Whitehaven Coal has entered a $1.08bn cash deal to offload 30% of the Blackwater coal mine in Queensland, Australia, to Nippon Steel and JFE Steel.
The two steel giants will acquire 20% and 10% interests respectively in Blackwater, which Whitehaven acquired from a joint venture of BHP and Mitsubishi.
Both Nippon Steel and JFE Steel will pay their share of the consideration upfront upon their deals’ closure, anticipated in early 2025.
The Blackwater mine will be owned by Whitehaven, Nippon Steel and JFE Steel through an unincorporated joint venture managed by Whitehaven.
The transactions await regulatory and competition clearances.
Nippon Steel and JFE Steel have a longstanding relationship with the Blackwater mine as consumers of its metallurgical coal.
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The joint venture includes offtake agreements that reflect the equity stakes and historical consumption patterns of the two companies, incorporating market-based pricing mechanisms.
The sale proceeds will bolster Whitehaven’s balance sheet, especially considering the deferred and contingent payments still pending from the Blackwater acquisition.
Both Nippon Steel and JFE Steel are committed to enhancing the value of Blackwater, a key source of seaborne metallurgical coal.
Located near Emerald, Queensland, the open-cut Blackwater mine has an annual run-of-mine coal production of 12-13 million tonnes per annum, with potential for increased output.
It is known for having the largest dragline fleet in the Southern Hemisphere and produces both hard and semi-soft coking coal, which is shipped to customers throughout Asia via the RG Tanna Terminal in Gladstone.
Whitehaven managing director and CEO Paul Flynn stated: “We are delighted to welcome Nippon Steel and JFE Steel as joint venture partners at Blackwater. Both companies have a long and proud tradition of excellence in steel production and have contributed to the economic advancement of Japan and the region more broadly.
“We look forward to working with our new partners as we continue to unlock opportunities at the operation. 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.”
In August 2024, Reuters reported that Whitehaven Coal will cut 192 jobs at the Daunia and Blackwater mines.
