BHP plans to cease mining at its New South Wales Energy Coal (NSWEC) asset by the end of the 2030 financial year.
The decision follows BHP’s 2020 review of its lower grade metallurgical and energy coal assets, which includes the Mt Arthur coal mine near Muswellbrook, and has also resulted in the divestment of its interests in Cerrejón and BHP Mitsui Coal (BMC) in January and May 2022 respectively.
A trade sale process for NSWEC was conducted, but the process did not result in a viable offer. Assessment of the resource economics, geotechnical profile and future investment requirements determined that continued mining in the near term and moving to a closure in 2030 provided the optimal financial outcome when compared to alternate options.
BHP said continuation of mining to the end of FY2030 would afford eight years to work with its people, state and federal governments and local communities in the Hunter Valley region on a transition approach that supports long-term community sustainability.
Plans to continue operating NSWEC to FY2030 are subject to obtaining relevant approvals to enable mining beyond the current consent, which only provides approval for mining until 2026.
Work is underway to prepare the application for the relevant approvals with the New South Wales and Australian governments to support mining until 2030.
This will also include plans for closure of the asset, including rehabilitation and determining the most appropriate post-mining land use. It is expected that continued work on rehabilitation will take 10 to 15 years following the cessation of mining.
The provision for closure of the mine as at December 31, 2021, was about US$700 million.
Minerals Australia president Edgar Basto said potential options for NSWEC had been thoroughly reviewed, including divestment and future investment requirements.
“Seeking approval to continue mining until 2030 avoids closure in 2026 and enables BHP to balance the value and risk of those considerations and our commitments to our people and local communities,” he said.