Australia’s Whitehaven Coal confirmed that it has executed definitive sale agreements with BHP and Mitsubishi Development Pty Ltd (BMA) to acquire the Daunia and Blackwater coal mines for an aggregate cash consideration of $3.2 billion. The transaction will position Whitehaven as a leading metallurgical coal producer with pro-forma, run-of-mine production of around 40 million metric tons per year (mt/y) with revenues based on 70% metallurgical coal sales and 30% thermal coal sales. The acquisition is expected to close in Q2 2024, subject to certain conditions including regulatory and merger control approvals.
Whitehaven believes it will see significant upside value with attractive growth opportunities in Queensland’s Bowen Basin, including synergies with Whitehaven’s Winchester South development project. “This is a compelling transaction for Whitehaven that accelerates our strategy, transforms our company and delivers substantial value for our shareholders,” said Paul Flynn, CEO and managing director of Whitehaven. “This acquisition will pivot our portfolio towards metallurgical coal, which has been a core pillar of our strategy for many years making this a better-balanced business. Our thermal coal business remains strategically important.”
Daunia is an open-cut coal mine located 30 km southeast of Moranbah. It produces a hard coking coal (HCC) and pulverized coal injection (PCI) metallurgical coal products, and it is expected to produce an average of 4.9 million mt/y of saleable coal production over the next five years. The current mine life is 17 years (2040). Daunia is adjacent to Whitehaven’s Winchester South development project. Daunia exports coal through the Dalrymple Bay Terminal near Mackay.
The Blackwater coal mine is an open-cut mine which lies 73 km southeast of Emerald and is expected to produce an average of 12.4 million mt/y of coal over the next five years. It is one of the largest coal mines in Australia, with a strike length of 80 km, and has the largest dragline fleet (7) in the Southern Hemisphere. Both HCC and semi soft coking coal (SSCC) metallurgical coal products are mined at Blackwater. The remaining LOM production is expected to be greater than 50 years. Blackwater’s coal is exported through the RG Tanna Terminal north of Gladstone.
“Daunia and Blackwater produce much-needed metallurgical coal that is in high demand across Asia – including in India and Southeast Asia where population growth and economic development is expected to drive strong demand for steel production and metallurgical coal through to at least 2050,” Flynn said. “This acquisition will increase our exposure to these high growth market segments while expanding our regional footprint through new customers.”
Whitehaven’s total coal resources will increase by 75% from 2.6 billion mt to 4.6 billion mt for operating and development mines. The acquisition will increase Whitehaven’s Coal Resources in the Bowen Basin from 1.1 billion mt to 3.1 billion mt, including 673 million mt of recoverable reserves.
The purchase price includes $2.1 billion upon completion, $1.1 billion in cash over three years after completion and the potential for up to $900 million in a price-linked earnout payable over 3 years. Whitehaven has placed a $100 million deposit. The transaction will be funded via a combination of available cash, a $900 million bridge facility and cashflows of Whitehaven’s expanded business over FY2025, FY2026 and FY2027.
