PERTH (miningweekly.com) – Commodity price volatility brought about by the onset of the Covid-19 pandemic has seen mining major BHP’s profits fall for the full year ended June; however, the miner remained upbeat about future outlook.

“BHP delivered a strong set of results for the 2020 financial year that reflect the strength, resilience and quality of our people and portfolio. In a year marked by the challenges of the global Covid-19 pandemic, social unrest in Chile and commodity price volatility, we were safer, more reliable and lower cost,” said CEO Mike Henry on Tuesday.

“BHP’s operations generated robust free cash flow and our balance sheet remained strong, with net debt finishing the year at the low end of our target range.”

Total revenue for the financial year ended June was down 5% on the previous period, to $42.9-billion, while underlying earnings before interest, taxes, depreciation and amortisation were down 5%, from $23.1-billion to $22-billion.

Attributable profit for the year declined by 4%, from $8.3-billion to $7.9-billion, while net operating cash flow declined by 12%, from $17.8-billion to $15.7-billion.

During the full year under review, BHP reported that iron-ore production from the Pilbara reached 281-million tonnes, up from the 270-million tonnes produced in the 2019 financial year, while petroleum production reached 109-million barrels of oil equivalent, down from the 121-million barrels produced in the previous 12 months.

Copper production was up 2% in the full year to 1.7-million tonnes, while metallurgical coal production declined by 2% to 41-million tonnes and energy coal production declined by 15% to 23-million tonnes. Nickel production for the full year was down by 8%, to 80 000 t.

Henry on Tuesday told shareholders that development projects and exploration programmes progressed well during the year under review, in line with the company’s strategy.

First production from Atlantis Phase 3 was achieved in July 2020 and the Spence Growth Option and South Flank are expected to deliver first production within the next 12 months.

The Jansen potash project is now expected to be presented to the BHP board for a final investment decision in the middle of the 2021 calendar year following delays to completion of the shafts. These delays are a result of initial challenges with placement of the shaft lining, since rectified, and due to impacts from its Covid-19 response plan, BHP said.

“We have secured, and will continue to grow options in copper and nickel, where increasing demand and our capability gives us competitive opportunities. We are moving to concentrate our coal portfolio on high-quality coking coals, with greatest potential upside for quality premiums as steelmakers seek to improve blast furnace utilization and reduce emissions intensity,” Henry said.

“In oil and gas, we will continue to invest in opportunities that are resilient under a range of price scenarios, and which are aligned to our strengths. We will seek to divest oil and gas assets that are mature or which are likely to realise greater value under different ownership.

“This approach to actively managing our portfolio for value, risk and returns over multiple time horizons will yield superior returns for our investors and greater value for our partners and communities. Our ability to do so will be underpinned by our distinctive culture and organizational capability, our strong balance sheet and disciplined approach to capital allocation.”

BHP was expecting major economies to contract heavily in 2020, with China being the exception, adding that recovery would vary considerably by country.

“Our diversified portfolio and high-quality assets position us to continue to generate returns in the face of near-term uncertainty, even as we secure and create the options in future-facing commodities that will allow us to sustainably grow value in the long term.”