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Japan’s Mitsui will buy stake on Vale’s Mozambique coal project

World Coal,

Japanese trading firm, Mitsui & Co, is set to buy a stake in Vale's Moatize coal project in Mozambique, according to two sources close to the situation.

Reuters reported that, under terms of the sale, Mitsui will buy 15% of the mine for about US$450 million from the Brazilian miner.

One source said the Japanese trader will take a 50% stake in the project's rail and port, on condition of contributions to future Capex costs.

Vale provided a mooted response to the reports of the Mitsui negotiations. The company released a statement informing reporters that "it has ongoing negotiations with a potential investor in its coal and logistics operations in Mozambique."

If and when the parties reach an agreement, a press release will be issued to the market detailing the transaction," the company said.

Vale SA, which has been hit by a dramatic fall in the price of its key profit driver iron ore, said a year ago it was looking to sell a 15 – 25% stake in its coal assets which are spread between Australia and Mozambique.

Analysts at the time valued the coal operations at roughly US$4 billion.

Moatize, one of the largest metallurgical coal mines in the world, was seen as by far Vale's best asset in the portfolio.

But it has not been an easy market in which to find a buyer. Coal prices have declined steadily for more than three years as demand has failed to keep pace with rising production.

Last month, European coal futures fell to US$69.60/t, their lowest since 2007.

Edited from various sources by Sam Dodson

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