BHP Group (NYSE:BHP) is considering a sale of the Brazilian copper and gold assets acquired through last year's $6.3 billion takeover of Oz Minerals.
What Happened: The assets reportedly up for sale include an untapped gold deposit and four small high-grade copper mines located in the state of Pará.
The most notable of these assets is the Pedra Branca project, which stands out as the sole operational mine, Bloomberg reported.
Before the acquisition of Oz Minerals, BHP's presence in Brazil was primarily tied to Samarco Mineracao SA, an independent iron ore venture with Vale (NYSE:VALE). However, Samarco has remained entangled in legal action following a 2015 dam collapse.
Last year, BHP explicitly stated its commitment to retaining its stake in Samarco, primarily focusing on restoring production to pre-disaster levels by 2028. Samarco's iron ore pellets are vital for producing low-carbon steel, aligning with BHP's sustainability goals.
Why It Matters: Situated in the Carajás mineral district, Pedra Branca's reserves are estimated at five million tons, grading at 2.1% copper and 0.5 grams per tonne of gold, translating to 104,000 tons of contained copper and 89,000 ounces of contained gold.
In the third quarter of 2023, the first full production quarter after the acquisition, the mine produced 1,200 tons of copper and 800 ounces of gold. However, operations were temporarily suspended in August due to a geotechnical event.
BHP's potential divestiture of these assets is part of a broader strategic review to optimize its portfolio following an unsuccessful $49 billion bid for Anglo American.
The report indicates the company has engaged Banco Santander SA to advise on the potential sale by anonymous sources who asked not to be identified.
BHP is scheduled to report next earnings on Aug. 25, 2024.
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