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BHP profits soar amid boom in iron ore exports

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These factors, combined with population growth and rising living standards, are expected to drive continued growth in demand for energy, metals and fertilizers.

Massive post-COVID-19 economic stimulus programs have fueled strong demand for steel in China at the same time as disruptions are affecting rival iron ore suppliers in Brazil. BHP’s underlying half-year profit jumped 16 percent as iron ore prices spiked from US $ 78 per tonne to US $ 103 during the half and most recently hit $ 170 US.

BHP also believes demand for steel and other commodities will be sustained by countries that combine green energy initiatives with post-foreclosure stimulus programs. Nickel and copper would be increasingly needed to make electric batteries, Henry said, while steel was needed for wind turbines and carbon capture and storage infrastructure.

The energy transition the world needs to make will ultimately be relatively raw material intensive … and will increase demand for many raw materials produced by BHP, he said.

Plato Investment’s portfolio manager Peter Gardner said BHP’s confidence in the global economic recovery and low level of debt puts it in a strong position to keep these dividends high going forward.

We thought it was a good result, a solid result, in terms of profit, Mr. Gardner said. It’s good to see management returning more of this money to shareholders.

Most analysts expected BHP to report underlying earnings of $ 6.3 billion for the six months ending Dec.31. Its statutory profit of $ 3.9 billion was 20% lower than the same period last year after BHP announced $ 2.2. billion dollars in write-downs, including on the value of its thermal coal mines in New South Wales and Colombia amid a deteriorating global outlook for coal.

In order to clean up its portfolio, BHP has sought to get rid of its thermal coal mines and some of its coking coal mines. BHP said it is evaluating splits and business selling opportunities.

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The price of BHP thermal coal used in power generation collapsed 25% to $ 44 per tonne amid the lingering shock of COVID-19 lockdowns reducing energy use and escalating Chinese bans on Australian coal imports which weigh on the market.

As the most carbon-intensive energy source in the world, coal is also at the center of growing concerns among investors and governments about its contribution to global warming.

Mr Henry said trade tensions between Australia and China were negatively impacting the revenues of BHP’s coal companies, but so far the company had been able to find new buyers for all. his products.

The ban on Australian coal imports into China has hurt, and you see it impacting the output of the coal industry, he said. We have always been strong supporters of free trade, we hope the world will follow a more positive course.

BHP was the first of Australia’s major miners to report profits this week, rivals Rio Tinto and Fortescue are also expected to post profits boosted by high iron ore prices.

BHP shares closed up 2.61% at $ 46.94.

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