BHP Group, the world’s biggest miner, yesterday reported its highest-ever full-year profit on record commodity prices and would push ahead with growth options on an improved demand outlook in China.
The producer would study plans to expand its top-earning iron ore unit to 330 million tonnes of production a year and is continuing to assess options to lift volumes in copper and nickel, Melbourne, Australia-based BHP said in a statement.
A giant new potash mine in Canada remains on track to begin output in 2026.
BHP chief executive officer Mike Henry said that China’s emergence from COVID-19 lockdowns would provide a “tailwind” to the global economy, in a counterpoint to jittery sentiment regarding China following a swath of surprisingly weak data.
“We think that over the next six-to-12 months, China, if anything, is going to provide some stability to global growth and will help offset some of the slowing that we see elsewhere,” Henry said.
China typically accounts for more than 60 percent of BHP’s revenue.
Rival miners have cautioned over a weaker outlook.
Rio Tinto Group last month reported a decline in first-half profit and halved its dividend.
Gold giant Newmont Mining Corp and copper producer First Quantum Minerals Ltd have also warned investors in the past few weeks about the likely effects of inflation.
Although BHP would face pressure from a slowdown in advanced economies, higher costs and tighter labor markets, there will be opportunities for low-cost miners as inflation also drives prices higher, the company said.
Production costs across major assets rose 13 percent on COVID-19-related issues and higher prices of diesel and electricity.
BHP is aiming to seize on any pressure on competitors to add metals tied to clean energy and electric vehicle supply chains, including copper and nickel.
Copper miner OZ Minerals Ltd — which rejected a BHP takeover approach — was “nice to have, not a must have,” Henry told reporters.
BHP would continue to produce high-quality metallurgical coal, but plans for new coal mines in Queensland, Australia, are on hold after the state government increased royalty taxes, Henry said.
Green steel technology, including using hydrogen rather than metallurgical coal, was still “decades” away from becoming commercial, he said.
Total underlying earnings were US$23.8 billion in the year to June 30, beating an average analyst forecast of US$21.6 billion, and the highest since the company was created in a 2001 merger.
The producer said it would pay a record final dividend of US$3.25 a share.
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