BHP (ASX: BHP) CEO Brandon Craig is prioritizing copper expansions over acquisitions, brushing aside speculation the mining giant could pursue uranium developer NexGen Energy (TSX: NXE) as lofty valuations make building projects far cheaper than buying rivals.

Craig, presiding over his first full-year results as CEO in Melbourne on Tuesday, said BHP remains comfortable with its four core commodity pillars of copper, iron ore, steelmaking coal and potash. His comments signal that, like his predecessor Mike Henry, he favours a build over buy strategy.

Reuters reported on Monday that BHP had shown interest in NexGen, which is seeking financing for its Canadian uranium project.

“Copper is really the focus for investment for us,” Craig said. “And then on the back of those investments, we will continue to work through whether we want to continue to grow uranium as part of that.”

BHP already accounts for about 5% of global uranium production through output recovered as a by-product at its Olympic Dam copper operation in South Australia. Craig declined to address speculation about Canadian opportunities, saying BHP continues to study other commodities but is satisfied with its existing portfolio.

Craig alluded to market rumours that BHP may look to exit its BMA coal business in Australia, saying that metallurgical coal was attractive and the company remained committed.

“If the market develops the way we expect it to, we think BMA will continue to be a very important part and attractive part of the BHP portfolio,” he said.

Build over buy

Craig said BHP would not categorically rule out M&A but argued current market valuations heavily favour developing the company’s own projects.

BHP estimates it can deliver its copper growth pipeline at a capital intensity of $16,000 to $30,000 per tonne. Craig compared that with an implied capital intensity of close to $85,000 per tonne for listed pure-play copper companies, before accounting for any takeover premium.

“If you had to pay a takeover premium, that would get you well over $100,000 per tonne, so you’re almost talking a five-to-one factor between building it versus buying it,” Craig said.

“Now it doesn’t mean categorically that we wouldn’t be monitoring options. We always do monitor the market, but I can leave you with just that simple statistic, which shows, I think, currently how attractive the organic program is that we have in BHP.”

Chief financial officer Vandita Pant said the strategy can be funded internally. At consensus commodity prices, BHP expects to generate $35 billion in attributable cash flow over the next five years after investment and capital spending.

“This is not something which many companies can say is possible,” Pant said.

Craig also reaffirmed BHP’s commitment to metallurgical coal amid speculation the company could eventually exit its BMA coal business in Australia. He said BMA should remain an attractive part of the portfolio if the market develops as BHP expects.

Jansen lessons

BHP’s emphasis on building rather than buying puts greater weight on its ability to execute major developments, an area under scrutiny after repeated delays and cost increases at the Jansen potash project in Saskatchewan.

“We acknowledge we didn’t get that project right, and having to adjust the cost and schedule was disappointing,” Craig said. “But we are an organization that learns, and on the back of that, we have a body of work underway to strengthen our project delivery capability.”

The capital cost for Jansen stage two was recently increased to $6.9 billion, but Craig said that spend wasn’t coming at the expense of copper investment. The project is 84% complete, with first production scheduled for mid-2027.

Pant added that BHP remained excited about Jansen and the outlook for potash.

“At consensus prices between Argus and CRU, between these two stages, we will have $1 billion of EBITDA per stage on fully ramped up basis,” she said. 

The company expects Jansen to operate for about 60 years with margins of roughly 60% at consensus pricing. BHP also forecasts global potash demand rising from about 70 million to 75 million tonnes today to 100 million tonnes by 2050, driven by population growth and food-security needs.

At that level, BHP expects Jansen to account for roughly 10% of the global market, giving the company another long-life growth platform alongside the copper projects Craig argues are currently too attractive to displace with expensive acquisitions.