Japanese firms to dig deep for Teck's $14bn miner

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The Independent Online

Leading Japanese companies are understood to be eyeing a minority stake in Fording Canadian Coal Trust, the miner on which Vancouver-based Teck Cominco spent $14bn (£9bn) just this summer.

UK and US bankers at Citigroup were hired last month to look at selling the stake. Sharply declining coal prices since the summer meant that Teck realised it would struggle to repay a 364-day, $5.8bn bridging loan next year. The loan was secured to help fund the acquisition. An industry source suggested that Fording – which owns 60 per cent of Elk Valley, the world's second-largest producer of seaborne hard coking coal – might now only be worth around $5bn. This, he added, would mean that at least a 40 per cent stake would have to be sold to make "any dents" in the bridging loan.

A second source cited Japan's Mitsui, Mitsubishi and Sumitomo as likely bidders, and a Teck insider admitted they could be approached.

Another possibility is the six-strong Japanese and South Korean consortium that bought 40 per cent of iron ore producer Namisa from Companhia Siderurgica Nacional, the Brazilian steel maker, in October. The consortium, which included Nippon Steel, paid $3.1bn for the stake.

Teck vice-president Greg Waller is reported to have said that coal asset sales are not "high on our list" of options to cover the loan, but he admitted that Citi was consulting on the idea of divestments.