Opinion: Bigger not always better as BHP’s capital allocation questioned | newsandimages
For BHP’s board and management, size has always mattered. The “Big Australian” has pursued a strategy of only holding mining assets that offer significant scale, are long-life and low-cost. Any mining assets deemed too small, or non-core, have been sold over the past two decades.
Despite funding the exploration, the Big Australian decided to exit the investment in 2003. At the time, Minotaur managing director Derek Carter explained BHP’s decision and then added a caveat.“It’s just basically not up to their size criteria,” he said. “But just because it’s too small for them doesn’t mean it can’t be a hugely successful mine.” Carter was talking his own book, but he was also right.
There has been a scramble globally by big mining companies to acquire copper assets, which reflects BHP’s interest now in Oz Minerals, as well as the synergies that exist. The two companies already share infrastructure and the Prominent Hill and Olympic Dam mines are adjacent to each other.
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