Global miner BHP Group Ltd said on Thursday it had been unable to sell its New South Wales Energy Coal (NSWEC) thermal coal unit and would now run the operation for another eight years before shutting it down.
BHP has been reviewing its options for NSWEC, which includes the Mt Arthur coal mine near Muswellbrook, for the last two years, but did not receive a viable offer, the Anglo-Australian miner said in a statement.
“Mt Arthur Coal has been economically challenged for a number of years and despite a recent price strengthening, we know it is a complex pit to operate”, said Adam Lancey, vice-president of NSW Energy Coal at BHP.
“That’s why, after two years of extensive work and looking at all options, it has been determined that operating to 2030 and then moving to long-term rehabilitation is the best option from an economic, community and rehabilitation perspective,” he said.
BHP has been looking to exit some of its lower-grade metallurgical coal and energy coal assets, and has sold its stakes in the BHP Mitsui Coal and Cerrejón projects over the last year.
The company will now close the NSWEC project in 2030, it said, adding that closing and rehabilitating the project site is expected to take an additional 10-15 years.
It had set aside a $700 million provision for the mine closure as of Dec. 31, 2021.
BHP shares rose 0.75% after the announcement, although the broader S&P/ASX 200 index .AXJO added 1% in early trade to snap a four-day losing streak.
Environmentalists welcomed the decision to close the mine but warned of high rehabilitation costs.
“The current $700 million provision for closure does not appear to match the enormous scale of the likely clean up bill,” Harriet Kater, Climate Lead (Australia) at the Australasian Centre for Corporate Responsibility (ACCR) said.
“BHP has an opportunity to draw on the returns from current record high thermal coal prices to properly fund high quality remediation.”