Discussions are underway between Global Infrastructure Partners (GIP), owned by BlackRock, and BHP regarding the potential acquisition of several key infrastructure assets. These assets include ports, railway lines, and desalination plants located both in Australia and internationally. The negotiations aim to carve out specific components of BHP’s expansive infrastructure portfolio, which features notable facilities such as the Hay Point Coal Terminal in Queensland and the Mount Newman Railway in Western Australia, integral to BHP’s iron ore operations.
Among the assets under consideration are desalination plants at BHP’s copper mines in Chile, specifically the Escondida and Spence sites. In addition to these facilities, BHP operates worker accommodation, roads, and small airports associated with various mining operations. Sources indicate that GIP and BHP have engaged in informal discussions, although it is unclear whether these negotiations have progressed to a more advanced stage.
As GIP redirected its focus towards solidifying a separate US$19 billion acquisition of an 80 per cent stake in Hutchison Ports, which manages 43 ports globally, talks with BHP may have taken a backseat. A spokesperson for BHP declined to comment on the ongoing discussions, and GIP could not be reached for further information.
Selling infrastructure assets to financial investors, followed by leasing them back under long-term arrangements, is a strategy frequently employed by mining companies to bolster capital, especially during periods of low commodity prices. Chris Ellison of Mineral Resources adopted this approach last year, which included the Onslow iron ore project and the Port of Ashburton.
For BHP CEO Mike Henry, any potential sale of these infrastructure assets, even if valued in the billions, may amount to only a small fraction of the company’s overall valuation, which currently stands at approximately US$201 billion. Despite a reported 26 percent decline in full-year earnings to US$10.15 billion as of June 30, BHP remains well-capitalized and can easily access billions from bond markets, likely at lower costs than divesting essential infrastructure.
The company has recently reduced dividends to their lowest level since the 2017 financial year, while continuing to explore avenues for financial growth. This context frames GIP’s potential move as ambitious, especially following its US$12.5 billion sale to BlackRock, which completed last year. GIP’s investments span several notable Australian assets, including Sydney Airport, Port of Brisbane, and Port of Melbourne, as well as Woodside Energy’s Pluto Train 2 and Queensland Curtis LNG Common Facilities.
As the discussions evolve, the outcome may significantly influence both GIP’s strategic positioning within the infrastructure sector and BHP’s operational focus moving forward.
