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(Bloomberg) –
The BHP Group will expand its plans to exit coal mining and examine opportunities to dispose of aging oil and gas assets under the more urgent impetus of new CEO Mike Henry to reshape the portfolios of the world’s largest miners for a low-emission future.
The producer aims to sell, or spin-off, its 80% stake in the BHP Mitsui Coal joint venture, which has two coking coal operations in Australia, as well as outgoing thermal coal mines and some oil and gas operations, the company said on Tuesday during its annual report. profits were flat at $ 9.1 billion, cushioned from the effects of viruses by rising iron ore prices.
Henry, appointed general manager in January, focuses BHP on supplying better iron ore and coking coal to seize China’s shift to prioritize premium raw materials for its steel industry . At the same time, it sets the stage for a longer-term transition to foster the growth of copper and nickel to meet the expected growing demand for renewable energy and the electrification of transport.
“The world is changing rapidly with the decarbonization of energy sources, population growth and the search for a higher standard of living in developing countries,” the company said in a statement. “This will require us to continue to be active portfolio managers.”
BHP has been planning for more than a year to get rid of its Australian thermal coal mine and a third of the stake in the Cerrejon operation in Colombia and has rejected some early offers, sources familiar with the matter said in the month latest. An exit process from those mines, and the coking coal business with Mitsui & Co., will now allow for commercial put options or a spin-off into a separate listed entity, BHP said.
The company has confirmed that it also plans to sell its 50% stake in oil and gas joint venture Bass Strait with Exxon Mobil Corp. in south-eastern Australia. Exxon said in September that it also plans to pull out. “We will seek to dispose of oil and gas assets that have matured or are likely to realize greater value under different ownership,” said Henry.
Henry said BHP was driven by business decisions to prune its fossil fuel assets, although the producer has come under pressure from investors and is also preparing to set more ambitious targets for reducing gas emissions next month. Greenhouse effect.
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Falling thermal coal prices mean that around two-thirds of the world’s maritime supply is losing money, as uncertainty persists over China’s policy on energy coal imports.
BHP’s plan to exit “all of its thermal coal business seems relatively ill-chosen, but from an ESG perspective, we understand the desire to make this decision,” said RBC Capital Markets analyst Tyler Broda in a note. “We expect it will probably take two years or more to divest or split the business.”
BHP shares fell 0.3% at 12:58 p.m. in Sydney as rival Rio Tinto Group rose 1%. Investors might be disappointed with a final dividend – of 55 cents per share – that was lower than analysts’ expectations, reflecting a conservative approach in a weak global economy, RBC’s Broda said.
The decision to add potash production during the initial development of the Jansen Project in Canada – seen as a way to diversify BHP’s profits beyond industrial raw materials – has been delayed until mid-2021, BHP said. The project, which could cost as much as $ 5.7 billion, could benefit from improved supply and demand dynamics from the late 2020s or early 2030s, said the society.
To support BHP’s portfolio overhaul plans, Henry promoted Johan van Jaarsveld to Director of Development. In other appointments, Laura Tyler has been transferred to a new role of CTO and Ragnar Udd will become President, Minerals Americas as Danny Malchuk – a rival to Henry for the CEO role – leaves the company.
The changes complement a management team reshuffle that began earlier this year when BHP announced that David Lamont, an executive at Australian drugmaker CSL Ltd., would become chief financial officer from December.
(Add analyst commentary to 8th paragraph)
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