BHP Billiton (BHP) continues to sell off unwanted small scale assets, this time flicking coal mining assets in Indonesia to its partner.
BHP said last night it intends to sell its 75% stake in IndoMet Coal to partner PT Alam Tri Abadi, the subsidiary of Adaro that owns the remaining 25% of the business. The deal is worth US$120 million.
That is considerably less than the $US335 million Adaro paid for a 25 percent stake in IndoMet in 2010. Falling coal prices and weakening demand from China are behind the sharply lower price.
The Indonesian operations centre on the Haju mine and produce both thermal (steaming) and coking (metallurgical) coal for the steel industry. It’s first shipment in the March 2016 quarter.
BHP said in April it was reviewing its plans for the IndoMet business, which includes the Haju mine in Central Kalimantan that began producing coal last year.
“After a detailed review of IndoMet Coal, we concluded that although the project could support a larger scale development, BHP Billiton has a range of other growth options in the portfolio that are more attractive for future investment," IndoMet Coal asset president James Palmer said in a statement.
BHP spun off a string of unwanted assets into South32 (S32) and said it would focus on investments in copper and petroleum, two markets the miner forecasts will rebound aided by strong Asian demand.
BHP shares jumped 2.9% to $19.78 in Australia yesterday. That had nothing to do with the Indonesian sale, but with a rise in iron ore prices and another fall in the value of the US dollar.
