Australia-based BHP Group (NYSE:BHP), a leading player in minerals, oil, and gas, recently stepped up its offer to buy mining company OZ Minerals, taking the bid to $6.34 billion.
The company has been eyeing ramping up production of copper and nickel as demand for electric vehicles (EVs) keeps rising (the two metals are key components of EV development). Also, increased copper and nickel production will aid in the development of wind turbines and solar farms.
OZ Minerals operates two copper-and-gold mines in South Australia and one in Brazil. The ability to access them is expected to be a big victory for BHP. The company expects the demand for copper, an excellent conductor of electricity, to double in the next 30 years.
OZ is also operating a nickel-extracting project in Western Australia, which will be easy for BHP to operate thanks to its existing nickel mining and processing facilities in the area. Markedly, this acquisition will significantly benefit BHP’s ongoing nickel supply agreement with Tesla (NASDAQ:TSLA) as well.
If it transpires, the buyout will be BHP’s largest since its $12 billion acquisition of Petrohawk Energy in 2011. The initial offer was made by BHP in August, but the acquisition fell through as the bid was deemed too low.
Is BHP a Good Stock to buy?
BHP stock is a Moderate Buy on Wall Street based on a Buy rating from one analyst, who also expects the price to reach $62, growing almost 6% over the next year.
Also, the price is 9.8 times the forward 12-month earnings estimate, which is quite reasonable for a mining company of this scale.
