BHP-GIP power deal sparks WA’s energy transition

The agreement is expected to complete towards the end of the 2026 financial year and marks an innovative approach to financing infrastructure in the mining sector. It underscores how private capital is being leveraged in Western Australia’s (WA) energy infrastructure, complementing the public sector efforts in the energy transition.

The WAIO comprises four main joint ventures in the Pilbara region of WA, with BHP holding an 85% interest.  The agreement involves carving out BHP’s share of the WAIO into a new structure for joint ownership with GIP. 

Under the agreement, BHP will receive US$2 billion from GIP in exchange for a 49% stake in the WAIO. The assets will be housed in a new trust entity, 51% owned and controlled by BHP, which ensures it retains majority ownership and full operational control of the power infrastructure. In return, BHP commits to pay the trust a regulated tariff for 25 years, linked to its share of power usage on this network.

This structured agreement frees up a significant amount of capital for BHP while allowing it to keep strategic control over a critical utility asset – a balance that addresses both commercial objectives and legal constraints.

The partnership exemplifies a broader trend of “asset recycling” in the resources industry, where miners monetise infrastructure by bringing in private capital, without wholly relinquishing control or service reliability. It also aligns with shifts in WA’s energy strategy, as companies seek to decarbonise operations by leveraging external investment.

Industry trends

The transaction has drawn attention as part of a wider trend in the mining industry.  In recent years, large miners have been increasingly willing to partner with external investors on big infrastructure pieces – especially those considered “non-core” to actual resource extraction – to share costs and risks.

The agreement highlights the growing use of external capital structures to support long-term resource expansion. It also demonstrates a trend towards miners recycling capital or “asset recycling” – BHP is, in essence, sweating its assets: taking a portion of the value embedded in a working asset built over years and turning it into cash today, all without disrupting the asset’s function. 

This is a strategy we expect to see more of as miners pursue growth through external private capital. If successful, the BHP-GIP partnership could spur similar transactions. Other resource companies in Australia – from iron ore to LNG – could emulate this infrastructure funding model or similar, bringing in global investors for roads, railways, ports, or energy systems that support their operations. The Pilbara region, with its vast scale of infrastructure, is a prime ground for such partnerships.  

The agreement demonstrates that a mining company can raise billions, retain control, and ensure the investor receives a defined income stream. We may see, for example, future transactions where renewable energy developers or infrastructure funds finance new solar or wind farms for mines under a similar tariff model, or partial sales of privately owned railways with long-term transport agreements in place. Importantly, the agreement also reflects strong global capital appetite for WA infrastructure – GIP’s US$2 billion bet underscores confidence in the stability of WA’s mining sector and its regulatory environment.

Policy implications and decarbonisation goals

The BHP-GIP partnership comes at a time when the WA state government and the mining industry are grappling with the energy transition and decarbonisation goals. The Pilbara power network in question, the WAIO, currently relies heavily on natural gas, and some diesel, generation to supply BHP’s mines. BHP has large greenhouse gas emissions in these off-grid operations, primarily from fuel combustion for power and mining vehicles. Both BHP and the WA state government have set ambitious decarbonisation targets: BHP aims to reduce operational – both Scope 1 and 2 – emissions by 30% by 2030, from 2020 levels, and achieve net zero by 2050, and the WA government has committed to net zero by 2050 as well, encouraging all major industries to contribute.  

Modernising the energy infrastructure of remote mines is a vital part of meeting these goals, and the agreement appears to align with this approach. The agreement frees up capital which could be redeployed into mine expansion or other decarbonisation efforts – such as electrifying mining fleet – while potentially creating an opening for partners to finance the growth or greening of that power network in the future.

From a policy perspective in WA, this approach aligns with the state’s objectives. Western Australia’s main electricity grid is on a path to decarbonise, with coal power stations slated to close by 2030. While the Pilbara’s mining operations are off-grid, the state has also indicated it is keen for those operations to also reduce emissions. Policy levers are, however, trickier for these private grids.

The WA government does not directly supply the Pilbara mines with power: companies like BHP historically self-generate. The state government’s role is more about enabling and possibly incentivising miners to adopt cleaner technologies, such as facilitating land for renewables or streamlining approvals, which, as we previously considered, the new State Development Act 2025 might help with.

That said, there are potential challenges and risks in relying on these private partnerships for decarbonisation. One risk is coordination: ensuring that the goals of the miner and the external investor remain aligned when it comes to upgrading the power system. For instance, if adding renewable generation or storage is needed to meet emissions targets or reduce fuel costs, BHP will have to either convince GIP to invest or work with separate third parties. Since BHP no longer fully “owns” the power infrastructure economics, it might need to share some benefits of efficiency improvements with the investor. Conversely, GIP will be interested in maintaining the viability of the network long-term, which likely means supporting a transition to cheaper or cleaner power if it makes the operations more sustainable through 2050.  

Another risk is contractual rigidity. For example, under the agreement, the 25-year tariff is set on certain assumptions, including BHP’s usage volumes. If BHP dramatically electrifies more of its operations, such as by replacing diesel haul trucks with electric trucks, which would significantly raise power demand, the question of how additional power needs will be met and paid for might arise. Scenarios like these mean the partners will need to collaborate on future-proofing the network. Given iron ore’s cyclical nature and the drive to lower emissions, flexibility will be important – something that can be built into contracts or handled through good-faith negotiations.

Another policy angle is the precedent for foreign investment in state resource infrastructure. WA generally welcomes investment that supports its mining sector, but it also keeps a watchful eye on critical infrastructure. By structuring this as a minority stake, BHP likely satisfied any informal concerns the state might have had. If more of these transactions follow, the WA government might develop a clearer policy stance on them.  

In relation to national policy, Australia has been encouraging of foreign investment in energy infrastructure when it contributes to new capacity, such as renewable projects by global firms, but cautious when it involves existing assets with monopolistic characteristics. The BHP-GIP deal navigates this by keeping the asset under Australian control and merely bringing in private capital – arguably a win-win that policymakers can hold up as supporting both economic growth and the energy transition.   

Implications for future infrastructure partnerships in mining and energy

The agreement has the potential to be a bellwetherfor how large-scale mining and energy projects are funded in the future, particularly in regions like the Pilbara.  

As mines become more technology-intensive, with electrification of operations, automation, and connectivity, major infrastructure such as power, rail, ports and data networks requires continuous investment. Traditionally, mining companies built and owned these outright, considering them part of the cost of doing business. Now, as the industry and capital markets evolve, we have seen a shift: infrastructure can be carved out and treated as a standalone investment opportunity, attracting funds that might not otherwise invest in mining.  

We see this having several implications:

• Diversified capital sources – projects that might have been shelved due to capital constraints could find new life with external funding;
• Risk sharing – by sharing ownership, miners also share certain risks. In the BHP-GIP case, operational risk remains with BHP, but financial and market risks are shared;
• Focus on core competency– mining companies can concentrate on finding and extracting resources, leaving the ancillary infrastructure business to specialists. This could lead to more efficient management of infrastructure;
• Standardisation and market creation– if numerous companies start doing infrastructure carve-out transactions similar to BHP-GIP, we might eventually see an established market for investing in mining infrastructure as an asset class. This could mean more standard transaction structures, and perhaps even conglomeration of assets;
• Challenges in future partnerships– despite the upsides, challenges will include aligning multiple stakeholders. There’s also the challenge of regulatory clarity – the WA government may need to update or clarify policies to accommodate these partnership arrangements in traditionally company-town settings. WA might need to consider how to regulate or facilitate open access if an infrastructure investor ends up serving more than one mine or company, to prevent potential anti-competitive situations.

The agreement underscores a broader narrative in heavy industry: achieving net-zero and sustaining growth will require coalitions of miners, investors, and energy companies, each playing to their strengths. WA’s Pilbara, long the domain of self-sufficient mining companies, may soon become a showcase for such collaborative infrastructure models – with BHP and GIP’s partnership a defining step on that path.

Co-written by Thomas Coleman of Pinsent Masons.