Winsway Coking Coal, a Chinese coal importer and distributor, has joined Marubeni, the Japanese trading house, in agreed CAD 1 billion (USD 1 billion) cash for Grade Cache Coal, a producer of coking coal. Winsway's core business is buying, washing, and transporting coking coal, used for steel production, in China's Inner Mongolia province and Mongolia.

This deal marks Winsway's 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 U.S. 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 percent of global coking coal imports last year.

Although China's steel demand dropped in recent weeks because of a slowing construction sector, this deal underscores that some Chinese companies are still betting on the long-term health of the steel industry

Grand Cache's mine in west-central Alberta in Canada is in the throes of an expansion to raise annual output to 3.5 million tons by March 2013. The mine has estimated reserves of 346 million tons. Winsway and Marubeni have offered CAD 10 per share of Grande Cache, or more than double its recent average trading level.