Highlights:
- Australia’s export earnings from the mining space are expected to grow to AU$419 billion in 2022–23.
- The EU embargo on Russia and the strong demand for varied commodities can act as a boon for the Australian mining industry.
- BHP (ASX:BHP) Group reported bumper profits for FY22, while RIO recorded a 28% decline in 1H profits.
The mining industry is the backbone of the Australian economy. The country’s export earnings are estimated to grow from AU$405 billion in 2021–22 to AU$419 billion in 2022–23, as per the Resources and Energy Quarterly edition of June 2022.
The growing economic activities leading to strong demand for commodities, along with European Union's embargo on Russia, have made this space very lucrative. The need for reliable and responsible suppliers with robust supply chains is growing.
Many big players operating in the Australian mining space are tapping growth opportunities amid the rising demand for energy and resources.
In this article, we have discussed two ASX-listed mining mammoths, namely BHP Group Ltd (ASX:BHP) and Rio Tinto (ASX:RIO) Limited.
BHP Group Limited (ASX:BHP): The ASX-listed mining company has a market capitalisation of AU$206.79 billion, as of 18 August 2022.
During FY22 ended 30 June 2022, the group registered strong results and achieved strategic milestones. The company posted record EBITDA of US$41 billion, up nearly 16% from the year-ago period.
The WAIO Western Australia Iron Ore segment reported record sales (on a 100% basis) for the third consecutive year. The profit was 34% up from the prior year to US$34.1 billion. The segment realised an EBITDA of US$40.6 billion at a record margin of 65% for continuing operations.
As part of its exploration work, the company is advancing copper targets in countries around the world. Meanwhile, it has been undertaking nickel exploration programs in Canada and Australia.
The total announced returns to shareholders stood at US$36.0 billion.
On 1 June 2022, BHP's Petroleum business completed its merger with Woodside Energy, and the company paid a fully franked specie dividend of US$3.86 per share.
The company also achieved its short-term operational greenhouse gas emissions target of maintaining or lowering emissions from 2017 financial year levels while continuing business growth.
Share performance: The shares of BHP were trading at AU$40.790 apiece midday on 18 August 2022. In the last one month, the company's shares have grown by over 10% but declined by nearly 4% on a YTD basis.
Rio Tinto Limited (ASX:RIO): Another major player in the Australian mining space, RIO delivered largely flat production and solid financial results for the half year period ended 30 June 2022.
Consolidated sales revenue stood at US$29,775 million for the reported period, up 10% year-on-year. The company registered a free cash flow of US$7.1 billion.
RIO realised an EBITDA of US$15,597 million and profits of US$8.91 billion, down 28%.
The company is following its dividend policy of a 50% payout, which took up the value of the interim dividend to AU$4.3 billion, making it the second highest ever interim dividend paid by RIO.
The company’s joint venture for US$1.0 billion with Robe River replacement iron ore mines is nearing completion. To ensure the Kitimat aluminium smelter's long-term, sustainable operation, the construction of Kemano hydropower tunnel project took place in British Columbia. Its second tunnel achieved water flow in June after tunnel construction.
Share performance: RIO has a market capitalisation of AU$35.91 billion. The shares of RIO were trading at AU$96.180 apiece midday on 18 August 2022. The shares have gained nearly 1% in the last one month and shed 3.52% on a YTD basis.