BHP share price climbs amid record year for iron ore

Mining worker wearing hard hat and high vis vest holds thumbs up and smiles

Mining worker wearing hard hat and high vis vest holds thumbs up and smiles

The BHP Group Ltd (ASX: BHP) share price is pushing higher on Tuesday.

In morning trade, the mining giant’s shares were up 2.5% to $37.93.

The BHP share price has since pulled back but remains up 0.7% to $37.22 at the time of writing.

Why is the BHP share price rising?

The BHP share price is rising on Tuesday after investors responded positively to the mining giant’s fourth quarter update.

For the three months ended 30 June, BHP reported an 8% increase in iron ore production to 64.2Mt and a 25% quarter on quarter increase in copper production to 461.8kt.

This brought the Big Australian’s full year production to 253.2Mt and 1,573.5kt, respectively, for iron ore and copper, which was in line with guidance. It also allowed BHP to deliver record full year sales volumes from its iron ore business in Western Australia.

According to a note out of Macquarie, its analysts were pleased with BHP’s performance during the June quarter. The broker highlights that the mining giant’s iron ore production was in line with its expectations, whereas copper and energy coal production were ahead of them.

What about revenue and earnings?

No details were provided in respect to revenue or earnings expectations for FY 2022.

However, BHP did provide investors with a summary of the average prices it received for its major commodities during the year. They were as follows:

  • Copper price up 9% to US$4.16 per pound
  • Iron ore price down 13% to US$113.10 per tonne
  • Metallurgical coal price up 225% to US$347.1 per tonne
  • Thermal coal price up 271% to US$216.78 per tonne
  • Nickel price up 43% to US$23,275 per tonne

What is expected from BHP’s full year results?

The team at Macquarie is currently expecting BHP to report revenue of US$65.93 billion and EBITDA of US$39.96 billion in FY 2022. This represents a year on year increase of 8.4% and 6.9%, respectively.

Macquarie is expecting this to underpin a fully franked US$2.93 per share full year dividend. Based on the current BHP share price and exchange rates, this will mean a massive 11.5% yield for investors.

Pleasingly, the broker expects another big yield next year. It is currently forecasting a 4 US cents increase to BHP’s dividend in FY 2023 to US$2.97 per share.

The post BHP share price climbs amid record year for iron ore appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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