JFE Steel, Japan's No. 2 steel-maker, is considering building a new electric arc furnace (EAF) to replace the No. 2 blast furnace at its Kurashiki plant in western Japan to reduce its carbon dioxide emissions, a company spokesperson said Monday.

The move comes as steel-makers around the world are under pressure to cut emissions to tackle climate change.

JFE Steel is studying the possibility of constructing an EAF that can cut carbon dioxide emissions to a quarter of those of a blast furnace sometime between 2027 and 2030 when the No.2 unit is due for refurbishment, the spokesperson said.

Blast furnaces go through a refurbishment every 20 to 25 years.

JFE Steel, a unit of JFE Holdings, has eight blast furnaces in Japan, including three in Kurashiki, Okayama Prefecture, but it is scheduled to shut one in eastern Japan by March 2024.

"We plan to maintain our annual crude steel output capacity of 26 million tons even if we switch one of the blast furnaces with an EAF," the spokesperson said.

Japanese steel-makers, including Nippon Steel, have been trimming capacity as they confront a period of waning demand as Japan's population declines and because of growing competition from the world's largest producer, China.

The Nihon Keizai Shimbun business daily said on Saturday that JFE may spend at least several tens of billions of yen for the new furnace, but the spokesperson said no investment plan has been set as the company has just decided last week to start considering an EAF at Kurashiki.

Carbon dioxide emissions from the world's steel sector will fall 30% by 2050 compared with 2021 as more mills turns to less-polluting electric furnaces, consultancy Wood Mackenzie said in May.

They predict around 48% of global crude steel will be made by electric arc furnaces by 2050, up from 30% in 2021 and almost on a par with blast furnace steel-making.