Coming up on the SPS on the money podcast, my interview with BHP CFO Vandita Pant on the growing copper business and the future for iron ore. Plus, we take a closer look at AI and why it'll be an investment theme for the next decade. All of that and more next.
Hi everyone, welcome to the SPS on the Money podcast for this Tuesday, the 17th of February 2026. A day where the Australian share market rose, the S&P/ASX 200 up 2%. I'll have some details with Jonathan Sheed from State Street Investment Management in a few moments. But first, shares. The world's largest listed miner, that's BHP, hit a record high today as it delivered a 5.6 billion US half-year profit. That's up 28%. BHP also increased its dividend by nearly 50% to 73 US cents per share. Its CFO, Vandita Pant, told me a deal to sell the rights to future silver production from one of its mines will help fund future dividends. Now the miner saw record half-year iron ore production but it's copper which proved to be instrumental and to tell me more about that I spoke with the CFO Vandita Pant.
Well, Ricardo, for this half year, half of our earnings were copper and this is part of the execution of our strategy for the last two or three years that our copper exposure has grown. For example, in Escondida, which is a mine that we have in Chile, this year not only has it delivered very well but we are increasing the guidance for this year for Escondida and for next year. Overall, copper now being half of EBITDA and not only that, we have a suite of really great attractive growth options in Chile, in Argentina, here in Australia, and in the US which will further increase our copper growth and part of the portfolio. Last four years we have grown 30% on copper and next up to mid-30s, this will go up further by 40%.
It's interesting you mention growth because the next question is about whether this growth will come organically or through acquisitions. To what extent is it all about scale? Especially when it comes to copper, you know your rival Rio Tinto has made no secret about wanting to merge with Glencore. How will BHP grow, especially in that copper field?
So, very important to go through how we think of copper or indeed any commodity. We do not think of growing for the scale of it just for the sake of it. Our value lens is really important and what we have is a rich suite of growth options which are also very attractive. If you look at our capital intensities of growth of copper projects, these are some of the best options in the industry. So to give you a sense, from where we are to mid-30s we grow copper by 5% on a compounded basis. Another way to think of this is we are already the world's largest copper producer with the largest resource base and will grow our copper equivalent tons to 2 and a half million tons including the byproducts for our share. This is a very rich tapestry of options. Now we are a big company and that does mean that we will look at inorganic from time to time but our bar for inorganic is very high. It has to create real shareholder value and we are very disciplined about it. But if I were to just say that if we were to execute just on our organic suite of options, our shareholders will do very well not just now but in future with this growth trajectory.
So with copper growing, you've also locked in a silver streaming agreement. You're expanding potash. What role do you see iron ore playing in your portfolio? And to what extent does China fit in here given the lower prices?
So actually iron ore demand has been very resilient in the past six months and China continues to produce a billion tons of steel. As you would have seen, we almost a decade back said that the iron ore market will start to steel market will start to plateau, and with that our strategy has been to really expand on the margin for iron ore business and become the lowest cost producer for iron ore globally among the majors and that is exactly what our business has done. It currently we make more than $10 a ton higher free cash flow, higher cash in our iron ore business than our nearest competitor and that is an important one as the demand starts to plateau over a period of time in the 2020s and then gradually reduces but will be a great business for us and as you can see we are investing in that business going from here to 305 million tons by FY28 as well. So we're continuing to invest in that business. It's a great business and in the half we had record production and record shipment and iron ore prices have been good as well.
Vandita shareholders would appear to be pretty happy because shares are at a record high, a near 50% increase in the interim dividend, a 60% payout ratio. So for those shareholders seeking security in dividend levels, should they continue to expect similar types of payouts in the medium term?
So our shareholders know that we really look for reliability with BHP. For past 20 plus years, our margins have been more than 50%. We have rewarded our shareholders over last 10 years with more than hundred billion dollars of dividends. And this performance gives us confidence and should give our shareholders confidence that we can manage good shareholder returns along with investing on behalf of our shareholders with attractive growth options while keeping our balance sheat really robust and strong. Our capital allocation framework means that every time 50% dividend comes as a minimum and then based on the cash flow that we generate either from our operations or indeed like the deal we have done today of silver which has brought in $4.3 billion in cash upfront from silver which is yet to be produced in our Anamina asset, all that cash comes into the capital allocation framework and then we allocate some to growth and some to shareholders. So I would say our shareholders can look forward to reliable performance which means strong cash flows from our operations every way in which we will unlock value and be able to give attractive shareholder returns with minimum 50% but attractive shareholder returns with top-ups and attractive growth options which means shareholders get value today and there is a lot more to come.
Final question on the global economy. In the statement to the ASX today, BHP says it expects global economic growth of around 3% this calendar year. That China's economy is resilient as you pointed to earlier while India continues to outperform. That seems pretty optimistic. What gives you that confidence about the global environment given the number of uncertainties out there?
So the confidence in the underlying global economy around 3% growth comes with a very supportive backdrop of fiscal and monetary policies which economies and countries are using to make sure that they can navigate any uncertainty and as you said we have said that we continue to see a real great momentum in India in terms of investment, in terms of advanced manufacturing base and indeed with more and more focus on infrastructure going there which is very good for both metals as well as met coal demand. China's 15th plan, the five-year plan, is very much focused on consumer demand but also advanced technology while continuing their stronger exports and then US very steady and we expect that to be steadily growing with the backdrop of pro investment policies. Overall, confident in the outlook but also very confident in what we can control through being really focused on our operational excellence of executing with lowest cost possible through our assets where you are seeing the performance come through and executing on our attractive growth projects.
That's the chief financial officer of BHP, Vandita Pant, there. BHP shares doing particularly well today, the company rising by 4.7% by the close $52.74. It's the main reason why the Australian share market finished stronger today. The S&P/ASX 200 at 8,958, that's a rise of 0.2% off the back of mining stocks doing particularly well. About five of the sectors finishing in positive territory. Materials doing best followed by consumer discretionary and consumer staples. The worst performing property related stocks and energy. So the best performer on the market today was JB Hi-Fi up by 8% building on the gains it made yesterday following its profit results. Promedicus up by 7.6% and the A2 milk company also doing well again today. Shares up by 6.2%. The worst performer following its profit results, Reliance Worldwide down by about 9%, that's a plumbing company. Lynas Rare Earths down by 5.5% and Treasury Wines continuing to extend on the losses it made yesterday, shares down by 4.6%. For more on today's market action, I spoke with Jonathan Sheed. He's the head of investments at State Street Investment Management.
Jonathan, how would you describe investor sentiment at the moment?
