BHP's global largest copper mine expansion approved, with a total investment of up to $14.7 billion.

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The expansion plan for Escondida, the world's largest copper mine owned by BHP Group, has taken a major step forward, marking the accelerated implementation of the mining giant's strategy to bet on long-term copper demand growth.

The Environmental Assessment Commission of Antofagasta, Chile, has approved the preliminary expansion works of the Escondida mine, covering sulfide leaching and power facilities upgrades, with an initial investment of about $1.3 billion. A BHP spokesperson confirmed this news on Tuesday. This approval removes regulatory barriers for subsequent larger-scale upgrades of the mine and processing facilities, with the total investment in the entire Chilean expansion plan expected to range from $10.7 to $14.7 billion.

BHP plans to double its annual global copper production to more than 2 million tonnes by the mid-2030s, with the success of its Chilean operations being critical to this goal. Copper is a key metal for the clean energy transition and data center construction, and its long-term demand outlook is widely regarded as promising.

Initial Projects Launched, Further Investments to Follow

The approved phase one works focus on upgrades to sulfide leaching technology and the power system, costing about $1.3 billion. After completing these foundational projects, BHP will carry out a series of major upgrades to the mine and ore processing facilities.

Escondida is the world's largest copper-producing mine. BHP holds a 57.5% stake, Rio Tinto holds 30%, and the remaining shares are owned by a consortium of Japanese companies.

Just last week, BHP applied to restart and expand the Cerro Colorado copper mine in northern Chile, with a project investment of about $1.5 billion. In March this year, the company applied to build a new concentrator at Escondida, with an investment estimated at about $5.9 billion. Collectively, these projects constitute BHP’s large-scale capital expenditure plan in Chile.

Strategic Investment Amid Ore Grade Decline Pressure

The main challenge driving these large-scale investments is the ongoing decline in ore grades. Mines in Chile such as Escondida are facing long-term pressure from declining grades, forcing BHP to continuously increase capital spending to maintain current production levels.

BHP is currently the world's largest copper mining operator. Copper plays an indispensable role in the decarbonization process and the expansion of data centers, which supports the company’s optimism about long-term demand. The company plans to significantly boost its global copper annual production to over 2 million tonnes by the mid-2030s, and achieving this goal depends heavily on ongoing expansion in Chile.

For investors, the approval of the first major environmental permit by Chilean regulators reduces the uncertainty of executing the expansion plan, although each subsequent stage must still undergo environmental assessment.

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