Our opinion on the current state of BHP(BHG)
BHP is a global commodities company headquartered in Melbourne, Australia, with operations in minerals, oil, and gas, and employing around 62,000 people, mostly in the Americas and Australia. The company is involved in producing a wide range of resources, including copper, iron ore, coal, oil, and gas.
Key assets of BHP include:
- **Escondida** (57.5% ownership) in Chile, one of the world's largest copper producers, also producing gold and silver.
- **Antamina** (33.75% ownership) in Peru, producing copper and zinc.
- **Pampa Norte** (100% ownership) in Chile, producing copper cathode in the Atacama Desert.
- **Samarco** (50% ownership) in Brazil, producing iron ore.
- **Cerrejón** (one-third interest) in Colombia, an open-cut coal mine.
- **Saskatchewan** mineral rights in Canada, holding one of the world’s largest unexploited potash deposits.
- **Olympic Dam** in Australia, which is one of the world's largest copper, uranium, and gold ore bodies.
- **Western Australia Iron Ore** (WAIO), a network of five mines linked by over 1,000 km of railways.
- **Queensland Coal**, which includes Mitsubishi Alliance and Mitsui Coal.
- **Mt. Arthur** open-pit coal mine in New South Wales.
- **Nickel West** in Australia, a nickel mine with smelting and refining capabilities.
- In petroleum, BHP holds resources in the Gulf of Mexico, Australia, Trinidad, and Tobago.
In its results for the six months ending 31st December 2023, BHP reported a 6% increase in revenue but a 48% drop in headline earnings per share (HEPS). The company’s tangible net asset value (NAV) was $8.68 per share, compared to $8.91 in the previous period. BHP emphasized its status as the lowest-cost producer of iron ore at its WAIO operations and highlighted record copper production at its South Australia and Chile operations. Additionally, it approved Jansen Stage 2 in Canada, which will nearly double its planned potash production capacity.
The company noted commodity price volatility and softer-than-expected demand in developed markets, although China’s demand remained healthy despite housing market weakness, and India emerged as a strong performer. For the three months ending 30th September 2024, BHP reported a strong start to the 2025 financial year, with increased production across major commodities: copper production was up 4% due to higher grades and recoveries at Escondida, and WAIO production was up 3%.
BHP’s share price has been in a long-term upward trend since the commodity cycle turned positive in January 2016. However, it has been affected by falling commodity prices since early 2024. While the share remains volatile due to its exposure to commodity prices, it continues to be supported by its diversified asset base.
On 25th April 2024, BHP announced a share offer for the entire issued share capital of Anglo American, with the condition that Anglo unbundle its holdings in Amplats and Kumba. Anglo rejected the offer as well as two subsequent improved offers. Negotiations are ongoing, and this development could spark a bidding war with competitors like Rio Tinto and Glencore.
Key assets of BHP include:
- **Escondida** (57.5% ownership) in Chile, one of the world's largest copper producers, also producing gold and silver.
- **Antamina** (33.75% ownership) in Peru, producing copper and zinc.
- **Pampa Norte** (100% ownership) in Chile, producing copper cathode in the Atacama Desert.
- **Samarco** (50% ownership) in Brazil, producing iron ore.
- **Cerrejón** (one-third interest) in Colombia, an open-cut coal mine.
- **Saskatchewan** mineral rights in Canada, holding one of the world’s largest unexploited potash deposits.
- **Olympic Dam** in Australia, which is one of the world's largest copper, uranium, and gold ore bodies.
- **Western Australia Iron Ore** (WAIO), a network of five mines linked by over 1,000 km of railways.
- **Queensland Coal**, which includes Mitsubishi Alliance and Mitsui Coal.
- **Mt. Arthur** open-pit coal mine in New South Wales.
- **Nickel West** in Australia, a nickel mine with smelting and refining capabilities.
- In petroleum, BHP holds resources in the Gulf of Mexico, Australia, Trinidad, and Tobago.
In its results for the six months ending 31st December 2023, BHP reported a 6% increase in revenue but a 48% drop in headline earnings per share (HEPS). The company’s tangible net asset value (NAV) was $8.68 per share, compared to $8.91 in the previous period. BHP emphasized its status as the lowest-cost producer of iron ore at its WAIO operations and highlighted record copper production at its South Australia and Chile operations. Additionally, it approved Jansen Stage 2 in Canada, which will nearly double its planned potash production capacity.
The company noted commodity price volatility and softer-than-expected demand in developed markets, although China’s demand remained healthy despite housing market weakness, and India emerged as a strong performer. For the three months ending 30th September 2024, BHP reported a strong start to the 2025 financial year, with increased production across major commodities: copper production was up 4% due to higher grades and recoveries at Escondida, and WAIO production was up 3%.
BHP’s share price has been in a long-term upward trend since the commodity cycle turned positive in January 2016. However, it has been affected by falling commodity prices since early 2024. While the share remains volatile due to its exposure to commodity prices, it continues to be supported by its diversified asset base.
On 25th April 2024, BHP announced a share offer for the entire issued share capital of Anglo American, with the condition that Anglo unbundle its holdings in Amplats and Kumba. Anglo rejected the offer as well as two subsequent improved offers. Negotiations are ongoing, and this development could spark a bidding war with competitors like Rio Tinto and Glencore.
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