BHP Group Ltd (LSE:BHP, ASX:BHP), the Aussie mining titan, is scheduled to report results on the evening of August 26 (Tuesday) with strategy to be a key theme predicts US bank Jefferies.
Jefferies predicts that the failed bid for Anglo American will figure prominently in the post-results discussion.
The US broker also suggests that organic growth in copper, operational strategy in metallurgical coal, and the macro outlook—particularly the risks to steel demand in China—will feature in the discussions. However, mergers and acquisitions (M&A) are likely to be the key topic.
"Acquisitions in copper are clearly a strategic priority for the company, and BHP has been the most active diversified miner in the ongoing M&A landscape in mining recently."
Although reported net debt is currently in the upper half of the company's previous target range of $5-15 billion, Jefferies expects BHP to remain strategically active.
It does not expect BHP to revisit its bid for Anglo American once the six-month standstill expires, but Canada-based operators and/or further consolidation of the Vicuña district may make strategic sense.
The importance of copper is also increasing. BHP achieved its highest copper production in more than 15 years in the year just ended, driven by the highest production in four years at Escondida, record production at Spence, and the integration of the OZ Minerals assets.
Based on guidance, production is expected to increase in 2024-25 before volumes at Escondida decline due to lower concentrator feed grades.
BHP has organic project options in copper to potentially replace the lower production, including the possible construction of a new concentrator and the application of leaching technologies at Escondida.
The investment view is a 'Buy' with a price target of 2,800p.