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BHP to keep Gregory Crinum operation

Mining heavyweight BHP Billiton (ASX: BHP) has decided not to sell its jointly owned Gregory Crinum coal mining operation. A spokeswoman for the company said that holding onto the asset was the best option for shareholders.

According to an email responding to questions, “recent operational improvements at the Crinum underground mine support the company’s decision to continue to operate the site.”

With rising labour and production costs hitting miners – as well as the plunge in price for coking coal (it has fallen roughly 17% to US$133 per metric tonne since the beginning of the year) – many companies have been attempting to diversify in non-core stocks and reduced capital spending. Rio Tinto (ASX: RIO) has also tried to sell its stake in a number of Australian coal operations, such as its Coal & Allied joint venture with Mitsubishi and two thermal coal mines in Queensland, in which it maintains a 29% interest.

Although BHP has ruled out further expansion of coal-mining operations, CEO Andrew Mackenzie has reaffirmed that coal remains one of the company’s core commodities, with several operations set to deliver production by late 2014. The US$133 price tag on coking coal is dwarfed compared to the prices seen in mid-2008 when it cost US$400 per metric tonne, reflecting the decline of the sector.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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