Steelmakers snapping up stakes in overseas mines

JIJI

Three major steelmakers are accelerating moves to acquire stakes in overseas coking coal and iron ore mines to ensure stable supplies of materials.

The steelmakers currently depend on Australia for 60-70 percent of their coal and iron ore imports and thus face challenges of diversifying suppliers and securing their own interests in overseas mines.

Last month, industry leader Nippon Steel & Sumitomo Metal Corp. bought a stake in the Revuboe coal mine in Mozambique, which is expected to start operations in 2016.

Peak production at the mine is seen reaching 5 million tons of coal a year. Nippon Steel & Sumitomo Metal will have the right to 1.7 million tons of the total, and this will raise the firm’s proportion of coking coal procured from mines invested in by itself by 5 percentage points to 25 percent, on par with that for iron ore.

The Revuboe mine project marks the first case in which a major Japanese steelmaker has taken part from the research stage. The government backed Nippon Steel’s participation.

Kobe Steel Ltd. purchased a 9.9 percent interest in an iron ore mine in southwestern Australia last year. Kobe Steel will thus be able to procure 20 percent of the iron ore it needs from mines invested in by the company in fiscal 2016, up from the current level of 7 percent.

JFE Steel Corp., a unit of JFE Holdings Inc., aims to raise its materials procurement ratio to 30 percent in the long term from 19 percent at present.