Whitehaven Sells $1.08B Stake In Major Australian Coal Mine To Japanese Steelmakers

Australian miner Whitehaven Coal WHITF has announced the sale of a 30% stake in its Blackwater metallurgical coal mine, located near Emerald in Queensland. The deal, valued at $1.08 billion, involves selling a 20% stake to Nippon Steel NISTF and a 10% stake to JFE Steel, two leading Japanese steelmakers.

Per Bloomberg's report, Whitehaven will manage this new yet unnamed joint venture, securing a long-term supply of high-quality coal for Nippon Steel and JFE Steel’s steel production.

“As long-term customers of Blackwater, their co-investment reflects the importance of Blackwater metallurgical coal in the seaborne market. The formation of this joint venture with such high-quality participants validates the asset purchase by Whitehaven, the coal quality, and Whitehaven's plans as the operator of Blackwater,” said Whitehaven's CEO, Paul Flynn.

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The agreement includes market-based offtake agreements that guarantee a steady flow of Blackwater coal to these major customers when the global coal industry faces uncertainty due to the shift towards cleaner energy sources.

“We decided to invest to ensure stable raw material procurement and secure earnings even if market conditions change," Nippon Steel's managing executive officer Ryuichi Nagai told Reuters.

“We’ll continue striving to secure quality resources,” he added, expressing openness to acquiring more assets in the sector.

The Blackwater coal mine, one of Australia’s largest metallurgical coal mines, produces between 12 million and 13 million tons of coal annually, with a strike length of 80 kilometers.

Whitehaven purchased the Blackwater mine in April 2023 as part of a $4.1 billion deal with BHP and Mitsubishi Corp that also included the Daunia mine. The acquisition transformed Whitehaven from a New South Wales-focused coal producer into a significant player in Queensland's coal industry.

With the sale of a stake in Blackwater, Whitehaven will reduce debt and potentially increase shareholder returns. Flynn noted that the deal “will immediately strengthen Whitehaven's balance sheet and provide enhanced financial flexibility.”

The transaction is expected to be completed in the first quarter of 2025.

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