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Whitehaven Coal has confirmed its interest in the Daunia and Blackwater mines in central Queensland, which are currently part of the BHP Mitsubishi Alliance (BMA) joint venture. The company announced it was ‘participating in the sale process’ initiated by BMA, with the two mines expected to net about $5 billion.
Whitehaven is not alone in this pursuit. Other interested parties include Yancoal, BUMA, and Coronado, all of which were named as potential bidders last month.
The company revealed to the ASX that its share buyback had been temporarily suspended while it reassessed its capital allocation framework in light of these growth opportunities. “Whitehaven confirms that those opportunities include the Daunia and Blackwater mines,” said the coal miner in a statement. The board will decide on resuming the share buyback at an appropriate time.
BHP had previously flagged plans to divest from the Daunia and Blackwater coal mines as part of a strategy to focus its coal portfolio on the highest quality metallurgical coal assets. Despite being high-quality assets with growth potential, BHP stated that these mines would struggle to compete for capital under its own capital allocation framework, given its global choices for deploying capital.
BMA’s decision to offload these two mines was also influenced by their not being of high quality and the State Government’s royalty hike. BHP expressed a preference for divesting these assets to an operator more likely to prioritise necessary investments for their continued successful operation.
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