By Angus Dalton
The largest coal mine in NSW will close by 2030 after BHP failed to find a buyer for its Mount Arthur mine in the Hunter Valley.
BHP has approval to extract coal from Mount Arthur until 2026, but the mining giant will seek approval to extend the operation by four more years until the site’s closure.
BHP’s Mount Arthur coal mine in Muswellbrook in the Upper Hunter.Credit: Janie Barrett
The mine employs 2000 people, just under 10 per cent of the state’s coal mining workforce. The mine has been digging up coal since 2002 and can produce 20 million tonnes of thermal coal per year.
After a fruitless two-year search for a buyer, BHP said “moving to a closure in 2030 provides the optimal financial outcomes”.
BHP slashed the value of the mine by about $1.6 billion in January 2021 as the long-term financial prospects of coal plummeted. Amid attempts to attract a potential buyer, which at one stage included Indian-owned Adani, BHP sought approval to extend its coal mining operation at Mount Arthur for another two decades until 2045.
By August the value of the open-cut mine had tipped into the red and BHP was offering $275 million for buyers to take the mine off its hands.
The mounting future cost of rehabilitating the site is part of the reason for the mine’s negative value. BHP has $US700 million ($998 million) slated for a 10-15 year land rehabilitation project that will start at the mine once it closes, which includes $40 million to rebuild a local road uprooted by the mine.
The attempted sale was part of BHP’s goal to offload its thermal coal mines by the end of 2022. The company sold its coal mine in Colombia earlier this year and divested from its BHP Mitsui coal venture in Queensland last month.
All coal mined from Mount Arthur’s is exported and burned overseas for energy. Although coal prices are currently soaring, future demand is in doubt as the effects of climate change become increasingly urgent and Australia’s top three thermal coal markets - China, South Korea and Japan - all commit to net zero by 2050.
Critics of BHP’s divestment from fossil fuel projects, including Climate Lead at the Australasian Centre for Corporate Responsibility Harriet Kater, point out shifting carbon-intensive projects from one owner to another does nothing to abate climate change.
“BHP has finally made the right call,” she said. “Use of asset divestment as a tool to lower carbon footprints and avoid responsible closure is not acceptable.”
Lock the Gate Alliance national co-ordinator Carmel Flint said the environmental group would’ve preferred the mine to close in 2026, but was pleased with the news.
“This is a very significant step by BHP, and the absence of buyers for the mine sends an incredibly strong message that thermal coal is in decline globally, as customer countries act on climate change,” she said.
Deputy Premier Paul Toole welcomed BHP’s intention to continue mining coal until 2030, saying the decision “provides certainty for workers and the communities of the Upper Hunter”.
Toole said many other coal mining companies in the Hunter Valley had been granted approval to extend their operations and “take advantage of record prices for thermal coal on expert markets”.
“This is consistent with the NSW Government’s Future of Coal strategy which forecast ongoing demand for export coal in our part of the world. We recently legislated the Royalties for Rejuvenation Fund, designed to help mining communities diversify their economies over time.”
There are 40 coal mines operating across NSW and 17 operating in the Hunter region. Some mines are seeking extensions to operate beyond 2040, said Toole.
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