Nippon Steel to acquire more global coal and iron ore assets

12 December, 2023 by

In a recent interview with Reuters, Takahiro Mori, the executive vice president of Nippon Steel Corporation, the world's fourth-largest steelmaker, revealed the company's ongoing efforts to acquire additional global coking coal and iron ore assets. This strategic move aims to fortify the supply chain of raw materials and mitigate potential disruptions caused by price fluctuations.

As part of this initiative, Nippon Steel is set to increase its equity in Elk Valley Resources, the metallurgical coal business of Canada-based Teck Resources. This acquisition aligns with Nippon Steel's proactive approach to ensuring a stable supply of coking coal, a crucial component in steel production.

Mori highlighted the anticipation of rising coking coal prices in the medium term due to limited investments in mines, driven by the global push for carbon neutrality. Recognizing the importance of securing their own interests, Nippon Steel aims to elevate its self-sufficiency ratio to approximately 40 percent, providing a buffer against the impact of raw material price fluctuations on market products.

Currently, Nippon Steel already holds stakes in several coking coal mines, constituting about one-fifth of its annual coal imports totaling 25 million metric tons. The impending deal with Teck Resources is expected to elevate this share to approximately 30 percent, marking a significant stride towards greater self-reliance.

In addition to coking coal, Nippon Steel also sources 20 percent of its 50 million metric tons of iron ore imports from its equity holdings. This diversified approach to securing raw materials positions the company resiliently in the face of market uncertainties and underscores its commitment to maintaining a robust and sustainable supply chain.

Nippon Steel's strategic pursuit of additional global coal and iron ore assets reflects its dedication to fortifying its position in the steel industry, enhancing self-sufficiency, and proactively addressing the challenges posed by evolving market dynamics.

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