Japanese steelmakers have raised concerns with Australian authorities about BHP Group’s potential takeover of Anglo American, fearing the deal could make BHP too dominant in the global supply of coking coal.
Australia is the world’s biggest exporter of coking coal, with around 60% of Japan’s imports coming from the state of Queensland, where BHP and Anglo American are the two largest producers.
Steelmakers are concerned that if the $39 billion deal goes through, it would concentrate the world’s top quality coking coal mines in the Bowen Basin under BHP’s control. The combined group would control 44 million tons, or about 13%, of the seaborne coking coal market, according to data from consultants Wood Mackenzie.
A JFE Steel spokesperson said the company would “take measures to ensure that further oligopolisation will not impede sound price formation and stable supply,” though they did not provide details on what those measures could be.
Representatives of Japanese steelmakers have met with Queensland government officials to raise alarm bells about the deal potentially concentrating too much market power in BHP’s hands.
Queensland Deputy Premier and Treasurer Cameron Dick said BHP would need to ensure its coal remains competitive or risk losing state government support. “We work closely with our Japanese customers and are aware of their concerns,” Dick told Reuters.
BHP, which has said expanding in high quality coking coal was a main driver of its tilt for Anglo, declined to comment on the Japanese steelmakers’ concerns.
The Japanese steel industry’s opposition could be a major hurdle for BHP if it decides to revise its takeover bid for Anglo American. Maintaining a competitive and stable supply of coking coal is a key priority for Japan’s steel producers.