Whitehaven to sell 30% of Blackwater coal mine to Japanese JV partners

Whitehaven Coal Ltd (ASX:WHC) has announced it will sell 30% of the Blackwater coal mine in Queensland for US$1.08 billion, with two Japanese steel companies – both long-time customers of coal from the mine – forming a joint venture to take on this investment.

Whitehaven has entered into separate binding agreements with Nippon Steel Corporation and JFE Steel Corporation which will see these companies take on 20% and 10% respective interests in the coal mine for an aggregate cash consideration of US$1.08 billion.

The transactions – set for completion during the first quarter of the 2025 calendar year – are part of Whitehaven’s wider strategy to boost its balance sheet and narrow company debt, which on June 30 was set at A$1.3 billion.

Outstanding deferred and contingent payments related to the acquisition of Blackwater were also a factor of consideration in this, although Whitehaven also stressed the desire to bring Nippon and JFE on board to ‘unlock further value’ at the mine, which supplies seaborne metallurgical coal.

CEO and managing director Paul Flynn said he was delighted to announce the JV arrangement.

“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,” he said.

“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.”

The JV arrangements with Nippon and JFE will also entail separate offtake agreements with both companies which consider their equity interests and historical consumption of Blackwater products.

Nippon Steel Corporation is perhaps best known as the company which in December 2023 announced it had entered an agreement to buy United States Steel Corporation, provoking controversy in American political circles. The timeframe for completing this process has been pushed out to late 2024 or early in 2025.

The market appeared happy with Whitehaven’s news, and at 12:09 AEST, its shares were trading at $7.58 – a rise of 5.28% since the market opened.