Australian producer Whitehaven Coal has confirmed that it is a bidder for Australian-Japanese joint venture BHP Mitsubishi Alliance's (BMA's) 12mn t/yr Blackwater and 2.5mn t/yr Daunia coking and thermal coal mines in Queensland.
The company was forced to admit its ongoing participation in BMA's sale of these lower grade coking coal mines following pressure from a major shareholder to disclose its intentions. Whitehaven shelved its share buyback programme last month as it looked to expand its operations, both organically and through mergers and acquisitions, which analysts said did not sit well with some shareholders.
Whitehaven's guidance is anticipated at 16mn-17.5mn t of managed coal sales in 2023-24. The potential acquisition of Blackwater and Daunia, totalling up to 14.5mn t/yr and expected to cost around A$3.5bn ($2.25bn), represents a significant investment, according to investors. This acquisition would also shift Whitehaven's sales focus more towards coking coal, moving away from its traditional high grade thermal coal.
The BMA assets would increase Whitehaven's exposure to Queensland, where mining firms are battling increased coal royalties that have netted the state an additional A$5.7bn in earnings. Whitehaven is currently New South Wales (NSW) focused and it appreciates the more consultative approach taken by the NSW government regarding royalty increases, which are set to take effect on 1 July next year.
Whitehaven faces competition for the BMA assets from Chinese-owned Yancoal and US-owned Coronado.
BHP has recently reshuffled its coal management team, promoting the head of its NSW energy coal division, Adam Lancey, to oversee the Queensland coking coal operations, which still currently include Blackwater and Daunia. The former head of BHP's Queensland coal division, Mauro Neves, has left the company. As a former director of both Newcastle Coal Infrastructure (NCIG) and Hunter Valley Coal Chain co-ordinator, Lancey will be familiar with Whitehaven and other coal mine operators in the Hunter Valley region of NSW.
Whitehaven reported a profit of A$2.67bn in 2022-23, up from A$1.95bn in 2021-22. It held a net cash position of A$2.65bn as of 30 June, compared to debts of A$809mn just two years ago.
