Top Miner BHP Sees an End to the Era of Coal

By David Stringer for Bloomberg LP

BHP Group, the world’s biggest miner, sees the outlook for thermal coal as challenged and won’t add production as it prioritizes growth in commodities tied to the shift to renewable energy and electric transport. There’s the prospect that the material will be “phased out, potentially sooner than expected,” Chief Financial Officer Peter Beaven said in an investor presentation on Wednesday. The Melbourne-based producer has “no appetite for growth in energy coal regardless of asset attractiveness,” he said.

BHP follows its biggest competitors Rio Tinto Group and Glencore Plc in questioning the future role of coal used for power generation, as investors press for more action to tackle climate change and tighten restrictions on holding companies that produce the fuel. Rio sold its final coal mines last year, while Glencore said in March it would seek to limit production. At BHP’s thermal coal mine in Australia and the Cerrejon operation in Colombia, where it has a third-share, the producer will focus on “maximizing value to shareholders, whether we are long-term owners or not,” Beaven told investors in a separate speech. While thermal coal will remain a large market, the company expects demand “to plateau and then decline,” he said.

The producer is also unlikely to add major capacity in iron ore or metallurgical coal, according to Beaven, seen as a leading contender to succeed Andrew Mackenzie as CEO. BHP will instead boost options in commodities with a more favorable exposure to the growth of energy demand and renewable power, the shift to electric vehicles and increasing food consumption, Beaven said.

‘We Need More’

“We have options in copper and oil, but we need more, and we are interested in adding more nickel sulphide resource to our portfolio,” he said. “We do not need to do M&A, but we never discount it as a way to acquire great resource bases, especially early in the life of a project.”

BHP continues to see potash as a valuable long-term option, and regards its Jansen project in Canada as a potential high-margin, long-life asset, he said.

The potash market currently has excess supply, but will likely require additional capacity from Jansen’s initial stage, likely to cost as much as a further $5.7 billion, by the middle of next decade, Beaven said. Jansen will need about five years from a decision to sanction the investment to be fully commissioned for production, according to the presentation.

BHP said last week it would retain its Nickel West operation in Western Australia for exposure to growth in electric vehicle battery markets, though sees related metals like lithium and cobalt as less attractive, Beaven said.

The information contained in this article and provided by VanadiumCorp is sourced from third-party content in the public domain and is for general information purposes only, with no representation, guarantees of completeness, warranty of any kind, express or implied regarding the accuracy, adequacy, validity, availability, completeness, usefulness or timeliness of any information contained within. Please also excuse any syntax as authors and reposted articles are sourced from global origins. UNDER NO CIRCUMSTANCE SHALL WE HAVE LIABILITY TO YOU FOR ANY LOSS OR DAMAGE OF ANY KIND INCURRED AS A RESULT OF THE USE OF THIS REPOSTED ARTICLE. THE USE OF THIS ARTICLE AND YOUR RELIANCE ON ANY INFORMATION CONTAINED HEREIN IS SOLELY AT YOUR OWN RISK. VANADIUMCORP ALSO ASSUMES NO RESPONSIBILITY OR LIABILITY FOR ANY ERRORS OR OMISSIONS IN THE CONTENT OF THIS ARTICLE.

Continue reading the full story here >>

This Post Has 0 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *