BHP to pump £1.9bn into giant copper mine in Chile
BHP Billiton has hit the button on a $2.46bn (£1.9bn) project to expand a giant copper mine in northern Chile, as it looks to feed rising demand for the red metal.
The long-awaited plan will extend the life of its Spence mine by 50 years, and it comes as investors look for clues about BHP’S future strategy ahead of its full-year results next week. BHP, which has been under pressure from activist fund Elliott to make bigger returns to shareholders, has declared that copper will be a key priority for the company in the future.
The metal is used in electric wiring and cars, and is expected to remain in long-term demand.
The miner still profits from iron draws most of its ore, used to make steel, although copper is expected to have made up around 19pc of its underlying earnings for the year to June. Copper prices have been on a roll in the last few months, with strong demand from China pushing the metal up 18pc in the year to date.
BHP will begin expanding the Spence mine next year and expects the project to be completed by 2021.
Andrew Mackenzie, its chief executive, said that the plan would “create long-term value for shareholders in one of our preferred commodities”.
Separately, the FTSE 250 copper miner Kaz Minerals hailed the doubling of its output in the six months to June 30, thanks to the opening of two new mines.
The Kazakhstan-based company said its strategy to spend heavily on new mines during a downturn was finally paying off, as it reported a neartripling of pre-tax profits to $240m. Revenues more than doubled to $837m.
“We are the only company in the industry who has delivered their results as per guidance for 10 years in a row,” said Oleg Novachuk, chief executive, who added that Kaz would consider reinstating its dividend next year, after a five-year suspension.