BHP Profit Climbs as Copper Offsets China Drag on Iron Ore

BHP Group’s earnings for the six months to the end of December rose by more than a fifth thanks to a surge in copper prices, even as plateauing demand in China weighed on its iron ore and steelmaking coal businesses.

The world’s largest miner said underlying attributable profit climbed to $6.2 billion, up 22% and broadly in line with analyst forecasts, according to a statement on Tuesday.

The copper division, a focus of BHP’s growth plans and good for more than half of its bottom line for the first time, saw underlying earnings before interest, tax, depreciation and amortization climb 59% to $8 billion. Realized prices climbed by almost a third over the period. 

“We have achieved around 30% growth in copper production in the last four years, positioning us ahead of the strengthening copper market that we had anticipated,” Chief Executive Officer Mike Henry said in the statement. 

Earnings from its iron ore business edged 4% higher, as steel exports and manufacturing demand in China helped to offset persistent weakness in the real estate sector that once drove consumption.

The company also announced it would receive $4.3 billion under a long-term silver streaming agreement with Wheaton Precious Metals Corp, an effort to make the most of high prices for the metal. The deal relates to silver produced as a by-product at the Antamina copper mine in Peru, in which the Australian miner has a 33.75% share.

BHP is seeking to balance the need for growth, particularly in copper, with a commitment to capital discipline. The company has made unsuccessful approaches for rival Anglo American Plc, most recently late last year in an effort to gatecrash the miner’s tie-up with Teck Resources Ltd.n — only to walk away yet again in November. 

BHP said it would pay an interim dividend of 73 cents, equivalent to a 60% payout ratio. 

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