Mining giant BHP is selling two of its central Queensland coal mines, citing a drop in profits and increased royalties in the state.
Key points:BHP is selling its Daunia and Blackwater minesThe metallurgical coal mines are owned by BMA, a joint venture between BHP and MitsubishiDaunia Mine only opened a decade agoThe company has reported a 32 per cent drop in its half-year profit, equating to $9.3 billion.
The company announced on Tuesday it would be looking for buyers for its open-cut metallurgical coal mines, Daunia and Blackwater.
The BHP Mitsubishi Alliance (BMA) – an equal partnership between the two companies – operates seven mines in the Bowen Basin, including those being sold.
BMA asset president Mauro Neves said the move was in line with the company’s direction.
“[The decision] is consistent with BHP’s strategy to focus our portfolio on the highest quality metallurgical coal assets sought-after by global steelmakers to support greater efficiency and lower emissions in their operations,” Mr Neves said.
“We know this is significant news for the people who work at Blackwater and Daunia, their families and the local community.
“We expect the divestment review process to take up to 18 months, and we will keep our people and the community informed as we progress.”
Daunia mine was expected to export 4.5 million tonnes of coal annually.(Supplied: Suzannah Baker)Mr Neves said the Queensland government’s decision to raise coal royalties had made the state uncompetitive.
“We considered a range of factors, including the resource base, technical planning and the market outlook for lower grade coals,” he said.
“The uncertainty caused by the unplanned increase in royalties did come into play as a contributing factor in our decision-making.
“Based on all of those factors, we determined that Blackwater and Daunia would struggle to compete for capital and may be better suited to a different owner.”
The mining giant sold two metallurgical coal mines, South Walker Creek and Poitrel, in 2021, before the coal royalty hike.
Queensland treasurer Cameron Dick said the mines were quality mines producing steel-making coal.
“I’m sure they will be snapped up by some of the many companies that want to continue to mine in the Bowen Basin,” he said.
Coal royalty hike criticisedQueensland Resources Council chief executive Ian McFarlane said the decision and its alleged contributing factors did not bode well for investment in the region.
“BHP indicated the two mines would struggle to compete for capital under its current global investment plans, which is why the Queensland government should be doing whatever it can to attract investors, not scare them off with the world’s highest royalty tax rate,” Mr Macfarlane said.
Daunia mine produces metallurgical coal used in the production of steel.(ABC Tropical North: Melissa Maddison)Mr McFarlane called on the state government to reconsider its decision to introduce the tax.
The state government raised the royalties to a three-tiered system in June, with Mr Dick saying the tax would be used to reinvest in regional Queensland.
Mr McFarlane said Queensland’s resource sector was the biggest industry in the state, contributing $94.6 billion to the state’s economy and supporting 450,000 Queenslanders through employment or other connections.
He said the sale of the mines would affect families and businesses in the regions.
The Bowen Basin is the heart of coal mining in Queensland.(ABC Tropical North: Melissa Maddison)Call to protect workersMining and Energy Union Queensland president Stephen Smyth has called for BHP to ensure it does not “cut and leave”.
He said he wanted to see the BHP guarantee worker entitlements and ongoing support to the communities affected, particularly in the Blackwater township which had been entwined with the mine for 50 years.
“BHP must guarantee that workers’ entitlements will be protected throughout this process, including their contractor workforce,” he said.
“I have no doubt that another operator can successfully and profitably run the Daunia and Blackwater mines, as there is strong global demand for Queensland coal.”
Mr Smyth said the union was waiting for further clarity on the sale process.
