BHP CEO Mike Henry said previous experience had taught his company not to get “boxed into M&A” in order to grow production.
“We’ve deliberately positioned ourselves so we don’t have to do M&A, recognising the lessons from the past — that’s a dangerous place to be,” Henry said on Tuesday after presenting BHP’s interim results ended December.
BHP twice sought a deal with Anglo American, the last attempt in December, but it had simultaneously developed organic growth options. BHP said in its interim results its ambition to develop copper projects in Argentina, through the previously announced Vicuna JV with Lundin Group, would see investment extend to as much as $18bn. It has targeted production of more than 500,000 tons of copper annually at peak output next decade
The Anglo bids were among other big transactions among the world’s largest miners to have failed. Glencore bid for Teck Resources in 2023 while Rio Tinto’s ‘merger’ with Glencore did not materialise after the Australian firm declined to extend negotiations.
Asked to comment on the recent poor track record on deal completions, Henry said: “We’ve seen some successes, some transactions that haven’t been consummated. I think that’s just the nature of M&A. But certainly from a BHP perspective, it all comes back to discipline — and as I said, M&A is not our first focus.”
Despite this, the group would readily walk into M&A again given the right opportunity, he said. “We’re BHP, so we can walk into any opportunity, and where we spot one of these very narrowly defined, discrete opportunities aligned with our strategy — and where we can unlock differential value for BHP shareholders — we’ve got the wherewithal to pursue it,” he said.
Henry was also asked about pursuing production growth in Africa. He replied: “If we were to pursue anything there it would likely be copper, and it would have to be a large enough opportunity that we would probably pursue it in partnership with others”.
BHP reported a stronger-than-expected half-year profit, with copper surpassing iron ore as the world’s largest miner’s biggest earnings contributor for the first time, driven by artificial intelligence-fuelled demand for the metal, said Reuters.
First-half underlying attributable profit rose 22% to $6.20bn, beating analyst consensus of $6.03bn. BHP declared an interim dividend of 73 cents per share, well ahead of market expectations of 63 cents, sending shares up 7% to an all-time high.
“It was a good result,” Andy Forster, portfolio manager at Argo Investments, a BHP shareholder told Reuters. “They smashed everyone’s expectations from a dividend perspective.”
Copper, including by-products such as gold, contributed $7.95bn to operating earnings in the six months to December 31, edging ahead of iron ore’s $7.50bn and accounting for 51% of total underlying operating earnings of $15.46bn. Realised copper prices jumped 32% over the period.
Rapid growth in power consumption at artificial intelligence data centres, alongside the broader transition to cleaner energy, has intensified competition among mining majors for high-quality copper assets.
The miner also agreed a silver streaming deal with Wheaton Precious Metals worth $4.3bn, part of a targeted $10bn to be raised from existing assets.
“In the last five years, Mike has set the business up with options,” Glyn Lawcock, head of metals and mining research at Barrenjoey Markets Pty in Sydney told Bloomberg News. “Clearly, growth to 2030 is really potash and iron ore, but you hit the start of the new decade, it’s pretty much all copper,” he said.
