BHP makes seven times its money on early carbon capture bet

afr.com:

BHP is set to bank a handy windfall on the back of Occidental Petroleum’s $US1.1 billion ($1.72 billion) acquisition of a Canadian carbon capture pioneer, but it won’t be enough to prevent Australia’s biggest company from reporting a substantial profit decline on Tuesday.

Expectations among brokers and analysts suggests BHP will post a $US13.76 billion underlying profit on Tuesday; a result that would be 36 per cent lower than last year when extremely high prices for coal and iron ore carried BHP to its biggest ever profit in Australian dollar terms. The consensus, as measured by VUMA, is that the mining group will pay dividends worth $US1.72 per share; 47 per cent less than last year’s dividend.

A technician in the Carbon Engineering lab. The Canadian company was sold to Occidental Petroleum for $US1.1 billion. Bloomberg

BHP’s razor gangs have been curbing discretionary spending for more than five months in anticipation that commodity prices and profits were set to “normalise” at the same time as costs rose from things like new federal carbon and industrial relations policies.

With that austerity drive still underway, BHP was reluctant to publicly celebrate the win it had this week when Occidental announced plans to spend $US1.1 billion buying private Canadian company Carbon Engineering.

BHP has been a shareholder in Carbon Engineering since it pumped $US6 million of seed funding into the company in March 2019.

Carbon Engineering is one of the world’s most advanced “direct air capture” companies; it uses giant fans to extract the carbon out of ordinary air.

BHP declined to reveal the size of its shareholding in Carbon Engineering, nor the financial windfall it will receive when Occidental completes the acquisition later