The $9.6 billion takeover deal will allow BHP to consolidate its copper holdings in South Australia and nickel deposits in Western Australia.
“The intention of the OZ Minerals board is to unanimously recommend the revised proposal as being in the best interests of OZ Minerals’ shareholders in the absence of a superior proposal,” the OZ board announced late last week.
That recommendation means BHP can move ahead with potential plans to consolidate major operations for copper and nickel, two of the most in-demand battery metals in the world.
“The combination of BHP and (OZ Minerals’) assets, skills and technical expertise provides a unique opportunity not available under separate ownership, with complementary resources … and existing facilities within close proximity, backed by BHP’s strong balance sheet, capital discipline and commitment to sustainable development,” BHP chief executive officer Mike Henry said.
OZ Minerals’ Prominent Hill and Carrapateena mines operate adjacent to BHP’s Olympic Dam mine and smelting operations in SA, about 550km north-west of Adelaide. The location of these operation – and the synergistic opportunities that presents – was no doubt a factor in BHP’s decision to ultimately increase its takeover bid for OZ Minerals.
It is believed BHP sees value in operating all three mines “by combining adjacent assets and sharing infrastructure to unlock extra capacity”.
“While the bid for OZ Minerals is partly motivated by a desire to get more nickel into BHP’s Western Australian smelters and refineries, it is mostly about finally solving the puzzle at Olympic Dam,” according to the Australian Financial Review.
The move means BHP can now create what will essentially be its own copper basin in SA. And with the demand and price for the metal likely to significantly increase given its central role in electrification, such a move puts the Big Australian in a strong position amid the world’s efforts to achieve its net-zero targets.
But copper is not the only opportunity for consolidation.
BHP’s acquisition of OZ Minerals means it can link its Nickel West mine in WA with OZ’s nearby West Musgrave copper-nickel operation.
OZ Minerals recently received board approval to develop the $1.7 billion West Musgrave copper-nickel project, which is set to generate almost $10 billion over its 24-year operating life.
With the BHP has been granted four weeks to conduct its due diligence on OZ Minerals, starting Monday November 21.