Whitehaven Coal’s decision to sell 30 per cent of its Blackwater coal mine underscores the long-term value and strategic importance of its metallurgical coal.
The binding agreement with Nippon Steel Corporation for 20 per cent and with JFE Steel Corporation for ten per cent joint venture interest in the project will amount to US$1.08 billion. This will immediately strengthen Whitehaven’s balance sheet and provide enhanced financial flexibility regarding the deferred and contingent payments that remain outstanding under the acquisition arrangements for Blackwater.
The transactions are expected to be completed in the first quarter of the calendar year 2025, subject to customary competition and regulatory approvals.
Nippon Steel and JFE Steel will each pay their pro-rata share of the aggregate consideration up front at the completion of their respective transactions. On completion of both transactions, Blackwater will be owned by Whitehaven, Nippon Steel and JFE Steel via an unincorporated joint venture. Whitehaven will manage the joint venture.
Nippon Steel and JFE Steel are long-term consumers of metallurgical coal from the Blackwater mine. As part of the joint venture arrangements, Whitehaven has entered into separate offtake agreements with Nippon Steel and JFE Steel, which consider their equity interests and historical consumption of Blackwater products.
CEO and Managing Director of Whitehaven, Paul Flynn, said the company is 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.
“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.
“The proceeds from the sell down will further strengthen Whitehaven’s balance sheet, providing enhanced flexibility as we assess the range of competing opportunities for capital in line with our capital allocation framework.”
Mr Flynn said Whitehaven looks forward to working with its new partners as it continues to unlock opportunities at the operation.
Representative Director and Executive Vice President at Nippon Steel, Takashi Hirose, said, “Having a secure supply of high-quality coking coal supports us to stabilise profits and build a more resilient Nippon Steel, fully utilising our technological advantages.”
Executive Vice President of JFE Steel, Hiroyuki Ogawa, said, “JFE has been committed to Australia as a key trading partner since the 1960s with long-standing investment in Queensland’s resources sector for close to 30 years.
“As a long-term user of Blackwater’s steelmaking coal, we are pleased to enter a strategic joint venture with Whitehaven to acquire a ten per cent interest in the Blackwater mine.
“Our investment secures a stable supply of high-quality coking coal from Blackwater, thereby underpinning our commitment to decarbonisation through our innovative technologies, such as the carbon-recycling blast furnace.”
Featured image: Natalia Kokhanova/shutterstock.com
