(Bloomberg) — BHP Group Ltd., the world’s biggest miner, missed analysts’ forecasts as its full-year profit slumped, with China’s struggling economy weighing on demand for iron ore and other commodities.

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Twelve months after posting its highest-ever profit as prices soared, the deteriorating economic outlook in the world’s biggest metals consumer has seen BHP’s earnings from iron ore, copper, coal and nickel recording double-digit percentage declines. Inflation, particularly in labor costs, also put pressure on profits, the company said Tuesday.

BHP’s plunging earnings mirror those posted by iron ore rival Rio Tinto Group last month, with miners holding their breath for an upswing in China’s economy since Beijing abandoned “Covid Zero” restrictions last November.

A slew of recent data suggest steel and iron ore demand could contract for the rest of the year, with the Chinese property market still in a trough, and authorities are unwilling to encourage massive building despite the slowdown reflected in July’s industrial output.

Read More: Solving China’s Steel Demand Mystery: Energy Daily

China’s near-term outlook was “contingent on the effectiveness of recent policy measures,” Chief Executive Officer Mike Henry said in a statement Tuesday, adding he expected “buoyant growth in India with strong construction activity underpinning an expansion in steelmaking capacity.”

BHP’s underlying attributable profit from continuing operations fell to $13.4 billion in the 12 months to June 2023, the Melbourne-based company said in a regulatory filing. It will pay a final dividend of 80 cents per share, compared with $1.75 the year before.

Still, BHP said it expects China steel production to reach more than 1 billion tons this calendar year, as it did last year. But in the medium term, “China’s demand for iron ore is expected to be lower than it is today as it moves beyond its crude steel production plateau and the scrap-to-steel ratio rises,” it said in the report.

Henry said on a media call Tuesday that he expected China’s economy to “pick up toward the back end of this year.” New-start property development was the biggest drag on steel demand, but “there’s many parts of the Chinese economy that are actually running quite well,” including green technology and the automotive sector.

BHP has put “future facing commodities” copper, nickel and potash at the center of its growth plans, driven by population growth, urbanization and the clean energy transition. Henry said capital expenditure would increase to around $10 billion in the current financial year, up from $7.1 billion last year, as the company invests more in these minerals.

The miner said it’s studying increasing annual iron ore production from its Australian operations to 330 million tons a year, up from 257 million tons now. BHP gave no update on the progress of the sale of two coal mines in Australia’s Queensland state.

(Updates with steel production forecast in seventh paragraph; iron ore expansion plans in ninth)

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