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Highlights
- BHP has consent to mine at New South Wales Energy Coal by 2026 and seeks to extend approval by 2030.
- The company retains the NSW’s coal mine as it did not find any viable offer.
- BHP shares dipped by around 2% to trade at AU$42.84 apiece.
Australian multinational petroleum and mining company, BHP Group Limited (ASX:BHP) is going to cease mining operation at the largest coal mine in NSW by 2030. As the company failed to find a buyer for the asset, BHP said it will shut New South Wales Energy Coal (NSWEC) mines by the end of the financial year 2030 (FY30).
Now, the mining giant has to retain the NSWEC in its portfolio. The mining consent on the asset would expire in 2026, and the company seeks to gain relevant approvals to extract coal for another four years.
The shares of BHP were spotted trading 2.61% lower at AU$42.84 apiece at 10:20 AM AEST. BHP shares were in-line with the sector benchmark ASX 200 Materials (XMJ) index, which was down by approximately 3% at the same time.
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Details of the NSWEC update
Image source: © Ralukatudor | Megapixl.com
NSWEC asset includes Mt Arthur Coal operations, situated near Muswellbrook, NSW. Hunter Valley Energy Coal, an entity owned by BHP, operates Mt Arthur Coal.
Yesterday, through ASX-announcement, BHP shared an update on the NSWEC divestment. The company said it did not receive any viable offer for the asset and, hence, retaining it.
The sale was part of the BHP’s review of its lower-grade energy coal and metallurgical assets, announced in August 2020. The review resulted in the sale of Cerrejon in January 2022 and the sale of BHP Mitsui Coal (BMC) in May 2022.
Related article: Here’s how BHP is advancing in its divestment strategy
After assessing the future investment requirements, geotechnical profile and resource economics, the company ascertained that closure in 2030 would reap optimal financial outcomes in comparison to other options. Since, the company have the approval to mine till 2026, it is preparing applications to obtain permissions from the Australian and NSW government to continue mining till 2030.
BHP informed that this includes a plan for the asset’s closure, which incorporates rehabilitation and ascertaining the post-mining land use. BHP said that after the cessation of mining, the continued work on rehabilitation could take around 10 to 15 years. Reportedly, the provision for closure of the mine was circa US$700 million as of 31 December 2021.
Edgar Basto, Minerals Australia President, said on the development:
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