BHP to continue to optimise Mt Arthur

BHP will continue to prune costs and introduce efficiencies at its Mt Arthur thermal coal mine in New South Wales despite indicating it is divesting the asset.
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BHP's Mt Arthur mine in NSW.

The company said in its annual report that NSW Energy Corporation unit costs were expected to be between US$55 and $59 per tonne - based on an average exchange rate of AUD/US70c - in FY2021.

"Work is underway at NSWEC to review mine planning and operating alternatives to structurally reduce costs in the near term and ensure a viable mining operation which is resilient during low price cycles," it said.

The company is believed to have struggled to find a buyer for its Mt Arthur coal mine on its own because of the depressed thermal coal price.

"Given our focus on hard coking coal, these assets [thermal coal and lower quality coking coal] would better compete for capital outside of BHP,'' it said.

"We are moving to concentrate our coal portfolio on high quality coking coals, with greatest potential upside for quality premiums as steel makers seek to improve blast furnace utilisation and reduce emissions intensity."

BHP CEO Mike Henry said the company recently announced further steps in the continued optimisation of its portfolio, including the intended divestment of some of its coal assets whose value will be best realised outside BHP.

"Value and returns will be underpinned by embedding social value, being excellent at operations and at allocating capital, and by ensuring we have a portfolio with options that allow us to invest in meeting society's needs in the short, medium and long-term," he said.

Decreased volumes were reported at NSW Energy Corporation for FY2020 due to the change in strategy to focus on higher quality coal and also because of unfavourable weather impacts from December to February.