BHP Group Ltd (ASX: BHP) shares are down 1.4% to $41.40 while the S&P/ASX 200 Index (ASX: XJO) is up 0.4% today.
In FY25, BHP Group produced record total attributable iron ore production of 263 million tonnes (Mt), up 1% on FY24.
BHP said lower iron ore prices contributed to a 26% decline in underlying group profit to US$10.2 billion for FY25.
Investors were unperturbed by this, with BHP shares rising 1.6% on the day of the report.
The miner got an average realised iron ore price of US$82.13 per wet metric tonne in FY25, down 19% from US$101.40 in FY24.
BHP's iron ore division produced underlying EBITDA of US$14.4 billion in FY25, down 24% largely due to lower commodity prices.
The division's underlying EBITDA margin was 63%.
Iron ore represented 53% of BHP's total underlying EBITDA of US$26 billion in FY25 (down 10% on FY24).
Looking ahead, the miner has guided total FY26 iron ore production of between 258 Mt and 269 Mt in total.
BHP produces iron ore through its Western Australia Iron Ore (WAIO) business and part-ownership in the Samarco project in Brazil.
BHP says WAIO has been the world's lowest-cost major iron ore producing business for six years.
Outlook on iron ore price
BHP CEO Mike Henry describes demand as "resilient", with China still buying plenty of Australian iron ore despite a weaker economy.
In its report, BHP said:
Chinese demand has been resilient, benefiting from solid infrastructure investment, healthy manufacturing particularly for sectors related to the energy transition, and strong steel exports. These factors offset continued weakness in the real estate sector.
Iron ore demand in the rest of the world was mixed: demand from developing Asian economies continued to grow along with new blast furnace capacity, while Developed Asia and European demand was impacted by planned blast furnace capacity retirements and maintenance in response to subdued steel demand.
BHP noted that benchmark iron ore prices held steady at about US$100 per tonne in FY25.
The company's estimate of cost support remains at between US$80 per tonne to US$100 per tonne on a 62% Fe CFR basis.
Cost support refers to the lowest price at which producers can profit, creating a natural market floor.
BHP said:
As the market turns more competitive, some additional high-cost suppliers may leave the market in the coming years.
The miner said rising trade protectionism could weigh on global iron ore and steel demand in the near term.
Additionally, seaborne supply was expected to be higher as production from existing supply basins normalises, and as new capacity comes onto the market, including from Simandou.
As for China, BHP maintains its view that China's steel production is likely to maintain its plateau around the 1 Bt level until the late 2020s.
However, Chinese pig iron production is expected to decline over this period, with more scrap used in steelmaking.
BHP anticipates diversification in its customer base over the long term, as demand from developing nations grows and Chinese demand potentially softens as the country transitions from a construction-led economy to a consumer-centred one.
The miner said:
In the long run, seaborne iron ore trade is likely to undergo steady diversification as demand grows in other developing regions.
On the supply side, traditional suppliers may need to weigh future investment to sustain production in the face of grade decline and resource depletion.
The iron ore price was US$104.53 per tonne at the close of last night's trading session.
Outlook for WAIO in FY26
BHP said WAIO remains the world's lowest-cost major iron ore producer on a C1 reported unit cost basis (US$17.29 per tonne in FY25).
BHP's WAIO business comprises five mines and four processing hubs in the Pilbara region, and two ports.
The five mines are BHP's 100% owned South Flank and joint-venture operations at Jimblebar, Newman, Yandi, and Mining Area C.
WAIO is connected by more than 1,000 kilometres of rail line.
WAIO produced a record 290 Mt of iron ore on a 100% basis in FY25. A record 257 Mt was attributable to BHP, up 1% on FY24.
BHP said the record iron ore production was driven by recent investment in WAIO's supply chain.
BHP said FY26 production may fall short or exceed FY25 levels.
FY26 guidance for production is between 284 Mt and 296 Mt on a 100% basis, with 251 Mt to 262 Mt attributable to BHP.
The unit cost in FY25 was US$18.56 per tonne.
The estimated forecast unit cost for FY26 is between US$18.25 per tonne and US$19.75 per tonne.
The medium-term forecast is less than US$17.50 per tonne.
BHP said:
By leveraging the installed infrastructure, improved labour productivity, such as the transition to autonomous haulage across all sites (excluding Yandi) and the improvements from the implementation of the BHP Operating System, we expect unit costs to decrease to <US$17.50/t (unchanged from prior guidance) through the medium term.
Over the medium term, BHP is targeting sustained production of greater than 305 Mt per annum at WAIO (on a 100% basis) from 4Q FY28.
South Flank exceeded its nameplate production capacity in FY25 and delivered record production, as did Mining Area C.
What about Samarco?
BHP booked an attributable 6.4 Mt of iron ore production at Samarco in FY25, up 34%.
On a 100% basis, Samarco produced 12.8 Mt of iron ore.
BHP expects its attributable iron ore production for FY26 to be between 7 Mt and 7.5 Mt.
BHP remains on the hook for partial compensation to victims, their families, and communities affected by the 2015 Samarco dam failure.
In October 2024, BHP and its joint venture partners reached an agreement with the Brazilian public authorities regarding compensation.
In its FY25 report, BHP said its provision stands at US$5.8 billion as of 30 June 2025, down from US$6.5 billion at 30 June 2024.
BHP is now the world's largest copper miner
As we've reported, BHP is now the world's largest copper producer following a 28% increase in production over the past three years.
The red metal accounted for 45% of BHP's underlying EBITDA in FY25.
Here is BHP's outlook on copper for FY26.
BHP shares price snapshot
BHP shares have risen by 6.6% over the past 12 months and 29% over the past five years.
