BHP agrees to sell Queensland mines for $6.49b

BHP (ASX:BHP) and Mitsubishi Development (MDP) have agreed to sell the Blackwater and Daunia mines for up to $6.49b (US$4.1b).

Two wholly owned subsidiaries of Whitehaven Coal (ASX:WHC) have agreed to acquire both mines.

The purchase price comprises of $3.32b (US$2.1b) cash on completion, $1.74b (US$1.1b) in cash over three years completion and the potential for up to $1.42b (US$900m) in a price-linked earnout payable over three years.

BHP president of minerals Australia Geraldine Slattery commented on the transaction.

“Whitehaven Coal has a strong track record as a responsible and reliable operator, and we will work closely with them to achieve a smooth change of ownership focused on maintaining safe and productive operations and supporting people and communities through the transition,” she said.

“In line with our long-term strategy, we will continue to develop our high-quality metallurgical coal assets in Queensland, which are sought after by global steelmakers and needed to support the energy transition.”

Upon completion, Whitehaven Coal will assume economic and operating control of Daunia and Blackwater, including all current and future environmental liabilities and rehabilitation obligations.

Whitehaven Coal managing director and chief executive Paul Flynn says the transaction is compelling for the company.

“This transformational acquisition will pivot our portfolio towards metallurgical coal, which has been a core pillar of our strategy for many years making this a better balanced business,” he said.

“It strengthens our portfolio of quality, long life assets in attractive locations providing geographic and operational diversification and scale benefits.

“Daunia and Blackwater produce much-needed metallurgical coal that is in high demand across Asia — including in India and Southeast Asia where population growth and economic development is expected to drive strong demand for steel production and metallurgical coal through to at least 2050.”

The sale is subject to the satisfaction of completion and regulatory approvals, and it’s expected to be completed in the June 2024 quarter.