BHP says it can grow just fine without Anglo, thanks

Australian mining giant BHP says it will keep growing its copper output without Anglo American, and while it is disappointed at the failure of its bid for Anglo earlier this year it will not overpay for acquisitions.

The Melbourne-based group walked away from Anglo in May after the Anglo board rebuffed its third attempt in an all-share bid and launched its own self-help restructuring plan. With the Anglo share price up by more than 10% since the failed bid, and BHP’s down to a similar extent, it is not clear whether the “big Australian” might contemplate another bid once the six-month “put up or shut up” ban ends later this year.

BHP CEO Mike Henry told journalists at the release of the group’s year-end results on Tuesday that Anglo wasn’t plan A for BHP. “Plan A is what you see outlined in these results,” he said. His group was not planning to bid for Anglo’s steelmaking coal assets in Australia, which have been put up for sale.

However, he said the group would continue to be open to mergers & acquisitions if the right opportunity arose: “right commodity, right asset quality, right price, yes”.

BHP increased its underlying profit 2% to $13.7bn in the year to June, but cut its dividend as it held on to cash to invest in organic growth in copper, which now accounts for about 30% of the group’s underlying profit.

And though the copper price is now well off its recent highs because of slowing demand from China, the group remains ultra-bullish on the red metal, which it sees as having multi-use applications to support the megatrends of population growth and decarbonisation as well as in the data centres required for artificial intelligence. It expects demand for copper to rise 70% by 2050. But with copper mines becoming ever deeper and more challenging, a structural deficit is expected to emerge in the market by the end of this decade.

Anglo’s rich copper mines in Latin America had been BHP’s particular target. But the Australian group added 300,000 tonnes to its copper output during the year to June. It made it clear on Tuesday that its growth focus was now on copper and potash (fertiliser), though it is still the world’s lowest-cost producer of iron ore, which has been its traditional cash cow.

“We’re in a process right now of reshaping the portfolio for the future,” said Henry.

“We grew copper production by 9% for the second consecutive year, making us the company with the fastest-growing copper exposure over that period. We’re anticipating a further 4% copper growth in 2025.”

Last month, it partnered with Canada’s Lundin Mining to buy Toronto-listed Filo Corporation, which owns the Filo del Sol and Josemina projects near the Argentina-Chile border. The deal is expected to close early next year. Last year it bought the South Australian copper mines of Oz Minerals.

joffeh@businesslive.co.za