Coal news and updates

SECRETIVE HEDGE FUND OPPOSES WHITEHAVEN COAL ACQUISITION OF BHP MINES

A London-based hedge fund called Bell Rock Capital Management has emerged as the investor pushing to prevent Whitehaven Coal from acquiring two major mines currently owned by BHP. The Daunia and Blackwater mines, located in Queensland, are expected to receive bids of up to $5 billion. Bell Rock has been aggressively campaigning against the acquisition, calling for increased shareholder returns through dividends instead. Despite the secretive nature of the hedge fund, sources suggest that it holds a significant share in Whitehaven and has been trying to engage with the company’s board for several months.

The acquisition of these mines would be a significant change for Whitehaven, as it currently has a market capitalization of approximately $6 billion. BHP’s decision to divest these mines is due to a focus on commodities needed for cleaner energy generation and a tax hike in Queensland that has affected the mines’ financial viability. Bell Rock has raised concerns about the lack of clarity regarding Whitehaven’s growth and expansion plans, questioning the rationale behind acquiring these particular mines.

Whitehaven has responded by stating that it actively engages with its shareholders to deepen their understanding of the business. The company has also emphasized its commitment to returning cash to shareholders, having already returned $1.6 billion through dividends and buy-backs. However, Whitehaven will need to refinance a $1 billion debt facility, which may prove challenging given reduced interest from banks in financing thermal coal. Additionally, the company has plans to expand a mine in NSW and build a new one in Queensland, requiring $1.5 billion in capital by 2027.

The opposition from Bell Rock underscores the challenges faced by Whitehaven in navigating the changing landscape of the coal industry. The company will need to carefully consider the concerns raised by stakeholders while balancing its growth aspirations and commitment to shareholder returns.