Nippon Steel Corp. wants to invest in Cia. Vale do Rio Doce's $1.4 billion planned coal mine in Mozambique to provide raw materials as costs rise.

Nippon Steel told Brazil's Vale, the world's biggest iron ore exporter, that it is interested in the mine, said Shoji Muneoka, who became president last month. Coking coal prices tripled this year to a record.

"In this extraordinary circumstance of soaring material prices, we have great interest in alternative sources," Muneoka, 62, said in Tokyo. "We like to invest if we have opportunities."

Nippon Steel expects profit to fall to a five-year low because it cannot raise prices enough to cover higher materials costs. Surging costs prompted ArcelorMittal, the world's largest steelmaker, to buy stakes in mining assets.

"I don't think Nippon Steel's investment in resources will be big enough to give them bargaining power," Takashi Murata, an analyst at Daiwa Institute of Research, said Tuesday. "But it's better to have some resources themselves for secure supply."

Nippon Steel's shares have declined 17 percent in the past year compared with a 51 percent gain in ArcelorMittal, out of concern that the company can't get customers to agree to price gains. The company lost ¥1.9 trillion in market value since last year's high in July, leaving it vulnerable to a takeover, Muneoka said.

"It is possible any company outside Japan looking at our technology and customers will be interested in acquiring us, considering that our current market cap is far from satisfactory," he said.

Nippon Steel, which got about 25 percent of its coal in 2006 from mines it partly owned, hasn't held "concrete talks" with Rio de Janeiro-based Vale, Muneoka said. Vale spokeswoman Patricia Malavez declined comment.

The Mozambique mine will cost $1.4 billion to build, Vale said in an October statement. The mine may be the largest in the Southern Hemisphere, producing 8.5 million metric tons of coking coal and 2.5 million tons of thermal coal a year and may start output in the first quarter of 2011, according to the statement.

Nippon Steel said in April its profit will fall 41 percent this year after floods in Australia caused coal prices to triple, and Vale won a 65 percent increase in iron ore prices.

Annual coking coal contract prices rose to a record $300 a ton in the year from April 1. Nippon Steel bought 21.9 million tons of coal in business 2006, the latest data available.

Higher costs are prompting Nippon Steel to increase product prices. The company will raise contract steel prices by ¥25,000 to ¥30,000 a ton for Toyota Motor Corp. in the year from April and by almost ¥30,000 a ton for Mitsubishi Heavy Industries Ltd., Japan's largest heavy machinery maker, a source said Monday.

Muneoka, who previously led price talks with carmakers, joined Nippon Steel when the company was formed in 1970.

Net income may drop to a five-year low of ¥210 billion in the year ending next March, from a record ¥355 billion, Nippon Steel said in April. Costs will "have a ¥1 trillion negative impact" this year, said Kiichiro Masuda, executive vice president.

Nippon Steel will pay Vale between 65 percent and 71 percent more for Brazilian iron ore in the year that started April 1. The company, along with other Asian steelmakers, hasn't settled Australian supply prices with BHP Billiton Ltd. and Rio Tinto Group, which want greater increases.