Mitsubishi Corporation is selling its interest in two Australian thermal coal mines for A$750 million ($539 million) to its joint venture partners Glencore and Sumitomo Corp., in a move that marks the end of its involvement in upstream fossil fuels.
The company, which is Japan’s biggest trading house, will sell its 31.4% stake in the Clermont coal mine to GS Coal, the 50-50 joint venture between Glencore and Sumitomo, and its 10% stake in the Ulan coal mine to Glencore.
The Swiss miner and commodities trader said the deal value was $530 million. Glencore noted it would only spend $130 million, mainly on the Ulan asset, while GS Coal will use its own funds for the Clermont stake.
The Clermont deal, expected to be completed in 2019, will bring the Glencore-Sumitomo joint venture’s interest in the mine to about 81.5%, Sumitomo said in a separate statement.
Since 2016, Mitsubishi has been shifting focus toward its non-resources businesses, which range from agricultural machinery to industrial finance and cars.
Last year, it sold its interest in two other thermal coal mines in Australia, including Gregory Crinum, which was bought by Japan’s Sojitz.
Today’s deal means the Japanese powerhouse will no longer have any participation in thermal coal operations, although it’s keeping its coking coal mines, which it considers key assets.
For Glencore, it’s just another coal asset under its belt, as the company — led by former coal trader and now billionaire Ivan Glasenberg — believes Southeast Asian countries will continue to rely on the fossil fuel to power its plants.
The deal comes as the International Energy Agency (IEA) predicted Tuesday that global coal demand will edge higher until 2023, mainly thanks to India and other Asian countries, which will offset a decline in Europe and the US.
It also follows an agreement last week among 200 countries to implement rules outlined in the Paris Agreement, the landmark 2015 global pact aimed at curbing emissions from fossil fuels.
Coal remains the second-largest global source of primary energy, behind oil, and the largest source of electricity.