BHP backs off on potash, breaks records in iron and copper

FY25 was a mixed bag for BHP, as the company’s iron ore and copper arms posted record-breaking production while potash aspirations slowed.

The miner has increased its estimated capital expenditure by at least $2b for the Jansen stage 1 potash project (JS1) in Canada, which had an original capex of $8.75b (US$5.7b).

BHP attributes the increased price tag to inflationary and real cost escalation pressures, design development and scope changes and lower productivity outcomes over the construction period.

After surpassing this half-way mark in July 2024, BHP expected to see first production in 2026, becoming a major global producer of potash by the end of the decade.

Now 68% complete, BHP estimates capex for JS1 to be in the range of $10.7b – $11.3b (US$7b – US$7.4b) and first production to revert to the original schedule of mid-CY27.

Given potential for additional potash supply coming to market in the medium-term BHP is considering a two-year extension for the execution of Jansen stage 2 from FY29 to FY31.

The miner expects to update the market on JS1’s timing and optimised capital expenditure estimate in H2 FY26.

On the bright side, BHP saw big wins in iron ore and copper production for FY25.

BHP chief executive Mike Henry says the record-breaking performance of iron ore and copper demonstrates the strength and resilience of the business and underpins its ability to deliver growth and returns to shareholders amid global volatility and uncertainty.

“BHP’s WA iron ore operations set multiple records, including for full year production. South Flank exceeded name plate capacity production in its first full year of operation after being delivered on time and on budget in FY24,” he said.

“The efficiency of our infrastructure hubs continues to strengthen performance with rail, port and technology investments delivering tangible production outcomes.”

BHP delivered record group copper production of more than 2mt, up 8%.

This swell was driven by strong performances across all operated copper assets, including a 16% production increase at Escondida, record production at Spence and record Q4 production from Copper SA.

BHP exceeded the top end of production guidance ranges at Escondida and NSWEC, while Spence, WAIO and BMA were all in the upper half of their production guidance ranges.

Copper SA achieved the mid-point of its revised production guidance, within its original guidance.

BHP says it remains on track to achieve FY25 unit cost guidance at Escondida, Spence, Copper SA and WAIO and revised guidance at BMA.

After delivering 28% copper production growth between FY22 and FY25, guidance for FY26 is between 1.8 to 2mt.

“BHP produced more than 2mt million tonnes of copper across the group — a record level of production in a commodity critical to urbanisation, digitisation and electrification,” Mr Henry said.

“In Chile, Escondida achieved its highest production in 17 years, and Spence delivered record production.

“In Australia, Copper SA finished the year strongly with copper production records in June and for the final three months of the year.”

BHP also delivered record iron ore production, increasing to a record 263mt.

Production for FY26 is expected to increase to between 258 and 269mt.

WAIO produced 290mt (100% basis), overcoming the impacts of Tropical Cyclone Zelia and Tropical Storm Sean in Q3.

The ramp up of the second concentrator at Samarco ahead of schedule, also contributed to record iron ore production.

BHP’s steelmaking coal business also increased production by 5% with improved truck productivity offsetting heavy wet weather and geotechnical challenges at Broadmeadow.

Looking ahead, Mr Henry says commodity demand globally has remained resilient so far in 2025.

“That resilience largely reflects China’s ongoing ability to grow its overall export base despite a significant decline in exports to the US and its ability to deliver robust domestic demand despite the dislocation in the property sector,” he said.

“Copper and steel demand have benefited from a sharp acceleration in renewable energy investment, electricity grid build out, strong machinery exports and EV sales. While slower economic growth and a fragmenting trading system remain potential headwinds, stimulus efforts by China and the US would help to mitigate the near-term impact.

“Going forward, China’s 15th 5-year plan is likely to provide more visibility on policies to sustain longer term growth and development.”