BHP and Mitsubishi Development, through their joint venture BHP Mitsubishi Alliance, have completed the sale of its Blackwater and Daunia coal mines in Queensland to Whitehaven Coal in a deal expected to be worth up to US$4.1 billion (AU$6.3 billion).
“This is a significant milestone for Whitehaven that transforms us into a leading metallurgical coal producer and will deliver benefits for all of our stakeholders,” Whitehaven Coal CEO Paul Flynn said.
BHP to Limit Queensland Investments
BHP announced the proposed sale of the two coal mines to Whitehaven in October last year, months after the mining giant said it would no longer invest in further growth in Queensland due to the state’s significantly high coal royalties.Whitehaven paid BHP Mitsubishi Alliance a US$2 billion cash consideration plus a preliminary completion adjustment of $44.1 million for working capital and other agreed adjustments.
Whitehaven already paid a US$100 million deposit upon the signing of the asset sale agreement last Oct. 18.
Whitehaven is expected to pay BHP Mitsubishi Alliance US$1.1 billion cash over and an additional amount of up to $900 million in a price-linked earnout over three years post-completion.
The price-linked earnout is subject to a cap of US$350 million every year and depends on average realised pricing exceeding the agreed thresholds for each of the three years following the completion.
With the sale, Whitehaven will assume economic and operating control of the mines, including all current and future environmental liabilities and rehabilitation obligations.
“This transaction has delivered a good outcome for the BHP Mitsubishi Alliance, our workforce, and the communities around the Blackwater and Daunia operations,” President of BHP Minerals Australia Geraldine Slattery previously said.
Whitehaven Investor Opposes Acquisition
The acquisition pushed through despite investor Bell Rock’s opposition. In a submission to the Australian Takeovers Panel, Whitehaven claimed that Bell Rock wrote to the coal company’s shareholders to urge them to vote against the acquisition.Union Says ‘Good riddance to BHP’
The Mining and Energy Union said that the sale of the mines is a “good riddance to BHP” as Whitehaven committed to more favourable labour conditions, including retaining all current, directly employed staff and transitioning 400 operations services hire workers to permanent direct employment.The union also said that BHP was attempting to influence Queensland’s policy when it said it would no longer invest in further growth in the state due to high royalties.
“The sale of Daunia and Blackwater comes after the sale of South Walker Creek and Poitrel mines to Stanmore Coal in 2021,” the union said.
“In reality, the sale of four of its nine Bowen Basin coal mines in the last two years is entirely to do with BHP seeking to exit the coal industry rather than the range of issues BHP publicly complains about, like fairer work laws and royalties. BHP’s employment practices are a major concern to the union.”
