BHP revs up WA unionisation warning amid copper overtaking iron ore as biggest earner, shares hit fresh high

WA iron ore no longer makes up the lion’s share of BHP’s earnings and boss Mike Henry “fears” an “explosion” of union activity will stifle long-term investment in the business unit. Half-year underlying earnings from the Big Australian’s South American-centric copper division surged 59 per cent to $US8 billion ($11.3b), versus a 4 per cent rise to $10.6b for WA iron ore. Shares in BHP eclipsed $53 for the first time ever on the back of a multi-billion-dollar silver streaming deal and the better-than-expected copper numbers. “Copper generated over half of BHP’s earnings for the very first time,” Mr Henry said following the release of the results on Tuesday. He said BHP, unlike many of its peers, was not “M&A dependent” to secure copper growth. This was likely a thinly-veiled dig at the company’s main rival Rio Tinto, which recently tried to merge with Glencore to significantly boost its production pipeline of the red metal. BHP’s decreasing reliance on iron ore in favour of copper comes as the miner is targeted by China’s state-run procurer of iron ore — China Mineral Resources Group. Tense pricing negotiations have dragged on since September with certain BHP ore products currently barred from the key export destination. While BHP made no mention of the dispute in its results announcement, Mr Henry said he was “confident” a reasonable resolution would be reached when grilled on the topic by journalists. “I’m confident that at the end of the day there’s a path through this, given the respect that we have for each other, to a resolution that is acceptable to both parties, but it takes time,” he said. BHP remains the most profitable iron ore producer in WA. It said inflationary pressures at its mines in WA, and more broadly across Australia, were easing. “In Australia, labour market conditions have eased, and wage growth has largely normalised to long-run average,” the company stated. Yet, Mr Henry said BHP was “not at all more relaxed or less worried about the impact” of Federal Labor’s industrial relations policies. “We see that within our Western Australian iron ore business, where we have a very marked uptick in (union) right of entry requests,” he said. “We are having to devote specific resources just to care for this explosion in request for rights of entry, where you’ve got mandated bargaining taking place, and so there’s a lot more effort going into this. “And I do fear for the long-term drag this is going to create, not just for our business, and at the end of the day we’re a global business and we can deploy capital into other jurisdictions where required.” Across BHP’s global business, first-half profit rose by 28 per cent to $8b while revenue jumped 11 per cent to $39.5b — both rises mainly driven by copper growth. BHP is now the world’s largest producer of the metal. The Big Australian declared a fully franked interim dividend of US73¢ a share, up from US50¢ a year earlier. BHP on Tuesday also announced it would receive more than $6b after signing a silver streaming agreement covering its Antamina copper and zinc mine in Peru. BHP no longer receives revenue from the by-product silver sales Silver at Antamina in exchange for the upfront payment. “Today’s (Antamina) announcement is a further example of our active capital management in action, and focus on strategically unlocking value from our portfolio,” BHP chief financial officer Vandita Pant said. The deal, plus the copper earnings bonanza, buoyed a 5.8 per cent rise in the miner’s share price to $53.25 by noon. Moody’s Ratings senior vice president credit officer Saranga Ranasinghe said the half-year results “underscored BHP’s continued balance sheet strength”. “Strong margins and diversified earnings, led by copper and iron ore, provide resilience against commodity price volatility,” he said. “(The) results highlight the increasing importance of copper, which now contributes around half of group earnings before interest, taxes, depreciation and amortisation and provides a strong earnings anchor. “This shift toward copper enhances portfolio resilience given its favourable long term demand outlook and cost positioning. BHP has lifted its copper production guidance at a time when supply has been removed from the market, which is supportive of stronger future cash flows as higher volumes coincide with tighter market conditions.” RBC Capital Markets analyst Kaan Peker said “copper now drives the story”, contributing 51 per cent of group EBITDA at a 66 per cent margin versus the iron ore margin 62 per cent. “While financial year 2026 guidance was been maintained, FY2027 copper guidance for Escondida has been lifted 100,000, reducing the dip in production.” “On growth, projects are being progressed with BHP outlining copper growth to approximately 2.5 million tonnes mid 2030’s anchored by Escondida, the South Australia hub and Vicuna.”