The Iron Curtain: BHP's Quiet Plan to Leave Iron Ore Behind
A bold but paused strategy reveals BHP’s internal struggle to evolve beyond its iron ore and coal legacy toward a greener, growth-focused future.
Editorial Team (ET)August 1, 2025
In a move that could have redefined the face of global mining, BHP Group—the world’s largest listed mining company—quietly explored the idea of spinning off its iron ore and coal divisions. According to three sources close to the matter, the discussions took place behind closed doors as the company evaluated a shift toward so-called “future-facing commodities” like copper and potash.
The proposed strategy, which ultimately did not proceed, would have been one of the most dramatic pivots in BHP’s 139-year history. Iron ore alone accounts for nearly 60% of the company’s profits, forming the bedrock of its identity in Australia since 1885. Coal, meanwhile, represents the bulk of BHP's carbon exposure. By shedding both, the company would not only break from its historic roots but signal a hard pivot toward a decarbonized, electrified future.
Why Copper and Potash?
The rationale behind this potential split was clear. Copper is essential to the global energy transition, forming the backbone of electric vehicles, wind turbines, and power grids. Potash, a key ingredient in fertilizers, is crucial for meeting the food demands of a growing global population. As governments around the world push for greener economies and stronger food security, demand for these resources is expected to soar.
BHP has already made considerable investments in these areas. Its Escondida copper complex in Chile is the largest in the world, and the Jansen potash project in Canada is set to become a cornerstone of its growth strategy. These developments require vast capital outlays, and while iron ore and coal are currently generating the bulk of the company’s cash flow, they are increasingly seen as legacy assets.
Echoes of South32
This isn’t the first time BHP has considered streamlining its operations by spinning off lower-growth assets. In 2015, the company created South32, bundling together its aluminum, manganese, and nickel operations into a separately listed company. That move was successful in freeing up capital and management attention for BHP's core assets. The idea of repeating that playbook with iron ore and coal demonstrates just how serious BHP has been about redefining its long-term trajectory.
Two sources said that if the spin-off had gone ahead, the new entity would most likely have been listed in Australia, mirroring the South32 structure. There was also speculation about strong investor interest, given the profitability of the iron ore and coal divisions and the potential for franking credits that benefit Australian taxpayers.
Timing and Leadership Transitions
Ultimately, timing proved to be the deal-breaker. As much as BHP’s executive team—led by CEO Mike Henry and former CFO David Lamont—were intrigued by the concept, they concluded that the company wasn’t yet in a position to let go of its cash cows.
Funding requirements for copper and potash are enormous and will remain so for at least the next five years. Without the consistent cash flow from iron ore and coal, those ambitions could stall. The failed bid for Anglo American in 2023 and 2024, which would have expanded BHP’s copper assets, also limited the company’s flexibility.
At the same time, a significant leadership transition was underway. Ross McEwan, former head of the National Australia Bank, took over as chairman this week, succeeding Ken MacKenzie. The search is now on for a new CEO to eventually replace Mike Henry, whose fifth year in the top role has brought both bold visions and tough decisions.
A Changing ESG Landscape
Another reason the plan was shelved, at least temporarily, is a global shift in corporate sentiment toward environmental, social, and governance (ESG) goals. The urgency around decarbonization that peaked a few years ago has begun to wane as some corporations and governments ease off on aggressive climate targets.
This shift has dulled the incentive for companies like BHP to rapidly divest from fossil fuel-related businesses. While ESG remains a central consideration for investors and regulators alike, the short-term economic calculus still favors assets that generate consistent cash returns.
Lessons from the Bid for Anglo American
One of the more telling aspects of the entire episode is how it dovetailed with BHP’s attempted acquisition of Anglo American. Had that deal succeeded, it would have given BHP a much stronger position in the global copper market, making the case for jettisoning iron ore and coal even more compelling.
Instead, the failed bid highlighted the limitations of BHP’s current balance sheet and reinforced the need to retain high-margin assets in the near term. Still, insiders say the groundwork has been laid. If copper and potash can become self-sustaining over the next few years, the door to a spin-off may open again.
What Comes Next for BHP?
For now, BHP remains a diversified mining giant. But the conversation has fundamentally changed. No longer is the company anchored solely to its iron ore legacy. The willingness to consider such a transformative move indicates a board and management team ready to rethink what BHP should look like over the next century.
With a new chairman in place and succession planning underway at the CEO level, fresh leadership could revisit the strategy. Investors are likely to keep a close eye on developments, especially if copper and potash operations start throwing off more cash and achieving scale.
Conclusion
The notion that BHP might one day shed its iron ore and coal divisions would have been unthinkable just a decade ago. Yet today, it is a serious, albeit paused, strategy underpinned by a vision of growth rooted in energy transition and sustainable agriculture. While the timing wasn’t quite right in 2024, the ambition is clear: BHP is preparing for a future where legacy assets no longer define its identity. As the world changes, so too must the mining giants that supply its essential materials. The question now is not if BHP will revisit this path—but when.
