• The waste treatment and effective resource utilization markets in Japan will continue to grow. However, waste treatment and recycling—markets related to the material recycling business of the Kyoei Steel Group— are expected to trend flat as the amount of waste being generated drops.
• There is a greater need for material recycling and other more advanced recycling methods due to an increased environmental awareness at places where waste materials are generated. At the same time, 3R (reducing, reusing, and recycling) efforts to reduce the amount of waste generated are being promoted from all angles. Meanwhile, the emergence of simple and inexpensive incinerators together with the development of new recycling technology has created competition for solutions based on EAF melting technologies.
• It is difficult now to recycle new materials such as lithium-ion batteries, and so for the time being, a reliable method of treating or processing (discarding) these materials is also required in order to keep costs down.

The illegal dumping of used hypodermic needles became a social problem during the latter half of the 1980s. In response, the Company developed a technology to dispose of these needles. This idea came when we were looking for ways to effectively use thousands of degrees
of heat generated when melting steel scrap in an EAF. We then launched our material recycling business based on this technology. As a pioneer in the field of safely melting waste using EAFs, our safe and reliable processes have won the trust of many companies and local
governments, and we command more than 50% of the EAF industrial waste treatment market.
We use a large gasification furnace at our Yamaguchi Division to melt shredded fragments of automobiles. We then collect and recycle metallic parts as molten metal. The gas generated during this process is also used as fuel for the heating furnace used by the division.

[Strengths]

• EAFs generate several thousands of degrees of heat and are capable of completely detoxifying waste; iron components in waste can then be partially recycled for use in steel products
• We have developed proprietary technologies and knowledge for maintaining steel quality while burning waste in EAFs
• Our technologies can treat even difficult-to-treat waste material, such as asbestos and vehicle-mounted lithium-ion batteries
• We are also expanding into the business of treating waste using gasification furnaces

[Opportunities]

• The need for treating difficult-to-treat waste material is increasing
• The effective resource utilization market is expanding

[Risks and challenges]

• There is increased competition due to the emergence of simple and inexpensive incinerators
• Developments in recycling technology will cause a transition to material recycling for difficult-to-treat waste material
• There are limits to the melting capabilities of EAFs, as treatment is performed during the steel production process

We have an over 35-year history as an environmental recycler which began with our MESSCUD operations at the Yamaguchi Division. Waste treatment has gone from being seen as a mere waste disposal business to being valued as a business that is ethical and essential for society. In light of this fact, the Company has decided to increase the visibility of its history of integrating steelmaking with medical and industrial waste treatment, and engage in the branding of the unique qualities of our business. We aim to leverage our strengths in EAF melting as we focus on developing new resource recycling technology, respond to a rising need for waste recycling driven by an increased social environmental awareness, and provide an even high level of quality as a resource circulation business.

Since closing the Osaka Mill (a site involved in treating medical waste) in 2016, we had focused on efforts such as reorganizing businesses within the Group and aggregating business functions within the Head Office’s Material Recycling Department, in an attempt to strengthen business capabilities. In FY2022, we posted our highest profit since 2016 at ¥2.0 billion, due in part to an increase in the volume of orders to treat expensive and difficult-to-treat waste and the acquisition of orders to treat medical waste related to COVID-19. In FY2023, we maintained a high profit level of ¥1.6 billion, although this was not at the level of the previous fiscal year. However, in FY2024, we saw a significant decrease in medical waste treatment orders due to the Japanese government reclassifying COVID-19 to a Class 5 disease, as well as the temporary suspension of operations at our Yamaguchi Division, the largest treatment site in the Group, for periodic repair work, which led to a significant decrease in revenue and profits.

We have a history of integrating steel production with medical and industrial waste treatment, and as a pioneer in the use of EAFs to melt and treat waste, we will work to restore business performance by branding and visualizing the things which makes us unique and differentiate us from other companies, and by extensively communicating and publicizing these. Further, in addition to EAF melting, we will also strengthen our one-stop waste treatment system by collaborating with other companies. We will aim to achieve further growth through further improvements to our resource circulation business, which integrates steelmaking and waste treatment.