BHP to shut down coal mine after failing to find buyer

Australian minerals giant BHP is closing down a coal mine in New South Wales after failing to find a buyer, the company said on Thursday.

It had planned to keep the Mt Arthur mine, in the state’s Hunter Valley coal heartlands, open until 2045, but will instead shutter it in eight years.

The mine has benefited from a surge in commodity prices due to the war in Ukraine, but was not expected to stay profitable beyond 2030. Its current operating licence expires in 2026 and an extension will require government approval.

BHP put the mine, the largest in NSW, on the market in August 2020 as part of a wider project to divest from thermal coal but the move “did not result in a viable offer”.

Reports suggested that potential buyers wanted BHP to pick up the bill for Mt Arthur’s rehabilitation – which could take 10-15 years - when it eventually closes down, which the company estimates at $700m.

"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.

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," said Harriet Kater at the Australasian Centre for Corporate Responsibility.

"BHP has an opportunity to draw on the returns from current record high thermal coal prices to properly fund high quality remediation."