Top miner BHP hits profit record and sees stronger China outlook
BHP GROUP, the world’s biggest miner, posted its highest ever full-year profit on record commodity prices and will push ahead with growth options on a stronger demand outlook in China.
The producer will study plans to expand its top-earning iron ore unit to 330 million tons of production a year, and is continuing to assess options to lift volumes in copper and nickel, Melbourne-based BHP said on Tuesday (Aug 16) in a statement. A giant new potash mine in Canada remains on track to begin production in 2026.
“We expect China to emerge as a source of stability for commodity demand in the year ahead, with policy support progressively taking hold,” chief executive officer Mike Henry said in the statement. China typically accounts for more than 60 per cent of BHP’s revenue.
Rivals have cautioned over a weaker outlook and Rio Tinto Group last month reported a decline in first-half profits and halved its dividend. Gold giant Newmont Mining and copper producer First Quantum Minerals have also warned investors in recent weeks on the impact of inflationary pressures.
Though BHP will face pressure from a slowdown in advanced economies, higher costs and tighter labour markets, there will be opportunities for low-cost miners as inflation also drives prices higher, the company said in its statement. Unit production costs across major assets rose 13 per cent on Covid-related issues and higher prices of diesel and electricity.
The producer is aiming to seize on any pressure on competitors to add metals tied to clean energy and electric vehicle supply chains. A takeover approach that valued copper producer OZ Minerals at about A$8.4 billion (S$8.1 billion) represented compelling value given the “deteriorating external environment”, Henry said last week. Adelaide-based OZ Minerals has rejected the offer as too low.
Total underlying earnings were US$23.8 billion in the year to Jun 30, beating an average analyst forecast of US$21.6 billion, and the highest since the current company was created in a 2001 merger. The producer will pay a record final dividend of US$3.25 a share. BLOOMBERG
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