A pivotal moment to build a better future

World Copper Conference
ragudd 2020
Rag Udd

President Operations, Minerals Americas

Thank you for the opportunity to speak to you today at what I believe is a pivotal moment for the global copper sector

The World Copper Conference is an opportunity for industry, government, and stakeholders to come together to strengthen support, for an industry that is key to the decarbonisation and development of the world

Today I would like to talk about three key themes: a. Firstly, why we at BHP are so focused on copper, and its importance to our growth strategy;

Secondly, our vision for ¨mining of the future¨, and why that makes BHP such a good partner of choice;

And finally, how the mining industry and copper sector is at a pivotal moment –an inflection point– that will shape its prospects for future generations

Why we are excited about copper

I will start by talking about copper and the future – at BHP, we are excited about both.

Our strategy is focused on the commodities of the future, what we call “future facing commodities”: nickel for electric vehicles; potash for sustainable farming to feed the world; and of course, copper for electrification and decarbonisation

Today I will focus on copper

Our portfolio analysis under BHP’s Paris-aligned 1.5 degree scenario, described in our 2020 Climate Change Report, indicated that the world will need twice as much mined copper in the next 30 years as it has in the last 30 years. 

I´ll say that again… the world will need twice as much mined copper in the next 30 years as it has in the last 30 years 

A decarbonised world that is reliant on electrification…a world that is hungry for copper to support this electrification

A world with raised standards of living

At BHP we want to play a leading role in delivering the copper to create that world

Growth opportunities in copper: how it fits our strategy

Put simply, copper is a commodity where we want to grow our portfolio

To achieve this, our growth strategy is based upon four key levers: a. First, through getting more out of our existing assets through innovation, technology, production efficiencies and expansions, as we are doing at our operations here in Chile.

Second, growth through exploration, like at Oak Dam in South Australia

Third, through early-stage entry, such as our recent investment in Filo Mining, a copper project located on the Chilean /Argentinian border.

And finally, through mergers and acqusitions, but only for value and under the right conditions.

BHP as a partner of choice

But growth is about more than tonnes. Not just “how much” but also “how”.

And this is the second point I wanted to make today:

Our growth strategy must benefit the countries and the communities in which we operate. It must benefit suppliers, employees, and customers.

We are focused on creating value for all our stakeholders.

When we invest in a region, we become an intrinsic part of its environment, its economy, its community, and society as a whole.

And because of this, the concept of social value is fundamental to the way we do business. Not just what we do – but how we do it.

Our approach to social value aligns to the UN’s Sustainable Development Goals which consider three elements: planet, people, and prosperity.

Firstly, we provide value to the planet, by contributing to the world’s efforts to achieve its decarbonisation ambitions and to a healthy environment.

Consider our recent progress with water and energy here in Chile.

Starting with water, at Escondida, the world’s largest copper producer, we have invested over 4 billion dollars in desalination capacity, and have effectively stopped extracting water from the Andean aquifers.

And on energy, we are also conscious about greenhouse gas emissions and have ended all our fossil fuel-based electricity contracts at Escondida and Spence. We are aiming for 100% of the energy consumed by these assets to come from renewable sources by the mid-2020s.

Secondly, we provide value to people through partnerships with local communities and creating an inclusive and future ready workforce.

This priority comes to life in many ways – big and small.

Whether it’s the vaccination center we opened in Antofagasta, in which over 168,000 COVID-19 shots were delivered

Or our aspiration to achieve gender balance within our employee workforce globally by the end of FY2025. In Chile, women now make up 26% of our workforce, more than twice the industry average.

And finally, we build prosperity through thriving, empowered communities, and responsible supply chains.

Through our Education Support Program–that has provided training, digital learning and computers to students and teachers from Sierra Gorda and nearby communities.

And by strengthening our supply chain by supporting local businesses. For example, in 2021 our Local Buying Program in Chile completed almost US$70 million in purchases to local suppliers.

Across each of these elements –planet, people, and prosperity– we continue to use our global perspective to build and deliver real value for our stakeholders

Conditions for a future-facing mining industry

The third point I wanted to make today refers to the opportunity we have ahead of us

As I said, we are focused on copper and enthusiastic about the role that BHP can play in delivering that copper.

But we must work together to take advantage of the opportunity

Our history here in Chile is a story of shared success that we wish to continue in the future

Chile is currently the world´s largest copper producer and has an extraordinary resource endowment, so it has the potential to be right at the centre of the expected demand growth for copper

But there are several headwinds: copper productivity has declined in recent years, and there are challenges with declining grades and rising costs. Other countries are also competitive and are vying for capital in a market that is internationally mobile.

At BHP, we want to grow in Chile, and are accelerating studies to do so. We would like to invest over $10 billion dollars of further investment in Chile, and create mutual benefit for at least the next 50 years.

We are looking at things like a new concentrator and leaching processing facilities, developing new mining areas, and investments in decarbonisation to reduce Scope 1 emissions, ultimately to net zero.

We are eager to grow. These investments would bring new jobs and shared prosperity for the communities and society in which we operate, and we want to ensure that our communities, employees, and partners come along on this journey.

But as I said, these investments need the right set of conditions. These conditions are well known, but worth repeating – long-term investments in mining require fiscal stability, legal certainty, and a clear pathway to permitting.

I hope that I have convinced you today that under the right investment conditions we can deliver copper to support the world of the future in a way that is sustainable and creates social value for the communities and society in which we operate

In conclusion:

We are excited about copper, and it is a key part of our future-facing growth strategy. 

We are committed to delivering copper in a way that is sustainable and creates social value for the regions in which we operate.

But the mining industry is at a pivotal moment –an inflection point– that will shape its prospects for the next generations

We see a substantial opportunity here in Chile: a win-win situation for BHP, for Chile and its people, and for the planet that needs copper.

It is a time for collaboration and cooperation. For governments, industry, and people to work towards the common goal of sustainable mining to support a decarbonised world with higher living standards.

A fairer, cleaner world..

Let’s work together to make that happen. The future is here, and we are ready for it.