BHP Offloads Shares in Australian Coal JV with Japan’s Mitsui for USD1.35bn

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  • BHP Offloads Shares in Australian Coal JV with Japan’s Mitsui for USD1.35bn

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    International mining company BHP [BHP:US] has inked a deal to sell its 80% stake in a metallurgical coal joint venture (JV) with Japan’s Mitsui [8031:JP] to Australian coal company Stanmore Resources [SMR:AU] for at most USD1.35bn, as reported by Reuters on November 8. Mitsui will keep its 20% stake in the JV, called BHP Mitsui Coal, which operates two open-cut metallurgical coal mines in Queensland, Australia. For the payment, Stanmore will first disburse USD1.1bn through a USD625m debt and a USD600m equity financing to finalize the deal and then pay USD100m after six months, while there is also a potential price-linked earnout worth up to USD150m to pay in 2024. Stanmore’s parent, Singapore-based thermal coal developer Golden Energy and Resources [GOLD:SP], will provide a USD600m guarantee for Stanmore’s obligations and any break fee. The deal still needs approval from Australia’s Foreign Investment Review Board and is expected to be completed by mid-2022.

    In alignment with the global decarbonization trend, BHP started an assessment of its thermal coal assets in August 2020 to offload lower-grade coal assets and switch its focus to premium-quality coking coal. This June, BHP and its partner miner Anglo American [AAL:LN] sold all shares of the Cerrejon thermal coal mine in Colombia to Glencore [GLEN:LN] for USD230m, expected to be finalized in the first half of 2022. The sale of its stake in BHP Mitsui Coal is BHP’s one more move to divest its coal assets. In addition to thermal coal, BHP also announced in August to sell its USD14.7bn oil and gas business to Australia’s Woodside Petroleum [WPL:AU].