Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site. Click here to give us your advice and feedback.

BHP (ASX:BHP) share price rises after US$1.2 billion coal deal

The BHP Group Ltd (ASX:BHP) share price is up this morning after it announced a deal to sell a coal asset for at least US$1.2 billion. 

The BHP Group Ltd (ASX: BHP) share price is up this morning after the resources giant announced a deal to sell a coal asset for at least US$1.2 billion.

BHP sells coal asset

BHP announced today that it has entered into an agreement to sell its 80% stake of BHP Mitsui Coal (BMC). This asset is a joint venture operation that produces metallurgical coal. That’s different to thermal coal, which is used to produce energy.

The resources giant is selling its subsidiary that owns the 80% of joint venture t0 Stanmore Resources Ltd (ASX: SMR). The Stanmore Resources share price has gone up by 15% at the time of writing.

BHP will get US$1.1 billion when the deal is completed, another US$100 million in cash in six months after completion and the potential for up to US$150 million in a price-linked earnout which would be paid in the 2024 calendar year. BHP will provide certain transitional services to Stanmore Resources for a short period of time after completion.

The deal still needs to go through the process of regulatory approval.

Management comments

The BHP President of Minerals Australia, Edgar Basto said:

As the world decarbonises, BHP is sharpening its focus on producing higher-quality metallurgical coal sought after by global steelmakers to help increase efficiency and lower emissions.

South Walker Creek and Poitrel are well-run assets that have been an important part of our portfolio for many years and we are grateful for their contribution to BHP.”

What will BHP do with the money?

BHP said that net proceeds will be incorporated into and evaluated in accordance with its capital allocation framework to determine the appropriate way to maximise value to shareholders through future dividends, share buybacks or a combination of both.

Summary thoughts on this deal and the BHP share price

The resources giant will be increasing its attractiveness to investors who want to avoid coal. This seems like a good time to be selling coal assets, with coal prices at a pretty strong point right now.

I like the evolving nature of the BHP’s portfolio, with increasing focus on future commodities like potash and divesting things like oil and coal.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, Jaz does not have a financial or commercial interest in any of the companies mentioned.
Skip to content