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Are BHP shares a ‘buy’ right now?

Diversified mining giant BHP is headed for a pivotal vote on its climate-transition plan, and may also be eyeing a foray into Congo.

  • BHP Group (ASX: BHP) share price rises to A$38.71 per share on Tuesday (12 October)
  • Its upcoming AGMs will include a climate-change shareholder vote
  • The group is in early talks to buy a Congo copper project
  • Keen to take advantage of BHP’s rising share price? Open an account with us to long the stock now.

BHP stock price inches up

Firm iron ore prices continued to drive gains for heavyweight miners on the Australian bourse.

Shares of the world’s biggest mining company BHP jumped as much as 1.7% to a high of A$38.71 by 11:10 AEST in Sydney.

Eight analysts recommended ‘buy’ on the Australia-listed counter, five said ‘hold’, and none gave ‘sell’ calls. Their average price target was A$47.89, Bloomberg data showed.

On Monday, Bernstein and Macquarie both gave ‘outperform’ ratings, alongside targets of A$45 and A$56 respectively.

Deutsche Bank suggested BHP was a ‘buy’ in the short term, as the counter had ‘materially lagged’ its peers since mid-August. ‘We’ve been surprised by the underperformance given the powerful rally in energy and coking coal prices in recent weeks,’ the analysts wrote.

However, they pointed out that near-term downside risks included declining commodity prices and a strong US dollar.

Will BHP gain support for its climate-change plan?

The Anglo-Australian group faces a pivotal vote on its climate-transition plan at its two upcoming annual general meetings (AGMs) for 2021.

Some major shareholders are debating whether to support a strategy that they believe does not go far enough, The Financial Times (FT) reported.

Its UK-listed entity will hold the AGM in London on 14 October 2021, while the Australia-listed company will conduct its event in Melbourne on 11 November 2021.

At both meetings, investors will have a ‘say on climate’ vote. Although the outcome will not be binding on the management, a defeat will send a strong message to BHP that it needs to do more, FT noted.

Among the 30 biggest shareholders, three told FT they were concerned about the plan and the group’s emissions reduction targets, which were reportedly not aligned with the goal of limiting global warming to 1.5 degrees Celsius.

Read more: Beginner’s guide to day trading

Is BHP changing strategy with potential Congo deal?

The Melbourne-based miner is in early discussions to buy a copper project in the Democratic Republic of Congo, Bloomberg reported on Tuesday.

The move is ‘a dramatic departure’ from the company’s policy of avoiding risky jurisdictions, Bloomberg added.

The project is said to be Toronto-listed Ivanhoe Mines’ Western Foreland exploration territory.

There is no guarantee that BHP will ink a deal with Ivanhoe, and other miners are also interested in Western Foreland.

As BHP has mainly operated in more developed countries in recent years, entering Congo will signify a strategy shift. In 2019, the company sold its last mining asset in Africa to Ivanhoe’s founder, billionaire Robert Friedland. It then focused on Australia, Canada, and Chile.

BHP is bullish on copper and anticipates a surge in demand, amid expectations of tight long-term supply, Bloomberg noted.

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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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