BHP has submitted a larger expansion proposal for the Escondida New Concentrator (ENC) project in Chile, upsizing the plant by roughly 20% and bringing forward an estimated 100ktpa of copper production. With a Buy rating and a price target of A\$57.10, we think this development improves the medium-term growth outlook and reinforces BHP’s positioning as the premier copper-leveraged major on the ASX.
Research published 14 April 2026. Price target and upside based on prices at time of publication.
About BHP Group
BHP Group Ltd is the world’s largest diversified miner by market capitalisation, headquartered in Melbourne with a dual listing on the ASX and London Stock Exchange. The company operates across four major commodity segments: iron ore (primarily from the Pilbara in Western Australia), copper (Escondida and Spence in Chile, plus Olympic Dam in South Australia), metallurgical coal (Queensland), and potash (the Jansen project in Canada). BHP employs approximately 80,000 people across operations in more than 20 countries. For more detail, see the company’s investor relations page and its most recent annual report.
The Escondida Expansion in Detail
BHP is now proposing to build a new 157ktpd concentrator at Escondida, up from the prior guided nameplate of 125ktpd. The project has been submitted to the Chilean government as part of a roughly one-year DIA approval process (Declaracion de Impacto Ambiental). The US\$5.15 billion budget places the capital intensity at a more competitive point versus the industry average, which sits around US\$11 to 15 billion for comparable Chile copper concentrator projects. Total concentrator capacity at Escondida will lift by over 10% to approximately 430ktpd once the new plant is operational.
The larger ENC plant almost fully offsets the recently deferred Laguna Seca debottlenecking project, a roughly 40ktpd milling circuit expansion. This means the LSE milling expansion is not really deferred in practice. It is simply being absorbed into the bigger new build. Based on a roughly one-year permitting approval process, a possible Final Investment Decision in the first half of calendar year 2027, and a three-year execution and construction timeline, the ramp-up of the new concentrator could commence in mid-2030. That brings forward roughly 100ktpa of copper production by approximately two years compared to previous estimates.
What This Means for Copper Production
Escondida’s copper output is now estimated to rebound from a range of 0.9 to 1.0 million tonnes to approximately 1.2 million tonnes per annum by FY32. On a consolidated basis, BHP’s copper production is projected to increase by around 25% from a low of 1.7 million tonnes in FY27 to roughly 2.1 million tonnes by FY33. Group copper equivalent production is expected to grow at an average of 1.5% to 2% per annum from FY27 through FY35 on an equity basis. This compares to BHP’s own growth estimate of 3% to 4% between FY27 and FY35, with the main difference being a more conservative assumption on lower South Australia copper production.
Targeted mining rates at Escondida have also been increased by roughly 15% to 610Mtpa, and up to approximately 670Mtpa maximum including rehandling. That is well above the 530Mtpa peak that BHP had previously disclosed. This higher throughput rate, combined with the upsized concentrator, meaningfully changes the production trajectory for the next decade.
Copper Becoming the Dominant Earnings Driver
The long-term story here is the structural shift in BHP’s earnings mix. Copper is projected to account for over 50% of group EBITDA on a sustained basis in the base case. That is a significant change from the iron ore-dominated earnings profile that investors have been used to. Iron ore’s share of group EBITDA is expected to decline from roughly 60% today to under 40% by the mid-2030s as Escondida, Spence, Olympic Dam, and the Filo del Sol and Josemaria projects ramp up.
The Escondida valuation alone has increased by roughly 8% to approximately US\$69 billion on a 100% basis, using a US\$5.2 per pound long-run copper price. That equates to roughly US\$40 billion, or about 16% of the total BHP net asset value. Escondida is 57.5% owned by BHP and 30% by Rio Tinto.
Valuation and Earnings
The price target of A\$57.10 is derived using a 50/50 blend of a 6.5x EV multiple on near-term EBITDA and an NPV with a weighted average cost of capital of 8.5%. EBITDA is forecast at A\$31.4 billion for FY26, A\$27.8 billion for FY27, and A\$27.1 billion for FY28. Earnings per share are forecast at 236 cents for FY26, 197 cents for FY27, and 193 cents for FY28. The NAV stands at A\$63.60 per share.
The slight step-down in EBITDA from FY26 to FY27 reflects the lower iron ore price assumptions and timing of new copper capacity coming online. But the growth profile from FY28 onwards improves materially as the new concentrator begins to ramp. Higher copper production from Escondida increases the group copper equivalent production CAGR to approximately 2.2% in the base case, and up to 2.5% when including all copper growth projects.
Key Risks
Upside risks include stronger currencies in producing countries (AUD, CLP, CAD), weaker commodity prices leading to lower industry costs, and ongoing higher costs from industry cost inflation. Project execution remains the primary concern. The Olympic Dam expansion, Jansen potash ramp, and Chile copper replacement projects all need to proceed on schedule for the growth estimates to be achievable. Potentially value-destructive M&A is another risk, though BHP’s track record on capital discipline has been solid in recent years.
On the downside, a weaker AUD, higher commodity prices, further cost-out and lower capex, plus higher production and guidance upgrades could drive additional upside. Value-accretive M&A in copper or other future-facing commodities would also be a positive surprise.
Our View
We think BHP remains the best way for Australian investors to get diversified exposure to the global copper growth thematic while still collecting meaningful dividends from the iron ore cash flows. The Escondida upsizing is a genuine positive because it brings forward copper production at a competitive capital intensity, and it replaces the deferred Laguna Seca debottleneck without losing any volume in practice. The structural shift toward copper accounting for more than half of group EBITDA is a multi-year re-rating catalyst that the market has not fully priced, in our view. At a price target of A\$57.10 there is upside from current levels, and the NAV of A\$63.60 suggests there is room for the stock to work higher as the copper projects progress through permitting and into execution.
If you would like to discuss BHP or how mining and resources stocks might fit within your portfolio, request a callback or call us on 1300 889 603.
