BHP posts higher profits, as iron ore prices soar

MELBOURNE – Anglo-Australian mining giant BHP today reported a spike in half-yearly profits, on the back of strong iron ore prices and record exports from Western Australia.

The company reported a 16% rise in underlying profits to US$6 billion (RM24 billion) for the year ending December 31.

BHP chief executive Mike Henry, who last year predicted a rocky road ahead amid the pandemic, said the result is boosted by record iron ore production in Western Australia as the mineral’s price soared.

He said despite the pandemic affecting the company’s supply chain, “against this backdrop of unprecedented challenge, we have achieved almost unprecedented performance”. 

He added that there is now a “compelling outlook for our commodities given the recovery underway and continued growth in the global economy, as well energy transition”.

After-tax profits were down 20% to US$3.9 billion from the same period in 2019, largely due to a US$1.6 billion write-down of coal assets as the company begins a shift away from thermal coal.

Investors will receive a record dividend of US$1.01 per share, up 55% from the previous six months.

The miner said it has been a “challenging” period for coking coal, with lower prices and reduced exports caused by adverse weather conditions, while Australia’s trade tensions with China impacted BHP’s coal business.

“On this note, we are continuing to sell everything we produce, successfully redirecting coals that would otherwise have gone to China,” chief financial officer David Lamont said.

“While we cannot be sure of how the situation will evolve, we remain of the view that ultimately, Chinese steel mills will continue to require higher-quality steel-making coals to meet their efficiency and environmental objectives.”

The company has previously said it plans to concentrate on coking coal, which is used to make iron and steel, and has not been the primary focus of efforts to reduce the impacts of climate change. 

As part of its plan to reach net-zero emissions by 2050, BHP said it has inked renewable power contracts for its Queensland coal and Western Australia nickel operations. – AFP, February 16, 2021