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BHP brings in US$25.7 billion in 6 months, but continues to complain about royalties

March 1, 2023

BHP brings in US$25.7 billion in 6 months, but continues to complain about royalties

It’s that time of year again. The world’s major mining and resource companies are revealing exactly how much money they’ve been able to add to their coffers over the past six months – or over the past year, for those operating with a January to December financial year. One announcement that has been generating a lot of news coverage is the BHP half-year results for July to December 2022.

BHP turned a profit of US$6.6 billion in the space of just six months, with revenue for the period surpassing US$25 billion. Remove last year’s stratospheric result (which was helped by extraordinary prices for hard coking coal), and BHP profits over the past few years remain on a consistent upward trajectory. While BHP’s average sale price for metallurgical coal has dropped about 37% since the first half of 2022, average thermal coal prices soared to US$354.30/t.

Australian coal continues to be a consistent money-spinner within the BHP portfolio. Revenue for BMA’s Queensland metallurgical coal mines was US$3.6 billion, leading to a cash profit of US$1.4 billion and a margin of 40%. Mt Arthur thermal coal fetched more than US$2bn in revenue, supporting a cash profit of US$1.3 billion and a margin of 62%. In fact, profits for the NSW Energy Coal unit were up 175% on the second half of 2021.

Meanwhile, iron ore revenue was US$11.8 billion, and it achieved as cash profit of US$7.6 billion on a very healthy 65% margin. While iron ore prices were down substantially compared to last year, solid earnings were assured due to a record half-year production result.

BHP has also made headlines, announcing that it will sell two of its Queensland mines, Blackwater and Daunia. This decision aligns with BHP’s broader plans to diversify away from coal assets over the long term, and comes after recent divestments of its interest in the BMC coal mines and Cerrejón in Colombia.

But BHP is not ready to let this reality stand in the way of a good media beat-up. It’s prepared to take every opportunity to complain about any government decision which dares curtail its windfall profits. Whether it’s a new royalties regime in Queensland, or a coal reservation scheme in New South Wales, any imposition in support of the public good is being used to cover the tough decisions that BHP was always more than willing to make anyway. And CEO Mike Henry has been quick to reaffirm BHP’s commitment to its six other Queensland coal mines, which produce some of the highest quality coking coal in the world.

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