Mining giant BHP to sell two coal mines as profits slump, royalties hike frustrates

Mining big BHP is promoting two of its central Queensland coal mines, citing a drop in earnings and elevated royalties within the state.

The corporate has reported a 32 per cent drop in its half-year profit, equating to $9.3 billion.

The corporate introduced on Tuesday it will be searching for consumers for its open-cut metallurgical coal mines, Daunia and Blackwater.

The BHP Mitsubishi Alliance (BMA) – an equal partnership between the 2 firms – operates seven mines within the Bowen Basin, together with these being bought.

BMA asset president Mauro Neves mentioned the transfer was consistent with the corporate’s route.

“[The decision] is according to BHP’s technique to focus our portfolio on the very best high quality metallurgical coal belongings sought-after by world steelmakers to help larger effectivity and decrease emissions of their operations,” Mr Neves mentioned.

“We anticipate the divestment assessment course of to take as much as 18 months, and we’ll maintain our individuals and the neighborhood knowledgeable as we progress.”

Mr Neves mentioned the Queensland authorities’s determination to lift coal royalties had made the state uncompetitive.

“We thought of a spread of things, together with the useful resource base, technical planning and the market outlook for decrease grade coals,” he mentioned.

“The uncertainty brought on by the unplanned enhance in royalties did come into play as a contributing think about our decision-making.

“Based mostly on all of these elements, we decided that Blackwater and Daunia would wrestle to compete for capital and could also be higher suited to a unique proprietor.” 

The mining big bought two metallurgical coal mines, South Walker Creek and Poitrel, in 2021, earlier than the coal royalty hike.

Queensland treasurer Cameron Dick mentioned the mines have been high quality mines producing steel-making coal.

“I am positive they are going to be snapped up by a number of the many firms that need to proceed to mine within the Bowen Basin,” he mentioned.

Coal royalty hike criticised

Queensland Assets Council chief govt Ian McFarlane mentioned the choice and its alleged contributing elements didn’t bode properly for funding within the area.

“BHP indicated the 2 mines would wrestle to compete for capital below its present world funding plans, which is why the Queensland authorities must be doing no matter it could possibly to draw buyers, not scare them off with the world’s highest royalty tax charge,” Mr Macfarlane mentioned.

Mr McFarlane referred to as on the state authorities to rethink its determination to introduce the tax.

The state authorities raised the royalties to a three-tiered system in June, with Mr Dick saying the tax would be used to reinvest in regional Queensland.

Mr McFarlane mentioned Queensland’s useful resource sector was the largest trade within the state, contributing $94.6 billion to the state’s financial system and supporting 450,000 Queenslanders by way of employment or different connections.

He mentioned the sale of the mines would have an effect on households and companies within the areas.

Name to guard staff

Mining and Power Union Queensland president Stephen Smyth has referred to as for BHP to make sure it doesn’t “reduce and depart”.

He mentioned he needed to see the BHP assure employee entitlements and ongoing help to the communities affected, significantly within the Blackwater township which had been entwined with the mine for 50 years. 

“I’ve little question that one other operator can efficiently and profitably run the Daunia and Blackwater mines, as there’s robust world demand for Queensland coal.”

Mr Smyth mentioned the union was ready for additional readability on the sale course of.

The Division of Assets has been contacted for remark.