* Japan is world's second-biggest coal importer
* Trading houses take advantage of depressed coal markets
* Signals some betting market has bottomed
* Assets eyed in Mozambique, Mongolia, Australia and
By Yuka Obayashi and Sonali Paul
TOKYO/MELBOURNE, Dec 22 Only a few months ago, a
potential buyer said Japanese trading house Marubeni Corp
was prepared to sell a costly stake in a Canadian coal
mine for as little as $1.
But a flurry of acquisitions of high-quality coal assets by
Japanese firms in recent weeks signals that some trading houses
at least are betting a depressed coal market where prices have
halved in three years may be bottoming out.
This vote of confidence comes amid signs that coal demand in
Japan and emerging markets such as India is holding up well
despite weaker demand in markets such as China, where coal
imports in the first 11 months fell nearly a tenth.
Japan is the world's second-biggest coal importer behind
China, importing almost 200 million tonnes a year.
Recent acquisitions include the first coal investment by
Mitsui & Co in 10 years. It is purchasing a stake in a
Mozambique mine operated by Brazil's Vale, in which
the trading firm has an indirect stake.
"The biggest reason for participating in the Moatize project
is to retain excellent quality metallurgical coal that is scarce
globally," Tetsuya Fukuda, general manager of Mitsui's coal
division, said. "With the resource supercycle, we had been not
able to buy any assets."
The partnership will be welcome for Vale, which incurred a
coal loss of almost $500 million in 2013, mostly from
Mitsui is paying $763 million to Vale for a stake in the
mine and port and rail connections, and is also committed to
spending $190 million to expand the mine.
Fukuda said Mitsui also had its eyes on other assets,
Coal prices soared from around $50 to over $200 a tonne
between 2005 and 2008, making mining assets expensive.
But prices have halved in three years and are back below $70
as miners invested in new production and demand stalled due to
alternative fuel sources and slower growth.
The low prices are now triggering interest in buying cheap
assets in anticipation of an eventual market pick-up.
"If you are interested in buying assets - they're probably
going to be more expensive in six months time from where they
are today," said Michael Elliott, global mining and metals
leader at consultants Ernst & Young.
"So it's an opportunity - can they get exposure to more
volumes, potentially even better quality assets than they hold,"
Itochu Corp said this month it was interested in
joining bidding for the giant Tavan Tolgoi coal project after
Mongolia relaunched an international tender.
"Tavan Tolgoi is one of the next big opportunities. Good
quality coking coal projects definitely have scarcity value,"
said Richard Gannon, head of metals and mining for Deutsche Bank
in Australia, when asked what Japanese firms may target next.
Joining the buying spree, Idemitsu Kosan Co said in
November it more than doubled its stake in Indonesian thermal
coal miner PT Mitrabara Adiperdana,. State-owned Japan
Oil, Gas and Metals National Corp has also invested in the early
stages of Australian mines in recent months.
The picture only a few months earlier looked very different.
Sumitomo Corp announced the closure of a coal mine
in Australia as part of $2.3 billion of writedowns, while a
potential buyer - Hong Kong-listed Up Energy Development Group
Ltd - said Marubeni was prepared to unload a stake in
a Canadian coal mine for as little as $1.
Marubeni, which did not disclose financial terms, jointly
paid about $1 billion for the mine in 2012, according to Thomson
($1 = 118.9200 yen)
(Writing by Aaron Sheldrick; Editing by Henning Gloystein and