BHP, Mitsubishi Development To Sell Blackwater And Daunia Mines Under BMA JV In Up To $4.1 Bln Deal

BHP Group Limited (BHP.AX,BLT.L,BBL,BHP) and its joint venture partner Mitsubishi Development Pty Ltd or MDP, a unit of Japan’s Mitsubishi Corp. (MBC.L,MSBHY.PK), announced Wednesday their agreement to divest the Blackwater and Daunia mines to Whitehaven Coal for cash consideration of up to $4.1 billion.

These mines are part of Queensland-based metallurgical coal joint venture BHP Mitsubishi Alliance or BMA, in which both BHP and MDP hold 50% interest each.

The purchase price comprises $2.1 billion cash on completion, $1.1 billion in cash over 3 years after completion and the potential for up to $0.9 billion in a price-linked earnout payable over 3 years.

Completion is expected to occur in the June 2024 quarter. The sale is subject to the satisfaction of certain conditions, including competition and regulatory approvals.

Under the deal, Whitehaven Coal’s two subsidiaries will buy Blackwater mine and Daunia mine, respectively. Whitehaven Coal has guaranteed the obligations of each buyer.

The companies noted that BMA will continue to operate the assets until completion, following which it will work closely with Whitehaven Coal and its units to ensure a successful transition of ownership.

For a short period of time after completion, BHP will support certain transitional services to the buyers.

The companies noted that the buyers have agreed to pay a $100 million deposit on signing. BHP and MDP are entitled to retain this amount if the proposed divestment is terminated in certain limited circumstances.

BHP said the net proceeds from the deal will be used to reduce its net debt.

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