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Jul. 08, 2026 07:12AM PST
The capital allocations support the company’s target to produce two million metric tons of copper annually by the mid-2030s.
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BHP (ASX:BHP,NYSE:BHP,LSE:BHP) continues to accelerate its global copper expansion, simultaneously securing environmental clearance to upgrade its Escondida mine in Chile and awarding a US$138 million engineering contract to scale its South Australian processing hub.
The Antofagasta Environmental Assessment Commission approved early works covering sulfide leaching and electricity infrastructure improvements at the Atacama Desert site, according to a Bloomberg report.
The initial phase will cost approximately US$1.3 billion and will form the first stage of a planned US$10.7 billion to US$14.7 billion expenditure across BHP’s Chilean portfolio.
The company, which owns 57.5 percent of Escondida alongside Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) and a Japanese consortium, is deploying capital to sustain production rates as ore grades fall.
BHP is also seeking regulatory approval to construct a US$5.9 billion concentrator plant at Escondida and to restart the Cerro Colorado mine, an estimated US$1.5 billion project.
Additionally, the company signed definitive agreements to sell its San Manuel property in Arizona to Faraday Copper (TSX:FDY,OTCQX:CPPKF).
In Australia, BHP also recently awarded a design and supply contract to China Nerin Engineering to develop smelting and refining facilities.
The agreement supports a planned expansion at the Olympic Dam complex in South Australia, subject to a final investment decision in 2027. The project aims to increase output from the Copper South Australia province to 500,000 metric tons per annum.
BHP currently has approximately US$1.4 billion of projects in execution in the region, including a 1.3-kilometer haul shaft at Prominent Hill.
Chilean production drops amid supply shortfall
Despite the capital deployments by BHP, structural production across Chile continues to decline.
The country's national copper output fell 9 percent year-on-year in the first quarter. Production at Codelco, the state-owned miner, has dropped to a 28-year low. Codelco currently operates with a US$25 billion debt burden.
Further worsening the outlook, a fatal collapse at its El Teniente mine last year halted work in key expansion areas. Following an internal audit, the company also reported it had overstated its 2025 copper production by almost 27,000 metric tons.
Chile’s outlook has suffered as a result. According to data from BloombergNEF, Chilean production is projected to fall from 5.4 million metric tons to 4.2 million metric tons by 2050 as legacy deposits deplete.
The consultancy forecasts the global shortfall between copper demand and production will widen to 7 million metric tons by 2035.
Recent operational issues at other major assets have further constrained supply. Freeport-McMoRan (NYSE:FCX)'s Grasberg mine in Indonesia is currently targeting 60 percent of capacity by the end of the year following wet ore complications.
Meanwhile, the Kamoa-Kakula joint venture in the Democratic Republic of Congo (DRC) revised its production guidance downward by 22.5 percent to a range of 290,000 to 330,000 metric tons.
Raw material inputs were also severely impacted by the closure of the Strait of Hormuz following the outbreak of the US-led war with Iran. Shipments of sulfuric acid, a necessary chemical for solvent extraction and electrowinning circuits, were restricted.
Future outlook
Despite the supply deficits, copper prices continue to rise, reaching all-time highs in May by hitting US$6.72 per pound on the Comex and US$14,196.50 per metric ton on the London Metal Exchange (LME).
Demand projections remain elevated due to the metal’s integral role in grid electrification and construction of artificial intelligence data centers.
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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.
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Giann Liguid is a graduate of Ateneo De Manila University with an AB in Interdisciplinary Studies. With a diverse writing background, Giann has written content for the security, food and business industries. He also has expertise in both the public and private sectors, having worked in the government specializing in local government units and administrative dynamics.
When he is not chasing the next market headline, Giann can most likely be found thrift shopping for his dogs.
When he is not chasing the next market headline, Giann can most likely be found thrift shopping for his dogs.
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Giann Liguid is a graduate of Ateneo De Manila University with an AB in Interdisciplinary Studies. With a diverse writing background, Giann has written content for the security, food and business industries. He also has expertise in both the public and private sectors, having worked in the government specializing in local government units and administrative dynamics.
When he is not chasing the next market headline, Giann can most likely be found thrift shopping for his dogs.
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