Nippon Steel, Japan's largest steelmaker, would continue to acquire stakes in coking coal and iron ore mines to mitigate the impact of tightening supply and price volatility, Reuters reported, citing an senior executive of the company.

Coking coal prices are expected to rise as supply will get tighter in the medium term  in the context of limited investments in mines due to carbon neutrality push, Executive Vice President Takahiro Mori said on November 29.

The company has owned stakes in various coking coal mines, which constitute about one-fifth of its annual 25 million tonnes of coal imports, and the recent deal with Teck Resources will elevate this share to approximately 30%.

Earlier this month, Nippon Steel acquired 20% interest in Elk Valley Resources, a steelmaking coal unit of Canadian miner Teck Resources, at a cost of approximately $1.34 billion.

While 60% of Nippon Steel's products are sold to term customers with pricing mechanisms linked to raw material costs, the remaining 40% are commodity products susceptible to market fluctuations.

To minimize the impact of raw material (coal and iron ore) prices on market products, the company aims to increase its self-sufficiency ratio to around 40%, Mori said.

(Writing by Emma Yang  Editing by Harry Huo)
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