Mining large BHP now considers its Mt Arthur thermal coal mine in the Hunter Valley a felony responsibility, after slashing a total bunch of tens of millions of dollars from its value.
- The Mt Arthur mission changed into value $2 billion radiant just a few years ago
- The value has now plummeted to detrimental $200 million
- Analysts enlighten it aspects to a bleak outlook for thermal coal
The mine, which is the largest working coal mine in Original South Wales, changed into value $2 billion radiant just a few years ago, but that changed into gash by extra than $1 billion in January.
In the latest write-down, the company now locations the mine’s value at detrimental $200 million, which chief financial officer David Lamont acknowledged mirrored “rehab and restoration” commitments.
Because it looks to divest thermal coal sources globally, BHP is halfway thru a two-yr route of to gain a buyer for Mt Arthur.
Talking from London, BHP chief executive Mike Henry changed into puzzled on whether the company had left it too gradual to promote the mine.
“I’d radiant enlighten we’re where we’re and so I produce not with no doubt desire to salvage into revisiting the previous in consequence of there were obviously factors that we in point of fact apt at that time,” he acknowledged.
“We did give ourselves two years at the time that we announced this one yr ago, so there changed into particular recognition that there changed into a route of to be undertaken and all strategies remain birth for consideration.”
The mine employs 2,000 folks, but Mr Henry did not take care of whether the company would agree with in thoughts decommissioning it if a buyer would possibly per chance maybe not be realized.
BHP sees thermal coal ‘in decline’, says analyst
Resource analyst with Wood Mackenzie Rory Simington acknowledged the asset write-down confirmed BHP changed into predicting an unsure future for thermal coal.
“BHP bear made up our minds to exit thermal coal and I judge they’d ask to see lower coal costs going ahead in consequence of lower inquire of,” Mr Simington acknowledged.
“Over the previous few years, BHP’s costs at Mt Arthur bear elevated fairly seriously. That’s been one other driver.”
Fleeing fossil fuels
Two months ago, the company offered its stake in Colombia’s Cerrejon coal mine to Glencore.
Mr Simington believed it changed into “positively tranquil imaginable” for BHP to promote the Mt Arthur mission, but a “smaller and smaller pool of investors” would be in the market.
“Thermal coal is a somewhat miniature phase of their portfolio and it would not designate them all that noteworthy to exit it in phrases of the general value of the company,” he acknowledged.
“We tranquil bear a particular valuation for Mt Arthur and we judge that is maybe since the coal costs that we’re using for that valuation are elevated than what BHP are using.”
The write-down came on the equal day as the company announced a merger with gas producer Woodside Petroleum value $20 billion.
The company has been under increasing stress from investors to divest its fossil fuel interests.
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