Nippon Steel Acquires Coal Mine’s Interest in Mozambique

Nippon Steel, Japanese largest steel maker, and Nippon Steel Trading, a subsidiary of Nippon Steel, announced on Wednesday Nippon Steel joins in Revuboe coal mine project in Mozambique partly led by Nippon Steel Trading. They start feasibility study of the project to commence production of high quality coal in 2014. Nippon Steel’s coal procurement rate from interest-taking mines is expected to approach 30-31% from present 25% when Revuboe’s output reaches maximum 5 million tonnes per year in full operation.

Coal price is rising rapidly due to expanding demand in China. Coal demand is also forecasted to increase in other emerging countries, India and Brazil. Nippon Steel develops new coal sources in cooperation with POSCO, South Korean largest steel maker, and strategically strengthens raw material procurement.

Nippon Steel acquires 23.3% interests of Revuboe project from Nippon Steel Trading in December 2010. Nippon Steel Trading has held 33.3% shares in the project. The final feasibility study is scheduled to finish in December 2011 and the mine development will start in mid 2012 with US$ 500-600 million investment. The mine operation is expected to commence in 2014-2015.

Revuboe coal mine is located in Tete province in Mozambique where coal mines concentrate. The recent research shows the mine reserves coking coal at approximately 800 million tonnes, the grade of which is as high as primary coking coal of Australia. The project targets to output 560 million tonnes per year by open-cut mining.

Nippon Steel Trading acquired exclusive research right of the mine in 2004 and continued exploration in cooperation with Talbot Group, Australian miner. Pre feasibility study finished in 2009. In May 2010, POSCO gained 7.8% shares in Talbot. After Nippon Steel joins in the project, controlling shares becomes 58.9% for Talbot and 10% for Nippon Steel Trading. Nippon Steel and POSCO will procure coking coal from the mine along with their taking shares.

This is the ninth coal project in which Nippon Steel possesses interests while the first project for Nippon Steel in areas other than Australia and Canada. Nippon Steel’s coal equity totals 1.6-1.7 million tonnes per year.