Fossil fuel major BHP is looking to add more oil, copper and nickel resources to its portfolio, while souring on thermal coal because it thinks the fossil fuel will be phased out, “potentially sooner than expected”.
At the same time BHP has come to the conclusion that electric vehicles will arrive more quickly than previously imagined and batteries really are the re-generators of the future, but that it will stick with nickel rather join the lithium rush.
BHP’s chief financial officer, Peter Beaven, has told investors and analysts in a strategy briefing that “the world will be a very different place in 10 to 20 years’ time” and the global miner must be thoughtful about the risks and opportunities.
The Guardian Online reports Mr Beaven said the miner believed that electrification of transport and the decarbonisation of stationary power were two strategic themes going forward.
As such, BHP believes that copper and nickel, used in electric vehicles, are sound investments, a turnaround from its stance of a few years ago when it was trying to sell off its Nickel West project in Western Australia.
However, even with the trend towards electric vehicles, BHP forecasts that the decline in existing oil fields ensures that new capacity will be required.
“It is likely that attractive rent will continue to be available for well-placed assets,” Mr Beaven said.
BHP is looking to develop oil projects in the United States, the Gulf of Mexico and Canada, Mr Beaven said.
It is also interested in finding another nickel resource in WA and expanding its existing copper projects, in South Australia, Arizona and Ecuador.
The conclusions and many more were revealed at the shareholder briefing and are the product of the sort of big thinking that sees Australia’s global resources major follow an investment rule book made orthodoxy by Royal Dutch Shell.
However, BHP has “no appetite for growth in energy coal regardless of asset attractiveness”, the company said in a briefing slide.
BHP has two high-quality thermal coalmines that generate high margins, the Mt Arthur Coal mine in New South Wales and the Cerrejón mine in Colombia, in which BHP holds a one-third stake, but Mr Beaven suggested they could be sold.
“Our focus will be on maximising value to shareholders, whether we are long-term owners or not,” he said.
BHP forecasts that metallurgical coal, used in steelmaking and mined by BHP in central Queensland, will still offer the company attractive returns, as will its iron ore operations.
However, there was a possibility that gas would be leapfrogged by emerging markets as they opt for renewable energy, Mr Beaven said.
In other resources, the abundant supply of lithium means BHP is not interested in the asset, and the miner foresees that cobalt will lose share to nickel.
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