A multinational mining company has confirmed it is considering options to exit its budget coal operations due to the pandemic.
BHP has confirmed it plans to sell off its stake in the BHP Mitsui Coal (BMC) Joint Venture, New South Wales Energy Coal (NSWEC) and Cerrejón Coal Mine. The tough decision came after the company reported a 4 per cent fall in full-year net profit to US$7.95 billion (A$11B) as a result of the ongoing Chinese coronavirus recession.
‘Lower quality coals’
“We also own 80 per cent of the BMC joint venture which is comprised of low cost mines but which produce lower quality coals,” the company said in a public statement.
“We will pursue options to divest our interests in BMC, NSWEC and Cerrejón … given our focus on hard coking coal, these assets would better compete for capital outside of BHP. We will look to maximise the value of these assets, including via a demerger of an independent, listed company and trade sale opportunities.”
Such a decision would directly impact on the Poitrel Coal Mine and South Walker Creek Coal Mine in Central Queensland’s Bowen Basin. It is unclear whether joint venture partner Mitsui and Co would increase its 20 per cent stake in the operations to compensate for BHP’s departure.
Up to 8300 workers affected
BHP revealed in a submission to the Productivity Commission that it manages 19 open-cut and underground coal mines in the Bowen Basin, Hunter Valley, Illawarra and Indonesian province of Kalimantan. The mines, ports, laboratories, town centres, marketing offices and administration centres employ a total of 8300 people.
The Construction, Forestry, Maritime, Mining and Energy Union (CFMEU) believes the sale could still benefit BHP mine workers as it would provide a valuable opportunity to end casualisation through BHP’s in-house Operations Services labour hire provider.
“[We want to] restore fair working conditions,” CFMEU mining and energy Queensland president Stephen Smyth told News Limited.
“BHP has been an industry leader in casualising permanent jobs in the Queensland coalfields, and is now driving down wages through its in-house labour hire provider Operations Services. Whoever buys these mines, we will fight for workers’ jobs, rights and safety.”
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For now it will be business at usual across BHP’s coal mining operations. The sale process is widely expected to a take as long as two years to reach final settlement. QMEB understands financial firm Goldman Sachs could advise on the future transaction since it previously helped BHP sell off its South 32 business back in 2015.