BHP to Sell Coking Coal Mines to Whitehaven for $3.2 Billion


Sybilla Gross and Megawati Wijaya
Wed, October 18, 2023 




(Bloomberg) -- BHP Group Ltd. agreed to sell two Australian coking coal operations to Whitehaven Coal Ltd. for at least $3.2 billion, as the world’s biggest miner extends its withdrawal from fossil fuels.

Whitehaven will pay $3.2 billion for the assets, along with additional payments of up to $900 million contingent on realized pricing exceeding agreed thresholds, it said in a statement Wednesday. It is also considering selling a minority stake in the assets to global steel producers through a joint venture, it added.

Shares of Whitehaven in Sydney closed 11% higher for the biggest jump since October 2020. Trading in the shares was halted during the morning, and resumed after the company released its statement. BHP finished up 0.7%.

Read More: BHP’s Iron Ore Output Falls 4% as It Confirms Coal Mine Sale

BHP co-owns the mines, which supply metallurgical coal to steelmakers in markets including China and India, in a 50:50 joint venture with Mitsubishi Corp. The bidding process for the two mines drew competition from rivals including Indonesia-based mining contractor Bukit Makmur Mandiri Utama PT, Stanmore Resources Ltd. and Peabody Energy Corp.

Since 2021, BHP has announced sales of coal, oil and gas assets in locations including Australia, the US and Colombia under Chief Executive Officer Mike Henry’s strategy to refocus the producer’s portfolio on materials tied to growth in renewable energy, electric vehicles and agriculture. The Melbourne-based company this year completed its biggest deal in more than a decade to add OZ Minerals Ltd. and boost volumes of copper, a key transition metal.

Henry has also focused on shedding costlier mines and argues BHP should only retain its highest-quality metallurgical coal operations which can potentially help customers limit some emissions in the steelmaking process. Royalties on output imposed by Queensland’s government mean the coal mines are unlikely to win major investment in the future, he previously said.

BHP will be the No. 3 supplier of the material after completing the sales and could seek to exit its stakes in remaining assets, Liberum Capital Ltd. said in a Sept. 20 note.

Read more: BHP Plans to Keep Remaining Coal After Completing Mine Sales

The producer has no current plans to consider sales of other Queensland coking coal operations, Chief Development Officer Johan van Jaarsveld said Oct. 5 in Melbourne.

BHP’s sale of the two mines was labeled “irresponsible” by the Australasian Centre for Corporate Responsibility, a shareholder advocacy group.

“Whitehaven Coal is a company determined to keep digging up and burning coal as more responsible stewards race to limit global warming,” the group said in an emailed statement. Selling “fossil fuel assets to climate laggards does nothing to assist the urgently required cuts to real world emissions,” it added.

Whitehaven said the acquisition of the two mines, which doesn’t require shareholder approval, is expected to be completed in the June 2024 quarter.

The sale announcement comes as BHP said iron ore production from Western Australia fell 4% in the three months to Sept. 30 from the year-before period. Still, it reaffirmed its total output forecast of the steelmaking material for the full-year that started July 1 at between 282 million to 294 million tons. It also said copper output rose 11% in its first quarter, while metallurgical coal fell 16%.

--With assistance from Georgina McKay.

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