BHP (ASX:BHP) share price in focus after strong FY 2021 performance

The BHP Group Ltd (ASX: BHP) share price is one to watch closely today. This follows the release of the…

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The BHP Group Ltd (ASX: BHP) share price is one to watch closely today.

This follows the release of the mining giant’s fourth quarter and full year update this morning.

How did BHP perform in FY 2021?

For the 12 months ended 30 June, BHP achieved record production at Western Australia Iron Ore (WAIO) and Goonyella. Also performing strongly was its Olympic Dam operation, which achieved both the highest annual copper production since its acquisition in 2005 and the highest gold production ever for the operation.

Over at Escondida, BHP maintained average concentrator throughput at record levels despite a challenging operating environment in Chile as a result of impacts from COVID-19.

This led to iron ore production of 235.5Mt, petroleum production of 102.8MMboe, and copper production of 1,635.7kt. Iron ore and copper were in line with guidance, whereas petroleum was slightly above guidance for FY 2021.

Positively, BHP enjoyed strong pricing during the year and looks set to report bumper free cash flow in August.

It revealed that its average petroleum price received increased 6% to US$52.56 per barrel, copper rose 52% to US$3.81 per pound, and iron ore increased 69% to US$130.56 per wmt.

Management commentary

BHP’s Chief Executive Officer, Mike Henry: “This strong performance is a reflection of the capability and commitment of our employees and contractors, the strength of our systems and the support of our business partners.”

“We achieved production records at our Western Australia Iron Ore operations and the Goonyella Riverside metallurgical coal mine in Queensland. We maintained all-time high concentrator throughput at our Escondida copper mine in Chile. Olympic Dam in South Australia had its highest annual copper production since BHP acquired the asset in 2005, and its best-ever gold production,” he added.

Mr Henry appears confident on the future, particularly given recent operational milestones.

The CEO commented: “South Flank, the largest and one of the most technically-advanced iron ore mines in Australia, began production in May and will boost the overall quality of BHP’s iron ore product suite. In the same month, the Ruby project in Trinidad and Tobago started production. Atlantis Phase 3 in the Gulf of Mexico and the Spence expansion in Chile began production in the first half of the year. BHP is in great shape.”

“Our operations are performing well, we continue our track record of disciplined capital allocation, and our portfolio is positively leveraged to the megatrends of decarbonisation, electrification and population growth,” he concluded.

FY 2022 guidance

Looking ahead, BHP’s guidance for FY 2022 is for relatively flat production across its key commodities.

Iron ore is expected to be 249Mt to 259Mt, representing a 2% decline to 2% increase on FY 2021.

Copper is expected to be between 1,590kt to 1,760kt, which will be a 3% decline to 8% increase year on year.

And finally, petroleum is forecast to be 99MMboe to 106MMboe, which represents a 4% decline to 3% increase.

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