Coal procurement from China for Nippon, Posco & Baosteel

Coal procurement from China for Nippon, Posco & Baosteel

Japanese steel maker Nippon Steel Corporation is in talks with other major producers South Korean POSCO, Chinese Shanghai Baosteel Group and Japanese trading house Mitsui & Co., according to latest reports from the industry. These companies together intend to secure supplies of high quality coal that they need for high quality steel production, at lower costs and therefore are in negotiations with major coal mines in China and Shanxi Province. An investment of about $450 million is intended to be made on the project for developing coal fields in China. There is no exact date for initialising production, and the main handicap currently appears to be strict rules against foreign capital in China. However, to supply coal from closer regions will help reduce the costs of these producers. Currently coal imports mainly come from Australia and Canada however supplies from China have increased recently accounting for around 10% of total imports. In case of the project can be actualised, the three steel making companies aim to use the coal in their steel production, and the trading house Mitsui's role to be shippers. It is believed that this project will help to increase their competitiveness in international markets.