BHP retains Mt Arthur coal mine, plans earlier closure as buyers walk

The move contrasts with successful divestments of the company’s 33.3 per cent interest in its Colombia thermal coal joint venture Cerrejón and its 80 per cent stake in BHP Mitsui Coal – a metallurgical coal joint venture in Queensland – in January and May, respectively.

“We thoroughly reviewed potential options for NSWEC including divestment and future investment requirements,” Minerals Australia president Edgar Basto said.

“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.”

On Thursday afternoon, BHP shares were 0.3 per cent higher at $44.03 in a positive broader market.

BHP chief Mike Henry kicked off the review of its coal assets in August 2020, eight months after taking the top job, as he sought to finetune its coal portfolio towards “higher quality” coking coals, which are used to make steel. This was part of his strategy to pivot its portfolio to commodities that are “fit for the future with opportunities for long-term growth”.

The company recently took its biggest step in this direction by selling its oil and gas assets to Woodside.

Harriet Kater, climate lead for Australia at the Australasian Centre for Corporate Responsibility (ACCR), said BHP had “finally made the right call” in abandoning the extension of Mt Arthur’s operation to 2045 and its planned divestment of the mine.

“Use of asset divestment as a tool to lower carbon footprints and avoid responsible closure is not acceptable,” she said.

The ACCR also criticised the extension to 2030, saying it was inconsistent with the International Energy Agency’s warning that there could be no new coal mines or extensions from 2021 so as to limit global warming to 1.5 degrees.

BHP, however, said that mining till the end of financial year 2030 gave the company eight years to work with its “people, state and federal governments and local communities” in the Hunter Valley region on the transition. The plans need to be signed off by the NSW and federal governments to allow mining beyond 2026.

Will van de Pol, the asset management campaigner at Market Forces, said: “This decision shows how quickly the tide is turning against the thermal coal mining industry.

“BHP must show true leadership by demonstrating a well-managed decline for a fossil fuel asset, one that delivers a just transition for workers and an impeccably remediated site.”