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Nippon Steel considers alternative coal supplies amid Queensland rail standoff

Nippon Steel & Sumitomo Metal Corp., which purchased over A$2.5 billion worth of Australian coal in 2016, warned it would consider buying coal from other regions due to the looming shortfall of the commodity amid a dispute between Queensland and Aurizon Holdings Ltd., The Australian reported May 30.

Queensland Premier Annastacia Palaszczuk said she would "reassure the Japanese government their coal exports are secure" in her scheduled meeting with the country's steelmakers and Foreign Minister Taro Kono.

According to the report, Queensland exports about A$5 billion of coal to Japan each year.

In February, Aurizon and major coal exporters were in a standoff after a Queensland, Australia, regulator proposed a cap on the revenue the rail operator can charge over four years to June 2021.

The Queensland Competition Authority set the limit at A$3.89 billion, about 20% or A$1 billion less than the company sought, which may cut the rail operator's annual earnings by A$100 million per year.

Miners affected by the dispute, including Glencore PLC, Anglo American PLC and Peabody Energy Corp., expressed their dismay over the developments, which are already affecting coal shipments.