Global mining heavyweight BHP (ASX:BHP) continues to notch iron ore production records and is considering further growth despite the price of the steelmaking commodity dropping over 30% this year.
The $207.12 billion miner reports record production for the 2024 financial year from its Western Australian iron ore operations of 255 million tonnes, which is a 1% increase over the previous financial year.
This contributed to the 2% increase in underlying attributable profit to US$13.7 billion ($20.24 billion) for the fiscal year, which prompted BHP to declare a fully franked final dividend of US$0.74 per share, or US$3.8 billion – equating to a 53% payout ratio.
Revenue rose 3% to US$55.7 billion, while profit from operations climbed 24% to US$17.5 billion. Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) was up 4% to US$29 billion and net operating cash flow jumped 11% to US$20.7 billion.
BHP expects its Western Australian iron ore production to grow to between 282 million tonnes and 294 million tonnes for the 2025 financial year and further increase to 305 million tonnes over the medium term.
The company is also assessing its options to increase that to 330 million tonnes per annum, “if market conditions warrant”.
In Brazil, the Samarco iron ore operation is set to almost double production through the restart of a second concentrator in the third quarter of the 2025 financial year.
This comes despite the continued softening in the Chinese crude steel market, which BHP says has plateaued at the same time as the ratio of scrap-based steelmaking rises.
BHP booked an average realised price of US$101.04 per wet tonne of iron ore in FY24, up from US$92.54 per wet tonne in FY23.
While the iron ore price has returned above the US$100-per-tonne mark this week as Chinese stockpiles are worked down, the price has been steadily declining over the course of this year, sliding over 30% after hitting a high of over US$140 per tonne in early January.
“We maintain our view that China’s steel production has plateaued above 1 billion tonnes and this is likely to continue across the mid-2020s,” the major says.
“However, Chinese pig iron production is expected to decline during this period with more recycled scrap used in steelmaking. We expect demand for our products from elsewhere in other developing Asia to offset this to a degree.”
BHP says it expects to complete studies into optimal mine and infrastructure configurations, and potentially increasing ore beneficiation at the Western Australian iron ore operations in 2025.
Meanwhile, copper production across the company’s global projects climbed 9% for the second consecutive quarter to around 1.9 billion tonnes. BHP expects this to increase by a further 4% in the 2025 financial year.
Saranga Ranasinghe, vice president and senior analyst for Moody’s Ratings, says BHP’s underlying EBITDA and operating cash flow rose during the period despite an increase in unit costs across all major commodities.
“Improved earnings were supported by higher production and realised prices for both iron ore and copper,” Ranasinghe says.
“BHP’s credit profile remains strong, supported by its low-cost asset base and conservative financial policies.”
Junvum Kim, Asia Pacific senior sales trader at Saxo, says BHP’s FY24 results show robust performance.
“The US$0.74 per share dividend underscores solid returns,” Kim says.
“Key growth drivers include copper expansions and the ahead-of-schedule Jansen potash project, with BHP’s strong balance sheet and strategic initiatives positioning the company well for sustained growth.”
BHP reported a fatality at its BMA metallurgical coal operation in Queensland in January.
The miner says the investigation outcomes will inform its continuing efforts to eliminate fatalities. BHP adds that it has reduced its high potential injury frequency by 36% in fiscal 2024.
Write to Angela East at Mining.com.au
Images: Stock
