• Production Growth: Over 5% increase in major commodities production, excluding divestments and suspensions.

• Unit Cost Reduction: Close to 4% reduction in unit costs for major assets.

• Inflation Impact: Almost a 4% inflation headwind, successfully overcome.

• Interim Dividend: USD 0.50 per share.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• BHP Group Ltd (NYSE:BHP) reported a strong operational and financial performance for the December 2024 half-year, with a production increase of over 5% in major commodities.

• The company achieved a close to 4% reduction in unit costs for major assets, overcoming a 4% inflation headwind.

• BHP Group Ltd (NYSE:BHP) declared an interim dividend of USD0.50 per share, reflecting strong underlying operational performance.

• The company is advancing attractive organic growth projects, including a joint venture with Lundin Mining in Argentina for a significant copper discovery.

• BHP Group Ltd (NYSE:BHP) is well-positioned with strong demand for its products, supported by early signs of recovery in China, resilient US economic performance, and strong growth in India.

Negative Points

• BHP Group Ltd (NYSE:BHP) faces challenges in mergers and acquisitions (M&A) due to market circumstances, making it difficult to find value in large global deals.

• The company has not yet provided a timeline for the CapEx announcement or investment decision on the Waikuna project.

• BHP Group Ltd (NYSE:BHP) is cautious about the iron ore market, anticipating a contracting market towards the end of the decade due to plateauing Chinese steel demand.

• The nickel market remains uncertain, with BHP Group Ltd (NYSE:BHP) suspending operations and planning to review the decision to restart in early 2027.

• The company is dealing with ongoing legal challenges related to the Samarco disaster, with claimants in the UK case and potential liabilities still unresolved.

Q & A Highlights

Q: Can you provide an update on the timing for the Waikuna project, including CapEx announcements and investment decisions? A: We haven’t specified exact timings yet, but we plan to provide resource updates and outline key milestones, including potential FID completion, in the first half of the year. – Mike Henry, CEO

Q: How does BHP view M&A opportunities given current market conditions? A: M&A is challenging due to market circumstances, and our focus remains on organic growth, particularly in copper and potash. We are committed to delivering on our existing projects. – Mike Henry, CEO

Q: Does the medium-term CapEx guidance include the Escondida recapitalization? A: Yes, the $10 billion to $11 billion per year guidance includes Escondida recapitalization but excludes future nickel CapEx and certain other projects. – Mike Henry, CEO

Q: What gives you confidence in ramping up copper production in South Australia given past underperformance? A: Improved performance at Olympic Dam, investment in asset integrity, and synergies from consolidating assets give us confidence in future growth. – Mike Henry, CEO

Q: Do you see the market needing an extra 25 million tonnes of iron ore with the Way 330 expansion? A: We don’t see a need for more tonnes due to plateauing Chinese demand, but we are evaluating the potential returns from expanding our best-performing asset. – Mike Henry, CEO

Q: Will the nickel asset be put up for sale in the near term? A: We are optimistic about the nickel market’s potential improvement but will review the decision to restart in early 2027. – Mike Henry, CEO

Q: Is the current net debt target range still appropriate given potential growth phases? A: We believe a firm net debt range is the best metric for ensuring a robust balance sheet and disciplined capital allocation. – Mike Henry, CEO and Vandita Pant, CFO

Q: Are there concerns about time slippage or cost implications for the Jansen project? A: No concerns, as we have a well-defined contract with West Shore, and the project is progressing well. – Mike Henry, CEO

Q: How low do you think iron ore prices can go in the next 5 to 10 years? A: Prices could be pressured by new supply, but we focus on being at the low end of the cost curve and improving product quality to maintain resilience. – Mike Henry, CEO

Q: Can you provide an update on the Samarco UK class action and other legal matters? A: Our position remains that the Brazilian system is the most appropriate recourse for claimants, and some have migrated to it for faster resolution. – Mike Henry, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.