Mining giant BHP has abandoned its plans to maintain coal mines on Mt Arthur New South Wales until 2045 and will close the mine in 2030 after it is not sold.
Environmentalists and shareholder activists welcomed the decision to close the Hunter Valley mine rather than sell it on to another operator. But they said: BHP the mine should close in 2026, when the current permit expires, rather than extending its life for another four years.
BHP brought the mine, the largest in NSW, to market in August 2020 as part of a wider project to divest thermal coal.
But while the company has successfully completed its interests in the Cerrejon mine in Colombia and BHP Mitsui Coal in Queensland earlier this year, it said efforts to sell Mt Arthur “did not result in a viable bid”.
It is believed that although there were bidders for the mine, they wanted BHP to pay for the site’s rehabilitation when it closes — a cost the company has on its books at $700 million, but which some activists believe is these will be much higher.
BHP will waive an application on foot to the NSW government to increase the size of the mine site, which is needed to keep it operational until 2045.
Instead, it will seek permission to keep mining within existing boundaries until the mine closes on June 30, 2030.
About 2,000 people are employed at the mine, but BHP said it hopes jobs will remain at the site during the rehabilitation, which is estimated to take 10 to 15 years.
Carmel Flint, national coordinator at the Lock the Gate Alliance, said the planned closure was welcome news, but she “still believed the mine should close in 2026 as previously planned — the world cannot afford to take climate action.” keep procrastinating”.
“It’s taken too long for BHP to read the letters on the wall,” she said.
“Had the company committed to closing Mt Arthur rather than trying to sell it several years ago, it could have already spent that time retraining and supporting employees rather than delaying the inevitable.
“This is a very important step by BHP, and the absence of buyers for the mine sends an incredibly strong signal that thermal coal is in decline globally as client countries act on climate change.”
BHP’s main rival, Rio Tinto, completely divested from coal in 2018.
However, while BHP committed to divesting thermal coal it plans to keep mines that extract metallurgical coal, which is used in steelmaking, and command a higher price.
The Mt Arthur mine is currently profitable due to high coal prices, partly caused by the Russian invasion of Ukraine. But it has lost money in the past two years and BHP considers it a fringe asset.
Expanding the mine so that it could continue beyond 2030 would also require BHP to spend large sums of money, which the company’s board of directors was unwilling to approve.
Harriet Kater, climate leader for Australia at the activist investor group the Australasian Center for Corporate Responsibility, said BHP had “finally made the right decision”, but questioned whether the company had set aside enough to clean up the massive open pit site.
“The current $700 million provision for closure doesn’t seem to match the sheer size of the likely clearance bill,” she said.
“BHP has the opportunity to capitalize on the proceeds of current record high thermal coal prices to properly fund high-quality remediation.”
She said BHP took too long to make the decision and that if it had acted sooner, it could have closed the mine by 2026.
“The IEA Net Zero scenario stated that there could be no new coal mines or expansions from 2021, so the decision to still seek an extension of mine life from 2026 to 2030 is completely inconsistent with the Paris Agreement and the limiting warming to 1.5 degrees,” she said.
Elizabeth Sullivan, climate and exports campaigner at the Australian Conservation Foundation, said the decision is “welcome recognition of the energy transition underway”.
“As the world is rapidly shifting towards renewable energy, projects like Mt Arthur have become such a climate problem that companies can hardly give them away,” she said.
“A cut-off date of 2030 is a big improvement over 2045, but earlier would be better for the climate.”
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