BHP Group Ltd (ASX: BHP) shares have been going sideways this week.
But could an announcement help drive the mining giant's shares higher? Let's find out.
Image source: Getty Images
What did BHP announce?
This week, the Big Australian announced its largest-ever renewable electricity supply arrangement for its South Australian copper operations.
The company notes that this is a big step in BHP's decarbonisation journey.
According to the release, BHP will source 100 megawatts (MW) of renewable electricity to power its Copper SA province. This includes the Olympic Dam mine, smelter and refinery as well as the Carrapateena and Prominent Hill operations.
The deal will be underpinned by output from the first 300 MW of Neoen's Goyder North Wind Farm, supported by its 200 MW / 800 MWh Goyder Battery. Both assets are under development near Burra in South Australia's mid-north, with BHP set to be the primary customer.
This is the third renewable electricity supply arrangement BHP has signed in South Australia in the past four years and its second with Neoen. Together with an earlier agreement, the mining giant now expects to meet around 70% of its Copper SA electricity demand from renewable sources by FY 2030.
BHP notes that this contributes to its long-term goal to achieve net zero operational greenhouse gas emissions by 2050.
BHP's Asset President of Copper SA, Anna Wiley, commented:
BHP's Copper SA operations are taking another step forward in our decarbonisation journey with its third renewable power arrangement. We are using the size and scale of our copper operations to underpin significant new investment in renewable electricity in South Australia.
This arrangement reflects our commitment to more sustainable operations and long-term partnerships. Together with our initial arrangement with Neoen, we expect to be able to meet about 70 per cent of Copper SA's electricity needs from renewable electricity in FY2030. The benefits will go beyond our Copper SA operations as the project will contribute to a more resilient energy future for South Australia through new infrastructure that supports regional communities and creates jobs.
Should you buy BHP shares?
The team at Morgan Stanley thinks that now could be a good time to buy BHP shares.
This month, the broker put an overweight rating and $46.50 price target on them. Based on its current share price, this implies potential upside of 15.5% over the next 12 months.
In addition, the broker expects a fully franked dividend of approximately $1.75 per share in FY 2026. This would mean a dividend yield of 4.3%, which boosts the total potential return to almost 20%.
