The BHP Group logo adorning the side of its global headquarters in Melbourne on February 21, 2023.
William West | Afp | Getty Images
Australian mining giant BHP optimistic China and India’s growth will boost demand for commodities, even as the company reported a sharp drop in half-year profits.
“We believe that Chinese growth and Indian growth will provide balance and support overall growth over the next six to 12 months, and beyond,” CEO Mike Henry told CNBC. “Street Signs Asia” on Tuesday.
In an earnings release, BHP said the long-term outlook for the company’s commodities “remains strong,” supported by population growth, rising living standards and metals needed for the energy transition, including steelmaking raw materials.
His comments came as the miner recorded a 16% drop in revenue in the six months ended December, from $30.53 billion to $25.71 billion. The company’s half-year profit came in at $6.46 billion, 32% lower than $9.44 billion in the same period a year ago.
BHP caused the decline in iron ore and copper prices. During the six-month period, the price of iron ore fell to $80.03 per metric ton on November 1 while copper reached $3.29 per pound on September 27.
BHP shares in Australia closed 0.33% lower on Tuesday.
Still, global miners are optimistic despite slow growth in the US and Europe.
“As we move into the second half, and then next year, we see momentum building in China, which is certainly a bode for the products that BHP manufactures,” Henry said.
The reopening and growth in China’s energy transition and automotive industry are driving demand for commodities like iron ore and copper, which are significant revenue streams for BHP.
Another investment opportunity
Elsewhere, miners are also looking at investment and growth opportunities with their South American and African partners.
“There are some South American countries, and African countries for that matter, that are aggressively chasing international capital, that have approached us – and others I’m sure – about trying to attract us to these countries to invest more and the same.” It offers attractive fiscal terms,” he said, without naming specific names.
He added that BHP is building a portfolio of growth options, particularly in undeveloped mining deposits.
“We have a few in South America [also] invest in Tanzania’s potentially large and excellent nickel resources as well.”
Henry said BHP is also monitoring its mining royalty bill in Chile, the world’s largest copper producer, and is also looking for growth opportunities there.