BHP to mine Australian coal using greener energy

BHP owns and operates mines in the Bowen Basin, Queensland, Australia. (Image courtesy of BHP.)

BHP (ASX, LON, NYSE: BHP) said on Tuesday it had inked a deal to support the development of new solar and wind farms in Australia’s Queensland state as part of a company-wide effort to use more renewable energy.

The miner, which runs nine metallurgical coal operations in the Bowen Basin through its BHP Mitsubishi Alliance (BMA) and BHP Mitsui Coal (BMC), said the move would help it cut its indirect emissions in the country by 20% over five years.

The agreement with state-owned generator and retailer CleanCo comes as BHP prepares to update the market next week on a revamped strategy to reduce the company’s operational emissions and its use of diesel.

Deal with Queensland state-owned generator and retailer Clean Co will see BHP coking coal mines use more renewable energy and is the first of its kind for the company in Australia

The “very tangible” climate actions will include targets to cut operational emissions by 2030, part of the world’s largest miner’s broader commitment to become carbon-neutral by 2050.

BHP said the steel-making coal it produces in central Queensland will be exported and does not count towards the company’s net-zero target.

“This is an important step forward in BHP’s transition to more sustainable energy use across our portfolio, and a first for our Australian operations,” BHP’s President, Minerals Australia Edgar Basto said in a statement.

BMA is Australia’s top producer and supplier of coking coal. The unit is a 50:50 partnership between BHP and Mitsubishi Development and operates seven mines —Goonyella Riverside, Broadmeadow, Daunia, Peak Downs, Saraji, Blackwater and Caval Ridge. BMA also owns and operates the Hay Point Coal Terminal near Mackay.

BMC has two open-cut metallurgical coal mines in the Bowen Basin – South Walker Creek and Poitrel.

The company intends to power half the electricity it needs to run those mines from low emissions sources, mainly solar, wind and hydro backed up by gas.

BHP currently sources 100% of the power it uses from the largely coal-fired Queensland grid.

Five-year deal

The renewable power purchasing agreement with CleanCo will run for five years from January 1, 2021.

It will support the development of new solar and wind farms in Queensland — the solar Western Downs Green Power Hub, due for completion in late 2022, and the Karara Wind Farm slated to begin operations in early 2023.

BHP is pursuing similar renewables supply deals for its iron ore operations in Western Australia and its Olympic Dam in South Australia.

The company already has four power agreements in Chile aimed at running its operations the country, including the Spence plant, and Escondida, the world’s largest copper mine, entirely on renewable power.

The Melbourne, Australia-based giant is also aiming to eliminate the use of water from aquifers in Chile by 2030.

Spence, a desalination water plant with a capacity of 1,000 litres per second, was expected to support a $2.5 billion expansion. The project, originally slated to be completed by the end of this year, was recently deferred until early 2021 due to effects of the coronavirus pandemic, BHP said in April.

At Escondida, a second desalination plant was commissioned in 2017 with a maximum capacity of 2,500 litres per second. Additional upgrades, plus the connection of the original desalination plant to this conveyance system will further increase total capacity.

Chile’s environmental watchdog said in July it would charge Escondida with drawing more water than its permits allowed for nearly 15 years.

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