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BHP has announced a new $2 billion deal to sell a 49% stake in its Western Australia power network to BlackRock-owned Global Infrastructure Partners.
The new deal allows the company to unlock cash from its energy infrastructure without ending control of its iron ore operations. The move comes as BlackRock is moving to buy hard infrastructure.
BHP CEO Mike Henry spoke to “The Claman Countdown” about the deal.
“This is really about us looking to be as sharp as we can be about how we go about allocating capital and where there’s opportunities for us to free up some parts of our business, secure capital at better multiples than we generate in our business, to redeploy into higher returning growth,” he said. “We are pursuing those opportunities, and this is the first of what I expect is ultimately going to be a series of similar deals.”
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The CEO expressed excitement about the company’s “copper future,” revealing the demand for the metal is “ubiquitous” and expected to grow by 70% over the next 25 years.
“It’s needed to power the everyday economy,” Henry explained, stressing BHP is the world’s largest copper producer. “It’s going to be needed for the energy transition. … These data centers and all the power that feed them are very copper-intensive.”
Along with copper development, BHP has also delved into supplying potash, a key element that goes into fertilizer.
“Why is potash important?” Henry asked. “We’ve got 8 billion mouths to feed today, 10 billion mouths to feed around the world by 2050, all living better standards of living, which tends to involve more calorie-intensive diets. So, the world is going to need a lot more agricultural production and potash, of course, is going to be a key enabler of that to be done in a sustainable fashion. So, we like this business. It’s going to generate high margins and it’s going to be attractive for shareholders for many decades to come.”
The company, he said, is laser focused on its growth options ahead and getting “organic projects” up and running.
“When there’s opportunities to acquire high-quality assets at a value that allows us to put hand on heart and create further value for BHP shareholders, it’s incumbent on us that we look at those opportunities,” Henry reflected.
