Column: BHP sees China commodity demand as stable. And that’s the best case – by Clyde Russell (Reuters – August 22, 2023)

LAUNCESTON, Australia, Aug 22 (Reuters) – BHP Group reported its lowest annual profit in three years, but the decline isn’t the most worrying factor for the world’s biggest mining company. That prize goes to an increasingly uncertain outlook for its key commodities.

BHP (BHP.AX) said on Tuesday the company’s underlying attributable profit for the year ended June 30 dropped to $13.42 billion from $21.32 billion a year earlier. This was below a Refinitiv estimate of $13.89 billion, and the lower profit resulted in the divided being slashed to $0.80 a share from $1.75 the prior financial year.

Much of the blame for the lower profit can be put on weaker commodity prices, especially for iron ore, which accounts for almost 60% of BHP’s underlying earnings. While BHP lifted output in the year to June 30 to 257 million metric tons from 253 million previously, the average realised price slipped to $92.54 a metric ton from $113.10 in the prior year.

The company also reported lower realised prices for copper and metallurgical coal, although there were small upticks in the prices of thermal coal and nickel, but these two commodities are small contributors to the company’s earnings.

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