Freedom Broker analysts maintain their “Hold” rating on shares of mining group BHP Group (BHP), cutting the target price from A$66 to A$55 per share on the Australian Securities Exchange (ASX). This implies downside potential of 3.73% versus the A$57.13 price cited in the report. Record results in the iron ore business support the company; however, lower copper grades in ore and commodity price risks limit the shares’ appeal.
What BHP is
BHP is an international mining group working with iron ore, copper, and coal and developing potash fertilizer production. The core of its business remains the Western Australia Iron Ore (WAIO) complex in Western Australia. Analysts link long-term growth opportunities to expansion of copper assets and the launch of the Jansen potash project.
Freedom Broker’s target price for BHP American depositary receipts is $77. One such receipt corresponds to two ordinary shares. The 3.73% downside potential cited in the report is calculated for shares on the ASX.
High copper prices come with falling output
The key question for BHP is whether the company can meet its annual copper plan after a weaker start to the financial year. Freedom Broker estimates that to reach the lower end of guidance over the remaining three quarters, it will need to produce about 1.25 million tonnes, or roughly 415 thousand tonnes per quarter. This is above the July–September result.
In Q1 of fiscal year 2027, which corresponds to July–September 2026, BHP produced 400.7 thousand tonnes of copper. The result was affected by a planned decline in metal grade in ore, maintenance, adverse weather in Chile, safety-related stoppages, and a conveyor failure at Carrapateena.
Copper grade shows how much metal is contained in the ore being processed. When it falls, more material must be processed to obtain the same volume of copper. At Escondida, the copper grade in ore fed to the concentrator was 0.81% versus an annual benchmark of about 0.70%. At the same time, analysts note the need to restore the metric in order to meet production plans. The average realized copper price reached $7.01 per pound, up 53% year over year. Thus, price conditions support the copper segment, but production constraints remain.
The iron ore business set records
The group’s iron ore production rose 4% to 66.5 million tonnes. The WAIO complex set production records at mines and ports. Total WAIO output was 71.9 million tonnes, including 64.3 million tonnes attributable to BHP. Sales from the complex reached 74.0 million tonnes. Freedom Broker forecasts full-year WAIO output at 262 million tonnes on BHP’s attributable basis—at the top end of the company’s 253–264 million tonne range.
However, the average realized iron ore price fell 9% to $76.27 per wet tonne, a unit of measurement that accounts for moisture contained in the material. In coal, BMA production increased 1% to 4.9 million tonnes attributable to BHP. The average realized metallurgical coal price rose 34% to $242.82 per tonne.
Copper projects must offset deteriorating ore quality
BHP has approved funding for a new concentrator at Escondida. The project cost is estimated at $5.4–6.3 billion for the entire facility, with additional capacity of 230–270 thousand tonnes of copper per year. First copper is scheduled for calendar years 2031–2032.
The project should offset a decline in Escondida production to 900–1,000 thousand tonnes per year in fiscal years 2028–2031 as ore grades deteriorate. Another focus area is Copper South Australia. A decision on a two-stage development of smelting capacity is expected in calendar year 2027. It is linked to a plan to reach production of about 500 thousand tonnes of copper per year by 2035.
Freedom Broker believes advancing the copper projects could increase the value of BHP’s assets. At the same time, analysts highlight the risk of construction budget overruns, which could worsen the company’s investment case.
Jansen is nearing launch
The first stage of the Jansen potash project, costing $8.4 billion, is 87% complete. Production is scheduled to begin in mid-2027, and then over two years the project should ramp up to capacity of 4.15 million tonnes per year.
The second stage, costing $6.9 billion, is planned for the end of fiscal year 2031. Launching Jansen will create a new revenue stream for BHP; however, cost growth remains a risk factor: the cost of the first stage has already increased by 47%.
Why analysts maintain a “Hold” rating
BHP left unchanged its annual production and unit-cost guidance across all key commodities. The copper plan is 1,650–1,800 thousand tonnes, including 1,000–1,100 thousand tonnes at Escondida.
Freedom Broker expects fiscal year 2027 EBITDA of $31.6 billion, which is 2% below the consensus forecast. EBITDA reflects earnings before interest, taxes, and depreciation and amortization. In their calculations, analysts use a tax rate of about 39%, close to the upper end of BHP’s 35–40% range.
The cut in the target price is primarily due to an update to the valuation methodology and price assumptions. Experts now equally weight the value of individual assets and a valuation based on the EV/EBITDA multiple for fiscal year 2027.
Key risks include dependence on China, which accounts for about 62% of revenue, and a potential decline in iron ore prices. Weak demand from construction and an increase in raw material supply could put pressure on cash flow and dividends.
Copper has already become the most important profit source
In February, BHP reported results for the first half of fiscal year 2026, which ended on December 31. Profit attributable to shareholders rose 22% to $6.20 billion, exceeding the consensus forecast of $6.03 billion.
Operating profit from the copper segment, including by-products, reached $7.95 billion, surpassing the iron ore business’s $7.50 billion. Copper accounted for 51% of the group’s underlying operating profit of $15.46 billion. Interim dividends were $0.73 per share with a payout ratio of 60%.
These results show copper’s growing importance for BHP. Freedom Broker’s October review points to the next question for investors: how successfully the company can sustain production and execute new projects amid declining ore grades.
This is not an individual investment recommendation.