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BHP Reports Record Iron Ore Production in FY24, Copper Up 9%
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BHP Group (BHP - Free Report) announced that its iron ore production rose 6% year over year to 69.2 Mt in the fourth quarter of fiscal 2024 (ended Jun 30, 2024), aided by record production at Western Australia Iron Ore (“WAIO”) as a result of the strong underlying performance at the mines and the benefits of the Port Debottlenecking Project 1. This brings the company’s total iron ore production for fiscal 2024 to a record 260 Mt, up 1% year over year. It came within its iron ore production guidance for fiscal 2024 at 254-264.5 Mt.
BHP also delivered on its targets for copper and nickel. Metallurgical coal was near the higher end of its guided range while energy coal outperformed the range.
Record Output at WAIO in FY24: WAIO’s iron ore production was 255 Mt for fiscal 2024 (287 Mt on a 100% basis), delivering a record performance. This reflects solid supply-chain performance with increased capacity unlocked by the record production at South Flank. These gains helped offset the impacts of the continued tie-in activity for the Rail Technology Program 1.
Per plans, South Flank completed ramp-up to full production capacity of 80 Mtpa (100% basis) in fiscal 2024. Production at Samarco increased 5% as a result of higher concentrator throughput.
Copper Output Reaches 15-Year High in FY24: Copper output improved 6% year over year to 504.9 kt in the fourth quarter and rose 9% year over year to 1,865 kt in fiscal 2024. It was the highest in 15 years. BHP’s guidance for copper production for fiscal 2024 was within the 1,720-1,910 kt range.
Copper production at Escondida increased 7% year over year as mining progressed into areas of higher-grade ore. This was partially offset by planned lower cathode production as a result of prioritizing concentrator throughput in prior years.
Copper output at Pampa Norte was down 8%. Spence delivered a record output of 255 kt, driven by improved concentrator throughput and increases in both concentrator feed grade and recoveries. Production was down due to the impact of Cerro Colorado entering temporary care and maintenance in December 2023.
Production from Copper South Australia was 322 kt, which marked a 39% surge from the prior fiscal quarter aided by strong underlying performance. Antamina’s copper production rose 4% to 143.9 kt in fiscal 2024 as a result of record concentrator throughput offsetting planned lower feed grades.
Nickel Production Up 2% in 2024: Nickel production was up 5% year over year to 23 kt during the fiscal fourth quarter and 2% in fiscal 2024 to 81.6 Kt. The company had provided guidance for nickel production between 77 kt and 87 kt for fiscal 2024.
Energy Coal Up, Metallurgical Coal Plunges in FY24: Energy coal production declined 21% year over year to 3.8 Mt in the fiscal fourth quarter. Metallurgical coal production was 4.9 Mt in the quarter, which plunged 42% compared with the year-ago quarter.
In fiscal 2024, energy coal production was up 8% year over year to 15.4 Mt, higher than the company’s guided range of 13-15 Mt. Improvement in weather conditions and labor availability aided the performance.
Metallurgical coal production was 22.3 Mt in fiscal 2024, 23% lower than fiscal 2023. It came near the high end of the company’s guidance of 21.5–22.5 Mt. Production declined due to increased stripping to improve supply-chain stability and restore depleted inventory positions, which arose from extended weather impacts and labor constraints over recent years, and the divestment of Blackwater and Daunia on Apr 2, 2024.
Prices: In the fiscal fourth quarter, average realized prices for iron ore were down 14% sequentially to $91.31 per ton. Copper prices were up 19% sequentially to $4.85 per pound. Average nickel prices were $18,414 per ton, up 11% sequentially. Prices for thermal coal rose 6% sequentially to $123.38 per ton and metallurgical coal prices were down 13% sequentially to $245.29 per ton.
In fiscal 2024, average realized prices were up 9% year over year to $101.04 per ton. Copper prices were up 9% to $3.98 per pound. Realized prices for thermal coal plunged 49% to $121.52 per ton and metallurgical coal prices were down 2% to $266.06 per ton. Average realized nickel prices were down 24% to $18,197 per ton.
FY25 Production Guidance
BHP’s iron ore production guidance for fiscal 2025 is in the range of 255-265.5 Mt. WAIO's production is expected to be between 250 Mt and 260 Mt (282 Mt and 294 Mt on a 100% basis).
The company expects copper production within the range of 1,845-2,045 kt in fiscal 2024. Production guidance for metallurgical coal is in the band of 16.5-19 Mt while for energy coal it is in the range of 13-15 Mt.
Other Updates
BHP and Mitsubishi Development Pty Ltd, on Apr 2, announced the completion of the divestment of the Blackwater and Daunia mines to Whitehaven Coal. Daunia and Blackwater were part of the BHP Mitsubishi Alliance (“BMA”) metallurgical coal joint venture in Queensland. Each of BHP and MDP held a 50% interest in BMA.
During fiscal 2024, BHP commenced construction of Jansen Stage 2, with Jansen Stage 1 now more than 50% completed.
BHP recently announced that the Nickel West operations and West Musgrave project (Western Australia Nickel) will be temporarily suspended from October 2024. The company intends to review the decision to temporarily suspend Western Australia Nickel by February 2027. This decision reflects the oversupply in the global nickel market. Also, nickel prices have been in the slump due to the strong growth of alternative low-cost nickel supply.
Peer Performances
Vale S.A. (VALE - Free Report) reported record iron ore production of 80.6 Mt for the second quarter, which was up 2% year over year, attributed to improved operating performance at the S11D mine and Vargem Grande. Vale’s iron ore production guidance for 2024 is in the range of 310-320 Mt.
Vale produced 78.6 kt of copper in the second quarter, which marked a 0.3% dip year over year. Improved performances at Salobo’s 1 & 2 and Sossego plants were offset by the bi-annual maintenance in Sudbury. The company expects to produce copper in the range of 320-355 kt.
Rio Tinto Group (RIO - Free Report) reported a 2% decrease in its second-quarter 2024 (ended Jun 30, 2024) iron ore production to 79.5 Mt (on a 100% basis) as ore depletion offset productivity gains. A train had derailed in mid-May at its Western Australia iron ore operations, which led to six days of lost rail capacity and full stockpiles at some mines, impacting production for the quarter. Copper production was 171 thousand tons, 18% higher than the year-ago quarter.
RIO’s shipments for the quarter (on a 100% basis) were reported at 80.3 Mt, which were down 2% year over year. It expects Pilbara iron ore shipments (100% basis) to be between 323 Mt and 338 Mt in 2024. The range indicates a year-over-year decline of 3% to growth of 2%.
Price Performance
BHP’s shares have lost 6.7% in a year compared with the industry’s 1.9% decline.
The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2024 earnings indicates year-over-year growth of 281.6%. CRS beat the consensus estimate in each of the last four quarters, the average earnings surprise being 15.1%. The company's shares have soared 109% in the past year.
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BHP Reports Record Iron Ore Production in FY24, Copper Up 9%
BHP Group (BHP - Free Report) announced that its iron ore production rose 6% year over year to 69.2 Mt in the fourth quarter of fiscal 2024 (ended Jun 30, 2024), aided by record production at Western Australia Iron Ore (“WAIO”) as a result of the strong underlying performance at the mines and the benefits of the Port Debottlenecking Project 1. This brings the company’s total iron ore production for fiscal 2024 to a record 260 Mt, up 1% year over year. It came within its iron ore production guidance for fiscal 2024 at 254-264.5 Mt.
BHP also delivered on its targets for copper and nickel. Metallurgical coal was near the higher end of its guided range while energy coal outperformed the range.
Record Output at WAIO in FY24: WAIO’s iron ore production was 255 Mt for fiscal 2024 (287 Mt on a 100% basis), delivering a record performance. This reflects solid supply-chain performance with increased capacity unlocked by the record production at South Flank. These gains helped offset the impacts of the continued tie-in activity for the Rail Technology Program 1.
Per plans, South Flank completed ramp-up to full production capacity of 80 Mtpa (100% basis) in fiscal 2024. Production at Samarco increased 5% as a result of higher concentrator throughput.
Copper Output Reaches 15-Year High in FY24: Copper output improved 6% year over year to 504.9 kt in the fourth quarter and rose 9% year over year to 1,865 kt in fiscal 2024. It was the highest in 15 years. BHP’s guidance for copper production for fiscal 2024 was within the 1,720-1,910 kt range.
Copper production at Escondida increased 7% year over year as mining progressed into areas of higher-grade ore. This was partially offset by planned lower cathode production as a result of prioritizing concentrator throughput in prior years.
Copper output at Pampa Norte was down 8%. Spence delivered a record output of 255 kt, driven by improved concentrator throughput and increases in both concentrator feed grade and recoveries. Production was down due to the impact of Cerro Colorado entering temporary care and maintenance in December 2023.
Production from Copper South Australia was 322 kt, which marked a 39% surge from the prior fiscal quarter aided by strong underlying performance. Antamina’s copper production rose 4% to 143.9 kt in fiscal 2024 as a result of record concentrator throughput offsetting planned lower feed grades.
Nickel Production Up 2% in 2024: Nickel production was up 5% year over year to 23 kt during the fiscal fourth quarter and 2% in fiscal 2024 to 81.6 Kt. The company had provided guidance for nickel production between 77 kt and 87 kt for fiscal 2024.
Energy Coal Up, Metallurgical Coal Plunges in FY24: Energy coal production declined 21% year over year to 3.8 Mt in the fiscal fourth quarter. Metallurgical coal production was 4.9 Mt in the quarter, which plunged 42% compared with the year-ago quarter.
In fiscal 2024, energy coal production was up 8% year over year to 15.4 Mt, higher than the company’s guided range of 13-15 Mt. Improvement in weather conditions and labor availability aided the performance.
Metallurgical coal production was 22.3 Mt in fiscal 2024, 23% lower than fiscal 2023. It came near the high end of the company’s guidance of 21.5–22.5 Mt. Production declined due to increased stripping to improve supply-chain stability and restore depleted inventory positions, which arose from extended weather impacts and labor constraints over recent years, and the divestment of Blackwater and Daunia on Apr 2, 2024.
Prices: In the fiscal fourth quarter, average realized prices for iron ore were down 14% sequentially to $91.31 per ton. Copper prices were up 19% sequentially to $4.85 per pound. Average nickel prices were $18,414 per ton, up 11% sequentially. Prices for thermal coal rose 6% sequentially to $123.38 per ton and metallurgical coal prices were down 13% sequentially to $245.29 per ton.
In fiscal 2024, average realized prices were up 9% year over year to $101.04 per ton. Copper prices were up 9% to $3.98 per pound. Realized prices for thermal coal plunged 49% to $121.52 per ton and metallurgical coal prices were down 2% to $266.06 per ton. Average realized nickel prices were down 24% to $18,197 per ton.
FY25 Production Guidance
BHP’s iron ore production guidance for fiscal 2025 is in the range of 255-265.5 Mt. WAIO's production is expected to be between 250 Mt and 260 Mt (282 Mt and 294 Mt on a 100% basis).
The company expects copper production within the range of 1,845-2,045 kt in fiscal 2024. Production guidance for metallurgical coal is in the band of 16.5-19 Mt while for energy coal it is in the range of 13-15 Mt.
Other Updates
BHP and Mitsubishi Development Pty Ltd, on Apr 2, announced the completion of the divestment of the Blackwater and Daunia mines to Whitehaven Coal. Daunia and Blackwater were part of the BHP Mitsubishi Alliance (“BMA”) metallurgical coal joint venture in Queensland. Each of BHP and MDP held a 50% interest in BMA.
During fiscal 2024, BHP commenced construction of Jansen Stage 2, with Jansen Stage 1 now more than 50% completed.
BHP recently announced that the Nickel West operations and West Musgrave project (Western Australia Nickel) will be temporarily suspended from October 2024. The company intends to review the decision to temporarily suspend Western Australia Nickel by February 2027. This decision reflects the oversupply in the global nickel market. Also, nickel prices have been in the slump due to the strong growth of alternative low-cost nickel supply.
Peer Performances
Vale S.A. (VALE - Free Report) reported record iron ore production of 80.6 Mt for the second quarter, which was up 2% year over year, attributed to improved operating performance at the S11D mine and Vargem Grande. Vale’s iron ore production guidance for 2024 is in the range of 310-320 Mt.
Vale produced 78.6 kt of copper in the second quarter, which marked a 0.3% dip year over year. Improved performances at Salobo’s 1 & 2 and Sossego plants were offset by the bi-annual maintenance in Sudbury. The company expects to produce copper in the range of 320-355 kt.
Rio Tinto Group (RIO - Free Report) reported a 2% decrease in its second-quarter 2024 (ended Jun 30, 2024) iron ore production to 79.5 Mt (on a 100% basis) as ore depletion offset productivity gains. A train had derailed in mid-May at its Western Australia iron ore operations, which led to six days of lost rail capacity and full stockpiles at some mines, impacting production for the quarter. Copper production was 171 thousand tons, 18% higher than the year-ago quarter.
RIO’s shipments for the quarter (on a 100% basis) were reported at 80.3 Mt, which were down 2% year over year. It expects Pilbara iron ore shipments (100% basis) to be between 323 Mt and 338 Mt in 2024. The range indicates a year-over-year decline of 3% to growth of 2%.
Price Performance
BHP’s shares have lost 6.7% in a year compared with the industry’s 1.9% decline.
Image Source: Zacks Investment Research
Zacks Rank & a Key Pick
BHP currently carries a Zacks Rank #3 (Hold).
A better-ranked stock in the Basic Materials space is Carpenter Technology Corporation (CRS - Free Report) , which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Carpenter Technology’s fiscal 2024 earnings indicates year-over-year growth of 281.6%. CRS beat the consensus estimate in each of the last four quarters, the average earnings surprise being 15.1%. The company's shares have soared 109% in the past year.