BHP reports lower annual profit, but long term commodity drivers remain firmly in place

BHP, the diversified natural resources group met its guidance across its assets and set new production records in copper and iron ore, even though full year underlying attributable profit fell to $10.2 billion, well down from $13.7 billion.

CEO Mike Henry said, however, the year to June 30 had been “another strong year for BHP,” marked by record production, continued sector-leading margins, and disciplined capital allocation.

Copper production exceeded 2 million tons for the first time, up 28% over the past three years. The group maintained its position as the world’s lowest-cost major iron ore producer at  Western Australia Iron Ore (WAIO), where it delivered 290 million tons – a new production record.

A final dividend of 60 US cents per share was declared, also well down from 74 US cents at the same time last year.

In the past year, a strong balance sheet was leveraged to fund organic growth opportunities; the production guidance was achieved, it was another year of sector-leading margins, cash flow, and returns were strong, while the growth project pipeline had been re-sequenced to optimise capital allocation.

“In each of the next two years, we expect to spend $11bn in capital and exploration, reducing to $10bn on average each year between the 2028 and 2030 financial years,” said Henry.

“The Jansen project in Canada is estimated to deliver first potash production by mid-2027. We are optimising our growth program at Escondida in Chile; Copper South Australia has the potential to double production through phased expansions, and the Vicuña project in Argentina is advancing towards a multi-decade copper opportunity,” he said.

At WAIO, production of greater than 305 million tons per year was being targeted over the next few years. Charter contracts for two ammonia dual-fuel bulk carriers were signed to reduce greenhouse gas emission intensity on the group shipping. 

Chinese copper demand outperformed in in the financial year, while iron ore demand was resilient, driven by strong infrastructure investment and manufacturing activity in China.

Steelmaking coal prices had softened due to oversupply, though policy shifts in China and new blast furnace capacity in Asia were expected to support the market.

Potash markets were expected to continue to benefit from a growing and wealthier population and the need for more sustainable agriculture.

“We remain confident in the long-term fundamentals of steelmaking materials, copper, and fertilisers, which are critical to global growth, urbanisation, and the energy transition,” he said.

They did not expect short-term macro volatility to fundamentally alter their longer-term outlook.

"As policies stabilise and trade flows adjust to the new dynamics, we continue to expect that population growth, urbanisation, rising living standards, and the infrastructure of digitalisation and decarbonisation will drive demand for steel, non-ferrous metals, and fertilisers for decades to come,” the group said in a commodity outlook that accompanied the results.

“The need to increase supply chain resilience across multiple geographies, together with strategic stockpiling, could provide further upside to this outlook,” BHP said.

The company said India, along with other parts of developing Asia, was in the early stages of a long structural growth cycle. A young and growing population, rapid urbanisation, and rising incomes were expected to drive sustained demand for steel, copper, and other industrial commodities for decades to come. For example, India’s copper demand per capita today was only 1one-eighth that of China and advanced economies.

On copper, the group said near-term weakness in ex-China electrification could be partially offset by higher-than-expected power demand growth from data centres and digitalisation.

In its latest base case forecast, the IEA projected installed data centre capacity to grow by 2.3 times by 2030, with almost 60% based in Europe and North America—both regions that had seen a deceleration in energy transition spend. “Nevertheless, we acknowledge that uncertainty in the digitalisation space is significant,” the group said.

BUSINESS REPORT