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(Bloomberg) — Anglo American Plc rejected a second approach from BHP Group that valued the miner at $43 billion, as pressure builds on the 107-year old company to lay out a compelling vision to survive on its own.

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Anglo shareholders were already demanding the company accelerate a turnaround plan that it’s been working on since the middle of last year. Rejecting BHP’s latest overture will add more pressure on Anglo to explain how it would create more value than by just selling to the rival. It now plans on doing that on Tuesday.

While BHP has raised its all-share offer, crucially it has maintained a structure that Anglo had already branded as unworkable, making it hard for the company to agree to talks under those terms. BHP will have to return with an improved offer, and possibly a new structure, if it wants to get a deal done.

“BHP obviously want the prize, but are not willing to take on the execution risk,” said Ben Davis, an analyst at Liberum. “They’re hoping that Anglo shareholders are frustrated enough with management that they pressure them to go for this.”

Anglo’s shares closed 2.4% lower at £27.07 — below the £27.53 that BHP is offering, in an indication investors don’t currently see the deal going ahead and aren’t banking on a better bid coming along. BHP’s London traded shares closed 0.7% lower

The world’s largest miner is seeking to buy Anglo for its South American copper assets. That would make it the No. 1 copper producer, alongside its sprawling portfolio of iron ore and coal.

BHP sweetened its proposal by almost 15%: offering 0.8132 of its shares for each one of Anglo’s, up from 0.7097 shares in its initial approach. But it still said that Anglo must spin off its two listed South African businesses first.

Anglo said Monday that it’s confident in its own plans for the business and will update investors on Tuesday, after accelerating a review.

The company also reiterated its rejection of BHP’s proposed deal structure, saying it leaves its holders with a disproportionate level of risk. It also still undervalues the company, Anglo said.

The pressure is now on Anglo to show shareholders how it can deliver more value on its own. Those investors include Elliott Investment Management, the activist hedge fund that’s built a roughly $1 billion stake in Anglo. So far, it’s not made its view public.

Read More: Anglo Investors Tell Company to Move Faster to Survive BHP Bid

Anglo American has long been viewed as a potential target among the largest miners, particularly because it owns attractive South American copper operations at a time when most of the industry is eager to add reserves and production. However, suitors have been put off by its complicated structure and mix of other commodities from platinum to diamonds, and especially its deep exposure to South Africa.

Anglo has faced a series of major setbacks over the past year as prices for some of its key products plunged, while operational difficulties have forced the company to slash its production targets — driving down its valuation and leaving the company vulnerable to potential bidders.

Investors have since pushed for details of a business review that Chief Executive Officer Duncan Wanblad has been running since mid-2023, looking at every mine in its portfolio. Central to investor concerns are the future of diamond miner De Beers, the Woodsmith fertilizer mine that Anglo is building in the UK and its South African businesses.

Read More: What’s Anglo Worth? For Now It’s Less than the Sum of Its Parts

If successful, a takeover would mark a return to large-scale dealmaking for BHP, which has revived its appetite for transformational acquisitions in the past couple of years under CEO Mike Henry.

BHP, which has a market value of about $145 billion, has made copper a central part of its strategy, betting that supply will struggle to keep pace with demand for metal to build electric vehicles, solar panels and high-voltage cables. But the company’s expansion options at its own assets are not enough to offset its retreat from fossil fuels, creating pressure to add new mines from outside.

A successful takeover would give BHP about 10% of global copper output. The offer is also sparking predictions that it will set off a wider wave of mining M&A, with many of BHP and Anglo’s rivals scouting for their own copper deals.

(Updates with shares in fifth paragraph.)

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(Bloomberg) — Anglo American Plc’s shareholders are pushing the company to speed up the release of its turnaround plan as the 107-year-old miner seeks to present an alternative to BHP Group Ltd.’s takeover bid.

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Anglo has been reviewing its business since mid-2023, looking at every mine in its portfolio to help reshape a company that’s fallen behind competitors in recent years. Yet that process was broadsided by a takeover approach last month from the world’s biggest miner.

Now, Anglo shareholders have been urging the company to expedite that analysis and explain to investors how it would create more value than by just selling to the rival, according to conversations with five of Anglo’s biggest holders, who asked not to be identified as the discussions are private.

Anglo may unveil the strategy as soon as the coming week, when the world’s top mining bosses attend Bank of America Corp.’s annual conference in Miami, according to people familiar with the matter.

Still, the situation remains fluid and Anglo is weighing the best time to show its hand, with BHP expected to return with a fresh bid and activist investor Elliott Investment Management, which has emerged as one of Anglo’s biggest shareholders, potentially planning to make its views public too.

An Anglo spokesman declined to comment.

Read more: South African Unions Urge Anglo Holders To Reject BHP Bid

Anglo Chief Executive Officer Duncan Wanblad told investors in February that while there was urgency about the company’s review, there was a danger of making decisions at a wrong point in the cycle.

The mining industry has been captivated by BHP’s move, watching to see what comes next. BHP likely will return with a fresh offer, but sitting on the sidelines is Elliott.

BHP presented its own vision for Anglo: separate two giant South African businesses and buy the rest, including the company’s copper mines, its crown jewels.

Read more: BHP CEO Flies to South Africa to Push $39 Billion Takeover

Anglo quickly dismissed BHP’s proposal, saying the value was too low and the spinoff plan was unworkable. Still, investors want to know what Anglo plans to do with the diamond business De Beers, the $9 billion Woodsmith fertilizer project underway in northern England, and those South African units.

Investors have pushed the company to slow spending on Woodsmith, bring in a partner, or even halt development altogether, some of the people said. The company is currently spending about $1 billion a year on the project.

In addition, some see De Beers as a strange fit for Anglo — diamonds are a discretionary product and require significant marketing in a way other commodities don’t — and its growth options are limited.

Still, De Beers is seen as a trophy asset, so while diamonds are at a low point, Anglo won’t accept a lowball offer.

–With assistance from Loukia Gyftopoulou and Jack Farchy.

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TSMC (TSM)

Taiwan Semiconductor Manufacturing Company’s April revenue jumped nearly 60% percent on-year, as the firm rides a wave of sustained demand for the advanced semiconductors used in artificial intelligence (AI) hardware.

The world’s largest contract chipmaker said consolidated revenues for April were approximately TWD236.02bn (£5.7bn/$7.2bn), an increase of 59.6% from April 2023. This compares with a 34.3% on-year jump in March 2024.

The company is Nvidia’s (NVDA) sole manufacturer for the most advanced training chips. TSMC also fabricates semiconductors for Apple (AAPL).

Last month, TSMC announced its newest semiconductor process, advanced packaging, and other technologies for powering the next generation of AI innovations.

"We are entering an AI-empowered world, where artificial intelligence not only runs in data centres, but PCs, mobile devices, automobiles and even the internet of things," said CEO C.C. Wei.

Novavax (NVAX)

Shares in Novavax were higher in pre-market trading as the pharmaceutical said it has signed a $1.2bn (£957m) deal with French drugmaker Sanofi (SAN.PA) to co-commercialise the company’s COVID vaccine starting next year.

Novavax will receive $500m in upfront payments as well as $700m in development, regulatory and launch milestones, according to a statement.

That total is roughly double Novavax’s current market cap of $627m.

Sanofi is also taking a minority equity stake of about 5% in Novavax. Novavax will benefit from a double-digit percentage of royalties from the sales of its Covid jab as well as any combined shot using its technology.

Novavax has had some turbulent times. Its market value boomed to more than $40bn at the height of the pandemic, propelled by investor excitement over its COVID shot. But it has since fallen by almost 99%.

Anglo American (AAL.L)

Shares in the miner were higher amid reports that rival Rio Tinto (RIO.L) had considered an offer for British miner Anglo American, which is now BHP’s (BHP.L) £31bn takeover target.

Rio “management had not ruled out making a play for part or all of the mining group and continued to study the day-to-day situation", the Australian Financial Review reported.

Anglo has turned down BHP’s proposal, saying it was opportunistic and significantly undervalued the British company. Under the UK’s takeover rules, BHP has until May 22 to make a formal offer.

“Shares in Anglo American are up on a report that Rio Tinto also considered a bid following BHP’s rejected offer. M&A speculation is helping to keep Anglo shares supported at the moment,” Victoria Scholar, head of investment at Interactive Investor, said.

BHP and Rio have a close working relationship at Escondida and Resolution Copper. One option for Rio is to informally assist BHP’s bid for Anglo by acquiring the assets that BHP does not want, such as Anglo’s diamond business, AFR wrote.

Glencore is also studying options for a possible approach for Anglo, Reuters reported earlier in the month, a move that could spark a bidding war.

IAG (IAG.L)

The owner of airlines British Airways and Aer Lingus has said its earnings have soared in recent months thanks to higher sales and lower fuel costs.

International Airlines Group (IAG) reported an operating profit for the first three months of the year of €68m (£58.5m), up from the €9m (£7.7m) reported this time last year.

Total revenues also jumped to €6.4bn (£5.5bn), up from €5.9bn (£5.1bn) last year, while fuel costs were about 5% lower than the previous year, due to lower average prices and more efficient aircraft deliveries.

IAG said the improved profits and sales had been driven by stronger demand across its airlines, which also include Iberia and Vueling.

It also highlighted that it was continuing to see a rebound in leisure travel.

Watch: Market strategist sees dollar dip lifting non-US stocks

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South African shareholders of the mining company Anglo American have signalled they are open to a revised takeover offer from BHP, despite warnings from South African politicians and unions that a deal could be bad for the country.

Investors, which collectively own more than 15% of the London-listed mining company, told the Financial Times that they were not opposed in principle to an acquisition by its Australian rival but said an improved and less complex offer would be needed.

It comes after the ruling African National Congress has been publicly critical of BHP’s move, with its mining minister, Gwede Mantashe, saying South Africa’s experience with BHP “was not positive”.

Last month, Anglo rejected a £31bn takeover offer from the Australian company, in what would have been the biggest deal in the mining sector for a decade.

At the time, the board unanimously rejected the offer, saying it “significantly undervalued” the company and its future prospects.

As part of the BHP proposal, Anglo’s South African platinum and iron ore businesses – Amplats and Kumba – would be excluded from the deal, which the board deemed “highly unattractive”.

However, several local investors have now told the FT that they would be open to a revised offer, but stressed this would need to be at a higher price because of BHP’s desire to spin off the South African parts of the business.

Dawid Heyl, a fund manager at Ninety One, which owns 2.1% of Anglo, said a deal along the lines proposed could be struck but the price would have to be substantially higher.

He said: “It would be easier, though, if BHP were to come back with a higher and simpler offer, which removes the conditionality of getting rid of Amplats and Kumba, which would make it trickier.”

Karl Leinberger, the chief investment officer at Coronation Fund Managers, which owns 1.2% of Anglo, said that it would “definitely” consider a deal but BHP would have to pay more if it wanted to exclude the South African businesses.

This is at odds with the mining minister Mantashe, who has publicly stated that he is against the takeover.

Speaking after the rejection of the first offer last month, Mantashe said BHP’s merger with the South African miner Billiton in 2001, “never did much for South Africa”.

South Africa’s government-owned Public Investment Company is Anglo’s largest stakeholder and owns a 7% stake in the company.

The Congress of South African Trade Unions, which includes the National Union of Mineworkers, has also urged local shareholders to reject a BHP bid, saying a deal would not be in the national interest.

BHP now has until 22 May to make a formal offer for Anglo American under UK merger and acquisition rules. There is speculation that other global mining companies could also enter the race, with Rio Tinto and Glencore also reported to be eyeing up bids.

(Reuters) -Mining giant Rio Tinto had considered an offer for British miner Anglo American, which is now BHP Group's $39 billion takeover target, the Australian Financial Review reported on Friday.

Rio "management had not ruled out making a play for part or all of the mining group and continued to study the day-to-day situation", the AFR reported, citing sources close to Rio.

The report did not mention why Rio did not make a proposal but said there is no suggestion that Rio is about to make an alternative bid. Rio declined to comment on the report.

BHP shares were down 0.4%, while Rio Tinto was trading flat. The Australian mining index was also flat as of 0438 GMT.

Anglo has turned down BHP's proposal, saying it was opportunistic and significantly undervalues the British company. BHP has until May 22 to make a formal offer under the UK's takeover rules.

Glencore is also studying options for a possible approach for Anglo, Reuters reported earlier in the month, a move that could spark a bidding war.

"Our policy is we don't speculate or comment on M&A activity," Rio's chair, Dominic Barton, said in reply to a question at a shareholder meeting last week on whether the company was considering a rival bid.

BHP and Rio work closely together on the Escondida and Resolution Copper mines, in which they both own stakes.

Rio should not stand against BHP but instead should look at smaller copper and lithium miners, said Daniel Sullivan, portfolio manager of Janus Henderson Investors' global natural resources fund that owns shares in Rio, the AFR report said.

(Reporting by Rishav Chatterjee in Bengaluru and Melanie Burton in Melbourne; Editing by Savio D'Souza and Rashmi Aich)

By Melanie Burton and Yuka Obayashi

MELBOURNE/TOKYO (Reuters) -Japanese steelmakers have raised concerns with Australian authorities that BHP Group could become too dominant in the global supply of coking coal if it goes ahead with a takeover of Anglo American.

Australia is the world's biggest exporter of coking coal and top supplier to Japan, making up around 60% of its imports, with most of the steel-making ingredient coming from the state of Queensland, where BHP and Anglo American are the two largest producers.

Steelmakers' concerns about BHP's coking coal market power could derail a deal if the Australian giant comes back with a revised bid for Anglo American, after being rebuffed with a $39 billion offer last month.

"BHP already has a large share of the supply of high-quality hard coking coal in the seaborne trade, and we will take measures to ensure that further oligopolisation will not impede sound price formation and stable supply," a JFE Steel spokesperson said, declining to elaborate on what measures they could take.

Representatives of Japanese steelmakers met with Queensland government officials raising alarm bells that if a deal went ahead it would concentrate the world's top quality coking coal mines in the state's Bowen Basin in the hands of BHP, two people familiar with the talks said.

The combined group would control 44 million tons, or about 13%, of the seaborne coking coal market, data from consultants Wood Mackenzie shows. That comes even as BHP's production has fallen after sales of some mines in recent years.

"In general, we are against the (BHP-Anglo) union as it would create a supplier with a huge market share, especially in the hard-coking coal market," said a source at a Japanese steel maker, adding that it was closely monitoring the situation.

"We, for our part, would not want BHP to buy Anglo and gain a stronger price competition power."

Queensland Deputy Premier and Treasurer Cameron Dick said BHP would need to ensure its coal remains competitive or risk losing state government support. "We work closely with our Japanese customers and are aware of their concerns," Dick told Reuters.

"BHP needs to explain to Japanese steelmakers and the market more broadly how it will ensure the ongoing supply of steelmaking coal remains competitive," he said.

BHP declined to comment for this story but has said expanding in high quality coking coal was a main driver of its tilt for Anglo.

Anglo American declined to comment.

COKING COAL SQUEEZE

Japan's Fair Trade Commission has the authority to investigate a BHP-Anglo American transaction and could block a deal if it found it would harm Japanese companies, two anti-trust lawyers in Tokyo said.

However, if a deal was deemed anti-competitive, the commission would likely ask BHP to offer a remedy, which could include a coal divestment, one of the two lawyers said. They both declined to be named due to the sensitivity of the issue.

The Fair Trade Commission declined to comment whether it has received any request to examine the BHP-Anglo deal.

Like JFE, Kobe Steel said it is keeping a close eye on the proposed deal and a potential increase in BHP's market power.

Japan's biggest steelmaker Nippon Steel declined to comment on the deal, but said it had expressed concern to the Queensland government that its royalty rate hike could result in lower investment in mines and disrupt coking coal supply in the future.

Key among steelmakers' concerns is that BHP has stressed it will not invest to expand production in Queensland after the state hiked coal royalties without industry consultation, a source familiar with the matter told Reuters.

BHP CEO Mike Henry said last year the company "will not be investing any further growth dollars in Queensland under the current conditions".

Anglo's Moranbah North and Grosvenor mines are effectively an extension of BHP's Goonyella mine, which produces a type of coal favoured by Japan and India.

The Japanese are facing growing competition from India for that coal. BHP already sends 40% of its coking coal to India and expects the country's demand for the steel-making ingredient to double by the end of the decade, CFO Vandita Pant said in March.

Japan could lobby anti-trust authorities in other jurisdictions to block a deal if it believes there will be an impact to the competitiveness of the global coking market, as it did when BHP made a bid for its iron ore rival Rio Tinto in 2007, one of the lawyers said.

Queensland could also complicate a deal.

"The transfer of mineral assets in Queensland are subject to a number of state government approvals. No resources company should take those approvals for granted," Treasurer Dick said.

(Reporting by Melanie Burton in Melbourne and Yuka Obayashi in Tokyo; Additional reporting by Katya Golubkova in Tokyo; Editing by Sonali Paul)

(Bloomberg) — South Africa’s biggest labor union federation urged local shareholders, including the powerful Public Investment Corp., to oppose BHP Group Ltd.’s bid to buy Anglo American Plc.

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The Congress of South African Trade Unions, which includes the National Union of Mineworkers among its members, said a deal wouldn’t be in the national interest. South African shareholders hold about 26% of Anglo, with the PIC owning 8.4%, according to data compiled by Bloomberg.

BHP’s proposal to acquire Anglo on April 25 raised the ire of some members of South Africa’s government, including Mines Minister Gwede Mantashe. The Australian company responded by deploying a senior team including its chief executive officer to South Africa to win over government officials, regulators and local Anglo shareholders.

BHP’s proposal includes a plan for Anglo to spin off its Johannesburg-listed platinum and iron ore units before an eventual takeover of the remaining assets. Anglo, founded in Johannesburg in 1917, also owns manganese and diamond mines in South Africa. While the miner was the bedrock of the South African economy for decades, it shifted its headquarters to London in the late-1990s.

Anglo rejected the initial bid, but BHP is expected to make an improved offer, Bloomberg has reported. The PIC, which manages the pensions of government workers, has said it will assess any BHP offer.

“Cosatu is deeply concerned about the possible sale of Anglo assets in South Africa to BHP,” the union federation said in comments sent to Bloomberg on Tuesday. “It is critical that South African shareholders, including the PIC, ensure these assets remain South African-owned.”

A BHP spokesman referred to comments it made last week, when the company said Anglo American Platinum Ltd. and Kumba Iron Ore Ltd. would continue to be listed on the Johannesburg Stock Exchange and would continue to be run by established South African-based management teams.

“South Africa will continue under BHP’s proposal to benefit from Anglo Platinum and Kumba operating as independently listed South African companies investing in local operations, communities and jobs,” BHP said last week.

Cosatu is a key ally of South Africa’s ruling African National Congress and President Cyril Ramaphosa was a co-founder of the National Union of Mineworkers. The bid from BHP comes before a national election later this month, which could see the ANC lose its majority for the first time since winning power in 1994.

The presidency has rejected the premise that BHP’s approach is vote of no-confidence in South Africa, after the opposition presented the bid as a stinging rebuke of the government’s handling of the economy in a country with one of the world’s highest unemployment rates and deteriorating infrastructure.

Read More: BHP CEO Flies to South Africa to Push $39 Billion Takeover

“These companies were built on the back of South African mine workers and pension funds,” Cosatu said. “The profit they generate is needed to grow the economy and create decent jobs.”

BHP is targeting Anglo for its South American copper mines, which would make it the world’s biggest producer of the key metal.

Anglo’s South African operations have been hamstrung by fractious labor relations, power outages and the deterioration of the national freight rail company. Its Kumba unit has had to stockpile the steelmaking raw material because there aren’t enough trains to take it to a port.

–With assistance from Thomas Biesheuvel and William Clowes.

(Updates with BHP comments from seventh paragraph.)

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Many investors define successful investing as beating the market average over the long term. But if you try your hand at stock picking, your risk returning less than the market. We regret to report that long term BHP Group Limited (ASX:BHP) shareholders have had that experience, with the share price dropping 17% in three years, versus a market return of about 21%.

It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.

Check out our latest analysis for BHP Group

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the unfortunate three years of share price decline, BHP Group actually saw its earnings per share (EPS) improve by 1.0% per year. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Or else the company was over-hyped in the past, and so its growth has disappointed.

After considering the numbers, we'd posit that the the market had higher expectations of EPS growth, three years back. Looking to other metrics might better explain the share price change.

Given the healthiness of the dividend payments, we doubt that they've concerned the market. BHP Group has maintained its top line over three years, so we doubt that has shareholders worried. A closer look at revenue and profit trends might yield insights.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth

BHP Group is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for BHP Group in this interactive graph of future profit estimates.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for BHP Group the TSR over the last 3 years was 20%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

BHP Group shareholders gained a total return of 0.8% during the year. But that was short of the market average. It's probably a good sign that the company has an even better long term track record, having provided shareholders with an annual TSR of 13% over five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with BHP Group , and understanding them should be part of your investment process.

Of course BHP Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Australian exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

(Bloomberg) — Brazil’s government rejected mining giants Vale SA and BHP Group Ltd.’s offer to pay about $25.7 billion (127 billion reais) in total compensation for a 2015 tailings dam disaster at the companies’ iron ore joint venture Samarco Mariana.

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“I cannot fail to express my outrage at how brazen it is for Vale and BHP to present a settlement proposal for the humanitarian tragedy of Mariana that’s less adequate than the previous one,” the nation’s Mines and Energy Minister, Alexandre Silveira, said in an interview with Bloomberg in Rome. “We’ll reject it.”

Read More: BHP, Vale Offer Brazil $25.7 Billion to Cover Dam Disaster (1)

Silveira said the proposal is technically and economically inappropriate because it reduces the companies’ obligations, transferring them to the federal government and the states. Brazil’s general attorney’s office confirmed in a statement the proposal was officially rejected Friday.

Brazil’s mines and energy chief signaled that President Luiz Inacio Lula da Silva’s government is studying legal ways of putting pressure on Vale, BHP and Samarco to speed up a settlement, without giving details.

“Vale and BHP either make an agreement or they will face the full rigor of the law,” Silveira said.

Minas Gerais state government said in a statement that it sees room for adjustments in the companies’ proposal with a focus on speeding up the reparation, adding that there has been progress compared with the previous $8.2 billion (42 billion reais) offer. State Planning Secretary Luisa Barreto criticized what she called “a unilateral decision by the federal government” to reject it.

A final settlement in the 2015 Mariana dam collapse, which killed 19 people and contaminated waterways in two Brazilian states, would remove a major legal shadow hanging over the companies and cement a reparation schedule for victims in what is Brazil’s biggest environmental disaster.

Silveira said he is concerned that BHP could expand operations in Brazil before giving reparation to the victims of Samarco dam break, if a bid to buy rival miner Anglo American Plc is successful. Anglo holds Minas Rio iron ore mine in Minas Gerais, one of the two states directly affected by Samarco’s dam collapse.

–With assistance from Carlos Caminada.

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BHP Group BHP announced that its iron ore production rose 3% year over year to 61.5 Mt in the third quarter of fiscal 2024 (ended Mar 31, 2024). This was attributed to a 3% rise in iron ore output at Western Australia Iron Ore (WAIO).In the first nine-month period of 2024, iron ore production was recorded at 191 Mt, down 1% year over year. This decline can be attributed to heavy rainfall in the third quarter of fiscal 2024, the continued tie-in activity for the Rail Technology Program, the impacts of the ongoing ramp-up of the Central Pilbara hub (South Flank and Mining Area C) and a bushfire near Yandi.BHP stated that South Flank is on track to ramp up to a full production capacity of 80 Mt per year (100% basis) by the end of fiscal 2024.Copper Output Up 15% in Q3: Total copper production in the third quarter of fiscal 2024 rose 15% year over year to 466 kt. This brings the copper production total to 1,360 kt for the first nine-month period of fiscal 2024, which marks 10% growth year over year. This reflects strong performance and additional tons from Copper South Australia, record year-to-date performance from Spence, as well as improved grades and production at Escondida.Production at Escondida was up 7% year over year to 816 kt in the first nine-month period of fiscal 2024. Copper output at Pampa Norte declined 9% to 200 kt in the first nine-month period compared with year-ago levels. Cerro Colorado entered temporary care and maintenance in December 2023. Spence continues to perform well with its output attaining a nine-month record of 189 kt, mainly driven by improved concentrator throughput and higher recoveries.Production from Copper South Australia surged 49% to 233 kt in the first nine-month period of fiscal 2024, driven by additional contributions from Prominent Hill and Carrapateena. Antamina’s copper production rose 4% to 106 kt in the first nine months of fiscal 2024.Nickel Production Down 4% in Q3: Nickel production was down 4% year over year to 18.8 kt during third-quarter fiscal 2024. In the first nine months of fiscal 2024, nickel output was 58.6 kt, which was 1% higher than the year-ago comparable period.Energy Coal Up, Metallurgical Coal Plunges: Energy coal production rose 5% year over year to 4.1 Mt in the third quarter of fiscal 2024. In the first nine months of fiscal 2024, production improved 23% year over year to 11.6 Mt owing to strong operating performance.Metallurgical coal production was 6 Mt, down 13% compared with the year-ago quarter. Production in the first nine months of fiscal 2024 was 17.4 Mt, which was 16% lower than the year-ago levels due to planned maintenance, an extended longwall move, as well as increased stripping to improve supply-chain stability.Prices: In the third quarter of fiscal 2024, average realized prices for iron ore were down 3% to $106 per ton. Copper prices were up 5% sequentially to $3.85 per pound. Average nickel prices were $16,581 per ton, down 1% sequentially. Prices for thermal coal dipped 4% sequentially to $116.11 per ton and metallurgical coal prices were down 4% sequentially to $281.51 per ton.

FY24 Production Guidance

BHP’s iron ore production guidance for fiscal 2024 is 254-264.5 Mt. WAIO's production is expected to be between 250 Mt and 260 Mt (282 Mt and 294 Mt on a 100% basis).BHP expects copper production within 1,720-1,910 kt in fiscal 2024. Production guidance for metallurgical coal has been lowered to 21.5-22.5 Mt from the previous expectation of 23 -25 Mt. The production guidance for energy coal is 13-15 Mt. Nickel production is expected to be near the lower half of the range of 77 kt and 87 kt.

Cost Guidance for FY24

Unit cost guidance for WAIO is $17.40-$18.90 per ton. Escondida unit cost is estimated to be $1.40-$1.70 per pound. Spence unit costs are expected to range between $2.00 per pound and $2.30 per pound. BMA unit cost is expected to be between $119 per ton and $125 per ton, higher than the prior stated range of $110-$116 per ton.

Other Updates

BHP and Mitsubishi Development Pty Ltd, on Apr 2, announced the completion of the divestment of the Blackwater and Daunia mines to Whitehaven Coal. Daunia and Blackwater were part of the BHP Mitsubishi Alliance (BMA) metallurgical coal joint venture in Queensland. Each of BHP and MDP holds a 50% interest in BMA.

Peer Performances

Vale S.A. VALE reported iron ore production of 70.8 Mt for the first quarter of 2024, which was up 6% year over year, attributed to improved operating performance at the S11D mine and higher third-party purchases. Vale’s iron ore production guidance for 2024 is 310-320 Mt.Vale produced 81.9 kt of copper in the quarter, which marked 22.2% year-over-year growth, benefiting from the steady ramp-up of Salobo 3 as well as better performance at Salobo’s 1 & 2 plants.Rio Tinto Group RIO reported a 2% decrease in its first-quarter 2024 iron ore production to 77.9 Mt (on a 100% basis) as planned ore depletion, predominantly at Yandicoogina, was partially offset by productivity gains across other operations.Shipments for the quarter (on a 100% basis) were reported at 78 Mt, marking a 5% year-over-year drop. This was due to weather disruption at the ports as well as lower output at the mines. RIO expects Pilbara iron ore shipments (100% basis) between 323 Mt and 338 Mt in 2024. The midpoint of the range indicates a year-over-year dip of 0.4%.Rio Tinto’s copper production was 156 thousand tons (on a consolidated basis), which was 7% higher than the year-ago quarter.

Price Performance

BHP’s shares have declined 7.6% in a year against the industry’s 3% growth.

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Zacks Rank & Another Key Pick

BHP currently carries a Zacks Rank #3 (Hold).A better-ranked stock in the Basic Materials space is Carpenter Technology Corporation CRS, which carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for Carpenter Technology’s 2024 earnings is pegged at $4.00 per share. The consensus estimate for 2024 earnings has moved 1% north in the past 60 days. It has an average trailing four-quarter earnings surprise of 14.3%. CRS shares have gained 68% in a year.

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BHP Group Limited Sponsored ADR (BHP) : Free Stock Analysis Report

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In this piece, we will take a look at the 11 best coal mining stocks to invest in. To know more about the top stocks, go directly to 5 Best Coal Mining Stocks To Invest In.

Coal has been recognized for its role in alleviating poverty through coal mining by offering employment opportunities in areas with limited or no jobs. Also, coal mining can spur economic growth by attracting investment and generating revenue for local governments. It is most reliable, and constant power of energy in areas that use coal as a primary energy source thus contributing to enhanced productivity and quality of life. Despite being the most reliable and abundant source of energy, coal consumption has been witnessed to partially decline particularly in the United States due to apprehensions regarding the impact of carbon dioxide and other emissions on climate.

Predominantly “green companies” have been claiming for a long time now that wind and solar are the cheapest forms of electricity and transitioning to renewable energy will contribute to the broader target of achieving net zero emissions. However, the opposite is true in this case as the transition to renewable energy sources has been witnessed to fail because it misaligns with the “Energy Trilemma” of focusing on security, affordability, and sustainability.

According to Ernst & Young's 2024 report, “Top 10 business risks and opportunities for mining and metals 2024”, ESG poses both substantial risks and considerable opportunities for miners that can contribute to achieving long-term value for all stakeholders. Moving forward, coal asset divestment continues because it produces carbon that represents a significant proportion of GHG emissions. Many diversifier miners have either divested their coal assets or set a timeline for closure. As per the latest IEA market report, a decline of 2.3% has been expected to take place globally in the demand for coal by 2026 in comparison to 2023.

Coal Industry Outlook 2024

China, India and Indonesia are the three largest coal producers. China, among them, has dominated global coal production for decades and is likely to continue as the foremost coal producer in the foreseeable future. Despite setting renewable energy targets, the growing economies of China and India continue to remain the top consumers of coal in efforts to fuel economic growth. China is the world’s largest energy consumer and over 60% of its electricity is generated by coal. Based on the projections from Energy Watchdog International Energy Agency, China’s share of global electricity consumption will surge to one-third by 2025, marking a substantial increase from a quarter in 2015.

On the contrary, according to Ember’s Global Electricity Review 2023, wind and solar energy are expected to replace coal by 2030, it will contribute to 41% of global electricity generation with a significant increase of 10% in 2021. Simultaneously, this transition demands a reduction in coal generation by 54% and gas generation by 28%. A notable surge in electricity demand with an average annual increase of 3.7% from 2021 to 2030 is also anticipated in this period.

Coal’s contribution to Energy Mix in 2024

According to the European Electricity Review of 2024, fossil generation plummeted by a record 19% last year with an unprecedented collapse in coal and gas generation. Coal generation fell by 26% to its lowest level accounting for only 12% of the EU electricity mix in 2023. Also, gas generation fell by 15%, which accounts for 17% of the total EU generation in 2023.

In the US alone, about 60% of 4.18 trillion kilowatt-hours of energy was generated last year from fossil fuels that included coal, according to the US Energy Information Administration. Coal amounted for roughly more than 16% of electricity generation in the nation.

Some of the best coal stocks include Teck Resources Limited (NYSE:TECK), Arch Resources, Inc. (NYSE:ARCH), Peabody Energy Corporation (NYSE:BTU), and others. For this, we decided to take a look at the 11 best coal mining stocks to invest in.

11 Best Coal Mining Stocks To Invest In

Our Methodology

To compile the list of the best coal mining stocks to invest in, we filtered companies listed on the New York Stock Exchange and Nasdaq that were engaged in coal mining operations. The stocks were ranked based on Insider Monkey’s database of 933 hedge funds tracked at the end of Q4 2023. The ranking was based on the ascending order of the number of hedge fund investors in each stock and then the top 11 coal mining stocks were picked for investment purposes. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.

Best Coal Mining Stocks To Invest In11. Alliance Resource Partners, L.P. (NASDAQ:ARLP)

Number of Hedge Fund Holders: 6

Alliance Resource Partners, L.P. (NASDAQ:ARLP) is the company involved in the production and marketing of coal. Alliance Resource Partners, L.P. (NASDAQ: ARLP) being a diversified coal and producer and marketer plays a significant role in the energy sector predominantly in regions where coal remains a vital source of electricity generation.

The company is the largest coal producer in the eastern United States that caters to both domestic and international utility and industrial sectors. Alliance Resource Partners, L.P. (NASDAQ:ARLP) is well-suited to be a reliable energy partner for the future having a market capitalization of $2.8 billion as of last quarter of 2023 and one of the best coal mining stocks to invest in.

The company possesses royalties from oil and gas operations and has notable investments in emerging alternative energy ventures which makes it as one of the best coal stocks. According to the last quarter of 2023, Alliance Resource Partners, L.P. (NASDAQ: ARLP) had 6 hedge fund investors out of 933 funds tracked by Insider Monkey database. Adam Peterson’s Magnolia Capital Fund was the largest stakeholder with 3.2 million shares having net worth of $68.1 million.

10. Ramaco Resources, Inc. (NASDAQ:METC)

Number of Hedge Fund Holders: 14

Ramaco Resources, Inc. (NASDAQ:METC) is a US based coal mining company that specializes in mining, processing and selling of metallurgical coal primarily used in steel production. As of March 2024, Ramaco Resources, Inc. (NASDAQ:METC) intends to increase its met coal production by two folds from the current 3.5 million tons and delve into the rare earth business that makes it as one the best coal stocks.

According to Insider Monkey’s Q4 database of 2023, 14 hedge funds were bullish on Ramaco Resources, Inc. (NASDAQ: METC) with Steve Cohen’s Point72 Asset Management being the largest stakeholder of the company, with 901,500 shares worth $15.5 million.

Ramaco Resources, Inc. (NASDAQ:METC) is one of the best coal mining stocks to invest in as it leads the coking coal industry as of March 2024 and it has managed to secure an average rating of buy and a price target of $23.50, according to analysts of S&P Capital IQ. In an effort to reduce costs and improve operational efficiency, Ramaco Resources, Inc. (NASDAQ: METC) has purchased a coal preparation plant for the Maben Complex and expects the same plant to get operational by Q4 this year.

9. Hallador Energy Company (NASDAQ:HNRG)

Number of Hedge Fund Holders: 17

Hallador Energy Company (NASDAQ: HNRG) is the leader in energy exploration since 1951 that makes it as one of the best coal stocks. The company is headquartered in Terre Haute, Indiana and through its wholly owned subsidiary, Sunrise Coal, LLC, produces electricity at its 1GW facility at the Merom Generating Station.

As of February 2024, Hallador Energy Company (NASDAQ: HNRG) announced a restructuring of its sunrise coal division to transition from a coal production company to a vertically integrated independent power producer that will eventually enhance the overall cost structure.

The last quarter of 2023 as per Insider Monkey’s database indicated that Hallador Energy had 17 hedge fund holders and Israel Englander’s Millennium Management was the biggest position holder, with 322,570 shares worth $2.9 million of the firm.

Along with Alliance Resource Partners, L.P. (NASDAQ: ARLP) and Ramaco Resources, Inc. (NASDAQ: METC), Hallador Energy Company (NASDAQ: HNRG) is one of the best coal mining stocks to invest.

8. SunCoke Energy, Inc. (NYSE:SXC)

Number of Hedge Fund Holders: 19

SunCoke Energy, Inc. (NYSE: SXC) is an independent manufacturer of coke. The company was established in 1960 and is headquartered in Lisle, Illinois. It operates through three segments: Domestic Coke, Brazil Coke, and Logistics. Analysts who are looking for strong oil-energy stocks, it is prudent for them to seek those companies that are outperforming and as of March 2024, SunCoke Energy, Inc. (NYSE: SXC) has certainly gained attention of many investors and is one of the best coal stocks.

SunCoke Energy, Inc. (NYSE: SXC) had 19 hedge fund holders as per Insider Monkey’s fourth quarter database. And Cliff Asness’s AQR Capital Management is the largest stakeholder of the company with 592,500 shares worth $6.4 million. SunCoke Energy, Inc. (NYSE:SXC) had surpassed its own forecasts with a consolidated adjusted EBITDA of $268.8 million in Q4. And the company is planning ahead for a challenging year of 2024 with a strategic focus on safety, environmental performance, and expanding its customer base.

7. Alpha Metallurgical Resources, Inc. (NYSE:AMR)

Number of Hedge Fund Holders: 20

Alpha Metallurgical Resources, Inc. (NYSE: AMR) was formerly known as Contura Energy Inc. and is a leading coal producer in the United States headquartered in Bristol, Tennessee. The company specializes in mining, producing, blending, and selling metallurgical and steam coal. Its portfolio of mining operations consists of 15 underground mines, nine surface mines and eight coal preparation plants.

Insider Monkey’s Q4 database results show that Alpha Metallurgical Resources, Inc. (NYSE:AMR) held 20 hedge funds out of 933 funds with Mohnish Pabrai as the largest stakeholder with 394,313 shares valued at $133.6 million. Mohnish Pabrai acquired a significant portion of AMR i.e. 369,642 shares during the second quarter of 2023 and added another 12% in the third quarter. The company’s strong financial discipline, clear-cut business model and commitment to maximizing shareholder returns makes it as one of the best coal stocks.

Alpha Metallurgical Resources, Inc. (NYSE:AMR) is one of the best coal mining stocks to invest like Hallador Energy Company (NASDAQ:HNRG) and SunCoke Energy, Inc. (NYSE:SXC).

6. BHP Group Limited (NYSE:BHP)

Number of Hedge Fund Holders: 24

BHP Group Limited (NYE: BHP) is one of the largest diversified mining companies that is the major producer of commodities such as iron ore, copper, coal, petroleum, and nickel with a substantial presence in each sector. Its strong focus and commitment to sustainability and environmental stewardship makes it as one of the best coal stocks.

BHP Group Limited (NYSE: BHP) has a market capitalization of around $144 billion. It published a white paper that focuses on the company’s efforts to transition from fossil fuel and carbon-intensive to a world of low or zero-carbon emission resources. In 2016, BHP Group Limited (NYSE:BHP) is committed to achieving gender balance by 2025, and has achieved 40% female representation this year. It is one of the first mining companies in Chile to exceed 40% female representation.

BHP Group Limited (NYSE: BHP) positions itself as a promising, resilient investment choice and one of the best coal mining stocks to capitalize amidst changing market dynamics and regulatory pressures due to its diversified portfolio spanning various commodities, vigorous operational efficiency and proactive approach to sustainability and environmental stewardship.

Insider Monkey’s fourth quarter database results show that 24 hedge funds were bullish on BHP Group Limited (NYSE:BHP) with Ken Fisher’s Fisher Asset Management as the largest position holder in the company have 19.9 million shares worth $1.4 billion.

Click to continue reading and see 5 Best Coal Mining Stocks To Invest In.

Most Read from Bloomberg

Recent rallies in gold and copper prices have done little to lift the S&P/ASX 200 Materials Index, down 6.6% for the year, due largely to share declines in behemoths BHP Group Ltd and Rio Tinto Ltd, which account for over half the gauge. In contrast, the Bloomberg World Mining Index is up almost 7%.

Miner shares have trailed falling iron ore prices, which have sunk by 17% this year as China’s real estate slump continues to damp steel demand. Both Rio Tinto and BHP get more than half of their revenue from China.

Still, there might be some positives for miners: ore prices are rebounding after dipping below $100 a ton, and quarterly production updates from BHP and Rio Tinto cast copper as a bright spot for both miners. SBG Securities analyst Tim Clark raised the recommendation on BHP to buy from hold following its trading update.

“We do expect the demand outlook out of China to stabilize into mid-year and be supportive of early-stage commodities, such as iron ore, coal,” UBS analysts including Lachlan Shaw wrote in an April 9 note.

Prolonged US dollar strength may also benefit Aussie miners’ profits as their US dollar-denominated export incomes gain from favorable exchange rates.

–With assistance from Michael G. Wilson and Paul-Alain Hunt.

Most Read from Bloomberg Businessweek

It is hard to get excited after looking at BHP Group's (ASX:BHP) recent performance, when its stock has declined 5.7% over the past three months. However, stock prices are usually driven by a company’s financials over the long term, which in this case look pretty respectable. Particularly, we will be paying attention to BHP Group's ROE today.

Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. Put another way, it reveals the company's success at turning shareholder investments into profits.

See our latest analysis for BHP Group

How Do You Calculate Return On Equity?

ROE can be calculated by using the formula:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity

So, based on the above formula, the ROE for BHP Group is:

20% = US$8.9b ÷ US$46b (Based on the trailing twelve months to December 2023).

The 'return' refers to a company's earnings over the last year. So, this means that for every A$1 of its shareholder's investments, the company generates a profit of A$0.20.

Why Is ROE Important For Earnings Growth?

So far, we've learned that ROE is a measure of a company's profitability. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.

BHP Group's Earnings Growth And 20% ROE

To start with, BHP Group's ROE looks acceptable. Further, the company's ROE compares quite favorably to the industry average of 10%. Probably as a result of this, BHP Group was able to see a decent growth of 13% over the last five years.

We then compared BHP Group's net income growth with the industry and found that the company's growth figure is lower than the average industry growth rate of 21% in the same 5-year period, which is a bit concerning.

past-earnings-growth

Earnings growth is a huge factor in stock valuation. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. What is BHP worth today? The intrinsic value infographic in our free research report helps visualize whether BHP is currently mispriced by the market.

Is BHP Group Efficiently Re-investing Its Profits?

The high three-year median payout ratio of 94% (or a retention ratio of 5.6%) for BHP Group suggests that the company's growth wasn't really hampered despite it returning most of its income to its shareholders.

Moreover, BHP Group is determined to keep sharing its profits with shareholders which we infer from its long history of paying a dividend for at least ten years. Existing analyst estimates suggest that the company's future payout ratio is expected to drop to 59% over the next three years. However, the company's ROE is not expected to change by much despite the lower expected payout ratio.

Conclusion

Overall, we feel that BHP Group certainly does have some positive factors to consider. As noted earlier, its earnings growth has been quite decent, and the high ROE does contribute to that growth. Still, the company invests little to almost none of its profits. This could potentially reduce the odds that the company continues to see the same level of growth in the future. We also studied the latest analyst forecasts and found that the company's earnings growth is expected be similar to its current growth rate. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company.

(Bloomberg) — The copper industry is about to get a new leader as BHP Group overtakes Codelco in the global producer rankings, according to Bloomberg Intelligence estimates.

Most Read from Bloomberg

As long as BHP’s giant Escondida mine in Chile continues to step up production, the Australian company will nudge past Codelco this year, disrupting the Chilean state-owned behemoth’s reign as No. 1, said Bloomberg Intelligence analyst Grant Sporre.

Still, Codelco may recover the top spot in the years ahead as it battles to recover from delays and missteps at its projects.

Most Read from Bloomberg Businessweek

BHP Group Limited

SASKATOON, Saskatchewan, March 19, 2024 (GLOBE NEWSWIRE) — BHP and the Saskatoon Food Bank and Learning Centre (SFBLC) are pleased to announce a $500,000 donation from BHP to SFBLC’s Plant Possibility Campaign. The donation will support a new food warehouse and learning campus, as the SFBLC expands to meet the city’s increasing need for safe, affordable and nutritious food. Poverty and hunger are overwhelming realities for the people turning to the SFBLC each month. In the last ten years, Saskatoon’s food bank has increased from 12,000 to as many as 23,000 people served each month, 40 per cent of which are children.

SFBLC currently operates out of inefficient, aging buildings that require expensive upgrades to operate more effectively. Patch-work repairs have been made over recent years, but SFBLC can no longer delay the need to find a new and functional home and have turned to the community to help raise the funds for an expanded space and purpose-built operations tailored to the communities’ needs.

BHP’s half a million-dollar investment will help the SFBLC to transform the model of service delivery in our community. It will go towards optimizing operations, increase the quality and quantity of healthy foods available, expand food distribution and allow the SFBLC to serve all 36 food banks in the province.

“BHP’s investment will have a transformative impact, today and tomorrow by ensuring hungry people will be fed,” said Laurie O’Connor, Executive Director of SFBLC. “Together we are shifting what is possible, and we thank you for your belief in what we do and for your support — a true reflection of the spirit, resilience, and values of Saskatchewan people.”

"We’ve all felt the rising costs of living, and the Saskatoon Food Bank & Learning Centre provides important access to healthy, nutritious food and vital support services that help people get back on their feet, allowing them to not only survive, but thrive," said Karina Gistelinck, Asset President Potash. “Through our investment, BHP is thrilled to support the new food warehouse as well as innovative employment and nutritional education programs that support long-term positive outcomes.”

Since 2015, BHP has contributed over $50 million to community organizations and initiatives in Saskatchewan. These contributions are driven by BHP’s fundamental belief that success is achieved through community partnerships that create lasting mutual benefit.

ABOUT SASKATOON FOOD BANK & LEARNING CENTREThe Saskatoon Food Bank & Learning Centre is committed to ensuring a food secure community where all people have access to safe, affordable, and nutritious food and believe it’s important to address the underlying issues contributing to hunger and poverty in our community. The Learning Centre offers various learning, self-help, and life skills programs that are supportive of learning needs and aspirations within a family-oriented, empowering, and self-directed environment.

ABOUT BHPBHP is a global resources company with its Canadian operational headquarters in Saskatoon, Saskatchewan and global business development headquarters in Toronto. BHP has a global workforce of approximately 80,000 people working in locations across Canada, Australia, Asia, the UK, US and Latin America. BHP produces commodities essential for global decarbonization, economic development and food security including copper, nickel, iron ore, metallurgical coal and is developing the Jansen potash project in Saskatchewan, Canada. Further information on BHP can be found at: bhp.com

MEDIA INQUIRIES

Saskatoon Food Bank & Learning CentreLaurie O’ConnorExecutive DirectorSaskatoon Food Bank & Learning Centre306.370.6998

BHPMegan HjulforsMedia RelationsBHP403.605.2314

Key Insights

Using the 2 Stage Free Cash Flow to Equity, BHP Group fair value estimate is AU$53.69
BHP Group is estimated to be 22% undervalued based on current share price of AU$41.95
Our fair value estimate is 15% higher than BHP Group's analyst price target of US$46.64

In this article we are going to estimate the intrinsic value of BHP Group Limited (ASX:BHP) by taking the expected future cash flows and discounting them to their present value. This will be done using the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.

Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model.

See our latest analysis for BHP Group

The Model

We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.

Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value:

10-year free cash flow (FCF) forecast

	2024	2025	2026	2027	2028	2029	2030	2031	2032	2033
Levered FCF ($, Millions)	US$11.1b	US$10.6b	US$11.0b	US$10.5b	US$10.9b	US$11.0b	US$11.1b	US$11.3b	US$11.5b	US$11.7b
Growth Rate Estimate Source	Analyst x10	Analyst x9	Analyst x8	Analyst x3	Analyst x2	Est @ 0.95%	Est @ 1.31%	Est @ 1.57%	Est @ 1.74%	Est @ 1.87%
Present Value ($, Millions) Discounted @ 7.6%	US$10.3k	US$9.1k	US$8.8k	US$7.8k	US$7.5k	US$7.1k	US$6.7k	US$6.3k	US$5.9k	US$5.6k

("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$75b

We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.2%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 7.6%.

Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = US$12b× (1 + 2.2%) ÷ (7.6%– 2.2%) = US$219b

Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$219b÷ ( 1 + 7.6%)10= US$105b

The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$180b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of AU$42.0, the company appears a touch undervalued at a 22% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula – garbage in, garbage out.

dcfImportant Assumptions

Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at BHP Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.6%, which is based on a levered beta of 1.192. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.

SWOT Analysis for BHP Group

Strength

Debt is not viewed as a risk.

Weakness

Earnings declined over the past year.

Dividend is low compared to the top 25% of dividend payers in the Metals and Mining market.

Opportunity

Annual earnings are forecast to grow faster than the Australian market.

Good value based on P/E ratio and estimated fair value.

Threat

Dividends are not covered by earnings.

Annual revenue is expected to decline over the next 3 years.

Moving On:

Whilst important, the DCF calculation shouldn't be the only metric you look at when researching a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. What is the reason for the share price sitting below the intrinsic value? For BHP Group, there are three further aspects you should explore:

Risks: For example, we've discovered 3 warning signs for BHP Group that you should be aware of before investing here.

Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for BHP's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.

Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!

PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the ASX every day. If you want to find the calculation for other stocks just search here.

In this article, we will be covering the top 10 uranium-producing companies in the world. If you want to skip our detailed analysis of the global uranium market, you can go directly to Top 5 Uranium Producing Companies In The World.

Global Uranium Market: An Analysis

According to the World Nuclear Association, uranium is a heavy metal that has been used as an abundant source of concentrated energy for more than 60 years. Uranium has far-reaching significance in the modern world due to its applications in nuclear energy and various industrial sectors. Uranium is a critical element and it serves as the primary fuel for nuclear power plants around the world, providing clean, low-carbon electricity. According to a report by IndustryARC, the global uranium market is expected to grow at a compound annual rate (CAGR) of 4.3% from 2024 to 2030 to reach a value of $12.7 billion by the end of the forecasted period. The North American region dominates the uranium market due to the increasing domestic production of this critical element.

The demand for uranium continues to increase as the world seeks to reduce greenhouse gas emissions and transition to cleaner energy sources. Nuclear power is becoming an increasingly attractive option and this is driving up demand for uranium, which is used as fuel in nuclear reactors. Responsible extraction, processing, and utilization are important not only for meeting growing energy demands but also for promoting environmental sustainability and well-being.

Uranium is used in the production of radioisotopes, which have various medical, industrial, and scientific purposes across the globe such as cancer treatment, sterilization, and quality control in manufacturing processes. According to a research report by the World Nuclear Association, more than 40 million nuclear medicine procedures are performed annually and demand for radioisotopes is growing by as much as 5% annually.

Radioisotopes also play a crucial role in the growing of crops and breeding livestock. Radioisotopes are used in the production of high-yield, disease-resistant, and weather-resistant varieties of crops. According to a publication available on the International Atomic Energy Agency's website, isotopes and radiation can play a crucial role in identifying and reducing the genetic and environmental limitations of animal production. Various industries around the world that use uranium and radioisotopes are acting as drivers for the growth of the uranium market.

Key Players in the Uranium Market

With the expansion of the uranium market, companies engaged within this sector are expected to have access to significant growth opportunities owing to the heightened demand for resources and services related to uranium. Some of the most notable names in the global uranium market include Cameco Corporation (NYSE:CCJ), Uranium Energy Corp. (NYSE:UEC), and Centrus Energy Corp. (NYSE:LEU).

Centrus Energy Corp. (NYSE:LEU) is an American company that supplies nuclear fuel and services for the nuclear power industry. The company supplies sources of enriched uranium to help meet the growing demand for clean, affordable, and carbon-free electricity. Centrus Energy Corp. (NYSE:LEU) is also one of the best uranium stocks to buy. On February 8, Centrus Energy Corp. (NYSE:LEU) reported strong earnings for the fiscal fourth quarter of 2023. The company reported earnings per share (EPS) of $3.58, surpassing EPS estimates by $2.82. Centrus Energy Corp. (NYSE:LEU) reported a revenue of $103.6 million and outperformed revenue estimates by $32.47 million.

Uranium companies are also increasing exploration and production efforts to address the growing demand for nuclear energy. Uranium Energy Corp. (NYSE:UEC) is a US-based uranium production and exploration company. On January 16, Uranium Energy Corp. (NYSE:UEC) announced that the company’s board of directors has approved restarting uranium production at its Christensen Ranch In-Situ Recovery operations in Wyoming. The recovered uranium will be processed at the fully operational Irigaray Central Processing Plant, which has a current licensed capacity of 2.5 million pounds of U3O8 (triuranium octoxide) per year. While Uranium Energy Corp. (NYSE:UEC) will provide further information on the anticipated volumes for the first year of production in the coming months, production is expected in August 2024.

Some of the biggest uranium companies are also participating in collaborative initiatives to promote nuclear energy's role in decarbonization. Cameco Corporation (NYSE:CCJ) is a Canadian uranium company. As one of the world’s largest uranium-producing companies, it is a major provider of nuclear fuel solutions for the generation of safe, reliable, and carbon-free nuclear power across the globe. On December 3, 2023, Cameco Corporation (NYSE:CCJ) announced that it has joined Net Zero Nuclear, the initiative aiming to triple global nuclear capacity to achieve carbon neutrality by 2050 by calling for collaboration among governments and industry leaders. This initiative, supported by various organizations including the World Nuclear Association and the International Atomic Energy Agency, seeks to accelerate the growth of the global nuclear fleet and advance research and development into emerging nuclear technologies. By promoting nuclear energy's role in decarbonizing global energy systems, Net Zero Nuclear will ensure nuclear energy’s potential is fully realized while also removing barriers to its growth.

Tim Gitzel, Cameco Corporation (NYSE:CCJ) President and CEO, said:

“Increasingly, countries and companies around the world are counting on nuclear power to play a role in achieving their net-zero emissions targets while strengthening their energy security. Its importance as an essential source of sustainable, carbon-free, baseload electricity has never been greater.”

Now that we have looked at what’s going on in the global uranium market, let’s take a look at the top 10 uranium-producing companies in the world. You can also take a look at the countries that produce the best uranium in the world.

Top 10 Uranium Producing Companies In The World

A miner in a hard hat and apron holding a piece of uranium ore in the Athabasca Basin, Saskatchewan.

Methodology

In this article, we have listed the top 10 uranium-producing companies in the world. To collect data for our list, we consulted the World Nuclear Association. We used data obtained for the latest year in their dataset, updated in August 2023. This database provided us with a list of companies and information on their uranium production for the year 2022. The top 10 uranium-producing companies in the world are listed below in ascending order.

By the way, Insider Monkey is an investing website that tracks the movements of corporate insiders and hedge funds. By using a consensus approach, we identify the best stock picks of more than 900 hedge funds investing in US stocks. The top 10 consensus stock picks of hedge funds outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). Whether you are a beginner investor or a professional one looking for the best stocks to buy, you can benefit from the wisdom of hedge funds and corporate insiders.

Top 10 Uranium Producing Companies In The World10. General Atomics

Uranium Production (2022): 1,740 Tonnes

General Atomics is an American energy and defense company that ranks among the top 10 uranium-producing companies in the world. It specializes in research and technology development, including physics research in support of nuclear fission and nuclear fission energy. General Atomics also owns Heathgate Resources and its affiliate Quasar Resources. Quasar Resources owns the Four Mile uranium mine in Australia, which is one of the world’s largest uranium-producing mines. The Four Mile mine is operated by Heathgate Resources. With a 4% share in global uranium production, General Atomics produced 1,740 tonnes of uranium in 2022 through its affiliated companies.

9. ARMZ Uranium Holding Co.

Uranium Production (2022): 2,508 Tonnes

ARMZ Uranium Holding Co. is a Russian company. It operates the Mining Division of Rosatom State Atomic Energy Corporation and produces uranium in Russia. ARMZ Uranium Holding Co. is also one of the biggest companies in terms of in-situ uranium reserves. As one of the top uranium-producing companies in the world, ARMZ Uranium Holding Co. produced 2,508 tonnes of uranium in 2022 to account for about 5% of the global uranium supply.

8. BHP Group Limited (NYSE:BHP)

Uranium Production (2022): 2,813 Tonnes

BHP Group Limited (NYSE:BHP) is an Australian multinational mining and metals company. As a major resources company, it produces iron ore, coal, copper, gold, nickel, and uranium. BHP Group Limited (NYSE:BHP) has over 90 locations around the world. As one of the biggest uranium-producing companies in the world, BHP Group Limited (NYSE:BHP) produced 2,813 tonnes of uranium in 2022 to provide about 6% of the global uranium supply.

7. China National Nuclear Corporation (CNNC)

Uranium Production (2022): 3,247 Tonnes

The China National Nuclear Corporation is a Chinese state-owned enterprise. The corporation owns a complete uranium exploration, mining, and milling system. Accounting for 7% of the global uranium production, the China National Nuclear Corporation (CNNC) produced 3,247 tonnes of uranium in 2022.

6. Navoi Mining and Metallurgy Combinat

Uranium Production (2022): 3,300 Tonnes

Navoi Mining and Metallurgy Combinat is a state-owned company in Uzbekistan. It is one of Uzbekistan’s largest mining companies and it also ranks high among the world’s largest uranium and gold producers. The company’s most important ore deposits are located in the Kyzyl Kum Desert. In 2022, Navoi Mining and Metallurgy Combinat produced 3,300 tonnes of Uranium. It ranks 6th on our list of the top 10 uranium-producing companies in the world.

Click to continue reading and see Top 5 Uranium Producing Companies In The World.

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The company announced last week it would take a $2.5 billion impairment on the value of its Australian nickel assets, which could be mothballed later this year following a review.

Global supplies of the metal — which has become key to the energy transition due to its use in electrification and batteries — ballooned after Indonesia quickly ramped up production, causing benchmark prices to crater and the closure of at least six nickel projects in Australia in the past year.

“There’s going to be a multi-year period of over-supply in nickel” that could last until the end of this decade, Chief Executive Officer Mike Henry said in a Bloomberg Television interview Tuesday after BHP announced its results. “The consideration that we need to give to nickel is what we do with our business in the intervening period, given that it’s currently loss-making and it has been for some time.”

The company reported that underlying attributable profit from continuing operations in the six months to Dec. 31 was steady at $6.57 billion, slightly below the estimate from analysts. Still, it was the massive slump in net income that was the biggest focus for investors, along with the cut in its interim dividend to 72 cents a share, down from 90 cents in the previous six months.

Read More: Top Miner BHP Takes $2.5 Billion Nickel Hit After Price Fall

BHP’s Sydney-based shares fell as much as 1% on Tuesday before trading down 0.2% to A$45.97 at 12:51 p.m. local time.

See-sawing demand for commodities in recent years has whiplashed BHP’s earnings, a trend that started during the pandemic and has continued due to the deteriorating outlook for China’s economy and particularly its metals-intensive construction and property sectors. Last year, just 12 months after posting its highest-ever profit as prices soared, the company reported its lowest annual profit in three years.

BHP said Tuesday all its assets were on track to meet full-year output and cost targets, with demand from top customer China “healthy” despite weakness in its housing sector. The six-month reporting period “had its challenges,” it said in a statement, referring to its nickel assets, which “offset an otherwise solid operation performance and overall healthy commodity prices.”

In a move aimed at supporting its flailing domestic industry, Australia last week added nickel to its Critical Minerals List, which will allow miners and downstream stakeholders of the metal to access the A$6 billion ($3.9 billion) available via the Critical Minerals Facility – a government fund aimed at ensuring Australia is at the forefront of the green metals transition.

Government Support

Prime Minister Anthony Albanese said in an interview on Monday that his government was looking at “how we can provide further support with a smart, targeted and time-limited policy” for the nickel sector.

Still, BHP’s Henry said Tuesday that federal tax credits and royalty relief at state level may not be enough to stop it shutting down its Nickel West operations, which haven’t been profitable since 2018.

“Given the current nickel price uncertainty, a large capital outlay is hard for BHP to justify” and avoid putting its Australian nickel assets on care and maintenance, RBC Capital Markets analyst Kaan Peker said in answer to emailed questions. The company will be looking for “additional government incentives associated with building downstream processing infrastructure associated in nickel, which the Australian government now deems to be a critical mineral,” he added.

Read More: BHP Nickel Supply Warning to Raise Questions on Strategy: Reaction

Beyond nickel, iron ore remains the company’s most important revenue earner. Prices of the steelmaking material surged 28% over the reporting period and remain historically high, and that has prompted major producers including BHP to consider development of once-stranded deposits.

BHP and its investors will also be watching whether China’s once insatiable demand for metals can be revived.The nation’s construction sector is expected to ramp up next month, and there will be a focus on whether Beijing will inject further fiscal stimulus to effectively counter steep declines from the crash in the metals-intensive housing market.

“In the near term, the economic outlook for the developed world is expected to improve modestly after a difficult year for both steel and non-ferrous metals demand,” BHP said in the statement. “China and India are expected to remain relative sources of stability for commodity demand.”

The company also said last week it would nearly double the provision set aside to cover damages from the 2015 Samarco dam failure in Brazil to $6.5 billion.

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By Sameer Manekar and Melanie Burton

(Reuters) -BHP Group on Tuesday logged first-half underlying profit that slightly beat analyst expectations, buoyed by strong iron ore prices, and said inflationary impacts were receding.

The world's largest listed miner was cautiously optimistic on a demand recovery in the developed world in the next 12 months but said it was not yet clear how effective stimulus policies have been in China, its biggest customer.

It was more bullish on India, which it said "has considerable positive momentum behind it".

BHP said it expects a "more balanced global economy and evidence that the worst of the general inflationary wave is behind us will have a positive impact on our industry in calendar year 2024."

For the first-half, BHP's strong revenue growth of 6% was underpinned by higher iron ore and copper prices and contributions from new projects, but was partially offset by lower energy coal prices.

BHP said underlying profit attributable to shareholders was $6.60 billion for the six months ended Dec. 31, unchanged from the previous year, but topping an LSEG estimate of $6.42 billion.

It declared an interim dividend of $0.72 per share, compared with $0.90 per share a year earlier. That beat Citi's expectation of $0.68, and a Visible Alpha consensus of $0.70.

"(The) market should take a modestly higher dividend than expected as a reflection of BHP’s improving confidence regarding (the) outlook on commodity demand/prices," analysts at Citi wrote.

Shares in BHP edged down 0.3% to A$45.91 amid a sour tone in resources stocks.

NICKEL

BHP, which announced a $2.5 billion impairment charge for its Western Australia Nickel business last week, said it sees the nickel industry facing "a difficult multi-year run," amid a flood of new supply coming out of Indonesia.

"Our base case is that the market may rebalance by the late 2020s," BHP said.

BHP operates a nickel smelter and a refinery in Western Australia, employing 3,000 people, and has warned that the slump in nickel prices could slow development of its West Musgrave copper nickel project.

"You should be expecting that to be a decision in months, not years," said Henry. "Clearly we weren’t expecting the nickel market to plunge as quickly and as significantly as it has," he told analysts at a results briefing.

While it welcomed Australia's moves to shore up the nickel sector though a production tax credit, BHP said that should not take the focus of ensuring "the right policy settings are in place to drive long term competitive positioning of Australia as a nation."

The company wants the government to improve industrial relations policies, fiscal settings and permitting requirements, CEO Mike Henry said, but added that might not be enough for miners that have already put their operations into care and maintenance.

"Given just how significant the challenges in the nickel market are today, that may not be enough to alter course."

($1 = $1.0000)

(Reporting by Sameer Manekar and Himanshi Akhand in Bengaluru; Additional reporting by Melanie Burton; Editing by Chris Reese, Leslie Adler and Sonali Paul)

By Melanie Burton

MELBOURNE (Reuters) -BHP Group will record another $3.2 billion impairment in relation to its Brazilian Samarco dam failure, and a $2.5 billion impairment charge for its Western Australia Nickel business, the world's biggest listed miner said on Thursday.

BHP flagged the two-non cash impairments ahead of its half year results next week where its earnings are expected to have broadly held up against the same time last year, underpinned by strong iron ore prices.

Last month a federal judge in Brazil ruled that BHP and Vale and their joint venture, Samarco, must pay up to 47.6 billion reais ($9.67 billion) in damages for the 2015 dam collapse, in a decision still subject to appeal.

The collapse in the southeastern city of Mariana caused a giant mudslide that killed 19 people and severely polluted the Rio Doce river, compromising the waterway to its outlet in the Atlantic Ocean.

The additional $3.2 billion income statement charge will raise BHP Brasil's provision for the Samarco dam failure to $6.5 billion as at Dec. 31, 2023, BHP said.

"The first thing to note is they are book writedowns not cash writedowns.. Nickel West wasn't contributing anything to their profits," said head of research Hayden Bairstow at Argonaut Securities in Perth. The writedowns are unlikely to impact dividend payments which stem from its iron ore unit.

The miner last month flagged a potential writedown at its Western Australian nickel operations as a jump in nickel supply from Indonesia has led to a swathe of writedowns and restructures across the sector. It has an arrangement to supply nickel to Tesla from the operations.

"Due to the deterioration in the short-term and medium-term outlook for nickel, BHP has lowered its nickel price assumptions," the miner said. "These unfavourable operating conditions are expected to endure for a considerable time."

BHP produced 80,000 tonnes of nickel in the financial year ending June but the division contributed -1% to its underlying earnings.

BHP said it would record a $2.5 billion non-cash impairment, including closure and rehabilitation provisions of approximately $900 million, which would reduce the carrying value of its Nickel West assets to minus $300 million.

The operations are now under review with the potential to be placed on care and maintenance.

BHP's Kambalda concentrator will be placed into care and maintenance in June after its supplier, mining company Wyloo, decided to suspend its Cassini and Northern Operations mines, which feed the plant, from late May.

It is also assessing development plans for its West Musgrave nickel project which is 21% complete.

BHP will report first-half results on Tuesday, Feb. 20.

(Reporting by Melanie Burton in Melbourne and Sameer Manekar in Bengaluru;Editing by Shinjini Ganguli, Aurora Ellis and Michael Perry)

BHP Group Limited; YWCA Saskatoon

SASKATOON, Saskatchewan, Feb. 13, 2024 (GLOBE NEWSWIRE) — BHP and YWCA Saskatoon are pleased to announce a $500,000 investment from BHP to YWCA's Hope Lives Here campaign. In 2022, YWCA Saskatoon’s Crisis Shelter & Residence turned away a staggering 4,253 women and children in need. Hope Lives Here is the organization’s largest capital campaign ever. With a fundraising goal of $19 million, the campaign is funding a new transitional housing wing that will more than double YWCA Saskatoon’s capacity to provide women and children with a safe place to stay. It will also contribute to funding much needed existing facility repairs and renovations.

BHP’s investment will go toward YWCA Saskatoon’s Employment and Learning Centre, a place where clients have access to programs and services that help them obtain sustainable employment. This generous gift will contribute directly to building a stronger, healthier community through helping women and families access the resources, programs and services needed to help them build stable foundations.

YWCA Saskatoon gave their heartfelt thanks to BHP for this extremely generous donation.

“From providing safe shelter, to our comprehensive employment programs, this transformational gift from BHP will directly contribute to helping YWCA Saskatoon serve women and families in need, giving hope to those who need it most,” said Cara Bahr, CEO of YWCA Saskatoon. “We are so very grateful for their generosity.”

“The YWCA Saskatoon is providing critical work that creates positive and lasting impact for so many in our city,” said Karina Gistelinck, Asset President of BHP Potash. “Access to training and courses opens doors and a new world of opportunity. Through the Employment and Learning Centre the YWCA is playing an important role in bringing access to people when it is most needed.”

Since 2015, BHP has contributed over $50 million to community organisations and initiatives in Saskatchewan. These contributions are driven by BHP’s fundamental belief that success is achieved through community partnerships that create lasting mutual benefit.

ABOUT THE YWCA SASKATOON

YWCA Saskatoon is an inclusive community-based organization that provides preventative and emergent services to women and their families. Their mission lies in empowering women and girls through programs and advocacy that advance reconciliation, independence, wellness and equal opportunity.

ABOUT BHP

BHP is a global resources company with its Canadian operational headquarters in Saskatoon, Saskatchewan and global business development headquarters in Toronto. BHP has a global workforce of approximately 80,000 people working in locations across Canada, Australia, Asia, the UK, US and Latin America. BHP produces commodities essential for global decarbonization, economic development and food security including copper, nickel, iron ore, metallurgical coal and is developing the Jansen potash project in Saskatchewan, Canada. Further information on BHP can be found at: bhp.com

MEDIA INQUIRIES

YWCA SaskatoonCarla HuntingtonVP, Development & EngagementYWCA Saskatoon306.986.2870

BHPMegan HjulforsMedia RelationsBHP403.605.2314

(Bloomberg) — Train drivers at BHP Group Ltd.’s Pilbara iron ore operations in Western Australia have voted to strike on Friday morning for 24 hours, potentially cutting supply to the producer’s Australian export hubs.

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Workers plan to carry out a stoppage under a campaign aimed at securing better working conditions and pay in an enterprise agreement, according to the Mining and Energy Union. The previous agreement, which covers about 580 drivers, shunters and trainees, was negotiated in 2014.

“Pilbara iron ore mine operators have had it their own way for a long time,” the union’s Secretary Greg Busson said in a statement. The workers had “been very patient and given BHP every opportunity to address their concerns,” he added.

There are approximately 150 rail employees on-shift at any one time. Workers who strike will not be paid for those hours.

BHP is “currently reviewing a revised set of claims provided by union representatives,” a company spokesperson told Bloomberg. “We believe that agreement can be reached without the need for protected action. We have contingency plans in place if action goes ahead.”

BHP shares closed 0.5% lower to A$46.07 in Sydney on Monday.

In Australia, industrial action is a legal right under the Fair Work Act 2009. It can be triggered when bargaining for a new enterprise agreement fails or an existing agreement is out-of-date, according to the Fair Work Commission.

A typical train iron ore train comprises of four locomotives pulling around 270 cars carrying 38,000 tons of iron ore, according to the company’s website.

(Updates with BHP comment in fifth paragraph.)

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(Reuters) -BHP Group said on Friday it would review a Brazilian Federal Court decision regarding a 155 billion reais ($31.53 billion) government claim over the 2015 collapse of Fundao dam owned by Samarco, its joint venture with Vale.

The company said its unit BHP Brasil had not received a decision from the court, adding that the group would review its implication, potential for an appeal and any potential impact on its provision related to the dam's collapse.

The court has issued an interlocutory decision ordering Vale, BHP and Samarco to pay 47.6 billion reais ($9.67 billion) in collective moral damages for the 2015 tailings dam burst that killed 19 people and led to severe pollution of the Rio Doce river.

This is one of the categories of damages sought in the $31.53 billion claim by the Federal Public Prosecution Office.

The parties have been in negotiations to seek a settlement of obligations under a framework agreement since 2021, and the talks are slated to resume in February this year.

BHP had set aside $3.7 billion in provision related to the Samarco dam failure, according to its 2023 annual report.

BHP said its unit is "fully committed to supporting the extensive ongoing remediation and compensation efforts in Brazil" through a not-for-profit foundation that was established following the dam failure.

"Although both companies' balance sheets should be able to handle these outflows, we think this could drive lower capital returns over time/push net debt in BHP's case through its $15bn target ceiling," RBC analysts said in a note.

($1 = 4.9165 reais)

(Reporting by Archishma Iyer in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu)

(Bloomberg) — Vale SA, BHP Group and their Samarco iron ore venture must pay 47.6 billion reais ($9.7 billion) in compensation for damages caused in a 2015 tailings dam disaster in Brazil, a judge ruled.

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The decision allows for the companies to appeal the sentence. It also states that the damages figure should be adjusted to reflect interest, given the time passed since the disaster.

Vale swung briefly on the news before extending earlier losses to trade 2.9% down for the day in New York.

A resolution over damages would help ease the legal uncertainty hanging over the companies, after the tailings dam collapse eight years ago at Samarco’s that mine killed as many as 19 people, and contaminated waterways in the Brazilian states of Minas Gerais and Espirito Santo.

The companies had been seeking a negotiated settlement outside of court, and had offered to pay 42 billion reais, while the authorities were seeking 126 billion reais, Bloomberg reported in December.

The companies need to meet environmental obligations in addition to making compensation payments, and had provided 34 billion reais in reparations by late last year.

The sentence was issued in response to a request from public prosecutors of two affected states and the federal government for an early trial of a public civil action used as a benchmark in the case. The authorities had asked the firms to be sentenced to pay the equivalent of at least 20% of the profits of Vale and BHP in the last three years.

Vale and BHP said they have yet to be notified of the decision. Samarco declined to comment.

Vale and BHP are also facing a parallel UK class action lawsuit, involving as many as 700,000 people.

(Updates with Vale and BHP comments)

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SAO PAULO (Reuters) -A Brazilian federal judge ruled that miners Vale and BHP and their joint venture Samarco must pay 47.6 billion reais ($9.67 billion) in damages for a 2015 tailings dam burst, according to a legal decision on Thursday seen by Reuters.

Vale and BHP said in separate statements they were not informed by the judiciary about the decision. Samarco declined to comment.

The dam collapse in the southeastern city of Mariana caused a giant mudslide that killed 19 people and severely polluted the Rio Doce river, compromising the waterway to its outlet in the Atlantic Ocean.

In the decision, judge Vinicius Cobucci wrote that the amount was fixed taking as a parameter the value of expenses already acknowledged by the companies in repair and compensation actions. He added the 47.6 billion reais need to be adjusted by monetary correction and late payment interest.

It was not immediately clear how much of the total stipulated in the sentence each company owes.

The judge wrote in the legal document that the money would be put in a state fund and used for projects and initiatives area affected by the dam collapse.

The companies can appeal the decision.

In the securities filing, Vale said the Renova foundation, which the companies have been using to pay for some of the repairs, had paid until last December 34.7 billion reais in socioeconomic and environmental compensation.

($1 = 4.9237 reais)

(Reporting by Marta Nogueira; writing by Andre Romani; Editing by Brendan O'Boyle and David Gregorio)

BHP Group Limited

TORONTO, Jan. 22, 2024 (GLOBE NEWSWIRE) — BHP has announced its second cohort of six companies, chosen from a pool of over 500 applicants, to join the BHP Xplor accelerator program. The accelerator program is designed to support early-stage mineral exploration companies in finding the critical resources needed to support the energy transition.

Each company will receive a grant of up to US$500,000 together with access to a network of internal and external industry experts to accelerate its growth and further build out its exploration concepts. The program aims to support development across technical, business and operational facets of the participating companies.

BHP Xplor pushes the boundaries of what has conventionally been achievable in the exploration field. Over the span of the six-month program, the six companies will work collaboratively with BHP Xplor to expedite the maturation of their geological concepts to position the projects for commercialisation or partnership.

Head of the BHP Xplor Program, Charlee Johnson, said: “The diversity and quality of the submissions amongst the applicants is amazing and inspiring. We are excited to partner with the selected cohort and help bring their ideas and passion for their exploration projects to life. We aim to accelerate this process and create disruptive results by identifying new concepts, data and testing opportunities.”

BHP Xplor provides BHP the opportunity to access some of the most exciting exploration prospects globally, enhancing the pipeline of new opportunities which may shape our future asset portfolio.

Vice President, BHP Exploration and Xplor, Sonia Scarselli said: “Exploration for critical resources is moving slowly, but to meet the needs of the energy transition we must move at pace. We will be working together with the 2024 cohort to accelerate exploration in new geographies and advance new geologic concepts.”

The six companies selected to join the BHP Xplor accelerator program are:

Longreach Mineral – a private company that is applying an innovative mineral systems approach by leveraging our petroleum DNA to identify new tier 1 deposits critical to the energy transition. Our expertise in seismic geophysics and AI search tools, sets us apart in the exploration industry.
East Star Resources – a United Kingdom-based company listed on the London Stock Exchange exploring for copper and other base and precious metals in Kazakhstan.
Pallas Resources – a private explorer focusing on large-scale copper, gold, nickel sulphide and lithium systems in Kazakhstan.
Hamelin Gold – a mineral exploration company listed on the Australia Securities Exchange, established to execute a modern exploration program at the 100% owned ~3,000km2 West Tanami Gold Project (“West Tanami”) in Western Australia. The Tanami Gold Province is prospective for high value, large scale gold deposits and for nickel-copper-PGE mineralised intrusions.
Cobre – an exploration company listed on the Australia Securities Exchange, concentrating on copper and base metals exploration in Botswana.
Equivest Minerals – a private company deploying a technology platform combining statistical insights on the location of major metal deposits with integrated machine learning and minerals systems to predict priority areas of interest within key regions.

For more information on BHP Xplor, and to stay up to date with the program news and opportunities, please visit https://www.bhp.com/xplor

Contact:xplor@bhp.com

(Adds detail on BHP, Wyloo, nickel market in paragraphs 4-7)

MELBOURNE, Jan 22 (Reuters) – BHP Group will temporarily shut part of its Kambalda nickel concentrator in Western Australia in June, the top global miner said on Monday, after Wyloo Metals, which supplies ore to the plant, announced a pause in mining due to low nickel prices.

"The decision by Wyloo to suspend its operations means it will no longer be viable to continue operating parts of the Kambalda concentrator from mid-year," BHP's Nickel West President Jessica Farrell said in a statement to Reuters.

Around 20 roles will be affected.

BHP's move was the latest in string of writedowns and restructures of nickel businesses in the country given a sharp jump in Indonesian supply which has hammered prices 40% in the past year.

Australia's top nickel producer said it would put the crushing, milling and flotation circuit at its Kambalda plant on care and maintenance but would continue to run part of the plant as a drying circuit to process third-party concentrate.

The announcement came after Wyloo, a private investment vehicle owned by iron ore billionaire Andrew Forrest, said it would put its Kambalda nickel operations on care and maintenance at the end of May as a result of weak nickel prices.

BHP, which has a deal to supply Australian nickel to Tesla , last week flagged it could take a writedown at the division that accounts for a key plank of its green energy transition strategy but less than 1% of its revenue.

"We are looking at a range of options to remain globally competitive in a very tough operating environment. Costs have risen sharply and continue to go up while prices have fallen as new supply comes into the market," Farrell said.

BHP said last week it would give more details on the options at its half-year results on Feb. 20.

It may write down the value of the West Musgrave nickel project, acquired with its $6.4 billion takeover of OZ Minerals last year, analysts said. Experts valued the project at $1.2 billion. Mine development, under way, could also be delayed.

(Reporting by Melanie Burton; Editing by Tom Hogue and Sonali Paul)

(Bloomberg) — A prolonged slump in nickel prices is stress-testing producers worldwide, raising the prospect of sweeping mine closures that will deepen Indonesia’s dominance of global supply.

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The metal used in stainless steel and electric-vehicle batteries is down more than 40% from a year ago amid a growing global glut. That’s piling pressure on higher-cost operations and could pose the greatest risk to new projects outside Indonesia.

So far, the main casualties are in Australia. On Monday, billionaire Andrew Forrest’s nickel producer Wyloo Metals Pty Ltd. said it’s shutting down mines and BHP Group Ltd. said it’s partly closing a processing plant. BHP had warned last week on prospects for its nickel business, while First Quantum Minerals Ltd. suspended a mine.

But production in Indonesia — which already accounts for half of global supply — may prove more resistant to output cuts. The Southeast Asian nation has emerged as a global nickel hub after billions of dollars of investment in efficient plants that benefit from inexpensive labor, cheap power and readily available raw materials.

“Indonesian projects are more flexible in absorbing the impacts of lower nickel prices,” said Allan Ray Restauro, an analyst at BloombergNEF. That means overall global supply will keep rising despite output curbs elsewhere, he said.

Low Prices

The flood of new supply from Indonesia in the past two years has overwhelmed demand at a time when metals markets are under pressure from a sputtering global economy. For nickel, softer demand growth from the EV sector is also a headwind, and prices have recently traded near $16,000 a ton, close to their lowest level since 2021.

Mallee Resources Ltd’s Avebury mine in Tasmania, and a project by IGO Ltd. are also at risk, according to BloombergNEF. Calls to the two firms were not immediately answered.

Parts of BHP’s Kambalda concentrator will be suspended from June because they can no longer receive ore supply from Wyloo’s halted mines, BHP said. The world’s biggest miner is reviewing its Nickel West business, and last week warned it may be forced to write down the value of the assets.

First Quantum said it would suspend its Ravensthorpe nickel facility in Western Australia and cut a third of its workforce.

Citigroup Inc. sees nickel falling to $15,500 a ton in the next three months. The bank recently slashed its forecast for average prices this quarter to $16,000 a ton, from $18,000 a ton.

To be sure, Indonesia has its own uncertainties. A December accident that killed 21 people has triggered calls in the country for tighter regulation of the nickel industry ahead of a presidential election next month. One of the three candidates to become vice president criticized how the incumbent government has managed the sector during a televised debate on Sunday.

Testing Times

The announcements by BHP and First Quantum add to other signs of stress. Glencore said in September that it will only keep funding the struggling Koniambo Nickel mine until next month. Nickel plants in the French territory of New Caledonia are seen at risk of closure, the French government said last year.

“A lot of supply is still coming in from Indonesia, and we will need nickel prices to go lower to constrain supply growth in Indonesia,” said Nikhil Shah, principal analyst for base metals at CRU Group.

Nickel’s woes reflect the dynamics of other battery-materials markets, which have seen prices sink after surprisingly strong growth in supply. Demand for nickel and cobalt have suffered too as EV makers adopt types of batteries that don’t use either of them.

Despite the potential for further cuts in mine supply, the market will remain in surplus this year, given higher primary nickel output coming from Indonesia and China, said Jason Sappor, senior analyst at S&P Global Commodity Insights.

“We expect nickel prices to remain subdued this year,” Sappor said.

–With assistance from Sybilla Gross and Andrew Janes.

(Updates with BHP’s concentrator status in third and eighth paragraphs.)

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