BHP Group deliberated a potential spin-off of its Australian iron ore and coal divisions, reported Reuters, citing sources familiar with the matter.
This move aligns with BHP’s medium-term growth strategy and shift towards “future-facing commodities” such as potash and copper.
The discussions over the spin-off come at a time when BHP is intensifying efforts to make its operations more environmentally friendly, while preparing for leadership changes and bidding for Anglo American in 2023 and 2024, which was later shelved.
Despite the considerations, BHP has chosen not to advance with the spin-off plans at present.
The deliberations offer an insight into the extent of change BHP is willing to consider under its new leadership.
The potential separation would have been transformative for BHP, distancing the company from its long-standing iron ore mining operations in Australia, which date back to 1885 and currently generate around 60% of its profits.
Additionally, divesting coal assets would also reduce BHP’s carbon footprint.
Ross McEwan, former head of National Australia Bank, has recently taken over as BHP chair, and the search for a successor to CEO Mike Henry is set to commence.
Henry and former CFO David Lamont had engaged with investors regarding the separation of BHP’s future growth from its maturing businesses.
However, the conclusion was that the timing was not right, given the substantial cash flow needed from the Australian divisions to fund capital projects such as the Escondida copper mine in Chile and the Jansen potash project in Canada.
The spin-off, according to one source, would generate cash and franking credits, likely attracting significant Australian investor interest.
It would also provide BHP’s copper and potash unit with greater flexibility to explore new partnerships, potentially with companies such as Teck Resources.
The plan’s complexity is heightened by BHP’s missed opportunity to acquire Anglo, which would have strengthened its copper division and cash flow.
Moreover, the urgency to ‘green’ the business has waned as many companies globally have retreated from environmental commitments, the report stated.
“The whole strategy is contingent on copper and potash being self-sustaining businesses, both of which have large capital requirements for at least the next five years,” explained a source.
In March 2025, BHP signed an agreement with Cobre to invest up to $25m (A$39.65m) in exploring copper-silver deposits at the Kitlanya projects in Botswana.
