TOKYO, Nov 30 (Reuters) – Nippon Steel (5401.T), the world's No.4 steelmaker, will keep on hunting for stakes in coking coal and iron ore mines to ensure a stable supply of essential raw materials and mitigate the potential impact of price volatility, its executive said.
A Glencore-led (GLEN.L) consortium, including Nippon Steel, sealed one of the mining sector's biggest deals in years this month, agreeing to buy Canadian miner Teck Resources' (TECKb.TO) steelmaking coal unit for $9 billion. The Japanese company will pay around $1.34 billion for a 20% stake.
“Coking coal prices are expected to rise as supply will get tighter in the medium term as there has been little investment in mines due to carbon-neutral push,” executive vice president Takahiro Mori told Reuters in an interview on Tuesday.
“So, it's extremely important to secure our own interests,” he said.
Japan's top steelmaker already owns stakes in several coking coal mines, which account for about a fifth of its annual coal imports totalling 25 million metric tons. The latest deal will boost that share to around 30%.
About 60% of Nippon Steel's products are sold for term customers with a mechanism that adjusts selling prices to raw materials costs, but 40% are commodity products that are affected by steel market fluctuation.
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