Do BHP shares give investors exposure to lithium?

BHP Group Ltd (ASX: BHP) shares are having a tough time in 2022. Since the start of the year, the mining giant’s shares have lost 14% of their value.

This is particularly disappointing given some of the incredible gains that have been recorded in the resources sector.

For example, Allkem Ltd (ASX: AKE) and Pilbara Minerals Ltd (ASX: PLS) have seen their shares rise an impressive 34% and 19%, respectively, over the same period.

This has been driven by Allkem and Pilbara Minerals’ exposure to one of the hottest commodities in the world right now – lithium.

Do BHP shares provide lithium exposure?

As you might have guessed from the difference in their returns, BHP’s shares do not provide investors with exposure to the white metal.

Despite being a highly diversified miner with hands in many pies, the Big Australian has no interest in the lithium market.

While this is disappointing in the current environment where lithium demand is being tipped to outstrip supply for some time to come and keep prices sky high, the miner doesn’t expect this to last. Particularly given how lithium is among the most abundant elements on Earth.

According to an interview from earlier this year, courtesy of Bloomberg, the company’s Minerals Americas head, Ragnar Udd, said that BHP prefers its projects large, long-life, and scalable in commodities with differentiated cost curves.

In addition, as low-cost lithium deposits tend to come from brine around the lithium triangle in Argentina and Chile, it isn’t a good fit for the miner. BHP has committed to minimising use of continental water in drought-hit Chile.

Udd also expects that supply will eventually catch up with demand and put downward pressure on the high prices we are seeing today. He said:

“We recognize that at the moment there’s short-term supply-demand conversations. How that plays out over the next 20 or 30 years, I don’t think it will last.”

Time will tell if BHP lives to regret its lack of lithium exposure.

The post Do BHP shares give investors exposure to lithium? appeared first on The Motley Fool Australia.

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