No one should have been surprised, five years ago, when Mike Henry rose to the top of the Australian mining giant BHP. When it comes to mining, Canadians have some game, and the University of British Columbia alum had built a 30-year career touching every aspect of the industry, from marketing to technology to operations.
What might have opened some eyes is how decisively the understated Henry, who’d been at BHP since 2003, moved to change things up. He eliminated BHP’s complicated dual listing on the London and Sydney exchanges, boosting the company’s ability to make acquisitions. He improved operations, spun off BHP’s oil and gas business, sold its thermal coal assets and focused the company on the minerals of the future: copper in South America and Australia, potash in Canada. In January, as the world’s biggest mining company was gearing up for the 2026 start of that potash project in Jansen, Sask.—the biggest bet in the company’s history—Henry spoke to us from his office in Melbourne.
Besides its vast size, what separates BHP? What makes it different in the industry?
A portfolio of commodities that are leveraged to the big mega-trends under way in the world around us. That is the single biggest determinant of value in a company like ours. Within those commodities—copper, potash, iron ore and the best of the steelmaking coals—we seek to have the best possible assets. That means large, long-life, sitting at the low end of the cost curve. We then seek to operate them exceptionally well, through the way that we develop talent internally and the way we harness their capabilities in the BHP operating system.
I’ve heard it said that under your watch, BHP has been less aggressive in pursuit of growth than rivals like Rio Tinto. What are you prioritizing instead of growth?
We’re prioritizing valuable growth. The single biggest growth driver for a company like us is productivity, and we’ve enhanced that markedly. I think what you’ll hear people referencing is the time frame of the growth we’re unlocking. We had a relatively bare cupboard in terms of growth opportunities. We’ve developed significant growth optionality in copper and, of course, we’ve triggered $15 billion of investment in potash growth. But what people will be flagging is that this growth comes on at the end of this decade, rather than in the near term, notwithstanding the fact that we’ve grown in copper by more than any company in the world over the past few years.
China accounted for about 60% of your sales last year. How much dependence on one market is too much?
China is such a driving force of commodity markets globally that even when companies aren’t selling directly into China, they’re exposed to dynamics in China. That high proportion of sales into China is driven predominantly by the fact that we’ve got this big, very high-performing iron ore business—the lowest-cost, best-performing iron ore business in the world. That drives a significant share of market into China.
But Chinese demand is falling, and some experts think that will continue, given that China has stopped building so much, and its population is shrinking.
Well, it is. At BHP, we make very long-term bets. About a decade ago, we said that, based on all the fundamental analysis we do, Chinese steel demand would peak in the mid-2020s and then move into decline. That’s the pattern for every major economy as it develops. As that happened in China, it would mean iron ore demand would peak and then move into decline, as well. That informed our strategy to become the lowest-cost supplier of iron ore in the world, because we knew competition was going to heat up. The same thinking informs how we want to grow in commodities like potash and copper, because even though Chinese demand for iron ore will shrink, its demand for other commodities will continue to grow.
Mike Henry rose to the top of the Australian mining giant BHP five years ago. Since then, he’s improved operations, spun off BHP’s oil and gas business, sold its thermal coal assets and focused the company on the minerals of the future.
You’ve made it clear that in the energy transition, you see more opportunity in copper than in lithium. Why?
We’ve said that copper is more attractive than lithium for BHP.¹ Copper demand is not solely dependent upon the energy transition. And copper resources are relatively scarce in the Earth’s crust, with greater differentiation between the quality of the deposits. So if you find the right deposit, low on the cost curve, you can generate better long-run margins than we’d be able to generate in lithium. And lithium will be more dependent on the energy transition as a sole determinant of demand.
In 2021, you estimated that demand for copper would increase 70% by 2050. Is that still true?
Yes, and here’s the other interesting dynamic. In the case of copper deposits, production declines as you produce, because grade—the amount of copper per tonne of ore—declines over time. So, just to stand still, people have to develop new mines or develop more production capacity at existing mines, and then you’ve got the 70% growth in demand on top of that. So that’s one of the reasons we see the dynamics for copper as being just so attractive, because there’s going to be a lot of capital that needs to be invested in the industry that will mean sustained higher prices than a market that had slower demand growth or declining demand growth.
Let’s talk about the Jansen project. When it’s fully operational, how much of BHP’s revenue will it account for?
After the first two stages are developed, it’ll be about 8.5 million tonnes of production.² How much of the revenue base it forms is going to be dependent upon what’s happening with prices. This is going to be a material part of BHP’s long-term business and very attractive, because this will be at the low end of the cost curve, certainly among Western-world potash producers. And it requires relatively little sustaining capital. Of the capital we generate, not that much needs to be reinvested to keep the business going, unlike some other businesses. So it will create really attractive cash flow for BHP and its shareholders.
Besides cash flow, what’s driving your interest in potash?
Potash demand is very resilient, because it’s needed for agricultural production globally. It’s not a substitutable thing, at the end of the day. Against the backdrop of a growing global population; rising living standards, which tend to lead to a more calorie-intensive diet; and the need to get more agricultural production off a constrained arable land footprint, that’s going to require more fertilizer. On the supply side, there’s only two big potash basins in the world. One is in Russia and Belarus, where the assets are a little bit older and obviously subject to some geopolitical disruption, and then it’s Canada. So Canada is the place to be in potash. We’ve got the best undeveloped green-field resource. It’s right within our sweet spot when it comes to capabilities. And finally, we like Canada as an investment destination. And the way that we’re going about investing in that business is going to be good for other stakeholders like Saskatchewan, Canada more broadly, First Nations in Canada, and so on.³
The former CEO of Nutrien, for one, has questioned the idea of building a single mine for potash, because it makes you vulnerable to events and disruption. What do you say?
We’ve got a strong focus on operational excellence, which makes us less subject to unexpected disruptions. And in the case of potash, some of what others have faced over time is water ingress into the shaft, for example. We’ve been very deliberate about our shaft construction. It’s steel-lined, which is a differentiator for us.
What’s the likelihood that potash will get caught up in the tariff fight with the United States? In January, the federal energy and natural resrouces minister specifically mentioned potash from the Jansen mine being part of negotiations.
It’s very early days. BHP is a global company, of course, so we don’t look at just one market. The U.S. is one market for potash, but we would be shipping globally. Whether potash becomes subject to tariffs or not will be a matter, I assume, for negotiation between the incoming administration in the U.S. and the government in Canada, post the next election. In the event that tariffs are implemented, because of the way commodities will re-order globally, we don’t believe it’s going to have a material impact on BHP sales for potash. But we continue to watch things closely.
Led by Mr. Henry, BHP is gearing up for the 2026 start of a potash project in Jansen, Sask.— the biggest bet in the company’s history.
You mentioned liking Canada as an investment destination, and you’ve said in the past that you’re bullish on Canada. Why?
Canada is blessed. Canada is resource rich, and there’s a lot of areas that remain under-explored. So we expect there’s going to be even more of these attractive resources found in Canada. Canada has a highly capable work force when it comes to mining. We’ve been the beneficiary of that, not just in Jansen, of course. I’m Canadian, the chair of BHP is Canadian, about half my management team are either Canadian or have worked for extended periods in Canada. So it’s got a ready-made workforce for a business like this. And while there’s always things to be improved upon, we’ve found our government engagements at the local, provincial and federal levels to be very positive.
You’ve been critical of the permitting process in Canada, where it can take 15 years or more to get a mine into operation. What has to happen to change that?
Over the past five years, the importance of metals and mining, and the importance of critical mineral supply chains, has exploded into the consciousness of policy makers globally. Some countries are responding by focusing on making it easier to invest in mining, in-country. In the U.S., there have been multiple efforts on both sides of the aisle to progress permitting reform. The point I’m trying to make is that it already takes longer in Canada, and other countries aren’t standing still. Canada has to keep that competitive dynamic in mind and look at how it can stay with the pack, or actually improve its relative position. A key area to do that is in permitting reform. That means removing duplication, speeding up the permitting process and giving rise to greater certainty around the permitting-process outcomes. In these big projects, time is money. By reducing permitting time frames, you improve the economics of the project, and by improving permitting certainty, you reduce the risk profile. Those are really the two things that will determine whether capital flows and investments get made or not.
Besides the permitting issue, how well is Canada competing for mining investment?
On government responsiveness, willingness to engage, proactiveness to try to secure investment—and this is seen through the experience we’ve had around Jansen—Canada is ranked right up there. When it comes to fiscal terms and fiscal certainty, that varies a little bit. In the case of potash, fiscal certainty and royalty certainty were very important. We had an example with steelmaking coal in Australia, where the government, in a very dramatic fashion, changed royalties. As a consequence, BHP can no longer invest in that state.⁴ So this has been a positive differentiator for Canada. But there’s opportunities to improve—tax reform, subsidies like those provided through things like the U.S. Inflation Reduction Act. Canada needs to recognize that other jurisdictions continue to evolve in a way that may attract more capital if there doesn’t remain a focus on reform.
There’s a thought out there that BHP’s past is in Australia, while its future is in Chile and Canada.
In its 140-year history, BHP has reinvented itself multiple times. And that’s part of what you see currently—recognizing that we’re moving to a different basket of commodities. And it’s not just potash in Canada. We’ve got investments in Brixton Metals, for example, a nascent copper company that’s pursuing a copper resource in B.C. We’re investing in tech companies in Canada. And through our Xplor effort, we’re funding small companies that have innovative approaches to exploration, including in Canada. So, we’ve got quite a bit of effort underway in Canada, and we relocated our global exploration headquarters to Toronto as a sign of our confidence in the country.⁵
You tried several times to buy Anglo American. Why did you want it, and why did you fail?
This was one of those unique opportunities where there were some high-quality assets in its portfolio, where we thought there were synergies to be unlocked for shareholders. But as we saw, Anglo had its own priorities, which it’s now in the process of executing.⁶
I have to ask: You’re in a personal relationship with Tracy Robinson, the CEO of CN Rail, which you had to disclose to BHP’s board.
Both Tracy and I recognize the importance of transparency. We personally, and the companies that we belong to, are committed to the highest standards of corporate governance. And so we disclosed it on that basis for awareness. And there were proper checks and balances put in place to ensure there was no potential conflict in terms of how that business would be executed. By way of example, I’m not involved at all, and have no line of sight on, anything to do with rail around Jansen.⁷
For a while, you had a reputation for being cautious, but lately, you seem to be shaking that up. You also recently tried parachute jumping in Montreal. Was the reputation wrong, or are you deliberately trying to change it?
Who knows what causes a reputation to rise? And I don’t want to say it’s wrong or right. What I will say is that I’m a deliberate person, and we’re a deliberate company. We’ve got a clear strategy, and we have been absolutely consistent on strategy since I took up the role in 2020. And we’re very deliberate about executing on that strategy. And that permeates the company’s DNA. When our ducks are lined up, we can do bold things, and we can do them quickly.
1. BHP has also mothballed its nickel assets—despite nickel being needed for the energy transition—because China had increased production from Indonesia, lowering prices, and Henry decided the operation had become uneconomical.
2. The Jansen project will be developed in four stages. Having already invested $4.6 billion in development, BHP will now invest $7.4 billion in Stage 1 and $6.4 billion in Stage 2 for a total of $18.5 billion.
3. BHP’s relationship with First Nations got off to a rocky start in 2012 when the company was sued for $10 billion by the George Gordon First Nation, which claimed it had not been consulted on BHP’s purchase of land leases. The suit was dismissed in 2020.
4. In 2022, the government of the Australian state of Queensland, with no warning, increased coal royalties to the highest rate in the world, resulting in an additional US$300 million in royalties paid in the first half of 2024 and an adjusted effective tax rate, including royalties, of 62%.
5. As part of that move in 2021, BHP relocated about 100 geologists from Chile to Canada. Its Xplor Global Accelerator Program has invested up to $500,000 in two Canadian companies, Bronzite Exploration and Viridian Metals. Its BHP Ventures program has invested in three Canadian startups: Summit Nanotech (developing ways to extract lithium from brine); Eavor Technologies (geothermal solutions) and GeologicAI (developing advanced core-scanning tech).
6. The US$49.1-billion deal would have made BHP the world’s biggest copper producer.
7. CN Rail is building a 47-kilometre rail spur that will allow BHP to transport potash from the mine to a port on the B.C. coast.