BHP Group Ltd’s capital outlay earmarked for its planned copper projects will put its balance sheet under pressure, according to Berenberg.

The German lender maintains a ’hold’ recommendation on BHP, with a share target price of 2,000 pence.

Shares in the Melbourne-based diversified miner rose 0.9% to 2,064.00 pence each on Friday afternoon in London, while they were up marginally at R 475.42 each in Johannesburg.

Berenberg estimates that BHP’s growth projects across Chile, Argentina and Australia could cost between $21 billion and $26 billion over the next 10 years.

The bank thinks that BHP’s medium-term capital expenditure guidance will need to rise towards $12 billion and $13 billion from $11 billion.

‘This in turn will put some pressure on its balance sheet, and we expect that net debt will steadily rise above its $5 bilion-$15 billion target range by FY 2027E, meaning that it will likely need to lift the target range,’ Berenberg analyst Richard Hatch.

‘Further, this investment to grow and replace falling volumes will limit excess capital returns, we think,’ Hatch said.

BHP has decided to invest in its own copper projects after failing to acquire peer Anglo American PLC.

Hatch said BHP plans to sanction new projects to bring its average volumes back up to 1.4 million tonnes per year over 2031 to 2040.

He said ‘the key questions for us are: how much capex will it need to spend to deliver on its copper growth ambitions in Chile, and across its wider copper portfolio in Australia? Plus, how much capex will it need to spend to deliver on its recently announced investments in Argentina? How will these above considerations affect its capex and returns profile?’

In Chile, the company has narrowed 20 studies to four main pathways across existing and new facilities, with final investment decisions planned for financial year 2026 to 2029, the bank said.

At Spence in Chile, the miner is considering the potential expansion of its concentrator to increase throughput and plans to extend the life of its leaching operations, it said.

At Copper South Australia, BHP has plans to double its production capacity to 650,000 a year by the mid-2030s through a phased smelter and refinery expansion project.

Elsewhere, BHP is increasing its copper exposure by building a portfolio of early-stage investments, including 50% interest in the Filo del Sol and Josemaria copper projects.

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