BHP shares fell almost 5 per cent on Thursday and kept sliding on Friday, after the miner reported record West Australian iron ore output for the year to June 30 and the market looked straight past it, to a copper downgrade and the first strike at Port Hedland in 26 years.
The operational review, released Thursday morning, had the numbers a mining company wants to print. Western Australia Iron Ore produced about 290 million tonnes on a 100 per cent basis, an all-time high. Copper came in around two million tonnes for the second consecutive year, with June-quarter production of 491,900 tonnes just ahead of consensus. "We finished the year strongly, delivering safe and reliable operations while setting several performance records across the business," chief executive Brandon Craig said, noting copper prices about 35 per cent higher than a year earlier.
The guidance told a different story. BHP's forecast for the 2027 financial year implies copper production falling roughly 12 per cent, driven by a grade cliff at Escondida in Chile, where ore fed to the mills is expected to drop from 0.90 per cent copper to about 0.70. Guidance for its South Australian copper operations came in below consensus, a miss RBC called out in its note on the result. Morgans held its rating with a $59.80 price target; Macquarie sat at neutral.
Hours after the release, about 200 operators and maintenance workers walked off the job at Port Hedland, the first strike at BHP's iron ore export hub since 2000. The Combined BHP Ports Unions stopped work for eight hours from 2pm local time, after five hours of talks facilitated by the Fair Work Commission failed on Tuesday. The unions are seeking rises of about $25,000 a year, arguing port crews earn up to $40,000 less than equivalent roles at the company's South Flank and Mining Area C operations. "For eight months this company has stonewalled and gaslit the people whose labour generated $15 billion in profits last year," Electrical Trades Union WA secretary Adam Woodage said. BHP said it has "tabled a draft agreement which includes a 16% pay increase over four years for the majority of employees, improved allowances and simplified pay structures". Talks resume Monday.
The stakes are not small. Port Hedland moved 575 million tonnes last year, more than any bulk export terminal in the world, and Singapore iron ore futures rose to US$102 a tonne on the strike news, their highest since July 2. BHP also confirmed a US$900 million investment in Ministers North, a high-grade deposit near its Yandi hub, targeting first ore in the 2028-29 financial year and about 20 million tonnes a year at full rate.
Rio Tinto's numbers this week made the same point from the other direction. Its Pilbara shipments of 85.3 million tonnes for the June quarter were its best in six years, up 7 per cent on a year earlier, and it still guided full-year shipments to the lower end of its range. The Pilbara machine has rarely run better. The market is paying for what comes next, not what just shipped.
The selling spread on Friday. The ASX 200 fell about half a per cent from Thursday's 8,840.7 close, its steepest drop in more than two weeks, with the materials sector down about 3 per cent and gold miners harder hit. Energy went the other way, Woodside gaining 3.3 per cent with Brent crude holding above US$84 on the Hormuz conflict. The next tests arrive quickly: strike talks at Port Hedland on Monday, and BHP's full financial results on August 18.
