BHP to close NSW’s biggest coal mine in 2030 after failing to sell it | BHP
Mining giant BHP has abandoned plans to hold mining coal at Mt Arthur in New South Wales until 2045 and will close the mine in 2030 after failing to sell it.
Environmentalists and activist shareholders have welcomed the decision to close the mine in the Hunter Valley rather than sell it to another operator. But they said BHP is expected to close the mine in 2026, when its current permit expires, rather than extend its life for another four years.
BHP put the mine, NSW’s largest, on the market in August 2020 as part of a wider thermal coal divestment project.
But while the company successfully sold its stakes in the Cerrejon mine in Colombia and BHP Mitsui Coal in Queensland earlier this year, it said efforts to sell Mt Arthur “did not result in an offer viable”.
It is believed that even if there were bidders for the mine, they wanted BHP to pay for the rehabilitation of the site when it closed – a cost the company has on its books at $700 million, but which some say militants, will be much higher.
BHP will drop an application on foot to the NSW government to increase the size of the mine site, which will be needed to keep it in operation until 2045.
Instead, it will seek permission to continue mining within existing boundaries until the mine closes on June 30, 2030.
About 2,000 people are employed by the mine, but BHP said it hopes there will still be jobs at the site during rehabilitation, which it says will take 10 to 15 years.
Carmel Flint, national coordinator for the Lock the Gate Alliance, said the planned closure was good news, but she was “still of the opinion that the mine should close in 2026 as previously planned – the world cannot afford to delay climate action”. .
“It took BHP too long to read the writing on the wall,” she said.
“If the company had committed to closing Mt Arthur instead of trying to sell it years ago, it could have already spent that time retraining and supporting workers instead of delaying the inevitable.
“This is a very important milestone for BHP, and the lack of buyers for the mine sends an incredibly strong message that thermal coal is in decline globally, as client countries act on climate change.”
BHP’s main rival Rio Tinto divested from coal altogether in 2018.
However, while BHP has pledged to divest itself of thermal coal, it intends to retain mines that extract metallurgical coal, which is used in steelmaking and is more expensive.
The Mt Arthur mine is currently profitable due to high coal prices, caused in part by Russia’s invasion of Ukraine. But it has lost money in the past two years and BHP sees it as a marginal asset.
Expanding the mine so that it could continue beyond 2030 would also have required BHP to spend large sums of money, which the company’s board was unwilling to approve.
Harriet Kater, head of climate for Australia at the activist investor group Australasian Center for Corporate Responsibility, said BHP had “finally made the right decision”, but wondered if the company had put aside enough to sanitize the vast open-air site.
“The current $700 million provision for closure does not appear to match the enormous magnitude of the likely cleanup bill,” she said.
“BHP has the opportunity to leverage the returns from the current record thermal coal prices to properly fund high quality rehabilitation.”
She said BHP took too long to make its decision and if it had acted sooner it could have closed the mine in 2026.
“The IEA’s Net Zero scenario indicated that there could be no new coal mines or extensions from 2021, so the decision to still seek an extension of mine life from 2026 to 2030 is completely inconsistent with the Paris Agreement and limits warming to 1.5 degrees,” she said.
Elizabeth Sullivan, climate and export campaigner at the Australian Conservation Foundation, said the decision was “a welcome recognition of the energy transition underway”.
“As the world rapidly transitions to renewable energy, projects like Mount Arthur have become such a climate liability that companies can barely give them away,” she said.
“A 2030 closing date is a big improvement over 2045, but sooner would be better for the climate.”