A diversified portfolio and continued push for future-facing minerals means BHP is set up for success in 2023 and beyond.
Fitch Solutions expects BHP’s performance to remain robust going forward, with the OZ Minerals acquisition expected to pass, offering the major greater exposure to copper and nickel.
“The (OZ Minerals) acquisition would be in line with future-facing commodities required for the energy transition, while it is consolidating less green fossil fuels like coal,” Fitch said in a recent report.
BHP sold its 33.3 per cent stake in the Cerrejón coal operation in Colombia to Glencore in 2022, along with its 80 per cent interest in BHP Mitsui Coal (BMC), which concerns coal assets in Queensland.
BHP is also constructing the Jansen potash mine in Canada which provides further exposure to the future-facing minerals the company desires, with potash a key commodity for fertiliser and food production.
The major miner is targeting the first phase of Jansen potash production to commence in 2026.
Fitch Solutions said BHP has also been working hard to reduce debt, with net debt declining from $US16.3 billion in the 2016–17 financial year (FY17) to $US333 million in FY22.
“This adds further cash capacity alongside divestment within the coal segment which contributed $US15.5 billion in revenue (in FY22),” Fitch said.
“It would provide ample cash flow for BHP to explore opportunities in more greenfield sites or borrowing for future facing commodities like nickel, copper and more.”
Fitch said BHP is also making wise technology investments to enhance productivity and capital efficiency, which will benefit the company in the long-term.
“It (BHP) has various trucking fleets undergoing automation,” Fitch said. “In June 2022, its South Flank fleet of 41 haul trucks began automation, with (the) program expected to be completed in 18 months.”
BHP has also developed an in-house machine-learning model to reduce the variability of its iron ore product across several of its Western Australian iron ore (WAIO) operations. This is expected to deliver an annual revenue uplift of $US22.8 million.
Autonomous shiploaders are also being tested in WA, where BHP hopes to fully automate eight shiploaders by 2024.
“This project is expected to increase production of 1 million tonnes of iron ore annually through faster load times and equipment optimisation,” Fitch said.