Why is the BHP share price smashing the market with a 22% gain in November?

The BHP Group Ltd (ASX: BHP) share price is on course to end the month on a positive note.

In afternoon trade, the mining giant’s shares are up almost 2% to $45.62.

This latest gain means the BHP share price is now up an impressive 22% since the start of the November.

This compares to a solid gain of 5.9% by the ASX 200 index.

Why is the BHP share price smashing the market this month?

There have been a couple of key catalysts for the rise in the BHP share price this month.

The first is the iron ore price. On Tuesday, the iron ore price returned above the US$100 per tonne mark again thanks to optimism over Chinese demand. This follows speculation that COVID restrictions could soon ease and news that the government is ramping up support for struggling property developers.

This is quite a turnaround for the iron ore price, which started the month at just US$81 per tonne. This is a 23% increase in value, which is broadly in line with how much BHP’s shares have gained over the same period.

And that isn’t a huge surprise that its shares have risen because of this. That’s because iron ore still contributes significantly to BHP’s overall earnings. For example, in FY 2022, iron ore EBITDA came in at US$21,707 million. This represents 53.4% of its total underlying EBITDA of US$40,634 million.

What else?

Also giving the BHP share price a boost was a positive update on its pursuit of OZ Minerals Ltd (ASX: OZL).

In the middle of the month, the Big Australian revealed that the copper miner’s board had accepted a takeover offer of $28.25 cash per share.

The “best and final” non-binding offer was increased from the original $25.00 per share offer made back in August and represents a 49.3% premium to where OZ Mineral’s shares were trading prior to the initial proposal.

BHP explained that it sees OZ Minerals as a great way to increase its exposure to future facing commodities. It also believes the combination of their operations will unlock value.

BHP’s CEO, Mike Henry, explained:

BHP’s proposal represents a highly compelling offer for OZL shareholders, providing certainty at a time of macroeconomic uncertainty and market volatility, and increasing risks for the industry. The combination of BHP and OZL’s assets, skills and technical expertise provides a unique opportunity not available under separate ownership, with complementary resources including the Oak Dam exploration prospect and existing facilities within close proximity, backed by BHP’s strong balance sheet, capital discipline and commitment to sustainable development.

Here’s hoping December is just as kind to the BHP share price.

The post Why is the BHP share price smashing the market with a 22% gain in November? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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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