BHP outperforming peers in terms of liquidity

According the report, the world’s largest miner has been able to stay ahead of the pack thanks to the quality and potential of its assets and projects, as well as the company’s marketing and diversification strategies.

As a testament to its industry-leading status, BHP has consistently been able to generate higher cash flows than its competitors over recent years (see graph below).

In FY2018 the company posted a profit of $8.9 billion, 33% higher y-o-y, and generated strong cash flows of more than $12 billion and achieved debt reduction of about $5.4 billion. The miner announced last October it would return $10.4 billion to shareholders via a stock buyback and special dividend, after the sale of its US oil and gas assets.

BHP’s performance “will remain positive in the coming years thanks to a diversified portfolio of large, long-life and low-cost assets across various commodities and geographies,” the report says, citing the fact that many of BHP’s current exploration are in low-risk jurisdictions.

Fitch Solutions adds that they believe BHP will cut debt further by spending less on greenfield exploration, and it will also see a boost in productivity through technology investments. The company’s South Flank iron ore deposit will be the first to fully embed cutting-edge technology like autonomous drills and trucks.