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BHP Aims to Cut Thermal Coal Output in 2020

Coal News - Published on Fri, 19 Jul 2019

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Reuters, citing the world's biggest miner, BHP Group, reported that it planned to produce less thermal coal in the coming financial year and that it would wash it instead as part of a drive to raise the quality of the commodity. Its New South Wales Energy coal production would fall as much as 18 per cent to between 15-17 million tonnes next year, down from 2019 levels of 18 million tonnes. The lower production will come after BHP optimised its mine plan "to focus on higher quality products. Thermal coal, used as fuel for power plants, can be processed to increase its energy content, boosting the value of the final product and cutting carbon emissions. The process can turn thermal coal into a semi-soft coking coal which then feeds steel producers. BHP's Australian thermal coal operations include the Mt Arthur open cut mine in the Hunter Valley region of New South Wales.

AME Group analyst Mr Lloyd Hain said that coal from BHP's Mt Arthur operation is typically lower-grade coal, with an energy content rating of 5,500 kilocalories per kilogramme, such as is often bought by China. BHP are trying to diversify out of their current market, and there is potentially more price upside for thermal coal.

Mr Hain added that raising the energy content to 6,000 Kcal would allow BHP to sell to markets like Japan and South Korea, which would improve the value of Mt Arthur if BHP were to decide to sell the asset. BHP is not the only miner seeking to move away from lower-grade, lower-priced thermal coal. Yancoal Australia said in its quarterly report late on Tuesday that it "continued to optimise" its split of thermal and coking coal sales "to meet the market demand and maximise prices".

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Posted By : Sanju Moirangthem on Fri, 19 Jul 2019
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