BHP Profit Climbs as Copper Offsets China Drag on Iron Ore

BHP Group’s earnings for the six months to the end of December rose by more than a fifth thanks to a rise in copper prices, even as sluggish demand in China put pressure on iron ore and steelmaking coal businesses.

The world’s largest miner said on Tuesday its attributable profit rose 22% to $6.2 billion, broadly in line with analyst forecasts.

Its copper division, which is the focus of BHP’s growth plans and accounts for more than half of its profitability for the first time, saw its underlying earnings before interest, tax, depreciation and amortization rise 59% to $8 billion. Realized prices increased by almost a third over the period.

“We have achieved approximately 30% growth in copper production over the last four years, positioning us ahead of the strengthening copper market we expected,” Chief Executive Mike Henry said in a statement.

Earnings from its iron ore business rose 4% as steel exports and manufacturing demand in China helped offset persistent weakness in the real estate sector that once drove consumption.

The company also announced it would receive $4.3 billion under a long-term silver streaming agreement with Wheaton Precious Metals Corp to make the most of the metal’s high prices. The deal concerns silver produced as a by-product at the Antamina copper mine in Peru, in which the Australian miner has a 33.75% stake.

BHP is trying to balance the need for growth, particularly in copper, with a commitment to capital discipline. The company made unsuccessful bids for rival Anglo American Plc, most recently trying to break up the miner’s relationship with Teck Resources Ltd. late last year, but left again in November.

BHP said it would pay an interim dividend of 73 cents, equivalent to a 60% payout ratio.

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