BHP expects inflationary pressures from the pandemic’s disruption of supply chains to last another year or two but underlying demand-driven inflation to persist globally for most of the decade.

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Mr Henry said the company had underestimated the effectiveness of China’s recent squeeze on demand but was starting to see the policies be relaxed.

“As we move into the next five-year plan, the expectation is that there’s going to be a focus on growth, economic stability and probably a bit more infrastructure spending,” he said.

Mr Henry said BHP would not be immune from inflation but could be a net winner as it had the capacity to keep a lid on costs while its revenue rose with commodity prices.

If commodity prices do rise, they will be from an already high base. Prices for BHP’s energy and metallurgical coal for the half-year were close to triple those of 12 months ago, copper and nickel were up 30 per cent each and iron ore prices were 9 per cent higher.

“We’re reshaping the portfolio into one that is almost all comprised of commodities with decarbonisation upside: copper, nickel, potash, and higher quality iron ore and coking coals for steelmaking,” he said.

While embracing the worldwide race to lower emissions in its product suite, BHP is slower than others to decarbonise its own operations.

Australia’s other diversified global miner Rio Tinto announced in October 2021 it would spend $US7.5 billion to halve its operational emissions by 2030. In comparison, BHP plans just a 30 per cent cut this decade with a budget of close to $US4 billion.

Mr Henry said projects to reduce emissions had to compete for capital with other investment options and the current analysis showed the planned spend would produce a negative net present value of $US500 million.

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Rio Tinto will use its balance sheet for $US1.5 billion of Pilbara wind and solar projects to slash gas consumption for power generation at its iron ore mines by 80 per cent.

Mr Henry said BHP would look to third parties to provide cleaner power to its operation, as it had done at its Chilean copper operation, where after “extreme calls” for a royalty increase BHP was more confident of an acceptable outcome.

At the Olympic Dam copper, gold and uranium mine in South Australia BHP was tackling “a legacy of investment in asset integrity” and was focussed on the base business running well before it considered any expansion.

Mr Henry said the Jansen potash project in Canada would become a significant part of BHP’s business over time, with the current focus on executing the $US5.7 billion Stage 1.

Efforts to sell the Mount Arthur energy coal mine continue with six months left of the two years BHP gave itself to exit the commodity that does not meet its criteria of being “future-facing” in a decarbonising world.

The sale of its other hydrocarbon fuel asset - the petroleum division - to Woodside is on track to be completed in the June quarter.

BHP shares were up 0.3 per cent to $48.18 a share when trading closed on Tuesday.

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