3 reasons I would buy BHP shares today

BHP Group Ltd (ASX: BHP) shares have been on my buy list for some time, and its latest quarterly update has given me a few more reasons to remain positive.

There were some challenges during the quarter, but I also found several encouraging developments that I think investors should be paying attention to.

Here are three reasons I would be happy buying BHP shares today.

Higher commodity prices could make a big difference

One thing that caught my attention in BHP’s latest update was the prices it received for its commodities.

Copper production fell 19% compared with the same quarter last year, reflecting lower ore grades, maintenance, and operational disruptions.

Yet the average price BHP received for its copper increased by an impressive 53%.

Steelmaking coal prices were also considerably stronger, increasing 34% year on year.

I think this is worth considering because mining profits depend on much more than production volumes.

When commodity prices rise, miners can generate significantly more revenue from the same amount of production, potentially delivering substantial earnings growth.

Of course, costs also influence profitability, and prices can fall just as quickly as they rise. But with BHP maintaining its full-year production guidance, I think the stronger pricing environment could provide meaningful support for earnings if it continues.

There could be more value in its existing assets

Another thing I like about BHP is that it still has considerable opportunities to grow production from assets it already owns.

Its latest announcement provided an interesting example at Olympic Dam in South Australia.

BHP reported a substantial increase in the mine’s mineral resource base, including a newly classified underground resource that could potentially support different mining methods in the future.

I think this highlights something important about owning a company with large, established mining operations.

As technology improves and further exploration is completed, opportunities can emerge to extract more value from deposits that have already been producing for decades.

BHP is also progressing plans to substantially increase copper production across its South Australian operations by 2035.

There is a lot of work still to be done, and mineral resources do not automatically become economically recoverable reserves.

Nevertheless, I like that BHP has opportunities to expand its business by building on its existing infrastructure and geological knowledge.

Important investments are getting closer to delivering results

My third reason to buy BHP shares is the progress it is making on projects that could start contributing over the next couple of years.

Its Jansen development in Canada is a good example. After years of investment, Stage 1 is now 87% complete, with first production expected in mid-2027.

I think reaching that milestone could be significant, as attention gradually shifts from construction spending towards production and eventually earnings.

There are also developments underway in Western Australia, including infrastructure improvements designed to support higher iron ore volumes and improve operational efficiency.

These projects won’t all deliver immediate financial benefits, but I like that BHP has several investments approaching important milestones.

Delivering them on time and within budget will be important, particularly given the capital involved.

Foolish takeaway

I would be happy buying BHP shares around $59. Its earnings will always be influenced by commodity prices, and there will inevitably be setbacks along the way.

But I think there is more happening at BHP than investors might appreciate from a quick look at its quarterly production figures.

The company has opportunities to improve its earnings, make better use of its existing assets, and bring major investments into production. I think that gives shareholders plenty to look forward to over the coming years.

The post 3 reasons I would buy BHP shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino 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 recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.