BHP, a mining giant, has announced a substantial investment of up to $14 billion to enhance copper production in Chile. The company’s strategic move aims to increase output significantly at its existing operations in the country, particularly at the Escondida mine, known to be the world’s largest copper mine.
With plans to invest between $10 billion and $14 billion, BHP is gearing up to boost production by an estimated 430,000 to 540,000 tonnes per annum. This investment is seen as crucial to counteract declining ore grades and the forthcoming closure of the Los Colorados plant.
Brandon Craig, the president of BHP’s Minerals Americas division, during a recent visit to Chile, disclosed that the company’s long-term production targets are set to stabilize at 1.4 million tonnes per annum, reflecting a modest increase from current levels.
The surge in demand for primary copper is primarily driven by the global transition to renewable energy sources and the increasing adoption of electric vehicles, both of which heavily rely on copper. BHP’s investment aligns with the projected demand growth, with estimates indicating a substantial supply-demand gap by 2035, necessitating an additional 10 million tonnes of copper.
To bridge this gap, the industry is anticipated to require an investment of $250 billion over the next decade. BHP believes that securing funding for various projects is critical to meet the escalating demand for copper, potentially paving the way for more mergers and acquisitions within the sector.
Chile holds a strategic position as the world’s leading copper producer, with BHP’s Escondida mine contributing significantly to the country’s copper output. The company’s operations are deemed essential to Chile’s economy, with an estimated contribution of $9.4 billion by the end of the fiscal year 2024.
Since 1990, BHP has played a pivotal role in copper production in Chile, accounting for more than 7% of the global copper mine output, totaling 38 million tonnes. However, the company anticipates a decline in its annual copper production to approximately 1.6 million tonnes by the end of the decade, signaling a reduction of around 300,000 tonnes.
Recently, BHP expanded its collaboration with ABB to drive decarbonization initiatives across its operations, including the Escondida mine in Chile, the Jansen project in Canada, and various ventures in Australia. Additionally, the company has broadened its copper portfolio in South America through acquisitions, such as acquiring a stake in Filo in partnership with Lundin Mining in a $3 billion deal.
Given the promising future outlook for copper demand and the critical role of Chile in the global copper market, BHP’s substantial investment underscores its commitment to meeting the evolving needs of the industry and ensuring its continued growth and sustainability in the years to come.
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