Mike Henry, CEO of Australian mining company BHP, standing beside a photograph of the company’s Jansen potash project in Saskatchewan, on Oct 17, 2023.Fred Lum/The Globe and Mail
BHP Group Ltd. BHPLF chief executive Mike Henry says Canada must speed up mine permitting, or it risks losing out to its global rivals in attracting investments in critical minerals.
Melbourne-based BHP, the world’s biggest mining company, already has significant operations in Canada. It is building a massive new potash mine in Saskatchewan called Jansen with the total capital expenditure pegged at $20-billion.
Mr. Henry, who is Canadian, said in an interview that while BHP clearly already has an affinity for Canada, based on its investment track record, the slow pace of obtaining mining permits is a big problem.
“When it comes to these big capital projects, time is both money and risk,” he said. “So permitting time frames have to be shorter.”
With mining permits in Canada taking up to 17 years to obtain, Canada risks losing out to its global rivals as BHP weighs future investment into copper, nickel and other critical-minerals mines, Mr. Henry said.
“Canada is a resource-rich nation, steeped in mining history, and has a really good talent base. But many other countries also have resources, they’ve spotted the opportunity, and they’re chasing after it pretty aggressively.”
Ottawa is keenly aware that red tape in Canada’s mining sector is scaring off potential investors such as BHP. In the federal government’s 2022 critical-minerals strategy, it acknowledged that getting a Canadian mine into production can take up to 25 years, and that is partly because of the inefficient permitting and regulatory system.
“Complex regulatory and permitting processes can hinder the economic competitiveness of the sector and increase investment risk,” the federal government said at the time in a release.
Ottawa vowed to harmonize, and streamline, the permitting and environmental review process, in part to avoid duplication when both the federal government and provinces are involved in permitting, which is often the case.
Without permitting reforms, Canada risks falling behind its global peers such as the United States, where there is bipartisan support to reduce permitting red tape for the mining industry, Mr. Henry said.
He also said that once a permit is granted in Canada, assurances need to be made that the fiscal terms won’t suddenly change.
“If that’s the way things may play out, then we don’t have a solid basis upon which to take our investment decisions,” he said.
BHP has shown its willingness to punish jurisdictions that change the fiscal rules mid-stream. In its home country of Australia, Queensland suddenly hiked royalties on the coal sector in 2022. BHP operates five coal mines in the state. Mr. Henry now calls Queensland “uninvestable.”
BHP had already invested $5-billion in the Jansen potash project at the time its board sanctioned it in 2021. BHP has committed to spending an additional $15-billion through a two-stage buildout with first production from the mine expected in late 2026.
Apart from its big swing in potash, BHP is also in the process of buying Canadian copper development company Filo Corp. FIL-T, with Lundin Mining Corp. LUN-T for $4.1-billion. Vancouver-based Filo owns the Filo del Sol (FDS) copper, gold and silver project, which straddles the mountains of Argentina and Chile. BHP also plans to take a 50-per-cent stake in Lundin’s nearby Josemaria project and create a joint venture holding both FLS and Josemaria.
Ottawa in the summer tightened the takeover rules around foreign buyouts of Canadian mining assets. Industry Minister François-Philippe Champagne said that under the net-benefit test, he would only approve the foreign acquisition of large Canadian-headquartered, critical-minerals companies under “the most exceptional circumstances.”
The federal government, however, did not put the Filo transaction through a net-benefit test.
“It’s not being subject to a review,” said Mr. Henry, who added he expects the transaction to close in the first quarter of next year.
Even with the impending addition of the Filo assets to the big miner’s portfolio, BHP’s CEO said he has the appetite for more copper acquisitions. However, the shortage of attractive assets means potential targets are “very few and far between.”
He puts the lack of viable candidates down to mine depletion, the dearth of new discoveries of high-grade, low-cost copper globally, and the increased technical challenges of putting new projects into production.
When asked if Canada’s Teck Resources Ltd. TECK-B-T, which recently transitioned from being primarily a coal company to a global player in copper, could be an acquisition target for BHP, Mr. Henry declined to comment.
He also would not comment on whether BHP might be interested in acquiring Lundin Mining Corp., which has a large copper portfolio. Mr. Henry said that the partnership approach is working well with Lundin, which has decades-long relationships in places such as Argentina, a jurisdiction that BHP is not well-versed in.
“BHP doesn’t need to own everything, it doesn’t need to control everything,” Mr. Henry said to explain the company’s affinity for the partnership approach.
BHP has also taken equity positions in Canadian mining exploration companies, Brixton Metals Corp. BBB-X and Midland Exploration Inc. MD-X over the past few years. BHP in 2021 moved its global mining exploration headquarters to Toronto from Santiago, Chile.
BHP failed in its attempt earlier this year to buy rival copper miner Anglo American PLC NGLOY. for US$49.1-billion. Had it acquired Anglo, BHP would have become the world’s biggest copper producer, bypassing Chile’s state-owned Codelco.