What’s going on with BHP shares and lithium?

BHP Group Ltd (ASX: BHP) shares are up a fraction of a per cent in morning trade.

The S&P/ASX 200 Index (ASX: XJO) mining giant closed yesterday trading for $45.24 per share. Those shares are currently trading for $45.28 apiece.

That’s Thursday’s rather muted early price action for you, the last day of trading before we head into the four-day Easter holiday weekend.

Now, what’s going on with BHP shares and lithium?

Is the mining giant rethinking its lithium ambitions?

If you’re investing in BHP shares, you’re likely aware that the ASX 200 miner produces uranium as a by-product at Olympic Dam in South Australia.

You’re also likely aware that the miner hasn’t been exactly keen to join the global lithium race.

Speaking at the 2022 BMO, Global Metals and Mining Conference, BHP CEO Mike Henry was clear about the company’s lithium aspirations.

It is one of these things where we always try to maintain an open mind and keep things under review. But, as we have been quite clear over a number of years now, we do not see the opportunity in lithium to create a business akin to the other businesses that we have, which are large, where we generate very significant margins.

Henry added:

No doubt lithium demand is increasing at quite a pace, but we think that the long-term cost curve for lithium is probably not aligned with the sort of shape of the cost curve and margin opportunity that we would see in things like copper, nickel, potash and even iron ore and high-quality hard coking coal.

To date, BHP shares haven’t been materially impacted by either the fast-rising or, subsequently, fast-falling price of lithium.

But that may not be the case in the future.

As Reuters reports, BHP’s nascent Xplor accelerator program is expanding its ambitions beyond prospective copper and nickel projects to also include uranium and lithium projects, commencing in September.

Addressing a commodities conference in Singapore this week, vice president of BHP Xplor Sonia Scarselli said, “We will be looking not just at copper and nickel, but at uranium and lithium and so on.”

BHP has already chosen seven companies to support for the first half of 2023, all focussed on copper or nickel. Both metals are core to the global energy transition, and BHP expects demand for both to grow strongly over the coming years.

The seven companies, including private Aussie mineral explorer Red Ox Copper and junior listed explorer Impact Minerals Ltd (ASX: IPT), receive up to half a million dollars in funding along with business and technical support.

Scarselli said the mining industry has been hamstrung by 10 years of underinvestment in exploration. BHP’s Xplor accelerator program is one way the mining giant is working to counter that trend and uncover metals crucial to the global electrification push.

And now, it appears, that lithium may be back on BHP’s radar.

How have BHP shares been tracking?

As you can see in the chart below, BHP shares are trading right around where they kicked off 2023.

Longer-term, shares in the ASX 200 miner have gained 58% over five years.

The post <strong>What’s going on with BHP shares and lithium?</strong> appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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