November 20, 2008

Big steel makes coal play but US companies absent

AP reported that international steel companies are getting back in the business of coal mining. While it's been decades since major steelmakers such as US Steel abandoned coal mining, the need for cheap, stable supplies of metallurgical grade coal is drawing the likes of ArcelorMittal back to the coalfields.

ArcelorMittal the world's largest steel producer recently upped its stake in Australia's Macarthur Coal and snapped up Mid Vol Coal Group, which has mines in West Virginia and Virginia.

Mr Charles Bradford industry analyst said that owning coal mines offers an advantage to steelmakers who use coke fired blast furnaces. Producers who've switched to electric arc furnaces are being hammered by scrap prices that have nearly tripled to USD 890 a ton today.

Mr Bradford said that everybody wants their own low cost materials.