BHP’s Mt Arthur open mine, located in the Hunter Valley region of New South Wales, supplies thermal coal used as fuel for power plants to domestic and international customers. Prices fell this year, cutting BHP’s likely selling price to less than $1 billion, two banking sources said.
BHP and JP Morgan, the US investment bank, refused to comment. Australian bank Macquarie did not respond immediately to a request for comments.
Previously, BHP said that the thermal coal business is a very small part of their portfolio, contributing about 3% of turnover, and said in February that if a good offer came along they would be willing to sell.
The active investor Elliott, which holds a 4.7% stake in the mining company, has pushed for the sale of BHP’s thermal coal assets, which include one third of the Cerrejon mine in Colombia.
BHP has also been pressured by green groups and some shareholders to leave any industry associations with policies that do not match the company’s support for the Paris Climate Agreement 2015.
Rival mining companies have also taken steps to free thermal coal, with Rio Tinto selling its last coal mines in 2018, and Anglo American considering the spin-off or sale of its South African coal operations in the next two or three years.
A handful of companies, including Australia’s Whitehaven Coal Ltd, China’s Yancoal and India’s Adani Enterprises, have expressed interest in the Mt Arthur mine, sources said.
Sales processes have slowed down over the last few months, with government lockdowns to contain the novel coronavirus stopping mine visits and due diligence.
But as the lockdown measures are gradually lifted, banking sources expect Mt Arthur’s sale to be possible by the end of the year.
