Today BHP Group Ltd [ASX:BHP] released their half-year results ending 31 December 2020. BHP is a global miner producing commodities like iron ore and copper.
BHP benefits from higher iron ore prices
BHP has reported a net profit of US$6 billion before write-downs, an increase of 16% from the same period last year.
The increase in profit came from more production and higher iron ore and copper prices.
The company hit record production in Western Australia and record concentrator throughput at their copper mine in Chile, Escondida.
Average realised prices for the first half of the year was US$3.32 per pound of copper compared to US$2.60 in the December half of last year. For iron ore, the company got US$103.78 per wet metric tonne, up from the US$78.30 they got in the comparable period.
Iron ore prices have been high on the back of strong demand from China and the fact that Brazilian iron ore producer Vale has had issues with production.
However, when accounting the write-downs, BHP’s attributable profits are down to US$3.9 billion, a 20% decrease from the US$4.9 billion it got at the same time last year.
BHP had to write-down US$2.2 billion that came mostly from its coal assets in New South Wales along with pandemic costs and tax losses.
BHP is looking to get rid of their thermal coal mines. As they said in their FY20 report, ‘coal power is expected to progressively lose competitiveness to unsubsidised renewables on a new build basis in the developed world and in China.’
What’s next for the BHP share price?
The BHP share price is up 2.6% today at time of writing, trading at $46.93.
BHP will be paying investors a record interim dividend of US$1.01 a share, up from the 65 US cents in the same period last year.
Higher iron ore prices have also helped push the Aussie dollar higher. So far in the last 12 months the Aussie dollar has increased 16% against the US dollar.
How will the Aussie dollar move next?
Check out our latest report ‘Will the Aussie Dollar Rise or Fall in 2021?’, where Rum Rebellion Editor Greg Canavan explores this question in depth.
To download this free report, click here.