Tue. Dec 7th, 2021

BHP has reached an agreement to sell up to $ 1.35 billion from two coal mines in Australia, as the world’s largest miner continues its withdrawal of fossil fuels.

The company is selling its 80 percent stake in BHP Mitsui Coal, which operates the South Walker Creek and Poitrel coal mines in Queensland, to Stanmore Resources. The remaining stake in the joint venture is owned by Japan’s Mitsui.

The sale comes amid the COP26 global climate talks in Glasgow and rising prices for coking coal, a key ingredient in steelmaking. It also continues BHP’s withdrawal of fossil fuels as the Anglo-Australian miner looking for a greener portfolio.

BHP recently approved a $ 5.7 billion plan to complete the development of a potash project in Canada, and aims to increase its exposure to copper and nickel.

“As the world coalesces, BHP sharpens its focus on producing higher quality metallurgical coal sought after by global steelmakers to help increase efficiency and lower emissions,” said Edgar Basto, head of the miner’s Australia division. .

Steel manufacturing is one of the industrial activities that contribute the most to climate change.

BHP put its stake in BMC at stake in August 2020, when it also announced plans to thermal coal leaves, which is burned in power stations.

The company also sold its stake in a large Colombian coal mine at Glencore and announced plan to merge its oil and gas assets with Woodside, an Australian oil and gas producer. It is still looking for a buyer for its remaining thermal coal asset, New South Wales Energy Coal.

“The review process for New South Wales Energy Coal is progressing, in line with the two-year timeframe announced in August 2020,” BHP said on Sunday, adding that it “remains open to all options and continues to consult with relevant stakeholders”.

Even after the sale of its controlling interest in BMC, BHP will remain the world’s largest exporter of coal through a separate alliance with Mitsubishi Corp.

The price of charcoal has risen this year at strong demand from China and steelmakers in other parts of the world as Covid-19 lock-in restrictions have been eased.

Australian hard coke coal prices rose from $ 120 per tonne at the beginning of the year to almost $ 334 per tonne, according to a price assessment by S&P Global Platts.

The agreement with BHP will transform Stanmore, which has a market value of just $ 250 million, into a significant force in the Australian coal industry. The two Queensland mines that will take control of the 11 million tonnes of coal produced in the year to June.

In order to finance the deal, Stanmore is asking shareholders to support a $ 600 million share issue, while a further $ 625 million will be raised in debt. The coal group is 75 percent owned by Golden Energy and Resources Limited, a Singapore-listed company that has agreed to endorse the BHP Mitsui Coal deal.

Under the agreement, Stanmore will pay $ 1.1 billion in advance, followed by a further $ 100 million in six months. The price could rise a further $ 150 million through a earn-out deal linked to coal prices.

Stanmore CEO Marcelo Matos said the deal would make the company a leading producer of coking coal and position it to generate “significant cash flow”. The assets he acquires from BHP produce a similar type of coal as his Isaac Plains mine in Queensland.

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