Inflation is both a burden and a boost for global miners. For BHP, the world’s largest, booming metals and minerals prices have pushed cashflows far above historic norms and have handed extravagant dividends to shareholders. But higher costs and an easing in realised prices over the second half of last year are a timely reminder that the boom times have an end.
A profit of $10.8 billion over the final six months of last year — and the first half of the Anglo-Australian miner’s financial year — missed market expectations of $11.5 billion. Why? Higher costs and lower prices banked for iron ore and copper, which make up the bulk of output.
Even if the $6.8 billion in cash churned out by the business was
