The BHP Group Ltd (ASX: BHP) share price is down after revealing its FY21 fourth quarter update to investors.
BHP’s strong finish to FY21
The mining giant explained how each of its main resources performed.
Iron ore
The resources giant told investors that in the fourth quarter of FY21 (for the three months to June 2021), it saw its iron ore production increase by 9% (compared to the March 2021 quarter) to 65.2 Mt.
Management explained that increased volumes at ‘Western Australia Iron Ore’ (WAIO) reflected a record quarterly production at Mining Area C, which included the first ore from the South Flank in May 2021, and continued strong operational performance enabled by improved supply chain reliability.
This led to FY21 iron ore being up 2% compared to FY20, to 253.5 Mt. It’s the strong iron ore price and production that are particularly helping profit, dividends and the BHP share price.
Copper
In the FY21 fourth quarter, copper production was up 3% (on FY21 Q3) to 403 kt. Higher volumes were because of the ongoing increase of concentrate production at Spence, following the first production at the ‘Spence Growth Option’ in December 2020.
For the whole of FY21, copper production was down 5% to 1,636 kt.
Petroleum
The June 2021 quarter saw an increase of 6% quarter on quarter to 27 million barrels of oil equivalent (MMboe). There was increased volume due to higher seasonal demand at the Bass Strait and improved uptime at ‘Atlantis’.
FY21 petroleum production was down 6% to 102.8 MMboe compared to FY20.
Coal
Metallurgical coal saw its June 2021 quarterly production increase by 23% to 11.8 Mt thanks to higher volumes in Queensland. FY21 saw a slight decline to 40.6 Mt for the year.
Energy coal saw a 31% production increase in the June 2021 quarter to 6.3 Mt, thanks to higher volumes at NSW Energy Coal (NSWEC). FY21 saw a 17% drop in energy coal production.
Nickel
In the June 2021 quarter, nickel production was up 10% to 22.4 kt, whilst FY21 nickel production went up 11% to 89 kt.
Summary thoughts on BHP and the share price
BHP says that it’s in great shape, boasting that its operations are performing well and it’s continuing its track record of disciplined capital allocation. The resources business also said that its portfolio is positively leveraged to the megatrends of decarbonisation, electrification and population growth.
However, the BHP share price reflects that strength. It is close to its high. I don’t think it’s a wise time to buy when commodities are at very high prices. I think it would be better to wait for a lower level. Resources are cyclical after all.
There are other ASX dividend shares that I’m looking at.
