BHP Group PLC (LSE:BHP) said it agreed to sell its 80% interest in BHP Mitsui Coal (BMC), a metallurgical coal joint venture in Queensland, for up to US$1.35bn (£1.0bn).
"As the world decarbonises, BHP is sharpening its focus on producing higher quality metallurgical coal sought after by global steelmakers to help increase efficiency and lower emissions,” said BHP's President Minerals Australia Edgar Basto.
Stanmore SMC Holdings Pty Ltd, a wholly owned subsidiary of Stanmore Resources Ltd, agreed to buy Dampier Coal (Queensland) Pty Ltd, the subsidiary which holds BHP's interest, for US$1.1bn in cash on completion, US$100mln in cash six months after completion, and the potential for up to US$150mln, depending on the coal price, payable in 2024.
BMC comprises the Poitrel and South Walker Creek operations, Red Mountain Infrastructure and the Wards Well development. Poitrel and South Walker Creek produce a combined 10 million tonnes a year of metallurgical coal.
BHP, which operates BMC as part of an 80:20 joint venture with Mitsui, said it will continue to operate BMC until completion.
Completion is expected to occur in the middle of 2022.
BMC achieved EBITDA of US$174mln on an 80% basis for the year to end September 2021.
BHP added that the review process for New South Wales Energy Coal is progressing, in line with the two-year timeframe announced in August 2020, and that it remains open to all options and continues consultation with relevant stakeholders.