PERTH (miningweekly.com) – Mining major BHP is reportedly mulling the closure of its Mt Arthur coal mine, in New South Wales, ahead of its 2030 target.
The ABC on Monday reported that BHP had told 2 000 staff at the mine that it might need to bring forward the closure, on the back of state government’s coal reservation scheme and a coal price cap announced by the federal government at the end of last year.
The New South Wales government would require thermal coal miners in the state reserve up to 10% of their output for domestic coal-fired power stations in a bid to address the near four-million tonnes a year of supply shortfall to meet the need of power generators in the region.
In December, the New South Wales government imposed domestic coal reservation and price cap orders on a number of New South Wales producers which have historically supplied coal to the domestic energy market to offer at least 18.6-million tonnes into the domestic market. These orders are to apply from April 1, 2023 to June 30, 2024 and are designed not to impact existing coal supply agreements.
The state government’s move followed on from the federal government in December introducing a 12-month price ceiling on domestic coal of A$125/t in New South Wales and Queensland in a bid to bring down domestic energy prices.
BHP New South Wales Energy Coal (NSWEC) VP Adam Lancey, said in a letter to staff, obtained by Mining Weekly, that the decisions would see Mt Arthur redirect 1.5-million tonnes of coal for domestic use, which would be sold at a reduced price of A$125/t.
“Our primary concerns relate to the potential impacts on Mt Arthur Coal’s operations and business model, including what to do if our production costs are above the price cap - as well as understanding potential impacts on local communities and infrastructure such as the rail network, our long-standing commercial partnerships and our ability to meet our obligations to customers, and the energy market more broadly,” the letter reads.
“And, while we support affordable energy prices for New South Wales households and businesses, we have doubts about the directions’ ability to achieve this. As a general point, BHP is opposed to market interventions because short-term measures can have negative long-term impacts: in this case businesses may think twice about investing in New South Wales.
“In light of these directions, we are actively reviewing operational plans and existing commitments to understand their implications. And, while I would like to avoid this scenario, the findings of this review may lead to a reassessment of our Pathway to 2030 plan.”
BHP in June of last year shelved plans to divest of its NSWEC business after failing to secure a "viable offer" for the assets. Instead the miner said that it would seek the relevant approvals to continue mining beyond its current consent, which expires in 2026, and would instead look to continue mining until 2030.
Lancey said in the letter to staff that the miner had written to the state government to make clear its position, and was actively engaging with government to convey its concerns.
“I understand this is a lot to take in – but I wanted you to hear it from me first. Importantly, nothing changes right now. We are working to understand the full impacts and implications, and as always you can count on hearing updates from me first – that is my number one commitment,” he added.