BHP Group Limited (AU:BHP) is among the world’s leading mining companies. Headquartered in Melbourne, Australia, the mining giant has a long history of producing various essential commodities. Over the years, BHP has played a significant role in the global mining industry, adapting to changing economic conditions and technological advancements.
Don't Miss our Black Friday Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
A Brief History of BHP
BHP was founded in 1885 as Broken Hill Proprietary Company Limited. The company’s initial focus was on mining silver, lead, and zinc in the town of Broken Hill in New South Wales, Australia. Over time, BHP expanded its operations and diversified into other minerals and resources. The company merged with Billiton in 2001, forming BHP Billiton, one of the largest mining companies in the world. In 2018, the company simplified its name to BHP Group Ltd.
Diverse Commodities Portfolio
BHP’s diverse portfolio of commodities is one of its major strengths. It possesses a world-class portfolio of assets poised to benefit from demand driven by global megatrends, like the growing adoption of electric vehicles (EVs).
The company produces a wide range of minerals that are essential for various industries, such as iron ore, coal, copper, and nickel. BHP also has interests in potash, lead, silver, molybdenum, and uranium. According to its 2023 annual report, iron ore was BHP’s highest revenue maker, contributing approximately $24.8 billion, followed by copper, which brought in around $16.03 billion.
From time to time, the company has adjusted its portfolio to align with emerging trends such as decarbonisation, electrification, urbanisation, and a growing population. The company has recognised the rising demand for copper for renewable energy, nickel for EVs, and iron ore and coal for new infrastructure.
In May 2023, BHP completed its acquisition of Oz Minerals for AU$9.6 billion to further strengthen its portfolio in copper and nickel. The acquisition aligned with its strategy to meet the growing demand for critical minerals such as copper and nickel, supporting the transition to clean energy.
BHP is also expanding into potash, which is important for food security and sustainable farming to support a growing population.
BHP’s Energy Transition
Environmental sustainability is a significant concern for the mining industry. In recent years, BHP has undertaken a journey towards a sustainable supply chain for future-oriented commodities to support significant reductions in global greenhouse gas (GHG) emissions and mitigate the threat of climate change.
The company is actively reducing its operational GHG emissions by using renewable electricity and promoting the development of electric trucks, trains, and light vehicles. Currently, BHP boasts one of the lowest absolute operational GHG emission levels among major mining companies.
Moving forward, the company aims to reduce its operational emissions by at least 30% by FY30 compared to FY20. Additionally, it targets achieving net zero operational emissions by 2050.
Meanwhile, BHP’s Australian rival Rio Tinto (AU:RIO) is targetting 50% operational emissions reduction by 2030 and net zero by 2050.
BHP’s Initiatives for the Future
BHP is constantly on the lookout for new growth opportunities, driving more innovation as a company. The company’s venture capital unit, BHP Ventures, is actively looking for ground-breaking technologies and emerging companies to cultivate a portfolio of new growth opportunities for the decades ahead. The unit is mainly focused on supporting the company’s innovation in its core operations as well as identifying new opportunities to ramp up its extraction process.
Meanwhile, BJP Xplor is the company’s accelerator program aimed at supporting innovative early-stage mineral exploration companies focused on discovering essential resources, such as copper and nickel, that are crucial for the energy transition. In January 2023, BHP selected seven companies through this program, each receiving $500,000. Three of these companies will be selected for additional investment from BHP.
Ending Thoughts
In conclusion, BHP Group is a mining giant that has successfully navigated the challenges of a changing world. With a strong focus on sustainability, innovation, and its diverse portfolio of commodities, BHP ensures that it can meet the evolving needs of various industries.
