Surging Iron Ore Prices Boost Profits at Mitsubishi and Mitsui

Surging Iron Ore Prices Boost Profits at Mitsubishi and Mitsui

Surging iron ore prices are likely to boost profits at two of Japan’s largest trading houses.

Both Mitsubishi Corp. and Mitsui & Co., Japan’s two biggest trading houses, are forecasting higher profit this year on the back of increased prices for iron ore and coking coal.

Mitsubishi said on Friday said that net income may climb to 370 billion yen ($3.99 billion) in the year ending March 2011 - up from 273.1 billion yen a year earlier.

Mitsui expects profits of 320 billion yen, up 114 per cent on 149.7 billion yen a year ago.


Mitsubishi has stakes in iron ore mines in Chile and Canada and in a coking coal venture with BHP in Australia. It expects profits from metals to hit 185 billion yen this fiscal year compared to 137.9 billion yen in the year ended March. Earnings from energy are expected to climb to 73 billion – up from 71.9 billion.

BHP To Meet Japanese Steelmakers Next Week

BHP Billiton Ltd., the world’s largest mining company, is to hold talks with Japanese steel mills next week on proposed quarterly pricing contracts for coking coal, according to investment bank UBS AG said.

Analysts led by Tom Price said in a note today that talks will be held through the BHP Billiton Mitsubishi Alliance.

BHP told Japanese steelmakers last month that it wants to set coking coal prices on a quarterly basis rather than annually.

“We expect BHP to secure some quarterly contracts this year at close to spot,” Price said. Contract prices are $129 a ton for the year ending March 31.

Mitsubishi Looks At Stake In Chilean Iron Ore Producer

Mitsubishi Corp., Japan’s largest trading house, has hired Citigroup Inc. to evaluate a possible stake acquisition in a Chilean iron-ore producer, La Tercera reported.

Mitsubishi wants to buy part of Cia. Minera del Pacifico, the unit of Chilean steelmaker Cap SA known as CMP, to gain Japanese tax breaks for companies that invest in foreign raw- materials producers, the Santiago-based newspaper reported, without saying where it got the information. Cap hired JPMorgan Chase & Co. to study the transaction, the newspaper said.

Mitsubishi already owns 10 percent of Cap and 50 percent of CMP’s Cia. Minera Huasco iron-ore unit, the newspaper said. Mitsubishi and Cap may reach an accord by December, La Tercera reported.

Source: Bloomberg