BHP Group (BHP) Status Update summary

Strategic context and market outlook

• Portfolio is focused on large, long-life, low-cost assets aligned with global megatrends such as decarbonisation, urbanisation, and digitalisation, with Chilean operations central to copper strategy.

• Copper demand is forecast to grow 70% by 2050, driven by electrification, digitalization, and rising living standards, with a 2% CAGR to 2050 and 2.6% to 2035.

• Latin America, especially Chile, is expected to remain the largest source of new copper supply, but faces challenges from declining ore grades, aging mines, and rising capital intensity.

• Many forecasted new supply projects are at risk of delay or may not materialise, requiring $250 billion in CapEx by 2034 and disciplined investment and technological innovation.

• Recycling and substitution will help meet demand, but 10 million tons of new mine supply is needed in the next decade.

Competitive advantages and operational excellence

• Holds the world’s largest copper resource base, with 26 Bt at Escondida, 2 Bt at Spence, and 2 Bt at Cerro Colorado, supporting over 65 years of mine life in Chile.

• Chilean copper assets have delivered a 58% average EBITDA margin over 20 years and over 20% ROCE in the last five years, with a five-year average EBITDA of $5.6bn.

• Productivity improvements since FY20 have generated $4 billion in benefits, with labor productivity up 10% and automation boosting output.

• Cost increases at Escondida and Spence (21% and 12% over two years) are well below the 75% average of competitors, and unit costs at Escondida are 17% lower than FY10 inflation-adjusted levels.

• Safety is prioritised through integrated systems, field leadership, and a fatality elimination program, with improving high-potential injury trends.

Growth strategy and project pipeline

• Growth plan targets 1.4 million tons of copper production per year in the 2030s, with potential to reach 1.5–1.6 million tons, and 15–19% IRRs.

• Growth options focus on concentrator expansions (Laguna Seca, Los Colorados, new Escondida concentrator) and innovative leaching technologies (BHP Leach, Jetti, Nuton).

• Pampa Norte’s growth leverages upgrades at Spence, SAL2 leaching, and potential restart at Cerro Colorado, with advanced leaching to extend cathode production.

• BHP Leach, an in-house nitrate leaching technology, is being demonstrated at scale, with $180 million invested and preliminary results expected by end of next year.

• Project delivery emphasizes safety, cost control, early contractor engagement, and leveraging global expertise, with capital intensity benchmarks below peers.