BHP Group BHP announced that its iron ore production rose 2% year over year to 64.6 Mt in the first quarter of fiscal 2025 (ended Sept. 30, 2024). This was attributed to an increase in production at Western Australia Iron Ore (WAIO) following the commissioning of the Port Debottlenecking Project and completion of the South Flank ramp-up.
Iron ore production at Samarco increased 4% in the quarter due to the early resumption of Pelletizing Plant No. 4. BHP’s iron ore production guidance for fiscal 2025 remains unchanged at 255-265.5 Mt. WAIO's production is expected to be between 250 Mt and 260 Mt (282 Mt and 294 Mt on a 100% basis).
BHP Reports a 4% Rise in Copper Production
BHP’s copper output improved 4% year over year to 476 kt in the first quarter of fiscal 2025.
Copper production at Escondida increased 11% year over year as mining progressed into areas of higher-grade ore as well as increased concentrator feed grade. This was partially offset by planned lower cathode production.
Copper output at Pampa Norte slumped 23%. Production at Spence was down 13% due to lower cathode production as a result of planned quarterly maintenance at the concentrator and a decline in stacked feed grade.
Production was down on a year-over-year basis reflecting the impact of Cerro Colorado entering temporary care and maintenance in December 2023. It had contributed 9.5 kt of copper output in the first quarter of fiscal 2024.
Production from Copper South Australia was reported at 73 kt, 2% higher than the prior fiscal quarter aided by upbeat underlying operational performance. Production was lower at Prominent Hill due to minor pit geotechnical instability and ventilation constraints, which impacted trucking capacity and production. BHP assured that these issues have been rectified.
Antamina’s copper production rose 12% to 36 kt on higher ore grade and recoveries, partially offset by planned lower concentrator throughput.
The company expects copper production within the range of 1,845-2,045 kt in fiscal 2024.
BHP Temporarily Suspends Nickel West Operations
Nickel production was down 3% year over year to 19.6 kt in the fiscal first quarter. This reflected BHP’s decision to temporarily suspend the Nickel West operation starting in October 2024, citing lower nickel prices.
Starting January 2025, BHP plans to invest around $300 million annually to keep the operation in readiness for a potential restart in case the market rebounds.
BHP’s Energy & Steelmaking Coal Output Up Y/Y
Energy coal production rose 2% year over year to 3.7 Mt in the quarter. Steelmaking coal production was 4.5 Mt, which declined 19% from the year-ago quarter. Production in the first quarter of fiscal 2024 included 1.8 Mt (3.7 Mt on a 100% basis) from the Blackwater and Daunia mines that were divested on April 2, 2024. Excluding these volumes, production of steelmaking coal was up 20% year over year.
Production guidance for steelmaking coal is in the band of 16.5-19 Mt while energy coal guidance in the range of 13 Mt to 15 Mt in fiscal 2025.
BHP Sees Lower Average Iron Ore Prices, Rising Copper Prices
In the fiscal first quarter, average realized prices for iron ore were down 18% year over year to $80.10 per ton. Copper prices were up 17% to $4.24 per pound. Average nickel prices were $16,359 per ton, down 20% from the year-ago quarter. Prices for thermal coal dipped 1% year over year to $124.32 per ton and steelmaking coal prices were down 9% to $214.86 per ton.
BHP’s Other Updates on Projects & Acquisitions
In July 2024, BHP and Lundin Mining Corporation LUNMF agreed to jointly acquire Filo Corp, which owns 100% of the Filo del Sol (FDS) copper project. BHP and Lundin Mining have also agreed to form a 50/50 joint venture to advance the FDS and Josemaria projects.
BHP commenced construction of Jansen Stage 2 for potash in fiscal 2024. It had been 4% completed in the fiscal first quarter. Meanwhile, the Jansen Stage 1 has been 58% completed. The operating expenditure related to potash is expected to be around $300 million in the current fiscal 2025.
BHP’s Peer Performances
Vale S.A. VALE reported iron ore production of around 91 Mt for the third quarter of 2024, reflecting a 5.5% increase from the year-ago quarter. This marks VALE’s highest output since the fourth quarter of 2018, driven by improved operating performances at Itabira and Brucutu. The company’s iron ore production guidance for 2024 is in the range of 323-330 Mt.
Vale produced 85.9 kt of copper, which was 5.3% higher than the year-ago quarter. The company expects to produce copper in the range of 320 – 355 kt.
Rio Tinto RIO reported a 1% year-over-year improvement in its third-quarter (ended Sept. 30, 2024) iron ore production to 84.1 Mt (on a 100% basis) as productivity gains offset ore depletion. This brings RIO’s total iron ore output for the nine-month period to 242.9 Mt, a decline of 1% year over year.
Iron-ore shipments for the quarter (on a 100% basis) were reported at 84.5 Mt, up 1% year over year. Rio Tinto expects Pilbara iron ore shipments (100% basis) to be between 323 Mt and 338 Mt in 2024. The midpoint of the guidance indicates a year-over-year dip of 0.4%.
Copper production was 168 thousand tons in the third quarter, 1% lower than the year-ago quarter. RIO expects copper production to be between 660 thousand tons and 720 thousand tons in 2024, indicating 11.3% growth at the midpoint.
BHP’s Price Performance & Zacks Rank
BHP’s shares have dipped 0.7% in a year compared with the industry’s 3% growth.
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BHP currently carries a Zacks Rank #5 (Strong Sell).
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