It succeeded in selling its stake in the Cerrejón coal mine in Colombia, acquired by Glencore (LON: GLEN), and divesting its majority stake in BHP Mitsui Coal – a metallurgical coal joint venture in Queensland, Australia.
It also kicked off a merger of its oil and gas assets with Australia’s Woodside Petroleum (ASX: WPL), which was completed in May 2022.
Mt Arthur proved to be a more difficult asset to sell, even though the company slashed last year the mine value by about $1.25 billion.
As it didn’t receive offers that matched its valuation of the asset, BHP said on Thursday it would retain its NSW Energy Coal division and seek approval to operate beyond 2026, when the current permit expires, until the 2030 financial year.
After that, it will close the operation, which ceased domestic sales in full-year 2020 and currently exports its coal mainly to Japan and South Korea.
BHP previously planned to mine at Mt Arthur, which churns out between 14 and 15 million tonnes of thermal coal per year, until 2045.
The company has earmarked $700 million for site rehabilitation, which is expected to take 10 to 15 years.
2,000 jobs to go
BHP’s decision to keep the mine running comes as prices for high-grade Australian thermal coal have reached near record levels, at around $390 a tonne.
It also follows Europe’s decision to ban coal imports from Russia, which will come into force in August.
“Seeking approval to continue mining until 2030 avoids closure in 2026 and enables BHP to balance the value and risk of those considerations and our commitments to our people and local communities,” Edgar Basto, head of BHP’s Australian minerals unit, said in the statement.
The mining giant noted it would work with Mt Arthur’s 2,000 workers, local business suppliers, traditional owners and governments on the transition. It added the mine’s “resource economics, geotechnical profile and future investment requirements” meant continued mining and closure in 2030 provided “the optimal financial outcome when compared to alternative options.”
The NSW Minerals Council CEO, Stephen Galilee, noted in a separate statement that Mt Arthur was one of about 40 operating coal mines across the state, and one of 17 in the Hunter region, and that granting BHP’s four-year extension would provide workers more time.
Galilee added that 30 coal mines in the state either had approvals or were seeking them to continue mining into the 2030s. Six had been approved or were seeking permission operate until 2040, and several “well beyond” this date.
BHP remains Australia’s largest producer and exporter of metallurgical coal as an equal partner in a separate alliance with Mitsubishi Corp. That joint venture operates seven mines and owns and operates the Hay Point Coal Terminal in Australia, one of the world’s largest coal export ports.
