China's Winsway Coking Coal and Japan's Marubeni Corp yesterday signed a deal to acquire Canada's metallurgical coal producer Grande Cache Coal for $1 billion in order to meet the growing demand from steelmakers in China.
Hong Kong-listed Winsway and Japanese trading conglomerate Marubeni will pay C$10 in cash, a premium of 70 per cent to Grande Cache's closing price on 28 October.
Alberta-based Grand Cache holds coal leases covering over 22,000 hectares containing an estimated 346 million tonnes of metallurgical coal resources in the Smoky River Coalfield located in west-central Alberta
Grand Cache has been producing coal in the Smoky River Coalfield located since 2004 and utilises both surface and underground mining techniques that produce a premium, low volatile, metallurgical coal.
In December of 2009, Grand Cache announced plans for a strategic expansion to increase coal production to 3.5 million tonnes by 31 March 2013.
Winsway, which supplies metallurgical coal to the Chinese steel industry, is one of Grande Cache's main customers and one of the single largest importers of Mongolian coking coal into China.