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Japan-based Idemitsu Kosan Co. will aim to go ahead with the sale of a stake in an Australian coal mine, despite a surge in prices.
The firm is in talks with several entities interested in acquiring its 85% stake in the Ensham mine in Queensland, said President Shunichi Kito, who didn’t elaborate on the parties involved or when a deal could be reached. A sale follows a pledge last month to cut coal production and trim oil output.
“There was of course a lot of debate within the board of directors,” he said in an interview in Tokyo. “Some questioned the sale of these mines when they’re still making profit, while others were of the opinion that we have to sell coal assets now.”
Idemitsu has decided to keep its other Australian coal mine — Boggabri in New South Wales — because there’s still demand from Japanese utilities and steelmakers, he said. The high cost of drilling is one of the reasons why it’s seeking a buyer for its stake in Ensham, Kito said.
A global energy crunch that was exacerbated by the war in Ukraine has buoyed coal this year, providing a lifeline to assets that were rapidly falling out of favor amid the green transition. The fuel makes up only a small segment of Idemitsu’s business, which is dominated by refining and petrochemicals, but the coal unit posted record revenue in 2021 and prices have rallied even further this year.
“It’s not easy to suddenly quit and pull out of the coal business, as we have customers,” Kito said. “But if we were to continue, we would need to continue to put investment into these assets, and there’s of course the risk of holding onto coal assets longer.”
Idemitsu plans to sell assets including the Australian mine stake, filling-station sites and real estate to raise 50 billion yen ($367 million) to fund the addition of cleaner energy sources, Kito said. The company — Japan’s second-biggest refiner — will consider consolidation options to curb 300,000 barrels a day of capacity by 2030, he added.
The company will also work on adding capacity in areas like biomass and ammonia, Kito said. Idemitsu announced last month that it will conduct a joint study to produce and export green ammonia in Queensland.
(By Shoko Oda and Tsuyoshi Inajima)
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