BHP profit beats forecasts as copper tops iron ore earnings for first time

By Sameer Manekar and Melanie Burton

MELBOURNE, Feb 17 (Reuters) - BHP Group BHP.AX reported a stronger-than-expected half-year underlying profit driven by its copper division, which for the first time surpassed iron ore to contribute more than half of the top global miner's earnings.

BHP's shares jumped 7% to an all-time high, with investors applauding a much stronger-than-expected dividend and the prospect of sizeable payouts ahead.

The strong result in copper comes as demand for the red metal is surging driven by rapid growth in power use for AI data centres and the shift to cleaner energy, which is spurring competition among mining majors for high‑quality copper assets.

BHP, the world's top copper producer, highlighted its own copper growth options and played down the need for acquisitions, having walked away last year from an approach to buy Anglo American AAL.L.

First-half underlying attributable profit rose 22% to 6.20 billion, beating the Visible Alpha consensus of $6.03 billion. BHP declared an interim dividend of 73 cents per share, ahead of market estimates of 63 cents, representing a payout ratio of 60%.

"It was a good result," said Andy Forster, portfolio manager at Argo Investments, a BHP shareholder. "They smashed everyone’s expectations from a dividend perspective.”

Copper, including byproducts such as gold, contributed $7.95 billion to BHP's operating earnings in the six months ending December 31, higher than iron ore's $7.50 billion and making up 51% of the group's total underlying operating earnings of $15.46 billion.

That was largely driven by a 32% jump in realised prices for copper, along with soaring prices for the precious metals produced as a byproduct. A record first-half iron ore production alongside higher prices also boosted the miner's profits.

BHP Chief Executive Officer Mike Henry said on a media call given its organic growth options, it did not feel any burning need to pursue mergers and acquisitions for copper growth.

Rio Tinto RIO.AX, the world's largest iron ore producer, was in talks to buy Glencore GLEN.L, a deal that would have had major implications for the global copper sector, but walked away citing disagreement over valuation.

BHP lifted its 2027 copper production outlook for Escondida in Chile to between 1 million and 1.1 million tons, citing strong operational performance and ongoing mine plan and productivity improvements at its biggest copper project.

Henry said "tough negotiations" with China over iron ore supply continued as the state buyer, CMRG, tries to extract better terms for Chinese steelmakers. He expressed confidence that the issues will be resolved, although it will take time.

In addition, the miner announced a silver streaming agreement with Wheaton Precious Metals WPM.TO for an upfront payment of $4.3 billion at completion, to deliver silver from its share of output at Peru's Antamina mine.

That payment is part of a targeted $10 billion that BHP aims to raise from existing assets, which could help boost its dividend payout for the full year, Henry said.

Separately, Miner Vicuna Corp, controlled by BHP and Canada's Lundin Mining LUN.TO, announced an $18 billion multi-year investment plan to develop copper, gold, and silver mining projects in northern Argentina.