BHP CEO Mike Henry’s next big call is on how to grow its copper business. He says Australia’s IR, tax and approvals policies could turn it away from Australia.
Nickel accounted for just 2.7 per cent of BHP’s revenue in the December half, but about 90 per cent of the questions chief executive Mike Henry took from journalists on Tuesday. The interest is understandable given the crisis facing the nickel sector, where mines are being shut, jobs are being lost and the federal government is scrambling to try to come up with financial support.
, which helped BHP retain its title as the world’s largest dividend payer. Or, the integration of OZ Minerals into BHP’s South Australian copper assets, six months ahead of schedule. Or, another good result from its Pilbara iron ore business, which retains the mantle of the world’s lowest cost operation. And more evidence that Henry’s strategy is working, from BHP’s exit from fossil fuels through to its new growth front in potash. Nevertheless, Henry dutifully worked through the nickel questions, revealing several key points about BHP’s attitude to a business it has now placed under strategic review, and may well shut in the coming months.Second, BHP believes the shift in the nickel sector’s dynamics – where prices have plunged due to an influx of high-grade nickel out of Indonesia – is structural, not cyclical.but this was not BHP’s idea. And the credits might not be enough to save nickel operations that have already been closed. Finally, and most importantly, the crisis in nickel emphasises Henry’s oft-made point that Australia does not have the same natural advantages in critical minerals as it does in bulk commodities like iron ore and coal.Advertisement Henry has been an outspoken critic of the Albanese government’s industrial relations reforms, particularly the “same job, same pay” policy that directly threatens the miner’s operations services model, which has been described as an in-house contracting division designed for maximum flexibility. But Henry’s broader point is that Australia needs to realise it is in a fight with other countries that are also trying to grab onto the critical minerals boom – and doing so, he says, in a more business-friendly way. Racing in to save the nickel sector at the last minute is one thing, but “it should not take the pressure off, or the focus of making sure we have the policy settings in place to drive long-term competitive positioning for Australia”. These settings, Henry says, will matter as BHP contemplates its next big investment call. Australia’s nickel sector is on its knees, but BHP still has big ambitions to grow in arguably the most important energy transition metal of them all: copper. The copper basin play that Henry has been quietly developing in South Australia, both through the acquisition of OZ Minerals and a ton of self-help at Olympic Dam, is shaping up nicely; on Tuesday Henry said BHP will make decisions on the suite of projects that would increase annual production from about 330,000 tonnes a year to 500,000 tonnes in the next two to three years. But between now and then, BHP will also consider expansion opportunities in Chile and possibly even Argentina. And the policy backdrop in Australia will be a part of the capital allocation deliberations.“As we work these numbers, of course, one of the things we’ll be looking at is the underlying cost base, both in terms of capital and in terms of ongoing operating costs. And it’s safe to say that some of the recent changes would have an impact on those, and not in a good way,” Henry says. The South Australian and West Australian governments, he says, have been constructive. But it’s hard to escape the sense Henry remains on a collision course with the Albanese government.