BHP and South African/UK multinational Anglo American have each sold their one-third shares in the giant Cerrejon thermal coal mine in Colombia to their joint-venture partner Glencore, leaving Muswellbrook's Mount Arthur as BHP's only thermal coal asset.
BHP is also looking to sell two coking coal mines in Queensland, along with Mount Arthur.
The trade journal Australian Coal Report (ACR) recently reported five bidders including Peabody, Yancoal, US private equity firm Elliott Management and an Indonesian consortium were still in the running.
Reports have since emerged that New Hope Group - the Washington H. Soul Pattinson-backed owner of Bengalla, immediately north of Mount Arthur - was also still in the running.
BHP declined to comment on the Mount Arthur sale yesterday, while the dominant coalmining union the CFMEU said it was "watching the process with interest".
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The Cerrejon sale was confirmed when BHP and Anglo announced they would each receive $US294 million ($389.3 million) for their 33.3 per cent shares, valuing the full deal at $US588 million ($778.6 million).
In its statement, the Swiss-based Glencore confirmed the same headline price but said there would be adjustments "subject to purchase price adjustments calculated at [the] closing" of a deal that had an "effective economic date" of the last day of 2020.
"Based on expected operating performance and current forward coal prices, assuming a closing during [the first half of] 2022, we anticipate the cash generated by the operation to reduce the effective aggregate cash consideration to approximately US$230 million, making the estimated investment payback period less than two years from closing," Glencore said.
BHP said the final price was "subject to adjustments at transaction completion which may include an adjustment for the dividends paid by Cerrejon to BHP during the period from signing to completion".
While the BHP statement did not mention greenhouse gas issues, Anglo said the sale represented the "final stage" of its transition out of thermal coal.
Anglo was once a major thermal coal player, with Hunter assets including the Drayton operation.
Glencore also referred to "the Paris Agreements" but said buying out its partners was better than having a new partner who might want to extend the lease past its 2034 expiry.
It said full ownership was consistent with its "commitment to a responsible managed decline of our coal portfolio" because production would "decline materially" after 2030.
It had also committed to "more aggressive total emission reduction targets" by lifting its total (Scope 1, 2 and 3 emissions) reduction target from 40 per cent of 2019 levels by 2035 to 50 per cent.
It also introduced a "new short-term" target of reducing 2019 levels by 15 per cent by 2026.
Related reading: History of a giant mine, Mount Arthur
Glencore's decision to buy all of Cerrejon comes after the annual market-setting Japanese Reference Price for top quality Newcastle thermal coal rose by almost 60 per cent this year to $US109.97 ($144.60 a tonne).
The 2021 price, which Australian Coal Report (ACR) said was negotiated at the start of the month between Glencore and Japanese power company Tohoku Electric, compares with last year's price of $US69, or $104.50 when the Australian dollar was trading at $US0.66 - 10 cents lower than its present level of about $US0.76.
The price surge is despite the long-term pressure on coal as governments around the world pledge to reduce their carbon dioxide emissions.
The ACR said the Japanese benchmark was not as dominant in price setting as it once was: however it was "still crucial" in negotiations with other Asian power companies.
The price rise exceeded expectations, with the March edition of the federal government's Resources and Energy Quarterly predicting a 2021 benchmark of $US64.50, rising to $US73 in 2023 and "easing back" to about $US60 in 2026.
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