BHP wins higher quarterly iron ore prices, overcoming China's buying curbs
BHP's Iron Ore and Copper Performance: Production, Pricing, and Outlook
Record Iron Ore Output and Pricing Amid China Tensions
July 16 (Reuters) - BHP Group posted record iron ore output and higher realised prices on Thursday, despite purchasing restrictions imposed by China Mineral Resources Group amid tense contract talks earlier this year.
Annual iron ore production from BHP's Western Australia operations on a 100% basis came in at 291.2 million metric tons, above last year's 290 Mt.
Average realised prices for iron rose 3% to $84.56 per wet ton in fiscal 2026.
Impact of China’s State Buyer and Contract Negotiations
BHP did not mention any pricing impacts from its annual negotiations with China's state buyer, after Reuters reported in April that its biggest customer had lifted its ban on certain products.
China's state buyer has been flexing its muscles during annual pricing negotiations with big iron ore miners as it looks to tap its market size to pay less for iron ore, and lower costs for its steelmakers.
Production Projections and Quarterly Performance
For fiscal 2027, the miner projects to produce 284-296 Mt of iron ore from its Western Australia operations.
In the last quarter of 2026, iron output was 74.8 Mt, compared to the Visible Alpha consensus of 75.1 Mt and 77.5 Mt produced in the same period a year ago.
Industrial Action and Operational Developments
Later on Thursday, hundreds of workers are scheduled to go on strike at BHP's Port Hedland iron ore operations, a major artery that handles about $80 million worth of iron ore daily, with negotiations set to resume on Tuesday next week.
Copper Performance and Strategic Outlook
Quarterly Copper Production and Market Drivers
COPPER PERFORMANCE AND OUTLOOK
Meanwhile, quarterly production of copper, which BHP sees as a long-term source of value growth, was 491,900 tons in the quarter ended June 30, largely in line with the Visible Alpha estimate of 492,700 tons and below 516,200 tons reported last year.
Copper is drawing greater focus from major miners as demand surges, driven by rapid growth in power use by AI data centers and transition to cleaner energy.
Operational Challenges and Production Forecasts
Last quarter, production at Copper South Australia was affected by an unexpected failure of the underground conveyor belt at Carrapateena, with the recovery and replacement process expected to impact mine production for up to eight weeks.
Copper production was forecast to fall as much as 15.5% next year due to an expected grade decline at Escondida.
Cost Management and New Project Approvals
BHP also projected that fiscal 2026 unit costs would be at the lower end of its forecast range, demonstrating strong cost management and resilience in a challenging macroeconomic environment.
Separately, the miner announced approval of $900 million for the Ministers North iron ore project in Pilbara, with first output expected in fiscal 2029.
Market Reaction and Upcoming Results
Shares slipped more than 1% in early trade, compared to a near 1% drop in the mining sub-index.
BHP will report annual results on August 18.
(Reporting by Sneha Kumar and Sherin Sunny in Bengaluru; Editing by Pooja Desai and Rashmi Aich)
