The BHP Group Ltd (ASX: BHP) share price has seen plenty of action over the past five years, rising more than 40%. Hence, investors may be wondering what the ASX mining share may look like another five years from now.
BHP typically generates a large amount of its profit from its iron ore operations, so the latest development of China launching financial stimulus for its real estate and financial sectors is promising. China is by far the biggest user of iron ore because it's a key ingredient for steel.
In five years, the business may be quite different.
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What could change in five years?
One of the most noticeable changes for the business will be the list of commodities it produces.
The ASX mining share is currently working on a large potash project in Canada called Jansen, which is located approximately about 140km east of Saskatoon.
According to the miner, Jansen's large resource gives BHP the opportunity to develop the project in stages. On completion, Jansen stage 1 is expected to produce approximately 4.15mt of potash per annum, and the first production is expected in late 2026.
Approval of the Jansen stage 2 has increased planned production to approximately 8.5mt per annum, with further brownfield expansions up to 8mt per annum.
First production from Jansen stage 2 is targeted for FY29, followed by a three-year ramp-up period.
There could also be changes relating to iron ore for BHP shares. On average, I'm not expecting its iron ore earnings, or the iron ore price, to be as strong over the next five years as the last five years. Australian miners like BHP and Fortescue Ltd (ASX: FMG) are aiming to increase production, which could harm the iron ore price. The production from the huge, upcoming Simandou project in Africa could also be a headwind.
In five years, copper could be a much more important, or perhaps the most important, earnings generator for BHP. It has made large moves by acquiring OZ Minerals and Filo. There is also the prospect of the copper price rising if global electrification trends lead to copper demand rising faster than supply.
Earnings projections
FY29 is a long way away, and resource prices could change dramatically over that period, so it's difficult to forecast accurately.
However, broker UBS has given some projections for the 2029 financial year. The ASX mining share is projected to generate US$52.6 billion in revenue, US$18 billion in operating profit (EBIT), US$10.8 billion in net profit, and US$2.13 in earnings per share (EPS).
BHP is forecast to pay an annual dividend per share of US$1.28. At the current exchange rate and BHP share price, that forecast payment works out to be a grossed-up (with franking credits) dividend yield of approximately 6%.
Ultimately, as with most other businesses, what happens with the profit could play a huge part in the BHP share price.
