BHP, the world’s largest mining company, is set to ramp up investment in its Chilean copper operations to address the surging global demand for the metal, a cornerstone of the green energy transition. Sources indicate that BHP will host a roadshow from November 17 to 20 for its Escondida and Spence mines, during which the company is expected to unveil a significant investment plan, potentially exceeding $7 billion.
Copper plays a central role in BHP’s strategy as demand accelerates due to the growth of electric vehicles and renewable energy. However, the company’s annual copper production is projected to fall by 300,000 tons by 2030, down to 1.6 million tons. BHP is considering investments between $7 billion and $12 billion to mitigate this decline. A key component of this plan may involve the construction of new concentration facilities at Escondida, which alone could cost $5 billion to $6.5 billion.
BHP forecasts that global copper demand will rise by 1 million tons annually until 2035, driven by the expansion of copper-intensive technologies like electric vehicles and renewable energy. However, copper mining faces challenges from rising costs and declining ore grades. BHP estimates that $250 billion in investments will be necessary over the next decade to bridge the gap between copper supply and demand.
Andy Forster, an analyst at Argo Investments, noted rising construction costs. RBC analyst Kaan Peker commented that BHP’s continued positive long-term outlook on copper suggests an expansion in capital investment. He added that copper prices could potentially exceed $5 per pound, while copper is currently trading at around $8,966 per ton (about $4 per pound) on the London Metal Exchange (LME).
UBS analyzed that acquiring Anglo American would be a strategic move for BHP to enhance its copper portfolio. However, under British acquisition rules, BHP cannot pursue Anglo American until the end of this month. UBS analysts predict BHP may revisit this option after Anglo American completes its restructuring and spin-off of Amplats, which is anticipated in early 2025.
BHP has made three unsuccessful attempts to acquire Anglo American in the past. Such a deal would cement BHP’s position as a global leader in copper production and help offset declining output from its existing assets.
Meanwhile, BHP has achieved its highest copper production in 15 years through its Escondida and Spence mines this year. BHP operates the Escondida mine as the majority shareholder, with global mining giant Rio Tinto and Japan’s Mitsubishi Corporation also holding stakes.
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