BHP Billiton: profit margin of 59% WAIO in the first half of 2021, Escondida copper production is a record.

Published: Feb 19, 2021 07:58 (GMT+8)
[BHP Billiton: a profit margin of 59 per cent WAIO in the first half of 2021 and record copper production at Escondida] the group's operating profit rose 17 per cent to US $9.8 billion. Profit before interest, tax, depreciation and amortisation for the current period (EBITDA) was $14.7 billion, with a profit margin of 59 per cent. The current operating performance was strong, with record production at both the Western Australian Iron Mine WAIO and the Escondida Escondida Copper Concentrator. The smooth commissioning of (Spence Growth Option), a production expansion project for Spence Copper Mine.

Maximize cash flow: strong operating performance and robust free cash flow with a profit margin of 59%

The current period's operating performance was strong, with the production of the Western Australian Iron Mine (WAIO) and the (Escondida) Copper Concentrator in Escondida both a record.

The group's operating profit increased by 17% to US $9.8 billion. Profit before interest, tax, depreciation and amortisation for the current period (EBITDA) was $14.7 billion, with a profit margin of 59 per cent. The annual unit cost guidance target for all major assets of the Group remains unchanged (calculated at the guiding target exchange rate).

Distributable profit was $3.9 billion (including a special loss of $2.2 billion, mainly due to the impairment of New South Wales thermal coal (NSWEC) and related deferred tax assets, as well as impairment charges for Colombia's Cerrej ó n thermal coal mine). Operating profit for the period was $6 billion, an increase of 16% over the same period last year.

Net operating cash flow reached $9.4 billion and free cash flow was $5.2 billion, reflecting rising iron ore and copper prices and the group's strong operating performance.

Capital allocation: the Spence copper mine expansion project (Spence Growth Option) went into production smoothly as planned, and the balance sheet remained strong.

Capital and exploration expenditure was $3.6 billion. As a result of the rise in the Australian dollar, we raised our guidance for fiscal year 2021 by US $300m to US $7.3 billion. The guidance for fiscal year 2022 remains unchanged at approximately $8.5 billion (at the target exchange rate).

The Group's four major projects under construction are progressing steadily as planned. (Spence Growth Option), the Spence copper mine expansion project, was successfully put into production in December 2020 as planned. The construction of the (South Flank) project in Nanpo Iron Mine is progressing smoothly and is scheduled to be put into production in mid-2021.

On the oil side, the Group completed the acquisition of an additional 28% interest in Shenzi Oilfield, an asset with high quality resources and growth potential.

In terms of exploration, we continue to expand our future-oriented commodities and increase our reserves for early-stage projects. We have signed an agreement to carry out nickel exploration in Canada and an option agreement for the (Elliott Copper Project) copper project in Elliott, Australia.

The group's balance sheet was strong, with net liabilities of $11.8 billion. Free cash flow remained strong throughout the first half of the fiscal year.

Value and return: the dividend hit an all-time high of $1.01 per share in the first half of the fiscal year. Return on capital (ROCE) increased to 24%.

The board decided to pay an interim dividend of $1.01 per share (a total of $5.1 billion), equivalent to 85 per cent of the current dividend yield.

We are divesting from the BHP Billiton third well Coal (BMC), New Wales Thermal Coal (NSWEC) and Colombia Cerrej ó n Thermal Coal projects as planned, and the Group is conducting extensive due diligence to assess spin-off and sale opportunities.

The return on capital ((ROCE)) for the current period increased further to 24%.

Han Murui (Mike Henry), chief executive of BHP Billiton, said:

In the first half of 2021, BHP Billiton achieved a series of strong results. Thanks to continued solid operating performance in the first half of the fiscal year, the production of Western Australian Iron Mine (WAIO) and the processing capacity of the (Escondida) Copper Concentrator in Escondida both set a record.

The group's operations generated strong cash flow, the return on capital increased to 24%, our balance sheet remained strong, and our net debt was at the lowest of the target range. The board declared a record semi-annual dividend of $1.01 a share. So far, BHP has returned more than $30 billion to shareholders over the past three years.

I would like to thank all the employees and contractors of BHP Billiton for their perseverance and perseverance in the face of the epidemic. At the same time, I would also like to sincerely thank all sectors of the community, suppliers, customers, the government and the aborigines of the mining area for their long-term support. Their efforts and efforts are the cornerstone of BHP's strong performance.

In the first half of the fiscal year, the value of the group's business increased further. We have realized the smooth commissioning of (Spence Growth Option), a production expansion project for Spence copper mine, and completed the acquisition of additional rights and interests in Shenzi oilfields. The Group's major projects in the areas of iron ore, oil and potash are also progressing smoothly as planned.

Future-oriented commodities remain a priority for BHP Billiton, and we will create and acquire more project options. In the nickel and copper business, we have established and expanded new partnerships, completed new mining rights acquisitions, and made steady progress in exploration.

We remain optimistic about the prospects for global economic growth and commodity demand. Across the world's major economies, policymakers have shown a strong determination to promote growth and an ambitious vision to combat climate change. These factors, coupled with population growth and rising living standards, will continue to drive demand for energy, metals and fertilizer products.

Our leadership team is poised to lead the group towards the goal of safer, lower cost and higher productivity. BHP Billiton is maintaining good momentum, and our portfolio provides the world with indispensable resource products to help the world move towards a cleaner and more prosperous tomorrow, while generating sustainable returns for our shareholders. continue to create important value for the community.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or for more information, please contact: lemonzhao@smm.cn
For more information on how to access our research reports, please contact:service.en@smm.cn
Related News
KGHM and South32 launch US$725m Sierra Gorda expansion, lifting copper capacity 26%
7 hours ago
KGHM and South32 launch US$725m Sierra Gorda expansion, lifting copper capacity 26%
Read More
KGHM and South32 launch US$725m Sierra Gorda expansion, lifting copper capacity 26%
KGHM and South32 launch US$725m Sierra Gorda expansion, lifting copper capacity 26%
KGHM and South32 have broken ground on a fourth grinding line at the Sierra Gorda copper-molybdenum mine in Chile's Atacama region. The US$725 million expansion runs for three years from January 2027, with completion by late 2029 and full output in H2 2030. Ore processing capacity rises 26%, from 131,000 tonnes per day to 165,000 tpd. Annual copper output is projected to climb from 165,000 tonnes in 2025 to 195,000 tonnes, with 6,000 tonnes of molybdenum, 58,000 ounces of gold and 1.7 million ounces of silver as by-products. The project creates over 900 direct jobs and is funded from operating cash flow and debt. Unit operating costs are expected to fall about 10%.
7 hours ago
Emerita Extends Final Review of Iberian Belt West PFS, Release Expected in Coming Weeks
8 hours ago
Emerita Extends Final Review of Iberian Belt West PFS, Release Expected in Coming Weeks
Read More
Emerita Extends Final Review of Iberian Belt West PFS, Release Expected in Coming Weeks
Emerita Extends Final Review of Iberian Belt West PFS, Release Expected in Coming Weeks
Emerita Resources has provided an update on the Preliminary Feasibility Study (PFS) for its Iberian Belt West polymetallic project in Spain, saying the study is well advanced but remains under final technical review.​ The company said the review process has been expanded to include additional technical and quality-assurance oversight before publication. As a result, Emerita now expects the PFS to be released in the coming weeks rather than within the previously indicated timeframe.​ Iberian Belt West hosts copper, zinc, lead, gold and silver mineralization and is one of Emerita’s principal development-stage assets in Spain. The PFS is expected to provide updated detail on the proposed mine plan, processing configuration, capital requirements, operating costs and project economics.​ Emerita said the additional review work is intended to ensure consistency and completeness across the technical disciplines contributing to the study before it is finalized.​ The company did not announce a revised specific publication date, and no new production, capital or economic figures were disclosed in the latest update.​ The extended review delays the next major technical milestone for Iberian Belt West, but the company continues to indicate that the PFS is nearing completion. For the copper market, the significance of the study will depend on the production profile and project economics ultimately disclosed, particularly the contribution of copper relative to the project’s other payable metals. Attention will therefore remain on the timing of the PFS release and whether the final study materially changes the project’s development outlook.
8 hours ago
Cascadia Intersects 75.55 m at 1.19% Cu at Carmacks Copper-Gold Project
9 hours ago
Cascadia Intersects 75.55 m at 1.19% Cu at Carmacks Copper-Gold Project
Read More
Cascadia Intersects 75.55 m at 1.19% Cu at Carmacks Copper-Gold Project
Cascadia Intersects 75.55 m at 1.19% Cu at Carmacks Copper-Gold Project
Cascadia Minerals has reported additional drill results from its 2026 exploration programme at the Carmacks copper-gold project in Yukon, Canada, with new step-out drilling extending mineralization at Zone 2000S beyond the boundaries of the existing Mineral Resource.​ Drill hole CD-26-058 returned 75.55 metres grading 1.19% copper, 0.97 g/t gold, 10.4 g/t silver and 335 ppm molybdenum, equivalent to 2.18% copper-equivalent. The interval included 48.66 metres grading 1.61% copper, 1.39 g/t gold, 15.1 g/t silver and 475 ppm molybdenum, equivalent to 3.03% CuEq.​ Within the same hole, a higher-grade interval of 14.50 metres returned 2.30% copper, 2.68 g/t gold, 29.5 g/t silver and 1,015 ppm molybdenum, equivalent to 5.08% CuEq.​ A second hole, CD-26-059, intersected 93.99 metres grading 0.96% copper, 0.70 g/t gold, 4.6 g/t silver and 919 ppm molybdenum, equivalent to 1.94% CuEq. This included 63.97 metres at 1.26% copper, 0.96 g/t gold, 6.3 g/t silver and 1,049 ppm molybdenum, equivalent to 2.52% CuEq.​ Cascadia said the latest results continue to expand mineralization at Zone 2000S beyond the limits of the current Mineral Resource and highlight the higher-grade nature of the extension. The reported drill intervals represent drilled thicknesses, with true widths estimated at approximately 60–70%.​ The latest step-out results indicate that copper-gold mineralization at Zone 2000S extends beyond the boundaries of the current Carmacks Mineral Resource. The broad intervals and higher-grade internal zones could support future resource expansion if additional drilling confirms continuity. However, the new intersections have not yet been incorporated into an updated Mineral Resource Estimate, meaning their ultimate impact on project scale and mine planning remains to be determined.
9 hours ago