BHP Aims to Conclude Chile Mine Sale in Coming Weeks, Months

Updated on
  • Miner prepares for Escondida wage talks amid higher prices
  • Malchuk says BHP progressing on sale of shale asset package

BHP Billiton Ltd. hasn’t given up on selling its Cerro Colorado copper mine in Chile and continues to speak to prospective buyers, President Operations Minerals Americas Daniel Malchuk said.

The Melbourne-based company hopes the process will be concluded in the coming “weeks or months,” he said Monday in an interview on the sidelines of the Prospectors & Developers Association of Canada conference in Toronto. However, he cautioned that any sale “needs to be for a price that protects the value for our shareholders.”

There is no deadline or expiration date for the process, he said. BHP gained 2.1 percent in Sydney trading Tuesday, and was up 2.3 percent in London at 1:38 p.m. local time.

Selling the asset is part of Chief Executive Officer Andrew Mackenzie’s bid to focus on large assets in commodities such as iron ore, oil and copper. Cerro Colorado is BHP’s smallest mine in Chile and it makes more sense for another owner to take it over and put in the work to extend its life, Malchuk said.

Andrew Mackenzie

Photographer: Carla Gottgens/Bloomberg

In August, BHP said the sale was in its final stages, but almost six months later no announcement has been made. Cerro Colorado’s environmental license runs out in 2023, after which new terms would have to be negotiated for water use. Asked if this accounted for the delay, Malchuk said all parties are aware of the 2023 date so it would be factored into their bids.

BHP is also preparing for wage negotiations at its giant Escondida copper mine in Chile. Those talks must begin by June 1, two months before the current contract expires, Malchuk said. However, the company is hopeful the union will be willing to begin talking sooner, Malchuk said, as advanced talks provide a better chance for a “complete dialogue.”

Both sides probably have had a “soul search,” he said, since talks ended last year without an agreement, leading to a 44-day strike, That said, higher copper prices have created higher expectations not just among workers in Chile but also the government, he said.

‘Certainly Fits’

Meanwhile, the company is making progress on plans to sell a package of shale assets and, based on the level of interest and current commodity prices, he said that may be concluded a little sooner than the two-year target the CEO has previously spoken about.

The U.S. shale business “certainly fits the profile” of the kind of asset Royal Dutch Shell Plc is looking for, an executive with that company said from the sidelines of an energy conference in Houston. “But it’s among a whole host of opportunities that are very similar.”

BHP is prepared to offer the assets in as many as seven packages, including three in the prized Permian Basin, people with knowledge of the producer’s plans said in February. The company values the assets at $10 billion or more, though it could consider a swap of onshore U.S. acreage for offshore wells in the Gulf of Mexico, according to the people.

— With assistance by David Stringer, Laura Millan Lombrana, R.T. Watson, Javier Blas, and Kevin Crowley

    Quotes from this Article
    Before it's here, it's on the Bloomberg Terminal.