Our opinion on the current state of BHP(BHG)

BHP Group, headquartered in Melbourne, Australia, stands as one of the largest and most diversified global commodities companies. With operations primarily in the Americas and Australia, BHP employs around 62,000 people and engages in the production of essential commodities such as copper, iron ore, coal, oil, and gas.

Among its notable assets, BHP holds a 57.5% stake in the Escondida mine in Chile, the world's largest copper producer, which also yields gold and silver. It also owns significant shares in other major mining operations such as the Antamina mine in Peru, producing copper and zinc, and the 100% owned Pampa Norte, which produces copper cathode in Chile's Atacama Desert.

In Brazil, BHP owns 50% of the Samarco mine, known for its iron ore production. It also holds a one-third interest in the Cerrejon coal mine in Colombia, one of the largest open-cut coal mines in the world. In Canada, BHP holds rights to one of the world's largest unexploited potash deposits in Saskatchewan.

BHP's Australian operations are extensive, including the Olympic Dam, one of the largest deposits of copper, uranium, and gold globally. The Western Australia Iron Ore operation consists of a network of five mines connected by over 1,000 kilometers of railway, reinforcing its status as a major player in the iron ore market. Additionally, BHP owns Queensland Coal, which includes the Mitsubishi Alliance and Mitsui Coal, and the Mt. Arthur open-pit coal mine in New South Wales. Its Nickel West operation in Australia includes a fully integrated mine with smelters, concentrators, and a refinery.

In the petroleum sector, BHP possesses high-quality resources in the Gulf of Mexico, Australia, Trinidad, and Tobago, which complements its solid minerals portfolio.

For the six months ending on 31st December 2023, BHP reported a revenue increase of 6% despite a 48% drop in headline earnings per share (HEPS). The company's tangible net asset value (NAV) slightly decreased from $8.91 to $8.68 per share. BHP noted operational highlights, including record production in copper at its operations in South Australia and Chile, and strong performance in Western Australia's iron ore sector. Furthermore, BHP is expanding its potash production capacity in Canada, illustrating its ongoing strategic growth initiatives.

Looking at the nine months to 31st March 2024, BHP remains on track to meet its production targets for copper, iron ore, and energy coal. This reflects robust performance and favorable ore grades, particularly highlighted by increased copper volumes from operations in South Australia and Chile.

BHP's performance is intricately linked to global commodity prices, making its shares subject to significant volatility. Despite this, the company has shown resilience, managing to recover from the impacts of the coronavirus pandemic with a strong upward trend in its share price since March 2020, though it has faced challenges with falling commodity prices starting in 2024. As a major player in the global commodities market, BHP's fortunes are closely tied to the overall health of the global economy, with specific attention to demand from regions like China and India. As such, while BHP is positioned for long-term growth, investors should be mindful of the inherent volatility associated with the commodities sector.