rated AAA environmentally by Innovest, U.S. environmental rating company Nippon Steel received an AAA rating from Innovest Strategic Value Advisors, Inc., New York, a U.S. environmental rating company. Innovest environmentally rates 1,200 companies in the world, of which 40 are Japanese firms. Innovest has comprehensively evaluated our environmental performance (environmental protection, ecoproducts, environmental plants, contribution to local communities, etc.) according to the data disclosed in our environmental reports and hearings with our environmental management staff. Whether or not measures, such as compliance with environmental regulations, education of employees and strategy with respect to consumers, are clearly defined and positively implemented is a key point. Encouraged by this AAA environmental rating, Nippon Steel will continue to tackle environmental protection. Examples of Integrated Projects 1 Inland / General technical cooperation 5 2 Usiminas / Integrated steelworks construction cooperation and general technical cooperation 3 Ilva / Taranto Steelworks / General technical cooperation 4 Sider / General technical cooperation 5 Iscor / General technical cooperation 6 Steel Authority of India Ltd., Burnpur Steelworks / Modernization project 7 Shanghai Baoshan Steelworks / Integrated steelworks construction cooperation Oceania 5 96 Environmental Communication 34 Environmental Report 2001 Environmental Communication 35 Environmental Report 2001

21 Environmental Communication Environmental Communication Environmental Communication Communication with Local Communities Environmental Preservation Agreements with Local Governments Nippon Steel has many steelworks throughout Japan: from Muroran, Hokkaido to the far north, to Oita, Kyushu, in the southernmost part of the country. Each steelworks has entered into various agreements with the local government, such as the Agreement for Environmental Preservation (Pollution Control Agreement), Agreement for the Afforestation of the Plant, etc. These agreements not only cover items specifically related to the environment, such as air, water quality, wastes, noise, vibrations, odors, afforestation, etc., but also include items not stipulated by law, such as standards on the sulphur content of raw materials. There are even some agreements that include regulations which are stricter than those provided by law. Nippon Steel is working on environmental preservation and the reduction of environmental impact in a given area by abiding not only by those laws and regulations which have been enacted to preserve the environment, but by agreements with local governments, as described above. Developing Harmonious Surroundings In 1971, aiming at coexistence and harmony between man and nature, Nippon Steel started the cultivation of community woods by applying a method which combines dense planting of seedlings with direct sowing of acorn seeds. Almost 30 years have elapsed since then and the plantings at each steelworks have grown, developing into forest land covered with shiny green foliage to a height of more than 10 meters, where wild birds such as pheasants and thrushes gather and wild animals such as raccoons and rabbits can be seen. The community woods of each steelworks plays an important role in the ability of local wildlife to coexist with mankind, acting as a kind of green filter by helping to absorb CO2 and serving additional functions as an agent of environmental preservation by protecting against smog, particulate matter, noise, etc. Animals Surrounding the Steel Works Works Yawata Muroran Kamaishi Hirohata Hikari Nagoya Sakai Kimitsu Oita Tokyo Animals Raccon Eagle, fox Japanese serow, seagull Shrike, rufous turtledove, starling 51 kinds of birds 31 kinds of birds Duck Bulbul, pheasant, swarrow, heron Firefly Raccon Change of Boundary Environmental Preservation Forests (Oita Works) in 1973 Present Kitakyushu Eco-Town (the Sea of Hibiki, Kitakyushu City) Kitakyushu city has accumulated various technologies and know-how on environmental preservation and systems for establishing and supporting industries based on environmental preservation, and is promoting the Kitakyushu Eco-Town Plan, which aims at turning Kitakyushu from a smokestack city into a vital industrial center for companies engaged in environmental businesses. As a member itself of communities in the area, Nippon Steel participates actively in turning them into communities focused on the environment by such means as increasing public access to information on the environment, the offer of unused land, and participation in new businesses. In the Kitakyushu Eco-Town, scrap automobile and appliance recycling plants have come into operation. Plans are also under way to build an industrial park for recycling by local small and medium enterprises and an integrated environmental industrial complex. Environmental advertisements Nippon Steel is sponsoring environmental advertisements via a variety of media to have its environmental protection activities and environmentally friendly products understood by as many people as possible. These environmental advertisements are created so that Nippon Steel appears close to consumers. Particularly because many school children and their teachers visit our steelworks, a picture book-style pamphlet, entitled New story of making things, is produced and distributed mainly to elementary and junior high school students so that they can understand our environmental protection activities. Displays at exhibitions Nippon Steel displayed its environmental achievements at eco-product and WESTECH exhibitions, and explained its environmental activities directly to visitors. At the ecoproduct exhibition, the company-wide environmental initiatives and eco-products in various consuming areas were presented. The visitors highly rated the environmental initiatives of Nippon Steel as a materials manufacturer. Conceptual plan of integrated environmental industrial complex Home appliance recycling Frontier zone Automobile recycling PET bottle recycling Shin-Monogatari URL: Eco-product 2000 Westek 2000 Beautifying surrounding areas (Muroran works) Environmental Volunteer Activities in the Communities Nippon Steel, as a responsible member of the communities, is conducting a wide variety of community activities for environmental improvement. Besides keeping the offices and plants clean and preventing the occurrence of particulates by water spraying, volunteers among the plant workers clean the surrounding areas of the works on a regular basis. Affiliation with Outside Organizations In addition to its own internal efforts, Nippon Steel makes a special endeavor to be extensively involved in environmental improvement activities of various outside organizations. At these occasions, based on knowledge and information accumulated from its preservation endeavors in the past, Nippon Steel plays an active role in the conduct of studies on various policy actions concerning the environment. Support for nature conservation projects both at home and abroad Interchanges with environmental NGOs, aimed at global environmental preservation and recycling society formation Membership in environment-related societies and research institutes Environmental Communication 36 Environmental Report 2001 Environmental Communication 37 Environmental Report 2001 Keidanren Nature Conservation Fund Keidanren Japan-China Afforestation Forum International Ecology Center, etc. Global Environmental Forum Green Procurement Network Japanese Council for Sustainable Development, etc. Research Institute of Innovative Technology for the Earth (RITE) LCA Japan Forum Society of Environmental Economics and Policy Zero Emission Forum at United Nations University International Environment Comparative Law Center, etc.

22 Environmental Management System Nippon Steel established the Environmental Control Department in 1970 and has carried out environmental protection activities with good results for 30 years since then. In recent years, the company has reviewed its basic environmental policy in view of expanding environmental problems, improved its environment-related organization, and founded the Environmental Management Committee to provide linkage between environment and management. Our environmental management is evolving further with acquisition of ISO certification and implementation of internal environmental audits. Environmental Management Environmental Management System Environmental Management Committee Environmental Audits In recent years, as the issue of global warming is emerging as a critical turning point, the need by society for action by the corporate sector is becoming more and more apparent, including the reduction of CO2 emissions as a result of energy savings, greater recycling of material, reinforcement of regulations on hazardous materials, etc. At the same time, the needs of the marketplace and of consumers are also on the rise, such as the development and supply of energy-saving, low-environmental impact products. In view of these trends, Nippon Steel established its own internal Environmental Management Committee as of April 1, 1998 to provide additional support for those company-wide initiatives by management focused on the environment, including production and sales activities, and the creation of new businesses and the technological development needed for their success. So far, the Committee has been involved in preparing the environmental report for publication, in introducing plans to reduce CO2 and harmful waste emissions, in complying with regulations, in reducing environmental impact in production processes, in developing and promoting products with low environmental impact, and in setting up new businesses through the use of technologies geared toward environmental protection. In the future, the Environmental Management Committee will continue to be active in sharing information and its understanding of the challenges to the environment which society is facing, as well as reviewing and coordinating strategies for deploying business activities where the environment is a key factor. Officers and Organizational Units Responsible for Environment Issues Within Nippon Steel there is an Environmental Affairs Division which operates under the directors charged with overall responsibility for the environment, and it is this organizational unit that allocates a full-time group responsible for environmental issues at each of the company s steelworks. These groups operate in close cooperation with each other in implementing carefully thought out decisions regarding the environment. In addition, a mechanism has been established whereby environmental issues and movements within society requiring action by the company are discussed by the Environmental Management Committee and decisions are communicated without delay to each division of the company and promptly executed by the organizational unit or officer involved. The Structure of the Environment Management Committee Chairman President Vice President (Environment) Managing Director (Environment) Environmental Affairs Division Steelworks Group in charge of the environment Sales Division Technology Division Board of Directors Management Committee Environment Management Committee Procurement Division Chairman: Vice President Okitsugu Mantani Research and Development Division Other Divisions, including the Engineering Divisions Group Energy Savings and Recycling Sub-Committee Environmentally- Friendly Steel Products Sub- Committee Environmental Business Sub- Committee Compliance with Environmental Issues Sub- Committee Promotion of energy savings, CO2 reduction, waste reduction and others Promotion of steady implementation of the Voluntary Action Program Development and propagation of the products characterized by low energy consumption, low material consumption and low environmental impact Creation of new businesses by utilizing environmental technologies Relevant actions to address environmental regulations including new regulations for chemical substances and others To achieve a reduction in environmental impact in terms of each aspect of the company s activities, Nippon Steel has established an Environmental Management System (EMS) designed to guarantee both transparency and objectivity through building on internal management systems based on established standards, the introduction of internal and external environmental audit systems, and disclosure of information. Acquisition of ISO14001 Certification In March 1996, Nippon Steel s Nagoya Works was issued the ISO14001 certification from an outside certifying organ, for the first time in the steel world. Since then, the other steelworks of the company have all obtained the environmental management system certification. Periodic audits and renewal audits indicated problems with the procedures for operating and controlling the Environmental Management System (ESM). Solution of the problems has firmly established the ESM within Nippon Steel. This is confirmed by a third-party audit organization. Internal Environmental Audit System Nippon Steel is conducting its own internal environmental audits in addition to those carried out by agencies or certifying bodies outside Nippon Steel. The objectives of these internal audits are improvement in EMS, ensuring each employee s understanding and cooperation, and improvement in the quality of environmental management and performance data, as well as understanding how the company s supervisory activities in this area are actually working, and improving the ability to identify and overcome environmental problems at individual work sites within Nippon Steel. To achieve these objectives, internal environmental audits are conducted periodically both on a company-wide basis and by individual steelworks. Beyond these measures, Nippon Steel is working to achieve a more rigorous evaluation of its efforts to preserve the environment by clarifying and strengthening its internal audit standards and by paying closer attention to details in its investigation of present conditions. As a result of these internal audits and the submission of reports of the audits to management, executives at Nippon Steel are now able to directly evaluate the company s efforts in protection and preservation of the environment. Performance Status of Environmental Audits Year ISO14001 certification Nagoya Works Kimitsu Works Hirohata Works, Yawata Works Nagoya Works (reissued) Oita Works, Muroran Works Hikari Works, Sakai Works Kamaishi Works Kimitsu Works (reissued) Procedure of Audits First year Second year Third year [Environmental Affairs Division] Environmental Management System 38 Environmental Report 2001 Environmental Management System 39 Environmental Report 2001 Environmental Report Environmental Report Environmental Report Document assessment Document assessment Internal environmental audit by the company (every 3 years) Internal environmental audits Nagoya Works, Kimitsu Works Yawata Works, Hirohata Works Muroran Works, Hikari Works Oita Works, Tokyo Works Futtsu Technical Development Bureau Sakai Works, Kamaishi Works Futtsu Technical Development Bureau Kimitsu Works Oita Works Yawata Works, Nagoya Works Hikari Works Futtsu Technical Development Bureau [Steelworks] Environmental management status investigation Environmental management status investigation Environmental management status investigation Internal audit Internal audit Internal audit [External audit] Periodic assessment Periodic assessment Accreditation assessment (every 3 years) Registration (re-registration) Main Topics of Obedience to the Law Environmental performance Status of waste reduction Environmental Audits Risk communication Environmental education for employees and others Internal environmental auditors are selected from those managers with training in environmental management and those employees with business experience in environmental management, energy management, conversion to resources and recycling. Auditors are given further special training in programs given inside the company or courses offered by outside institutions.

23 Environmental Management System Environmental Management The Number of Employees Qualified as Environmental Pollution Control Managers Air Type 1 Other types Subtotal Water quality Type 1 Other types Subtotal Noise Vibration Dust Dioxins Chief manager Total The Number of Employees Qualified as Energy Managers Heat energy Electric energy Total , Environmental Education, Awards and Others Environmental Education Nippon Steel has formulated an education plan so that each steelworks can provide whatever instruction is needed for its employees, and such plans are revised from time to time, as needed. In addition, each steelworks actively encourages its employees to acquire qualifications useful for environmental preservation and a total of 1,010 employees are now qualified as environmental pollution-control managers and 863 employees are qualified as energy managers. External information about the latest trends in environmental policies and regulations, latest internal information about the company s environmental activities, and information about general environmental issues and laws are distributed through the company s intranet for the purposes of sharing the environmental knowledge of employees and enhancing the environmental awareness of employees. Environmental articles are also carried in the monthly in-house organ Shin Nittetsu to raise the environmental awareness of employees and their family members. Environmental Awards Nippon Steel has an excellent reputation both at home and abroad for its environmental preservation and energy-saving technologies. National Invention Awards (Sponsored by the Japan Institute of Invention and Innovation) FY1995 FY1998 FY1995 FY1997 FY1998 FY1999 Web width expansion rolling of H-sections by skew rolls Ultra fine grain surface layer steel sheets with excellent performance in the stoppage of brittle fracture propagation (HIAREST steel) Okouchi Prizes (Sponsored by the Okouchi Memorial Institute) Awards for research and development of production engineering and production technologies and excellent production methods FY1995 FY1997 FY1998 FY1999 Development of coke making technology for low cost, low pollu - tion ironmaking Development of hot-rolling high speed steel rolls using a continuous tinkering method Development of an environment-friendly sintering technology for hard-to-process iron ore resources Excellent impact energy absorbing power steel Ichimura Prizes (Sponsored by the New Technology Development Foundation) Awards concerning the nurture of excellent domestic technologies Development of high tensile strength steel wire for bridges Heat resistant magnetic domain control technology for grain-oriented electrical steel sheets Development of titanium-clad hot-rolled steel sheets Weathering steel for coastal service Awards for Recycling Technology and System (Sponsored by the Clean Japan Center) FY1999 Development of long-life, eco-paint using BF slag Energy Conservation Superior Case Awards (Sponsored by the Japan Energy Conservation Center) FY1996 FY1997 FY1998 FY1999 FY2000 FY1998 Minister of MITI Award Director General of the Agency of Natural Resources and Energy Award Director General of MITI Award Japan Energy Conservation Center Superiority Award Director General of the Agency of Natural Resources and Energy Award Director General of MITI Award Chairman of the Japan Energy Conservation Center Award Director General of the Agency of Natural Resources and Energy Award Chairman of the Japan Energy Conservation Center Award Director General of the Agency of Natural Resources and Energy Award Chairman of the Japan Energy Conservation Center Award Director General of the Agency of Natural Resources and Energy Award Director General of METI Award Japan Energy Conservation Center Superiority Award Japan Institute of Energy Awards (Sponsored by the Japan Institute of Energy) Development of a Direct Melting and Recycling System for Waste and its Application Technology Nagoya Works Hirohata Works Kimitsu Works Oita Works Nagoya Works Yawata Works Muroran Works Nagoya Works Oita Works Nagoya, Yawata Works Muroran Works Oita Works Kimitsu, Nagoya, Hokkai Works Yawata Works Environmental Management 40 Environmental Report 2001

24 Profile of Nippon Steel [Company name] NIPPON STEEL CORPORATION [Foundation] April 1, 1950 (the start of Nippon Steel Corporation was March 31, 1970) [Business objectives] 1. Production and sales of iron and steel products 2. Production and sales of nonferrous metals, ceramics and chemical products 3.Production and sales of industrial machinery/equipment including iron- and steel-making plants, chemical plants, etc., and steel structures 4.Contract of construction work, design/construction supervision of buildings, urban development business, and transactions and lease of housing lands and buildings 5.Production and sales of information processing/telecommunication systems and electronic equipment, and telecommunications 6. Production and sales of agricultural and aquatic products by biotechnology 7. Management of education/medical service/sports facilities and others 8. Supply of electricity 9. Treatment and recycling business on waste materials 10. Sales of the technologies related to the aforementioned items 11.Business accompanied by the aforementioned items [Capitalization] 419,524 million yen (as of March 31, 2001) [Number of shareholders] 518,070 (as of March 31, 2001) Net Sales (Unit: million yen) Ordinary Profit (Unit: million yen) Net Income (Unit: million yen) 1,918,538 1,810,842 1,848,710 78,776 18,355 50,238 42, Crude Steel Output (Unit: million tons) Number of Employees 29,975 (Unit: person) 27,689 26,333 Location of Nippon Steel offices Muroran Kamaishi Hirohata Tokyo Hikari Nagoya Kimitsu Yawata Sakai Futtsu (Technical Development Bureau) Head Office Oita Environmental Management 41 Environmental Report 2001

25 Photo on cover The cover photo shows NS louvers installed along the Higashi Meihan Expressway. The NS louver is Nippon Steel s ecoproduct with a sound barrier function friendly to local residents, a light adjustment function friendly to automobile drivers, and a ventilation function helpful in improving the road environment. Nippon Steel Environmental Report 2001 Published in Oct Environmental Affairs Division Nippon Steel Corporation 6-3, Otemachi 2-chome, Chiyoda-ku, Tokyo , Japan Phone: Fax: kankyo@hq.nsc.co.jp This Environmental Report was printed on Eco-Mark recycled paper using Soyink. Home Page: