Source : THE AGE NEWS
Australian mining giant BHP has ramped up its output of copper, one of the most sought-after metals in the clean energy shift, amid falling demand and prices in its iron ore division that has driven the bulk of its profits for years.
Melbourne-based BHP, the world’s biggest mining company, still earns most of its money from its sprawling operations in Western Australia, where it digs up vast amounts of iron ore and ships it to China to be processed into steel.
Stacked cathodes at BHP Billiton’s giant Escondida copper mine in northern Chile.Credit: AP
But chief executive Mike Henry has been leading a push to boost BHP’s exposure to what he terms “future-facing” commodities, particularly copper. As a critical ingredient in electric wiring, copper is considered among the most in-demand materials needed in the build-out of renewable energy generation and transmission infrastructure, while electric cars require up to four times more copper than internal combustion engine vehicles.
In an update on Tuesday, BHP revealed it had boosted copper production by 17 per cent in the three months to December 31 compared to the same time a year earlier. The figures were stronger than most analysts had been expecting.
“Copper production was the standout,” said Kaan Peker, an analyst at RBC Capital Markets.
Last year, BHP made repeated attempts to take over London-listed rival Anglo American, which it had targeted largely for its extensive ownership of copper mines. After its $US49 billion ($78 billion) offer was rebuffed, BHP walked away from the proposal and embarked on plans to expand its South American copper presence under a deal with Canada’s Lundin Mining to acquire a 50 per cent stake in junior copper miner Filo Corp.
Henry on Tuesday said Filo’s projects were among the “most significant copper discoveries in decades”.
Across the December quarter, BHP’s group-wide copper output of 510,700 tonnes beat consensus market forecasts by 5 per cent, largely due to BHP’s jointly owned Escondida mine in Chile achieving its highest production level in a decade.
While BHP’s copper assets in South Australia were hit by a weather-related power outage at its Olympic Dam operations, the impact was “more than offset” by Escondida, Henry said.
BHP’s iron ore output, meanwhile, was 1 per cent higher across the December quarter, and prices for the commodity collapsed by more than 20 per cent year-on-year.
Iron ore, the raw ingredient used by steel-makers in giant furnaces to churn out molten pig iron, remains BHP’s biggest earner and Australia’s single biggest export, raking in more than $130 billion in revenue during 2023-24.
But weakening economic activity in China, the world’s biggest iron ore consumer, and deteriorating conditions in its construction sector have triggered a slowdown in steel demand in the past 12 months and pummelled the share prices of top Australian miners BHP, Rio Tinto and Fortescue.
Since the start of 2024, benchmark iron prices have now lost about a quarter of their value, having fallen from around $US140 a tonne.
BHP’s average iron ore price of $US82 a tonne was lower than analysts had been expecting.
In its latest official forecasts, the federal government expects Australia’s overall iron ore export earnings to fall by about $30 billion this financial year – from $138 billion to $108 billion – before easing to $96 billion in 2025–26.
The Chinese government has so far struggled to counter the downturn plaguing its property market through stimulus measures. Analysts from investment bank UBS have flagged that “testing times” appear likely to continue for Australian miners in 2025 amid uncertainties surrounding US President Donald Trump’s plans to hike tariffs that could crimp global growth and the effectiveness of Chinese stimulus measures.
BHP did not comment on the demand outlook in China on Tuesday, but Rio Tinto, the second-largest Australian miner, last week pointed to November figures on home sales and prices as possible “signs of stabilisation”.
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