(EnergyAsia, July 3 2012, Tuesday) — Japanese trading house Sojitz Corporation said it has agreed to pay RMB30 million for a 10% stake in Inner Mongolia Zhongmeng Coal Co Ltd, a wholly-owned subsidiary of China’s Inner Mongolia Erdos Group, which is involved in Mongolia’s resource business. (US$1=RMB6.36).

As Japan’s third largest coal trader, Sojitz, which has been selling about one million tonnes of Mongolian coal a year to China through Zhongmeng Coal since 2010, said it intends to raise that to three to five million tonnes as well as develop new sales to Japan.

An active exporter of Mongolian coal to China, Zhongmeng Coal owns and operates its border-crossing logistics and trade facilities including a stock-yard, transportation vehicles and a coal washing plant at the border area between the two countries.

The Erdos Group, the world’s largest producer and seller of cashmere products, also handles ferroalloy, electric power, coal, and coal chemicals, primarily in Inner Mongolia, and is one of the region’s largest companies.

Sojitz said it is also planning to jointly develop Mongolian coal resources with Zhongmeng Coal and Erdos as part of a plan to establish an integrated coal supply chain in the country covering upstream (resources), midstream (logistics and processing), and downstream (marketing and sales) activities.

With abundant coal reserves over 150 billion tons making it he world’s third largest, Mongolia is well positioned to produce low-cost coking coal through large-scale open-cut mining.

Sojitz said it expects Mongolia to steadily raise its metallurgical coal export volume to eventually meet 10% of world demand due to its close proximity to large consumers in Japan, China and South Korea, which are the world largest users.

Mongolia could more than double its coal exports to 50 million tons by 2020 from around 23 million tons last year, said Sojitz.