This article is part of the latest daily news from FNArena.com. Stay informed with the latest financial, business and economic insights.
Written by Greg Peele
Production beats and declines across the portfolio led BHP Group to a broadly in-line result, with little change in FY26 guidance.
- BHP Group’s March quarter results led to some changes in forecasts.
- Iron ore performed strongly on price fixing and the resolution of disputes with China.
- Copper mining proved mixed, but pure solid
- FY26 production and cost guidance remained largely unchanged.
By Greg Peele
BHP Group’s ((BHP)) March quarter was better, RBC Capital suggests, but not cleanly.
Iron ore did the heavy lifting, with strong pricing driven by the mix, leading to a mixed operational result. Volumes were steady and guidance held.
Copper remains solid at the portfolio level, with Copper South Australia (old OZ Minerals), Escondida, and Antamina offsetting weakness in Spence (all in Chile).
Cost pressure is obvious but mostly based on Forex. Guidance remains unchanged and the balance sheet is supported by Wheaton’s earnings, RBC notes, which mitigates year-end risk.
Under its agreement with Wheaton Precious Metals, BHP will receive an upfront payment of US$4.3 billion and in return will supply Wheaton with silver calculated against its share of silver in the Antamina mine.
iron
A key positive outcome was the resolution of a months-long dispute with China Mineral Resources Group (CMRG), the state-owned procurement agency for steel mills, although no details on pricing were provided.
UBS advises changes in iron ore prices and the 61% move to the iron benchmark index since January has offset the -US$2-US$3 per tonne haircut the company had to take on its Jimblebar and Newman fines products during the dispute.
News of the easing of the import ban comes after BHP CEO-elect Brendan Craig and CEO Mike Henry visited China and met with executives from CMRG, Baowu and Chalco.
Otherwise, Western Australian iron ore shipments of 69.8Mt seasonally fell -10% in the quarter, hit by storms, port closures and maintenance disruptions, but were up 4% year-on-year compared to the weather-affected March quarter last year, UBS notes.
Citi pointed out that while BHP’s seasonal decline was better than the -21% decline reported by Rio Tinto ( RIO ) for Pilbara shipments over the same period, BHP was less affected by storms than its rival.
At an iron ore price of US$85.4/t, receipts are largely quarter-on-quarter and in line with expectations.
Record material mining in Mining Area C and South Flank (up 7% year-on-year) and inventory drawdowns were offset by improved car dumper and rail performance and arrivals in support of portfolio mix changes during the CMRG negotiations.
Copper
BHP’s copper output of 477kt was broadly flat on the previous quarter and met consensus expectations.
The main positives from the results came from gold/silver production, a by-product of copper mining, and despite prices correcting during this period thanks to the Trump war, remained high. Rio Tinto made similar gains over the period.
Production improved to 144Koz for gold and 4.9moz for silver, both up slightly from the previous quarter, Citi notes.
UBS reports that Escondida copper production of 303kt was above consensus, as underlying mine performance (throughput, recovery) helped offset planned grade reductions. Spence production was again soft versus consensus due to ore complexity and variability.
Macquarie points out that the lack of span was due to equipment reliability issues that resulted in variations in the on-spec grade offered to the mill. Spence has since corrected this issue by enabling his low target.
Macquarie suggested that changes to the process should reduce efficiency from 2028.
Copper South Australia is performing in line with its strong production underpinned by strong operational performance (record material transferred to Olympic Dam).
Coal
BHP Mitsubishi Alliance (BMA) is Australia’s largest coal producer, operating five met coal mines in Queensland’s Bowen Basin, which has experienced the heaviest rainfall in 15 years during this period.
Thus production of 3.8 million tonnes was below the consensus. Open-cut mines performed well, UBS notes, with unloading volumes at their highest level in five years, despite the weather, ongoing geotechnical issues at Broadmeadow, as well as Saraji South being put on maintenance and upkeep.
Price recovery for met coal at US$227/t nevertheless increased by 15% compared to the previous quarter, reflecting the strong flow of spot prices.
BHP’s NSW Energy Coal (Thermal Coal) operation at Mt Arthur produced 4.0mt, slightly above consensus by 10%.
Potash
Johnson Potash (Canada) Phase 1 is now 78% complete and on track for first tonne in mid-2027.
A Stage 2 review is due this quarter and could be a catalyst/signal on CEO Brendan Craig’s strategic and economic appetite for Jensen’s pick within the wider BHP portfolio.
In UBS’s view, Jansen is a Tier-1, BHP-style asset but the delayed and more expensive build-out is disappointing for shareholders.
guidance
BHP did not provide quantitative guidance on the impact of the Middle East war, noting only that “centralized purchasing capacity and low-cost operations have benefited us” to cope with rising energy and input costs and to secure supplies.
Macquarie sees BHP as having similar iron ore price pressure on Rio Tinto on fuel and inputs.
Otherwise, BHP’s FY26 guidance for production of 284-296mt, and unit costs of US$18.25-$19.75/t are unchanged.
BHP now expects Escondida copper production to be at the upper end of its guidance range of 1,200-1,275 kt, while Antamina production has been raised to 150-160kt from 140-150kt. This is offset by lower production for Spence from 230-250kt to 210-220kt.
While copper guidance is unchanged at 1.9-2.0mt, the guidance is for upper half production in FY26, notes Citi.
Better production at key mines and higher gold/silver revenues have led BHP to lower cost guidance for the Escondida unit to US$1.0-1.2/lb, compared to earlier guidance of US$1.2-1.5/lb.
Coal production from FY26 is still in the lower half of the 36-40mt range, and unit costs now move to the upper end of the US$116-$128/t range.
The post Stable as she moves to BHP appeared first on FNArena.com
