BHP Group (ASX: BHP), the world’s largest mining company, has reportedly considered separating its iron ore and coal operations as part of its medium-term growth strategy.
According to sources quoted by Reuters, the potential separation aligns with BHP’s shift toward becoming a “greener” mining company, with a focus on “future-facing” commodities such as potash and copper. This move would involve distancing itself from iron ore and coal, two key raw materials for steel production that have been central to the company’s business for many years.
BHP is currently the world’s third-largest iron ore producer, with five mines in the Pilbara region of Western Australia. It is also a major metallurgical coal producer, operating five mines in Queensland’s Bowen Basin.
If BHP moves forward with the spin-off, it would significantly reduce the company’s presence in Australia, where it is headquartered. The iron ore and coal businesses would likely be listed in Australia, according to Reuters sources.
Despite the potential separation of its iron ore and coal divisions, BHP would retain its Australian copper assets, such as the Olympic Dam mine, home to one of the world’s largest copper deposits. BHP continues to push its copper ambitions, evidenced by last year’s failed attempt to acquire rival Anglo American (LON: AAL).
This is not the first time BHP’s management has considered restructuring. In early 2024, CEO Mike Henry and then-CFO David Lamont discussed the possibility of separating the company’s declining growth sectors by the end of the decade. However, these plans were eventually dropped, as BHP still relied on the cash generated by the iron ore and coal divisions to fund capital projects like the Escondida copper mine in Chile and the Jansen potash project in Canada.
BHP has previously shown willingness to spin off parts of its business, notably with the creation of South32 (ASX: S32) a decade ago.
According to one Reuters source, a spin-off of BHP’s iron ore and coal businesses could generate cash and franking credits that would benefit Australian taxpayers, potentially attracting considerable domestic interest in any public offering.
