Diversified major BHP has increased its group copper production guidance for the 2026 financial year to between 1.9-million and 2.0-million tonnes, as the world’s biggest copper producer positions to capture higher copper and gold prices.

CEO Mike Henry said on Tuesday that strong performance at the company’s flagship Escondida operation, together with solid contributions from other assets in Chile and South Australia, underpinned the upgrade.

“In copper, we have raised production guidance by a cumulative 150 000 t over the next two years. We are capturing the current high copper and gold prices,” he said.

Copper accounted for 51% of group underlying earnings before interest, tax, depreciation and amortisation (Ebitda) in the six months ended December, which Henry highlighted as a milestone for the company.

“This half marks a milestone for BHP with copper contributing the largest share of our overall earnings, at 51% of underlying Ebitda,” he said, noting that just over half of earnings for the period came from copper – up 30 percentage points over the past three years.

“We have achieved about 30% growth in copper production in the last four years, positioning us ahead of the strengthening copper market that we had anticipated."

BHP is targeting about 2.5-million tonnes of copper equivalent production a year, including by-products, by the mid-2030s, supported by four growth options across Chile, Argentina, Arizona and South Australia.

Meanwhile, the company’s Western Australia iron-ore (WAIO) business delivered record first-half production and shipments, maintaining its position as the world’s lowest-cost major iron-ore producer.

BHP is investing in additional infrastructure at Port Hedland, including a sixth rail car dumper, to support sustainable volumes of more than 305-million tonnes a year.

Across the group, BHP reported underlying Ebitda of $15.5-billion for the half year, up 25%, with an underlying Ebitda margin of 58%.

Underlying attributable profit rose more than 20% to $6.2-billion, while underlying return on capital employed increased by about three percentage points to around 24%.

The miner generated $9.4-billion in operating cash and ended the period with net debt of $14.7-billion, around the midpoint of its $10-billion to $20-billion target range.

An interim dividend of 73c a share was declared, equivalent to a 60% payout ratio. Henry said the payout reflected “strong operating performance, disciplined capital allocation and confidence in our outlook”.

Over the past three months, BHP has announced agreements relating to WAIO’s inland power use and future silver production at Antamina, unlocking more than $6-billion of cash. “We see the potential to unlock up to a total of $10-billion,” Henry said, adding that the capital could be reinvested into higher-returning opportunities and/or increased shareholder returns.

POTASH PUSH
In Canada, BHP expects first production and revenue from the Jansen Stage 1 potash project in mid-2027, following completion of a detailed review of cost and schedule estimates. While first production remains on track, the updated cost estimate for Stage 1 has increased to $8.4-billion.

“We believe our Jansen potash asset in Canada can be another WAIO-like asset. What do I mean by that?” Henry said.

“Once ramped up, Jansen will be a world-class, low-cost potash producer. It is expected to deliver around $1-billion of Ebitda per year, per stage, with margins above 60%.

“It will also make BHP stronger because potash demand drivers and key customer markets are differentiated from our other commodities, meaning even lower volatility in earnings and cash flow generation.”