Will a US$733 Million Joint Venture Secure Nippon Steel's (TSE:5401) Long-Term Supply Narrative?

• On October 7, 2025, Rio Tinto, Mitsui, and Nippon Steel announced a joint investment of US$733 million to develop new iron ore deposits at the West Angelas Sustaining Project in Western Australia, securing all required government approvals.
• This partnership not only extends mining operations and supports local job creation but also reinforces Nippon Steel’s efforts to secure a long-term and reliable supply of raw materials for its steel production.
• We’ll examine how this significant iron ore investment shapes Nippon Steel’s investment narrative through a focus on long-term supply security.

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What Is Nippon Steel's Investment Narrative?

For investors considering Nippon Steel, the big picture centers on exposure to long-term steel demand and supply security, particularly as global industry shifts toward more sustainable practices and reliable supply chains. The recent $733 million joint investment with Rio Tinto and Mitsui in the West Angelas Sustaining Project may represent a meaningful shift in short-term catalysts, as it directly addresses Nippon Steel's access to a steady flow of iron ore, key amid ongoing volatility in raw material costs and supply. Previously, risks included ongoing losses, tight dividend coverage, and an uncertain regulatory environment tied to overseas expansion. Now, the new project could lessen fears about input scarcity, potentially reducing immediate cost risk and reinforcing supply stability, but core financial issues and execution risks around expansion remain unresolved, especially with upcoming earnings reports offering fresh short-term catalysts. However, governance questions and concerns about profit turnaround haven't gone away.

Nippon Steel's shares have been on the rise but are still potentially undervalued by 41%. Find out what it's worth.

Exploring Other Perspectives

Three members of the Simply Wall St Community estimate Nippon Steel's fair value to range from ¥698.91 up to a very large ¥3,352.16. While some see strong upside, others remain more cautious, especially given the uncertainties around profitability and earnings recovery. Considering these divergent opinions can help broaden your view on Nippon Steel’s future.

Explore 3 other fair value estimates on Nippon Steel - why the stock might be worth just ¥699!

Build Your Own Nippon Steel Narrative

Disagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Nippon Steel research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Nippon Steel research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Nippon Steel's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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