Last embers: India isn't going to rescue BHP's coke business

Indian steelmakers need less of it as they seek to decarbonize output

- DAVID FICKLING

The BHP Group never seems to pick the right moment to sell its fossil fuel businesses. Consider coking coal. The high-quality solid fuel used in steelmaking was for many years seen as a jewel in BHP's crown. At the peak, its mines in the Bowen Basin of Australia's Queensland state accounted for about a quarter of such coal traded by sea. It's a relatively small if volatile business, but when supply and demand get out of line, the profits can be extraordinary. The last time prices spiked, in 2022, the world's biggest miner sold more than $10 billion of the stuff at a 62% profit margin.

That would have been a good moment to get out. Coking coal's charms have since faded drastically. CEO Mike Henry, a veteran of BHP's coal unit who always speaks highly of its potential, has been shrinking the business ever since taking over in 2020. Sales in the 12 months through 30 June came to just 17.8 million tonnes, about 41% of the figure in 2019. Further mines may have to close if current low prices persist and Queensland doesn't cut royalty taxes, he warned in annual results last week.

Taxes are not sufficient to explain the problem.