The BHP Group Ltd (ASX: BHP) share price is dropping after the resources giant released its FY21 third quarter update.
BHP’s Q3 update
The mining giant reported record production at its Western Australia iron ore operations in the year to date to March 2021, with record average concentrator throughput at Escondida. It was up 4% year on year to 188.3 million tonnes.
However, quarterly iron ore production was 4% lower in the March 2021 quarter than the December 2020 quarter due to weather impacts and maintenance.
Petroleum production was down 8% in the year to date to March 2021 because of hurricanes in the Gulf of Mexico.
Copper production was down 6% in the year to date to March 2021 because of lower throughput of Escondida due to a reduced operational workforce because of COVID-19 restrictions and lower concentrator feed grade.
In the year to date to March 2021, metallurgical coal production was down 2% to 28.8 million tonnes and energy coal production was down 26% to 13 million tonnes.
Management comments
BHP CEO Mike Henry said: “We are reliably executing our major projects, bringing on new supply in copper, petroleum and iron ore. The Spence Growth Option and Samarco are ramping up and West Barracouta, in petroleum, started production this month.
“BHP continues to deliver on decarbonising, in line with the Paris Agreement goals. We have established emissions reduction partnerships with three major steelmakers in China and Japan whose combined output equates to around 10% of global steel production. In Shipping, we have successfully completed an initial trial of marine biofuels, in addition to the tender awarded last year for LNG-powered iron ore vessels. In our own operations, we have established significant renewable power supply agreements for our Kwinana nickel refinery, Queensland Coal operations and Escondida and Spence copper mines.”
Summary thoughts about Q3 and the BHP share price
The BHP share price may be lower, but it continues to generate high levels of production and profit thanks to the strong demand for iron ore. BHP is paying big dividends at the moment.
It’s usually best to wait for commodity prices to be lower before buying a resource business like BHP. Iron prices are at high prices. But who knows when iron ore prices will be lower again? It could be longer than some analysts are expecting. Or, potential African iron ore could put a dampener on things.
There may be some ASX dividend shares that are able to generate more consistent profits and dividends.
