BHP Group announced on Tuesday opens a new tab has agreed to lower prices on some of its iron ore sales as it seeks a 2026 supply agreement with China, and indicated record first-half production of the steelmaking ingredient.
The Melbourne-headquartered miner reported a 20 per cent surge in costs for its Jansen potash project in Canada. BHP is also negotiating annual iron ore buying contracts with the Chinese state buyer, China Mineral Resources Group. It signaled that it is exploring additional sales of its products in different markets.
In a statement, BHP said, “During negotiations, we continue to optimise product placement distribution channels and take actions within our operations to preserve operational flexibility and productivity. This has seen some impact to realised price.”
The announcement is an unusual concession by the largest listed miner in the world regarding the effects of its long-standing negotiations with CMRG, which has been attempting to negotiate more favorable terms of entry to Chinese steelmakers, in a developing situation that will be monitored closely by its competitors.
Therefore, BHP has been increasing its production of copper, and iron ore remains its largest profit-making product. Some of the sources reported by Reuters that a Chinese state-owned iron ore buyer has instructed steel mills and traders not to buy various forms of BHP iron ore since September.
According to RBC Capital Markets analyst Kaan Peker, CMRG’s purchase limitations on Chinese steelmakers are expected to reduce spot market supply and support the headline index price, countering growing discounts experienced by BHP.
BHP shares plummeted 2 per cent on Tuesday amid weakness in the broader mining sector. BHP noted that the overall cost of investment in its Jansen stage 1 project would rise to $8.4 billion as compared to an estimated value of between $7 billion and $7.4 billion reported in July 2025.
It claimed that the price escalation was due to the time spent in construction and the number of materials that they had not estimated before. The actual investment cost of the Jansen stage 1 was $5.7 billion at the time of project approval in August 2021.
BHP reported that its Western Australia mine on a 100-basis metric ton basis produced a record 146.6 million metric tons of iron ore in the six months to December 31, 1 per cent or 1 per cent higher than its production in the previous year.
Iron ore production on a 100 percent basis reached 76.3 million metric tons in the December quarter, up from 70.2 million tons in the September quarter. This second-quarter result surpassed a Visible Alpha estimate of 74.3 million tons.
The miner maintained its full-year iron ore production projections at 284 million to 296 million tons, as it pointed out that robust production in the first half of the year had placed BHP in a good position to lead into the third quarter.
BHP increased the lower limit of its copper production expectations. It anticipates producing between 1.9 million and 2 million tons of copper in the financial year ending June 30, which is slightly higher than its earlier estimates of between 1.8 million and 2 million tons. The miner stated that a change in outlook came as a result of good operational performance in its copper assets.
BHP also maintained the annual forecast of coking coal production in the BHP Mitsubishi Alliance as per its production, but indicated that the production would be on the low side of the forecast since it continued to have some geotechnical challenges in its Broadmeadow mine. Thus, BHP will declare its half-year financial results on February 17.
