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BHP Group will expand plans to abandon coal companies and seize opportunities to hide waste of oil and gas assets under new urgent Mike Henry’s more urgent pressure to change the world of the top miner for a future with low emissions.
The producer intends to sell its 80% stake, as a spinoff, in the joint venture BHP Mitsui Coal, which has two coconut coal operations in Australia, along with outgoing thermal coal mines and some oil and gas operations, it said. company Tuesday in reporting annual profits held stable at $ 9.1 billion, driven by viruses affected by higher iron ore prices.
Henry, installed as chief executive in January, focuses BHP on supplying higher-quality iron ore and coal to catch up with China’s shift to prioritize premium raw materials for its steel sector. At the same time, it lays the groundwork for a longer-term transition to favor growth in copper and nickel to meet the growing demand for renewable energy and the electrification of transport.
“The world is changing rapidly with decarbonisation of energy sources, population growth and the drive for higher living standards in the developing world,” the company said in a statement. “It will require us to continue with active portfolio managers.”
BHP has been plotting to load its Australian thermal coal mine and one-third stake in the Cerrejon operation in Colombia for more than a year and has rejected some early offers, people familiar with the matter said last month. A process to leave those mines, and the coke coal care with Mitsui & Co., will now advance options for commercial sales, as a demerger to a separate listed entity, BHP said.
The company confirmed that it will also plan its 50% stake in the Bass Strait oil and gas joint venture with Exxon Mobil Corp. in southeastern Australia. Exxon said in September it also plans to go out. “We will try to diesel oil and gas assets that are mature or that are likely to achieve greater value under different ownership,” Henry said.
Henry said BHP is motivated by commercial decisions to cut back on its fossil fuels, although the producer is facing investor pressure and is also set to set more ambitious targets next month to reduce greenhouse gas emissions.
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Lower thermal coal prices mean that about two-thirds of the world’s marine resources are losing money, while there is continuing uncertainty about China’s policy on energy imports.
BHP’s plan to ‘exit the entire thermal coal business’ seems relatively timeless, but from an ESG perspective we understand the desire to make this decision, “said RBC Capital Markets analyst Tyler Broda in a note. “We expect this will probably take two years or more to disinvest or demerge the company.”
BHP shares were 0.3% lower than 12:58 in Sydney trading when rival Rio Tinto Group advanced 1%. Investors may be disappointed with a definitive dividend – of 55 cents per share – that was below analysts’ forecasts, reflecting a conservative approach amid a weak global economy, Broda told RBC.
A decision to increase potato production through the initial development of the Jansen project in Canada – seen as a way to spread BHP’s revenues outside of industrial raw materials – has been postponed until mid-2021, BHP said. The project, which could cost as much as $ 5.7 billion, could benefit from improving dynamics in supply and demand from the late 2020s to early 2030s, the company said.
To support plans to rebuild BHP’s portfolio, Henry Johan van Jaarsveld was promoted to Chief Development Officer. In other appointments, Laura Tyler was moved into a new role as Chief Technical Officer and Ragnar Udd will become president, Minerals Americas, as Danny Malchuk – a rival for Henry for the post of CEO – leaves the company.
The moves to complete a reshuffle of the executive team began earlier this year when BHP announced that David Lamont, an executive at Australian medicine maker CSL Ltd., would become Chief Financial Officer in December.
(Adds analyst comment in 8th paragraph)
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