BHP has entered into a binding agreement with Global Infrastructure Partners (GIP), a part of BlackRock, in relation to BHP’s share of Western Australia Iron Ore’s (WAIO) inland power network.
WAIO comprises four main joint ventures in the Pilbara region of Western Australia. BHP holds an 85% interest in WAIO. Under the agreement, a trust entity will be established that is 51% owned and controlled by BHP and GIP will provide $2 billion in funding for a 49% stake. BHP will pay the entity a tariff linked to its share of WAIO’s inland power over a 25-year period.
Under the agreement, BHP retains full operational control of WAIO including its inland power infrastructure. It does not affect BHP’s existing joint venture agreements or BHP’s obligations under its agreements with the State of Western Australia or affect ownership of any WAIO assets (including the WAIO inland power infrastructure), BHP clarified. WAIO will continue to plan and execute its long-term strategy focused on increasing iron ore production to 305 Mt/y, supported by targeted investments, while retaining optionality for future growth.
Net proceeds will be incorporated into and evaluated in accordance with BHP’s capital allocation framework.
BHP Chief Executive Officer, Mike Henry, said: “We are pleased to partner with GIP on this arrangement that enables BHP to access capital and maintain operational and strategic control of a critical part of WAIO’s infrastructure.”
BHP Chief Financial Officer, Vandita Pant, added: “This arrangement is an example of BHP’s disciplined approach to capital portfolio management. It strengthens our balance sheet flexibility, supports long-term value creation and enhances BHP’s shareholder value.”
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