BHP delivered record iron ore volumes and stable copper production of around 2 million tonnes in FY26, underpinned by disciplined cost control and a robust growth pipeline including the Ministers North project.
- Record 265 Mt iron ore production with Ministers North project approved
- Copper output steady at ~2 Mt despite grade declines and operational challenges
- Strong cost management amid inflation and supply chain pressures
- Strategic partnerships and leadership changes bolster growth plans
- FY27 production guidance remains solid across key commodities
Record Iron Ore Production Anchors FY26 Performance
BHP pushed iron ore production to a new high of 265 million tonnes in the fiscal year ended June 2026, edging up 1% on the prior year. Western Australia Iron Ore (WAIO) operations delivered record output, supported by strong supply chain execution and operational improvements such as the Car Dumper 3 rebuild and enhanced rail network efficiency. The newly approved Ministers North project, expected to add around 20 Mtpa from FY29, signals a strategic commitment to sustaining and growing iron ore volumes in the Pilbara. This project passed its Definition Phase Study and feasibility hurdles with positive economics, underpinning BHP’s long-term iron ore supply ambitions.
Copper Production Steady Despite Ore Quality Challenges
For the second consecutive year, BHP produced approximately 2 million tonnes of copper, maintaining a leading position in the global copper market. Escondida, the company’s flagship copper mine in Chile, saw a 3% production decline due to lower feed grades but offset by operational enhancements including reagent innovations and higher concentrator throughput. Spence faced ongoing challenges processing complex ore and lower feed grades, prompting sanctioning of a flotation circuit upgrade and sulphide leaching project, both expected to come online by FY28 to improve recoveries. Copper South Australia recorded a 2% production increase, driven by Olympic Dam’s 20-year record copper output and strong performance at Prominent Hill and Carrapateena, despite a recent conveyor belt failure causing an expected eight-week production impact.
Cost Discipline and Financial Highlights Amid Inflationary Pressures
In a challenging macroeconomic environment marked by inflation, higher diesel prices, and global supply chain disruptions, BHP managed to keep unit costs within or near the bottom end of guidance ranges across its copper assets, WAIO iron ore, and coal operations. This reflects strong operational control and benefits from by-product credits. The company expects FY26 unit costs at Escondida, Spence, and Copper SA to be at the bottom end of guidance, while BMA coal costs trend towards the top end. Financially, BHP anticipates higher depreciation and amortisation charges (~US$450 million) and impairment charges related to the Jansen potash project (~US$2.3 billion). The Samarco dam failure continues to impact cash flows and provisions, with related payments and settlements ongoing.
Strategic Partnerships and Leadership Changes Support Growth
The year saw significant leadership updates, with Brandon Craig taking the helm as CEO and a refreshed Executive Leadership Team announced. Jessica Farrell assumed regional presidency roles for North and South America, while Geraldine Slattery’s remit expanded to include Copper South Australia. On the board, Mark Vassella joined as a Nonexecutive Director. Strategically, BHP advanced its US copper footprint through a transaction with Faraday Copper Corp, exchanging its San Manuel asset for a 30% stake in Faraday, expected to close in early FY27. Additionally, a memorandum of understanding with Sierra Gorda SCM aims to enhance operational efficiencies at adjacent Chilean copper mines. The trial of battery-electric haul trucks at WAIO in collaboration with Rio Tinto and Caterpillar marks a notable step towards reducing greenhouse gas emissions in mining operations.
Outlook and Production Guidance for FY27
BHP’s production guidance for FY27 remains robust, projecting copper output between 1.65 and 1.8 million tonnes, iron ore between 260 and 272 million tonnes, and coal volumes steady or slightly higher. The company anticipates a decline in copper grades at Escondida and Spence but expects the upcoming concentrator upgrades and leaching projects to mitigate these impacts over time. Iron ore growth is supported by the Ministers North project ramp-up and ongoing operational improvements. Coal operations, particularly BMA, plan to increase raw coal inventories to buffer supply chain risks. The company also flagged an expected eight-week production impact at Carrapateena due to conveyor belt replacement and planned refinery maintenance in H1 FY28.
Bottom Line?
BHP’s FY26 operational strength and strategic investments position it well for sustained commodity demand, though grade declines and project execution risks warrant close attention.
Questions in the middle?
- How will the Spence concentrator upgrade and sulphide leaching project impact copper recoveries and costs post-FY27?
- What are the potential financial and operational implications of the Jansen project impairment for BHP’s potash ambitions?
- To what extent can BHP’s adoption of battery-electric haul trucks at WAIO accelerate its emissions reduction targets?