Source: Bloomberg    Date: May 19, 2010

Japan’s fourth-largest trading company, Itochu Corp., says it invested in Winsway Coking Coal Holdings Ltd. to secure coal from Mongolia,  stepping up competition with China and Russia for the steelmaking ingredient as prices jump. Itochu joined a group led by Hopu Investment Management Co., the USD2.5-billion fund run by Goldman Sachs Group Inc. partner Fang Fenglei, in investing in Winsway with the purchase of USD10 million of convertible debt last month. Winsway, based in the British Virgin Islands, transports coal from Mongolia to China.

Itochu wants to add Mongolian assets to its operations in Australia, Indonesia and North America as prices climb to a near record this year. “The current levels enable Mongolian coal to sufficiently compete against coal produced in other regions,” the company chairman has said. “Mongolian coal wasn’t viable to export when prices were around USD30 and USD40” a metric ton.  Coking coal for immediate delivery traded at USD236 a ton as of April 30.

Winsway has expanded sales recently by investing in trucks to carry coal from mines in Mongolia, including one close to the Tavan Tolgoi coal deposit.  Mongolia’s coal exports to China may climb to about 12 million tons this year from 8.5 million tons in 2009, and about 4 million tons in 2008.