BHP has flagged plans to offload the Bowen Basin metallurgical coal mines it owns in joint venture with Japan’s Mitsui and Co.

In its annual results presentation the company said it would pursue options to divest its interests in BHP Mitsui Coal (BMC) as well as thermal coal businesses New South Wales Energy Coal and the Cerrejón mine in Colombia.

BHP holds an 80 per cent stake in BMC, which owns and operates South Walker Creek mine and Poitrel mine in Central Queensland.

Despite the company reporting a 4 per cent drop in annual profits, BHP chief executive officer Mike Henry generally hailed the results for the 2020 financial year as strong.

“In a year marked by the challenges of the global COVID-19 pandemic, social unrest in Chile and commodity price volatility, we were safer, more reliable and lower cost,” he said.

In its summing up on the coal portfolio, BHP described the the medium to long-term fundamentals for higher quality metallurgical coals as attractive.

“Even against the backdrop of the decarbonisation of the global economy, metallurgical coal will remain an essential input into the steel-making process for a long time yet,” it said.

It anticipates that markets will evolve to place an even higher relative value on higher quality hard coking coals (HCC) that increase blast furnace productivity and reduce emissions intensity of steel production.

“BHP has the world’s leading portfolio of metallurgical coal assets. The majority of our mines produce HCC coals and are owned via our 50 per cent share of the BHP Mitsubishi Alliance (BMA) joint venture,” it said.

“We also own 80 per cent of the BHP Mitsui Coal (BMC) joint venture which is comprised of low cost mines but which produce lower quality coals.

“Our energy coal exposure comprises a very small portion of our overall asset portfolio (approximately 3 per cent of our net asset base). We own two assets, a 100 per cent share of the New South Wales Energy Coal asset and a 33.3 per cent stake in the independently operated Cerrejón mine in Colombia.

“We will pursue options to divest our interests in BMC, NSWEC and Cerrejón. These are large-scale and long life assets.”

BHP said it would look to maximise the value of these assets, including via a demerger of an independent, listed company and trade sale opportunities.