Australian metals and mining company BHP has said it plans to invest $10bn into Chile under “the right sets of conditions”, as the demand for copper rises ahead of the energy transition.

Rag Udd, president of BHP Minerals Americas, said at the CRU World Copper Conference 2022 on March 29 that “we would like to invest over $10bn dollars of further investment in Chile and create mutual benefit for at least the next 50 years”.

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Chile is the world’s biggest copper producer and BHP’s Escondida mine, located in the Atacama desert, is the world’s biggest copper deposit. 

Mr Udd laid out the possibility of developing a new concentrator, leaching processing facilities and new mining areas, while investing in decarbonisation to reduce direct greenhouse gas emissions.   

“We are eager to grow,” he said; however, he warned that “these investments need the right set of conditions”, such as fiscal stability, legal certainty, and a “clear pathway to permitting”.

This announcement comes as Chile’s constitutional assembly is debating nationalising mining assets in the country and the senate is discussing a bill to increase mining royalties.

Mr Udd’s speech followed that of Chile’s mining minister, Marcela Hernando, who assured the conference that the government did not intend to nationalise the extractive sector; however, she did not comment on the outcome of the increase in mining royalties.

Gabriel Boric, Chile’s youngest ever president and a former student activist, was elected on December 19 last year and has pledged to address the country’s wealth inequality and reform the social welfare system. 

The biggest risk globally to the copper mining sector comes from the two policies of nationalisation and an increase in royalties in Chile, wrote Bob Brackett, senior analyst at Bernstein, in a note on March 14. 

As an effective electrical conductor, it is the one metal that will become critical for the energy transition. 

Copper is used in renewable energy systems to generate power from solar, hydro and wind energy to electric vehicles. There is 12 times more copper in renewable energy systems than in traditional energy, says the International Copper Association.

If overall demand for copper is expected to grow until 2040, two key areas of demand growth will come from electric vehicles (EVs) and renewable energy.

Copper demand from EVs will grow at a compound annual growth rate (CAGR) of 18% to 2040, increasing from 1% of total demand to 20%, while copper wires needed for renewable energy generation are expected to create a CAGR of 5% to 2040, according to Bernstein estimates.

“The world will need twice as much mined copper in the next 30 years as it has in the past 30 years,” Mr Udd says. “A decarbonised world that is reliant on electrification [is] a world that is hungry for copper to support this electrification.”

BHP aims for its assets to be sourced using 100% renewable energy by the mid-2020s.