BHP Copper Output Drops 19% in Quarter as Higher Prices Lift Earnings

what happened

BHP Group said copper production in the first three months of its new fiscal year fell 19% from a year earlier, to 400,700 metric tons. According to Dow Jones Newswires, the company blamed planned grade declines, scheduled maintenance, severe weather in Chile, a conveyor failure at the Carrapateena operation in South Australia and the death of a worker at the Escondida mine on September 23.

Iron ore output rose 4% to 66.5 million tons, while steelmaking coal gained 1% to 4.9 million tons and thermal coal jumped 26% to 4.4 million tons. The average realized copper price was US$7.01 per pound, up 53% on a year earlier, which helped offset a 9% drop in the iron ore price to US$76.27 per ton. BHP kept its annual production and unit cost guidance unchanged.

Chief Executive Brandon Craig said: "Stronger commodity prices provided a tailwind for earnings, particularly in copper where prices were around 50% higher than a year ago."

why it matters

For copper markets, the report points to lower supply from the world's biggest miner by market value, which offers support to metal prices. The weaker iron ore price, however, pressures revenue for producers exposed to that commodity, while higher thermal coal output reflects firmer activity in that segment.

market impact

Copper: lower BHP output supports the metal's market; iron ore: lower prices pressure the segment

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