BHP announced in 2022 that it would shut down its Mt Arthur coal operation near Muswellbrook in the Hunter Valley after failing to find a buyer in a sale process. 

The planned 2030 closure came as the mine nears the end of its economic life.

The mining giant was given the green light to operate until 2026 but had sought to extend its operation until the site closed. 

An original plan to seek an extension until 2045 was discarded by the company.

On Wednesday, BHP announced it would explore the development of a pumped hydro energy storage project at Mt Arthur in partnership with Spanish renewable energy company Acciona Energía.

A statement by BHP said it had gained NSW government approval to continue mining at the site from July 2026 to June 2030 as part of the planned pathway for closure.

BHP’s own studies forecast the pumped hydro energy storage project would support around 1000 local jobs during its construction and provide power for up to 500,000 homes across the state every day once finished.

The mining giant commenced operations at Mt Arthur in 2002 and currently employs around 2000 people at the site.

Acciona Energía will carry out "due diligence on the possibility of converting part" of the mine into the new green energy project over the coming 12 months, according to a statement from BHP.

President of BHP’s Australia operations Geraldine Slattery said the company was “working hard” to explore alternative uses for the mine to continue supporting jobs, the local economy and regional investment.

“The community have told us they want to see Mt Arthur repurposed when mining ends. This study will examine the role pumped hydro at the Mt Arthur site could play in the region’s future,” Ms Slattery said.

A $30m community fund for the Upper Hunter was also revealed by the mining giant.

“BHP is committed to leaving a positive legacy in the Hunter Valley. With our approval to keep mining to 2030 and with a $30 million fund, we’re recommitting to giving the community and our people the certainty and the support they need for the future,” Ms Slattery said. 

Pumped hydro energy storage facilities are capable of dispatchable electricity and could generate power on demand.

BHP’s statement said the geological characteristics of mines such at Mt Arthur meant they could be particularly well suited for such projects.