Two Japanese trading houses want to unload their holdings in a big Australian coal project amid a shakeup in the sector that is being driven by low commodity prices, high costs and a strong Australian dollar, the Financial Times reported.
Itochu and Sumitomo have a combined 45 percent stake in the Newlands and Collinsville mines in Queensland, as well as access to a berth at the Abbott Point port, the report said.
The planned sale came after Dudgeon coal port shelved an A$10 billion (US$9.45 billion) expansion plan and Peabody Energy tried to sell Wilkie Creek mine to entrepreneur Nathan Tinkler.
“It’s a buyer’s market out there, a large number of assets are on the block, and not too many buyers are in the market,” UBS analyst Daniel Morgan was quoted as saying. “Transactions have slowed, sellers need to realize its not 2011-12 any more, [and] lower their asking price in order to get a deal.”
The Newlands and Collinsville mines, and the Abbott Point port access, are part of a joint venture in which Glencore owns 55 percent, Itochu 35 percent and Sumitomo 10 percent, according to the newspaper.
There’s currently an oversupply of thermal and coking coal due to record Australian production and a rise in exports from the United States and Indonesia, the report said.
The price of thermal coal has dropped 45 percent to US$70 a ton since 2011 while that of coking coal has fallen to US$120 from US$300 over the period, it added.
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