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BHP - BHP Group

Dona Ferentes

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BHP looking at penetrating into the $41 today. Nice.
Numbers looking very good at the minute.

onward and upward:
- Chinese easing Covid restrictions
- US elections settled and not alarming
- Fed and other Central banks "may" pivot
- Commodity prices turning back up ... Iron ore +4.7% to $US92.25 a tonne

The June selldown is becoming just a memory

1668384991012.png
 
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onward and upward:
- Chinese easing Covid restrictions
- US elections settled and not alarming
- Fed and other Central banks "may" pivot
- Commodity prices turning back up ... Iron ore +4.7% to $US92.25 a tonne

The June selldown is becoming just a memory

View attachment 149226
Yeah, it's a good couple of days. Will it hit 55...A big ask but never say NEVER.
 

JohnDe

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"No sane mining manager would consider trucking significant volumes of raw ore over that kind of distance and expect to keep costs down. You can talk about messing around with mine sequencing all you want, but handling ore multiple times drives up costs."

South Australia has 4 mines with copper, gold, silver & nickel, Whyalla is close by with a sea port and connect by rail to Iron Knob. Build more rail.

Is Oz Minerals a BHP ‘province play’ or a simple copper bet?

Forget the hype about a South Australian copper province play, BHP’s $9.6bn bid for OZ Minerals is a simple bet on the copper price, and perhaps a way to try and get around its own capital allocation framework and finally beef up Olympic Dam.

If there’s a message in BHP’s bid for OZ Minerals it is that “sub-scale” assets of the kind BHP said it didn’t want when spinning out South32 in 2015 are okay, providing they produce copper and nickel.

There’s nothing wrong with buying profitable mines, and by the end of the decade every tonne of copper bought at today’s prices will probably look like a bargain.

But of OZ Minerals mines, only Carrapateena could possibly emerge as a BHP-scale asset.

Despite all of the talk about a “province play” it’s difficult to see any synergies in the group that would move the dial on volume and cost in any significant way.

Prominent Hill is almost 200km from Olympic Dam – and about 440km by the highway. Carrapateena is another 190km away via the highway, less as the crow flies.

No sane mining manager would consider trucking significant volumes of raw ore over that kind of distance and expect to keep costs down. You can talk about messing around with mine sequencing all you want, but handling ore multiple times drives up costs.

Other synergies – energy and water infrastructure, and BHP’s greater purchasing power – could improve margins at the edges.

BHP’s Oak Dam discovery is close enough to Carrapateena to justify trucking, but it’s not clear whether the deposit’s ore – believed to be rich in uranium – could be processed at the mine’s current plant.

There is certainly a case for moving copper concentrate from Prominent Hill and Carrapateena to the Olympic Dam smelter.

But that is still just fiddling with margins. Only production at large scale drives down costs into the bottom quartile where BHP likes them.

In the short term what Mike Henry is also doing, though, is buying the kind of cash flow needed to justify growth spending in the region.

Olympic Dam’s notoriously troubled processing facilities mean the massive deposit often struggles to turn a profit at all and, despite multiple attempts, BHP has never hit on a viable plan to expand Olympic Dam to deliver the kind of volume and cost profile that would make it a tier one asset.

When BHP dumped the last expansion plan, the so-called BFX, in 2020 Mike Henry made it clear that Olympic Dam would not get any fresh capital until it could run consistently and profitably at its 200,000 tonne a year nameplate capacity.

It is now closer to achieving that but, although BHP has previously signalled it is working on options and hopes to make some decisions in 2023, there is still no sign of a replacement plan.

But if those options include any significant spending, it is still an open question whether a multi-billion dollar expansion of Olympic Dam would deliver better returns than capital spending elsewhere in its portfolio – particularly if the operation isn’t contributing much cash to the kitty along the way.

As OZ’s first-half financial results presentation shows, its operations have generated net cash from operations in every half-year since the beginning of 2018, and the majority of those half-year periods have delivered more than $300m.

Add OZ Minerals’ cash generating assets to the group and it becomes a lot easier to justify spending money on growth at Olympic Dam, as it won’t soak up cash generated elsewhere in BHP.

That also suggests that BHP is betting that copper will enter a bull run until the second half of the decade, rather than earlier.

It will take at least six months to take control of OZ, and any planning underway for Olympic Dam will inevitably get torn up again as BHP looks to integrate its new assets into a broader plan.

On form, that suggests an Olympic Dam expansion plan won’t be ready until at least 2024, possibly later. Add another year or two for construction time, and extra tonnes will only likely hit the market until 2026 or later.

That is, coincidentally, around the same time the first production will come from the West Musgrave nickel and copper project in WA.

NICK EVANSRESOURCE WRITER
 
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you are making it hard ( for me ) to see a good case for throwing more cash at BHP ( either on market or via a SPP )

i see the logic , but don't feel it is compelling even if they poach the better staff for other projects
 
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Do anyone have a wild guess..what will happen to BHP sp if OZL accepted the offer?
no me !!

if the take-over completes , i will be more tempted to buy extra S32 than BHP or WDS with the pay-out cash

now one way to calculate is add the market cap. of OZL to the market cap. of BHP and calculate the market weight of the combined company because many index funds will be obliged to weight the fund accordingly in their portfolios .. so you should see some upward pressure on the share price , but IMO not much
 
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no me !!

if the take-over completes , i will be more tempted to buy extra S32 than BHP or WDS with the pay-out cash

now one way to calculate is add the market cap. of OZL to the market cap. of BHP and calculate the market weight of the combined company because many index funds will be obliged to weight the fund accordingly in their portfolios .. so you should see some upward pressure on the share price , but IMO not much
Thks for the reply. I am thinking of exiting before the 'slow' holiday trading period. Hold cash n buy in again at low. Shares portfolio is my pocket play money not Investment. Done pretty well with properties investment. Retired n trying to tidy up loose ends.
 

Dona Ferentes

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This seems to be ongoing:

Workers at Chile’s Escondida mine, the largest copper deposit in the world, turned down an offer by BHP and could stop work on 28 and 30 November if the company does not meet their demands, a union source told Reuters on Thursday.

BHP announced earlier this week that it reached a deal with the union to avert a work stoppage, but the agreement had to be ratified by its members.
 
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divs4ever, you r thinking of S32 cos of Steel n the sp price lower compare to BHP?
I am thinking of BHP materials diversification.
S32 because of it's greater diversity and the willingness to take on Tier 2 and brownfield projects ,

it should also be under less pressure to follow the 'Green agenda '

i would expect S32 to scoop up some smaller stressed neighbours whereas the BHP-OZL deal is seen as a step down from the usual BHP acquisitions ( of world class assets ) , and therefore see S32 as more nimble and able to expand into new areas of production ( say a small move into vanadium or tin , or rare-earth elements )

now i don't watch it regularly , but am very surprised nobody has run the tape-measure over SVL ( i don't hold SVL , it looks to be too far away from div. paying for me )
 
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