TOKYO - Mitsui & Co, Japan's second-biggest trading house, says it and its British partner will boost production at their Australian coal mines by 80 per cent over the next three years to meet demand in Japan and elsewhere in Asia.
Mitsui and British mining giant Anglo American will raiseproduction of coal used by steel makers and power utilities to 12.7 million tonnes a year by 2007 from the current 7 million tonnes.
The two firms will invest A$900 million ($960 million) to renovate production facilities.
The Australian expansion, which will cost Mitsui alone A$470 million including loans, comes days after Nippon Steel Corp, Japan's biggest steel maker, agreed to pay a record of over US$120 per tonne for steelmaking coal in the business year from next April amid tightening supplies of raw materials.
The contract price is more than double the current business year's price of around US$50 and tops market expectations of US$97.
Steel prices have jumped over the past two years because of tight raw materials supplies and a surge in demand, mainly due to China's growing economy.
Tight steel supplies have recently caused Japanese car makers to cut output.
Nissan Motor Co said last month it would suspend some production this year and might have to cut more next year, while Suzuki Motor Corp dropped plans to boost production this month due to a shortage of steel.
Soaring energy prices are also driving up profits at Japanese trading companies, particularly Mitsubishi Corp, the world's top supplier of coking coal along with BHP Billiton of Australia.
