Whitehaven Coal has signed binding agreements with Nippon Steel and JFE Steel. Under these agreements, Nippon Steel will acquire a 20% joint venture interest in the Blackwater coal mine, while JFE Steel will obtain a 10% stake. The total cash consideration for these transactions is valued at $1.08bn.
Completion of the transactions is expected in the first quarter of 2025, subject to standard competition and regulatory approvals.
Nippon Steel and JFE Steel will each pay their pro rata share of the total consideration upfront upon the completion of their respective transactions. Once both transactions are finalised, ownership of the Blackwater coal mine will be held by Whitehaven, Nippon Steel, and JFE Steel through an unincorporated joint venture, with Whitehaven managing the operation.
As long-term consumers of metallurgical coal from the Blackwater mine, Nippon Steel and JFE Steel have entered into separate offtake agreements with Whitehaven. These agreements take into account their respective equity stakes and historical consumption of Blackwater products, with pricing determined by market-based mechanisms.
Whitehaven’s divestment of a 30% stake in the Blackwater coal mine underscores the long-term value and strategic significance of Blackwater’s metallurgical coal. The upfront payment upon completion will significantly bolster Whitehaven’s balance sheet, enhancing financial flexibility.
Additionally, the long-term offtake agreements with both Nippon Steel and JFE Steel reflect robust demand for Blackwater’s metallurgical coal.
The Blackwater coal mine, located 73km south-east of Emerald in Queensland, is an open-cut operation that has produced approximately 12-13 million tonnes per annum (Mtpa) of run-of-mine (ROM) coal in recent years, with potential to increase output.
As one of Australia’s largest coal mines, Blackwater spans a strike length of 80 km and operates the largest dragline fleet in the Southern Hemisphere, with seven units. The mine produces both hard coking coal and semi-soft coking coal.
Blackwater’s remaining life of mine is projected to extend beyond 50 years.
The coal produced at Blackwater is exported to customers across Asia via the RG Tanna Terminal, located north of Gladstone.
Whitehaven CEO and managing director Paul Flynn said: “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.
“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.”
