Nippon Steel, Xstrata to Develop New Coal Mining Area in Bulga Mine

Nippon Steel announced on Thursday the firm agreed with Zurich based major mining firm, Xstrata to develop new mining area of underground operation at Bulga thermal coal and semi hard coking coal mine in Australia. Nippon Steel, which has 12.5% of interest in the mine, expends around 4 billion yen or 12.5% of total A$ 350 million of investment. The new mining area starts the annual 5 million tonnes of new operation in 2009 when existing underground area will finish the mining by the end of 2009. They try to keep the annual 10 million tonnes of coal output including open cut mining area. The mine, which is located in Hunter Valley, New South Wales, has open cut and underground operations producing 5 million tonnes each. They will develop new mining area, Blakefield, which is below of current underground operation at Beltana area, to secure output after mining out of Beltana. They start construction work for Australian largest Longwall and other facilities for the new mine in 2007. Nippon Steel expects the new mine could produce more coking coal than current more than 10% of total output due to the lower coal seam. Bulga mine, of which Xstrata controls 68%, is no.4 large coal mine in Australia supplying coking coal for steel makers and thermal coal for electric power companies. Nippon Steel has supported the mining operation since the start in 1992 and increased the interest. Nippon Oil Corporation, Toyota Tsusho Trading and JFE Shoji Trade Corporation have minor interest in the mine. The mine with 182 million tonnes of reserve produced 8.94 million tonnes in 2005, of which coking coal represented 11%. Nippon Steel had established stable purchase system of iron making raw materials through interests in iron ore and coal mines and long tern purchase contracts. The firm tries to expand the procurement security including new interests in iron ore and coal mines and partnership with miners under tight supply of the raw materials in a coupe of years.