BHP (NYSE:BHP) has announced plans to invest up to $14 billion to enhance its copper production in Chile, as revealed during a three-day site tour of its operations. This substantial capital expenditure aims to secure the long-term future of its assets in the region and support the growing global demand for copper.
Brandon Craig, President of BHP's Minerals Americas business, noted the significance of the company's Chilean operations.
"BHP has the largest contained copper resource globally, and almost half of that is in Chile. Our 30 billion tons of total copper resources in Chile could support almost seven years of global demand. And this excludes our share of Filo del Sol, Josemaria, Antamina, and Resolution," he said.
This capex cycle will focus on the Escondida mine, the world's largest copper operation. BHP plans to allocate $7.3 billion to $9.8 billion to offset ore grade declines and prepare for the closure of the Los Colorados plant in 2029.
The construction of a new concentrator at Escondida, set to produce between 220,000 and 260,000 tons annually starting in 2031/32, will require $4.4 billion to $5.9 billion. Additional projects include expanding the Laguna Seca plant and introducing new leaching facilities, which should add up to 125,000 tons annually, starting in 2030.
Beyond Escondida, an investment of $2.8 billion to $3.9 billion should boost Pampa Norte, which includes the Spence and Cerro Colorado mines. Utilizing supergene leaching techniques, the restart of Cerro Colorado alone could contribute up to 100,000 tons annually.
These efforts are part of a broader strategy to stabilize BHP's total copper output at around 1.4 million tons per year by 2031, particularly after the company failed to realize a $49 billion Anglo American (OTC:AAUKF) acquisition earlier this year.
BMO's analyst Alexander Pearce said that the total planned copper addition exceeded market expectations, and the associated costs were less than feared. In a note, he described much of the expenditure as "sustaining capital to offset grade decline."
BHP's increased focus on copper reflects the metal's critical role in the global energy transition and the rise of electric vehicles, both of which are driving copper demand for wiring and components. The company estimates an additional one million tons of copper will be required annually until 2035, with demand expected to surge by 70% by 2050.
Despite its ambitious plans, BHP's Chilean operations face challenges. Alexis Barrera, union president at Minera Escondida, criticized the company for alleged labor law violations, citing a recent case involving a dismissed worker on medical leave.
"We are asking BHP to stop violating Chilean labor laws and abusing the company's dismissal system," Barrera stated for bnamericas, noting concerns about women on maternity leave being unfairly affected.
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