In-Depth Analysis Report on BHP's Copper Production Guidance Upgrade

Based on the above data, I now provide you with a systematic and comprehensive analysis report.

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BHP Group released its H1 FY2026 operational bulletin in January 2026. Based on the outstanding performance of its key mines,

[0][1]. The main reasons for this adjustment are:

• The throughput of the concentrator at Chile’s Escondida Copper Mine hit an all-time high
  [1], which is the world’s largest copper mine, with BHP holding a 57.5% stake
• Antamina Copper Mine increased its production target
  [1], with BHP holding a 33.75% stake
• Copper SA achieved record refined gold production
  [1], benefiting from the recovery of operational stability at Olympic Dam after weather-related power outages in FY2025

Mike Henry, CEO of BHP, said: “The higher-than-expected production is driven by the strong performance of the large Escondida copper mine in Chile, and will help the company further capitalize on record prices.”[1]

Indicator	Figure
Actual copper production in FY2025	2.017 million tonnes
Original guidance for FY2026	1.8-2.0 million tonnes
New guidance for FY2026	1.9-2.0 million tonnes
Increase in lower limit	+100,000 tonnes

Notably, copper production in Q2 FY2026 (ending December) was

, down 1% quarter-on-quarter and 4% year-on-year[0], but total H1 production was basically flat year-on-year at 984,100 tonnes[0].

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Copper prices performed strongly in 2025, repeatedly breaking previous historical highs:

• LME copper price broke through the historical peak of $11,952 per tonne
  [2]
• The main SHFE copper contract exceeded the 94,000 yuan per tonne mark for the first time
  [2]
• US copper futures prices soared to record highs, with market concerns about copper supply shortages continuing to mount[1]

Major institutions are generally optimistic about 2026 copper prices, forming a consensus expectation of

:

Institution	Forecast target/range	Time frame
Goldman Sachs	$5.17/lb (approx. $11,400/tonne)	2026 average price[3]
UBS	$11,000/tonne	Target for September 2026[3]
JPMorgan	Approx. $11,000/tonne	2026 average price[3]
Citigroup	$11,000-$12,000/tonne	Short-to-medium term[3]
Bank of America	$5.13/lb (approx. $11,300/tonne)	2026 average price[3]
TD Securities	$5.25/lb (approx. $11,600/tonne)	Upgraded forecast[3]

[2][3]

1. Increasing mining difficulty
   : As mines go deeper, ore grades decline, and ore hardness increases, capital expenditures to maintain current production continue to rise[2]
2. Slow supply growth
   : Goldman Sachs predicts that the global copper mine supply will grow at an average annual rate of only 1.5% between 2025 and 2030[2]
3. Insufficient new project approvals
   : 2014-2022 was regarded as a “tightening period” for the copper mining industry, with the average annual number of new project approvals by major mining companies dropping 45% compared to 2007-2013[3]
4. Supply disruptions among competitors
   : BHP pointed out that “the strong copper price is driven by healthy demand and supply disruptions among some competitors”[1]. Freeport McMoRan’s Grasberg Mine suspended production due to an accident in April 2025, and it is expected to resume pre-accident production levels no earlier than 2027, with copper and gold production in 2026 expected to drop by approximately 35% compared to previous forecasts[1]

1. Demand from AI and data centers
   : Copper’s strategic position as a “new energy infrastructure metal” has been strengthened[2]
2. Energy transition
   : The rapid expansion of electric vehicles, high-voltage transmission systems, and renewable energy facilities may drive annual copper demand growth of over 2.5%[2]
3. Infrastructure investment in Western countries
   : Infrastructure investment and energy transition drive sustained growth in copper demand[2]
4. Inventory transfer effect
   : Global copper stocks migrated to the US in 2025, with New York copper prices once being nearly $3,000 per tonne higher than LME copper prices[2]

• The
  $10,000 per tonne bottom
  of copper prices has been confirmed by supply-side structural challenges[2]
• To balance the market in the latter part of this decade, investment in South American brownfield projects is necessary, and the price required to launch these projects is at least
  $10,500 per tonne
  , which forms a solid bottom for copper prices[2]
• Current copper prices are more than 30% above the 95th percentile cost curve of global copper mines, providing a basic incentive for project investment[3]

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The

in BHP’s production guidance has relative to its full-year guidance of 1.9-2.0 million tonnes. From the perspective of supply-demand balance:

• The global refined copper market is expected to have a surplus of approximately
  180,000 tonnes
  in 2026[2]
• BHP’s incremental output accounts for
  56%
  of the expected surplus
• The global copper mine supply gap is expected to peak in 2028-2030, with a supply-demand gap of approximately
  7 million tonnes
  (assuming 3% annual demand growth)[3]

Period	Market Status	Main Driving Factors
2025-2026	Small surplus → tight balance	Mine production increases vs demand growth
2027-2028	Widening supply-demand gap	Insufficient new production capacity + sustained demand growth
Post-2029	Structural shortage	Declining mine grades + project delays

Scenario	Copper Price Range	Trigger Conditions
Base scenario	$10,000-$11,000/tonne	Basic supply-demand balance, stable macro environment
Optimistic scenario	$11,000-$12,000/tonne	Sustained supply disruptions, demand exceeding expectations
Extreme scenario	$15,000-$25,000/tonne	Gap materializes in 2027-2030[3]

: BHP’s production increase , but may have a certain calming effect on market sentiment and short-term speculative positions in the short term.

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Indicator	Figure
Current share price	$63.87
Market capitalization	$162.17 billion
Price-to-Earnings (P/E)	18.17x
Return on Equity (ROE)	19.66%
Net Profit Margin	17.59%
Current Ratio	1.46

Scenario	Intrinsic Value	Relative Upside from Current Price
Conservative scenario	$236.45	+270.2%
Neutral scenario	$306.86	+380.4%
Optimistic scenario	$697.81	+992.5%
Probability-weighted value	$413.71	+547.7%

1. Increased certainty of copper business growth
   : The upward revision of production guidance validates the operational improvement of the Escondida copper mine, making the copper business an important growth engine for the company[1]
2. Advantages of diversified metal portfolio
   : In addition to copper, the company also has core assets such as iron ore (production increased by 5% to 69.7 million tonnes) and coking coal[0]
3. Cost control capability
   : Despite inflationary pressures, BHP’s unit costs remain at a relatively low level in the industry[1]
4. Capital return discipline
   : The company maintains strict capital allocation discipline and focuses on shareholder returns

Company	Ticker	Copper Business Share	P/E Valuation	Investment Characteristics
BHP Group	BHP	~30%	18.2x	Diversified metal portfolio, strong anti-cyclicality
Freeport-McMoRan	FCX	~75%	22.5x	Pure copper mining target, maximum elasticity
Rio Tinto	RIO	~18%	12.8x	Iron ore-focused, copper as growth driver
Zijin Mining	601899	~65%	25.3x	Leading Chinese player, strong growth

• Leading copper mining companies
  : BHP Group, Freeport-McMoRan, Rio Tinto, Glencore, etc., will directly benefit from rising copper prices[3]
• Copper mining equipment suppliers
  : Mining machinery and concentrator equipment manufacturers will benefit from the recovery of capital expenditures in the industry[3]

• Low-cost producers
  : At current copper prices, projects with unit costs below $2 per pound have significant profit margins[3]
• Capacity expanders
  : Mining companies with brownfield expansion projects will benefit from simultaneous growth in volume and price

• Long-term upward shift in copper price center
  : Bank of America predicts that copper prices need to reach $20,000 per tonne to incentivize sufficient new supply development[3]
• 7 million-tonne gap by 2035
  : The continuous expansion of supply-demand gaps will support the long-term high operation of copper prices[3]

Risk Type	Details	Impact Assessment
Price Risk	Macroeconomic slowdown, demand falling short of expectations	May lead to copper price corrections
Supply Risk	Accelerated commissioning of new projects, increased scrap copper supply	May limit upward potential
Cost Risk	Inflationary pressures, labor shortages, rising environmental compliance costs	Compresses profit margins
Policy Risk	Adjustments to mining taxes, export restrictions, stricter environmental regulations	Affects profitability
Geopolitical Risk	Political instability in Chile and Peru, risk of resource nationalization	Affects supply stability

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• BHP Group (BHP)
  : As the world’s largest diversified mining company, BHP combines the upside from rising copper prices with the defensiveness brought by business diversification. Current DCF valuation shows significant undervaluation, with ample margin of safety.

• Freeport-McMoRan (FCX)
  : A pure copper mining target with the highest copper business share (~75%), offering maximum elasticity to copper prices. Attention should be paid to the resumption progress of its Grasberg Mine.
• Zijin Mining (601899)
  : Leading Chinese copper mining company with strong domestic resource integration capabilities and prominent growth.

• Rio Tinto (RIO)
  : Although its copper business share is relatively low, its iron ore business provides stable cash flow, making it a stable choice in the portfolio.

Phase	Time Window	Strategy Focus
Short-term	Q1-Q2 2026	Accumulate on dips; copper prices are expected to receive support amid supply concerns
Medium-term	Q3-Q4 2026	Focus on the realization of peak-season demand; copper prices may break through the upper limit of the range
Long-term	2027-2030	Supply-demand gap expands; hold firmly to enjoy trend-driven gains

• Initial Position
  : It is recommended that the allocation ratio of copper mining targets does not exceed 15-20% of the portfolio
• Addition Conditions
  : Copper prices pull back below $10,000 per tonne, or major supply disruption events occur
• Reduction Conditions
  : Short-term copper price increases exceed 30%, or obvious bubble signs appear in valuations

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1. BHP’s upward revision of production guidance is positive
   : Although the 100,000-tonne increase is not large in absolute terms, it highlights the operational improvement and cost competitiveness of the company’s copper mining assets, providing marginal support against the backdrop of tight global copper supply.
2. The long-term upward trend of copper prices remains unchanged
   : Despite BHP’s production increase, the global copper market in 2026 will still be in a high-range box pattern of “support at the bottom, resistance at the top”. In the long run, structural supply-demand gaps will support a continuous upward shift in the copper price center.
3. Investment value of copper mining companies is prominent
   : Leading copper mining companies will directly benefit from rising copper prices, and DCF valuations show that leading companies such as BHP are significantly undervalued, with favorable margin of safety and upside potential.
4. Investment strategies should focus on the long term
   : It is recommended that investors accumulate high-quality copper mining targets on copper price pullbacks, and share the dividends from copper demand growth brought by global energy transition and AI infrastructure construction.

Copper prices are affected by multiple factors such as macroeconomics, geopolitics, and supply-demand fundamentals, and are highly volatile. Investors should make cautious decisions based on their own risk tolerance, and closely monitor global copper mine supply dynamics and changes in macroeconomic conditions.

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[0] Jinling API Market Data - BHP Group (BHP) Company Profile, Financial Analysis and DCF Valuation Data

[1] China Financial Information Network - “BHP Raises Copper Production Guidance; Potash Project Costs Rise Again” (https://m.cnfin.com/dz-lb//zixun/20260120/4368170_1.html)

[2] EBC Financial Group - “2026 Copper Price Forecast: Copper Prices Enter a New Range” (https://www.ebc.com/zh-cn/jinrong/273610.html)

[3] HSTONG - “Warning! Is a Copper Mine Gap Coming in 2026? UBS In-Depth Report” (https://www.hstong.com/news/detail/26011411043923482)

[4] GuruFocus - “BHP Group (BHP) Raises Copper Production Forecast Amid Record Prices” (https://www.gurufocus.com/news/4170092/bhp-group-bhp-raises-copper-production-forecast-amid-record-prices)

[5] Benzinga - “BHP Ups Copper Outlook To Catch Record Pricing, Competitors’ Supply Hits Help” (https://www.benzinga.com/trading-ideas/movers/26/01/49999320/bhp-ups-copper-outlook-to-catch-record-pricing-competitors-supply-hits-help)

[6] DeVere Group - “Copper Price Forecast 2026: Analysts Issue Bullish Outlook Amid Supply Shortage” (https://www.devere-group.com/copper-price-forecast-2026-analysts-issue-bullish-outlook-amid-supply-shortage/)

[7] Securities Times - “Copper Doctor in the Wind” (https://www.stcn.com/article/detail/3558833.html)