Tuesday (December 9) announcementconfirms that the company has entered into a binding agreement with GIP covering BHP’s share of Iron Ore’s domestic energy network in Western Australia.
Under the structure, a new trust entity will be created, which will be majority owned by BHP with a 51 percent stake, while GIP will acquire the remaining 49 percent in return for the $2 billion contribution. Over a period of 25 years, BHP will pay the entity a rate linked to power consumption.
The deal gives BHP additional balance sheet flexibility at a time when the company is pursuing a renewed push to grow iron ore volumes.
The company currently has an 85 percent stake in WAIO, which includes four major joint ventures supplying some of the world’s most important steelmaking customers.
Operationally, BHP will continue to manage domestic energy infrastructure and maintain full strategic oversight of WAIO. The deal does not change existing joint venture rights or its obligations to the State of Western Australia, and ownership of the physical assets of the electricity network remains unchanged.
Chief Executive Mike Henry described the transaction as a sensible way to free up capital without giving up control of core infrastructure.
“We are pleased to be working with GIP on this arrangement that will enable BHP to access capital and maintain operational and strategic control over a critical part of WAIO’s infrastructure,” Henry said in the company press release.
BHP is in the midst of a long-term effort to increase Pilbara production capacity to 305 million tonnes per year.
The company says the WAIO business will continue to plan and execute its broader strategy, while retaining options for future growth.
Completion is expected by the end of fiscal year 2026, subject to regulatory approvals, including approval from Australia’s Foreign Investment Review Board.
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Securities Disclosure: I, Giann Liguid, have no direct investment interest in any company mentioned in this article.
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