BHP Group Limited (BHP) – Copper shines

May 1, 2025

BHP Group (BHP) reported better-than-expected March-quarter output in all its commodities bar metallurgical coal, where severe wet weather in central Queensland and geotechnical issues hampered production in the period. The mining giant reiterated FY25 production guidance for all its commodities except metallurgical output.

Costs across its iron ore, energy coal and copper businesses were all on track to meet FY25 guidance, while unit costs in the metallurgical coal division were likely to be higher thanks to the wet weather impact on its operations. Copper was the standout commodity in the period, production coming in 5% ahead of forecasts thanks to a strong performance at Chile’s Escondida project, a joint venture which BHP operates and owns 57.5% of, with Rio Tinto (RIO, Buy) holding 30% and Japan’s JECO Corp owning the other 12.5%.

Escondida won on all key fronts – an increased amount of ore mined, improved ore grades and greater mill throughput – in the quarter. A review of the project’s performance also led BHP to upgrade its medium-term production outlook for the project.

We maintain our target price of $42.00 and Accumulate recommendation on BHP, while noting that Rio Tinto remains our preferred choice among the major diversified miners.

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