BHP takes copper project stake
BHP is building joint exploration ventures with junior miners as it boosts exposure into ‘future facing’ commodities.
BHP has struck a deal to take a majority stake in a Northern Territory copper project, underlining a greater focus on building joint exploration ventures with junior miners as it boosts exposure into “future facing” commodities including copper and nickel.
The mining giant can acquire a 75 per cent stake in Encounter Resources’ Elliott copper development in the NT’s Beetaloo Basin through spending $22m over 10 years.
Shares in Encounter soared 31 per cent to 19c after it revealed the tie-up with the potential for copper to be found under shallow cover in the NT.
Data packages will be completed between the two miners by year-end with BHP holding the option to fund validation programs through 2021 before making a decision on whether to enter the joint venture.
With plans underway to sell some of its Australian coal mines and ageing gas assets including its share of the Bass Strait fields, BHP is looking to recycle spending into commodities with a strong growth profile over the next few decades complementing earnings from its iron ore and metallurgical coal assets.
The appointment of Laura Tyler as chief technical officer and Johan van Jaarsveld as chief development officer – two newly created roles - signalled a desire to aggressively chase partnerships with junior explorers after at least a decade of focusing on the bigger end of the spectrum.
BHP boss Mike Henry said in August that partnering with smaller miners will be one path to boost its exposure further to copper and nickel.
BHP will “look to exploration at early stage partnering. So exploration means us going out and finding new resources. You‘ve seen us do that recently with the Oak Dam deposit in South Australia,” Mr Henry told a retail shareholder forum.
“On the early stage partnering front, we‘ve entered into exploration partnerships. So we’ve gained a toehold in early stage resources in Canada, in Mexico, in Ecuador. And we’ll look for more of those opportunities.”
In addition to copper, BHP has recently boosted its once-unloved Nickel West operations in a move cementing the company’s place as the country’s dominant nickel producer for decades to come.
BHP was seeking to sell Nickel West in 2014 and still regarded the asset as “non-core” until only a year ago, when the then chief executive Andrew Mackenzie brought the division back into the fold.
He argued it had the potential to return to a tier-one flagship asset for the mining major as a key supplier of nickel sulfate to the battery market amid expectations a boom in electric vehicles would lead to a surge in demand for the commodity over the next decade.
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