BHP bets on China stimulus boost for iron ore

A day after Rio Tinto raised doubts about the property market remaining a key plank of Chinese economic growth, BHP boss Mike Henry is more optimistic.

BHP chief executive Mike Henry. Picture NCA NewsWire / Aaron Francis

BHP boss Mike Henry expects China to beef up its so far underwhelming stimulus measures aimed at reviving its ailing economy amid growing concerns about iron ore prices.

China has left markets and investors hanging on the size of a much-anticipated stimulus package after a briefing last weekend that was light on details.

BHP boosted iron ore production from its mines in WA in the three months to September 30, but prices fell 12 per cent on the previous quarter and were down 18 per cent on the same time last year.

The weaker pricing was outlined days after BHP held another meeting with unions seeking to re-establish themselves in the iron ore industry.

The union efforts have focused on signing up members at BHP’s South Flank and Mining Area C operations, which were central to boosting iron ore production in the September quarter.

BHP remains confident its big bet on copper will pay off and is standing by forecasts that demand will grow by 70 per cent by 2050 as part of the electrification of the global economy.

Copper production was up 4 per cent on the same time last year to 476,300 tonnes but pricing fell 7 per cent from the June quarter.

A day after Rio Tinto raised doubts about the property market remaining a key plank of Chinese economic growth, Mr Henry was more optimistic.

“China has announced a series of monetary easing policies in an effort to support economic growth, and has indicated more significant fiscal stimulus is on the horizon,” he said.

“Upcoming stimulus is likely to focus on relieving local debt, stabilising the property market and bolstering business confidence.”

BHP said it had completed work at Port Hedland aimed at boosting iron ore exports, with production up 3 per cent on the same period last year to 71.6 million tonnes.

It will now step up work to improve the capacity on the rail lines that connect its mines to the port. Locomotives will have to come off-line for upgrades as part of that work in 2024-25.

BHP said it remained on track to produce between 282 million and 294 million tonnes of iron ore in 2024-25 – the same guidance that was in place for last year.

The company wants to boost export capacity to 305 million tonnes, and then to 330 million tonnes, a move likely to involve building a new mine.

Mr Henry hailed light at the end of the tunnel for BHP’s Queensland coal division after two downgrades in sales guidance and a fatality at the Saraji mine in the Bowen Basin in 2023-24.

He said there were signs of stabilisation in the BMA coking coal operations, with production up 20 per cent in the quarter excluding the Blackwater and Daunia mines recently sold to Whitehaven for $4.1 billion.

BMA is starting to rebuild inventory after being hit by heavy rain and cyclones in 2023-24.

BHP is preparing to defend a British lawsuit over the fatal 2015 dam collapse at the Samarco iron ore operations in Brazil, with the case due to start on Monday.

Separate from that case involving more than 600,000 claimants, BHP said that along with Vale it continued to negotiate with Brazilian governments and authorities on a $34bn settlement. It is understood the parties are close to agreement on the compensation package.

BHP has argued that the $70bn class action in the UK led by law firm Pogust Goodhead duplicates issues being dealt with in Brazil.

Originally published as BHP bets on China stimulus boost for iron ore