Why is the BHP share price slipping on Monday?

The BHP Group Ltd (ASX: BHP) share price is down 0.83% in early trade.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining stock are currently trading for $49.13 apiece.

Today’s slide in the BHP share price comes as the company appears to be upping the ante in its stoush with the New South Wales government over the state’s planned domestic coal reserve legislation.

What’s happening in NSW?

In case you’re not aware, New South Wales is proposing that thermal coal miners (the kind of coal used to generate electricity) set aside up to 10% of their annual production for use by coal-fired power stations within the state.

That proposal doesn’t sit well with BHP’s management.

In an internal memo, reported by The Australian, the miner has revealed the state’s coal reserve plans may lead to the closure of Mt Arthur coal mine four years earlier than currently planned.

Mt Arthur, which employs some 2,000 people within NSW, was previously planned to continue operations through to 2030. That’s if BHP seeks and receives approval to extend its life by four years from 2026 to 2030 in its ‘Pathway to 2030’ plan.

But, in a revelation that could be throwing up some headwinds for the BHP share price today, the miner may not be seeking that approval after all.

According to BHP’s NSW energy coal vice-president, Adam Lancey:

In light of these directions, we are actively reviewing operational plans and existing commitments to understand their implications. And, while I would like to avoid this scenario, the findings of this review may lead to a reassessment of our Pathway to 2030 plan.

The miner said it believes it may cost more than the $125 per tonne price cap on domestic coal to cap soaring electricity costs for it to provide coal to the state’s power plants.

“Our primary concerns relate to the potential impacts on Mt Arthur Coal’s operations and business model, including what to do if our production costs are above the price cap,” Lancey said.

“BHP is opposed to market interventions because short-term measures can have negative long-term impacts: in this case businesses may think twice about investing in NSW,” he added.

BHP share price snapshot

Despite today’s dip, the BHP share price has been on a tear so far in 2023. Shares are up 7.8% since the closing bell on 30 December.

The post Why is the BHP share price slipping on Monday? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Invested $5,000 in BHP shares 5 years ago? Here’s how much passive income you’ve earned
• 5 things to watch on the ASX 200 on Monday
• Why is the BHP share price in the green today?
• How to generate $50,000 of passive income from BHP shares
• The BHP share price has had a stellar start to 2023. Is it too late to buy?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/QR8x9u2