Nippon Steel, a prominent Japanese steelmaker, remained engaged in negotiations with Teck Resources regarding its strong interest in acquiring a stake in Teck's esteemed high-grade coking coal asset, according to a Reuters report last week.
Takahiro Mori, the executive VP at Nippon Steel, expressed the company's determination to secure a stake of 15% or more in the coal asset, intending to establish it as an affiliate unit.
Initially, Nippon Steel had outlined plans in February to acquire a 10% stake in Elk Valley Resources, the coking coal unit set to be separated from Teck, for an estimated amount of around C$1.15 billion.
The agreement included a provision allowing Nippon Steel the option to increase its stake to a maximum of 17.5%. However, Teck recently abandoned its proposal to divide its coal and metals business after failing to obtain the required approval from its shareholders.
The primary objective driving Nippon Steel's interest in investing in Teck's high-quality coking coal is to secure a stable supply of this vital ingredient for steel production and to capitalize on the asset's potential profitability, as highlighted by Mori during the interview.
Mori also acknowledged the potential implications of a Teck acquisition by Glencore, stating that if such a scenario were to occur, the integration of thermal coal and coking coal could influence Nippon Steel's decision-making process.
(Writing by Alex Guo Editing by Harry Huo)
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