Copper outshines iron ore for BHP
Copper contributed more than half of BHP’s (ASX: BHP) underlying EBITDA in FY26, with the commodity’s earnings surpassing iron ore for the first time in the company’s history, despite a 3% decline in total copper production.
In its FY26 annual report, BHP reported a 9% year-on-year rise in net profit to US$9.8b, driven largely by a 35% rise in realised copper prices alongside higher iron ore and steelmaking coal prices.
The company reported an underlying EBITDA of US$33b, up 27% year-on-year, with a margin of about 60%, supported by a record 70% margin in its copper business.
Despite BHP’s copper output declining to 1953kt for the period, the company’s copper revenue increased by US$6.5b to US$29b and underlying EBITDA for copper increased by US$5.9b to US$18.2b due to higher average realised copper prices.
BHP says spot copper prices on average were 26% higher in FY26, with the second half of the year experiencing increases of about 40% as copper moved above US$13,000/t.
BHP chief executive Brandon Craig says FY26 demonstrated the strength of the company’s assets and its operating momentum.
“Copper contributed more than half of our earnings for the first time, at a strong 70% EBITDA margin, and we remained the world’s largest copper producer,” he said.
BHP will continue to ride the copper wave, with the company expecting annual capital expenditure of about US$11b per year on average over the medium term, with more than half allocated to copper growth projects.
BHP chief financial officer Vandita Pant comments on the company’s copper growth pipeline.
“When you add on our expected investment commitments in copper non?operated joint ventures Vicuña and Resolution, the bulk of our growth spend is now copper?focused,” she said.
“A key feature of our copper growth program is that we expect it to be self?funding.
“We are already the world’s biggest copper producer, and these assets generate significant cash flows that we expect will more than fund all capital needs into the mid?2030s.
“This gives us confidence we can deliver multiple copper growth projects at the same time.”
In FY26, BHP advanced its copper growth pipeline with the submission of plans for a new concentrator at Escondida to environmental authorities in Chile, while Copper South Australia’s expansion plans progressed to detailed engineering ahead of a final investment decision.
In June, two of the company’s sustaining growth projects were sanctioned at Spence, part of the company’s Pampa Norte operation in Chile, with first production expected from FY28.
During the period, BHP also achieved important regulatory milestones at both Vicuña and Resolution while developing further exposure to future copper opportunities through its investment in Faraday Copper.
“Taken together, we aim to deliver compound annual production growth on a copper?equivalent basis from our current organic growth plans of around 3-4% a year from FY27 through to FY35,” Mr Craig said.
“That includes growth in our copper business of around 5% per year to FY35.”
The company’s iron ore production remained strong in FY26, with total production increasing 1% and iron ore prices averaging $105/dmt, up 4% year-on-year. Total iron ore revenue increased by US$1b to US$23.9b, which BHP attributes primarily to higher realised prices.
BHP’s WA Iron Ore (WAIO) operations remained the lowest?cost major iron ore producer globally for the seventh consecutive year, achieving record material mined, up 6% year-on-year, with South Flank exceeding its annual nameplate capacity.
BHP says its cost leadership at WAIO delivered about US$10/t more free cash flow than its next closest major Pilbara competitor.
At WAIO, BHP plans to increase production to more than 305mtpa by Q4 FY28 and sustain this level over the medium term.
In coal, BMA production increased by 3% year-on-year, supported by strong operational performance at its open-cut operations, which achieved its highest stripping volumes in five years.
Notably, NSW Energy Coal (NSWEC) exceeded its production guidance and lifted earnings, with production increasing 9% year-on-year.
In H2 FY26, steelmaking coal prices rebounded 28%, supporting a US$500m increase in coal revenue to US$5.6b.
Despite inflation and higher diesel prices, unit costs across the company’s major assets were on average 6% lower year-on-year.
BHP’s economic contribution totalled US$50.8b globally in FY26, including payments to suppliers, wages to its global workforce, taxes, royalties and other payments to governments and dividends to shareholders.
In Australia, BHP paid US$6.6b to governments during the period, while in Chile, the company made US$5.5b in government payments.
