Whitehaven Makes $1.08 Billion Deal to Sell 30% Stake in Blackwater Coal Mine

Whitehaven Coal has entered into binding agreements with Nippon Steel Corporation and JFE Steel Corporation to sell joint venture interests in its Blackwater coal mine. Nippon Steel will acquire a 20% interest for US$540 million, while JFE Steel will acquire a 10% interest for US$270 million, resulting in a total transaction value of US$1.08 billion.

This strategic partnership with two leading Japanese steelmakers aligns with Whitehaven Coal's commitment to expanding its global reach and securing long-term market access for its high-quality metallurgical coal. The transaction is expected to provide significant value to Whitehaven Coal's shareholders through a combination of upfront cash proceeds and future royalties from the joint venture.

The sale of the joint venture interests in Blackwater is subject to customary regulatory approvals and conditions precedent. Whitehaven Coal anticipates completing the transaction in the second half of 2024.

The transactions are anticipated to conclude in the first quarter of 2025, pending standard competition and regulatory approvals. Nippon Steel and JFE Steel will each provide their proportional share of the total consideration upon the completion of their respective transactions. Following the closure of both deals, Blackwater will be jointly owned by Whitehaven, Nippon Steel, and JFE Steel through an unincorporated joint venture arrangement. Whitehaven will take on the role of managing the joint venture, overseeing the operational and strategic aspects of the partnership.

Nippon Steel and JFE Steel have been established long-term purchasers of metallurgical coal from the Blackwater mine. In line with the joint venture structure, Whitehaven has secured individual offtake agreements with both Nippon Steel and JFE Steel, reflecting their equity stakes and historical consumption patterns of Blackwater's output. These agreements incorporate market-based pricing mechanisms to align with current market conditions.

Whitehaven’s strategic decision to sell a 30% stake in the Blackwater mine for US$1.08 billion underscores the significant long-term value and strategic relevance of its metallurgical coal assets. The full proceeds of US$1.08 billion will be received upfront upon completion, bolstering Whitehaven’s balance sheet and enhancing its financial flexibility. This move is particularly advantageous in light of the deferred and contingent payments still due under the acquisition arrangements for Blackwater. As of June 30, 2024, Whitehaven's net debt stood at A$1.3 billion.

Paul Flynn, CEO & Managing Director of Whitehaven, expressed enthusiasm about the addition of Nippon Steel and JFE Steel as joint venture partners at Blackwater. He praised the companies for their distinguished history in steel production and their role in advancing Japan’s economy. Flynn anticipates productive collaboration with these new partners to explore further opportunities at Blackwater. The investment underscores the significance of Blackwater’s metallurgical coal in the global market and validates Whitehaven’s acquisition and operational strategies. Additionally, the proceeds from this investment will enhance Whitehaven’s financial flexibility, allowing for more strategic capital allocation.