Our opinion on the current state of BHG

BHP, headquartered in Melbourne, Australia, stands as a global leader in the commodities sector, engaging in the processing of minerals, oil, and gas. With a workforce of 62,000 employees primarily based in the Americas and Australia, BHP's extensive operations encompass the production of copper, iron, coal, oil, and gas. The company's significant assets include the Escondida mine in Chile, known for being one of the world's largest copper producers; the Antamina mine in Peru, producing copper and zinc; and the Pampa Norte operation in the Atacama Desert, Northern Chile, known for copper cathode production.

Further expanding its diverse portfolio, BHP holds interests in the Samarco mine in Brazil for iron ore production, a one-third interest in the Cerrejon coal mine in Colombia, and mineral rights in Saskatchewan, Canada, which contains one of the largest unexploited potash deposits globally. In Australia, its operations include the Olympic Dam, one of the largest ore bodies globally, Western Australia Iron Ore, Queensland Coal, the Mt. Arthur coal mine in New South Wales, and Nickel West.

In the petroleum sector, BHP owns high-quality resources in the Gulf of Mexico, Australia, Trinidad, and Tobago. For the six months ending on 31st December 2023, BHP reported a 6% increase in revenue, although headline earnings per share (HEPS) saw a significant decrease of 48%. The tangible net asset value (NAV) slightly decreased from $8.91 to $8.68 per share. Highlighting its operational excellence, BHP noted record copper production in South Australia and Chile, alongside strong performance in its consolidated copper province in South Australia. The company also sanctioned Jansen Stage 2 in Canada to nearly double its planned potash production capacity.

Despite global commodity price volatility and softer demand in developed countries, BHP noted healthy demand from China and identified India as a promising market. As a diversified international mining company, BHP's financial health and share performance are closely tied to commodity prices and the global economy's state.

The share price trajectory of BHP has mirrored the broader commodity cycle, with a steady rise since January 2016, a sharp decline at the onset of the coronavirus pandemic, and a subsequent recovery. However, the start of 2024 has seen a downturn in response to falling commodity prices. While BHP remains in a long-term upward trend, its status as a commodity share subjects it to significant volatility, reflective of the broader economic and market conditions.