The BHP Group Ltd (ASX: BHP) share price has seen plenty of movement over the past year, as we can see on the chart below.
With the latest goings on in the resources world and for BHP, I'm going to look at whether the ASX mining giant is an investment opportunity in this period before Christmas.
The first thing to consider is BHP's quarterly operational review for the three months to 30 September 2023.
Image source: Getty Images
Quarterly recap
These numbers compare against the three months to 30 September 2022. Copper production increased by 11% to 457kt, iron ore production fell by 3%, metallurgical coal production fell 16% to 5.6mt, energy coal production increased 38% to 3.6mt, and nickel production fell by 2% to 20.2 kt.
We also learned that BHP and Mitsubishi Development had signed an agreement to sell the Blackwater and Daunia coal mines, which are part of the BHP Mitsubishi Alliance (BMA) metallurgical coal joint venture in Queensland (with BHP's share being 50%).
Whitehaven Coal Ltd (ASX: WHC) is buying the mines for a cash consideration of up to US$4.1 billion.
The purchase price comprises US$2.1 billion of cash on completion, US$1.1 billion in cash over three years after completion and the potential for up to US$0.9 billion in a price-linked earnout payable over three years. BHP said net proceeds would be used to reduce net debt.
BMA will continue to operate the assets until completion.
BHP advised that in line with its long-term strategy, it would continue to develop its "high-quality metallurgical coal assets in Queensland, which are sought after by global steelmakers and needed to support the energy transition".
Is the BHP share price a buy?
Analysts are somewhat mixed on BHP right now – according to the ratings collated by Factset, there are eight buys, 14 holds, and three sells for the business.
The broker UBS currently has a neutral rating on the ASX mining share with a price target of $43. Considering the BHP share price is above $44 at the time of writing, the broker anticipates that the BHP share price could fall back from here over the next 12 months.
UBS thinks that iron ore prices will stay in a current range of between US$100 per tonne to US$130 per tonne over the next six months. After a detailed cost analysis, it also increased its long-term estimate for iron ore to US$85 per tonne, up from US$65 per tonne.
The broker pointed out that the market expected more Chinese stimulus to be announced, including "further property policy easing, fiscal expansion (more infrastructure investment) and additional policy rate cuts and credit support".
It also noted that Chinese household and business confidence was weak and had seen a muted reaction to the "aggressive property stimulus of easing house purchase rules, down payments and mortgage rules and rates."
I can understand why many analysts rate BHP as a hold right now. Every month that the iron ore price stays above US$110 per tonne is another month of good earnings, which could help pay more rewarding dividends. However, I think the best time to buy BHP shares is when confidence is weak, and the iron ore price is low, which doesn't describe the current situation.
Even so, the BHP dividend estimate on Commsec implies a grossed-up dividend yield of 7.4%.
