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BHP's Copper Growth Plans Under Review by South Australian Government
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BHP Group (BHP - Free Report) recently announced that the South Australian government initiated an assessment of its planned Smelter and Refinery expansion (SRE) at Olympic Dam.
The SRE plan will be carried out in two phases and is expected to take BHP’s copper production in South Australia from 322,000 tons in fiscal 2024 to more than 500,000 tons by early 2030’s. The figure is expected to reach 650,000 tons in the mid-2030’s.
BHP’s Efforts to Grow Copper South Australia
Following the acquisition of OZL in May 2023, BHP established the Copper South Australia province. The deal added Prominent Hill (a high-quality copper-gold mine) and Carrapateena (an iron-oxide-copper–gold underground mine) to its portfolio. Both mines are located in the highly lucrative Gawler Craton in South Australia and are close to BHP’s Olympic Dam and Oak Dam development project.
The recent development marks an important step for BHP and the South Australian government as they work together to significantly increase copper production in the state. A final investment decision on phase one of the SRE plan is currently scheduled for the first half of fiscal 2027. The SRE plan is expected to unlock around $1.5 billion of synergies, including $0.6 billion already captured via integration
The SRE plan is supported by the recent exploration success at OD Deeps where the company has identified intercepts indicating grades greater than 1% copper as well as solid prospects at Oak Dam.
BHP, in its fiscal 2024 results, declared that Oak Dam’s Inferred Mineral Resource is 1.34 billion tons at 0.66% copper grade and 0.33 grams per ton gold grade.
BHP added that at Prominent Hill, the Wira shaft mine expansion project is in progress with shaft sinking completed around 40%. The hoisting shaft system is expected to extend the mine life to at least 2036.
At Carrapateena, BHP is investing in processing plant capacity to boost throughput from the sub-level cave to 7 Mtpa. The Block Cave Expansion project, which is currently underway, is expected to extend the mine life beyond the existing sub-level cave and increase throughput at Carrapateena up to 12 Mtpa.
BHP’s Strategies to Boost Copper Portfolio
BHP’s copper output rose 9% year over year to 1,865 kt in fiscal 2024, the highest in 15 years. It was attributed to improved production at Spence and Carrapateena and the highest production in four years at Escondida.
The company’s copper production in the fiscal 2022-2024 period has outscored competitors.
BHP expects copper production for fiscal 2025 to be in the range of 1,845-2,045 kt. The midpoint of the range indicates year-over-year growth of 4%.
BHP and other miners are now focusing on increasing their exposure to future-facing commodities, such as copper and nickel, which are key components for the green energy transition. It plans to allocate around 65% of its medium-term capital to future-facing commodities.
In July 2024, BHP strengthened its copper resource position and early-stage options by agreeing to acquire a 50% interest in the promising Filo del Sol and Josemaria copper projects in Argentina.
Besides South Australia, BHP has a pipeline of copper projects under development in Chile as well. These include expanding the of Laguna Seca concentrators, improving throughput and increasing recovery at Spence and exploring potential leaching options at Escondida and Pampa Norte. BHP is also planning a new concentrator at Escondida. Final investment decisions are planned from fiscal 2026 to 2029.
BHP also has a 45% interest in the Resolution Copper Project in the United States, one of the largest undeveloped copper projects in the world. It has the potential to become a significant copper producer in North America.
BHP Stock’s Price Performance
BHP’s shares have lost 5.3% in a year compared with the industry’s 6.2% decline.
Image Source: Zacks Investment Research
BHP’s Zacks Rank & Key Picks
BHP Group currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2025 earnings is pegged at $6.06 per share. The consensus estimate for earnings has moved 17% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 15.9%. CRS’ shares have gained 125% in the past year.
The consensus estimate for IAMGOLD’s 2024 earnings is pegged at 39 cents per share. The consensus estimate for earnings has moved 44% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 200%. IAG’s shares have gained 103% in a year.
The Zacks Consensus Estimate for Eldorado Gold’s 2024 earnings is pegged at $1.32 per share. The consensus estimate for earnings has moved 22% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 430%. EGO’s shares have gained 37% in a year.
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BHP's Copper Growth Plans Under Review by South Australian Government
BHP Group (BHP - Free Report) recently announced that the South Australian government initiated an assessment of its planned Smelter and Refinery expansion (SRE) at Olympic Dam.
The SRE plan will be carried out in two phases and is expected to take BHP’s copper production in South Australia from 322,000 tons in fiscal 2024 to more than 500,000 tons by early 2030’s. The figure is expected to reach 650,000 tons in the mid-2030’s.
BHP’s Efforts to Grow Copper South Australia
Following the acquisition of OZL in May 2023, BHP established the Copper South Australia province. The deal added Prominent Hill (a high-quality copper-gold mine) and Carrapateena (an iron-oxide-copper–gold underground mine) to its portfolio. Both mines are located in the highly lucrative Gawler Craton in South Australia and are close to BHP’s Olympic Dam and Oak Dam development project.
The recent development marks an important step for BHP and the South Australian government as they work together to significantly increase copper production in the state. A final investment decision on phase one of the SRE plan is currently scheduled for the first half of fiscal 2027. The SRE plan is expected to unlock around $1.5 billion of synergies, including $0.6 billion already captured via integration
The SRE plan is supported by the recent exploration success at OD Deeps where the company has identified intercepts indicating grades greater than 1% copper as well as solid prospects at Oak Dam.
BHP, in its fiscal 2024 results, declared that Oak Dam’s Inferred Mineral Resource is 1.34 billion tons at 0.66% copper grade and 0.33 grams per ton gold grade.
BHP added that at Prominent Hill, the Wira shaft mine expansion project is in progress with shaft sinking completed around 40%. The hoisting shaft system is expected to extend the mine life to at least 2036.
At Carrapateena, BHP is investing in processing plant capacity to boost throughput from the sub-level cave to 7 Mtpa. The Block Cave Expansion project, which is currently underway, is expected to extend the mine life beyond the existing sub-level cave and increase throughput at Carrapateena up to 12 Mtpa.
BHP’s Strategies to Boost Copper Portfolio
BHP’s copper output rose 9% year over year to 1,865 kt in fiscal 2024, the highest in 15 years. It was attributed to improved production at Spence and Carrapateena and the highest production in four years at Escondida.
The company’s copper production in the fiscal 2022-2024 period has outscored competitors.
BHP expects copper production for fiscal 2025 to be in the range of 1,845-2,045 kt. The midpoint of the range indicates year-over-year growth of 4%.
BHP and other miners are now focusing on increasing their exposure to future-facing commodities, such as copper and nickel, which are key components for the green energy transition. It plans to allocate around 65% of its medium-term capital to future-facing commodities.
In July 2024, BHP strengthened its copper resource position and early-stage options by agreeing to acquire a 50% interest in the promising Filo del Sol and Josemaria copper projects in Argentina.
Besides South Australia, BHP has a pipeline of copper projects under development in Chile as well. These include expanding the of Laguna Seca concentrators, improving throughput and increasing recovery at Spence and exploring potential leaching options at Escondida and Pampa Norte. BHP is also planning a new concentrator at Escondida. Final investment decisions are planned from fiscal 2026 to 2029.
BHP also has a 45% interest in the Resolution Copper Project in the United States, one of the largest undeveloped copper projects in the world. It has the potential to become a significant copper producer in North America.
BHP Stock’s Price Performance
BHP’s shares have lost 5.3% in a year compared with the industry’s 6.2% decline.
Image Source: Zacks Investment Research
BHP’s Zacks Rank & Key Picks
BHP Group currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation (CRS - Free Report) , IAMGOLD Corporation (IAG - Free Report) and Eldorado Gold Corporation (EGO - Free Report) . CRS, IAG and EGO sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2025 earnings is pegged at $6.06 per share. The consensus estimate for earnings has moved 17% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 15.9%. CRS’ shares have gained 125% in the past year.
The consensus estimate for IAMGOLD’s 2024 earnings is pegged at 39 cents per share. The consensus estimate for earnings has moved 44% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 200%. IAG’s shares have gained 103% in a year.
The Zacks Consensus Estimate for Eldorado Gold’s 2024 earnings is pegged at $1.32 per share. The consensus estimate for earnings has moved 22% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 430%. EGO’s shares have gained 37% in a year.