China’s Winsway in Canadian coking coal bid
Winsway Coking Coal, a Chinese coal importer and distributor, has joined Marubeni, the Japanese trading house, in an agreed C$1bn ($1bn) cash bid for Grande Cache Coal, an Alberta-based producer of coking coal, used in steelmaking.
Hong Kong-listed Winsway’s core business is buying, washing and transporting coking coal in China’s Inner Mongolia province and in neighbouring Mongolia.
This deal marks its biggest step yet overseas, and comes at a time when coking coal is increasingly considered strategic in China. Earlier this month, Winsway announced it would form a joint venture with Peabody, the US coal company, to market coal in Asia.
China is the world’s second-largest importer of coking coal, after Japan, and Chinese imports of coking coal have been growing as China’s steel sector expands.
China and Japan together accounted for 40 per cent of global coking coal imports last year.
Although China’s steel demand has fallen slack in recent weeks because of a slowing construction sector in the country, this deal underscores that some Chinese companies are still betting on the long-term health of the steel industry.
Grande Cache’s mine in west-central Alberta is in the throes of an expansion to raise annual output to 3.5m tonnes by March 2013. The mine has estimated reserves of 346m tonnes. Winsway and Marubeni are already among its biggest export customers.
Winsway and Marubeni have offered C$10 for each Grande Cache share, or more than double its recent average trading level.
The agreement includes a termination fee of C$50m and a cost reimbursement fee of C$10m payable by Grande Cache if the deal is not completed. Winsway and Marubeni have agreed to pay reverse break fees totalling C$110m.
The bid is the latest in a series of moves by Chinese companies to gain access to Canada’s natural resources, notably oil sands, shale gas and coal.
Sinopec last month offered C$2.2bn for Daylight Energy, a Calgary-based junior oil and gas exploration company with large acreage in western Canada that is only partially developed.
Hong Kong-listed Winsway’s core business is buying, washing and transporting coking coal in China’s Inner Mongolia province and in neighbouring Mongolia.
This deal marks its biggest step yet overseas, and comes at a time when coking coal is increasingly considered strategic in China. Earlier this month, Winsway announced it would form a joint venture with Peabody, the US coal company, to market coal in Asia.
China is the world’s second-largest importer of coking coal, after Japan, and Chinese imports of coking coal have been growing as China’s steel sector expands.
China and Japan together accounted for 40 per cent of global coking coal imports last year.
Although China’s steel demand has fallen slack in recent weeks because of a slowing construction sector in the country, this deal underscores that some Chinese companies are still betting on the long-term health of the steel industry.
Grande Cache’s mine in west-central Alberta is in the throes of an expansion to raise annual output to 3.5m tonnes by March 2013. The mine has estimated reserves of 346m tonnes. Winsway and Marubeni are already among its biggest export customers.
Winsway and Marubeni have offered C$10 for each Grande Cache share, or more than double its recent average trading level.
The agreement includes a termination fee of C$50m and a cost reimbursement fee of C$10m payable by Grande Cache if the deal is not completed. Winsway and Marubeni have agreed to pay reverse break fees totalling C$110m.
The bid is the latest in a series of moves by Chinese companies to gain access to Canada’s natural resources, notably oil sands, shale gas and coal.
Sinopec last month offered C$2.2bn for Daylight Energy, a Calgary-based junior oil and gas exploration company with large acreage in western Canada that is only partially developed.
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