World's largest mining company to exit thermal coal mining within two years and prioritise 'higher quality coking coal' for steelmaking
Mining giant BHP is to sell off all its remaining thermal coal mines within two years, it confirmed today, amid mounting mounting pressure from investors to distance itself from the polluting fuel.
Announced as part of the firm's annual results today, BHP said it planned to divest assets that produce coal for electricity generation, which includes its operations in New South Wales, Australia and Cerrejon in Colombia, in addition to its joint venture with Japan's Mitsui in Queensland that also produces metallurgical - or coking - coal used for steelmaking.
BHP said it was taking steps to shrink its coal portfolio in a bid to prioritise "a core of higher-quality coking coal assets" it sees as attractive to steelmakers looking to reduce their emissions and improve the performance of their blast furnaces.
"Exiting these assets would simplify BHP's coal portfolio, with the retained assets largely hard coking coal, long-life, low-cost, well positioned for decarbonisation upside and competitive for capital within BHP," chief executive Mike Henry said in a briefing to investors this morning.
The firm also confirmed plans to update its Scope 1 and Scope 2 emissions reduction targets and publish details on how the company links executive remuneration to progress on climate change next month. It said it would also be publishing "Scope 3 actions" and "an analysis of a 1.5 degree scenario".
BHP, which announced a full-year profit of $7.95bn, also said that it would "continue to invest" in petroleum, noting that there was "opportunity to grow material value" over the coming years. It also plans to expand production of copper and nickel in anticipation of increasing demand for the materials as the world shifts to a low carbon economy characterised by electrified technologies.
Mining companies have faced increased pressure from institutional investors of late to distance themselves from activities at odds with international climate targets, in particular coal. Earlier this year, Norway's sovereign wealth fund halted all mining investment in coal, in a move that excluded Glencore and Anglo American from the $1tr pot.
The sovereign wealth fund put BHP - alongside Uniper, Enel and Vistra Energy - on notice for possible exclusion in the future if they did not address its use or production of coal. The fund owns approximately five per cent of shares in the company's London-listed arm. Meanwhile, UK pension fund the National Employment Savings Trust (Nest), sold its last share in BHP last month as part of its ongoing mission to divest from fossil fuels.
It follows BHP's move to set out its climate-related expectations of industry groups of which it is a member, including the Minerals Council of Australia, the Business Council of Australia and the Australian Petroleum Production and Exploration Association, all of which have faced shareholder criticism for public-policy positions surrounding fossil fuels.
In a set of updated standards published on Friday, BHP said that in order for it to remain a member of industry associations going forward, these trade bodies should advocate for climate targets that increase over time and aim towards achieving net-zero emissions by 2050, as well as policies to support that transition including a price on carbon.
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