BHP copper output slips 5% in Q4, flags further decline in Chile

BHP Group (ASX:BHP) reported a 5% drop in fourth-quarter copper production on Thursday, hurt by lower production at Escondida and Pampa Norte, while it flagged an expected decline in Chilean copper production for next year.

The world’s largest listed miner produced 491.9 k) of copper in the quarter ended June 30, compared with 516.2 kt in the same period last year. For the full financial year, copper output totalled 1.95 million tonnes (Mt), down 3% from 2.02 Mt in FY25, though still close to 2 Mt for a second consecutive year.

Escondida, the world’s largest copper mine, produced 1,261.2 kt on a 100% basis, down 3%, as the concentrator feed grade eased to 0.90% from 1.02% a year earlier. Pampa Norte, which includes the Spence mine, fell a sharper 21% to 212.6 kt as the operation moves into deeper, more complex ore.

Copper South Australia bucked the trend, up 2% to 320.7 kt, with Olympic Dam posting a 20-year production record.

BHP guided group copper production for FY27 to between 1,650 kt and 1,800 kt, well below the FY26 outcome, “predominantly as a result of the forecast grade decline at Escondida.”

Escondida’s own guidance of 1,000-1,100 kt is unchanged, but Spence is expected to slip further, to 210-230 kt, before a sanctioned concentrator upgrade lifts recoveries from FY28.

Prices did much of the heavy lifting even as volumes slipped. BHP’s average realised copper price for FY26 was $5.74 per pound, up 35% on the year, while the fourth-quarter realised price of $6.53/lb was 47% higher than a year earlier — the kind of tailwind incoming chief executive Brandon Craig, who took the helm on July 1, pointed to in describing a year of stronger prices for both copper and iron ore.

Copper was not the only record-setter. Western Australia Iron Ore delivered record production of 265 Mt, up 1%, while BMA’s steelmaking coal volumes climbed 3% on the strongest stripping performance in five years.

The gains came despite cost pressure elsewhere in the portfolio. BHP flagged a further hit to its Jansen potash project in Canada, where a $2.3 billion impairment was booked as the Stage 2 budget swelled again, even as Stage 1 remains on track for potash production next year.

Argentina decision by year-end

BHP used the results to underline a copper pipeline it is counting on to offset the grade decline at its ageing Chilean assets.

Escondida is central to that effort: BHP has been pursuing a roughly $5 billion new concentrator to hold processing capacity at 460,000 tonnes per day as ore grades keep falling. Nearby, the company submitted an environmental impact assessment for a potential $1.5 billion restart of Cerro Colorado, the mothballed mine it plans to bring back using chloride leaching technology over a 20-year life.

Spence, meanwhile, signed a memorandum of understanding with neighbouring Sierra Gorda to explore shared processing and cost efficiencies as both operations contend with falling grades. BHP also plans to host a site visit to Copper South Australia in November to lay out plans that could potentially double the asset’s production.

Further afield, Argentina’s Vicuña project — the Filo del Sol and Josemaría deposits being developed with Lundin Mining, where BHP has been ramping up spending toward $800 million this year — received approval in June for Argentina’s RIGI incentive regime, locking in a stable fiscal framework for 40 years and keeping the project on track for a first-stage investment decision in calendar 2026.

In the US, BHP is transferring its legacy San Manuel property in Arizona to Faraday Copper for a 30% equity stake, a deal that will lift BHP’s overall shareholding in Faraday to roughly 32.5% and combine San Manuel’s infrastructure with Faraday’s adjacent Copper Creek project to create a new copper hub. BHP also continues to hold interests in the wider Arizona copper district through the Resolution and Globe-Miami projects.

Price support

BHP’s results land against a copper market that has spent much of 2026 grinding higher. LME cash copper started the year near $12,571 a tonne and has since climbed to around $13,540, up roughly 8% year-to-date, with a run to a 2026 high near $13,730 in early June.

Forecasters remain split on where it goes from here: BMI this week raised its 2026 average price forecast to $12,700 a tonne — still below Macquarie’s $13,165 call and UBS’s most recent upgrade, which topped out at $13,000 by year-end, but above Goldman Sachs’ $12,650 forecast and Chile’s Cochilco, which lifted its own 2026 outlook to $12,235 a tonne.

The bullish case for the years ahead rests on the same forces reshaping BHP’s own growth pipeline — electrification, data-centre buildout and a supply base struggling to keep pace with grade declines at mines like Escondida — even as most forecasters agree the current rally has run ahead of a market still technically in surplus.