Whitehaven Coal, a coal mining company, has entered into a $3.2 billion deal to acquire the Duania and Blackwater metallurgical coal mines in Queensland from BHP and Mitsubishi Development. BHP had previously announced plans to divest these assets to focus on high-quality metallurgical coal assets.

Under the agreement, Whitehaven will acquire full ownership of the two metallurgical coal mines. The deal consists of a $2.1 billion upfront payment upon transaction completion, as well as $1.1 billion to be paid in three separate installments over the first, second, and third anniversaries of the transaction's completion. Additionally, contingent payments of up to $900 million, dependent on realized pricing exceeding certain thresholds, will be made over three years.

Whitehaven intends to fund the transaction using a combination of available cash, a $900 million bridge facility, and cashflow generated by its expanded business from 2025 to 2027.

Upon completion of the deal, Whitehaven's total coal resources will increase by 75%, from 2.6 billion to 4.6 billion tonnes for operating and development mines. This acquisition will boost Whitehaven's coal resources in the Bowen Basin from 1.1 billion to 3.1 billion tonnes, including 673 million tonnes of recoverable reserves.

The acquisition allows Whitehaven to pivot its portfolio toward metallurgical coal, a core part of its long-term strategy. The company views its thermal coal business as strategically important, especially as customers seek high-quality, high-calorific value products to reduce emissions and support the global energy transition.

The transaction is subject to certain conditions, including competition and regulatory approvals. The completion of the sale is expected to occur in the June 2024 quarter, with BHP continuing to operate the assets until that time.

Geraldine Slattery, BHP President Minerals Australia, stated, “In line with our long-term strategy, we will continue to develop our high-quality metallurgical coal assets in Queensland, which are sought after by global steelmakers and needed to support the energy transition."

This strategic acquisition positions Whitehaven Coal to further meet the growing demand for metallurgical coal, particularly in Asian markets where steel production is expected to remain strong for years to come.