BHP Seeks Copper Deals while Metal is Hot

SEATTLE (Scrap Monster): BHP (ASX: BHP) continues its global search for copper to meet soaring demand driven by the energy transition, but a shortage of high-quality deposits— particularly in stable jurisdictions —remains a challenge.

Over the past five years, the world’s largest miner has shifted its focus. In 2020, iron ore dominated its earnings and investment, but today it accounts for less than a quarter. In contrast, copper now receives half of BHP’s capital expenditure.

A barrier for BHP is its cautious approach that favours stability over high-risk, high-reward ventures. Competitors such as Glencore (LON: GLEN) and Rio Tinto (ASX: RIO) have embraced volatile regions—Kazakhstan, the Democratic Republic of Congo, Mongolia, and Guinea. BHP instead has traditionally stuck to safer ground: Australia, Brazil, Canada, Chile, Peru, and the United States. Even its failed $49 billion bid for Anglo American (LON: AAL) last year was carefully structured to exclude South African assets.

 There are benefits to this caution, Bloomberg Opinion columnist David Fickling writes. Political instability poses operational and reputational risks. Rio Tinto’s 28-year struggle with its Simandou iron ore mine in Guinea resulted in executive shake-ups and costly bribery settlements. Glencore has also faced challenges, paying over $1 billion in fines for bribery and market manipulation.

Yet, mineral-rich regions rarely align with political stability, compelling even BHP to step outside its usual comfort zone.

Last year, it completed a $2 billion deal for a 50% stake in Argentina’s Filo del Sol copper project alongside Lundin Mining (TSX: LUN). Argentina, long avoided by major miners due to its volatile political and legal environment, has become more attractive under libertarian President Javier Milei’s pro-mining policies. Still, Argentina’s track record of policy instability makes the investment a calculated risk.

With large-scale mergers and acquisitions reshaping the mining industry — Glencore and Rio Tinto reportedly discussed a potential blockbuster deal — the timing could be right for BHP to pursue a long-rumoured target: Freeport-McMoRan, the world’s top copper producer.

Such a deal would immediately double BHP’s copper output and secure control over four of the five largest copper mines. Even with such a deal, BHP’s market share in global copper production would remain under 20%, staying within limits unlikely to trigger antitrust scrutiny.

 Courtesy: www.mining.com