BHP seeks more copper, nickel and oil to meet demand

BHP said it wanted access to more copper, nickel and oil to take advantage of increasing demand as the miner set out its long-term strategy.

The FTSE 100 miner said the world was changing fast and, though it is confident about the short and medium term, it is planning over 10 or 20 years.

In a presentation to investors, chief financial officer Peter Beavan said BHP invests in commodities whose current or potential size is large with good demand. A diversified business allows the company to absorb short-term pressures and to invest when prices are cheap, he said.

"The changing world – including demand sources, the supply environment, required capabilities, and societal expectations – both challenges and excites us," Beavan said.

The Anglo-Australian company tests its business against themes such as electrification of transport, decarbonisation of power, reduced waste and more recycling and government actions to limit expansion, Beavan said. Copper, nickel and oil are the obvious areas to grow against this backdrop, he added.

"We can, with a degree of conviction, say that adding options in copper and nickel sulphides (as opposed to laterites) are likely to be a sound investment," he said. "Demand will grow and, at the same time, new supply sources will be hard to discover and permit, and will be more expensive to develop."

New oil capacity will be needed despite moves towards electric vehicles, Beavan said. New discovery trends are weak and good oil assets will remain attractive.

"We have options in copper and oil, but we need more. And we are interested in adding more nickel sulphide resource to our portfolio. So we should continue to add exploration options in these areas."

He was less enthusiastic about lithium and cobalt because there are large supplies of lithium and substitutes will be used for cobalt. Steel production will "remain marginal and increased recycling and long term slower growth in infrastructure will challenge even these low possible growth rates," Beavan said.

We have options in copper and oil, but we need more. And we are interested in adding more nickel sulphide resource to our portfolio. So we should continue to add exploration options in these areas. Demand for gas will increase but there is plenty of supply. Potash demand will increase but existing latent capacity will cap prices until the middle of the next decade, he said.