BHP Targets $10 Billion in Asset Sales to Help Fund Copper Expansion
Copper now accounts for the largest share of its earnings
BHP Group cashed in on record silver prices by selling future output from a mile-high mine in the Andes, part of a plan to raise up to $10 billion from deals to help fund an expansion in copper.
BHP said Tuesday’s sale of its share of future silver production from the Antamina copper mine in Peru to Wheaton Precious Metals WPM 4.84%increase; green up pointing triangle for $4.3 billion is the most valuable silver-streaming agreement on record.
The transaction anchors the $10 billion goal that BHP outlined to investors three months after abandoning a takeover bid for Anglo American that was fueled largely by a desire to grow its copper business. BHP said the target also includes the sale of a stake in power infrastructure at its Australian iron-ore mines for $2 billion in December.
Assets that could be put up for sale include other power networks and desalination plants, said Chief Financial Officer Vandita Pant. She said BHP doesn’t have a deadline for additional deals.
“We have a lot of infrastructure around in our company which could be undervalued, or assets which are undervalued,” Pant said in an interview.
The silver deal, announced by BHP alongside a net profit of $5.64 billion for the six months through December and an improved dividend, pushed the global miner’s stock up more than 5% to an all-time high in Australia on Tuesday.
Silver prices surged to a record high on the Comex exchange in late January and are up 11% so far this year, helped by investors seeking assets considered safe havens during times of geopolitical or economic uncertainty.
“What is interesting is that the total Antamina valuation by brokers of BHP’s stake is around $4.5 billion,” Pant said. “We have unlocked $4.3 billion just on the silver portion of it, retaining fully our copper exposure and our zinc exposure to Antamina.”
She said selling unwanted assets gives BHP “financial flexibility to allocate these proceeds to the higher-returning uses, be it growth—attractive growth—or be it shareholder returns.”
BHP has long relied on iron ore for the bulk of its earnings, benefiting from huge demand as China’s economy rapidly expanded.
Now, however, it is reshaping its portfolio around copper, an industrial metal used heavily in electric vehicles, renewable energy and data centers. New supplies of the metal aren’t expected to keep pace with demand, leading to higher prices.
Illustrating this strategic shift, BHP said copper now accounts for the largest share of its earnings. It contributed about 25% five years ago.
BHP acquired Australian copper miner Oz Minerals for more than $6 billion in 2023. Last year, it spent roughly $2 billion to establish a joint venture with Lundin Mining to develop a large copper project on the border of Argentina and Chile.
It had hoped to turbocharge its copper business with a takeover of Anglo American, but repeated approaches—the most recent last November—were rebuffed.
BHP, already the world’s largest producer of the metal, has repeatedly said that it isn’t reliant on deals and that it already has plenty of copper reserves it can develop. However, executives have also acknowledged that resources are getting harder to find and extract.
BHP expanded on its copper options on Tuesday. They included updated studies from its Vicuna joint venture with Lundin. The miner said it is preparing for a potential final investment decision on the first phase of that development before the end of the year.
“For the discreet few opportunities that might come along that fit the very strict criteria that we have, we’ve got the wherewithal to pursue them, but we’re not feeling any burning need to,” Chief Executive Mike Henry said of possible copper deals.
Asked whether BHP could speed up some of its copper projects, Henry said it was difficult to accelerate expansion plans because of constraints related to technical studies and permitting.