It is that belief that is underpinning the world's largest resources player's capital allocation plans in the coal space.

Responding to questions after his address to the Bank of America Metals, Mining and Steel Conference Henry said metallurgical coal set the scene for the discussion around thermal coal in BHP's portfolio.

Last year BHP announced it was selling its New South Wales Energy Coal, its stake in the massive Cerrejon thermal coal mine in Colombia and its BHP Mitsui Coal assets in Queensland.

Henry believes a sale is the only way left for BHP to unlock the value in those assets because it is not prepared to invest in them.

However, he believes premium metallurgical coal still has a strong future.

"At some point there will be a decarbonisation of the steel industry," Henry said.

"The world needs that to become net-zero [carbon emissions] by 2050.

"There are some easier to abate emissions and some harder to abate emissions.

"Emissions from steel making is in the harder to abate area."
Henry said the technologies needed to decarbonise steel production were still a way off.

BHP is helping develop some of those technologies, partnering with steel mills and some start-ups to progress that.

Those are still pretty much at the work in progress stage.

"For decades to come coal is still going to be needed for steel making," Henry said.

"We believe steel makers will be taking some steps to reduce emissions be it through hydrogen injection or better utilisation of the blast furnace to reduce emissions intensity."
That is where Henry believes premium quality coking coals will come to the fore, because they are a crucial part of increasing blast furnace utilisation.

If he is right that means these high premium coking coals will remain in demand and likely attract an even greater premium over lower quality coking coals.

"And so that means that in the BHP portfolio where we've got thermal coal, less high quality hard coking coal, premium hard coking coals that the part of the portfolio that will attract ongoing capital investment will be the premium coking coals," Henry said.

"Therefore, we unlock the true value of the other assets in the BHP portfolio and that's what sits behind our decision to divest New South Wales Energy Coal, our stake in Cerrejon and BMC that we announced last year.

"Recognising the nature of the process that needs to play out we're expecting about two years to complete that."