Posted on 01 Dec 2023
Nippon Steel is seeking more opportunities to acquire coking coal and iron ore assets to ensure a stable supply of steelmaking raw materials.
Takahiro Mori, executive vice president of Nippon Steel, told Reuters in an interview this week that coking coal prices will strengthen as slower mine investment, because of decarbonisation, will tighten supply. Nippon Steel aims to secure profits through more direct investment in upstream assets, Kallanish learns.
"We would like to raise the self-sufficiency ratio of coking coal and iron ore to around 40% in order to neutralize the impact of raw material prices on market products", Takahiro Mori said.
In mid-November, Nippon Steel announced its intention to invest in coking coal in Canada partnered with Teck Resources. Glencore has now finalized its acquisition of 77% of the Teck-owned Elk Valley Resources. Nippon Steel has agreed with Teck that its 2.5% interest in Teck's Elkview operations, which is one of the company's four steelmaking coal operations in Elk Valley, will be rolled over into a 3% equity interest in Elk Valley Resources.
The company plans to acquire additional equity in Elk Valley Resources, to raise its stake to 20%. The 20% stake in Teck's coking coal business will also boost Nippon Steel's annual profit by about JPY 70-80 billion ($474-542 million) based on the current prices, Mori said.
In a separate interview this week, Takahiro Mori noted that the company made better-than-expected cost-cutting progress in the first half, which will contribute to profits. In recent years, the company has focussed on reviewing the conditions of its trading contracts, to ensure that the existing contract formula does not need to be modified even with large fluctuations in raw materials prices.
"We're not just looking at coking coal, but other resources as well, with an eye toward carbon neutrality", he adds.
Source:Kallanish
