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Japan's Itochu, Sumitomo put Australia coal stake up for sale
July 23, 2014 / 9:07 AM / 3 years ago

Japan's Itochu, Sumitomo put Australia coal stake up for sale

MELBOURNE, July 23 (Reuters) - Japan’s Itochu Corp and Sumitomo Corp want to sell their stakes in two Australian coal mines and a coal terminal they co-own with Glencore PLC, two people familiar with the matter said on Wednesday.

The Collinsville and Newlands mines in Queensland make up the sixth-largest coal producing complex in Australia, exporting energy coal for power stations and metallurgical coal for steel mills.

The joint auction of Itochu’s 35 percent stake and Sumitomo’s 10 percent stake would follow a string of mine sales, closures and project cancellations as coal producers battle prices at near five-year lows, high costs and a stubbornly high Australian dollar.

“Nothing has been decided,” Sumitomo spokeswoman Sayaka Ito said, declining to comment further. Itochu and Glencore declined to comment.

The sale was first reported by the Wall Street Journal.

The Collinsville mine was shut last year for four months and resumed production earlier this year after Glencore, the majority owner and operator, cut costs by dropping contractor Thiess, an arm of Leighton Holdings Ltd, and using its own workers.

The mine produced 2.3 million tonnes over the eight months it was operating last year.

The Newlands open-cut and underground mines produced 6.95 million tonnes of mainly energy coal last year. The underground mine is due to close in 2015 when it reaches the end of its life, which Glencore has opted not to extend because of the coal-price slump.

For Sumitomo, exiting the mines would follow its acquisition with Glencore of a majority stake in the Clermont mine, Australia’s third-largest thermal coal mine, for just over $1 billion last year.

The people familiar with the sale declined to comment on a possible price for Itochu’s and Sumitomo’s 45 percent stake. (Reporting by Sonali Paul; Additional reporting by Yuka Obayashi in TOKYO)

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