BHP approves £2.5bn copper expansion project

The board had approved the spending for the Spence Growth Option project, with chief executive officer Andrew Mackenzie saying that execution of option "will create long-term value for shareholders in one of our preferred commodities".

"The project significantly extends the life of our Spence operation and unlocks the potential of the large, quality resource."

Approximately 185 ktpa of payable copper in concentrate and 4 ktpa of payable molybdenum is expected from the project in the first 10 years of operation, said the company, with the first production expected in the 2021 financial year.

The company's current copper cathode stream was expected to continue until the 2025 financial year and convert 1.3 Bt1 of measured and indicated mineral resources to hypogene sulphide Ore Reserves.

In addition, the project was rigorously evaluated using BHP's capital allocation framework, and has an expected internal rate of return of 16% along with an expected payback period of 4.5 years from first production, said the company.

The SGO project, according to the company, would also create up to 5,000 jobs during the construction phase, drawing on experience developed from previous projects.