The concentration of
iron ore supply among a handful of miners is the biggest issue that faces Japanese steelmaker Tokyo-based
Nippon Steel Corp., though the company is also concerned by governments levying resource taxes in order to cash in on booming demand for commodities in North Asia,
Nippon Steel chairman Akio Mimura said on July 11.
Mr. Mimura said costs such as those for
iron ore and coking coal - critical ingredients in the production of steel - now account for 85 percent of the total costs of
Nippon Steel, up sharply on a decade ago. "If we seek to increase prices of products, we will meet strong opposition from our customers," Mimura told the Boao Energy, Resources & Development Conference in Perth,
Australia.
Japanese steelmakers have had their profit margins squeezed by miners including
Australia-based
BHP Billiton moving away from annual negotiations to pricing
iron ore on a quarterly or spot basis. This shift has exposed the steelmakers to volatility in commodity prices, Mr. Mimura said, especially as demand for
iron ore and coking coal continues to rise sharply in North Asia, driven by rapid industrialization in
China and India.