Why BHP is still bullish on iron ore and betting $7.4bn on copper

Note: This interview was recorded on Tuesday 27 August 2024, hours after BHP released its FY24 results to the market.

"The Big Australian" has always been beloved, but even more so recently because of the generous franked dividends it has paid. Can it keep up the pace in coming years?

The business has had to contend with volatility in commodity prices and declining exports to China, all within a political global landscape focusing increasingly on decarbonisation. It also pursued and failed to take over Anglo American as a play to enhance its copper focus in the last year.

Amidst uncertainty, the latest annual report from BHP (ASX: BHP) continued to impress investors, with revenue up 3% and the company announcing US$7.4 billion in returns to investors, despite cutting dividends by 14%.

In this interview with Livewire, BHP’s Chief Financial Officer Vandita Pant remained optimistic about the future, including in terms of iron ore.

Iron ore traditionally represents over 40% of BHP’s total revenue and is facing into pricing challenges and weakening demand from China. Pant argues concerns are overblown and it’s an opportunity for BHP to capitalise on its competitive advantages in the form of high quality and low operational costs.

She also discusses BHP’s increasing focus on copper, along with the opportunity from potash with production expected to commence in 2026. The copper play represents a $7.4 billion projected investment in FY2025 alone. It’s a big bet but one Pant and the team anticipate will pay off due to the global efforts to decarbonise. It could also be a savvy choice given the miner has actively chosen to steer clear of the other green metal essential – lithium – which has seen an extraordinary fall.

BHP is planning big, and millions of investors will continue to be watching closely.

Timestamps

• 0:00 - Introduction
• 0:25 - The highlights of BHP's FY24 results 
• 2:20 - BHP's dividend return 
• 3:28 - The outlook for iron ore 
• 4:35 - The implications of this outlook for BHP's revenue 
• 5:53 - Why BHP is focusing on copper 
• 8:48 - The outlook for potash and why BHP is investing