Japan steelmakers oppose "tough" CO2 cut target

TOKYO, Sept 25 (Reuters) - Japanese steelmakers on Friday opposed the new government's target of cutting greenhouse gas emissions by 25 percent by 2020, saying the goal would hurt their competitive edge and prompt them to transfer production abroad.

Prime minister Yukio Hatoyama pledged to meet the target, which is much more ambitious than the previous government's, after sweeping to victory in an election last month.

Shoji Muneoka, chairman of the Japan Iron and Steel Federation, said there is virtually no room for Japanese steelmakers to further improve energy efficiency.

"Such a tough goal would force us to buy carbon credits from abroad, which would raise production costs and put us in a disadvantageous position compared to rivals, who have no such obligations," Muneoka told a news conference. "A transfer of steel production to energy-inefficient developing nations would never solve the problem of global warming."

Muneoka, also the president of Nippon Steel Corp (5401.T), the world's second-biggest steelmaker, also said Japanese steelmakers would stick to the annual benchmark system for deciding iron ore prices, which he said is supported by global steelmakers like those in South Korea, Taiwan and Europe, as well as most mining companies.

The world's biggest diversified miner, BHP Billiton (BHP.AX) (BLT.L), has been pushing for years to stop selling iron ore and other commodities at benchmark prices -- fixed prices agreed once a year -- in favour of what it calls more transparent arrangements such as index or floating pricing.

Steelmakers favour the benchmark system as the stable raw material price allows them and manufacturers to concentrate on product development. (Reporting by Yuko Inoue; Editing by Joseph Radford)