August 21, 2019 Read More →

BHP CEO says company likely to exit coal mining business

Nikkei Asian Review:

BHP Group might sell off coal assets, the mining giant’s chief hinted Tuesday, joining global peers in the move toward environmentally sustainable businesses as retail and institutional investors grow more sensitive to such issues.

“We increasingly have concluded that this is not a business that is going to offer the prospects for growth and would compete for capital … compared to our other businesses,” CEO Andrew Mackenzie said on an earnings call.

And while coal is not going away quickly, “the plentiful supply of energy coal, combined with a somewhat dampening in demand, as it’s going to form a smaller part of the market share going forward, means that this is a less interesting asset than others for us to invest in,” Mackenzie said.

BHP owns the Mount Arthur thermal coal mine in the Australian state of New South Wales, as well as the Cerrejon project in Colombia. BHP’s thermal coal output in ownership stake terms came to 27 million tons during the fiscal year ended June, down 6% from a year earlier.

The Anglo-Australian multinational projects the output to sink as far as 13% in the fiscal year ending June 2020, underscoring the extent of the downsizing. If a buyer made a generous offer for the two mines at this moment, BHP will seriously consider it, a company insider said.

BHP at one point owned coal mines in South Africa and North America. It produced 73.49 million tons of thermal coal in the year ended June 2014 — nearly three times the volume of the year ended this June. Production plunged after BHP parted with South African and North American assets. Output went further south in recent years due partly to inclement weather in Colombia.

More: BHP weighs pullout from coal mining as investors grow greener

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