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Mitsubishi Heavy Industries Ltd. is considering selling one of its largest shipbuilding plants in Japan to reduce costs as it faces tough competition from Chinese and South Korean rivals, informed sources said Thursday.

The company is weighing the sale of the Koyagi plant in the city of Nagasaki to Oshima Shipbuilding Co., the third biggest shipbuilder in the country, the sources said.

The move could accelerate the realignment of the Japanese shipbuilding industry after Imabari Shipbuilding Co. and Japan Marine United Corp., the largest and second largest shipbuilders in the country, last month announced a basic agreement to form a capital and business partnership.

The Koyagi plant, founded in 1972, stopped building liquefied natural gas vessels in September this year and now focuses on liquefied petroleum gas ships.

Mitsubishi Heavy apparently thinks it is unlikely to see improved profitability in the gas ship business where competition with Chinese and South Korean rivals is especially fierce, the sources said.

The company plans to focus its shipbuilding operations on naval vessels for the Defense Ministry at its Nagasaki main factory and on ferries at its Shimonoseki factory in Yamaguchi Prefecture, the sources said.

Oshima Shipbuilding, based in Saikai, Nagasaki Prefecture, mainly builds bulk carriers. It apparently aims to improve its profitability by acquiring the Koyagi factory, the sources said.

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