BHP has told workers at its Queensland coal operations that the mines can no longer attract investment and are generating no returns for the company, according to an email to workers seen by Bloomberg News.
The Australian state is home to some of the world’s largest steelmaking coal mines, which BHP operates in a 50-50 joint venture with Mitsubishi Development. Despite generating more than $1.67bn in revenue in the six months to December, the operations were entirely unprofitable due to lower commodity prices and rising costs, the newswire said.
“Our financial performance is challenged by unsustainable royalty payments, increased production costs and fluctuating coal prices,” BHP Mitsubishi Alliance asset president Adam Lancey was quoted as writing in the email. “For every dollar we have invested, we are getting zero in return.”
BHP said in September it would close one of its mines in the state because of cost pressures. These costs included an increase in the Government of Queensland’s royalty regime, implemented in 2022. The company will also wind down its BHP FutureFit Academy training school, which has offered entry-level pathways into mining careers since 2020, said Bloomberg News.
Mike Henry, CEO of BHP has made capital discipline a priority amid a focus on growth in copper and other commodities tied to the energy transition. Financing and permitting for new coal mines in Australia have grown more difficult as banks pull back from the sector amid investor concern over emissions, said the newswire.
BHP is not alone in its difficulties. QCoal shut its Cook Colliery last year, Bowen Coking Coal placed its Burton mine into administration, and Virtinite, which operates the Vulcan mine, was also placed into administration this month.
