BHP is full of money if spot prices remain stable


“Mining companies using the USD as a functional currency with operations in Australia could also benefit. A weaker AUD could help reduce cost pressures caused by supply disruptions and labor shortages. , a common theme reported by many miners during the quarterly update in March”.

The broker’s forecast for iron ore is US$146 per tonne this year, falling to US$113 per tonne next year and US$95 in 2024. The spot price of iron ore fell 4 .5% to settle at US$127.55 per tonne on the spot market. Thursday, according to Platts.

Macquarie prefers BHP (and South32) to Rio Tinto and Fortescue Metals Group. He also believes that BHP will obtain a higher market valuation once it divests its energy assets as planned, and that BHP will be able to maintain full enfranchisement of its future dividends.

Free cash flow yields are equally attractive for publicly traded coal miners, such as Whitehaven Coal, which trades on a free cash flow yield of 51% for fiscal 2022 and 40% for the financial year 2023 based on Macquarie forecast.

The price of metallurgical coal and thermal coal have both outperformed Whitehaven’s share price since 2021, and the same is true for coal miners New Hope Corp and Coronado Global Resources.

Macquarie has an “outperform” recommendation and a price target of $60 on BHP.

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