World's Largest Mining Company BHP May Exit Oil and Gas Business

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] Bloomberg News reported on the 20th (local time), citing an anonymous source, that BHP Billiton, the world's largest mining company, is considering selling its oil and gas business.

The source stated that BHP is reviewing its entire oil business and that a sale is being considered as one option. They added that if a sale is decided, the sale price would be more than $15 billion (approximately 17 trillion won).

Mike Henry, CEO of BHP, has emphasized that the oil business can continue to generate profits for at least another 10 years. In fact, BHP's oil division is expected to earn more than $2 billion (about 2.3 trillion won) this year.

Nevertheless, the reason BHP is reviewing its oil business is due to growing social demands to withdraw from fossil fuel businesses.

Tyler Broda, an analyst at RBC Capital Markets, said, "I understand why BHP is considering exiting the oil business it has long operated," adding, "Investors are increasingly focusing on ESG (Environmental, Social, and Governance)."

It also appears that BHP is considering the possibility that the value of its oil division may decline further as environmental importance grows. They seem to believe that selling the oil division will become more difficult over time. Since international oil prices have risen about 60% over the past year, now may be the right time to sell the oil business.

In fact, BHP put its coal business for power generation up for sale last August but has yet to find a suitable buyer. It is reported that the bids from interested companies did not meet BHP's own valuation.

BHP has been steadily reducing its fossil fuel business share. In 2018, it sold its shale business to British Petroleum (BP) for $10.4 billion. It also put mining stakes in Queensland and New South Wales, Australia, up for sale and recently sold a 33% stake in a Colombian coal mine to Glencore.

Analyst Broda estimated that if BHP sells its oil business, the sale price would be about $14.3 billion.

This content was produced with the assistance of AI translation services.