Japanese trading firm Sojitz Corp is in talks to buy an undeveloped coal mine in Australia. The company is looking to replace its Minerva mine, which is due to cease operations in 2019.
"We are negotiating with a company which is conducting exploration at a coal concession near Minerva to buy the asset," Masaaki Bito, general manager of the coal department at Sojitz, said.
There is a potential cut-price bargain to be had for Sojitz, as coal prices at near five-year lows have forced miners to cancel coal projects, shut mines and lay off thousands of workers.
A proposed AU$ 10 billion Australian coal port expansion near the Great Barrier Reef was shelved last week by its sponsors, who pointed to a lack of demand for the extra capacity.
"It's not a bad time to develop mines," Bito said. "Compared to two years ago, it's much easier and cheaper to secure equipment and hire engineers for exploration."
Sojitz’s Minerva mine in Queensland produces 3 million tpa of thermal coal. The mine’s coal trading volume will hit 30 million t within 2 – 3 years, according to Bito.
"What we are aiming at is an asset which can generate synergy from the existing operation... something near Minerva where the current infrastructure and staff can be used," Bito said.
"We want to make good use of our expertise and human resources we've got from Minerva. A new mine with similar size to Minerva will be ideal," Bito said.
Sojitz is also looking at two other assets near Minerva - another undeveloped coal concession and the Athena exploration area in which the company owns a 45% stake - for development.
"We want to make a decision as soon as possible," Bito said.
The coal market
The price of coal at Australia's Newcastle Port , an Asian benchmark, was AU$ 71.83 a tonne in the week to 20 June, levels last seen in late 2009 and down sharply compared to AU$ 136.30 a tonne in January 2011.
Despite the slumping prices, Sojitz, which holds a stake in four coal mines in Australia and Indonesia, still makes profits from its coal assets, according to Bito.
He said that growing coal demand from China, South Korea and Japan, as well as emerging countries like Vietnam and Myanmar, would help the coal market improve from 2016 – 17.
Edited from various sources by Sam Dodson
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