BHP profits soar on higher coal prices

The world’s biggest miner on Tuesday said earnings rose 26% to $21.3bn for the year to June 30. A final dividend of $1.75 a share was declared for a total of $3.25 a share.

Chief executive Mike Henry also failed to rule out an increased offer for rival Oz Minerals, which last week rebuffed a $5.8bn cash offer from BHP.

"It's nice to have but not a must-have. It's pretty disappointing that the board (of OZ Minerals) chose not to engage," he said.

Profits were boosted by its coal business, with prices hitting record levels after Russia's invasion of Ukraine, offsetting falls for other commodities such as steel.

BHP’s coal division reported underlying earnings before interest and tax of $8.7bn against a loss of $577mn a year as prices surged on supply fears.

Iron ore earnings fell to $19.5bn from $24.3bn a year ago. BHP said it would assess options to expand production at its top iron ore producing unit to 330 million tonnes a year.

The company warned of a slowdown in advanced economies as monetary policy tightens, and said it expects labour constraints to continue to put pressure on global and local supply chains.

Henry however said he was optimistic about China and its return from pandemic lockdowns should boost demand for resources.

"We expect China to emerge as a source of stability for commodity demand in the year ahead, with policy support progressively taking hold," he said.

Reporting by Frank Prenesti at Sharecast.com