BHP Group Limited (NYSE:BHP), the leading global mining firm, has delivered an operational update. For the fiscal year ended June 30, 2026, the company said Western Australia Iron Ore (WAIO) set a production record, while group copper output reached 1.95 million tons.
However, the update points to a tougher operating environment for the new CEO, Brandon Craig. BHP is facing declining ore grades, processing challenges, unplanned equipment failures, labor tensions and rising capital pressure, including a $2.3 billion impairment on the Jansen potash project in Canada.
Stronger commodity prices cushioned the year, but the next phase looks more difficult. Lower near-term volumes, tighter cost discipline, and a growing need to accelerate copper growth options in the US and Argentina.
BHP Benefits From Higher Copper and Iron Ore Prices
The first issue is price versus volume. Copper has performed exceptionally well over the past quarters, and average realized copper prices have risen to $5.74 per pound. Iron ore prices were also firmer, with WAIO realizing $84.56 a wet metric ton for the year, up 3%.
The prices helped offset operational softness, as copper production fell 5% year-on-year, while iron ore declined 3% in the same period.
BHP said fiscal 2026 unit costs should land at the bottom end of guidance for copper, within range for WAIO and toward the top end for BMA coal, as Craig’s early plans point to cost controls.
Falling Production, Reduced Guidance, Strike Risks
The sharper concern is fiscal 2027 guidance. BHP expects group copper output to fall to between 1.65 million and 1.8 million tons, down from 1.95 million tons in fiscal 2026.
The main reason is the flagship Escondida operation in Chile, where concentrator feed grade fell to 0.90% in fiscal 2026 from 1.02% a year earlier and is expected to drop further to about 0.70% in fiscal 2027.
Spence, another Chilean operation, is under pressure due to complex hypogene ore processing and lower stacked feed grades. Meanwhile, an unplanned underground conveyor belt failure in South Australia’s Carrapateena could cause up to 8 weeks of mine production impact.
BHP’s iron ore engine is not without risk either. The Pilbara supply chain is at risk, as roughly half of 450 workers at the Port Hedland export terminal went on an eight-hour strike today.
It was the first industrial action in the region’s mining sector in decades, as workers protested pay erosion and inconsistent individual employment contracts. According to the Financial Times, the negotiations are set for July 21.
US Plans and Argentina Guidance
With issues in Chile and Australia, BHP’s actions in the US and Argentina are gaining in importance. So far, the firm has offloaded the legacy San Manuel asset in Arizona, gaining a 30% fully diluted equity stake in Faraday Copper. It continues to hold interests across the broader Arizona district, including Resolution and Globe-Miami.
Meanwhile, Vicuña, a world-class project in Argentina, received approval under the RIGI incentive regime for the Josemaría and Filo del Sol deposits, securing a 40-year fiscal framework. The project remains on track for a Stage 1 final investment decision in calendar 2026.
BHP Price Action
BHP Price Action: BHP Group shares were down 3.12% at $82.81 during premarket trading on Thursday, according to Benzinga Pro data.
Photo by T. Schneider via Shutterstock
