BHP Group: Undergoing Reductions
In the ever-evolving landscape of the mining industry, BHP Group finds itself navigating a challenging environment, particularly in Queensland's seaborne supply region. The current climate is marked by persistently low coal prices and high license fees imposed by the Queensland government, as highlighted in recent news from Fox News.
The news comes as BHP Group prepares to close its Saraji South coal mine in November, a move that is part of a broader restructuring effort. This decision follows the announcement of planned layoffs affecting 750 employees in the Queensland coal division. The layoffs are a direct consequence of the prolonged low coal prices and the high license fees imposed in 2022.
The CEO of BHP Group, Mike Henry, has been at the helm since early 2020. In August 2025, he hinted at potential layoffs, signalling the company's struggle to adapt to the current conditions.
Despite these challenges, the valuation of BHP Group remains attractive, with a P/E ratio of 13. The company's stock, currently trading at a dividend yield of four percent, is considered a solid hold. However, a stop-loss for BHP Group's stock is recommended at €17.50.
In a bid to attract new talent, particularly women, to the mining industry, BHP Group launched the FutureFit Academy. Unfortunately, the news does not provide any updates on the current status of this initiative, leading to speculation that it may be shut down.
The CEO, Mike Henry, has expressed concerns about the 'key seaborne supply region of Queensland' not being conducive to long-term capital investment under the current license fee system. This statement underscores the ongoing challenges faced by BHP Group in the region.
Newcastle coal futures dipped to around $100 per tonne this week, hitting a new three-month low. In contrast, the price for a tonne of coal was over $150 in October 2024. This price fluctuation underscores the volatility of the coal market and the impact of the current conditions on BHP Group's operations.
The news does not indicate any changes in the planned job cuts, mine closures, or potential shutdown of the FutureFit Academy. As the situation evolves, updates on these matters are expected to be announced in due course.
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