BHP Billiton Betting on Copper

Base Metals Investing
Copper Investing

BHP intends to spend US$900 million on exploration in the next financial year, with much of that to be focused on copper and oil.

BHP Billiton (NYSE:BHP,ASX;BHP,LSE:BLT) announced on Monday that it would be focusing on copper and oil exploration for the next financial year.
The company will spend approximately US$900 million on exploration in the next financial year, accounting for 18 percent of its overall capital budget. BHP Billiton Head of Geoscience, Laura Tyler, said at Citigroup’s Mining Exploration Day in Sydney that exploration is a key source of value creation for BHP.
“We are investing at a time when most in our sector continue to reduce discretionary spend,” Tyler stated.
With copper prices down 18 percent over the past year, a number of major copper miners have cut back their focus on the red metal. Both Glencore (LSE:GLEN) and Freeport-McMoRan (NYSE:FCX) made healthy cuts to copper production last year.
However, with copper prices up 4.59 percent since June 14, some believe that copper prices could be ready to rise. Thomson Reuters is calling for a medium-term recovery for copper prices, and BHP is betting on copper for the long term.
As per the company’s release, BHP’s copper exploration will target “tier 1 greenfield mineral deposits,” with a specific focus on:

  • copper porphyry and skarn deposits in Chile, Peru and the south west of the United States,
  • sedimentary hosted copper deposits in the north of Canada, and
  • Iron Oxide Copper Gold deposits in South Australia’s Stuart Shelf, adjacent to Olympic Dam.

Certainly, it is encouraging for junior mining investors to see one of the largest mining companies in the world place a renewed focus on copper exploration.
“We execute our Copper exploration both directly and through investment in joint venture opportunities and we continue to seek partnerships with junior explorers,” Tyler said.
As an example of a junior miner that currently has a partnership with BHP, this May, Aston Bay Holdings (TSXV:BAY), signed a definitive option agreement with a Canadian subsidiary of the company for its Storm copper project in Nunavut.
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Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
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