JFE Steel announced on May 22 that it will proceed with a 46 billion yen ($341 million) plan to increase electrical steel sheet manufacturing capacity at its Kurashiki factory in western Japan to fulfil rising demand for electric vehicles (EVs).

The move comes after Nippon Steel Corp announced earlier this month that it will invest 90 billion yen in two of its domestic steel facilities to increase capacity for high grade non-oriented electrical steel sheet.

In February, JFE, the flagship unit of JFE Holdings Inc, signalled the possible expansion of electrical steel sheet, a critical material used in primary motors of EVs.

The current investment follows a commitment in 2021 to spend 49 billion yen to increase the plant's capacity by September 2024.

When the second extension is finished by March 2027, output capacity will have tripled from its current level.

Japan's second-largest steelmaker also announced a basic agreement with Indian partner JSW Steel Ltd to form a joint venture to produce electrical steel sheets used in power plant transformers.

According to the plan, which was also announced in February, the new factory will open in March 2028.

JFE Steel's representative declined to comment on the projected investment cost.