The mining giant BHP has abandoned plans to keep mining coal at Mt Arthur in New South Wales until 2045 and will close the mine down in 2030 after failing to sell it.
Environmentalists and shareholder activists welcomed the decision to close the mine in the Hunter Valley rather than sell it on to another operator. But they said BHP should close the mine in 2026, when its current permit expires, rather than extending its life for another four years.
BHP put the mine, the largest in NSW, on the market in August 2020 as part of a wider project to divest from thermal coal.
But while the company successfully offloaded its stakes in the Cerrejon mine in Colombia and BHP Mitsui Coal in Queensland earlier this year, it said efforts to sell Mt Arthur “did not result in a viable offer”.
It is believed that while there were bidders for the mine, they wanted BHP to pay for rehabilitation of the site when it closes down – a cost the company has on its books at US$700m, but which some activists believe will be far higher.
BHP will abandon an application on foot with the NSW government to increase the size of the mine site, which be required to keep it operating until 2045.
Instead, it will ask for permission to keep mining within existing boundaries until the mine shuts on 30 June 2030.
About 2,000 people are employed by the mine, but BHP said it hopes there will continue to be jobs at the site during rehabilitation, which it estimates will take 10 to 15 years.
Carmel Flint, national coordinator at the Lock the Gate Alliance, said the planned closure was welcome news but she was “still of the view that the mine should close in 2026 as previously planned – the world can’t afford to keep delaying climate action”.
“It’s taken too long for BHP to read the writing on the wall,” she said.
“Had the company committed to shutting down Mt Arthur instead of trying to sell it several years ago, it could have already spent that time retraining and supporting workers instead of delaying the inevitable.
“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.”
BHP’s main rival, Rio Tinto, completely divested from coal in 2018.
However, while BHP has committed to divesting from thermal coal it intends to retain mines that extract metallurgical coal, which is used in making steel and commands a higher price.
The Mt Arthur mine is currently profitable due to high coal prices, caused in part by Russia’s invasion of Ukraine. But it has lost money for the past two years and BHP regards it as a marginal asset.
Expanding the mine so that it could continue past 2030 would also have required BHP to spend large sums of money, which the company’s board was not willing to approve.
Harriet Kater, climate lead for Australia at the activist investor group the Australasian Centre for Corporate Responsibility, said BHP had “finally made the right call” but questioned whether the company had set aside enough for remediating the vast open pit site.
“The current US$700m provision for closure does not appear to match the enormous scale of the likely clean up bill,” she said.
“BHP has an opportunity to draw on the returns from current record-high thermal coal prices to properly fund high quality remediation.”
She said BHP took too long to make the decision and if it had acted earlier it would have been able to close the mine in 2026.
“The IEA Net Zero scenario stated there can be no new coal mines or extensions from 2021 so the decision to still seek a mine life extension from 2026 to 2030 is completely inconsistent with the Paris Agreement and limiting warming to 1.5 degrees,” she said.
Elizabeth Sullivan, a climate and exports campaigner at the Australian Conservation Foundation, said the decision was “a welcome acknowledgement of the energy transition that is underway”.
“As the world rapidly shifts to renewable energy, projects like Mt Arthur have become such a climate liability that companies can barely give them away,” she said.
“A closing date of 2030 is a big improvement on 2045, but earlier would be better for the climate.”
