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BHP Group Limited American Depositary Shares (Each representing two Ordinary Shares)
Our verdict on BHP Group Limited American Depositary Shares (Each representing two Ordinary Shares) isn’t the consensus take — see where we landed, and the one risk the bull case glosses over.
See the verdict — free →How durable is the business?
BHP maintained its position as the lowest-cost major iron ore producer globally, with WAIO unit costs at $18.19/t, widening its lead over competitors despite inflationary pressures. (3 expanding)
“Our iron ore business is a critical part of our future and we have extended our lead as the lowest-cost major iron ore producer globally.”
China's share of total revenue increased from 58% to 62.4%, reinforcing its position as the dominant customer segment for BHP's commodities. (1 expanding)
“China 34,752 [2024] 31,205 [2023]”
BHP maintained its position as the lowest-cost major iron ore producer for the sixth consecutive year, though unit costs at WAIO rose slightly from $18.19/t to $18.56/t due to inflation and maintenance. (1 stable)
“Western Australia Iron Ore (WAIO) is the lowest-cost major iron ore producer globally and has one of the lowest greenhouse gas (GHG) emission production intensities.”
China remains the dominant geographic segment, though its share of total revenue slightly decreased from 62.4% to 62.58% (nominal increase in concentration but total revenue from China fell by $2.67B). (1 stable)
“China 32,083... Total 51,262”
The Iron Ore segment revenue grew by 12.6% to $27.95 billion, driven by higher average realized prices ($101.04/wmt vs $92.54/wmt) and record production at Western Australia Iron Ore (WAIO). (3 expanding, 2 contracting across 3 engines)
“Revenue 22,919... Total Iron Ore revenue decreased by US$5.0 billion to US$22.9 billion in FY2025, primarily due to lower average realised prices.”
See the full cited Business Model analysis of BHP Group Limited American Depositary Shares (Each representing two Ordinary Shares)
What could break the thesis?
The risk is easing as net debt decreased by US$2.0 billion during the fiscal year to US$9.1 billion, driven by strong operating cash flows and divestment proceeds. (1 easing, 1 intensifying)
“This resulted in Net debt of US$12.9 billion, which represented an increase of US$3.8 billion compared with the Net debt position at 30 June 2024.”
The risk is stable as the remediation cost estimate remains unchanged at US$280 million, and the company has begun recrediting leave and making payments to affected workers. (1 stable)
“Based on the Group’s net financial assets and liabilities as at 30 June 2025, a weakening of the US dollar against these currencies... would decrease the Group’s equity and profit after taxation by US$29 million”
The risk is easing as remediation is well-advanced. BHP has paid approximately 85% of affected former employees and expects to close out the primary issue in FY2026. (1 easing)
“For example, production at Olympic Dam was halted for two weeks due to severe storms in the first half of FY2025, resulting in production loss.”
BHP faces a $280 million liability for underpaying employees in Australia. While a remediation program is underway, the company is still working to find and pay over 14,000 affected current and former workers. [GOVERNANCE]
“Based on the currently available information, remediation costs remain in line with the previously recognised US$280 million pre-tax, as reflected in the Group’s FY2023 financial results.”
The risk has transitioned from a demand threat to an execution/suspension phase. Operations entered temporary suspension in December 2024, resulting in a 63% production drop and an Underlying EBITDA loss of US$0.6 billion. (1 stable)
“Western Australia Nickel (WAN) production decreased by 63 per cent to 30 kt, as operations transitioned into temporary suspension in December 2024... WAN recorded an Underlying EBITDA loss of US$0.6 billion in FY2025.”
See the full cited Risk analysis of BHP Group Limited American Depositary Shares (Each representing two Ordinary Shares)
BHP Group Limited American Depositary Shares (Each representing two Ordinary Shares) analysis by filing period
Read the full thesis on BHP Group Limited American Depositary Shares (Each representing two Ordinary Shares)
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