BHP: Solid Production and Two Metallurgical Coal Mines to Be Sold to Whitehaven Coal

We maintain our fair value estimate for no-moat BHP of AUD 41 per share as fiscal 2024 first-quarter sales met our expectations. BHP also reiterates fiscal 2024 guidance. BHP’s share of sales from its Western Australia iron ore operations, the main driver of its earnings, was 64 million metric tons, up modestly on the previous quarter and the same period last year. BHP’s WAIO business is on track to meet our unchanged forecast for fiscal 2024 of roughly 255 million metric tons, its share, around 3% higher than last year. An average price of USD 98 per metric ton was modestly lower than our forecast for fiscal 2024 of about USD 102, but futures prices are higher. We continue to forecast WAIO unit cash costs of around USD 18 to USD 19 per metric ton for fiscal 2024. BHP’s iron ore business accounts for about 60% of our forecast fiscal 2024 EBITDA of roughly USD 30 billion.