Posted on 23 Aug 2023
Mining giant BHP on Tuesday reported a 37% drop in underlying attributable profits during the full year ended June 2023, largely due to lower commodity prices across iron-ore, metallurgical coal and copper. While its underlying profits fell to $13.4 billion in FY23, its revenues declined 17% on-year to $53.8 billion, impacted by weaker Chinese demand, Kallanish learns.
The underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) for two electrification critical materials – copper and nickel – declined 22% and 61%, respectively, to $6.7 billion and $200 million. BHP’s average realised price for copper dropped 12% to $3.65/pound in FY23, while the average realised price for nickel rose 3% to $24,021/tonne.
In terms of operations, the firm reported a 9% increase in copper production and a 4% increase in nickel production, achieving full-year production guidance for both. It produced 1.71m t of copper and 80,000 t of nickel, with the latter impacted by inventory drawdowns, inflation and lower realised prices for intermediate products.
“Our balance sheet is robust and deliberately positioned to support portfolio growth in commodities the world needs for population growth, urbanisation and decarbonisation,” says BHP ceo Mike Henry. The increasing recognition of the importance of critical minerals to incentivise investment in supply and demand offers opportunities and challenges, the top executive adds.
“We are creating a new copper province in South Australia following the acquisition of OZ Minerals,” Henry continues. “We are investing strategically in new ideas, technologies and countries through exploration and early-stage copper and nickel prospects to capture future growth opportunities.”
In terms of copper outlook, the Australian group notes that a range of projects, including in Peru, Chile, central Africa, and Mongolia, have either recently gone live or are expected to go live during 2023-2024. Despite multiple setbacks during the pandemic, the firm expects mine supply to increase by around 12% compared to 2021 by December 2024, roughly twice the global refined demand expected during the period.
Meanwhile, in the long term, nickel will be a “substantial beneficiary of the global electrification mega-trend,” BHP adds in its report. Additionally, nickel sulphides are expected to be “particularly attractive” due to the relatively lower cost of production of battery-grade Class-1 nickel compared to laterites. With electric vehicles gaining momentum, nickel-rich chemistries are expected to be the leading technology driving them.
“We now see a small surplus or a balanced copper market (better Chinese end-use demand and operational shortfalls), which is a shade better than expected at the outset of the year,” notes Huw McKay, BHP vice president, market analysis and economics. “We foresee a somewhat larger surplus in total nickel units (lower than expected demand and very rapid growth from Sino–Indonesian facilities).”
Source:Kallanish
