Nippon Steel may acquire stake in Teck

Nippon Steel may acquire stake in Teck

By Tiffany Smith

Budrigannews.com – Teck Resources (NYSE:), a subsidiary of Nippon Steel Corp., even though Glencore (OTC:) According to a senior executive, Japan’s leading steelmaker is still eager to acquire a stake in Teck’s high-grade coking coal asset.    

“We are as yet haggling with Teck toward making a value interest in coal resources,” leader VP Takahiro Mori told Reuters in a meeting on Wednesday. “We are determined to take 15% or more stake in the coal asset so that we can make it an affiliate unit,” he stated. “The amount of our investment may need to be lifted due to Glencore’s bid, but we are determined.”    

Nippon Steel stated in February that it would spend approximately 1.15 billion Canadian dollars, or $860 million, to acquire a 10% stake in Elk Valley Resources Ltd. (EVR), the coking coal unit that will be spun off from Teck. The company has the right to increase its stake to a maximum of 17.5%.   

However, Teck withdrew its plan to split its coal and metals business last month due to shareholder opposition. The board of directors of the company stated that it would devise a new, simplified separation plan after rejecting Glencore’s offer.   

Mori stated that Nippon Steel, the fourth-largest steelmaker in the world, wants to make an investment in Teck’s high-quality coking coal to ensure a consistent supply of the essential component for steelmaking and to profit from the asset.   

To protect itself from fluctuations in the price of the raw materials, Nippon Steel has stated that it intends to acquire additional stakes in iron ore and coking coal mines. At the moment, the mines in which Nippon Steel owns stakes supply 20 percent of the 27 million tonnes of coking coal it imports annually.   

Mori responded, “If Glencore buys Teck, Nippon Steel would invest in the coal asset.” there could be an alternate choice in the event that warm coal and coking coal are coordinated,” highlighting a negative ramifications as far as environment activity.   

According to Mori, the outlook for demand in China has deteriorated in comparison to the previous three months, and a recovery may be delayed until next year.   

Mori stated, “With no firm economic stimulus policy in place and the real estate market remaining sluggish, demand is expected to stay weak for a long time.” 

At two of its domestic steelmaking facilities, Nippon Steel is considering replacing blast furnaces with electric arc furnaces in order to reduce carbon dioxide emissions.

Mori stated, “If we decide to do it, it must be done by 2030.”