Nippon Steel and JFE Steel have agreed to acquire a 30% stake in the Blackwater coking coal mine in Queensland, Australia.

Earlier this year, Whitehaven Coal, listed on the Australian Stock Exchange (ASX), completed the acquisition of the Daunia and Blackwater metallurgical coal (coking coal) mines from BMA, a joint venture between BHP Group and Mitsubishi Development, for US$3.2 billion. It is now bringing in equity partners in an all-cash deal valued at US$1.08 billion.

The Blackwater mine will now be owned by Whitehaven (70%), Nippon Steel (20%) and JFE Steel (10%), through an unincorporated joint venture managed by Whitehaven. Both Japanese companies, the country's top two steelmakers, have a longstanding relationship with the Blackwater mine, which supplies them with coking coal.

Commenting on the deal, JFE Steel says: “The demand for coking coal is expected to grow as the production of crude steel using the blast furnace method increases in India and Southeast Asia. Meanwhile, both the development and expansion of coking coal mines are becoming increasingly difficult, leading to concerns that the supply of coking coal will become tighter in the future.

“In response, the acquisition of a concession in the Blackwater mine will ensure a stable supply of high-quality coking coal for JFE Steel as well as support stable earnings.”

For Whitehaven, its acquisition of the Daunia and Blackwater coal mines transforms the firm into a metallurgical coal producer with pro-forma managed run-of-mine production of around 40 million tonnes per annum and pro-forma revenues of around 70% metallurgical coal and 30% thermal coal.

The deal also increases its exposure to high-growth markets including India and Southeast Asia, while diversifying its market exposures currently focused on Japan, South Korea and Taiwan.