Japanese trading houses are becoming increasingly assertive in African resources deals, industry sources have said. Until recently, Chinese companies had traditionally been considered the “top dogs” in resources deals in South Africa, but that it is now changing, one banker specializing in the sector said. He noted that he had seen a resurgence of interest by Japanese trading houses in the space, pointing to iron in Africa as one area where Japanese firms are heading a robust challenge to Chinese hegemony. “It used to be considered a Chinese playground,” he continued, adding, “but now the Japanese trading houses are much more aggressive.” A lawyer focused on resource deals commented that Japanese companies, in particular the trading houses, are looking to acquire more iron ore as well as coal assets in Africa. Major trading houses in Japan include Mitsubishi Corp., Mitsui & Co., Sumitomo Corp. and Marubeni. The race for African resources has been heating up, in particular with the discovery of one of the world’s largest reserves of high-quality coal, which sits below Tete, Mozambique. Majors worldwide are pouring in millions to the mining projects, according to previous news reports. “Specialists say they are the most valuable to be discovered anywhere in the world since production began at the Bowen Basin in Queensland, Australia in the 1960s,” according to a FT report. A Japanese government official contacted by this publication confirmed there were several Japanese companies currently in South Africa for this purpose, and that the major trading houses were among them, but said he could not divulge any names. However, he said that it was part of a wider trend of Japanese companies looking to enter South Africa to acquire natural resources. The official pointed to the Japan Oil, Gas and Metals National Corporation (JOGMEC), which has been offering financial assistance to various Japanese firms in an effort to increase resource asset acquisitions overseas. Last month, JOGMEC inked a memorandum of understanding (MoU) with the governments of Namibia and Malawai to explore and develop mineral resources, while it also signed another MoU with the government of Kazakstan to jointly prospect for rare metals. Japan’s Itochu Corporation is one major trading house that has been active in acquiring uranium assets in South Africa, inking a financing deal from JOGMEC for JPY 4bn (USD 46.8m) to mine for uranium in Namibia earlier this year. However, a second lawyer cautioned that by and large, Japanese firms may still consider Africa to be risk heavy and thus, shy away from bigger deals. While Japanese companies may be looking to acquire in the country, whether or not it results in steady, major deals has yet to be seen, he continued. One South African mining sector source noted resources such as platinum, chrome and nickel are of particular interest to Japanese trading houses. These Japanese investors are looking to Africa to secure raw material supply streams, said the source, who referred to the fact that Mitsubishi Corp has established an office in Sandton, Johannesburg. A second South African mining industry source noted that "while the Japanese have always been around," Japanese investors have historically preferred to acquire "passive" interests in mining stakes rather than controlling stakes. by Mai Mizuta and Peter Cromberge
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