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BHP is continuing to review its Mt Arthur coal operations, including making moves to lower operating costs, despite the mining giant expressing its interest to sell the New South Wales mine.

In its annual report, BHP reflected on transitioning its New South Wales Energy Coal (NSWEC) assets, including Mt Arthur, with a new product quality strategy, resulting in reduced volumes but an increased product quality.

BHP is expecting NSWEC unit costs to be between $US55 and $US59 ($75-$80) per tonne, based on an exchange rate from Australian to United States dollars of 70 cents in the 2021 financial year.

The company is working to reduce costs at its NSWEC assets in the short term, to ensure viable and resilient long term mining options.

“Work is underway to review mine planning and operating alternatives to structurally reduce costs in the near term and ensure a viable mining operation which is resilient during low price cycles,” BHP stated in the report.

“New South Wales Energy Coal continues to plan for the most productive path through steeply dipping resources and securing the required regulatory approval to continue operations post financial year 2026.

“In financial year 2020, BHP completed an optimisation of the New South Wales Energy Coal outbound supply chain commercial arrangements through a partial divestment of shares and stapled capacity at the Newcastle Coal Infrastructure Group terminal.

“The total export capacity of the asset remains unchanged and the transaction has facilitated a more competitive cost position.”

During the 2020 financial year, BHP’s underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) dropped by $US2.4 billion ($3.3 billion) to $US1.6 billion ($2.2 billion), reflective of the lower prices.

This included an underlying EDITDA decrease of $US374 million ($514 million) for NSWEC as a result of its focus on producing higher-quality products and unfavourable weather.