BHP ends domestic thermal coal sales

Thermal coal mined by BHP will no longer be burned to make electricity in Australia, after the miner quietly ended the decades long connection between its NSW mine and the nearby power stations of AGL Energy.

BHP has started dismantling the 10 kilometre conveyor belt that fed coal from its Mt Arthur mine to AGL's Bayswater and Liddell power stations, and the miner confirmed that it had stopped selling coal to the power stations altogether during fiscal 2020.

The move continues BHP's gradual shift away from thermal coal, which had manifest in a series of incremental changes in the Hunter Valley in recent years until it was formalised in August, when BHP finally confirmed that it was trying to sell Mt Arthur and another thermal coal asset in Colombia.

BHP deliberately reduced production volumes at Mt Arthur by 12 per cent in fiscal 2020 in a bid to sell more of the high energy coal that is desired by Japanese and Korean customers, rather than the medium quality coal that Mt Arthur has traditionally sold to Chinese and Australian customers.

The decision was also influenced by the end of a long standing supply agreement with AGL, the looming retirement of the Liddell power station, and the fact BHP saw an opportunity to lower mining costs by finding an alternative use for the land that housed the conveyor.

That section of land is now being used for the dumping of waste material called "overburden", thereby reducing haulage costs at Mt Arthur.

Coal has been mined for electricity generation at the Mt Arthur precinct since 1968 when production started at the Bayswater Colliery.

Bayswater Colliery was acquired by Billiton in 1996, and BHP won approval to develop the adjacent Mt Arthur North lease in 2001; the combination of the two sites created the biggest integrated mining hub in the Hunter Valley.

The Liddell power station was commissioned in 1971 and is rapidly nearing the end of its working life; Liddell's first generation unit will close in April 2022, with the remaining three generation units closing in April 2023.

Read the full article published in the AFR 25th Sept 2020