Biggest challenge is iron ore supply for Nippon Steel - Chairman
2011-07-13 09:31:24 [Print]
Mr Akio Mimura chairman of Nippon Steel Corporation said that the concentration of iron ore supply among a handful of miners is the biggest issue that Nippon Steel Corporation faces, though the company is also concerned by governments levying resource taxes to cash in on booming North Asian commodities demand.
Mr Mimura said that flexible costs such as those for iron ore and coking coal critical ingredients in the production of steel now account for 85% of its total costs, up sharply on a decade ago.
Although Nippon Steel tries to pass on higher costs to buyers, this is difficult in Japan, where the economy isn't growing quickly. Steel demand in Japan has also weakened since the devastating March 11th 2011 earthquake and tsunami, which led many domestic auto producers to temporarily shutter factories.
Mr Mimura told the Boao Energy, Resources & Development Conference in Perth that "If we want to increase prices of products, we will suffer great opposition from our customers."
Mr Mimura said that "The biggest issue in front of us is the limited number of players on the supply side. Another issue is resources taxes. Once a tax is in place it will delay the exploration of resources and will slow down the investment in energy and resources. This causes us concern."
Australia's ruling Labor government plans to impose a 30% tax on iron ore and coal mining profits in order to fund public services and other expenditures. Australia is one of the world's biggest producers of iron ore.
Mr Mimura said that flexible costs such as those for iron ore and coking coal critical ingredients in the production of steel now account for 85% of its total costs, up sharply on a decade ago.
Although Nippon Steel tries to pass on higher costs to buyers, this is difficult in Japan, where the economy isn't growing quickly. Steel demand in Japan has also weakened since the devastating March 11th 2011 earthquake and tsunami, which led many domestic auto producers to temporarily shutter factories.
Mr Mimura told the Boao Energy, Resources & Development Conference in Perth that "If we want to increase prices of products, we will suffer great opposition from our customers."
Mr Mimura said that "The biggest issue in front of us is the limited number of players on the supply side. Another issue is resources taxes. Once a tax is in place it will delay the exploration of resources and will slow down the investment in energy and resources. This causes us concern."
Australia's ruling Labor government plans to impose a 30% tax on iron ore and coal mining profits in order to fund public services and other expenditures. Australia is one of the world's biggest producers of iron ore.
