Under the Spotlight: BHP Group ($BHP)

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BHP Group ($BHP) turned 140 this year, and its share price is celebrating right along with it.

After a bruising 2024 that wiped more than a fifth off its value, the world’s biggest miner has staged an impressive comeback.

No surprise it’s jumped onto Stake’s list of top traded equities for 2025. 

Shares are up around 13% in 2025, or 32% since the April bottom. That’s despite a second failed attempt to acquire mining giant Anglo American following last year’s rejection. A final rebuttal for CEO Mike Henry the AFR has called a ‘Love Actually’ moment. 

The deal would have added even more firepower to BHP’s powerful copper business, a metal that has rallied to record levels this year – bringing the miner’s share price along for the ride.

As we head into the end of the year, it’s worth revisiting BHP, arguably the most important company in Australia and one whose performance affects everything from the ASX to the national budget.

Gift of copper

If 2024 was about surviving a downturn, 2025 has been about repositioning for the next decade. For BHP, that future is copper. 

Copper is essential to the electrification movement. It’s used everywhere – from household electrical items, wiring, electric vehicles and data centres. 

BHP already owns the world’s biggest copper mine, Escondida, in Chile, alongside projects in South Australia and Peru. Together, these mines accounted for 45% of BHP’s FY25 underlying earnings, delivering a record 2M tonnes of copper – an increase of 28% in three years. 

Those figures have been buoyed by copper’s impressive rally this year, surging more than 30% and hitting fresh record highs in December. Its strength is expected by analysts to continue into next year. JPMorgan forecasts average copper prices of around US$12,075/mt in 2026 – roughly a 2.6% increase from its last December peak.

Show steeler

For all the excitement around copper, BHP is still a business built on iron ore, a commodity reliant on China’s economy – and the mood of its government. 

Following a weak 2024, BHP’s iron ore revenue fell US$5B in FY25 on slower Chinese demand and steel production, weighed down by China’s construction and building downturn.

Those trends are predicted to shape prices into next year, with some analysts predicting average iron ore prices to fall below the all-important US$100/tonne level, the average price in the second half of FY25. 

CommBank’s commodities analyst Vivek Dhar wrote in October: ‘We expect negative steel mill margins, driven by weak downstream steel demand, will eventually push iron ore prices lower.’

Western Australia’s government, which relies heavily on mining royalties, is more pessimistic than most. It predicts iron ore prices to fall to $US72/tonne in the next few years and revenue from iron ore to drop 22% in FY26. 

If correct, it’s a sizable headwind for a company whose iron ore business still delivers more than half of its profits. In FY25, it delivered US$14.4B of BHP’s group EBITDA – a 24% drop on last year’s already weak figure.

The good news is that prices stabilised toward the end of 2025, giving BHP a firmer footing heading into next year. And with its status as the lowest-cost iron ore producer globally, BHP remains better positioned than many of its peers to ride out volatility. 

Growth lever

Unsurprising for a company so reliant on commodity prices, FY25 earnings were more subdued than its share price.

Underlying attributable profits fell 26% to US$10.2B, the lowest number in five years. Revenue also slid 8% to US$51.3B.

Slowing global iron ore demand was the biggest drag, but the closure of several operations, including its WA nickel mine and several coal assets, also weighed on results. 

Still, new projects could add fresh life to the balance sheet. BHP’s developing one of the world’s biggest potash mines in Canada, with first production expected by mid-2027. Once fully operational, BHP is on track to be one of the world’s top potash producers – a key ingredient in fertiliser.

The sale of its 49% stake in its Pilbara power network to Black Rock’s Global Infrastructure Partners (GIP) will bring in an extra US$2B and shift focus back to its core business. 

And it’s spending big on growth levers. BHP plans to invest around 70% of capex over the next few years into copper and potash production, further reducing its reliance on iron ore.

Buy or sell?

BHP won’t deliver the same impressive price swings you get from U.S. tech, but it’s a blue chip that has delivered consistent performance for years. 

That makes it a favourite among dividend investors. BHP has reliably paid dividends for decades, even through tougher cycles. It’s expected to deliver a 4.4% dividend yield in FY26 according to UBS forecasts.

Right now, analyst ratings imply a fairly valued stock, with the LSEG average price target of $44.35 sitting just below its current level.  

Citi was upbeat in December, offering a price target of $47, citing stronger-than-expected iron ore and copper prices for FY26. Bank of America also maintained a ‘Buy’ rating from 24 November, with a price target on the higher range target of $49.

Still, BHP’s fortunes hinge on the unpredictable nature of commodities. Back in August, Morningstar equity analyst Jon Mills predicted iron ore prices had peaked, with prices expected to fall further to US$72/tonne by 2029. Mills rated $BHP’s stock as overvalued.

But this is a miner with one foot in the past and one in the future. Copper offers structural upside; iron ore still dictates the cycle. If both cooperate, BHP has room to climb. If iron ore wilts again, 2026 could look more like 2024.

This is not financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.