BHP profits fall as China demand slows and iron ore prices slide

BHP, the world’s largest mining group, has posted its lowest profit in five years. The company saw underlying profit decline to $10.16 billion for the year ending June, marking a 26 per cent drop from the previous period. Revenue took an eight per cent year on year hit, sliding to $51.3 billion as the price BHP received for iron ore fell nineteen per cent. Weaker demand from China, which consumes over 60 per cent of global seaborne iron ore, was a central factor in the price drop. China’s status as the leading steel producer means its economic trends reverberate across global markets.

The fall in iron ore revenue was partially offset by a stronger copper market. BHP’s copper production exceeded two million tonnes for the first time, up twenty eight per cent in three years. Higher copper prices bolstered performance, reflecting increased demand for copper in the green energy and electric vehicle industries.

Chief executive Mike Henry remarked on the year’s challenges against a backdrop of global uncertainty. He attributed some of the turbulence to policy shifts in tariffs and fiscal decisions as well as rapid changes in the industrial landscape. Despite these pressures, commodity demand held steady and shares in BHP rose as the company’s final dividend reduction was not as severe as some had feared.

The group’s final dividend stands at sixty cents per share, down from seventy four cents the previous year, while total yearly dividends are now at their lowest since 2017. The miner continues to focus on debt management and the disposal of non core assets, which influenced current shareholder returns. BHP raised its net debt target range in line with technical analysis, distancing the move from any immediate plans for mergers or large scale acquisitions.

BHP remains committed to growth projects and exploration, planning to invest $11 billion over the next two years. Copper and potash are earmarked as key areas for expansion. However, the company signalled a moderate reduction in annual spend between 2028 and 2030 to an average of $10 billion.

Earlier in the year, BHP reported a significant cost overrun and delay at the Jansen potash project in Canada and exited the Kabanga nickel project in Tanzania. These decisions exemplify a cautious approach to large scale investments amidst global market unpredictability. The company’s long history and global presence continue to make BHP a bellwether for trends in the mining and commodity sectors.