BHP caps off financial year with record iron ore and copper production
BHP produced a record amount of iron ore in FY24 as well as the highest copper production result in 15 years.
Source: iStock
Mentioned
KEY POINTS
- BHP achieved production guidance for all commodities in FY24, with record iron ore production and highest copper output in 15 years
- Average realised prices for copper and iron ore were higher in FY24, while metallurgical coal remained stable; nickel and energy coal prices were lower
- BHP's FY25 production guidance is largely in line with consensus expectations, maintaining strong output for iron ore and copper while reducing coal production
FY24 was the year of operational excellence for BHP (ASX: BHP), where it achieved production guidance for all commodities, including record iron ore production and the highest copper production in over 15 years.
Western Australian Iron Ore (WAIO) operations delivered a second consecutive year of record production, up 1% year-on-year to 259.7 million tonnes. BHP has a medium-term goal of boosting WAIO production to more than 305 million tonnes per annum.
"We achieved a strong performance across our copper business globally, underpinned by the highest production in four years at Escondida and another year of record production from Spence in Chile," the company said in a statement.
At a glance
BHP delivered a clean sweep of above consensus production figures for the June quarter 2024.
Commodity | Q4 FY24 Actuals | Q4 FY24 Consensus | vs. Q4 FY23 |
|---|---|---|---|
Iron Ore (Mt) | 69.2 | 67.7 | 6% |
Copper (kt) | 504.9 | 475.3 | 6% |
Met Coal (Mt) | 4.9 | 4.6 | -42% |
Energy Coal (Mt) | 3.8 | 3.8 | -21% |
Nickel (kt) | 23 | 20 | 5% |
Source: BHP
For the full-year, production numbers all landed towards the mid-to-upper end of its guidance.
Commodity | FY24 | FY24 Guidance | vs. FY23 |
|---|---|---|---|
Iron Ore (Mt) | 259.7 | 254-264.5 | 1% |
Copper (kt) | 1,865.2 | 1,720-1,910 | 9% |
Met Coal (Mt) | 22.3 | 21.5-22.5 | -23% |
Energy Coal (Mt) | 15.4 | 13-15 | 8% |
Nickel (kt) | 81.6 | 77-87 | 2% |
Source: BHP
Strong commodity prices
"Average realised prices for copper and iron ore were higher in FY24, while metallurgical coal prices remained relatively stable, and nickel and energy coal prices were lower," the company said in a statement.
Commodity | FY24 Average | vs. FY23 |
|---|---|---|
Iron Ore (US$/wmt) | 101.04 | 9% |
Copper (US$/lb) | 3.98 | 9% |
Met Coal (US$/t) | 266.06 | -2% |
Energy Coal (US$/t) | 121.52 | -49% |
Nickel (US$/t) | 18,187 | -24% |
Source: BHP
Dam failure overhang
Last Friday, BHP reached an agreement with Brazil's Vale to equally share the cost of any damages from court proceedings in the UK and Netherlands related to the 2015 Fundao Dam collapse.
"The matter remains an overhang on the stock with potential for the final settlement number coming in higher than already increased provisions (from US$3.7bn to US$6.5bn on 15/02/2024)," Morgan Stanley analysts said in a note last week.
"The market's reaction to the final settlement would be determined by both the quantum and timing (of payment) of final settlements."
FY25 production guidance
BHP guided to the following production figures for FY25, which were largely in-line with consensus expectations.
Commodity | FY25 | FY25e vs. FY24 |
|---|---|---|
Iron Ore (Mt) | 255-265.5 | (2%) - 2% |
Copper (kt) | 1,845-2,045 | (1%) - 10% |
Met Coal (Mt) | 16.5-19 | (26%) - (15%) |
Energy Coal (Mt) | 13-15 | (15%) - (2%) |
Nickel (kt) | Nil | Nil |
Source: BHP
To add some perspective, Macquarie forecasts FY25 iron ore production of 261.5Mt and 1,974kt of copper.
Market Index's Broker Consensus page currently rates the stock as a 'Buy' (two Buy and two hold ratings) with a $45.33 target price.
