BHP (ASX: BHP) share price rises amid rumors of selling coal assets

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The BHP Group Ltd. (ASX: BHP) The share price is currently up more than 1% amid rumors about its coal assets.

BHP derives most of its profits from iron ore and copper, but the company also has metallurgical coal and thermal coal divisions.

Selling coal assets on the cards?

According to the report of the australian, BHP could consider selling its coal assets.

Previously, it was rumored that BHP was set to sell its coal assets to Peabody Energy in August, although nothing happened.

However, discussions reportedly continued.

Coal prices continue to rise and BHP is benefiting from the surge in profits generated by the coal segment.

the australian said the high price of coal encouraged other potential bidders to consider it, such as BUMA and Sinar Mas Group. However, New Hope Corporation Limited (ASX: NHC) is apparently not among the companies currently interested.

The newspaper cited a figure of around $ 2 billion for the potential value of the coal trade.

It has been noted that BHP may have an incentive to sell its coal assets when the price of coal is so high, rather than wait until there are no buyers.

However, it is possible that BHP may decide to hold onto the assets and take advantage of the cash flow it generates and “deplete” it over the next several years.

Will BHP phase out all fossil fuels?

If BHP were to leave coal, it would leave it with a portfolio of iron ore, copper, nickel and potash. This could highlight the BHP share price for investors who exclude “fossil fuels” from their portfolios.

If readers are wondering about the oil business, it is currently in the process of merging it with Woodside Petroleum Limited (ASX: WPL).

The two companies have agreed to merge the oil and gas portfolios in a stock merger to create one of the world’s top 10 independent energy companies by production.

Once BHP shareholders receive new Woodside shares, BHP investors will own 48% of the company and Woodside will own 52% of the combined company.

Describing the benefits of the merger, Woodside and BHP said:

With the combination of two portfolios of high quality assets, the proposed merger would create the largest energy company listed on the ASX, with a global position in the top 10 of the LNG industry in terms of production. The combined company will have a high-margin oil portfolio, long-lived LNG assets and financial resilience to help provide the energy needed for global growth and development during the energy transition.

One of the benefits that the companies provided more detail on was the synergies estimated at over US $ 400 million per year from optimizing business processes and systems, leveraging combined capabilities and improving the efficiency of capital on future growth and exploration projects.

BHP share price overview

According to ASX, BHP has a market capitalization of $ 112.3 billion.

Commsec places BHP shares at around 10 times estimated FY 23 earnings.


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