Copper Overtakes Iron Ore as BHP's Biggest Earner — But a Production Slowdown Looms
BHP's underlying profit rose 30% to US$13.20 billion in the 2026 financial year (covering 1 July 2025 to 30 June 2026), beating analyst estimates. The standout driver was copper, which generated a record US$18 billion in EBITDA — a measure of operating profit before interest, taxes, depreciation, and amortization — and surpassed iron ore as the company's single largest earnings contributor for the first time (Reuters). The board declared a final dividend of US$1.72 per share, the highest payout in four years (Reuters).
BHP's Annual Report 2026 confirms that copper accounted for more than half of group EBITDA over the full fiscal year (BHP Annual Report 2026). The cross-over from iron ore to copper as BHP's dominant earnings driver had been visible at the half-year mark: for the six months ended 31 December 2025, copper including byproducts such as gold contributed US$7.95 billion to operating earnings, edging past iron ore's US$7.50 billion (Reuters). Copper's share of underlying EBITDA in that half stood at 51% (BHP).
This result reverses a sharp decline from the prior year. BHP posted an underlying profit of US$10.16 billion for FY2025, a five-year low at the time, as weaker iron ore prices squeezed margins (Reuters). The year before that, FY2024, delivered US$13.66 billion (Reuters). The swing from FY2025's trough to FY2026's US$13.20 billion reflects both higher copper production volumes and a commodity price environment that has lifted copper prices relative to iron ore.
During the first half, BHP raised its FY26 group copper production guidance to 1.9–2.0 million tonnes (BHP). That guidance framed a narrative of growth in what the industry calls the red metal. But the forward picture has since darkened. In July 2026, BHP flagged that copper production could fall as much as 15.5% in the following fiscal year, citing lower output from its Chilean operations (Reuters).
Chile hosts BHP's Escondida and Pampa Norte assets, which are central to the group's copper volume. A 15.5% year-on-year decline in production guidance would tighten the physical supply that underpinned FY2026's record EBITDA. The timing matters: BHP enters FY2027 with copper at a record share of group earnings precisely as its largest copper-producing region guides lower.
The broader context here is that the FY2026 results lock in a structural shift in BHP's earnings mix. Iron ore carried this company through the last decade's commodity cycle. Copper now contributes the majority of EBITDA, and that weighting is set to increase as projects like the Olympic Dam smelter and the South Flank tie-ins ramp up. The tension is between that strategic trajectory — which aligns BHP with the global push for electrification — and the near-term operational reality that declining ore grades and water constraints in Chile can shave double-digit percentages off group copper output.
For investors and analysts, the key variable to monitor is whether BHP's non-Chilean copper assets, principally Olympic Dam in South Australia, can offset the guided Chilean decline. The half-year crossover point, when copper's US$7.95 billion overtook iron ore's US$7.50 billion, was a margin event driven by both copper price strength and iron ore softness. If iron ore prices recover while Chilean copper volumes fall, the earnings mix could partially revert, though the full-year FY2026 data, with copper above 50% of group EBITDA, suggests the structural tilt is now firmly in place.
The dividend at US$1.72 per share signals confidence in cash generation, but it arrives alongside a production forecast that introduces execution risk into the copper growth story that delivered this year's record result. BHP's management is effectively asking investors to weigh a record earnings year and a four-year-high payout against a guided copper production decline of up to 15.5% in the year ahead. How the market prices that trade-off will depend on whether the Chilean headwind is viewed as transitory grade-related weakness or a more persistent structural constraint on the copper thesis that now sits at the centre of BHP's earnings profile.
