Japanese steelmakers have expressed concerns to Australian authorities about the potential takeover of Anglo American by BHP Group, fearing it could give BHP too much dominance in the global supply of coking coal.
Australia is the world’s largest exporter of coking coal, a key ingredient in steel production, and Japanese steelmakers rely on Australia for around 60% of their imports, with most coming from the state of Queensland where BHP and Anglo American are the two largest producers.
Steelmakers worry that if BHP successfully acquires Anglo American, it would concentrate the world’s top quality coking coal mines in the Bowen Basin region of Queensland under a single company. Data from consultants Wood Mackenzie shows the combined group would control around 44 million tons, or 13%, of the seaborne coking coal market.
Representatives of Japanese steelmakers have met with Queensland government officials to raise alarm bells about the potential deal, fearing it would impede sound price formation and stable supply of coking coal.
A JFE Steel spokesperson stated that the company will take measures to ensure further “oligopolisation” does not hinder the market, though did not elaborate on the specific actions it could take.
Queensland’s Deputy Premier and Treasurer, Cameron Dick, acknowledged the concerns of Japanese customers and said BHP would need to ensure its coal remains competitive if it wants to maintain state government support. BHP declined to comment but has previously said expanding in high-quality coking coal was a key driver behind its bid for Anglo American.
The opposition from Japanese steelmakers could potentially derail the BHP-Anglo American deal if the concerns are not addressed satisfactorily.