BHP guides 2027 copper drop, approves $14.7bn Chile investment
BHP's copper output will fall to 1.65 million tonnes in 2027 due to deteriorating Chilean ore grades, but a newly approved $14.7 billion investment program aims to position the miner for a looming global supply deficit.
BHP produced 1.95 million tonnes of copper in fiscal 2026, a 3% decline from the 2.02 million tonnes recorded the prior year. While this kept the miner within the upper half of its guidance band, the focus has shifted to fiscal 2027, when group output is projected to fall to between 1.65 million and 1.80 million tonnes.
The company explicitly linked the impending drop to a "forecast grade decline at Escondida." Concentrator feed grades at the world’s largest copper mine have already slipped to 0.91%. The pressure extends beyond Escondida, as output at the Spence mine is expected to fall to 210,000 to 230,000 tonnes due to lower stacked feed grades and a transition to poorer sections of the pit.
This near-term contraction mirrors broader national headwinds. Chilean copper production recently fell to a 25-year low of 5.33 million tonnes, a drag on the country's fiscal revenues. However, the global supply-demand dynamic is inverted. BHP estimates the world requires an additional 10 million tonnes of mined copper by 2035 to satisfy renewable energy and electrification demand, underscoring a looming global deficit.
For equity holders, the 2027 dip represents an engineered valley rather than a structural decline. BHP has secured environmental approval for early-stage works, unlocking up to $14.7 billion in capital expenditure over roughly ten years.
Starting in fiscal 2028, the company will direct $7.3 billion to $9.8 billion toward Escondida projects. This spending targets sulfide leaching upgrades, electricity infrastructure improvements, and the replacement of the Los Colorados plant.
Including investments at Spence and the restart of the Cerro Colorado mine, BHP expects its Chilean operations—currently producing about 1.3 million tonnes annually—to stabilize at roughly 1.4 million tonnes per year through the 2030s. Escondida is projected to settle at 900,000 to 1 million tonnes, while Pampa Norte should hover around 235,000 tonnes.
The current production plateau near 2 million tonnes is a high-water mark preceding this transition. BHP is leveraging its balance sheet to bridge a temporary grade trough, betting that sustained global supply shortages will reward the massive capital deployment required to modernize its Chilean assets.
