Japanese trading house aims to tap growing market amid decarbonization push
KEIGO YOSHIDA, Nikkei staff writer
TOKYO -- Japanese trading house Mitsui & Co. is set to begin recycling steel for use in automobiles and other industrial products in India, Nikkei has learned.
Mitsui will invest in Indian recycling company MTC Group -- one of the largest such businesses in the South Asian nation -- to obtain a more than 20% share and make MTC an equity-method affiliate.
The investment is expected to total about 20 billion yen ($127 million).
India has surpassed Japan as the third-largest automobile market in the world in new cars sold, trailing only China and the U.S. Mitsui aims to tap the growing market by being part of a supply chain that supports decarbonization.
That fits the investment in MTC, as recycling steel emits less carbon dioxide than making it from scratch.
MTC gathers and processes scrap metal, which is sold to steel manufacturers and auto parts processing companies as material for steel products to be used for automobiles. Annual sales are about $1 billion.
Mitsui will utilize its sales network to gather more scrap metal from automakers in Japan, the U.S. and Europe.
Auto sales in India grew 7% in 2023 from the year before, reaching 5.07 million cars. The demand for steel is expected to reach 230 million tonnes in fiscal 2030, a 70% rise from 2022, according to a research company.
When scrap metal and an electric arc furnace are used to make steel, carbon emissions are reduced to about a quarter of what is emitted when using a blast furnace and iron ore.
The Indian government is tightening environmental regulations regarding automobiles. One policy under consideration is requiring automakers to use some recycled steel in the manufacturing process, which is expected to boost demand for recycled steel.