Miner BHP to pay record dividend after commodity prices jump

Mining giant BHP has handed shareholders a record dividend after boosting profits but warned that global trade tensions and the rise of nationalism could threaten returns in the sector.

The world’s biggest mining firm declared the bumper dividend after it posted its largest annual profit for five years, due to strong commodity prices and cost reductions.

However, shares dipped in early trading as the UK-Australian firm narrowly missed profit and dividend expectations, as it held back funds to deal with cost rises.

BHP reported a 2% rise in underlying profits to 9.1 billion US dollars (£7.5 billion) for the year to June 2019.

The miner said it had “strong cash flow” throughout the period due to record production on several of its operations, as well as higher prices.

It was boosted by jumps in the value of key commodities such as iron ore and copper during the period.

Improvements in the company’s operations were offset by the impact of weather, higher headwinds and unplanned outages during the first half of the year, BHP said.

Andrew Mackenzie, chief executive officer of BHP, said: “Our transformation programmes have the potential to unlock significant value through more productive and stable operations, as we embrace new ways of working and harness new technology.

“This disciplined approach sets us up to deliver strong returns over the long term.

“We enter the 2020 financial year with positive momentum and a strong outlook for both volume and cost.”

Iron ore prices have tumbled this month as global supply has normalised, but the chief said he still expects a strong performance over the current year.

Shares in BHP fell 1% to 1,264p in early trading on Tuesday.