Steelmakers eye Chinese coal mines
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China accounts for around 10 percent of Japan's coal imports, most of which come from Australia
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TOKYO, Japan -- Top steelmakers from Japan, South Korea and China plan to develop coal mines in China's Shanxi province, according to a report.
Steelmakers Nippon Steel Corp. of Japan, POSCO of South Korea, Shanghai Baosteel Group of China and the Japanese trading house Mitsui are due to begin negotiations with Chinese officials soon, the Nihon Keizai Shimbun stated Friday.
The Shanxi mine project is due to start in the next fiscal year, which begins April 1, and would be the first joint project for those steelmakers.
The Nikkei reports that Chinese officials have not yet approved the investment of overseas capital in the project. So the companies are filing for development rights and the right to conduct exploratory studies on the extent of the coal reserves.
Up to $420 million in backing
The project would likely be financed with 30-50 billion yen ($250 million to $420 million).
The Shanxi mines currently produce coal for power stations, to generate electricity. But the steelmakers are keen to explore mining for the higher-grade coal necessary for making steel.
Two-thirds of Japan's 63 million tons of annual coal imports comes from Australia. Sourcing production from China would reduce shipping costs substantially.
China now generates around 10 percent of Japan's coal imports, a figure that has been rising rapidly as China and Japan tighten their trading ties.
