BHP’s deal with Canadian-listed Mundoro Capital gives the Australian mining giant the option to take a stake in three exploration areas that Mundoro holds in the Timok region, in the country’s east.
Morningstar’s resources equity analyst Jon Mills said the agreement not only showed a continuation of the big miners moving towards so-called “future-facing” commodities but also demonstrated the lack of existing projects available to them.
“Even the projects that are out there, they’re not for sale really unless someone like OZ (Minerals) plays hard to get,” Mr Mills said.
“Obviously the industry is a lot more concentrated than it was 10 years ago so that limits the potential mergers among the big miners — they’ve got to try and search for the smaller miners that own copper assets or develop them themselves.”
However, while global moves are necessary they are not without risk. BHP’s rival Rio Tinto is battling its own operating issues in Serbia and Mr Mills warned miners were facing “more resource nationalism”.
BHP’s growing appetite for copper — which is critical for decarbonising the economy due to its use in wind turbines, electricity grids and EVs — was most recently evidenced in its $9.6 billion acquisition of OZ Minerals.
“The (Mundoro) agreement aligns with our strategy to secure early-stage opportunities in key future-facing commodities such as copper, which is a critical resource for electrification,” a BHP spokesman said in a statement to The West Australian.
“In entering Serbia, we sought investment opportunities with partners with proven capability to work with the community and a variety of stakeholders in a positive and productive way.”
The Serbia deal also follows comments by BHP chief Mike Henry at the World Economic Forum in Switzerland last week that miners must be willing to take on more risk on using innovative technology to meet the huge demand for critical minerals.
Mundoro chief executive Teo Dechev said the company had established a decade-long history of early stage exploration in Serbia and Bulgaria.
“Mundoro welcomes BHP as an exploration partner that recognises the potential of further exploration in the western Tethyan Belt,” Ms Dechev said in a statement announcing the partnership overnight.
The Serbian government last year revoked Rio’s lithium mining licences for its $US2.4b Jadar lithium project following weeks of protests from environmental groups.
Serbia’s president last week said it may revisit its decision to block the project.
Asked whether BHP could experience similar issues, Mr Mills also pointed to recent mining delays in Chile and the stalled Resolution copper development in Arizona jointly owned by BHP and Rio, saying: “There’s obviously more resources nationalism and threats of increasing taxes and royalties.”
Chile’s government last week rejected the $2.5b Dominga copper and iron mining project in Santiago due to biodiversity concerns.
However Mr Mills expected high-value projects Jadar — which would be capable of producing 58,000 tonnes of refined battery-grade lithium carbonate a year, powering about one million electric vehicles — would eventually be developed.
“There’s just too much money involved and too many jobs and taxes, and tax revenue for the local and national authorities,” he added.
“Even if the Serbians say no, you can’t develop these mines, so what? It’s so immaterial in the scheme of things for BHP . . . we’re still very early in the process.”
BHP chair Ken MacKenzie in November told investors the miner was “very focused on future-facing commodities” — in particular copper, nickel and potash — and expected they would represent 50 per cent of BHP’s portfolio by 2030.
The company has already built stakes in a copper explorer in Ecuador and a nickel company in Tanzania.
