BHP signs up wind and hydro in new power purchase deal for coal mines

BHP has signed up to power its massive Queensland metallurgical coal mining operations with renewable energy, in a deal with state’s publicly owned gen-tailer CleanCo that will supply a mix of locally sourced wind, solar and pumped hydro power.

The deal commits CleanCo to provide half of the forecast electricity demand of the central Queensland operations of BHP Mitsubishi Alliance (BMA) over five years from January 2026.

The new power purchase agreement, or PPA, effectively extends out to 2030 the existing low carbon emission power agreement between BMA and CleanCo that runs until the end of 2025.

BMA is Australia’s largest producer and supplier of seaborne metallurgical coal and is owned in a 50:50 split between BHP and Mitsubishi Development. It operates seven Bowen Basin mines and owns and operates the Hay Point Coal Terminal near Mackay.

Metallurgical coal, or coking coal, is a higher carbon variety of the fossil fuel that is an essential part of the steel-making process – one of those “hard-to-abate” sectors that is struggling to find a commercially viable zero carbon alternative.

In the meantime, heavy emitters like BHP will be keen to grab any emissions reductions they can find up and down the supply chain.

“We are increasing renewable electricity at BMA in line with our decarbonisation commitments to 2030 and beyond, improving the long-term sustainability of our business while at the same time supporting Queensland’s renewable electricity infrastructure build, regional communities and local jobs,” said BHP Australia president Geraldine Slattery.

“We expect demand for Queensland’s higher-quality metallurgical coal to remain strong for many years to come, as major steelmakers look to reduce their emissions intensity while delivering the steel needed to support global population growth and decarbonisation infrastructure.”

According to the new PPA, the renewables used to power half of BMA’s central Queensland coal operatoins will come from the 180MW Dulacca wind farm in the state’s south-east, due for completion in late 2023, and the 1.026GW MacIntyre project near Warwick in the southern downs region, due for completion in 2025.

Power will also be sourced from both the Western Downs Green Power Hub and Kaban Wind Farm that currently supply electricity to the grid and are expected to reach full commercial operation later this year.

The PPA is also linked to CleanCo’s new renewable energy storage initiative, which directs excess renewables to the Wivenhoe Pumped Storage Hydroelectric Power Station to support an increase in around-the-clock renewable supply and cost management.

“At CleanCo we are committed to providing tailored, clean energy solutions to help our customers decarbonise,” said CleanCo CEO Tom Metcalfe.

“It is our role to develop solutions that meet the unique energy needs of these companies so that they can thrive in a net zero future and I am thrilled BMA has entrusted CleanCo to continue to supply reliable, renewable energy for its operations.”