August 23, 2008

Japan Steelmakers May Jointly Buy Overseas Iron Ore Mining Rights

Tokyo, Aug. 23 (Jiji Press)--Major Japanese steelmakers including Nippon Steel Corp. and JFE Steel Corp. are considering joining forces to purchase overseas iron ore mining rights to cope with the raw material's soaring prices, informed sources said Saturday.

Also seen to join the move, intended to share massive purchasing costs and secure stable supply of iron ore, are steelmakers Sumitomo Metal Industries Ltd. and Kobe Steel Ltd. and major Japanese trader Itochu Corp. .

The Japanese government plans to support the effort by having the government-affiliated Japan Bank for International Cooperation offer low-interest loans, the sources said.

Mines in Brazil and on the west coast of Africa are now considered as targets.

To start with, the consortium is considering participating in competitive bidding for Brazilian steelmaker CSN's Namisa iron ore unit, the sources said.

With mine acquisition prices rising in line with surging natural resources price, however, the Japanese companies may face tough talks on the planned purchases.

Rio Tinto Group and BHP Billiton, both British-Australian firms, and Brazil's Vale together dominate over 70 pct of global iron ore output. Japan fully depends on imports to procure some 140 million tons of iron ore it consumes annually.END

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