BHP shifts focus to copper as AI demand drives record share price surge

BHP’s chief executive Mike Henry wooed investors with a strategy to make copper the centrepiece of the miner’s next generation of wealth creation.

On Tuesday, BHP said a new AI age could catapult demand for copper in data centres six times higher by 2050 as it also becomes a “future metal” used in renewable energy industries, such as the world’s transformation to nearly 100 per cent electric vehicle usage.

“This is an exciting position to be in,” Mr Henry told BHP’s investors when delivering its half-year results on Tuesday.

Copper’s resurgence over a 2500-year arc of history means that more than half BHPs operating profits now come from the metal in a symbolic shift away from BHP’s history as a Pilbara-focused iron ore miner.

Shares hit record high

Investors cheered Mr Henry and his upgraded forecast for total copper production to climb by 40 per cent on a “low-risk pathway” by 2035 to send the shares 7.2 per cent higher to a record high of $54.20.

The enthusiasm for the miner’s copper plans and a falling US dollar have now helped Mr Henry add around $91 billion in total BHP shareholder value in 2026, as its market cap hit a record $272 billion on Tuesday.

In particular, investors liked BHP hiking guidance for copper production by 100,000 tonnes per year in financial 2027 to between 1 million and 1.1 million tonnes for its Escondida Mine in Chile. The mine is continuing to produce stronger-than-expected metallurgical recoveries and now accounts for around 70 per cent of its operating profits in copper.

“The increase in guidance means we now expect to deliver over 500,000 more tons over the next five years compared to what we announced at the Chile site visit in 2024,” Mr Henry told analysts.

“At today’s prices and margins, that would be an additional $5 billion of EBITDA (operating income) over that period.”

Mr Henry said he expects copper to become a higher proportion of BHP’s earnings over the next decade. “This is capital-efficient, predominantly brownfield growth (in copper production),” he said.

The bullish forecasts for rising prices is based on the potential for a market supply shortfall as BHP argues operational and development challenges for new mines around the world are likely to steepen.

Dividend tops expectations, iron ore profits edge higher

For the six-months ending December 31, the miner’s total operating income from copper surged 59 per cent to $US8 billion to top the market’s consensus expectations by six per cent as sales and production costs were both better than expected.

The average realised price received for copper over the half-year also jumped 32 per cent to $US5.28 a pound.

Total operating income in BHP’s iron ore operations grew 4 per cent to $US7.5 billion on an average realised price also up 4 per cent to $US84.71 a tonne.

For iron ore analysts are also worried about a months-long dispute between BHP and China’s state-run buyer of iron ore — China Mineral Resources Group.

On Tuesday, BHP made no mention of the row that has seen it barred from supplying certain ore products to China for months, although Mr Henry told journalists he’s “confident” the problems will be resolved.

The interim dividend for the half-year period of US$0.73 cents per share landed on a payout ratio of 60 per cent of earnings of $US1.22 per share and topped the market’s expectations of $US0.69 cents per share.

Net debt for The Big Australian finished the half at $US14.7 billion, towards the lower end of its targeted range between $US10 billion and $US20 billion. It said wage growth for Australian employees normalised over the period after the pandemic-era of higher-than-normal growth.

Copper first came to prominence in human history after the Stone Age around 5000 BC, when it was used in tools and weapons before being usurped by the Bronze and Iron Ages that ended around 200 BC.