Nippon Steel eyes more stakes in coking coal mines to secure
stable supply
TOKYO
(Reuters) - Nippon Steel Corp, the world's No.4 steelmaker, is looking to buy
more stakes in coking coal mines to secure stable supply of the key
steel-making ingredient, its executive said.
Japan's biggest
steelmaker already owns stakes in several coking coal mines and iron ore
mines, procuring about 20% of the 27 million tonnes of its annual import of
coking coal and the 58 million tonnes in iron ore import from those holdings. "It's not necessary
to stop at the 20%," Takahiro Mori, executive vice president, told
Reuters on Tuesday in an interview. "We are considering
raising the self-sufficient ratio by buying interests in raw materials
(assets) that are meaningful in our strategy, high-quality and
economical," he said. For the steelmaker, more
urgent need is to invest in coking coal mines than iron ore projects, Mori
said, as Western sanctions on Russia over the invasion of Ukraine have
squeezed an already-tight supply of commodities such as metallurgical coal. Iron ore prices are
expected to move in line with steel demand, but coking coal prices will
likely stay high due to higher thermal coal prices and falling investment in
new coal mines in the global efforts to tackle climate change, Mori said. "The hurdles for
mining investment have risen considerably due to the global decarbonisation
trend, but a certain amount of coking coal will be needed to produce steel
even after carbon neutrality is achieved in 2050," he said. Nippon Steel has no plan
to invest in thermal coal mines, Mori said. The steelmaker's net
profit for the April-September period rose 25% to 372 billion yen ($2.7
billion) on inventory valuation gains and higher product prices while
stronger contribution from its stakes in upstream assets helped offset
surging raw materials costs. Going forward, Nippon
Steel is concerned over weaker steel demand in top buyer China, a global
economic slowdown due to interest rates hikes by the U.S. and European
central banks and delayed recovery in Japanese automobile production. "We want to
maintain the growth trend in our profit next year by cutting variable costs
further and boosting the proportion of high-value products," Mori said. |