BHP cuts dividend as China slowdown hits Australian iron ore miners

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BHP, the largest Australian mining company, has reduced its interim dividend to an eight-year low due to a slowdown in Chinese demand for iron ore shipments and the threat of fresh trade tensions affecting economies worldwide.

BHP, based in Melbourne, said on Tuesday its underlying profit dropped by more than 20 per cent to $US5.08 billion ($8 billion) for the six months to December 31, due to decreases in the prices it received for selling iron ore and coking coal to the steel-making industry.

Shareholders will receive a 50 cent (79 cent) half-year dividend on 27 March, BHP said, which is 30% less than the same time last year. It's also the minimum payout under the miner's policy to return at least 50% of underlying profits.

For years, huge demand from Chinese steel mills, which process iron ore in steel-making furnaces to produce molten pig iron, have given massive profits to Australian miners BHP, Rio Tinto and Fortescue, and made iron ore Australia's most valuable export.

But a decline in economic activity in China over the past 12 months, combined with a housing oversupply that's causing problems for its construction industry - which accounts for 30 per cent of its steel demand - have led to a slowdown.

Analysts have warned that "testing times" are still ahead for iron ore miners in 2025, with concerns that China's stimulus plans might not be effective in turning things around, and uncertainty surrounding the potential impact of US President Donald Trump's tariffs on China's economy and beyond.

BHP chief executive Mike Henry said on Tuesday that commodity demand had been "soft" throughout 2024, but sounded a more optimistic note as he pointed to early signs of a recovery in China's property market for the first time since 2021.

“What we're now seeing is a stabilisation at a low level in the property market, with some signs of growth in new home sales and prices in certain areas,” he said.

We can see things starting to get moving into 2026.

He also pointed to the relatively high prices and strong demand forecast for copper, which is crucial for speeding up global electrification and decarbonisation efforts, and is at the centre of BHP's growth plan.

While BHP still makes most of its money from its huge iron ore mines in Western Australia, Henry's been driving a push to get BHP into more commodities that'll be in strong demand in the future. They'll need heaps more copper over the next few years to build power lines, renewable energy systems and electric cars.

BHP tried to buy out Anglo American, a London-listed company, which it had been eyeing for its huge copper mine assets. After its $77 billion bid was knocked back, BHP gave up on the idea and started making plans to expand its copper presence in South America through a deal with Canada's Lundin Mining to buy a 50% stake in junior copper miner Filo Corp.

BHP's financial reports on Tuesday revealed that copper made up over 40 per cent of BHP's underlying profits for the half-year period.

Morgans analyst Adrian Prendergast said copper's share of BHP's earnings before interest, tax, depreciation and amortisation had jumped from 25 per cent to 39 per cent from the same time a year ago, "influenced by stronger pricing".

Escondida, BHP's jointly owned copper mine in Chile, has done a "fair dinkum job", he said.

A spokesperson from Barrenjoey, Glyn Lawcock, said BHP's half-year earnings were slightly above what the market had anticipated, thanks to the copper division exceeding expectations by 2 per cent, primarily due to lower-than-expected costs at the Escondida operation.

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