BHP sheds more fossil fuel assets with $1.8 billion metallurgical coal sale

BHP has signed a deal that will see it divest up to A$1.8 billion in metallurgical coal assets in Australia, as the world’s largest miner continues its retreat from fossil fuels.

The company will sell its 80% stake in BHP Mitsui Coal (BMC), which operates the South Walker Creek and Poitrel coking coal mines in Queensland, to ASX-listed junior Stanmore Resources.

The deal includes $1.5 billion in cash on completion, $135 million in cash six months later and up to $203 million as a potential pay out in the 2024 calendar year linked to prices. The agreement, excluding the potential price-linked payment, represents an enterprise value-to-EBITDA multiple of 6.9 times, BHP said.

If the acquisition of BHP’s stake in BMC is approved, Stanmore — majority owned by Singapore-listed Golden Energy and Resources — will become a significant force in the Australian coal industry. The firm is also developing the Isaac Downs coking coal project in Queensland’s Bowen Basin.

 “As the world decarbonises, BHP is sharpening 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 BHP’s Minerals Australia business.

Since putting its BMC stake up for sale last year, BHP has sold its stake in the Cerrejón coal mine in Colombia to Glencore and exited the petroleum business following a merger of its oil and gas assets with Australia’s Woodside in August.

@AusBNOnline