BHP’s ‘measured creep’ of risk appetite – by Matthew Stevens (Australian Financial Review – November 11, 2018)

Ivan Glasenberg wondered recently how it was the BHP had moved into mining frontier of Ecuador when management at Australia’s Smart Thinking resources house was supposedly content to sustain and grow its business around its existing sites. This bemusement is well founded.

Among the themes consistent through Andrew Mackenzie’s evolving reformation of BHP are that it has little or no appetite for investment in frontier opportunities and that the company’s growth aspirations will be best afforded through a laser focus on the Global Australian’s existing six-strong fleet of mega-resource basins.

But that message is in the process of being massaged into something more nuanced, and not just because BHP’s two-stream play to possibly shape Ecuador’s future in copper stands an obvious test of the past house line in emerging mining sovereignties.

To refresh here, BHP has so far spent $131.9 million in a two-step onto the register of an Australian-based, UK listing called SolGold. It has found what could be big copper in Ecuador and BHP 11 per cent stake in SolGold gives it a call over whatever happens next.

At the same time, BHP has acquired virgin exploration country on the fringes of SolGold’s Andean copper finds, and it has recently moved to open an office in the Ecuador’s capital of Quito. All of that is despite the inescapable fact that Ecuador is not an OECD destination and neither does it have a mature mining law or a legacy mining estate.

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