The BHP Group Ltd (ASX: BHP) share price is in focus after the ASX mining share released its operational update for June 2023.
BHP has told investors how it performed in the June 2023 quarter and in the year to June 2023.
Operational update
First, I’ll say what the quarterly growth was, and then the annual growth.
The all-important iron ore division produced 65.3mt for the quarter, which was up 2% year on year. Annual production was 257mt, an increase of 1%. Stronger production is helpful for the BHP share price.
Copper production for the quarter was 476.2kt, an increase of 3% year on year. Annual copper production was up 9% to 1,716kt.
Metallurgical coal production for the quarter was 8.5mt, which was an increase of 4%. The annual production was 29mt, the same as last year.
Energy coal quarterly production was 4.8mt, which was an increase of 22% year on year. Annual production of 14.2mt was a year-on-year rise of 3%.
Nickel quarterly production was 22kt, up 17% year on year. Annual production was 80kt, a rise of 4%.
BHP said that full year production guidance was achieved for copper, iron ore, metallurgical coal and energy coal. Nickel achieved the revised guidance and finished in line with the lower end of original guidance.
Costs and prices
BHP revealed that full year unit cost guidance is expected to be achieved for the copper project Escondida, Western Australian Iron Ore (WAIO) division and New South Wales Energy Coal (NSWEC). However, BHP Mitsubishi Alliance is expected to be “marginally above its revised guidance range.”
The ASX mining share’s average realised prices for copper, iron ore and metallurgical coal products were “lower” in FY23 compared to the prior year. Nickel prices “remained stable”, while thermal energy prices were stronger, mostly in the first half of FY23. Commodity prices usually have a key impact on the BHP share price.
Guidance for FY24
For copper, BHP is expecting production of between 1,720kt to 1,910kt – this would represent growth of up to 11%.
Iron ore production is predicted to be in a range of between 254mt to 264.5mt, which would represent a small decline to a small increase.
Both forms of coal are expected to be approximately the same as FY23.
Nickel’s production range is between 77kt to 87kt, which would represent either a fall of up to 4% or a rise of up to 9%.
Final thoughts on the BHP share price
There are two main things that I think can affect how much profit BHP makes – how much production it can make and what prices it can get for that production.
The production for most of its commodities in FY24 could be similar to FY23, though the copper production could rise nicely.
With BHP being such a big company, I’d only want to consider buying it at a share price below $40 because of how cyclical the share price, dividends and profit could be. I think a sub-$40 price would reward me in the good times, and be low enough for a decent margin of safety in most market declines.
