Whitehaven (ASX:WHC) to Divest 30% Stake in Blackwater Coal Mine to Japanese Joint Venture Partners

2 min read | August 22, 2024 10:31 AM AEST | By Team Kalkine Media

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Whitehaven (ASX:WHC) to Divest 30% Stake in Blackwater Coal Mine to Japanese Joint Venture Partners — Image source: shutterstock

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Highlights:

Major Divestment: Whitehaven Coal will sell a 30% stake in its Blackwater coal mine for US$1.08 billion, with Nippon Steel Corporation acquiring 20% and JFE Steel Corporation taking a 10% interest.

Strategic Move: The transaction, set to close in the first quarter of 2025, aims to improve Whitehaven’s balance sheet and reduce its A$1.3 billion debt, while also addressing deferred payments related to the Blackwater acquisition.

Enhanced Value: The joint venture with Nippon Steel and JFE Steel will include separate offtake agreements and is expected to unlock additional value from the Blackwater mine, which is a significant supplier of seaborne metallurgical coal.

Whitehaven Coal Ltd (ASX:WHC) has announced it will sell a 30% stake in its Blackwater coal mine in Queensland for US$1.08 billion. The sale will see **Nippon Steel Corporation** and **JFE Steel Corporation**, both longstanding customers of Blackwater coal, form a joint venture to acquire these interests. Nippon Steel will acquire a 20% stake, while JFE Steel will take a 10% stake.

The transactions, expected to be finalized in the first quarter of 2025, are part of Whitehaven’s broader strategy to enhance its financial position and reduce its company debt, which stood at A$1.3 billion as of June 30. This divestment also addresses outstanding deferred and contingent payments related to the Blackwater acquisition.

The joint venture with Nippon Steel and JFE Steel is designed to unlock additional value from the Blackwater mine, which is a key supplier of seaborne metallurgical coal. Both companies will also enter into separate offtake agreements reflecting their equity interests and historical consumption of Blackwater coal.

Paul Flynn, Whitehaven’s CEO and Managing Director, expressed enthusiasm about the deal: "Both companies have a long and proud tradition of excellence in steel production and have significantly contributed to Japan’s economic progress. Their co-investment highlights the critical role of Blackwater metallurgical coal in the global market."

Flynn added that the formation of this joint venture validates Whitehaven’s asset acquisition, the quality of its coal, and the company’s operational plans for Blackwater. The proceeds from this stake sale will strengthen Whitehaven’s balance sheet and provide greater flexibility for future capital opportunities in alignment with its capital allocation strategy.

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