Itochu, Sumitomo seek to sell Glencore stake
Japan’s Itochu Corp. (TYO:8001) and Sumitomo Corp. (TYO:8053) are looking to sell a combined 45% interest in the NCA Project coal venture operated by Glencore Plc (LON:GLEN) in Australia.
According to The Wall Street Journal, Itochu has hired JP Morgan to help it find a buyer for its 35% interest and Sumitomo has enlisted Rothschild to advise it on selling its 10% stake as the Japanese trading companies move to reduce their exposure to mining amid a commodity price downturn.
The NCA Project involves central Queensland’s Newlands and Collinsville mines, which are able to produce 17 million tonnes of thermal coal and coking coal per year, the newspaper said.
But mine managers have recently cut output below peak levels to protect profits, with coal prices near multiyear lows, it said. Thermal coal is used for power generation; coking coal, for steelmaking.
Itochu and Sumitomo are intent on closing a deal on the project, which also includes access to a berth at the Abbot Point coal port, before the year’s end, the newspaper said.
Falling coal prices have created uncertainty in coal mining, Australia’s second-largest export commodity after iron ore and one of the country’s biggest employers.