BHP shares continue slide amid investment challenges
The mining titan BHP has seen its share price continue to slide following ongoing difficulties with their new potash mining operations. Amid a global commodities boom with no end in sight, will the BHP share price rise again?
- The BHP share price has fallen 7% since 1 June to £20.43
- BHP has struggled to open a potash mine in Canada
- The ongoing commodities boom has kept BHP optimistic
- BHP has also entered into deals with Microsoft and AWS
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Why is the BHP share price still falling?
The Anglo-Australian mining company BHPB has seen its share price continue to fall when markets opened in London on 18 June, following a bearish month so far that has seen the BHP share price fall by more than 7% since 1 June.
This comes despite a global commodities boom that has put the prices and demand for BHP's core products, including copper and iron, at multi-year highs. One part of the reason why BHP's share price is falling is the same reason why other mining giants are experiencing a bear run right now.
Moves from China to temper metals prices throughout June have helped to sink the share price of competitor companies such as Glencore, Anglo-American, and Rio Tinto. However, BHP's current share price decline is also related to more localised concerns.
For one, the company's attempts to diversify into the more carbon-neutral and potentially lucrative market of fertiliser mining has met with some early obstacles. BHP Group is currently attempting to finalise a $5.7 billion plan to mine for potash in their Canadian Jansen Mine, amid fierce local opposition.
Although it is expected that the project will move forward, the project represents a significant short-term expenditure for the $47 billion company, and it is unlikely to see any returns until at least the 2030s.
What's the longer-term outlook for BHP shares?
Although the current share price trajectory for BHP is bearish, investors feel more optimistic in the long run. The US asset management firm Harding Loevner recently published a glowing buy recommendation for BHP. The recommendation argued that BHP's long-term profitability and outlook are 'attractive', and Loevner expects 'the company to deliver consistent profits and cash flows across the inevitable ups and downs of the global metals cycle'.
Meanwhile, despite moves from China, it is unlikely the demand for global commodities will wane any time soon, which is exactly why BHP has maintained that its annual revenues will remain high. BHP's own optimism is also evident in the fact that it revised its Q1 dividend upward by 55% in its HY21 results.
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