Whitehaven to Buy Mitsubishi, BHP Coal Mines at $4.1B

Australian coal operator Whitehaven Coal will purchase two coal mines in Queensland from Mitsubishi and BHP Group, totaling $4.1 billion. BHP Group and Mitsubishi controlled the two mines through an equally owned joint venture and announced the sale after posting a close to 4% drop in iron ore output. The sale occurred at an auction that saw Whitehaven, currently the largest listed miner on the globe, scoop up the Blackwater and Daunia metallurgical coal mines.

According to Mitsubishi, the deal was set at $3.2 billion, with the additional $900 million being paid over a three-year period under specific conditions.

UBS analysts say the sale could increase Whitehaven’s metallurgical revenue from below 20% to around 60%. However, with Whitehaven Coal recently committing to “future-facing” products such as copper that will play a critical role in the green-energy transition, senior market analyst Henry Jennings says the sale would likely make some activist shareholders at the company “very unhappy.” Jennings notes that many shareholders were displeased with the deal and says their displeasure will likely be reflected in Whitehaven’s share price.

BHP divested from the Poitrel and South Walker Creek coal mines in 2022 and began the process of divesting from Daunia and Blackwater in early 2023 to focus its attention on battery minerals, including nickel and copper. With several Western nations pledging to transition from internal combustion engine vehicles to battery electric cars, BHP has spent the past few years investing in the battery metals sector.

The Anglo-Australian company teamed up with mineral exploration company KoBold Metals in late 2021 to fund mineral exploration programs in Australia and other nations. A year later, BHP secured a deal that resulted in the purchase of Australian miner OZ Minerals at $9.6 billion and expanded its reach over nickel and copper resources. On top of a $40 million investment in a Tanzanian nickel mine, BHP has also invested $500,000 each in several companies in the nickel and copper exploration sector to increase its battery mineral portfolio.

BHP has remained uninterested in lithium, equally as important to the nascent electric vehicle sector, on the basis that it is well supplied.

Thanks to potash supply disruptions from dominant suppliers Russia and Belarus, which has opened a market gap in the Canadian market, BHP has pledged to invest up to $8.7 billion in the development of a potash mine in Saskatchewan province in Canada.

As companies such as Whitehaven enter the nickel mining space, they will join the likes of companies such as Canada Nickel Company Inc. (TSX.V: CNC) (OTCQX: CNIKF) that have made some considerable strides in establishing an alternative source of battery metals outside China and its allies.

NOTE TO INVESTORS: The latest news and updates relating to Canada Nickel Company Inc. (TSX.V: CNC) (OTCQX: CNIKF) are available in the company’s newsroom at http://ibn.fm/CNIKF

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