Copper is the key driver of BHP's success

Net profits for the year to 30 June surged 63% to $10.45bn (�5.54bn), from a restated $6.4bn last time.

The massive profits were reported during a strike at a Chilean mine responsible for 8% of the world's copper where BHP is the majority owner.

Workers at the mine want a pay rise, saying they deserve a share of BHP's booming profits.

The Anglo-Australian firm had been widely expected to post record profits for its third consecutive year, amid a background of record commodity prices and strong demand from emerging nations such as China and India at a time when supplies are tight.

But its shares fell nearly 4% to 1014 pence as investors expressed concerns about future pressure on profit margins.

Market strength

It's a pretty strong result, and has exceeded the market forecasts Sean Fenton, Jenkins Investments Check BHP's shares

"Commodity markets remain strong, underpinned by supply restrictions and a generally constructive global economy," the company said in a statement.

BHP also unveiled record annual production levels for aluminium, copper, iron ore, nickel and natural gas.

The company also announced plans to return $3bn to shareholders through a share buyback, on top of the $2bn already returned earlier in the year through another buyback.

"It's a pretty strong result, and has exceeded the market forecasts," Sean Fenton, portfolio manager at Jenkins Investments said.

BHP remained upbeat about the future delivering a positive assessment of the global economy, despite warnings that rising energy costs and interest rates could slow growth.

"Growth in Asia will help drive the global economy, with Japan's expansion well established," it said, adding that China's economy would continue to grow despite government efforts to cool its rapid expansion. "Elsewhere, the US economy will slow from rapid growth experienced this year but is likely to remain at levels consistent with long-term trends," BHP added.

Strike concerns

BHP's results come as the pay row with workers at Chile's Escondida mine continues.

A 16-day strike at the site has centred on staff demands for an 8% rise in pay, as well as a bonus of $19,000 and better working conditions.

Unions say members have seen no benefit from the recent boom in copper prices and are calling for a share of BHP's "numerous and fabulous earnings" made on the back of their work.

Relations between the two sides have turned increasingly bitter with negotiations between the two sides breaking down at least twice.

Government attempts to get the two sides together at the weekend failed and unions have now threatened to take legal actions against what it claims is "union busting activity" by BHP officials at the site.

A BHP spokeswoman said the firm was not aware of any provocation at the site, adding that Escondida's workers were the highest paid in Chile and BHP always negotiated fairly and in good faith.