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BHP to sell more Australian coking coal mines

  • Wednesday, February 22, 2023
  • Source:ferro-alloys.com

  • Keywords:BHP, Australian coking coal mines
[Fellow]Australian resources firm BHP and Japanese trading house Mitsubishi plan to sell the 12mn t/yr Blackwater and 2.5mn t/yr Daunia mines from their BHP Mitsubishi Alliance (BMA) joint venture in Queensland.
 
Australian resources firm BHP and Japanese trading house Mitsubishi plan to sell the 12mn t/yr Blackwater and 2.5mn t/yr Daunia mines from their BHP Mitsubishi Alliance (BMA) joint venture in Queensland.
 
BMA has launched a trade sale process for these lower grade hard coking coal, pulverised coal injection and thermal coal mines, while retaining ownership of premium hard coal mines like the 6mn t/yr Peak Downs and 5mn t/yr Saraji. This meets with BHP's strategy to move to high-grade coking coal, which it sees as best placed to remain profitable in a transition to a low-carbon economy.
 
The planned divestment follows BHP's sale of its [80pc stake in BHP Mitsui Coal (BMC) coking and thermal coal joint venture](BMC) to Australian firm Stanmore in May 2022.
 
Blackwater and Daunia produced 14.65mn t of BMA's 58.28mn t of coal production in the 2021-22 fiscal year to 30 June. The sale will cut BMA's production to around 45mn t/yr. BMA's Hay Point port facility near Mackay has a capacity of 55mn t/yr, although it only exported 46.3mn t in 2022. Blackwater coal is usually shipped through Gladstone. But it is unclear if Daunia coal will continue to use the Hay Point facility or be shifted to the adjacent port of Dalymple Bay Coal Terminal if the sale goes through.
 
BHP has linked the sale of Blackwater and Daunia to increased coal royalties in Queensland, although the higher grade coals that remain within BMA are more likely to attract the top rate of royalty of 40pc that kicks in at prices above A$300/t. The unexpected shift in royalties worsens the economics of the Daunia and Blackwater mines, according to BHP chief executive Mike Henry.
 
BHP's planning to sell off Daunia and Blackwater began before the royalty increases, which were announced in June. The firm had been working with the Queensland state government on amending the Central Queensland Coal Associates Agreement to allow BMA mines to be split from the joint venture for over a year.
 
There are several potential buyers for the lower grade BMA assets, with the BMC sales process likely to have flushed out options for BHP. Chinese coal mining firm Yancoal, which has thermal coal assets in Australia, is one potential buyer, as are Australian firms Whitehaven and New Hope.
 
BHP last month warned that BMA would come in at the bottom end of its 58mn-64mn t production guidance for the 2022-23 year to 30 June and raised its cost guidance to $100-105/t from $90-100/t on sector-wide inflation.
 
BMA reported costs of $100.23/t during July-December, up from $85.30/t for January-July. BHP reported underlying earnings before interest, tax, depreciation and amortisation for its coal division of $2.63bn for July-December compared with $2.64bn a year earlier.  argusmedia

 

  • [Editor:kangmingfei]

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