Global 'headwinds' could see the giant Muswellbrook coal mine sold to Yancoal

The mining giant on Tuesday said it was "not going to comment on speculation" of a sale, which has been building for the past year, but "we will always consider opportunities to deliver value for shareholders".

Yancoal is believed to be the likely buyer of the mine which is approved to operate until 2026.

On Wednesday Yancoal did not deny an interest in Mount Arthur in response to questions about whether it was doing due diligence before a purchase.

"In relation to BHP's thermal coal assets, Yancoal continues to consider both organic and acquisitive growth opportunities as they arise and is committed to acquiring appropriately priced assets of genuine future value," a spokesperson said.

"The acquisition of value-accretive assets is a key element of Yancoal's business strategy. In deciding whether to acquire a particular asset, we consider strategic value-accretion, return on investment, future growth potential and level of synergies created by the investment."

Yancoal's existing Hunter mines include the large Mount Thorley Warkworth and Hunter Valley Operations mines in Singleton, the Moolarben mine between Denman and Mudgee and Stratford Duralie mine near Gloucester.

The possible sale of BHP's only remaining thermal coal asset in Australia - the largest open cut coal mine in NSW with an estimated net value of $600 million in early 2019 - is seen by environment groups and analysts as a significant move despite its two thermal coal assets, at Mount Arthur and in Columbia, representing only 3 per cent of its asset base.

At an investor briefing in May, 2019 BHP chief financial officer Peter Beaven said the company had no appetite for growth in thermal coal because the global market is expected to "plateau and then decline, as headwinds strengthen".

Muswellbrook mayor Martin Rush said his council welcomed a possible sale.

"Council's made it clear over a number of years that it would welcome a new operator of Mount Arthur. BHP has a woeful history of environmental offending and has become a worst practice miner," Cr Rush said.

"It's made almost no attempt to honour its conditions of planning consent to rehabilitate mine areas as soon as reasonably practical after mining has occurred. There are no parts of Mount Arthur mine that would come within a bull's roar of meeting rehabilitation conditions.

"That is a sad indictment of BHP and it's also a sad indictment of the regulator," Cr Rush said.

In 2019 Mount Arthur paid more than $1 million to meet conditions of an enforceable undertaking with the state's mining watchdog after a contract worker was set alight during a shocking refuelling incident in 2017.

Institute of Energy Economics and Financial Analysis analyst Simon Nicholas said BHP considering exiting thermal coal entirely was significant. The company will decide by April 30 whether it will leave the NSW Minerals Council "after becoming concerned that the council's public stance on emissions reduction is out of step with its own", Mr Nicholas said.

Lock the Gate Alliance spokesperson Georgina Woods said BHP in 2019 announced it accepted the science of climate change and would set goals for decarbonisation in line with the Paris Agreement goals, but it was "not okay for BHP to simply sell out of thermal coal".

"Global efforts to reduce coal burning and achieve the Paris climate agreement goals will have profound implications for the Hunter region and it's not okay at this point for BHP to simply sell out of thermal coal and leave the people, communities and landscape of the Hunter Valley to an uncertain fate," Ms Wood said.

"Coal mining communities around the world suffer inter-generational social and economic consequences from a failure to plan and prepare for declining markets. BHP's wealth has been made from the labour of miners and wrung from the land and river. It will leave scars and pollution that must be managed for decades.

"The companies that have profited from mining our region need to show some leadership in putting us on a sustainable path, rehabilitating the land and water of the valley and creating secure, well-paid and lasting jobs in sustainable industries.

"Mining is only approved to continue at Mount Arthur for another six years. To make good on its statements that it supports an 'orderly' transformation of the world's energy sector, BHP needs to start in the Hunter by pitching in and supporting the economic diversification that our region needs."

In July last year the then BHP chief executive Andrew Mackenzie acknowledged climate change "activism and debates from schools to parliaments all around the world".

"We see this this period as an escalation towards a crisis," Mr Mackenzie said.

The company planned to set public goals in 2020 to address scope 3 emissions which are produced when coal produced in one company is exported and burnt to produce emissions in another.

Analysts over the past year have increasingly expected a sale of Mount Arthur as BHP makes climate-related structural changes to its long-term risk profile, and in response to activist investors pushing for the company to leave thermal coal.

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