Japanese trading house Sojitz Corp aims to increase its holding of coking coal using funds from the planned sales of thermal coal assets, its president said.
Some of Japan’s trading houses are cutting or freezing thermal coal investments to mitigate criticism around the environmental harm the fuel causes and as Japan seeks to curb emissions by 26 percent by 2030 from 2013 level.
“It’s difficult to buy coking coal assets at the moment as prices have climbed so much,” Yoji Sato, Sojitz President and CEO told a news conference.
“But we’ll continue to seek opportunities to cut some of our thermal coal assets and raise our coking coal exposure,” he said, adding that a recovery in thermal coals prices provides a good opportunity to sell stakes in low-quality coal mines.
The price of coking coal – a key steel-making ingredient – has been volatile, nearly quadrupling between March and late November 2016, but then halving by the end of March.
Prices then rose after Cyclone Debbie hit major producer Australia, cutting rail lines in the state of Queensland, the world’s largest coking coal export region.
The price of thermal coal has also surged by more than 50 percent over the past year.
Sojitz does not disclose sales volumes from its coal mine holdings. But a company spokesman said on Monday it is above 5 million tonnes a year and 80 percent of that is thermal coal.
“It will be extremely hard to purchase stake in Australia’s coking coal mines now although there may be possibility in other countries,” Sato said, without elaborating further.
Sato was speaking at a briefing where Sojitz forecast a 22.7 percent increase in net profit for the current fiscal year ending in March 2018 to 50 billion yen ($447 million), backed by stronger profit in coal assets and a turnaround in food and agriculture businesses.
Sojitz also aims to expand coal trading to 20 million tonnes this fiscal year, against 18 million tonnes in the 2015/2016 fiscal year, by increasing trading of Russian coal to buyers in Japan, India, South Korea and Vietnam, the spokesman said.
Source: Reuters (Reporting by Yuka Obayashi; Editing by Christian Schmollin
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