Why is the BHP share price slipping on Monday?

New South Wales want thermal coal producers to set aside 10% of their annual production for the state's coal-fired power plants.

Key points
  • The BHP share price opened in the red on Monday
  • The ASX 200 miner may close its NSW Mt Arthur coal mine four years earlier than planned
  • BHP and other major coal producers are displeased with the NSW government’s plans for a domestic coal reserve

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.

A senior investor wearing glasses sits at his desk and works on his ASX shares portfolio on his laptop.

Image source: Getty Images

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.

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.

More on Resources Shares

Two workers on a tablet at a mine site, with mining machinery behind them.
Resources Shares

Fortescue vs BHP: Which ASX miner is better for passive income in October?

Comparing Fortescue vs BHP shares for passive income—who pays the bigger franked dividend, and which miner I'd buy today for…

Read more »

Female miner standing smiling in a mine.
Broker Notes

3 ASX mining shares with 43% to 322% upside ahead: brokers

The miners remain on an upward trajectory despite the broader market weakening in 2026.

Read more »

Two workers on a tablet at a mine site, with mining machinery behind them.
Resources Shares

Is BHP the best ASX mining share to buy for the next 5 years?

I look at how copper, iron ore, and potash could reshape the mining giant over the next five years.

Read more »

Mining equipment and red iron ore against blue sky.
Resources Shares

Fortescue posts September 2026 quarterly earnings update

Fortescue iron ore shipments fell 6% in Q1 2027, with debt up as the miner paid its final dividend and…

Read more »

Gold bars on top of coins.
Resources Shares

Ramelius Resources September quarter earnings: Gold production update and outlook

Ramelius Resources lifted gold output and cash for the September quarter as it advances major projects and targets growth through…

Read more »

Woman with gold nuggets on her hand.
Resources Shares

West African Resources delivers record Q3 gold output, on track for 2026 targets

West African Resources delivered record group gold production in Q3 2026 and remains on track for annual guidance.

Read more »

Two people wearing hard hats talking with each other at a mine site, with two workers in the background.
Resources Shares

Fortescue vs PLS Group: Which ASX mining share is the better buy?

Which blue chip miner offers more upside—Fortescue or PLS Group? I dig into the numbers, dividends, and value to find…

Read more »

Stacked gold bricks.
Resources Shares

Regis Resources share price steady after Q1 production update

Regis Resources posts steady September quarter gold production and a strong cash position, with full results coming soon.

Read more »