BHP (ASX: BHP), one of the world’s largest mining companies, is intensifying its search for copper resources. This strategic move is largely driven by the increased demand associated with the global energy transition. However, the company faces the challenge of a shortage of high-quality copper deposits.
Copper has become a significant focus for BHP, now accounting for half of its capital expenditure. This is a sharp increase from less than a quarter over the past five years. As part of its strategy, BHP emphasizes operating in stable jurisdictions. Its areas of focus include Australia, Brazil, Canada, Chile, Peru, and the United States. This approach differentiates BHP from its competitors like Glencore and Rio Tinto, which may not have the same preference for geopolitical stability.
In a move to bolster its copper holdings, BHP completed a $2 billion transaction to secure a 50% stake in Argentina’s Filo del Sol copper project. This decision was partly influenced by pro-mining policies introduced under President Javier Milei. Furthermore, there is speculation that BHP might consider acquiring Freeport-McMoRan, a major player in the copper market and the largest copper producer globally. Such a deal could significantly boost BHP’s copper output.
Despite these acquisition considerations, BHP’s CEO, Mike Henry, has expressed a preference for expanding existing operations rather than pursuing significant acquisitions. He argues that organic growth could offer better returns for the company. BHP is aiming for substantial production targets, with plans to produce 1.4 million tonnes of copper annually from Chile by the 2030s. Similarly, in South Australia, potential production increases could lead to outputs ranging from 500,000 to 650,000 tonnes per annum in the mid-2030s.
Acquiring Freeport’s assets, such as the Grasberg mine, comes with its challenges. The mine is notorious for issues related to separatist violence and environmental management, though Freeport has made improvements in its operations and corporate reputation. Additionally, the risk of nationalization at Grasberg has decreased after a state-owned company acquired a majority stake.
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