BHP (ASX:BHP) share price on watch after Q1 update and reaffirming guidance

BHP is tracking in line with its FY 2022 guidance…

| More on:
Two smiling men in high visibility vests and yellow hardhats stand side by side with a large mound of earth and mining equipment behind them smiling as the Carnaby Resources share price rises today

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The BHP Group Ltd (ASX: BHP) share price will be one to watch on Tuesday.

This follows the release of the mining giant's first quarter update this morning.

BHP share price on watch after unspectacular but in line quarter

The BHP share price could be on the move today after it delivered a first quarter update in line with its guidance for the full year.

BHP's Iron Ore production came in at 63.3Mt for the quarter. This was down 3% quarter on quarter and 4% year on year. Management advised that this reflects planned major maintenance including car dumper one and the impacts of temporary rail labour shortages due to COVID-19 related border restrictions. Positively, the latter improved during September.

Copper production was down 7% quarter on quarter and 9% year on year to 376.5kt. This was driven by lower volumes at Olympic Dam due to the commencement of the planned smelter maintenance campaign. This activity was delayed by approximately one month due to COVID-19 related border restrictions.

BHP's Petroleum production was a highlight, growing 2% quarter on quarter and 3% year on year to 27.5 MMboe. These higher volumes were driven by increased production from Ruby and higher seasonal gas demand at Bass Strait. This was partially offset by lower production at North West Shelf and natural field decline.

Elsewhere, Metallurgical coal and Energy coal production was down 25% and 6%, respectively, quarter on quarter. For the former, this was due partly to planned maintenance at BMA. Whereas the latter was impacted by lower volumes at NSWEC due to mining in higher strip ratio areas.

Finally, Nickel production dropped 21% quarter on quarter to 17.8kt due to planned maintenance across the supply chain.

Management commentary

BHP's Chief Executive Officer, Mike Henry, appears pleased with the company's performance given the challenges faced from COVID-19.

He said: "BHP's operations delivered reliably during the first quarter and we completed planned major maintenance activities across a number of our assets. We continue to skilfully navigate the ongoing challenges of COVID-19."

"We progressed the ramp-up of production of high quality iron ore at South Flank and copper from the Spence Growth Option, and we delivered first nickel sulphate from our new plant at Kwinana. We sanctioned the Jansen Stage 1 potash project in Canada, and made a series of targeted investments in copper and nickel exploration in Australia and Canada."

"These are aligned with our efforts to increase our exposure to future facing commodities and to position the portfolio to continue to deliver attractive returns and long-term value to shareholders," he added.

FY 2022 guidance

One thing that could support the BHP share price today is confirmation that its FY 2022 guidance remains unchanged.

This includes iron ore production of 249 to 259Mt, copper production of 1,590 to 1,760kt, and petroleum production of 99 to 106MMboe.

Management also confirmed that the proposed merger of its Petroleum business with Woodside Petroleum Limited (ASX: WPL) is progressing to plan. The full form transaction documents are expected in November 2021. It notes that if the deal goes ahead, it will create a global top 10 independent energy company.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

A young woman holds onto her crown as another moves to take it, indicating rival ASX shares
Resources Shares

Is a royalty ruling a problem for Liontown shares?

Not the news investors were hoping for.

Read more »

Cheerful businessman with a mining hat on the table sitting back with his arms behind his head while looking at his laptop's screen.
Resources Shares

Fortescue shares are galloping again as Twiggy stays confident in China's horsepower

It's business as usual for the miner despite Trump's promised 60% tariffs on Chinese imports.

Read more »

Miner standing at quarry looking upset
Resources Shares

This ASX All Ords mining stock sinks 13% after a rocky quarter

Investors continue unloading shares in the precious metals company.

Read more »

Miner looking at a tablet.
Resources Shares

Will ASIC make a dog's breakfast of Mineral Resources shares?

ASIC has now stuck the probe in to investigate.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Resources Shares

Should you buy Rio Tinto stock or Woodside stock today?

Which of these giants is best? Here's what Goldman thinks.

Read more »

Miner looking at a tablet.
Resources Shares

What does Trump's win mean for iron ore shares like Fortescue?

The controversy on tariffs has already started.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Resources Shares

Own BHP shares? Directors of the mining giant have been busy with stock transactions

It can be worrying when directors sell.

Read more »

Buy, hold and sell ratings written on signs on a wooden pole.
Resources Shares

Are Lynas shares a buy, sell, or hold for 2025?

Much depends on the outlook for rare earths.

Read more »