BHP Group may consider selling off its thermal coal assets, CEO Andrew Mackenzie hinted during an earnings call on Tuesday.
“We increasingly have concluded that this is not a business that is going to offer the prospects for growth and would compete for capital … compared to our other businesses,” Mackenzie said when addressing the current state of BHP’s coal operations.
Mackenzie added that concerns about global warming have dampened demand for coal, and combined with the plentiful supply, coal will “form a smaller part of the market share,” and become a “less interesting asset than others” for the company to invest in.
Apart from cutting back investments in thermal coal, Mackenzie did not discuss in detail what the future holds for BHP’s coal business, except that coal “needs to be part of an orderly transition.”
As for its coking coal operations that supply steelmakers, BHP is expected to hold on to these assets for now.
BHP currently owns the Mt Arthur thermal coal mine in New South Wales, Australia, as well as the Cerrejón project in Colombia. The two operations combined make up only 3% of BHP’s revenue.
Since July, the Australian mining giant has been rumored to be divesting its thermal coal assets, joining rivals Rio Tinto and Anglo American in moving towards “greener” pastures.
Last year, BHP took its first step away from thermal coal by leaving the World Coal Association (WCA), citing differences in their stance on climate change.
However, any potential deal for its two coal projects may be independent of what the company’s position is on climate and energy. Explaining BHP’s thermal coal strategy, Mackenzie stressed that any decision regarding its thermal coal business will be for “pure commercial or financial reasons.”