Japan's Itochu Corp will partner with USA-based Drummond Coal in a $1.5 billion deal to market Colombian coal in Asia. Itochu will take a 20% stake in a new company, Drummond International, with the privately owned US firm holding the balance.
"Specifically, this transaction is tied to a capital program in Colombia over the next five years projected to be over $1.3 billion," Drummond said.
Drummond International plans to raise coal production by 10 Mt to 35 Mt by 2014. Itochu said 70% of that 10 million extra coal output will be sold to Asia, especially to China, India and Japan.
Europe will remain the key market for Colombian coal, utilities and producers told Reuters. China has occasionally taken medium to low-grade coal from Colombia and India has taken trial cargoes but to date, other origins have dominated Asian coal supply.