BHP and Lundin Mining have completed the acquisition of Toronto-listed Filo Corporation which runs the Filo del Sol copper project in Canada at a time prices of the commodity have peaked at 200 day highs, with bullish sentiment characterising the outlook.
BHP has been consolidating its copper portfolio after Anglo American rebuffed its offer for the London and Johannesburg listed resource group. In the quarter ended September 2024, BHP raised its copper production by 4% to 476 000 tons “due to higher grade and recoveries” at Escondida.
The company is consolidating its copper portfolio and yesterday said it, together with Lundin Mining Corporation had completed the acquisition of Filo Corp for $2 billion (R38bn).
The acquisition of the Filo del Sol copper project through Filo Corp has been followed by the formation of a Canadian-incorporated joint venture company, Vicuña Corp, owned by BHP Canada and Lundin Mining. Vicuna will hold interest in the Filo del Sol copper project as well as in the Josemaria copper project located in the Vicuña district of Argentina and Chile.
“Vicuña Corp. will be the operator and will be responsible for the management of the projects,” said BHP.
Prior to the transaction, Lundin Mining owned 100% of the Josemaria project. BHP Canada has now acquired a 50% interest in the Josemaria copper project from Lundin Mining while the two companies have contributed their respective 50% interests in Filo Corp. and the Josemaria project into the new joint venture vehicle.
“Leveraging the complementary capabilities of Lundin Mining and BHP, the development of Vicuña’s projects aims to deliver substantial value to shareholders, as well as to other stakeholders. The projects will be developed and will operate in line with international industry standards,” said Mike Henry, CEO for BHP.
He described the Vicuña Joint Venture as an “exciting new copper growth opportunity” for both companies.
“BHP is one of the world’s leading producers of copper, a metal essential to global economic growth, the energy transition and to the rapidly growing demand for data centres to support the harnessing of artificial intelligence,” added Henry.
Copper prices have been on a bullish run, touching $9033 this week, the highest level for the commodity in the past 200 days, said analysts.
“As long as price and seasonality agree, I am giving the copper bullish case the benefit of the doubt,” said commodity analyst, Jay Kaeppel,
BHP Canada paid Lundin Mining a $690 million cash consideration for a 50% interest in the Josemaria project.
This comes at a time copper is becoming a sought after commodity, with Duane Hope, a partner at Capital10X, saying new demand sources for copper included electrification and energy transition.
“New copper demand sources (include) electrification” with copper seen as a “big driver of net zero in transport, smart grids” among others.
BUSINESS REPORT