BHP shortlists coalmine buyers

There have been some big numbers thrown around for the sale process, with one suggestion that BHP’s Daunia mine could sell for as much as $6bn, and Blackwater up to $3bn.

• ByBRIDGET CARTER

  DATAROOM EDITOR

  @BridgetCarterb
• 9:00PM MAY 22, 2023
• 1COMMENT

BHP has shortlisted parties for the second round of its coalmine sale process, with Whitehaven Coal, Yancoal and Coronado Energy all understood to have made the cut.

Peabody Energy is also through to round two, according to sources. Final bids are expected to be due at about the end of next month.

There have been some big numbers thrown around for the sale process, with one suggestion that BHP’s Daunia mine could sell for as much as $6bn, and Blackwater up to $3bn.

Yet most around the market say they would be surprised if the assets were sold at such big numbers. However, it would all come down to the coal price and production projections being attributed to the assets.

Should they fetch such numbers, sources say this would knock Coronado out of the running, and potentially other Australian listed groups.

One option is that a group such as Coronado or Peabody partners with other groups such as a Japanese strategic player to pay up to win the competition.

Yet Yancoal is funded by Chinese investors and may have the ability to write a huge cheque.

Earlier, Yancoal was said to be gunning hard for the portfolio and was shaping as the frontrunner in the competition.

The company is 62 per cent-owned by China’s state-owned enterprise, the Yankuang Energy Group, while the state-owned China Cinda Asset Management owns about 13.7 per cent of the group.

Blackwater produces thermal coal as well as metallurgical coal, while Daunia produces metallurgical coal.

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They are two of nine metallurgical coalmines in Queensland’s Bowen Basin that are part of the joint venture, split 50-50 between BHP and Mitsubishi Development.

The assets are up for sale through investment bank Macquarie Capital.

As earlier reported by DataRoom, BHP is understood to have initially attracted between 15 and 25 parties interested in its two Queensland coalmines. And earlier, the mines were believed to be worth a combined $2bn.

Coalminers have prospered on the back of soaring coal prices linked to the Ukraine-Russia conflict that has stemmed the flow of fossil fuels for energy.

Whitehaven Coal in October told the market it could return more than $1bn to shareholders in the year in line with its policy of returning 20-50 per cent of net profit to shareholders, as it booked a $2bn annual net profit.

The Australian thermal coal price hit $US330.35 a tonne in November last year, and the metallurgical coal price hit $US381 a tonne.

But prices have since fallen substantially.

On Friday, the metallurgical coal price was at $US235 a tonne, and the price of thermal was $US162.25 a tonne.

BRIDGET CARTER

DATAROOM EDITOR

Bridget Carter has worked as a writer and editor for The Australian’s DataRoom column since it was launched in 2013, focusing on capital markets, mergers and acquisitions, private equity and investment banking. S...Read more