bhp's mackenzie tips copper commodity boom

Business Spectator 18/1
By Robert Gottliebsen

BHP chief executive Andrew Mackenzie believes iron ore's halcyon days are over. If he's right about the next hot commodity, his strategy could deliver a cash bonanza to shareholders.



After more than five decades of watching BHP, I cannot recall anything like its 2014 interim report presentation.

Not only does BHP chief executive Andrew Mackenzie give BHP shareholders a tip on where he thinks the next boom might come from, but what is happening on the BHP capital expenditure front is without precedent in BHP’s last half-century.

First: the next boom. It was iron ore that drove the BHP half-yearly profit and cash flow generation way beyond what analysts had anticipated.

But tucked away in the BHP investor presentation is a graph that shows that global iron ore production is going to rise faster than demand.

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The next boom is not going to come from iron ore. Mackenzie clearly believes that copper is a great boom candidate. Mackenzie has submitted a remarkable graph to BHP shareholders. It shows that demand for copper will keep growing, but supply is set to slump. That’s why BHP is expanding and improving Escondida.