Japanese steelmaker Nippon Steel has announced plans to invest in coal mining company Elk Valley Resources (EVR), a spin off business from the Canadian firm Teck Resources.
Nippon Steel says the arrangement will give it a supply of high-quality coal needed for new processes that will lead to carbon neutrality.
To reduce those emissions, the industry is developing a next-generation process that uses hydrogen to make steel- which requires high-quality coal to produce iron.
The $850m investment will allow the companies to enter into a long-term coal offtake rights agreement, under which EVR will supply steelmaking coal to Nippon Steel. Nippon Steel plans to acquire a 10% stake in EVR, which will have an annual production capacity of 25~27Mt from four mines.
In addition to ‘securing high-quality steelmaking coal’, following completion of the investment and the acquisition by Nippon Steel of additional common shares of EVR to increase its interest, the steelmaker will be able to consolidate EVR as an equity-method affiliate, says an online press release.
Source: NHK World