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BHP Extends Fossil Fuels Withdrawal With Met Coal Asset Sale

Coal is stockpiled in preparation for loading onto ships for export at the Newcastle Coal Terminal in Newcastle, north of Sydney, Australia, on Wednesday, Sept. 8, 2010. Photographer: Ian Waldie/Bloomberg

BHP Group will sell its 80% stake in the BMC metallurgical coal venture to Stanmore Resources Ltd. in a deal worth up to $1.35 billion, extending the global miner’s withdrawal from fossil fuels. 

BMC, which is 20% owned by Mitsui & Co. Ltd., has two operating mines in Queensland with a combined output of about 10 million tons of coal a year, as well as the undeveloped Wards Well project. Stanmore, which is majority owned by Singapore’s Golden Energy & Resources Ltd., will pay $1.2 billion in cash with a potential follow-up payment of up to $150 million after two years linked to the performance of coal prices.

“This transaction is consistent with BHP’s strategy,” Edgar Basto, head of BHP’s Minerals Australia business, said in a statement. “As the world decarbonizes, BHP is sharpening its focus on producing higher quality metallurgical coal sought after by global steelmakers to help increase efficiency and lower emissions.” The global miner will retain exposure to steelmaking coal through its BHP-Mitsubishi Alliance venture, which is Australia’s top producer.

BHP in August announced a deal to sell its oil and gas operations to Woodside Petroleum Ltd. in exchange for shares that it will distribute to its own investors. The company said Monday it was continuing the review process for its New South Wales thermal coal operation and remained open to all options.

READ: BHP’s Thermal Coal Exit in Doubt After Fuel Hits Record High

The sale was criticized by shareholder activist group, the Australasian Centre for Corporate Responsibility.

“Rather than make the hard decisions to wind these assets down, BHP is running for the door,” Dan Gocher, director of climate and environment at the group, said in a statement. “Along with the proposed BHP petroleum merger with Woodside, these are not the actions of a climate leader. BHP should retain these assets and decline production in keeping with a 1.5°C pathway.”

Brisbane-based Stanmore, which produced around 2.6 million tons of metallurgical coal in fiscal 2021, operates the Isaac Plains complex, also in Queensland, and has environmental approval to develop the adjacent Isaac Downs project.

Completion of the BMC deal, which requires sign off from Australia’s Foreign Investment Review Board, is expected around the middle of 2022. BHP shares rose as much as 1.8% in Sydney following the announcement, while Stanmore jumped up to 24%, its highest in more than two years.

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