Key Takeaways

  • Western Australia Iron Ore produced a record 256.9 Mt on a BHP-share basis (291.2 Mt at 100 per cent) in FY26, with C1 unit costs inside the US$18.25 to US$19.75 a tonne guidance range.
  • FY27 copper guidance of 1,650 to 1,800 kt sits well below FY26 output of 1,952.8 kt, driven predominantly by a forecast Escondida feed grade decline to about 0.70 per cent.
  • Net debt was expected at about US$9 billion at 30 June 2026, below the bottom of BHP's US$10 billion to US$20 billion target range, ahead of full FY26 results in August.

Iron ore below US$100 puts a record year in a harsher light

BHP Group Limited (ASX: BHP) has opened the new financial year with a gap between its operating scorecard and its. Benchmark iron ore was quoted at about US$98.35 a tonne on 27 July 2026, back under the US$100 level Australian investors treat as a psychological floor.

That matters because iron ore still supplies the largest slice of BHP's cash flow. and the miners have been soft as Chinese steel output and abundant seaborne supply weigh on sentiment. BHP reports in US dollars and the figures below are in that currency.

What BHP actually reported on 16 July

BHP lodged its operational review for the year ended 30 June 2026 on 16 July. Western Australia Iron Ore produced a record 256.9 Mt on a BHP-share basis, or 291.2 Mt on a 100 per cent basis and shipped 254.4 Mt (288.1 Mt at 100 per cent).

The record belongs to WAIO rather than the group. Total iron ore, including BHP's 50 per cent share of Samarco in Brazil, was 264.7 Mt. WAIO's C1 unit cost landed within its US$18.25 to US$19.75 a tonne guidance range.

BHP realised an average US$84.56 a wet metric tonne over the year. FY27 group iron ore guidance is 260 to 272 Mt, with WAIO at 253 to 264 Mt - essentially flat.

Copper: the best year is behind, not ahead

Group copper production was 1,952.8 kt,017 kt but near the 2 Mt mark for a second year. Escondida contributed 1,261.2 kt, Spence at Pampa Norte 212.6 kt, Copper South Australia 320.7 kt and Antamina 151.5 kt.

Olympic Dam set a 20-year copper production record and Prominent Hill benefited from higher feed grades. Carrapateena recorded its strongest material mined and milled, though an unplanned conveyor belt failure in July may affect output for up to eight weeks.

FY27 copper guidance of 1,650 to 1,800 kt implies a fall of roughly 150 kt to 300 kt, which BHP attributes predominantly to the forecast grade decline at Escondida. Concentrator feed grade dropped to 0.90 per cent in FY26 from 1.02 per cent and is expected near 0.70 per cent in FY27, with Escondida guided to 1,000 to 1,100 kt.

Coal, nickel and a portfolio already reshaped

Steelmaking coal from BMA produced 18.6 Mt on BHP's 50 per cent share, at an average realised price of US$210.21 a tonne. Unit costs sat towards the top of the US$116 to US$128 a tonne range and FY27 guidance is 18.5 to 20.5 Mt.

That is a smaller but higher-quality book after BMA divested Daunia and Blackwater to Whitehaven Coal in April 2024. New South Wales Energy Coal beat guidance at 16.4 Mt and is guided to 14 to 16 Mt.

Western Australia Nickel remains in temporary suspension, fully in place since December 2024. BHP is funding care and maintenance and has said it would review that decision by February 2027.

Jansen: the potash option keeps getting dearer

Potash is meant to be the fourth pillar. Jansen Stage 1 in Saskatchewan was 84 per cent complete at year end and still targets first production in mid-calendar 2027. Its capital estimate was lifted in January 2026 to US$8.4 billion, from a US$7.0 to US$7.4 billion range and an original US$5.7 billion.

Stage 2 was rebased on 18 June 2026 to US$6.9 billion, from the US$4.9 billion approved in October 2023, with first production pushed to late FY31 from FY29. BHP flagged an impairment of about US$2.3 billion in the FY26 accounts. Stage 1 did not slip again.

Balance sheet, capital expenditure and the dividend question

BHP expects net debt of about US$9 billion at 30 June 2026, down from US$14.7 billion at 31 December 2025 and below the bottom of its US$10 billion to US$20 billion target range.

Capital and exploration expenditure was guided at about US$11 billion for FY26 and again for FY27, easing to roughly US$10 billion a year across FY28 to FY30.

BHP's policy is a minimum 50 per cent payout of underlying attributable profit. The December 2025 half-year interim was US 73 cents a share, a 60 per cent payout worth about US$3.7 billion. With gearing this low, the final dividend is the live question in August.

Competitive position and the Anglo American chapter

BHP remains among the lowest-cost seaborne iron ore producers, which is exactly what a sub-US$100 price tests. Its Pilbara cost base gives it more room than higher-cost rivals, but new supply from West Africa is reshaping the market.

In copper, scarcity is the strategic asset. BHP walked away from a renewed approach for Anglo American in November 2025 after Anglo judged it inferior to its combination with Teck. That chapter now looks closed.

Growth is instead organic: an assessment to restart Cerro Colorado in Chile, two sanctioned Spence projects, progress at Resolution in Arizona and Vicuna's Argentine incentive-regime approval.

The principal risks

Commodity price is the dominant risk. A sustained iron ore price below US$100 a tonne, driven by softer Chinese steel demand and rising supply, compresses margins on BHP's largest earnings engine faster than cost control can offset.

Chile carries the operational risk. Falling Escondida grades are disclosed and planned, but they arrive alongside water and energy costs, permitting timelines and more complex ore at Spence. Copper capital costs industry-wide have also inflated sharply.

Then there is execution. Jansen has absorbed two cost rebases and a US$2.3 billion impairment and Port Hedland industrial relations were a live issue in July.

A balanced outlook

The working narrative that BHP set an iron ore record while flagging a copper dip holds up against the filing. The nuance is that copper has already turned: FY26 was and FY27 guidance deepens the decline for disclosed, geological reasons.

The harder numbers - underlying EBITDA, attributable profit, the impairment and the final dividend - arrive with full-year results in August. Until then this is a volume story, not an earnings one.