BHP Group signals intention to shed coal, oil & gas assets
The priority for BHP is to sell off its coal enterprises. It is aiming to sell its 80% share in BHP Mitsui Coal, which owns two coking coal plants in Australia. The company is also planning to cast off its thermal coal mines, and some of its oil and gas operations.
These plans are not borne from economic necessity: BHP Group announced steady annual profits of $9.1bn on 18 August, supported by higher prices for iron ore. Rather, they signal a change of strategy under Mike Henry, who became CEO in January. Henry is laying the ground to transform BHP Group into a company focussed on copper and nickel, the demand for which is expected to grow in demand in the next decade, due to their use in the renewable energy sector and in the electrification of transport.
A company statement on 18 August read: “The world is rapidly changing with decarbonisation of energy sources, population growth and the drive for higher living standards in the developing world. It will require us to continue to be active portfolio managers”.
BHP has already received offers for its Mt Arthur thermal coal mine, in the Hunter Valley region of New South Wales, and its one-third stake in the Cerrejon mine in Colombia, but did not accept them. BHP Group is considering options for trade sales, or for the mines to be demerged into separate listed entities.
The company also announced its intention to sell its 50% stake in the Bass Strait oil and gas joint venture with Exxon Mobil off the coast of Tasmania.
Copper production from top ten companies to increase by 3.8%
Copper production from the world’s top companies is set to increase by up to 3.8% this year, following a fall of 0.2% in 2020, GlobalData analysis reveals. Last year’s marginal slump saw production drop to 11.76 million tonnes (Mt).
The initial impact of the COVID-19 pandemic on mining operations was immense, however, six of the ten largest copper producers succeeded in increasing output last year. In 2021, copper production from the top ten copper companies is expected to bounce back, rising by up to 3.8%, to reach 12.2Mt, according to GlobalData, a leading data and analytics company.
The highest increase in copper production was by Canada’s First Quantum, which, despite all the challenges, reported 10.4% growth in 2020. The company’s Sentinel mine in Zambia and Cobre Panama were key contributors to this growth. While the latter remained under care and maintenance between April and August 2020, it delivered record production levels during the subsequent months.
Codelco, the world’s largest producer of the red metal used in electric vehicles, also bucked the trend.
Vinneth Bajaj, Associate Project Manager at GlobalData, commented: “Despite Codelco reporting over 3,400 active cases during July 2020, the company achieved 1.2% growth in its production in 2020. The company implemented a four-phase plan, as part of the COVID-19 measures, to ensure the health and safety of its employees, while also avoiding any significant impact to its copper output.”
Although the overall impact was minimal, declines in production were observed from Glencore (8.2%), Antofagasta (4.7%), BHP (3.9%) and Freeport McMoRan (1.3%). Reduced operational workforces due to COVID-19 measures, lower ore grades and production halts due to maintenance were the key disruptors to output during 2020.
The move towards electric vehicles and clean energy from renewables sources such as solar panels and wind turbines has driven the copper price to all-time highs. Copper has been among the best performers over the last month where metals ranging from aluminum to iron ore have surged to their highest prices in years. The rally is being fueled by stimulus measures, near-zero interest rates and signs that economies are recovering from the global pandemic.