BHP Billiton’s (NYSE:BHP) plans to sell a mine in New Mexico to a Native American group were put on hold today as a couple of moving parts, including proposed reforms of the state’s electricity market, have formed a blockade on the deal.
BHP, based in Australia, planned to sell the mine to Navajo Nation for $85 million, but this deal can’t go ahead until a separate deal is completed between two companies for part of a power station nearby. That deal looked to be close to done but now depends on how the state’s utility regulator approaches market deregulation, reports NASDAQ.
BHP’s sale of the mine would have been the most recent transaction in an effort to reduce costs thanks to weak coal prices. As recently as June 7 the company finalized the sale of its interest in drilling sites on the coast of Australia.
Now the company must wait and see if energy company Arizona Public Service, owned by Pinnacle West Capital (NYSE:PNW), can complete its acquisition of Southern California Edison. In a regulatory filing Monday Pinnacle said it couldn’t predict the effect the commission’s examination might have on the power station’s future operation. The commission has invited interested observers to list pros and cons of retail electricity deregulation through August, at which point it will hold an open meeting to discuss the issues.
Eleanor Nichols, a spokeswoman at BHP, said that a successful sale would extend the life of the mining operation through 2031. Citing a study by Arizona State University she said that it would secure 800 jobs and create an economic impact of $372 million each year in San Juan County through 2031.
BHP clearly is eager to sell their stake in this mine plant, and they won’t get any trouble from Pinnacle, whom have stated they will keep all the necessary requirements for the purchase of the power station in tact until the commission makes its decision. At the very earliest, that could come in August.