Mitsui & Co., Japan’s second largest trading house, is not considering revisiting its agreement with Brazilian mining company, Vale, over its investment in Vale’s coal projects in Mozambique.
“Vale informs that the financial impairments incurred in 2015 do not impact Mitsui’s investment decision in the coal project in Mozambique,” the company said in a press statement.
The company was responding to report in a local newspaper that that Japanese trading house was reconsidering its investment after Vale announced US$2.4 billion of writedowns in the Africa country.
In 2014, Mitsui agreed to buy stakes in Vale’s Moatize coal mine and Nacala logistics project for US$763 million – but according to the newspaper report, no investments have yet been made by Mitsui.
In response, Vale noted Mitsui’s continued commitment to the investment in its last conference call: "Vale´s impairment does not directly impact our investment decision; we are currently in negotiations for prompt closing of the transaction, including the conclusion of the Project Finance,” the Japanese company said.
Mitsui recently announced that it expects to make its first net loss since it was founded in its modern form in 1947 due to writedowns on its mining and energy projects. Resource industries account for more than two-thirds of its profit with the company active in oil, iron ore, coal and gas trading.
The Tokyo-based company said it expected to make a loss of JPY 70 billion (US$623 million) in the fiscal year ending in March. And further misery may not be far away.
“Unless commodity prices rebound and stay stable, there is a chance for further impairments,” Thanh Ha Pham, an analyst at Jefferies Group LLC, told Bloomberg.
Edited by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/coal/31032016/mitsui-committed-to-mozambique-coal-investments-2016-495/