BHP is prepared to pursue opportunities in “tougher jurisdictions”, as the world’s biggest mining company seeks to increase its exposure to metals that will be needed to power the energy transition.
Chief executive Mike Henry told the FT Mining Summit on Thursday he was confident the company could manage the risks of investing and operating in politically volatile developing countries that are often hotbeds of bribery and corruption.
“For attractive enough opportunities we would contemplate pursuing them, sure,” said Henry, who wants about half of BHP’s revenues to come from the “future facing commodities” of copper, potash and nickel by the end of the decade.
BHP has historically focused on developed countries such as Australia, Canada, Chile, and the US but Henry’s comments suggest there is a realisation that to gain access to the best copper and nickel deposits it may need to operate in riskier countries. The company has already taken a stake in a London-listed copper company developing a project in Ecuador.
Henry’s comments come as BHP is reported to be in talks with billionaire Robert Friedland’s Ivanhoe Mines about buying into a large copper project in the Democratic Republic of Congo, which sits on some of the richest deposits of the metal in the world.
Known as Western Foreland, the 2,550 square kilometre exploration project is near Ivanhoe’s Kamoa-Kakula operation in the south-east of the DRC, which started production this year and is the highest-grade large copper mine of its size in the world.
“This is not just the discovery of a mine. This is the discovery of a whole new mineral province,” Friedland told the Financial Times earlier this year.
Copper demand is set to surge over the next decade because of its use in clean energy technologies such as wind turbines and electric cars. Copper prices have risen 15 per cent this year, and hit a 10-year high above $10,000 a tonne in April.
While the copper market is relatively well supplied for the next couple of years, thanks to developments such as Kamoa-Kakula and Anglo American’s $5bn Peruvian development Quellaveco, the pipeline of new projects beyond then looks thin. BHP’s largest copper mine, Escondida in Chile, has been operating since 1990.
While BHP is prepared to look at tougher jurisdictions, Henry told the FT summit he also believed copper and other “future-facing” commodities could be found in “areas we like”, although at a higher cost.
“I want to be clear we don’t see exploration success as being confined to moving into new jurisdictions. We know there is more copper to be found in the areas we like but it is going to be harder to find and perhaps deeper, which is going to bring different technological and financial challenges,” he said.
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“No doubt there are going to be large new deposits found in jurisdictions that BHP is not currently operating in but I would point you to Oak Dam that’s in our backyard,” he said, referring to an exploration project the company is working on in South Australia.
Ivanhoe declined to comment on the report. Shares in Ivanhoe rose as much as 8 per cent on Monday on the news.
Friedland, who has discovered some of the biggest nickel and copper projects in the world, has often bridled at the suggestion that Chile is a better place to mine than the DRC.
Politicians in Chile have been debating the introduction of a new royalty on sales of copper that would increase sharply in line with rising prices.
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