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BHP Group Limited

SASKATOON, Saskatchewan, March 19, 2024 (GLOBE NEWSWIRE) — BHP and the Saskatoon Food Bank and Learning Centre (SFBLC) are pleased to announce a $500,000 donation from BHP to SFBLC’s Plant Possibility Campaign. The donation will support a new food warehouse and learning campus, as the SFBLC expands to meet the city’s increasing need for safe, affordable and nutritious food. Poverty and hunger are overwhelming realities for the people turning to the SFBLC each month. In the last ten years, Saskatoon’s food bank has increased from 12,000 to as many as 23,000 people served each month, 40 per cent of which are children.

SFBLC currently operates out of inefficient, aging buildings that require expensive upgrades to operate more effectively. Patch-work repairs have been made over recent years, but SFBLC can no longer delay the need to find a new and functional home and have turned to the community to help raise the funds for an expanded space and purpose-built operations tailored to the communities’ needs.

BHP’s half a million-dollar investment will help the SFBLC to transform the model of service delivery in our community. It will go towards optimizing operations, increase the quality and quantity of healthy foods available, expand food distribution and allow the SFBLC to serve all 36 food banks in the province.

“BHP’s investment will have a transformative impact, today and tomorrow by ensuring hungry people will be fed,” said Laurie O’Connor, Executive Director of SFBLC. “Together we are shifting what is possible, and we thank you for your belief in what we do and for your support — a true reflection of the spirit, resilience, and values of Saskatchewan people.”

"We’ve all felt the rising costs of living, and the Saskatoon Food Bank & Learning Centre provides important access to healthy, nutritious food and vital support services that help people get back on their feet, allowing them to not only survive, but thrive," said Karina Gistelinck, Asset President Potash. “Through our investment, BHP is thrilled to support the new food warehouse as well as innovative employment and nutritional education programs that support long-term positive outcomes.”

Since 2015, BHP has contributed over $50 million to community organizations and initiatives in Saskatchewan. These contributions are driven by BHP’s fundamental belief that success is achieved through community partnerships that create lasting mutual benefit.

ABOUT SASKATOON FOOD BANK & LEARNING CENTREThe Saskatoon Food Bank & Learning Centre is committed to ensuring a food secure community where all people have access to safe, affordable, and nutritious food and believe it’s important to address the underlying issues contributing to hunger and poverty in our community. The Learning Centre offers various learning, self-help, and life skills programs that are supportive of learning needs and aspirations within a family-oriented, empowering, and self-directed environment.

ABOUT BHPBHP is a global resources company with its Canadian operational headquarters in Saskatoon, Saskatchewan and global business development headquarters in Toronto. BHP has a global workforce of approximately 80,000 people working in locations across Canada, Australia, Asia, the UK, US and Latin America. BHP produces commodities essential for global decarbonization, economic development and food security including copper, nickel, iron ore, metallurgical coal and is developing the Jansen potash project in Saskatchewan, Canada. Further information on BHP can be found at: bhp.com

MEDIA INQUIRIES

Saskatoon Food Bank & Learning CentreLaurie O’ConnorExecutive DirectorSaskatoon Food Bank & Learning Centre306.370.6998

BHPMegan HjulforsMedia RelationsBHP403.605.2314

Key Insights

Using the 2 Stage Free Cash Flow to Equity, BHP Group fair value estimate is AU$53.69
BHP Group is estimated to be 22% undervalued based on current share price of AU$41.95
Our fair value estimate is 15% higher than BHP Group's analyst price target of US$46.64

In this article we are going to estimate the intrinsic value of BHP Group Limited (ASX:BHP) by taking the expected future cash flows and discounting them to their present value. This will be done using the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.

Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model.

See our latest analysis for BHP Group

The Model

We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.

Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value:

10-year free cash flow (FCF) forecast

	2024	2025	2026	2027	2028	2029	2030	2031	2032	2033
Levered FCF ($, Millions)	US$11.1b	US$10.6b	US$11.0b	US$10.5b	US$10.9b	US$11.0b	US$11.1b	US$11.3b	US$11.5b	US$11.7b
Growth Rate Estimate Source	Analyst x10	Analyst x9	Analyst x8	Analyst x3	Analyst x2	Est @ 0.95%	Est @ 1.31%	Est @ 1.57%	Est @ 1.74%	Est @ 1.87%
Present Value ($, Millions) Discounted @ 7.6%	US$10.3k	US$9.1k	US$8.8k	US$7.8k	US$7.5k	US$7.1k	US$6.7k	US$6.3k	US$5.9k	US$5.6k

("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$75b

We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.2%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 7.6%.

Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = US$12b× (1 + 2.2%) ÷ (7.6%– 2.2%) = US$219b

Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$219b÷ ( 1 + 7.6%)10= US$105b

The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$180b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of AU$42.0, the company appears a touch undervalued at a 22% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula – garbage in, garbage out.

dcfImportant Assumptions

Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at BHP Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.6%, which is based on a levered beta of 1.192. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.

SWOT Analysis for BHP Group

Strength

Debt is not viewed as a risk.

Weakness

Earnings declined over the past year.

Dividend is low compared to the top 25% of dividend payers in the Metals and Mining market.

Opportunity

Annual earnings are forecast to grow faster than the Australian market.

Good value based on P/E ratio and estimated fair value.

Threat

Dividends are not covered by earnings.

Annual revenue is expected to decline over the next 3 years.

Moving On:

Whilst important, the DCF calculation shouldn't be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. What is the reason for the share price sitting below the intrinsic value? For BHP Group, there are three further aspects you should explore:

Risks: For example, we've discovered 3 warning signs for BHP Group that you should be aware of before investing here.

Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for BHP's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.

Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!

PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the ASX every day. If you want to find the calculation for other stocks just search here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

In this article, we will be covering the top 10 uranium-producing companies in the world. If you want to skip our detailed analysis of the global uranium market, you can go directly to Top 5 Uranium Producing Companies In The World.

Global Uranium Market: An Analysis

According to the World Nuclear Association, uranium is a heavy metal that has been used as an abundant source of concentrated energy for more than 60 years. Uranium has far-reaching significance in the modern world due to its applications in nuclear energy and various industrial sectors. Uranium is a critical element and it serves as the primary fuel for nuclear power plants around the world, providing clean, low-carbon electricity. According to a report by IndustryARC, the global uranium market is expected to grow at a compound annual rate (CAGR) of 4.3% from 2024 to 2030 to reach a value of $12.7 billion by the end of the forecasted period. The North American region dominates the uranium market due to the increasing domestic production of this critical element.

The demand for uranium continues to increase as the world seeks to reduce greenhouse gas emissions and transition to cleaner energy sources. Nuclear power is becoming an increasingly attractive option and this is driving up demand for uranium, which is used as fuel in nuclear reactors. Responsible extraction, processing, and utilization are important not only for meeting growing energy demands but also for promoting environmental sustainability and well-being.

Uranium is used in the production of radioisotopes, which have various medical, industrial, and scientific purposes across the globe such as cancer treatment, sterilization, and quality control in manufacturing processes. According to a research report by the World Nuclear Association, more than 40 million nuclear medicine procedures are performed annually and demand for radioisotopes is growing by as much as 5% annually.

Radioisotopes also play a crucial role in the growing of crops and breeding livestock. Radioisotopes are used in the production of high-yield, disease-resistant, and weather-resistant varieties of crops. According to a publication available on the International Atomic Energy Agency's website, isotopes and radiation can play a crucial role in identifying and reducing the genetic and environmental limitations of animal production. Various industries around the world that use uranium and radioisotopes are acting as drivers for the growth of the uranium market.

Key Players in the Uranium Market

With the expansion of the uranium market, companies engaged within this sector are expected to have access to significant growth opportunities owing to the heightened demand for resources and services related to uranium. Some of the most notable names in the global uranium market include Cameco Corporation (NYSE:CCJ), Uranium Energy Corp. (NYSE:UEC), and Centrus Energy Corp. (NYSE:LEU).

Centrus Energy Corp. (NYSE:LEU) is an American company that supplies nuclear fuel and services for the nuclear power industry. The company supplies sources of enriched uranium to help meet the growing demand for clean, affordable, and carbon-free electricity. Centrus Energy Corp. (NYSE:LEU) is also one of the best uranium stocks to buy. On February 8, Centrus Energy Corp. (NYSE:LEU) reported strong earnings for the fiscal fourth quarter of 2023. The company reported earnings per share (EPS) of $3.58, surpassing EPS estimates by $2.82. Centrus Energy Corp. (NYSE:LEU) reported a revenue of $103.6 million and outperformed revenue estimates by $32.47 million.

Uranium companies are also increasing exploration and production efforts to address the growing demand for nuclear energy. Uranium Energy Corp. (NYSE:UEC) is a US-based uranium production and exploration company. On January 16, Uranium Energy Corp. (NYSE:UEC) announced that the company’s board of directors has approved restarting uranium production at its Christensen Ranch In-Situ Recovery operations in Wyoming. The recovered uranium will be processed at the fully operational Irigaray Central Processing Plant, which has a current licensed capacity of 2.5 million pounds of U3O8 (triuranium octoxide) per year. While Uranium Energy Corp. (NYSE:UEC) will provide further information on the anticipated volumes for the first year of production in the coming months, production is expected in August 2024.

Some of the biggest uranium companies are also participating in collaborative initiatives to promote nuclear energy's role in decarbonization. Cameco Corporation (NYSE:CCJ) is a Canadian uranium company. As one of the world’s largest uranium-producing companies, it is a major provider of nuclear fuel solutions for the generation of safe, reliable, and carbon-free nuclear power across the globe. On December 3, 2023, Cameco Corporation (NYSE:CCJ) announced that it has joined Net Zero Nuclear, the initiative aiming to triple global nuclear capacity to achieve carbon neutrality by 2050 by calling for collaboration among governments and industry leaders. This initiative, supported by various organizations including the World Nuclear Association and the International Atomic Energy Agency, seeks to accelerate the growth of the global nuclear fleet and advance research and development into emerging nuclear technologies. By promoting nuclear energy's role in decarbonizing global energy systems, Net Zero Nuclear will ensure nuclear energy’s potential is fully realized while also removing barriers to its growth.

Tim Gitzel, Cameco Corporation (NYSE:CCJ) President and CEO, said:

“Increasingly, countries and companies around the world are counting on nuclear power to play a role in achieving their net-zero emissions targets while strengthening their energy security. Its importance as an essential source of sustainable, carbon-free, baseload electricity has never been greater.”

Now that we have looked at what’s going on in the global uranium market, let’s take a look at the top 10 uranium-producing companies in the world. You can also take a look at the countries that produce the best uranium in the world.

Top 10 Uranium Producing Companies In The World

A miner in a hard hat and apron holding a piece of uranium ore in the Athabasca Basin, Saskatchewan.

Methodology

In this article, we have listed the top 10 uranium-producing companies in the world. To collect data for our list, we consulted the World Nuclear Association. We used data obtained for the latest year in their dataset, updated in August 2023. This database provided us with a list of companies and information on their uranium production for the year 2022. The top 10 uranium-producing companies in the world are listed below in ascending order.

By the way, Insider Monkey is an investing website that tracks the movements of corporate insiders and hedge funds. By using a consensus approach, we identify the best stock picks of more than 900 hedge funds investing in US stocks. The top 10 consensus stock picks of hedge funds outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). Whether you are a beginner investor or a professional one looking for the best stocks to buy, you can benefit from the wisdom of hedge funds and corporate insiders.

Top 10 Uranium Producing Companies In The World10. General Atomics

Uranium Production (2022): 1,740 Tonnes

General Atomics is an American energy and defense company that ranks among the top 10 uranium-producing companies in the world. It specializes in research and technology development, including physics research in support of nuclear fission and nuclear fission energy. General Atomics also owns Heathgate Resources and its affiliate Quasar Resources. Quasar Resources owns the Four Mile uranium mine in Australia, which is one of the world’s largest uranium-producing mines. The Four Mile mine is operated by Heathgate Resources. With a 4% share in global uranium production, General Atomics produced 1,740 tonnes of uranium in 2022 through its affiliated companies.

9. ARMZ Uranium Holding Co.

Uranium Production (2022): 2,508 Tonnes

ARMZ Uranium Holding Co. is a Russian company. It operates the Mining Division of Rosatom State Atomic Energy Corporation and produces uranium in Russia. ARMZ Uranium Holding Co. is also one of the biggest companies in terms of in-situ uranium reserves. As one of the top uranium-producing companies in the world, ARMZ Uranium Holding Co. produced 2,508 tonnes of uranium in 2022 to account for about 5% of the global uranium supply.

8. BHP Group Limited (NYSE:BHP)

Uranium Production (2022): 2,813 Tonnes

BHP Group Limited (NYSE:BHP) is an Australian multinational mining and metals company. As a major resources company, it produces iron ore, coal, copper, gold, nickel, and uranium. BHP Group Limited (NYSE:BHP) has over 90 locations around the world. As one of the biggest uranium-producing companies in the world, BHP Group Limited (NYSE:BHP) produced 2,813 tonnes of uranium in 2022 to provide about 6% of the global uranium supply.

7. China National Nuclear Corporation (CNNC)

Uranium Production (2022): 3,247 Tonnes

The China National Nuclear Corporation is a Chinese state-owned enterprise. The corporation owns a complete uranium exploration, mining, and milling system. Accounting for 7% of the global uranium production, the China National Nuclear Corporation (CNNC) produced 3,247 tonnes of uranium in 2022.

6. Navoi Mining and Metallurgy Combinat

Uranium Production (2022): 3,300 Tonnes

Navoi Mining and Metallurgy Combinat is a state-owned company in Uzbekistan. It is one of Uzbekistan’s largest mining companies and it also ranks high among the world’s largest uranium and gold producers. The company’s most important ore deposits are located in the Kyzyl Kum Desert. In 2022, Navoi Mining and Metallurgy Combinat produced 3,300 tonnes of Uranium. It ranks 6th on our list of the top 10 uranium-producing companies in the world.

Click to continue reading and see Top 5 Uranium Producing Companies In The World.

Most Read from Bloomberg

The company announced last week it would take a $2.5 billion impairment on the value of its Australian nickel assets, which could be mothballed later this year following a review.

Global supplies of the metal — which has become key to the energy transition due to its use in electrification and batteries — ballooned after Indonesia quickly ramped up production, causing benchmark prices to crater and the closure of at least six nickel projects in Australia in the past year.

“There’s going to be a multi-year period of over-supply in nickel” that could last until the end of this decade, Chief Executive Officer Mike Henry said in a Bloomberg Television interview Tuesday after BHP announced its results. “The consideration that we need to give to nickel is what we do with our business in the intervening period, given that it’s currently loss-making and it has been for some time.”

The company reported that underlying attributable profit from continuing operations in the six months to Dec. 31 was steady at $6.57 billion, slightly below the estimate from analysts. Still, it was the massive slump in net income that was the biggest focus for investors, along with the cut in its interim dividend to 72 cents a share, down from 90 cents in the previous six months.

Read More: Top Miner BHP Takes $2.5 Billion Nickel Hit After Price Fall

BHP’s Sydney-based shares fell as much as 1% on Tuesday before trading down 0.2% to A$45.97 at 12:51 p.m. local time.

See-sawing demand for commodities in recent years has whiplashed BHP’s earnings, a trend that started during the pandemic and has continued due to the deteriorating outlook for China’s economy and particularly its metals-intensive construction and property sectors. Last year, just 12 months after posting its highest-ever profit as prices soared, the company reported its lowest annual profit in three years.

BHP said Tuesday all its assets were on track to meet full-year output and cost targets, with demand from top customer China “healthy” despite weakness in its housing sector. The six-month reporting period “had its challenges,” it said in a statement, referring to its nickel assets, which “offset an otherwise solid operation performance and overall healthy commodity prices.”

In a move aimed at supporting its flailing domestic industry, Australia last week added nickel to its Critical Minerals List, which will allow miners and downstream stakeholders of the metal to access the A$6 billion ($3.9 billion) available via the Critical Minerals Facility – a government fund aimed at ensuring Australia is at the forefront of the green metals transition.

Government Support

Prime Minister Anthony Albanese said in an interview on Monday that his government was looking at “how we can provide further support with a smart, targeted and time-limited policy” for the nickel sector.

Still, BHP’s Henry said Tuesday that federal tax credits and royalty relief at state level may not be enough to stop it shutting down its Nickel West operations, which haven’t been profitable since 2018.

“Given the current nickel price uncertainty, a large capital outlay is hard for BHP to justify” and avoid putting its Australian nickel assets on care and maintenance, RBC Capital Markets analyst Kaan Peker said in answer to emailed questions. The company will be looking for “additional government incentives associated with building downstream processing infrastructure associated in nickel, which the Australian government now deems to be a critical mineral,” he added.

Read More: BHP Nickel Supply Warning to Raise Questions on Strategy: Reaction

Beyond nickel, iron ore remains the company’s most important revenue earner. Prices of the steelmaking material surged 28% over the reporting period and remain historically high, and that has prompted major producers including BHP to consider development of once-stranded deposits.

BHP and its investors will also be watching whether China’s once insatiable demand for metals can be revived.The nation’s construction sector is expected to ramp up next month, and there will be a focus on whether Beijing will inject further fiscal stimulus to effectively counter steep declines from the crash in the metals-intensive housing market.

“In the near term, the economic outlook for the developed world is expected to improve modestly after a difficult year for both steel and non-ferrous metals demand,” BHP said in the statement. “China and India are expected to remain relative sources of stability for commodity demand.”

The company also said last week it would nearly double the provision set aside to cover damages from the 2015 Samarco dam failure in Brazil to $6.5 billion.

Most Read from Bloomberg Businessweek

By Sameer Manekar and Melanie Burton

(Reuters) -BHP Group on Tuesday logged first-half underlying profit that slightly beat analyst expectations, buoyed by strong iron ore prices, and said inflationary impacts were receding.

The world's largest listed miner was cautiously optimistic on a demand recovery in the developed world in the next 12 months but said it was not yet clear how effective stimulus policies have been in China, its biggest customer.

It was more bullish on India, which it said "has considerable positive momentum behind it".

BHP said it expects a "more balanced global economy and evidence that the worst of the general inflationary wave is behind us will have a positive impact on our industry in calendar year 2024."

For the first-half, BHP's strong revenue growth of 6% was underpinned by higher iron ore and copper prices and contributions from new projects, but was partially offset by lower energy coal prices.

BHP said underlying profit attributable to shareholders was $6.60 billion for the six months ended Dec. 31, unchanged from the previous year, but topping an LSEG estimate of $6.42 billion.

It declared an interim dividend of $0.72 per share, compared with $0.90 per share a year earlier. That beat Citi's expectation of $0.68, and a Visible Alpha consensus of $0.70.

"(The) market should take a modestly higher dividend than expected as a reflection of BHP’s improving confidence regarding (the) outlook on commodity demand/prices," analysts at Citi wrote.

Shares in BHP edged down 0.3% to A$45.91 amid a sour tone in resources stocks.

NICKEL

BHP, which announced a $2.5 billion impairment charge for its Western Australia Nickel business last week, said it sees the nickel industry facing "a difficult multi-year run," amid a flood of new supply coming out of Indonesia.

"Our base case is that the market may rebalance by the late 2020s," BHP said.

BHP operates a nickel smelter and a refinery in Western Australia, employing 3,000 people, and has warned that the slump in nickel prices could slow development of its West Musgrave copper nickel project.

"You should be expecting that to be a decision in months, not years," said Henry. "Clearly we weren’t expecting the nickel market to plunge as quickly and as significantly as it has," he told analysts at a results briefing.

While it welcomed Australia's moves to shore up the nickel sector though a production tax credit, BHP said that should not take the focus of ensuring "the right policy settings are in place to drive long term competitive positioning of Australia as a nation."

The company wants the government to improve industrial relations policies, fiscal settings and permitting requirements, CEO Mike Henry said, but added that might not be enough for miners that have already put their operations into care and maintenance.

"Given just how significant the challenges in the nickel market are today, that may not be enough to alter course."

($1 = $1.0000)

(Reporting by Sameer Manekar and Himanshi Akhand in Bengaluru; Additional reporting by Melanie Burton; Editing by Chris Reese, Leslie Adler and Sonali Paul)

By Melanie Burton

MELBOURNE (Reuters) -BHP Group will record another $3.2 billion impairment in relation to its Brazilian Samarco dam failure, and a $2.5 billion impairment charge for its Western Australia Nickel business, the world's biggest listed miner said on Thursday.

BHP flagged the two-non cash impairments ahead of its half year results next week where its earnings are expected to have broadly held up against the same time last year, underpinned by strong iron ore prices.

Last month a federal judge in Brazil ruled that BHP and Vale and their joint venture, Samarco, must pay up to 47.6 billion reais ($9.67 billion) in damages for the 2015 dam collapse, in a decision still subject to appeal.

The collapse in the southeastern city of Mariana caused a giant mudslide that killed 19 people and severely polluted the Rio Doce river, compromising the waterway to its outlet in the Atlantic Ocean.

The additional $3.2 billion income statement charge will raise BHP Brasil's provision for the Samarco dam failure to $6.5 billion as at Dec. 31, 2023, BHP said.

"The first thing to note is they are book writedowns not cash writedowns.. Nickel West wasn't contributing anything to their profits," said head of research Hayden Bairstow at Argonaut Securities in Perth. The writedowns are unlikely to impact dividend payments which stem from its iron ore unit.

The miner last month flagged a potential writedown at its Western Australian nickel operations as a jump in nickel supply from Indonesia has led to a swathe of writedowns and restructures across the sector. It has an arrangement to supply nickel to Tesla from the operations.

"Due to the deterioration in the short-term and medium-term outlook for nickel, BHP has lowered its nickel price assumptions," the miner said. "These unfavourable operating conditions are expected to endure for a considerable time."

BHP produced 80,000 tonnes of nickel in the financial year ending June but the division contributed -1% to its underlying earnings.

BHP said it would record a $2.5 billion non-cash impairment, including closure and rehabilitation provisions of approximately $900 million, which would reduce the carrying value of its Nickel West assets to minus $300 million.

The operations are now under review with the potential to be placed on care and maintenance.

BHP's Kambalda concentrator will be placed into care and maintenance in June after its supplier, mining company Wyloo, decided to suspend its Cassini and Northern Operations mines, which feed the plant, from late May.

It is also assessing development plans for its West Musgrave nickel project which is 21% complete.

BHP will report first-half results on Tuesday, Feb. 20.

(Reporting by Melanie Burton in Melbourne and Sameer Manekar in Bengaluru;Editing by Shinjini Ganguli, Aurora Ellis and Michael Perry)

BHP Group Limited; YWCA Saskatoon

SASKATOON, Saskatchewan, Feb. 13, 2024 (GLOBE NEWSWIRE) — BHP and YWCA Saskatoon are pleased to announce a $500,000 investment from BHP to YWCA's Hope Lives Here campaign. In 2022, YWCA Saskatoon’s Crisis Shelter & Residence turned away a staggering 4,253 women and children in need. Hope Lives Here is the organization’s largest capital campaign ever. With a fundraising goal of $19 million, the campaign is funding a new transitional housing wing that will more than double YWCA Saskatoon’s capacity to provide women and children with a safe place to stay. It will also contribute to funding much needed existing facility repairs and renovations.

BHP’s investment will go toward YWCA Saskatoon’s Employment and Learning Centre, a place where clients have access to programs and services that help them obtain sustainable employment. This generous gift will contribute directly to building a stronger, healthier community through helping women and families access the resources, programs and services needed to help them build stable foundations.

YWCA Saskatoon gave their heartfelt thanks to BHP for this extremely generous donation.

“From providing safe shelter, to our comprehensive employment programs, this transformational gift from BHP will directly contribute to helping YWCA Saskatoon serve women and families in need, giving hope to those who need it most,” said Cara Bahr, CEO of YWCA Saskatoon. “We are so very grateful for their generosity.”

“The YWCA Saskatoon is providing critical work that creates positive and lasting impact for so many in our city,” said Karina Gistelinck, Asset President of BHP Potash. “Access to training and courses opens doors and a new world of opportunity. Through the Employment and Learning Centre the YWCA is playing an important role in bringing access to people when it is most needed.”

Since 2015, BHP has contributed over $50 million to community organisations and initiatives in Saskatchewan. These contributions are driven by BHP’s fundamental belief that success is achieved through community partnerships that create lasting mutual benefit.

ABOUT THE YWCA SASKATOON

YWCA Saskatoon is an inclusive community-based organization that provides preventative and emergent services to women and their families. Their mission lies in empowering women and girls through programs and advocacy that advance reconciliation, independence, wellness and equal opportunity.

ABOUT BHP

BHP is a global resources company with its Canadian operational headquarters in Saskatoon, Saskatchewan and global business development headquarters in Toronto. BHP has a global workforce of approximately 80,000 people working in locations across Canada, Australia, Asia, the UK, US and Latin America. BHP produces commodities essential for global decarbonization, economic development and food security including copper, nickel, iron ore, metallurgical coal and is developing the Jansen potash project in Saskatchewan, Canada. Further information on BHP can be found at: bhp.com

MEDIA INQUIRIES

YWCA SaskatoonCarla HuntingtonVP, Development & EngagementYWCA Saskatoon306.986.2870

BHPMegan HjulforsMedia RelationsBHP403.605.2314

(Bloomberg) — Train drivers at BHP Group Ltd.’s Pilbara iron ore operations in Western Australia have voted to strike on Friday morning for 24 hours, potentially cutting supply to the producer’s Australian export hubs.

Most Read from Bloomberg

Workers plan to carry out a stoppage under a campaign aimed at securing better working conditions and pay in an enterprise agreement, according to the Mining and Energy Union. The previous agreement, which covers about 580 drivers, shunters and trainees, was negotiated in 2014.

“Pilbara iron ore mine operators have had it their own way for a long time,” the union’s Secretary Greg Busson said in a statement. The workers had “been very patient and given BHP every opportunity to address their concerns,” he added.

There are approximately 150 rail employees on-shift at any one time. Workers who strike will not be paid for those hours.

BHP is “currently reviewing a revised set of claims provided by union representatives,” a company spokesperson told Bloomberg. “We believe that agreement can be reached without the need for protected action. We have contingency plans in place if action goes ahead.”

BHP shares closed 0.5% lower to A$46.07 in Sydney on Monday.

In Australia, industrial action is a legal right under the Fair Work Act 2009. It can be triggered when bargaining for a new enterprise agreement fails or an existing agreement is out-of-date, according to the Fair Work Commission.

A typical train iron ore train comprises of four locomotives pulling around 270 cars carrying 38,000 tons of iron ore, according to the company’s website.

(Updates with BHP comment in fifth paragraph.)

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(Reuters) -BHP Group said on Friday it would review a Brazilian Federal Court decision regarding a 155 billion reais ($31.53 billion) government claim over the 2015 collapse of Fundao dam owned by Samarco, its joint venture with Vale.

The company said its unit BHP Brasil had not received a decision from the court, adding that the group would review its implication, potential for an appeal and any potential impact on its provision related to the dam's collapse.

The court has issued an interlocutory decision ordering Vale, BHP and Samarco to pay 47.6 billion reais ($9.67 billion) in collective moral damages for the 2015 tailings dam burst that killed 19 people and led to severe pollution of the Rio Doce river.

This is one of the categories of damages sought in the $31.53 billion claim by the Federal Public Prosecution Office.

The parties have been in negotiations to seek a settlement of obligations under a framework agreement since 2021, and the talks are slated to resume in February this year.

BHP had set aside $3.7 billion in provision related to the Samarco dam failure, according to its 2023 annual report.

BHP said its unit is "fully committed to supporting the extensive ongoing remediation and compensation efforts in Brazil" through a not-for-profit foundation that was established following the dam failure.

"Although both companies' balance sheets should be able to handle these outflows, we think this could drive lower capital returns over time/push net debt in BHP's case through its $15bn target ceiling," RBC analysts said in a note.

($1 = 4.9165 reais)

(Reporting by Archishma Iyer in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu)

(Bloomberg) — Vale SA, BHP Group and their Samarco iron ore venture must pay 47.6 billion reais ($9.7 billion) in compensation for damages caused in a 2015 tailings dam disaster in Brazil, a judge ruled.

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The decision allows for the companies to appeal the sentence. It also states that the damages figure should be adjusted to reflect interest, given the time passed since the disaster.

Vale swung briefly on the news before extending earlier losses to trade 2.9% down for the day in New York.

A resolution over damages would help ease the legal uncertainty hanging over the companies, after the tailings dam collapse eight years ago at Samarco’s that mine killed as many as 19 people, and contaminated waterways in the Brazilian states of Minas Gerais and Espirito Santo.

The companies had been seeking a negotiated settlement outside of court, and had offered to pay 42 billion reais, while the authorities were seeking 126 billion reais, Bloomberg reported in December.

The companies need to meet environmental obligations in addition to making compensation payments, and had provided 34 billion reais in reparations by late last year.

The sentence was issued in response to a request from public prosecutors of two affected states and the federal government for an early trial of a public civil action used as a benchmark in the case. The authorities had asked the firms to be sentenced to pay the equivalent of at least 20% of the profits of Vale and BHP in the last three years.

Vale and BHP said they have yet to be notified of the decision. Samarco declined to comment.

Vale and BHP are also facing a parallel UK class action lawsuit, involving as many as 700,000 people.

(Updates with Vale and BHP comments)

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SAO PAULO (Reuters) -A Brazilian federal judge ruled that miners Vale and BHP and their joint venture Samarco must pay 47.6 billion reais ($9.67 billion) in damages for a 2015 tailings dam burst, according to a legal decision on Thursday seen by Reuters.

Vale and BHP said in separate statements they were not informed by the judiciary about the decision. Samarco declined to comment.

The dam collapse in the southeastern city of Mariana caused a giant mudslide that killed 19 people and severely polluted the Rio Doce river, compromising the waterway to its outlet in the Atlantic Ocean.

In the decision, judge Vinicius Cobucci wrote that the amount was fixed taking as a parameter the value of expenses already acknowledged by the companies in repair and compensation actions. He added the 47.6 billion reais need to be adjusted by monetary correction and late payment interest.

It was not immediately clear how much of the total stipulated in the sentence each company owes.

The judge wrote in the legal document that the money would be put in a state fund and used for projects and initiatives area affected by the dam collapse.

The companies can appeal the decision.

In the securities filing, Vale said the Renova foundation, which the companies have been using to pay for some of the repairs, had paid until last December 34.7 billion reais in socioeconomic and environmental compensation.

($1 = 4.9237 reais)

(Reporting by Marta Nogueira; writing by Andre Romani; Editing by Brendan O'Boyle and David Gregorio)

BHP Group Limited

TORONTO, Jan. 22, 2024 (GLOBE NEWSWIRE) — BHP has announced its second cohort of six companies, chosen from a pool of over 500 applicants, to join the BHP Xplor accelerator program. The accelerator program is designed to support early-stage mineral exploration companies in finding the critical resources needed to support the energy transition.

Each company will receive a grant of up to US$500,000 together with access to a network of internal and external industry experts to accelerate its growth and further build out its exploration concepts. The program aims to support development across technical, business and operational facets of the participating companies.

BHP Xplor pushes the boundaries of what has conventionally been achievable in the exploration field. Over the span of the six-month program, the six companies will work collaboratively with BHP Xplor to expedite the maturation of their geological concepts to position the projects for commercialisation or partnership.

Head of the BHP Xplor Program, Charlee Johnson, said: “The diversity and quality of the submissions amongst the applicants is amazing and inspiring. We are excited to partner with the selected cohort and help bring their ideas and passion for their exploration projects to life. We aim to accelerate this process and create disruptive results by identifying new concepts, data and testing opportunities.”

BHP Xplor provides BHP the opportunity to access some of the most exciting exploration prospects globally, enhancing the pipeline of new opportunities which may shape our future asset portfolio.

Vice President, BHP Exploration and Xplor, Sonia Scarselli said: “Exploration for critical resources is moving slowly, but to meet the needs of the energy transition we must move at pace. We will be working together with the 2024 cohort to accelerate exploration in new geographies and advance new geologic concepts.”

The six companies selected to join the BHP Xplor accelerator program are:

Longreach Mineral – a private company that is applying an innovative mineral systems approach by leveraging our petroleum DNA to identify new tier 1 deposits critical to the energy transition. Our expertise in seismic geophysics and AI search tools, sets us apart in the exploration industry.
East Star Resources – a United Kingdom-based company listed on the London Stock Exchange exploring for copper and other base and precious metals in Kazakhstan.
Pallas Resources – a private explorer focusing on large-scale copper, gold, nickel sulphide and lithium systems in Kazakhstan.
Hamelin Gold – a mineral exploration company listed on the Australia Securities Exchange, established to execute a modern exploration program at the 100% owned ~3,000km2 West Tanami Gold Project (“West Tanami”) in Western Australia. The Tanami Gold Province is prospective for high value, large scale gold deposits and for nickel-copper-PGE mineralised intrusions.
Cobre – an exploration company listed on the Australia Securities Exchange, concentrating on copper and base metals exploration in Botswana.
Equivest Minerals – a private company deploying a technology platform combining statistical insights on the location of major metal deposits with integrated machine learning and minerals systems to predict priority areas of interest within key regions.

For more information on BHP Xplor, and to stay up to date with the program news and opportunities, please visit https://www.bhp.com/xplor

Contact:xplor@bhp.com

(Adds detail on BHP, Wyloo, nickel market in paragraphs 4-7)

MELBOURNE, Jan 22 (Reuters) – BHP Group will temporarily shut part of its Kambalda nickel concentrator in Western Australia in June, the top global miner said on Monday, after Wyloo Metals, which supplies ore to the plant, announced a pause in mining due to low nickel prices.

"The decision by Wyloo to suspend its operations means it will no longer be viable to continue operating parts of the Kambalda concentrator from mid-year," BHP's Nickel West President Jessica Farrell said in a statement to Reuters.

Around 20 roles will be affected.

BHP's move was the latest in string of writedowns and restructures of nickel businesses in the country given a sharp jump in Indonesian supply which has hammered prices 40% in the past year.

Australia's top nickel producer said it would put the crushing, milling and flotation circuit at its Kambalda plant on care and maintenance but would continue to run part of the plant as a drying circuit to process third-party concentrate.

The announcement came after Wyloo, a private investment vehicle owned by iron ore billionaire Andrew Forrest, said it would put its Kambalda nickel operations on care and maintenance at the end of May as a result of weak nickel prices.

BHP, which has a deal to supply Australian nickel to Tesla , last week flagged it could take a writedown at the division that accounts for a key plank of its green energy transition strategy but less than 1% of its revenue.

"We are looking at a range of options to remain globally competitive in a very tough operating environment. Costs have risen sharply and continue to go up while prices have fallen as new supply comes into the market," Farrell said.

BHP said last week it would give more details on the options at its half-year results on Feb. 20.

It may write down the value of the West Musgrave nickel project, acquired with its $6.4 billion takeover of OZ Minerals last year, analysts said. Experts valued the project at $1.2 billion. Mine development, under way, could also be delayed.

(Reporting by Melanie Burton; Editing by Tom Hogue and Sonali Paul)

(Bloomberg) — A prolonged slump in nickel prices is stress-testing producers worldwide, raising the prospect of sweeping mine closures that will deepen Indonesia’s dominance of global supply.

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The metal used in stainless steel and electric-vehicle batteries is down more than 40% from a year ago amid a growing global glut. That’s piling pressure on higher-cost operations and could pose the greatest risk to new projects outside Indonesia.

So far, the main casualties are in Australia. On Monday, billionaire Andrew Forrest’s nickel producer Wyloo Metals Pty Ltd. said it’s shutting down mines and BHP Group Ltd. said it’s partly closing a processing plant. BHP had warned last week on prospects for its nickel business, while First Quantum Minerals Ltd. suspended a mine.

But production in Indonesia — which already accounts for half of global supply — may prove more resistant to output cuts. The Southeast Asian nation has emerged as a global nickel hub after billions of dollars of investment in efficient plants that benefit from inexpensive labor, cheap power and readily available raw materials.

“Indonesian projects are more flexible in absorbing the impacts of lower nickel prices,” said Allan Ray Restauro, an analyst at BloombergNEF. That means overall global supply will keep rising despite output curbs elsewhere, he said.

Low Prices

The flood of new supply from Indonesia in the past two years has overwhelmed demand at a time when metals markets are under pressure from a sputtering global economy. For nickel, softer demand growth from the EV sector is also a headwind, and prices have recently traded near $16,000 a ton, close to their lowest level since 2021.

Mallee Resources Ltd’s Avebury mine in Tasmania, and a project by IGO Ltd. are also at risk, according to BloombergNEF. Calls to the two firms were not immediately answered.

Parts of BHP’s Kambalda concentrator will be suspended from June because they can no longer receive ore supply from Wyloo’s halted mines, BHP said. The world’s biggest miner is reviewing its Nickel West business, and last week warned it may be forced to write down the value of the assets.

First Quantum said it would suspend its Ravensthorpe nickel facility in Western Australia and cut a third of its workforce.

Citigroup Inc. sees nickel falling to $15,500 a ton in the next three months. The bank recently slashed its forecast for average prices this quarter to $16,000 a ton, from $18,000 a ton.

To be sure, Indonesia has its own uncertainties. A December accident that killed 21 people has triggered calls in the country for tighter regulation of the nickel industry ahead of a presidential election next month. One of the three candidates to become vice president criticized how the incumbent government has managed the sector during a televised debate on Sunday.

Testing Times

The announcements by BHP and First Quantum add to other signs of stress. Glencore said in September that it will only keep funding the struggling Koniambo Nickel mine until next month. Nickel plants in the French territory of New Caledonia are seen at risk of closure, the French government said last year.

“A lot of supply is still coming in from Indonesia, and we will need nickel prices to go lower to constrain supply growth in Indonesia,” said Nikhil Shah, principal analyst for base metals at CRU Group.

Nickel’s woes reflect the dynamics of other battery-materials markets, which have seen prices sink after surprisingly strong growth in supply. Demand for nickel and cobalt have suffered too as EV makers adopt types of batteries that don’t use either of them.

Despite the potential for further cuts in mine supply, the market will remain in surplus this year, given higher primary nickel output coming from Indonesia and China, said Jason Sappor, senior analyst at S&P Global Commodity Insights.

“We expect nickel prices to remain subdued this year,” Sappor said.

–With assistance from Sybilla Gross and Andrew Janes.

(Updates with BHP’s concentrator status in third and eighth paragraphs.)

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(Adds detail around BHP, Tesla, nickel supply woes)

MELBOURNE, Jan 22 (Reuters) – Wyloo Metals, a private investment company owned by iron ore billionaire Andrew Forrest, will put its Australian Kambalda nickel operations on care and maintenance at the end of May as a result of low nickel prices, it said on Monday.

The miner supplies concentrate to BHP Group's Nickel West operations south of Perth, which in turn has an agreement to supply Tesla with the metal key to electric vehicle batteries.

It comes as nickel miners are announcing writedowns and restructures across the board and after BHP last week flagged possible writedowns at its operations.

“We are exploring a number of options for the long-term future of our business," Wyloo CEO Luca Giacovazzi said in a statement.

Wyloo Metals last year bought Mincor's Kambalda nickel operations for $504 million. Kambalda nickel has capacity of 15,000 metric tons and has a contract to supply BHP Group until 2025.

Giacovazzi still believes in the long-term fundamentals for Australian nickel, he told Reuters last week. (Reporting by Melanie Burton; Editing by Lisa Shumaker and Stephen Coates)

(Bloomberg) — Wyloo Metals Pty Ltd., the private nickel producer owned by billionaire Andrew Forrest, is shutting down its Western Australian mines due to a sharp slump in prices for the key transition metal.

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The mines near Kambalda will go into care and maintenance from May 31, the company said in a statement on Monday. Wyloo, which bought the mines only six months ago, informed BHP Group Ltd. that it won’t be able to fulfill a nickel off-take agreement that’s due to expire at the end of 2025, a spokesperson added.

Prices for nickel — used to make stainless steel and EV batteries — have slumped in the past year, mainly driven by a flood of cheap supply from Indonesia that’s threatening to disrupt the industry. Earlier this month, First Quantum Minerals Ltd. said it will halt mining at its nickel and cobalt operation in Australia and cut a third of the workforce in response to weaker metal prices and higher costs.

The closure of Wyloo’s Kambalda mines comes after BHP, the world’s biggest miner, last week warned it could be forced to write down the value of its nickel to mitigate the crash in prices.

Wyloo, which owns assets in Canada and Australia, last year also entered into a joint venture agreement with with IGO Ltd. to produce battery-ready materials at a plant near Perth. Despite the shutdown of the mines, it’s studying developing its own nickel concentrator in the Kambalda region, Wyloo said in the statement.

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(Bloomberg) — Whitehaven Coal Ltd. is studying options to sell a 20% stake in the Blackwater mine to global steelmakers as it works to finalize a $3.2 billion deal for two Australian assets.

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The producer is exploring opportunities as it also works to complete the acquisition of Blackwater and Daunia sites from co-owners BHP Group Ltd. and Mitsubishi Corp. by early April.

“Interest is very, very strong” in relation to a stake in Blackwater, Chief Executive Officer Paul Flynn told analysts Friday on a call. “We’ll think about the opportunity with Daunia at a later date.”

Read more: BHP to Sell Coking Coal Mines to Whitehaven for $3.2 Billion

Whitehaven’s shares advanced as much as 7.3% as of 12:10 p.m. Sydney time.

Metallurgical coal, used in steel production, is showing signs of strengthening and an “anticipated growing structural shortfall” in higher quality material to supply Asia — and particularly India — will underpin prices over the longer term, the producer said.

Whitehaven’s average received coal price fell 4% in the three months to Dec. 31 on the previous quarter, as the market continues to normalize after 2022’s shocks to energy supply. Global demand for the fossil fuel likely peaked in 2023, according to the International Energy Agency.

High-calorific value thermal coal prices are likely to remain strong over the long-term because of underinvestment in new supply and the depletion of existing mines, Whitehaven said. Russian sanctions and weather-related impacts in Queensland have also contributed to recent tightness.

(Updates to add CEO comment, share price from third paragraph)

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(Bloomberg) — BHP Group Ltd. is considering options for its Australian nickel operation to mitigate the impact of a sharp fall in prices and warned it could be forced to write down the value of the assets, the latest sign of trouble in the green metals sector.

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The world’s largest miner said it was assessing market conditions for the key battery material and will update investors next month, along with half-year results.

“The nickel industry is undergoing a number of structural changes and is at a cyclical low in realized pricing,” BHP said in Thursday’s statement. “Nickel West is not immune to these challenges.”

Nickel prices dropped 45% last year, weighed down by a flood of cheap supply from Indonesia, where new techniques to produce battery-grade material are threatening to disrupt the industry. BHP’s warning adds to a string of similar announcements from other companies, as smaller miners struggle to raise money from more traditional sources and grapple with rising costs.

Earlier this week, First Quantum Minerals Ltd. said it would halt mining at its nickel and cobalt operation in Western Australia and cut a third of the workforce in response to weaker metal prices and higher costs. The metal is used to make stainless steel and EV batteries.

Read More: Battery Metal Price Plunge Is Closing Mines and Killing Deals

BHP produced 19,600 tons of nickel in the final three months of 2023, up 11% from the year before, it said in Thursday’s statement. The company’s Nickel West operations include three mines, a smelter in Kalgoorlie, its Kwinana refinery and a sulphate plant.

Under Chief Executive Officer Mike Henry, BHP has reshaped its portfolio by exiting oil and gas, selling coal assets and completing the $6 billion takeover of OZ Minerals Ltd. to add more exposure to copper. Demand for that metal is forecast to surge as the world decarbonizes due to its use in power grids and electric vehicles.

A potential writedown of Nickel West would not be overly material to BHP as the metal forms a “a very small part of their overall business portfolio,” Barrenjoey resources analyst Glyn Lawcock said in a phone interview.

“By nature we’re in a cyclical industry — today, it feels like nickel’s not the place I want to have money tied up and invested in,” said Lawcock, who added that the massive surplus of Indonesian supply had caught the market by surprise.

Mainstay Product

Even as Henry shifts focus to energy-transition materials, iron ore remains BHP’s mainstay product. The company’s output of the steelmaking material in the three-month period was 65.8 million tons, down 2% from the year before.

Chinese demand for steel has plateaued and production is on track to peak before the end of the decade, dented by a years-long crisis in the nation’s property sector, which has typically consumed more than a third of the country’s steel output. While there’s some growth in smaller segments like manufacturing of electric cars and air conditioners, the pace of construction has slowed, meaning the nation’s iron ore imports are forecast to decline.

Earlier this week, BHP’s rival Rio Tinto Group reported output of iron ore for the three months to Dec. 31 fell 2% to 87.5 million tons.

Meanwhile, BHP’s copper production rose 3% in the three months, while metallurgical coal slumped 18%. Production guidance ranges for the fiscal year remained unchanged for all assets, with the exception of coking coal which was lowered. In October, BHP agreed to sell two Australian coking coal operations to Whitehaven Coal Ltd. for at least $3.2 billion.

Operations at BHP’s Saraji coking coal mine were suspended on Jan. 15 after a worker fatality and are expected to progressively restart over the coming days, it said Thursday.

BHP’s shares in Sydney fell as much as 2.2% before trading 1.3% lower to A$45.985 apiece at 1:20 p.m. local time on Thursday.

(Updates with Nickel West project details in 6th paragraph, analyst comments in 8th)

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BHP to offer more detail on nickel unit at earnings on Feb 20

Western Australia iron ore output eases 2.2%, meets forecasts

Quarterly copper output falls 4%

(Rewrites throughout, adds detail on nickel operations, copper production)

By Melanie Burton

MELBOURNE, Jan 18 (Reuters) – BHP Group said on Thursday it was reassessing the value of its nickel operations after a price slump, in a move that could lead to writedowns amid an oversupply of the metal used in electric vehicle batteries.

The world's biggest listed miner, which signed a deal to supply nickel to Tesla in 2021, is reevaluating the business after prices fell 40% in the last year as Indonesian supply jumped, causing restructures and writedowns at nickel mines across Australia.

BHP said it was looking at options to mitigate the impacts of the sharp fall in nickel prices and that it would offer more details at its half-year results on Feb. 20.

"The nickel industry is undergoing a number of structural changes and is at a cyclical low in realised pricing," it said in quarterly production report. "Nickel West is not immune to these challenges….Given the market conditions, a carrying value assessment of the Group's nickel assets is ongoing."

BHP may write down the value of the West Musgrave nickel project it acquired with its purchase of OZ Minerals last year that experts valued at $1.2 billion, analysts said. The mine, currently under development, could also be delayed.

BHP could put its Nickel West unit that include its Kwinana plant that produces nickel sulphate under strategic review for a possible sale, although this was seen by analysts as less likely, or choose to delay planned investment.

Earnings tanked at BHP's nickel business in the 2023 financial year, sliding 61% from a year earlier to just $164 million. The division accounts for less than 1% of its earnings but is a major part of its green energy marketing strategy.

BHP failed to sell the division about a decade ago due to an estimated $1 billion in closure costs at the time.

Elsewhere, BHP reported a small 2.2% drop in second-quarter iron ore production that was in line with analyst forecasts as it ties in its rail line to a central production hub in the Pilbara region.

Iron ore production from Western Australia on a 100% basis was 72.7 million metric tons (Mt) in the three months to Dec. 31, down from 74.3 Mt reported a year ago.

That compares with a Visible Alpha consensus estimate of 72.5 Mt, according to Morgan Stanley.

BHP said it was working with authorities after a worker at its BHP Mitsubishi Alliance (BMA) coal business was fatally injured in a vehicle incident on Jan. 15.

BHP logged a 4% drop in quarterly copper production to 457,000 metric tons due mostly to lower concentrator grades at its Escondida mine in Chile.

(Reporting by Melanie Burton in Melbourne and Himanshi Akhand and Echha Jain in Bengaluru; Editing by Maju Samuel and Jamie Freed)

By Melanie Burton

MELBOURNE (Reuters) – Australian nickel producers, hit by a sharp jump in supply from rival Indonesia, are starting to buckle under low prices that analysts expect will force a rethink by top global miner BHP Group on its nickel strategy this year.

The metal has long been feted as a key battery material for electric vehicles because it improves energy density so cars can run further on a single charge.

BHP has promoted nickel as core to its green strategy. It signed a deal to supply Australian nickel to Tesla in 2021, touting the country's rich geology and strong financial and environmental regulations.

But Australia's producers have been squeezed by Indonesia's emergence as a supply powerhouse and on the demand side by innovations away from using nickel in batteries, which have led to a 40% price slump over the past year to around $16,000 a ton.

"The challenges facing many nickel producers are unlikely to ease near term. We are bearish on the commodity and quite cautious on assets and producers," said UBS analyst Lachlan Shaw.

Lithium iron phosphate (LFP), which does not use nickel, has been gaining ground as the EV battery chemistry of choice, especially in China, because LFP batteries can be produced more cheaply, making EVs more affordable.

However, BHP has placed a big bet that nickel sulphide deposits in low-risk jurisdictions will attract a premium because they use less energy to extract nickel than laterite deposits found in Indonesia.

It is not alone.

Wyloo Metals, which last year bought nickel miner Mincor for $504 million, still believes in the long-term fundamentals for Australian nickel, said CEO Luca Giacovazzi.

"The industry needs a more appropriate and transparent pricing mechanism, that distinguishes between clean and dirty nickel, so consumers can be confident their EV really is a better choice for the environment," Wyloo's Giacovazzi told Reuters.

But for now, weak prices have forced Australia's high cost producers to announce a swathe of writedowns and restructures, with Canada's First Quantum the latest to cut production.

SHELVING PROJECTS?

Earnings tanked at BHP's nickel business in the 2023 financial year, sliding 61% from a year earlier to just $164 million. The division accounts for less than 1% of its earnings.

"We are working hard to remain globally competitive in a very tough operating environment. Costs have risen sharply and continue to go up while prices have fallen as new supply comes into the market," said BHP Nickel West Asset President Jessica Farrell.

She said the company is working to "take action to address these challenges", without elaborating.

At its Western Australian nickel operations, BHP is assessing options for a major smelter renewal and a mine expansion while it sets out to build the West Musgrave mine that it acquired with its $6.4 billion takeover of Oz Minerals.

One option for BHP could be for it to delay West Musgrave until the market recovers, said Barrenjoey analyst Glyn Lawcock.

"Clearly right now nickel is challenged," he said. "(But) I think to write nickel off today for forever is a big call."

Even with the growing use of LFP batteries, they won't capture 100% of the market. As consumers go for cheaper cars, governments could mandate greener sourcing policies, he noted.

"It's going to be a big decision point for BHP this year," Lawcock said.

(Reporting by Melanie Burton; Editing by Sonali Paul)

In the name of “national security”, Beijing has imposed new exports controls on graphite, restricting one of the most critical battery metals to Western markets as China attempts to dominate the global EV market. It’s both a threat and an opportunity. It’s an opportunity if you are a rare graphite processing company with operations in both the U.S. and China.

One of the biggest news pieces on the graphite scene since Beijing’s export restrictions was a proposed SPAC deal in December 2023 that could see Graphex Group (NYSE American: GRFX), with a market cap of $40 million, sell its USA processing business for between $100 million and $200 million. The USA processing business would be spun off as a separate Nasdaq listing.

Graphex isn’t a cash-guzzling mining operation with years-long exploration processes to get through: The USA spinoff will be processing graphite—a first in the country—and that’s where some 85% of the graphite profit is. The company is now moving forward quickly with design and equipment selection for its flagship Detroit graphite processing plant and the hunt is on for additional locations, with major JV and offtake deals apparently underway.

Beijing’s market-dominating move has also helped strengthen Graphex China’s operations in East Asia, where output is now expected to triple by the first quarter of 2025.

Led by veteran energy sector leader John DeMaio, Graphex USA is leading a SPAC deal that not only awards shareholders through a buyout worth multiples of the current market capitalization but also gives investors exposure to the most critical supply line for North America’s massive EV push.

On December 6, Graphex Group (NYSE American: GRFX) and its wholly-owned U.S. subsidiary, Graphex Technologies, LLC entered into a Letter of Intent (LOI) with an independent NASDAQ-listed blank check company to acquire 100% of the equity interest of Graphex Tech.

The pre-money enterprise value, net of liabilities, for Graphex Tech is anticipated to be between $100 million and $200 million in a deal that is set to close in the first half of 2024.

This is a US-based company that is building its first graphite processing plant in Detroit, Michigan, and is now on the hunt for more locations across the U.S. and Canada.

It's also in advanced and late-stage testing with the auto industry, battery manufacturers, and OEMs (original equipment manufacturers). And it already has JVs and offtake deals with non-Chinese entities that meet the strict compliance requirements set down by the Biden administration’s Inflation Reduction Act (IRA).

And it’s a critical metals segment that will play a huge role in defining North American security and the energy transition.

Graphite is the biggest—and most critical–component in any lithium-ion battery. It makes up 95-99% of the anode (negative electrode). The average lithium-ion battery contains 15X more graphite than lithium, and for lithium, North America already has a much clearer path to supply not dominated by China.

North America has zero commercial production of refined graphite.

Graphex could end up being the first to domesticate this supply chain.

Right now, it’s in the final stages of the construction of its 15,000-ton-per-annum graphite refining facility in Detroit–the heart of America’s auto industry. First production is expected in the first quarter of 2025.

The Safe China Exposure

The team at Graphex Group (NYSE American: GRFX) has over a decade of experience processing graphite in Asia. The current CTO has designed and built multiple Asian plants, from Korea to China.

All that China-based experience is now being rebuilt in North America, led by Graphex Technologies President John DeMaio– former President, CEO, and Board Member of JouleSmart Solutions, general manager of Siemens Smart Infrastructure, VP of MWH Global, VP of SPG Solar and COO of Thompson Solar Technologies.

From an investor’s point of view, the key to profiting from the graphite supply chain is not mining—it’s processing, which represents over 85% of the value of this segment. And that’s exactly where Graphex USA is focusing. There won’t be any mining overhead expenses– just multi-source, IRA-compliant graphite processing capabilities.

By the third quarter of 2024, Graphex Asia aims to double its graphite production from 10,000 metric tons per year to 20,000 metric tons per year. By the first quarter of 2025, the company aims to triple this to 30,000 metric tons, with bank financing already approved for the production ramp-up. And they are hoping to get ~$5500 per metric ton for that graphite.

And back on the home front in North America, Graphex believes it has multiple raw graphite supply deals lined up to feed its Detroit processing plant—along with other proposed new plants as they come online–in accordance with the IRA sourcing requirements for North American supply that doesn’t come from China.

Late last year, Graphex entered into an LOI with Northern Graphite Corporation (TSXV:NGC) for raw material supply, and signed an MOU with Reforme Group Pty Ltd. And in January this year, they joined forces with Northern Graphite to build a large-scale graphite processing facility in Quebec’s Baie-Comeau region. The partners are now evaluating sites to house a facility that could produce up to 200,000 tons of graphite annually. They also have an LOI with Canada-based Gratomic for raw graphite to evaluate building.

Then, in August this year, they signed the biggest supply deal yet with Syrah Resources’ Balama graphite operation in Mozambique, the largest in existence outside of China, with a production capacity of 350,000 metric tons per year.

Source: Syrah Resources

Both Mozambique and Tanzania are poised to become major graphite miners, home to the fifth- and sixth-largest graphite reserves in the world, respectively.

With Beijing’s restrictions on graphite exports, Graphex represents an interesting way for non-Chinese investors to gain exposure to the China graphite market. Graphex Asia already has the necessary export licenses.

In 2021, China only housed some 22% of global graphite reserves, yet it produced over 79% of the world’s supply because of its processing power. That same year, the U.S. was 100% reliant on foreign sources of processed graphite, one-third of which came from China. Graphex Group (NYSE American: GRFX) is North America’s first chance at diversifying this supply with an unprecedented domestic solution.

Other miners to keep an eye on in 2024:

Compass Minerals International (NYSE: CMP), based in Overland Park, Kansas, is a leading provider of essential minerals, including salt, sulfate of potash, magnesium chloride, and even sustainable lithium. The company's diversified product mix serves a wide range of markets, including agriculture, consumer deicing, water conditioning, and various industrial applications.

Beyond its current offerings, Compass Minerals is investing in new technologies and methods to enhance the efficiency and environmental sustainability of its operations. The company's focus on innovation is particularly evident in its approach to lithium extraction, where it aims to capitalize on the growing demand in the electric vehicle market. This strategic direction not only diversifies their portfolio but also positions Compass Minerals as a key player in the transition to a more sustainable global economy.

Freeport-McMoRan Inc. (NYSE: FCX), based in Phoenix, Arizona, is one of the world's leading mining companies, with significant reserves of copper, gold, and molybdenum. The company's sizeable asset base includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits, and significant mining operations in the Americas. With copper being a critical material in renewable energy and electric vehicle technologies, Freeport-McMoRan stands to benefit from the global push towards greener economies.

Freeport-McMoRan is also actively involved in community engagement and environmental stewardship. The company has implemented various initiatives aimed at reducing its environmental footprint and promoting sustainable mining practices. These efforts include water management, biodiversity conservation, and emission reduction strategies. By focusing on responsible mining, Freeport-McMoRan is not only ensuring compliance with environmental standards but is also contributing to the broader goal of sustainable development in the regions it operates.

Rio Tinto (NYSE: RIO), a global leader in the mining and metals sector, is known for its operational efficiency and commitment to sustainable development. The UK-Australian multinational corporation operates in around 35 countries worldwide and has significant assets across several commodities including aluminum, copper, diamonds, coal, iron ore, and uranium. Rio Tinto's robust portfolio of world-class assets is further reinforced by strong market fundamentals, especially in the copper and iron ore markets, making it an interesting proposition for potential investors.

In addition to its extensive mining operations, Rio Tinto is a leader in the implementation of cutting-edge technologies and sustainable mining practices. The company's commitment to reducing its carbon footprint and protecting the environment is evident in its various initiatives, such as investments in renewable energy and efforts to rehabilitate mining sites post-extraction. Rio Tinto's proactive approach to corporate responsibility and sustainability is an integral part of its business strategy, setting a standard for the mining industry.

FMC Corporation (NYSE: FMC), based in Philadelphia, Pennsylvania, is a global agricultural sciences company that delivers innovative technology to growers around the world. While not a mining company in the traditional sense, FMC has a significant stake in lithium, a critical component in rechargeable batteries and other high-tech applications.

FMC's commitment to innovation and sustainability is noteworthy, and the company's agricultural products contribute to increased crop yield and quality, making it a significant player in addressing global food security issues. In recent years, FMC has benefited from robust demand for its crop protection products, driven by higher commodity prices and strong agricultural market fundamentals.

Livent Corporation (NYSE: LTHM), a spin-off from FMC Corporation, is a global leader in lithium technology, powering the electric vehicle revolution. The Philadelphia-based company supplies lithium used in batteries for hybrid and electric vehicles, mobile devices, and other consumer electronics. Livent's position in the high-growth lithium market, driven by increasing demand for electric vehicles, makes it a compelling option for investors seeking exposure to the green energy transition.

Livent Corporation is expanding its reach in the global lithium market by investing in new technologies and forming strategic partnerships. Their focus on sustainable lithium extraction and processing methods demonstrates a commitment to environmental responsibility. As the demand for lithium continues to grow, Livent's role in supplying this critical material for electric vehicles and renewable energy storage becomes increasingly significant, positioning them as a key contributor to the green energy transition.

BHP Group (NYSE: BHP), headquartered in Melbourne, Australia, is one of the world's largest mining companies. It primarily deals in commodities like iron ore, copper, coal, and nickel. BHP is particularly known for its large-scale operations and has significant assets in Australia, North and South America, and other regions. The company's focus on sustainable mining practices and its diverse portfolio of commodities make it a key player in the global mining industry.

BHP Group's commitment to sustainability extends to all aspects of its operations. The company is investing in technologies to reduce greenhouse gas emissions and improve water usage efficiency. BHP's focus on creating sustainable mining practices reflects a broader trend in the industry towards environmental responsibility and could set new standards for mining operations worldwide.

Vale S.A. (NYSE: VALE) headquartered in Rio de Janeiro, Brazil, is one of the world's largest miners of iron ore and nickel. It also produces copper, coal, manganese, and ferroalloys. Vale has a strong presence in several countries and is known for its large-scale operations, especially in Brazil and Africa. The company's focus on producing essential minerals for global industries, along with its commitment to sustainable mining practices, makes it an important entity in the resources sector.

Vale's focus on sustainability is also prominent in its corporate strategy. The company has made significant investments in renewable energy projects and initiatives to reduce carbon emissions in its operations. Vale's commitment to responsible mining practices and community engagement has been integral in maintaining its position as a leader in the global mining industry, especially in the areas of iron ore and nickel production.

Newmont Corporation (NYSE: NEM) is one of the world's leading gold mining companies and also a producer of copper, silver, zinc, and lead. Newmont operates in various countries including the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, and Ghana. The company's emphasis on responsible mining practices and its extensive portfolio of assets in gold and other minerals make it a significant player in the global mining sector. Additionally, Newmont's commitment to sustainability and community development initiatives aligns it with modern environmental and social governance criteria.

Newmont Corporation is actively involved in various initiatives to promote sustainable mining practices. These include efforts to minimize the environmental impact of its operations, improve safety standards, and engage with local communities. Newmont's approach to responsible mining is a key aspect of its business strategy, reflecting its commitment to ethical practices and long-term sustainability in the mining sector.By. Tom KoolIMPORTANT NOTICE AND DISCLAIMER

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Read this article on OilPrice.com

This article will list the world's top silver mining companies and highlight the recent trends in the silver industry. You can skip our detailed overview of supply and demand intricacies of silver and read 5 Biggest Silver Mining Companies in the World.

Global Silver Demand and Supply

In 2022, the dynamics of global silver demand and supply underwent major changes. The year saw a minor decline in mine production, with a 0.6% drop to 822.4 million ounces, in contrast to the previous year's robust growth of 5.8%. According to the Silver Institute, this decrease primarily resulted from reduced output at lead/zinc mines, notably in China and Peru, where silver production decreased by 3.5% to 248.2 million ounces. However, this decline was partially offset by increased silver production in gold and copper mines, which rose by 1.0% to 129.5 million ounces and 0.8% to 212.0 million ounces, respectively. Production from primary silver mines remained relatively stable, with a marginal 0.1% increase, totaling 228.2 million ounces.

Meanwhile, the demand for silver experienced an upswing in 2022, with total demand increasing by 18% to 1,242 million ounces, reaching its highest level since 2010. Notably, silver recycling continued to rise for the third consecutive year, growing by 3% and reaching a 10-year peak of 180.6 million ounces. This underscores the growing interest in silver as both a mined resource and a recyclable commodity.

Must Read: Top 20 Gold Mining Companies in the World

Major Silver-Consuming Sectors

Silver experiences high demand in key sectors, namely physical investment, jewelry, and silverware. Regarding the investment aspect, the Silver Institute reported a significant increase in physical silver investments for the fifth consecutive year in 2022, reaching a record 332.9 million ounces. Notably, India stood out with a staggering 188% year-over-year increase in silver investments, driven by lower prices and bargain hunting.

Silver jewelry manufacturing also saw impressive growth, rising by 29% to a record 234.1 million ounces in 2022, primarily driven by India. In India, a combination of pent-up demand post-pandemic and restocking led to a doubling of volumes from the previous year. However, excluding India, there was a slight decline in jewelry manufacturing.

The US experienced reduced demand as consumer spending normalized. In contrast, Europe showed some increase in silver jewelry demand, driven by increased local consumption despite a drop in exports from Italy. Thailand, Indonesia, and Turkey also reported growth due to a recovery in exports and improvements in domestic sales. It's worth noting that jewelry manufacturing is expected to decrease by 15% at the end of the fiscal year, returning to pre-pandemic levels, particularly in India, where the market is adjusting after the 2022 surge.

Lastly, silverware manufacturing outpaced jewelry in terms of growth percentage, experiencing an 80% increase in demand in 2022, reaching 73.5 million ounces. This boost, as seen in the jewelry sector, was mainly driven by India, where demand more than doubled in 2022 as employment and income levels returned to pre-pandemic norms.

Also Read: 10 Largest Cobalt Mining Companies and Their Mines in the World

Top Silver Producing Countries

The largest silver-producing countries in the world are Mexico, China, and Peru. In 2022, Mexico led the way with an impressive production of 6,300 metric tons, drawing from its reserves of 37,000 metric tons. Following closely, China also made a significant contribution, producing 3,600 metric tons of silver, supported by its substantial reserves estimated at 71,000 metric tons, according to the US Geological Survey. Peru, ranking third in silver production, boasts the world's largest silver reserves, totaling 98,000 metric tons. In 2022, Peru's commitment to sustainable mining practices resulted in a silver production of 3,100 metric tons.

Let's now talk about the top silver mining companies in the world!

15 Biggest Silver Mining Companies in the World

Our Methodology

We identified the world's largest silver companies based on their average silver production over the past three years. This was determined using data from The Silver Institute's World Silver Surveys of 2022 and 2023, along with the companies' annual reports. The top silver mining companies were ranked in ascending order according to their annual silver yield.

Based on the available data, here are the top silver mining companies in the world:

15. First Majestic Silver Corp (TSE:FR)

Average Annual Silver Production:11.6 million ounces

First Majestic Silver Corp., headquartered in Vancouver, is among the biggest silver mining companies in the world, with a notable presence in Mexico. The company's primary mining sites in Mexico include the San Dimas, Santa Elena, and La Encantada mines. The most prominent among them is the Santa Elena Silver/Gold Mine, which encompasses an extensive area of 102,244 hectares and operates both the Santa Elena and Ermitaño underground mines.

Looking ahead to the end of 2023, First Majestic has set ambitious production targets, aiming to achieve a record high of 33.2 million to 37.1 million silver equivalent ounces. This represents approximately a 12% increase from the previous year. This production goal is further broken down into 10 million to 11.1 million silver ounces and 277,000 to 310,000 gold ounces. The projected all-in sustaining cost per silver equivalent ounce is expected to range between $18.47 and $19.72.

14. Boliden AB (STO:BOL)

Average Annual Silver Production: 11.8 million ounces

Boliden AB, a European company headquartered in Stockholm, primarily focuses on silver extraction in three key areas: the Boliden Area, Garpenberg, and Aitik. The Boliden Garpenberg mine stands out as one of the world's most efficient underground zinc mines and holds the distinction of being Sweden's oldest active mining area. This mine processes complex ores containing a combination of zinc, lead, silver, copper, and gold. In 2022, Garpenberg processed approximately 2,989 kilotons of ore, resulting in the production of metal concentrates, including silver.

13. BHP Group (NYSE:BHP)

Average Annual Silver Production: 12 million ounces

BHP Group (NYSE:BHP), among the world's most valuable mining companies, operates several copper mines, notably the Escondida mine in Chile and the Antamina mine in Peru. Silver is a significant byproduct of copper and zinc mining within the company's operations, contributing to its high global silver production. Another key asset in BHP's silver production portfolio is the Olympic Dam operation in South Australia, known for its vast deposits of copper, gold, silver, and uranium. BHP Group (NYSE:BHP) also manages the Carrapateena and Prominent Hill mines in Australia, both notable for their substantial gold and silver projects.

12. South32 (ASX:S32)

Average Annual Silver Production: 12.7 million ounces

South32, an Australian mining and metals organization, plays a significant role in the global silver mining industry. In the fiscal year 2022, the company achieved a notable milestone by producing 12.3 million ounces of silver. The primary source of this impressive production is the Cannington site located in Queensland, Australia, which ranks among the world's largest silver production sites.

Expanding its operations beyond Australia, South32 is also advancing the Hermosa project in Arizona, USA. This forward-looking project encompasses two significant deposits: the Taylor sulfide deposit, rich in zinc, lead, and silver, and the Clark oxide deposit, known for its zinc, manganese, and silver content.

Also Read: Top 20 Diamond Producing Countries in the World

11. Hecla Mining Company (NYSE:HL)

Average Annual Silver Production: 13.5 million ounces

Founded in 1891, Hecla Mining Company (NYSE:HL) is one of the largest silver-producing companies in the US, operating active mines in Alaska, Idaho, Quebec, and Canada and developing a new mine in Canada's Yukon region.

In 2022, Hecla Mining Company (NYSE:HL) achieved substantial success, reporting a silver production of 14.2 million ounces, a 10% increase over the previous year. This remarkable growth was primarily attributed to substantial production increases at two key mines: the Lucky Friday mine in Idaho, which experienced a 24% boost, and the Greens Creek mine in Alaska, contributing to a 5% rise. Notably, Greens Creek was a major contributor, accounting for 9.7 million ounces of the total silver produced in 2022.

During the first three quarters of 2023, despite a slight decline in silver production in the third quarter compared to the second quarter, the company's overall output for the first nine months of 2023 demonstrated an 8% increase compared to the same period in 2022, totaling 11,407,232 ounces of silver.

10. Volcan Cia Minera (BME:XVOLB)

Average Annual Silver Production: 13.8 million ounces

Volcan Compañia Minera S.A.A., a leading mining firm based in Peru, specializes in various activities, including exploring, extracting, processing, and selling polymetallic ores, with a particular focus on silver. This company is situated in the mineral-rich Central Andes regions of Junin and Pasco, where it operates 16 polymetallic mines: 11 underground and five surface mines, along with six processing plants and a gold mine concentrator. Despite its extensive operations, the company saw a slight decline in silver production in 2022, with output decreasing by 5% to 14.3 million ounces (Moz) from the previous year's 15 Moz.

9. Pan American Silver Corp (NYSE:PAAS)

Average Annual Silver Production:18.3 million ounces

In 2022, Pan American Silver Corp (NYSE:PAAS) successfully produced 18.5 million ounces of silver, meeting its adjusted projection of 18.0 to 18.5 million ounces. Initially, the company had aimed for a higher range of 19.0 to 20.5 million ounces. Additionally, it achieved significant gold production, totaling 552.5 thousand ounces, which fell within its forecasted range of 550.0 to 605.0 thousand ounces for the same period. The third quarter of 2023 marked a notable period for Pan American Silver Corp (NYSE:PAAS) as it recorded a silver output of 5.7 million ounces and achieved a record-breaking gold production of 244.2 thousand ounces.

8. Southern Copper Corp (NYSE:SCCO)

Average Annual Silver Production: 19.7 million ounces

Southern Copper Corporation (NYSE:SCCO), a prominent player in the silver mining sector, has recently experienced fluctuations in its silver production. In the third quarter of 2023, the company produced 4,390,000 ounces of silver, marking a 10% decrease compared to the same period the previous year. This decline was consistent across all their operations, except for the Toquepala mine. Additionally, there was a 7% decrease in the company's silver sales volumes year-over-year.

Despite these production and sales challenges, Southern Copper Corp (NYSE:SCCO) exhibited robust financial performance in the third quarter. The company's net sales increased by 16.2%, primarily attributed to higher prices for molybdenum, silver, and copper. Its net income also showed significant growth, reaching $619.5 million, a 19.4% increase from the previous year's third quarter.

7. Polymetal International plc (OTC:POYYF)

Average Annual Silver Production: 20.08 million ounces

Polymetal International plc operates in Russia and Kazakhstan, consistently delivering strong performance. In the third quarter of 2023, the company's gold equivalent production increased by 12% compared to the same period the previous year, reaching a total of 508 thousand ounces. This significant rise was primarily driven by heightened production levels at their Russian facilities, including Urals, Mayskoye, and Dukat sites. Throughout the first nine months of 2023, Polymetal continued this growth trajectory, reporting a 6% year-on-year increase in gold equivalent production, totaling 1,272 thousand ounces, with substantial contributions from both Kazakhstan and Russia.

6. Hindustan Zinc Ltd (NSE:HINDZINC)

Average Annual Silver Production: 22.02 million ounces

Hindustan Zinc Ltd, headquartered in Udaipur, Rajasthan, India, has achieved the remarkable status of being the world's fifth-largest silver producer, as highlighted in the 2023 World Silver Survey by The Silver Institute. Since its inception in 2002, when it produced 41 tonnes, the company has steadily expanded its production capacity to reach 800 tonnes. In 2022, Hindustan Zinc Ltd produced an impressive 694 tonnes (22.2 million ounces) of silver. Notably, the company's silver refinery in Pantnagar, Uttarakhand, has earned recognition from the London Bullion Market Association (LBMA) and holds a place on the prestigious "London Good Delivery" list. The silver produced at Hindustan Zinc's refinery boasts an exceptional purity level of 99.99%, adhering to the stringent standards set by the LBMA.

Click to continue reading 5 Biggest Silver Mining Companies in the World.

Most Read from Bloomberg

Rio Tinto Group, the world’s largest iron ore producer, shipped its first cargo of the steelmaking ingredient from this spot in 1966, at the dawn of a boom that minted billionaires and lifted the Australian economy, generating A$1.3 trillion ($820 billion) in earnings in the past two decades alone. Last year, iron ore shipments accounted for about 5% of the country’s gross domestic product.

But now China is cooling, while steel producers are under pressure to clean up a sector that accounts for at least 7% of global greenhouse gas emissions, a change that will require new methods and higher-quality raw materials. Much of the dry, dusty Pilbara region’s gargantuan resource base may no longer make the grade.

Rio, BHP Group Ltd. and Fortescue Metals Group Ltd. produce almost two-thirds of the world’s seaborne iron ore from Western Australia, and margins remain enviable. For the first time in a generation, though, the specter of disruption looms over mining’s most reliable profit generator.

“Australia’s ore industry is now at the start of a long-term structural decline,” said Tom Price, a London-based analyst at Liberum Capital Ltd. “It’s a fundamental shift that will resonate across the Australian economy.”

The first, and most urgent, question is China, which accounts for about 85% of Australia’s export earnings from iron ore.

Demand for steel in the second-biggest economy has plateaued and production is on track to peak before the end of the decade, dented by a years-long crisis in China’s property sector, which has typically consumed more than a third of the country’s steel output. While there’s some growth in smaller segments like manufacturing of electric cars and air conditioners, the economy is no longer building at breakneck speed, meaning the nation’s iron ore imports are forecast to decline. Impact is inevitable, even if other emerging nations make up for some of China’s lost appetite.

Still, the more intractable long-term challenge for the Pilbara’s giants may well be a green one.

At least 70% of steel is produced today using a process that’s been deployed in much the same way since the 14th century: metallurgical coal is heated to create coke, which is then used in a blast furnace to melt iron ore at temperatures of more than 1800C.

It’s an energy-intensive activity and one that produces about two tons of carbon dioxide for each ton of liquid steel, according to Rio.

Global demand for steel is still rising, and will climb by as much as a quarter through 2050, as India and developing economies across Asia industrialize — but investor, consumer and climate pressure on one of the dirtiest corners of industry is growing. Governments are acting too, with policies like the European Union’s carbon border adjustment mechanism, that penalizes carbon-heavy imports.

Read more: What It Would Take to Make Steelmaking Greener: QuickTake

The trouble for big diggers is that there are few attractive alternatives. Existing lower-emissions options include the use of electric arc furnaces — a method that doesn’t require coal and uses recycled steel scrap in place of iron ore. A shaft furnace route, deployed in about 5% of steel production, needs high grade pellets with low levels of impurities.

Among the most favored prospective solutions is to combine a renewables-powered electric furnace with direct reduced iron, a material produced by deploying natural gas to remove oxygen from premium ores. Eventually replacing the gas with green hydrogen — created using solar or wind energy — could dramatically cut steel emissions.

But Australia’s typical iron ore has a grade of between 56% and 62%, making it largely unsuitable for DRI production — or only with additional processing that could add as much as 25% to costs, according to Wood Mackenzie Ltd.

“The premium for higher grade material is going to increase significantly,” said David Cataford, chief executive officer of Champion Iron Ltd., a competitor to Australian producers which supplies higher-grade iron ore from Canada. “If you’re producing lower grade, we do feel it’s going to be more complicated in the medium-term.”

The biggest miners say they already produce the better stuff. Vale SA, which ships higher-quality raw material from Brazil and expects to command a green premium in future, is among those eager to forecast a world that favors richer ores. But higher-grade production — with an iron content of 66% or more — currently makes up only about 3% of global supply, so the race is on to crank up output from projects like the expansive (and expensive) Simandou development in Guinea, in which Rio is an investor.

“There’s an obvious shortage if demand ramps up during the course of decarbonization,” said Liu Yinghao, technical director at the low carbon metallurgy innovation center of China Baowu Steel Group Corp., one of the world’s top steelmakers.

The shortfall in higher grade iron ore could be as much as 200 million tons a year by 2050, Wood Mackenzie estimated in a report this month — a volume roughly equivalent to about a fifth of China’s current annual imports.

To plug the gap and hold on to their position in the market, Australia’s iron ore producers are experimenting with everything from microbes to straw, in a series of trials aimed at making their materials suitable for greener steelmaking. BHP is studying use of carbon capture technology at conventional steel mills and has a pilot with Hatch Ltd. to build an electric smelting furnace — a method that adds an additional process step and holds potential to utilize lower-grade raw material.

“If we can crack the code on the Pilbara ores, that is potentially a game changer,” Tania Archibald, chief executive for Australian steel products at BlueScope Steel Ltd. — among 40 entities collaborating with Rio — told an investor day last month.

Billionaire Andrew Forrest’s Fortescue, meanwhile, has begun production of small volumes of high-quality magnetite ore at its Iron Bridge project in the Pilbara, and has tested a coal-free electrolysis method to convert ore to green iron.

Forrest sees potential to go further than that intermediate step, and to use Australia’s advantages in renewable energy for a low-carbon revival of a domestic steelmaking sector that saw output peak a quarter of a century ago.

“Australia has got everything going for it to make its own steel,” Forrest said earlier this month in Perth, citing the country’s solar and wind resources, and potential to produce green hydrogen. “The policies right now channel against doing that — and encourage offshore production.”

Steelmakers are positioning for that shift, including South Korean giant Posco, which aims to develop new industrial facilities in Port Hedland, the Pilbara’s export hub.

Few changes come fast in mining. Australia’s iron ore incumbents say they have sufficient time to make the technology breakthroughs or strategy shifts they need to continue to prosper.

“The transition away from coal-based steel making is a reality, but it will take some time and there remain significant uncertainties,” said Simon Farry, Rio’s head of steel decarbonization.

After all, traditional blast furnaces in Asia are relatively new — on average about 12 years old in China, compared to more than 40 years across the mostly wealthy nations in the Organisation for Economic Co-operation and Development — and will operate for decades more, according to BHP’s Chief Economist Huw McKay. “The age of capital stocks is a critical factor in assessing the energy transition,” he told Bloomberg Television in an Oct. 24 interview. India will likely to prioritize the need for affordable steel from existing processes, he said.

But several markets are already adapting quickly, including Japan, South Korea, and — to a more limited extent — China, as Vale said in a written response to questions. Iron ore’s No. 2 supplier is adding output tailored to direct reduction in Brazil, and developing hubs in locations including Saudi Arabia, the United Arab Emirates and Oman to produce materials from as soon as 2027 for future green steelmaking.

Australia’s mining industry has been caught out before by the pace of change. Back in the early 2000s, it struggled to keep up with China’s accelerating iron ore consumption. Now, the risk is repeating the error at the other end of the economic and green cycle.

“The world is going to decarbonize,” Vale said. “If we don’t act quickly, we could miss this opportunity.”

–With assistance from Yee Xing Ng "Liz", Jacob Lorinc, Mariana Durao, Thomas Biesheuvel and James McIntyre.

Most Read from Bloomberg Businessweek

(Bloomberg) — Australia’s accelerating shift from coal-fired power to clean energy is stoking volatility in its power markets and raising concerns for large businesses, according to BHP Group Ltd., the country’s most valuable company.

Most Read from Bloomberg

The main National Electricity Market, which covers about 80% of Australia’s demand, is experiencing the largest fluctuations in daily electricity prices globally, driven by issues including unplanned outages of coal plants and the integration of rooftop solar, according to Rystad Energy.

“It’s a nervous time to be a major consumer of electricity on that particular grid,” Huw McKay, BHP chief economist, said Tuesday in an interview with Bloomberg Television.

Following its acquisition of OZ Minerals Ltd., BHP is seeking to lift copper output from mines in South Australia, and wary over the unpredictability in the state’s energy system as work continues on constructing an interconnector linking the region to neighboring New South Wales, according to McKay. “We are anticipating a period of heightened volatility,” he said.

Read More: BHP Sees Squeeze for Global Copper Markets Later This Decade

South Australia had the country’s highest wholesale electricity prices in the three months to Sept. 30, averaging A$92 ($58) per megawatt hour compared to a national figure of A$63 per megawatt hour, according to the Australian Energy Market Operator.

Most Read from Bloomberg Businessweek

Teck Resources Limited TECK recently announced that its third-quarter 2023 steelmaking coal sales volumes have been impacted by the slower-than-expected supply-chain recovery following the wildfires in British Columbia, labor disruption at ports, and plant challenges.

Steelmaking coal sales volumes were 5.2 million tons in the third quarter compared with 5.6 million reported in the year-ago quarter. It also came in lower than the sales volume of 6.2 million tons in the second quarter of 2023. Volumes also fell short of the company’s guidance of 5.6 to 6.0 million tons for the quarter.

During its second-quarter conference call, Teck Resources had provided the guidance factoring in lower inventories at the end of the second quarter and planned maintenance shutdown activities at two of its operations during the third quarter.

The company had also stated that labor disruption at ports could impact its sales volumes in the third quarter. Teck Resources had thus anticipated a rise in transportation costs as it utilized its additional port capacity to deliver on customer commitments. The company, however, maintained its transportation cost guidance at 45-48 CAD per ton for the steelmaking coal segment in 2023. Teck Resources reported average realized steelmaking coal price of $229 per ton in the third quarter of 2023. This was lower than the steelmaking coal prices of $304 per ton in the third quarter of 2022 and $264 per ton in the second quarter of 2023. TECK expects to report provisional pricing adjustments of $23 million in its third-quarter results, which are scheduled to be reported on Oct 24, 2023.

In the second quarter of 2023, the segment reported sales of CAD$2.25 billion ($1.68 billion), reflecting a year-over-year slump of 39% due to the significant decline in steelmaking coal prices from the all-time highs in the same period last year. The segment reported a gross profit of CAD$1,100 million ($821 million) in the second quarter, which was down 57% from the second quarter of 2022.We expect the steelmaking coal segment’s sales to be around CAD $1.63 billion ($1.21 billion) in the third quarter of 2023. Compared with the sales of CAD $2.27 billion, the figure indicates a year-over-year drop of 28%.Teck Resources had earlier stated it is actively engaged in the divestment of the steelmaking coal business and is engaging with a number of potential suitors. The business is garnering interest due to its significant high-quality steelmaking coal reserves and stable demand outlook.Teck confirmed in June that it is engaging with Glencore GLNCY about their proposal regarding the steelmaking coal business. Glencore has offered about $8.2 billion to buy the business.In case this business is sold, TECK will be able to focus solely on the metals needed for the energy transition, such as copper and zinc. Teck Resources and other mining companies like BHP Group BHP and Rio Tinto plc RIO, among others, are trying to capitalize on the growing demand for copper, driven by electric vehicles, renewable energy and infrastructure investments.BHP has created a new copper province in South Australia following the acquisition of OZ Minerals in May 2023. The company is investing strategically in new ideas, technologies and countries through exploration and early-stage copper and nickel prospects to capture growth opportunities.Rio Tinto, in August 2023, had announced that it has formed a joint venture to develop the La Granja copper project in Peru. It is one of the largest undeveloped copper deposits in the world and will augment Rio Tinto’s copper portfolio.The company is also developing the Oyu Tolgoi project in the South Gobi region of Mongolia. It is one of the largest known copper and gold deposits in the world. When the underground mine is complete, it will be the fourth-largest copper mine in the world.

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For Immediate Release

Chicago, IL – October 20, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Visa Inc. V, AbbVie Inc. ABBV, BHP Group Ltd. BHP, Caterpillar Inc. CAT and Boston Scientific Corp. BSX.

Here are highlights from Thursday’s Analyst Blog:Top Research Reports for Visa, AbbVie and BHP

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Visa Inc., AbbVie Inc. and BHP Group Ltd. These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.You can see all of today’s research reports here >>>Visa shares have outperformed the Zacks Financial Transaction Services industry over the past year (+27.9% vs. +21.7%). The company’s numerous buyouts and alliances paved the way for long-term growth and consistently drove its revenues.Constant investments in technology are solidifying its position in the payments market. A shift in payments to the digital mode is a boon for Visa. The company's steady domestic volumes and transactions rise will aid its overall performance. A strong cash position enables it to boost shareholder value.However, high operating expenses stress its margins. Ramped-up client incentives will dent the top line. Its volumes are likely to see diminishing effects of the Russia-Ukraine conflict. As such, this stock warrants a cautious stance.(You can read the full research report on Visa here >>>)Shares of AbbVie have gained +8.7% over the past year against the Zacks Large Cap Pharmaceuticals industry’s gain of +27.8%. The company has several new drugs in its portfolio that have the potential to drive the top line to make up for lost Humira revenues. Skyrizi and Rinvoq have established outstanding launch trajectories bolstered by the approval in new indications.It has several early/mid-stage candidates that have blockbuster potential. However, there are concerns about long-term sales growth since Humira generics have entered the U.S. market. Increasing competition from newer therapies is hurting Imbruvica’s sales.Slowing consumer demand due to economic pressure is hurting the aesthetics franchise’s sales. Nonetheless, though revenues are expected to decline in 2023, AbbVie expects to return to robust sales growth in 2025. Estimate movements have been mixed ahead of Q3 results. ABBV reported impressive earnings surprise in recent quarters.(You can read the full research report on AbbVie here >>>)Shares of BHP have gained +25.4% over the past year against the Zacks Mining – Miscellaneous industry’s gain of +26.7%. Iron ore prices had earlier lost steam on weak demand in China. Hopes of a pickup in demand in China, owing to a fresh round of stimulus measures for new infrastructure projects, helped lift up prices lately.Going forward, iron ore prices will be supported by demand in the automotive sector, infrastructure and housing market. Copper and nickel prices will be fueled by demand for electric vehicles.BHP’s investment in projects with a focus on future–facing commodities like copper, nickel and potash will aid growth. Efforts to make operations more efficient through technology will drive earnings.(You can read the full research report on BHP here >>>)Other noteworthy reports we are featuring today include Caterpillar Inc. and Boston Scientific Corp.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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BHP Group and Japan’s Mitsubishi have agreed to sell two jointly owned steelmaking coal mines in Australia to Whitehaven Coal for up to $4.1 billion in cash. It’s a deal that shows there are still buyers for coal assets, despite worries over their carbon emissions. Higher-quality metallurgical coal is in demand for operations looking to reduce emissions.

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