BHP (ASX:BHP) Group Ltd (ASX: BHP) has encountered a challenging trading session, with its share price falling by 1.5% to $41.31 during Tuesday morning trading. This decline is part of a broader market trend impacting various mining stocks, driven by a general pullback in commodity prices.
Despite this overall market weakness, BHP has announced a major strategic move aimed at strengthening its position in the copper sector. The mining giant has entered into a significant agreement with Lundin Mining to jointly acquire Filo Corp for C$4.1 billion (A$4.5 billion). This transaction will be executed through a Canadian plan of arrangement, marking a substantial investment in the copper mining space.
Filo Corp, a key player in the copper industry, owns the Filo del Sol (FDS) copper project, which is located in the Vicuña district spanning Argentina and Chile. The Filo del Sol project is noted for its large-scale, high-grade sulphide deposit and is considered one of the most significant copper discoveries in recent decades. This acquisition represents a strategic enhancement of BHP’s copper portfolio, aligning with its long-term growth objectives.
Under the terms of the deal, BHP is expected to make a total cash payment of approximately US$2.1 billion. In addition to this, BHP will acquire a 50% stake in the Josemaria copper project from Lundin Mining for around US$690 million. The acquisition of these assets is expected to solidify BHP's position in the copper market, particularly in the promising Vicuña district.
The transaction will also result in the formation of a 50:50 joint venture between BHP and Lundin Mining. Each party will contribute their respective interests in Filo Corp and the Josemaria project into this new joint venture. This partnership is designed to combine the strengths and expertise of both companies, facilitating the development of a new, high-potential copper district.
Mike Henry, CEO of BHP, highlighted the strategic significance of this acquisition. He noted that the transaction builds on a multi-year relationship between BHP and the Lundin Group, during which both parties have developed a comprehensive understanding of the resource potential in the Vicuña district. Henry emphasized that this deal aligns with BHP’s strategic goal to acquire attractive early-stage copper projects and enter into strategic partnerships that can deliver long-term economic and social value. He also noted that the joint venture with Lundin Mining would contribute substantially to the Argentine economy over the coming decades, while also strengthening BHP’s investments in the Canadian mining sector.
This acquisition and joint venture represent a major step in BHP's strategy to expand its copper exposure and enhance its growth prospects in the global mining industry. The development of the Vicuña district and the strategic partnership with Lundin Mining are expected to create significant value for both companies, leveraging their combined expertise to advance major copper projects in the region.