Expansion plans: Workers from BHP’s Escondida copper mine, camp close to ‘Coloso’ port owned by the copper company in Chile. BHP is pushing to expand its copper output given the commodity’s outsize role in the energy transition. — AFP
MELBOURNE: BHP Group reported a better-than-expected 2% rise in annual underlying profit after a strong performance at its iron ore and copper businesses and says it is comfortable with raising its debt levels to fund growth.
The world’s biggest listed miner is pushing hard to expand in copper given the commodity’s outsize role in the energy transition and a tougher outlook for its top revenue generator – iron ore, as China’s economic growth slows.
BHP walked away from a blockbuster US$49bil bid to take over Anglo American in May that would have significantly boosted its copper business and is now turning to other options.
BHP unveiled more details around its spending and growth plans for two key copper provinces, in Argentina and in South Australia after it posted an underlying attributable profit for the year ended June 30 of US$13.66bil.
That beat a Visible Alpha consensus of US$13.26bil and was ahead of the US$13.42bil profit a year ago.
Andy Foster, a portfolio manager at Argo Investments, said BHP’s results showed its cash flow was pretty strong and its balance sheet was in good shape.
“They have clearly laid out capital expenditure, and growth expectations for copper where they are still looking at copper as a key commodity, clearly,” he said.
“It’s just been so hard to execute large-scale acquisitions so you have to make the most of your existing assets and then look at other opportunities.”
BHP said in July it would jointly take over developer Filo Corp for its copper growth projects near the Argentine-Chilean border, and paid US$4.5bil with Canada’s Lundin Mining.
UK regulations bar BHP from making another offer for Anglo until November, should it still have interest in doing so. BHP said it was keeping its balance sheet flexible.
“We are comfortable to move above our net debt target temporarily to execute value accretive opportunities in the portfolio,” BHP said.
Its net debt stood at US$9.1bil as of June 30, roughly at the midpoint of its target range of US$5bil and US$15bil.
The miner said it would lift its capital and exploration spending to about US$10bil in the current 2025 financial year and an average US$11bil a year in the medium term from the 2026 financial year, up from US$9.3bil last year.
BHP’s profit was underpinned by record iron ore output for a second year and resilient prices, which offset weak coal prices and the sale of two of its coal mines.
BHP declared a dividend of US$0.74 per share, below the prior year’s US$0.80 a share, for a full-year dividend of US$1.46 per share.
That was its lowest full-year dividend since the 2020 financial year but still among the top-four it has declared in its history. — Reuters
