Japan 4 Traders to Get Australia PCI Coal Interest

Marubeni Corporation, Sojitz Corporation, JFE Shoji Trade and Nippon Steel Trading announced on Monday they agreed to purchase 19.7% interest in Codrilla coal deposit from Australian pulverized coal injection coal major, Macarthur Coal and Chinese resource company, CITIC Resources for A$ 126 million. They develop the new deposit as expansion of existing PCI coal joint venture to start operation in 2013. They try to contribute to stable raw materials procurement of Japanese steel makers including Nippon Steel and JFE Steel while they try to follow growing PCI coal demand especially in emerging countries.

Marubeni and Sojitz purchase 7% interest each in Codrilla deposit while JFE Shoji Trade and Nippon Steel Trading purchase 3.7% and 2% interests respectively. Macarthur Coal controls 73.3% of the deposit while CITIC Resources has 7% as existing Coppabella & Moorvale joint venture. They discuss their offtake and contracts with users including Nippon Steel and JFE Steel.

They develop the new deposit with around 50 million tonnes of reserve, which is located around 150 kilometers southwest of major coal terminal, Dalrymple Bay in Queensland. They will get mining lease soon to start development in the year. They produce around 3.2 million tonnes per year of high grade PCI coal at the open cut mine as existing operation.

The joint venture produces annual 7 million tonnes of PCI coal at Coppabella and Moorvale mines, which represents top share in world PCI coal seaborne trade with more than 30 million tonnes per year. The joint venture seeks synergy with existing mines by developing Codrilla deposit through sharing existing infrastructure while the joint venture tries to follow growing PCI coal demand in East Asia, Europe and Brazil by expanding the output to annual 10 million tonnes level.

Marubeni and Sojitz expand the equity coal volume as a key part of the resource strategy eyeing another chance for further equity in competitive mines. Nippon Steel Trading and JFE Shoji Trade seek investment opportunity to get competitive iron making raw materials as a part of strategy of Nippon Steel group and JFE Steel group respectively.