BHP will pay $2.1 billion (R38.7bn) for its interest in Filo Corporation, a Canadian copper miner, that the company is jointly acquiring under a joint venture with Lundin Mining Corporation, a diversified metals company that operates in Brazil, Chile and Portugal among other jurisdictions.
BHP has been on the lookout to bolster its copper ambitions. In May, Anglo American rejected BHP’s takeover offer.
Filo Corp. owns the Filo del Sol copper project in Canada, with BHP and Lundin Mining agreeing to form a 50/50 joint venture to hold the FDS as well as the Josemaria projects (owned by Lundin Mining) located in the Vicuña district of Argentina and Chile.
Under the joint venture, BHP and Lundin will develop the emerging copper district touted to have “world-class” potential. BHP traded 2.54% lower in the afternoon yesterday at R492.15, worsening its year-to-date 20.28% loss of value from its stock on the JSE.
BHP said its cash payment for the final transaction amounted to about $2.1bn. It will acquire 50% of the Josemaria project from Lundin Mining for a cash consideration of about $690 million.
Mike Henry, the CEO of BHP, said: “The proposed transaction builds on a multi-year relationship between BHP and the Lundin Group of companies through which we have developed a strong understanding of the resource potential of the Vicuña district and the possible pathways for development of the Filo del Sol and Josemaria projects.”
He added that the transaction was in alignment with BHP’s strategy to acquire attractive early-stage copper projects and to seek out strategic partnerships to deliver long-term value.
He described the Vicuña district that the new partnership is investing into as offering “the potential to become a major contributor to the economy of Argentina” for years to come.
“By partnering with Lundin Mining, BHP is continuing to invest in the growth of a robust mining sector in Canada,” he added.
Under the transaction, shareholders in Filo Corp. may choose to receive cash, shares in Lundin Mining or a combination of cash and shares.
BHP’s share of the consideration for the Filo Acquisition will be approximately $1.3bn in cash while Lundin Mining’s share of the consideration for the Filo Acquisition will be around C$859m (R11.4bn) in cash and C$1.3bn in Lundin Mining shares.
“The Filo Acquisition will be implemented by a court-approved plan of arrangement under the Canada Business Corporations Act and will require approval by Filo Corp. shareholders in accordance with applicable Canadian corporate and securities laws,” the company said.
BHP’s total copper production surged by 9% to 1.8 million tons in the year to June 2024. It expects output of the commodity for the 2025 full year to be between 1.8 million tons and 2 million tons.
“We achieved a strong performance across our copper business globally, underpinned by the highest production in four years at Escondida and another year of record production from Spence in Chile,” explained Henry earlier.
The company’s Escondida mine had uplifted production due to a higher concentrator feed grade of 0.88% as mining progressed into areas of higher-grade ore as planned following the implementation of measures to manage geotechnical events in the prior year. However, this had been partially offset by planned lower cathode production, as a result of prioritising concentrator throughput in previous years.
Nonetheless, the successful integration at Copper South Australia delivered additional production tons, and exceeded the annualised synergies planned at the time of the OZL acquisition.
BUSINESS REPORT