COLUMN-The stampede to exit coal is a worrying harbinger for LNG: Russell | Reuters

COLUMN-The stampede to exit coal is a worrying harbinger for LNG: Russell | Reuters

A global diversified miner paying to exit its coal assets, and a multi-bil-lion dollar investment by Qatar to reclaim its status as the world’s largest producer of liquefied natural gas have more in common than might be visible at first glance.

South32, the Australian commodity producer spun out of BHP Group, is effectively handing over up to $250 million to Seriti Resources to take South African thermal coal operations off its hands.

While it’s not unusual for sellers of mining assets to cover rehabilitation costs, the sizeable amount involved shows just how much South32 wanted out of thermal coal - and in effect, just how little the assets are worth.

South32 is one of several major coal miners seeking to exit a business that has become increasingly problematic amid action by environmental activists, concern among shareholders and the withdrawal of financing and insurance for mines viewed as contributing to climate change.

In short, coal mines, particularly those producing thermal coal for use in power plants, are increasingly seen as a millstone around the neck of diversified miners. The latter would prefer to focus on producing commodities seen as essential to decarbonising the world’s energy systems.