Australian multinational mining giant BHP Billiton has failed to find a buyer for its unprofitable Gregory Crinum coal project in Australia and decided not to divest.
Gregory Crinum coking coal mine is located 60km north-east of the rural centre of Emerald and 375km north-west of Gladstone, and comprises the Gregory open-cut operations and Crinum underground mine.
The open-cut mine is jointly owned by BHP and Japanese conglomerate Mitsubishi.
In February, the company undertook a review process for the mine that included the option to sell.
The failure to sell the mine, which is valued at around $400m, may not bode well for other firms that are also planning to sell their assets in Australia.
The company is believed to have expected to sell the mine for $800m.
Against the backdrop of falling coal prices and high mining costs, BHP Billiton Mitsubishi Alliance (BMA) suspended operations at the mine in October 2012.
The Gregory Crinum complex, one of ten assets that the company is planning to sell, produced 854,000t of coking coal in the year to June 2013, mainly from the underground mine.
A BHP Billiton spokesperson was quoted by The Wall Street Journal as saying that the recent operational improvements at the Crinum underground mine supports the company’s decision to continue operating the mine.
A steep drop in coal prices and escalating production costs have led several mining companies to slash jobs, sell assets, and stop new projects worldwide.
Over the past 18 months, thermal coal prices dropped by about a third, while coking coal prices fell about 40%.
Even though it put up Gregory Crinum for sale, BHP expected to increase its overall coking coal production capacity by more than 40% by 2014-2015 from around 52 million tonnes recorded in fiscal 2012.
In May, BHP chief executive Andrew Mackenzie was quoted by the publication as saying that coal is one of its core commodities even though its investments are primarily focused towards US shale-oil production and iron ore mines in Western Australia .
Image: The Gregory open-cut mine was closed in October 2012.