BHP’s tech-inspired startup program closes in on first deals with tiny explorers

BHP (NYSE: BHP; LSE: BHP; ASX: BHP) is using its giant heft to jumpstart small exploration companies with new ideas on how to find energy transition minerals.  

The company’s BHP Xplor six-month accelerator program, now in its second year, gives explorers a $500,000 grant, a chance to learn from BHP experts and peers, and best of all, a chance to partner directly with the US$148-billion market cap miner. 

While no announcements have yet been made, the world’s biggest miner was in talks with some of the six companies that graduated from last year’s inaugural program, Charlee Johnson, the head of the program confirmed in early February. 

“We are pursuing follow-on investments on multiple cohort members from year one,” Johnson said. 

“We’re still in the confidentiality period but yes, the ultimate objective is that each company leaving the program has a more investible project. So we think over the six-month period, their project will mature and advance in a way that will increase the likelihood of further investment that may be from BHP.” 

BHP Xplor aims to apply the accelerator business model that has been so successful in the technology space to mineral exploration. The inspiration for the program was tech companies like Y Combinator and Techstars, which have funded thousands of startups and launched companies like Airbnb, Instacart, Stripe (Y Combinator), Contently and Everledger (Techstars). 

In exploration, the goal is to help companies looking for minerals like copper, nickel and lithium develop their geological concepts over a short period of time to the point where they can attract funding. The program’s focus on energy minerals fits with BHP’s pivot to “future facing” commodities in 2021, when it made a deal to sell its oil and gas division and merge it with Woodside Energy. 

Junior finance challenge

BHP Xplor grew from an idea in February 2022 to the launch of the program in August that year, when 250 companies applied. 

“The challenge for financing and the junior market was at an all-time high and continues to be,” Johnson said. 

“We thought that there was a pretty strong demand but what we saw really blew our expectations away.” 

The number of applications doubled this year to over 500, of which six companies were chosen in January. 

The program’s benefits to small companies are obvious, but what does a mining giant that spent US$350 million last year on exploration get out of working with the tiniest of exploration companies? 

“Some of them are operating in areas that BHP doesn’t have a presence in, which gives us the ability to not only learn about new technical opportunities, but to learn about new jurisdictions,” Johnson said. “What we learn from the companies is just as much as what they take away from these groups, from us. They also teach us quite a bit about being nimble and moving fast.” 

The companies selected so far include a mixture of private and publicly listed early stage explorers from around the world, but the strongest showing has been from Australia-based companies. 

“We saw applications come in globally from many different countries, but Australia and Canada, were definitely in the strongest,” Johnson noted. 

Strong Aussie showing

A handful of the nearly 100 Canadian companies that applied for this year’s program made it to the final stage of the selection process, she said, but didn’t make the cut. 

Bronzite Exploration, part of the first year cohort that graduated in 2023 and focused on early stage copper exploration in Canada’s north, has been the only Canadian company selected so far. Bronzite is headed by economic geologist and Carleton University professor James Mungall. 

Two of this year’s companies, U.K.-based East Star Resources (LSE: EST) and privately held Pallas Resources are active in Kazakhstan. Two others — private companies Longreach Mineral and Equivest Minerals — are using artificial intelligence in their search for new discoveries. And the final two are both Australia-based: Hamelin Gold (ASX: HMG), exploring for both gold and nickel-copper-PGE deposits in Western Australia; and copper and base metals focused Cobre (ASX: CBE), active in Botswana. 

“In terms of who we bring into the program, we look at the projects themselves, the operating jurisdiction, the teams and then ultimately the likelihood that the opportunities will yield follow-on investment in the portfolio. We bring in projects that we think are set up for a future with BHP,” said Johnson, who has been with the company for 12 years, starting in the petroleum business and moving over to Xplor after BHP exited oil and gas. 

During the six-month program, which begins with a week-long, in-person bootcamp in Toronto, the companies go through a curriculum focused on technical readiness, business strategy, and operational readiness, taught by BHP experts. They also get access to the company’s networks of external service providers and have opportunities to collaborate with them and previous cohorts. 

Aside from Xplor, BHP is spending more on exploration. Its US$350 million budgeted in the year ending June 2023, was up 37% from US$256 million the previous year. 

Johnson suggests that there may be more to come, with BHP Xplor vice-president Sonia Scarselli being named BHP’s VP of exploration in September. Xplor is now also part of BHP’s mineral exploration group (it started out in the company’s portfolio strategy and development division). 

Scarselli has just completed a reset of the exploration strategy and the operating model, Johnson said. 

“I think what you’re going to see coming out of the strategy reset is a pretty aggressive and exciting approach to what the future of exploration will look like in BHP and some pretty big aspirations to bring in new opportunities and get to those discoveries.”