Copper: BHP in talks for DRC project

The Melbourne-based miner is in talks with Ivanhoe Mines Ltd. to buy Western Foreland, a huge exploration territory that borders Ivanhoe’s Kamoa-Kakula mine.

The foray into a nation emerging from decades of conflict would mark a shift in strategy for BHP, which has operated mainly in more developed countries in recent years. The company sold its last mining project in Africa (the rights to develop an iron ore deposit in Guinea) to Friedland in 2019, while focusing on Australia, Canada and Chile.

During CEO Mike Henry’s 18-month tenure, BHP’s position has softened. There is a realisation that to gain access to the best mineral deposits for the global energy transition, the company needs to operate in riskier jurisdictions.

BHP is particularly bullish on copper, a metal used for wiring that is crucial to decarbonisation. Like its main rivals, BHP expects demand to surge, while long-term supply looks constrained due to a lack of new mine development and as growth in top producer Chile slows due to deteriorating ore quality and huge investment costs.

While BHP has already shown more appetite for risk by building a stake in Ecuador’s copper mine developer, SolGold Plc, making a bet on the DRC is a significant step forward. While the country is Africa’s largest source of cobalt and copper producer, corruption in the sector has kept the nation among the poorest in the world.

The DRC’s challenges are highlighted by the Kamoa-Kakula mine in Ivanhoe, which began operations earlier this year. Kamoa-Kakula is one of the world’s highest-grade copper mines, with the potential to become one of the largest, with Chinese companies financing the project as Western rivals were deterred by the risks associated with the country.