BHP Group's new internal corporate venture unit has already made some investments and is open to backing startups that focus outside the mining sector to aid its own hunt for "future-facing" commodities.
BHP Group recently established an in-house venture capital investment team called BHP Ventures to build and manage a portfolio of minority interests in emerging technology companies, targeting innovation and growth. The company created the chief technical officer and chief development officer roles in August, appointing Laura Tyler and Johan van Jaarsveld, respectively, from Sept. 1.
BHP Ventures sits within the portfolio of the chief development officer, while Mark Frayman was recently appointed vice president of the division. Frayman returned to Australia in October to take on the new role after working in the U.S. as chief investment officer of New York investment group Kin Group USA.
BHP CEO Mike Henry said in August that he prefers growing exposure to "forward-facing" commodities such as copper and nickel via early-stage exploration partnerships rather than through mergers and acquisitions.
Henry also told analysts during an Aug. 18 earnings call that elevating van Jaarsveld to the executive leadership team as chief development officer would aid the strategic priority to secure "new options in future-facing commodities." Van Jaarsveld has previously worked with Goldman Sachs Group Inc. and Blackstone Group LP.
BHP Ventures' focus
Frayman told a Nov. 27 panel during the Australia-hosted online International Mining and Resources Conference that the new division has made some investments. "We're not going out and talking about each and every investment. We're quietly building," he said.
BHP Ventures is targeting technologies that could increase safety, productivity and efficiency and will look to provide growth in areas such as exploration, "finding more of the commodities we covet," Frayman said.
The division may also look at seeding and de-risking new business platforms, looking beyond traditional mining startups and considering getting involved in companies developing technology related to decarbonization or the climate.
In-house corporate venture units are rare in mining as it is "tough" to marry strategic and financial goals and differing cultures and capabilities, Frayman said, noting that they are "extremely common" globally in other sectors, with 350 of the Fortune 500 companies containing such units.
Frayman outlined "an incredible amount of network from Silicon Valley, Tel Aviv and other areas, starting to think about our sector."
The mining, equipment and technology sector, or METS, is a "little-known treasure trove" in the investment community, according to fellow panelist RCF Jolimont Mining Innovation Managing Partner Lex McArthur. Frayman said METS is becoming increasingly well known.
Capital ecosystems are starting to converge in the metals and mining sector, and the ongoing coronavirus pandemic may be accelerating the process, according to Frayman. He said he is also seeing a convergence of themes, such as the METS' technology focus and climate-focused technology among others, judging by the new types of investors in the mining sector.
This sector streamlining will present new risks while offering huge opportunities and is a trend that will continue, Frayman said.
RCF Jolimont Mining Innovation's first fund invested in 10 METS companies, and a new second fund is on the verge of closing two deals.
Similarly, McArthur said the pandemic has aided his firm's portfolio companies as it has forced the mining sector to accelerate a shift to remote implementation systems and processes.
Victor Aguilera, managing partner at Chile-based Aurus Capital, also told the Australian panel that the pandemic has "boosted" some of his firm's portfolio companies. "Before the pandemic, being able to operate the mine remotely wasn't that important. ... Now it's a must," he said.
Aurus has three funds under management totaling US$165 million, Aguilera said, the third of which is focused on the mining industry value chain and is also its largest, comprising half of the firm's portfolio.