Whitehaven Coal is entering binding agreements with Nippon Steel Corporation and JFE Steel Corporation for the sale of a 30 per cent joint venture interest in the Blackwater coal mine in Queensland.
The agreements, which amount to $US1.08 billion ($1.6 billion), will see Nippon Steel acquire a 20 per cent stake and JFE Steel a 10 per cent stake, with the transactions expected to be completed in early 2025, subject to regulatory approvals.
One of Australia’s largest coal operations, the Blackwater mine is a crucial supplier of metallurgical coal to Asian markets.
The $1.6 billion of proceeds will strengthen Whitehaven’s balance sheet, with the payment to be made upfront upon completion, immediately enhancing the company’s financial flexibility as it continues to manage outstanding payments from the original acquisition of Blackwater.
Whitehaven had $1.3 billion of net debt at the end of the 2023–24 financial year.
“We are delighted to welcome Nippon Steel and JFE Steel as joint venture partners at Blackwater,” Whitehaven chief executive officer and managing director Paul Flynn said.
“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.”
Flynn said the transaction validates Whitehaven’s acquisition of Blackwater and highlights the asset’s quality.
“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,” Flynn said.
Nippon Steel executive vice president Takashi Hirose said buying into Blackwater would strengthen the company.
“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,” he said.
JFE Steel executive vice president Hiroyuki Ogawa echoed this sentiment.
“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,” he said.
“As a long term user of Blackwater’s steelmaking coal, we are pleased to enter a strategic joint venture with Whitehaven to acquire a 10 per cent interest in the Blackwater mine.”
Whitehaven posted an underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) of 1.4 billion in the 2023–24 financial year, including a $272 million contribution from the Blackwater and Daunia coal mines in the June quarter. Whitehaven completed its acquisition of the mines on April 2.