BHP, one of the world’s biggest mining companies, recently shared some exciting news. The company’s revenue grew by 3%, reaching a whopping $55.7 billion. This growth was largely due to higher prices and increased sales of copper and iron ore, even though prices for coal and nickel dropped. BHP’s cash profit also went up by 4%, totaling $29 billion.

Copper has been shining brightly for BHP. For the second year in a row, copper production rose by 9%, and the company expects it to go up another 4% next year. Iron ore, another key player, saw a 1% increase in production. BHP is planning to spend around $10 billion in the coming year, with almost half of it going towards its copper operations.

The company’s free cash flow—basically the cash it has after paying its bills—more than doubled to $11.9 billion. Meanwhile, BHP managed to reduce its debt by 18%, bringing it down to $9.1 billion. However, the company faced two significant losses: a $2.7 billion write-down in its nickel business and a $3.8 billion charge due to a dam failure at the Samarco operation.

Despite these setbacks, BHP announced a final dividend of $0.74 per share, bringing the total for the year to $1.46, equivalent to $7.4 billion. Investors seemed pleased, as BHP’s shares went up by 1.5% in early trading.

So, what’s driving BHP’s focus on copper? The company had tried to buy parts of its rival, Anglo American, but when that didn’t work out, BHP decided to double down on its own assets. Copper is seen as a future-facing commodity, with demand expected to rise steadily over the next few years. BHP is getting ready to benefit from this by ramping up production and planning expansions at both new and existing sites.

Iron ore, however, remains BHP’s main money-maker. Demand has been strong in countries like China and India, but China’s situation is a bit uncertain. The Chinese economy hasn’t bounced back as strongly as some hoped, and the impact of recent stimulus policies is still unknown. This makes the future of iron ore demand a bit of a gamble.

But BHP has some advantages on its side. Western Australia, where most of BHP’s iron ore is produced, has some of the lowest production costs in the world. The Escondida copper mine in Chile is also known for its low costs. These factors help BHP maintain higher profit margins compared to its competitors.

With the Anglo American deal off the table, BHP is focusing its investments on copper and potash. Potash is a mineral used in fertilizer, and unlike other commodities, it’s needed by farmers no matter how the economy is doing. BHP’s Jansen project, set to become one of the world’s largest potash mines, is expected to start production in 2026. However, it’s a big investment, and there’s a lot of risk involved in making sure everything goes as planned.

Nickel, once seen as a growth opportunity, has hit a rough patch. A global oversupply of nickel has caused BHP to halt its investments in this area. The company even had to write down the value of its nickel operations and temporarily suspend production. This highlights how quickly markets can change and the challenges miners face in staying ahead.

Despite these challenges, BHP’s low-cost, high-margin assets are attractive, and the company has several growth opportunities in the medium term. However, China’s uncertain economic situation remains a concern. If things don’t improve, BHP’s high valuation could put it at risk if commodity prices take a hit.

One area where BHP and other mining companies face ongoing challenges is in managing environmental, social, and governance (ESG) risks. These include issues like carbon emissions, waste management, and community relations. BHP has been recognized for its strong management of these issues, but the risks are always present in the mining industry.

In summary, BHP is betting big on copper and iron ore to drive its future growth. While there are risks and challenges ahead, the company’s focus on low-cost production and strategic investments in future-facing commodities like copper and potash position it well for the years to come.