Nippon Steel looks at coal projects

Tokyo: Nippon Steel Corp, Japan's biggest mill, is interested in investing in coal projects in Mongolia and Russia to secure raw material supplies, an executive said.

"There is plenty of high-quality coal at Elga and Tavan Tolgoi" deposits, said Shinichi Taniguchi, executive vice-president of the Tokyo-based company. "We're interested" in taking stakes or helping develop the regions, he said.

Mongolia plans to pick a contractor to mine in Tavan Tolgoi, the region with one of the world's largest untapped deposits of steelmaking coal, while the Elga mining project in eastern Siberia is being developed by Russia's Mechel. Steelmakers are scouring the globe for iron ore and coking coal assets.

Nippon Steel wants to see the projects in Mongolia and Russia developed "as soon as possible" to ease tightening global supply and help push down prices, Taniguchi said.

Nippon Steel stock has fallen 21 per cent this year.

Contract coking coal prices for the first three months of 2011 were agreed at $225 a tonne, Citigroup Inc. said December 17. That's 74 per cent higher than the year earlier level.

Rich deposits

China Shenhua Energy Co., the nation's biggest coal producer, and Itochu Corp., Japan's fourth-largest trading company, are among those interested in developing Tavan Tolgoi, which holds more than 6 billion metric tonnes of coal.

Sumitomo Corp., Japan's third-largest trading company, expressed interest in helping develop the Elga field. Mechel, Russia's biggest producer of coal for steelmaking, sold 20 billion rubles (Dh2.41 billion) of bonds this year to refinance its debt and help fund a railroad to the Elga deposit.