BHP wants out of Mount Arthur and three other mines while Wambo cuts jobs as coal prices plummet

But while BHP also intends to exit its one-third stake in the Cerrejon thermal mine in Colombia - and the two coking coal mines it runs in Queensland in an 80/20 joint venture with Mitsui - it wants to keep the other seven Queensland coking coal mines it runs in a 50/50 partnership with Mitsbushi.

BHP's announcement was foreshadowed last week by the Newcastle Herald, and was delivered with the company's annual financial results, which were led by an after-tax profit of $US7.9 billion ($11.3 billion) from all of its operations, a fall of just 4 per cent on the previous year despite the global impact of COVID-19.

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The coronavirus was blamed, though, for production cuts and job cuts announced yesterday by Peabody Energy, the owner and operator of the Wambo underground mine, west of Singleton.

Peabody refused to clarify the numbers of jobs to go beyond saying: "We expect to retain approximately half our workforce following the consultation period."

Peabody reported heavy losses from its mines back in late April and announced it was "temporarily" shuttering Wambo underground in late May, when the Herald reported that about 100 of a 280-strong workforce were expecting to be stood down for up to three weeks from June 19, depending on final consultations with the CFMEU.

That would put the job cuts in yesterday's announced halving of the workforce at about 140 or 150.

While Wambo would not confirm numbers, it stressed the cutbacks at Wambo underground did not affect the Wambo-United open-cut joint venture with Glencore.

Glencore recently announced its own production cut-backs across its coal portfolio, forcing thousands of mineworkers to take holidays during the September school break.

But the Wambo numbers could be higher than 150 people, given Peabody told US regulators earlier this month that it "furloughed approximately 280 positions, including contractors" at Wambo underground for 59 days from mid-June.

As an underground mine, Wambo would be expected to have substantially higher operating costs than open-cuts such as Wilpinjong, which Peabody's August 5 filings showed as supplying about three-quarters of its thermal coal shipments out of Australia.

Price pressure is shown in the returns it declared for NSW thermal coal in the past year, with the price of a US short ton (about 900 kilograms) falling from $US51.18 in June 2019 to $35.10 in June this year.

Converted to the usual Australian measurement in tonnes, the June 2020 price equates to $US38.61, or $A53.37 at present exchange rates.

BHP's Mount Arthur mine is the single biggest consolidated coal mining site in NSW and BHP has not denied speculation it had been on the market for at least two years.

Various sources have said potential buyers including Yancoal had been shown around the site.

It appears a failure to find a buyer quietly has led to BHP considering a spin-off or "initial public offering" (IPO), together with the South Walker Creek and Poitrel open-cuts in Queensland, and its one-third stake in Cerrejon, where Glencore and Anglo-American are the other partners.

In a letter to employees yesterday, BHP talked about "sharpening [its] focus on higher quality coking coals, essential for steelmaking", as its reason for exiting thermal coal - burned in boilers to make steam to spin turbines to generate electricity.

"This process may take up to two years - no decisions have been made yet, so it's business as usual," BHP said.

The pro-renewables Institute for Energy Economics and Financial Analysis, which last week published a report on the finances of Mount Arthur, welcomed the announcement.

Director Tim Buckley described the inclusion of the two Queensland coking coal mines as "sensible", from an investors point of view.

READ MORE: Today's Herald's Opinion on the Wambo and BHP announcements

The northern district president of the CFMEU's mining division, Peter Jordan, said the union was pleased BHP had finally confirmed its intention to sell, which was "common knowledge", and was looking forward to "working with a new owner to restore fair working conditions at the site".

"BHP has been a poor corporate citizen in our region," Mr Jordan said.

"It has led the mining industry's charge to outsource good permanent jobs to lower-paid casual labour hire.

"Its fully-owned labour hire subsidiary, Operations Services, gives employees a BHP shirt but treats them like second class citizens.

"Hunter Valley coal miners deserve better. Good riddance to BHP."

Lock The Gate Alliance spokesperson Georgina Woods said the organisation was concerned that BHP would abandon the Hunter without properly rehabilitating the site, or committing the money to ensure it happened under a subsequent owner.

"BHP has made a lot of money out of Mount Arthur," Ms Woods said. "Now that it has started losing money it wants to turn tail.

Labor's Joel Fitzgibbon said mining companies needed to put their workers first, but he also said "a company can't hang on forever, taking losses".

He was confident Mount Arthur - "a very valuable mine" - would find a buyer.

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