— Finance

BHP, Woodside: Resources behemoths agree to merge

BHP and Woodside have agreed to merge petroleum assets, creating a global energy giant and giving the miner an exit from fossil fuels. Mining behemoth BHP has combined its petroleum assets with oil and gas giant Woodside, creating a global energy colossus.

The confirmation comes after weeks of speculation BHP was planning to get out of the petroleum business as part of an exit from fossil fuels. It had already announced its retreat from thermal coal, used to make electricity.

On Tuesday, as BHP released its full-year results, the companies confirmed their epic tie-up would go ahead, subject to shareholder, regulatory and other approvals. If given the nod, it will create the biggest ASX-listed energy company with a global top 10 ranking in the LNG industry in terms of production volumes.

It would be owned 52 percent by existing Woodside shareholders and 48 percent by existing BHP investors. The companies said the merged entity would have a grander scale and diversity of geographies, products, and end markets and benefit from estimated cost “synergies” of more than $US400m ($A549m) per year.

An essential plan is to make a final investment decision on Woodside’s long-awaited Scarborough project off Western Australia this calendar year. The company’s chief executive Meg O’Neill said the proposed merger de-risked the planned development.

BHP chief executive Mike Henry said the union would “provide choice for BHP shareholders” and bolster “the skills, talent and technology of both organizations to build a resilient future as the world’s needs evolve”. The miner would be left “simpler and more agile” with a portfolio “more geared to global mega-trends”, Mr. Henry told reporters.

“BHP’s products are essential to global economic growth and decarbonisation,” he said. “The world is going to need more copper and nickel for more renewable power and electric vehicles, iron ore and high-quality metallurgical coal to produce steel for infrastructure – and that includes infrastructure for decarbonization – and potash for sustainable global food production.”

BHP also announced it had approved a $US5.7bn ($A7.82bn) spend for the first stage of its Jansen potash project in Canada, with Mr. Henry saying it was another step in building the miner’s exposure to future-facing commodities.

Asked if BHP planned to completely get out of dirty businesses by exiting metallurgical or hard coking coal, Mr. Henry said steel mills would still need the commodity for the foreseeable future and would seek the highest quality in a bid to reduce their carbon footprint.

“The ability to produce steel without any coal whatsoever, that’s going to take a fair amount of time to unfold,” he said. Anticipating the merger announcement, environmentalists gathered outside BHP’s Perth headquarters to protest. Anthony Collins, a campaigner with climate change activists 350 Perth, said the aim of the demonstration was to “show BHP that simply dumping their fossil fuel projects at the feet of Woodside is not going to cut it”.

“Rather than take responsibility for the highly polluting petroleum business sites BHP has built, this is a cynical attempt to simply walk away,” he said. “Ultimately, Woodside is acting as BHP’s ‘useful idiot’; taking on a burden that BHP has decided is too toxic to touch.”

BHP also made another big announcement about “unifying” its dual-listed structure, moving to a single primary listing on the Australian Securities Exchange and just a standard listing on the London Stock Exchange.

RBC Capital Markets analyst Kaan Peker said the move would incur one-off costs of $A400m to $A500m “and stop the leakage of franking credits” to pay the London-listed share dividends.

BHP’s full-year results showed a whopping 42 percent surge in revenue to $US60.8bn ($A83.3bn) and net profit to $US11.3bn ($A15.49bn), in large part driven by its flagship WA iron ore operations.

It announced a record final dividend of $US2 ($A2.74) per share, bringing the total annual payout to shareholders to more than $US15bn ($A20.56bn). Published initially as BHP agrees to merge petroleum assets with Woodside, creating an epic energy company.

Gemma Broadhurst
Gemma Broadhurst is a 23-year-old computing student who enjoys extreme ironing, hockey and duck herding. She is kind and entertaining, but can also be very standoffish and a bit evil.She is an Australian Christian. She is currently at college. studying computing. She is allergic to milk. She has a severe phobia of chickens

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