Japan’s Nippon Steel Corporation has signed a master agreement with Champion Iron (CI) and trading house Sojitz Corporation to buy a stake in the Kamistiatusset (Kami) iron ore project in Newfoundland and Labrador, Canada. 

The Kami project, owned by CI, produces high-grade direct reduced (DR) iron ore, a rare resource worldwide that is especially suitable for producing direct reduced iron (DRI). 

The mine is under consideration for new development, and to progress a feasibility study toward its development and operation. 

With all the necessary conditions now met, Nippon Steel said it has formed a joint venture called the Kami Iron Mine Partnership (the partnership) in collaboration with CI and Sojitz. 

Nippon Steel, through its wholly owned subsidiary NS Canadian Resources, has acquired a 30% stake in the partnership.  

The initial payment for this acquisition is C$42m ($30.2m), contributing to the total agreed consideration of C$150m. 

The remaining C$108m is contingent upon an additional investment decision based on the results of the feasibility study. 

By acquiring interests in the Kami project and partnering with CI and Sojitz, Nippon Steel seeks to secure raw materials for DRI production and strengthen its consolidated earnings foundation. 

DRI, combined with high-quality scrap, is essential for producing high-grade steel in large electric arc furnaces. Nippon Steel plans to construct these furnaces as part of its strategy to lower carbon emissions. 

Nippon Steel, which recently completed its $14.9bn (Y2.19trn) acquisition of US Steel, has been increasing its investments in coking coal and iron ore mines to secure a steady supply of crucial raw materials.