Synopsis: Japan's JFE Steel is in discussions to acquire a stake in the metallurgical coal segment of Canada's Teck Resources. The move is part of a broader trend among major steelmakers diversifying their sources of coking coal due to Russian sanctions. Talks between JFE and Teck have been ongoing since September. The potential deal is still in the early stages, and specific details, such as the stake size and price, remain uncertain, reports Reuters.Article: In a significant development, Japan's JFE Steel Corp has initiated discussions regarding the acquisition of a stake in the metallurgical coal business of Canada's Teck Resources, according to sources with knowledge of the situation. These negotiations add JFE Steel to the list of interested parties, which also includes mining giant Glencore.The context for this heightened interest in coking coal assets stems from global steelmakers' efforts to diversify their supply chains. This drive is motivated, in part, by sanctions imposed on Russia, a leading producer of coking coal.The confidential talks between JFE Steel and Teck have been ongoing since September, but the sources wished to remain anonymous as they are not authorized to speak publicly on the matter.A spokesperson for JFE Steel stated, "We will continue to consider the acquisition of interests in coking coal, but we cannot answer individual questions." JFE Steel, based in Tokyo, is one of Japan's most prominent steel manufacturers.Teck Resources, on the other hand, has chosen not to comment on this speculation, referring instead to its previous statement that it is actively engaging with various counterparties regarding its steelmaking coal business.It's worth noting that these discussions are in their early stages, and it's uncertain whether they will lead to a definitive agreement. The details, such as the stake size JFE is interested in and the proposed price, remain undisclosed.In the world of steelmaking coal, only a handful of major producers exist, with the most significant ones located in Australia, Canada, and Russia.Japan's Nippon Steel had previously expressed its intent to acquire a 10% stake in Teck's coal business for C$1.15 billion, valuing the overall business at approximately C$11.5 billion. Furthermore, Nippon Steel has an option to increase its stake to 17.5%.Teck has been exploring the possibility of splitting its coal and copper businesses since March, but an initial proposal for this was voted down by shareholders. In April, the company also rejected a $22.5 billion unsolicited takeover offer for the entire organization from Swiss mining and trading firm Glencore.Glencore has signaled its interest in acquiring Teck's coal business for approximately $8.5 billion.At the time of reporting, Teck's shares were trading down by 0.6%, while the Toronto stock index benchmark showed a 0.1% decrease.Notably, JFE Steel already holds a 15% equity stake in India's JSW Steel, which had previously been considering an investment in Teck's coal business. However, diplomatic tensions between India and Canada have slowed down this process, as reported in September.Teck's CEO, Jonathan Price, recently conveyed that the company had received multiple suggestions from investors about how to separate its coal and metals businesses. A decision regarding this potential separation is anticipated to be made by the end of the year. The company is weighing two options: a complete sale of the coal business for cash or a partial sale of the coal business, with the proceeds directed toward expanding the copper business.Conclusion: JFE Steel's exploration of a stake in Teck Resources' metallurgical coal business aligns with a broader industry trend where major steelmakers are seeking diversified coking coal sources due to geopolitical factors. Talks between JFE Steel and Teck have been ongoing since September, but details remain undisclosed. This development adds to the ongoing speculation around the future of Teck's coal business, with various players expressing interest. A decision on its potential separation from the metals business is expected by year-end.