BHP’s global largest copper mine expansion under its umbrella has been approved, with total investment of up to $14.7 billion.

BHP Group’s expansion plan for Escondida, the world’s largest copper mine, has taken a key step, marking that the mining giant’s strategy of betting on long-term growth in copper demand is moving faster toward implementation.

Chile’s Antofagasta Environmental Assessment Commission has approved the preliminary expansion works at the Escondida mine, covering sulfide leaching and upgrades to power facilities, with an initial investment of approximately $1.3 billion. A BHP spokesperson confirmed the above on Tuesday. This approval clears regulatory obstacles for subsequent, larger-scale upgrades to the mine and processing facilities, and the total investment for the entire Chilean expansion plan is expected to range between $10.7 billion and $14.7 billion.

BHP plans to double global copper annual production to more than 2 million tonnes by the mid-2030s, and the outcome of its Chile operations is crucial to achieving this goal. Copper is a core metal for the clean energy transition and data center construction, and the market generally holds a positive outlook for its long-term demand prospects.

Initial work begins; subsequent investments follow

The approved first-stage works focus on upgrades to sulfide leaching technology and power system improvements, costing about $1.3 billion. After completing the above foundational engineering, BHP will move forward with a series of major upgrades to the mine and concentrator facilities.

Escondida is the copper mine with the largest production volume in the world. BHP holds a 57.5% stake, Rio Tinto holds 30%, and the remaining shares are held by a consortium of Japanese companies.

Just last week, BHP also applied to restart and expand the Cerro Colorado copper mine in northern Chile, with a project investment of approximately $1.5 billion. In March this year, the company applied to build a new concentrator at Escondida, with an estimated cost of about $5.9 billion. The above projects, taken together, form BHP’s large-scale capital expenditure blueprint for Chile.

Strategic investment amid pressure from declining ore grades

The core challenge driving the above large-scale investments is the ongoing decline in ore grades. Chilean mines such as Escondida are facing long-term pressure from grade depletion. To maintain current production levels, BHP has had to keep increasing capital expenditure.

BHP is currently the world’s largest copper mining producer. Copper plays an indispensable role in the decarbonization process and data center expansion, supporting the company’s optimistic judgment about long-term demand. The company plans to significantly increase global copper annual production from current levels to more than 2 million tonnes by the mid-2030s, and achieving this goal depends heavily on the continued expansion of its Chile operations.

For investors, the first major environmental approval from Chilean regulators has reduced the uncertainty in executing the expansion plan, but each subsequent phase of engineering still needs to pass the environmental impact assessment (EIA) process one by one.

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