BHP Group CEO Mike Henry provided an update on BHP’s copper portfolio during the company’s FY2024 results presentation on August 27th, 2024. Here are his comments:
On BHP Copper:
Mike Henry:
In copper, we are in a very good position today. BHP has the largest copper resource of any company in the world.
But simply having the resource isn’t enough. To get the most out of them, we strive to be the best operators – more productive, consistent and reliable.
We have delivered the largest absolute growth over the past two years – more growth, in fact, than the annual production of a lot of other companies.
Today, we are one of the world’s largest copper producers. And we have a pathway towards well-over 2 million tonnes per year of copper production – so our strong position is set to become even stronger. For those that want to invest in copper today – BHP is very well placed.
On Copper South Australia:
Mike Henry:
Copper South Australia is a key part of that industry-leading copper story.
In recent years, Olympic Dam has achieved more consistent, strong operational performance, and that has certainly been the case since the last smelter rebuild in 2021. In the past year, the team has successfully integrated Carrapateena and Prominent Hill, unlocking significant synergies in the process. Together, the strong underlying operational performance, and the expanded asset base, provide a stable foundation from which we can invest in growth with confidence.
The best way to deliver this growth is in phases. This would allow us to leverage Olympic Dam’s existing smelter and refinery infrastructure, and better match processing capacity with planned mine and concentrator growth over time – into the 2030s. This makes for a more capital efficient and value accretive pathway.
The first of these phases, the Smelter and Refinery Expansion, or ‘SRE’ Project, involves installing a new primary smelting furnace in front of Olympic Dam’s existing smelter – converting it to a two-stage smelter – and an expansion of the refinery.
Phase 1 would deliver value on multiple fronts:
First, it would allow us to process all of our copper concentrate from the province in-house… unlocking value through, for example, a reduction in treatment and refining charges, and transport costs.
Second, it would be sized for growth, including a near-doubling in volumes from Carrapateena as its block cave comes on towards the end of the decade, and growth from Olympic Dam through investments in a new decline and expansion of the Southern Mining Area.
SRE is expected to help unlock around US$1.5 billion in synergy value from the OZ Minerals acquisition – including US$600 million already captured to date – underscoring the value we saw in that deal and the potential of this world – class province.
We expect a final investment decision on Phase 1 in the first half of the 2027 financial year, and, if approved, this would see copper production grow from 310 to 340 thousand tonnes per year today, to over 500 thousand tonnes in the early 2030s. Including by-products, this equates to around 700 thousand tonnes in copper equivalent terms – 100 percent owned by BHP.
The second phase would further expand smelting and refining capacity – potentially to 650 thousand tonnes of copper per year by the mid-2030s – to match production growth as we further define, and develop, our upstream options – including Oak Dam and continued growth from Olympic Dam.
On Chilean Copper Growth:
Mike Henry:
In addition to the growth from our Australian copper operations, we’ve made good progress in narrowing down the growth pathways at our Chilean copper assets.
At Escondida, our projects are shaping up well. They have the potential to add around 200 thousand tonnes per year of incremental copper production… with attractive returns – in the range of 14% to 19% – and competitive capital intensities. We will take a staged approach to executing these, with some – like the Laguna Seca expansion and a potential new concentrator – ready for final investment decisions sooner than others – like some of the leaching options.
At Spence, we’re looking at the potential expansion of the concentrator and extending the life of our leaching operations.
And finally, at Cerro Colorado – where we still have 1.7 billion tonnes of Inferred Resource – there is the potential to restart operations with the application of novel leaching technologies a bit further down the line.
We look forward to taking investors and analysts to our Chilean copper assets later this year – where we’ll be able to be more expansive on these growth pathways and projects.
On the Vicuña District:
Mike Henry:
In addition to organic growth, over the past several years, we’ve also been building a portfolio of early -stage investments – where we seek to gain exposure to undeveloped resources with world -class potential.
In late July we progressed one of these, with the agreement… to jointly acquire Filo Corp with Lundin Mining… to acquire 50 per cent of the Josemaria project from Lundin Mining… and to form a 50/50 joint venture between us to advance the Filo de Sol and Josemaria copper projects in the Vicuña district in Argentina and Chile.
This is a rare opportunity to grow our pipeline of long-term copper options by securing access to what we consider to be one of the most significant copper discoveries globally in recent decades. And it creates a long -term partnership with Lundin in which both parties bring complementary skills and experience to the table. The proposed transaction, which is expected to complete in the March 2025 quarter, 16 builds on a multi-year relationship between BHP and Lundin, through which we’ve developed a strong understanding of the resource potential of the Vicuña district and possible pathways for development.
In the near-term, while Filo continues exploration at Filo del Sol, we’ll be focused on setting up the joint venture with Lundin and working with them to determine the best path forward to develop this emerging copper district and deliver long-term economic and social value for stakeholders. We intend to update the market on the timeline for technical studies in the first half of 2025.
