BHP to sell two Queensland coal mines for over $4bn

The Blackwater and Daunia metallurgical coal mines, owned equally by BHP and Mitsubishi Development Pty under the BHP Mitsubishi Alliance, are being purchased for an initial $2.1bn in cash upfront, followed by $1.1bn over three years post-completion and a further $0.9bn in a price-linked earnout payable over three years.

Excluding the price-linked earnout, the sale represents an enterprise value-to-reserves ratio of 12.8 per tonne.

BHP, which will used the proceeds to reduce its debt, said the BHP Mitsubishi Alliance will continue to operate the assets until completion, which is expected to occur midway through next year.

"This transaction has delivered a good outcome for the BHP Mitsubishi Alliance, our workforce and the communities around the Blackwater and Daunia operations" said BHP's president of minerals in Australia, Geraldine Slattery.

"Whitehaven Coal has a strong track record as a responsible and reliable operator, and we will work closely with them to achieve a smooth change of ownership focused on maintaining safe and productive operations and supporting people and communities through the transition."

In a separate statement, BHP said it remains on track to deliver full-year production and unit costs in line with guidance for the year to 30 June 2024.

This follows a solid fiscal first quarter, which saw a 11% rise in copper production, a 3% fall in iron ore output and a 16% drop in metallurgical coal.