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The lithium industry has taken a beating recently. While this is disappointing, it could prove to be a great buying opportunity for investors.

For example, three ASX lithium shares that analysts have recently named as buys with major upside potential are listed below.

Here’s what you need to know about them:

Allkem Ltd (ASX: AKE)

Despite being very bearish on lithium prices, Goldman Sachs remains bullish on Allkem. This is because the broker believes it is well-placed to offset weaker prices with its production growth. In addition, Goldman sees opportunities for the company to benefit from value-added downstream activities.

Goldman Sachs currently has a buy rating and $15.40 price target on its shares. Based on the latest Allkem share price of $10.17, this suggests potential upside of 51%.

Latin Resources Ltd (ASX: LRS)

Latin Resources could be another ASX lithium share to buy. It is focused on lithium exploration and project development across tenements in the state of Minas Gerais, Brazil. This includes the 100%-owned Salinas project, which has an initial mineral resource estimate (MRE) of 13.3Mt @ 1.2% Li2O.

However, Bell Potter doesn’t expect the MRE to stop there. Last week, it highlighted that drilling at Colina West will potentially add significant scale to the Salinas MRE.

In light of this, the broker has reiterated its speculative buy rating with a 22 cents price target. This is more than double the current Latin Resources share price of 10 cents.

Pilbara Minerals Ltd (ASX: PLS)

Finally, Pilbara Minerals’ shares could also have material upside potential according to analysts. It is the owner of the Pilgangoora Project. This is one of the largest hard rock lithium deposits in the world and considered strategically important within the global lithium supply chain.

Macquarie appears to believe recent weakness in the Pilbara Minerals share price has created an incredible buying opportunity. Last week, it retained its outperform rating with a $7.50 price target. Based on the current Pilbara Minerals share price of $3.56, this implies potential upside of 110%. Macquarie is also forecasting a massive dividend yield of 11.5% in FY 2023.

The post Analysts say 2 of these ASX lithium shares can double in value appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• The first-ever Pilbara Minerals dividend is being paid today. Here’s what to expect
• Buy these ASX 200 shares for 50%+ returns: Goldman Sachs
• 5 things to watch on the ASX 200 on Friday
• Buy Pilbara Minerals and this exciting ASX growth share: analysts

Motley Fool contributor James Mickleboro has positions in Allkem. 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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Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares offer investors not only the chance for share price appreciation but also provide a handy passive income stream.

ANZ shares edged lower over the course of the past week.

Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock were swapping hands for $22.52 at market close on Friday.

At that price, ANZ shares trade at a fully franked trailing dividend yield of 6.5%.

Here’s how I’d aim to garner $250 of passive income each month by investing in the bank’s stock.

Aiming for $250 per month in passive income from ANZ shares

Over the past 12 months, the ANZ board declared a 72 cents per share interim dividend (paid on 1 July 2022) and a 74 cents per share final dividend (paid on 15 December).

That works out to a full-year dividend of $1.46 per share, fully franked.

So, to build my $250 of monthly passive income – or a handy $3,000 per year – I’d need to buy 2,055 ANZ shares. Which would give me an extra 30 cents.

Now there are two things to keep in mind.

First, with ANZ shares trading for $22.52 apiece, I likely won’t be able to build my $250 in monthly passive income all in one shot.

But that’s okay.

Investing is a long-term game.

If I can’t buy them all in one go, I’d set up a budget and allot enough to buy maybe 20 shares a month. Eventually, I’ll get to my goal.

The second thing to keep in mind is that we’re talking about a trailing yield, which by definition is backwards looking. There are no guarantees ANZ shares will pay similar dividends in the future. Those may be higher or lower.

On that front, however, it’s worth noting that the bank’s full-year 2022 dividend payout was 4 cents per share higher than in 2021.

And there are reasons to believe it can continue to deliver a healthy yield.

Citi’s analysts recently noted that “ANZ remains our top pick in the sector.” The broker is forecasting growing dividends from the big four bank.

Its analysts expect ANZ shares will deliver $1.66 of fully franked dividends apiece in FY 2023. And Citi believes this will increase to $1.76 per share in FY 2024.

At the current share price that works out to a yield of 7.4% in FY23 and 7.8% in FY24.

Happy income investing!

The post How I’d aim for $250 in monthly passive income from ANZ shares appeared first on The Motley Fool Australia.

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More reading

• Want $10,000 of passive income? Check out these ASX shares
• Should ASX 200 banks pay more for this implicit government backstop?
• ASX big four bank shares close the day ahead as financial fears linger
• Online trading in these ASX 200 bank stocks is surging. Here’s why
• ANZ shares could offer a dividend yield of 10% in FY23, is it a buy?

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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A popular expression in investment communities is “buy low and sell high.”

While this can work out well for investors, it does mean you could miss out on the power of compounding.

This is when you earn interest on interest or, in the case of ASX shares, returns on returns.

It is for this reason that I would prefer to do things the Warren Buffett way by buying low and holding for the long term.

This doesn’t necessarily mean set and forget, though. It just means that as long as the investment thesis remains intact, I would hold onto these ASX shares and let compounding work its magic.

This is how the Oracle of Omaha has generated staggering returns over multiples decades.

And when I say staggering, I mean it. The most recent Berkshire Hathaway (NYSE: BRK.B) annual letter reveals that the book value of its shares has increased by an average of 19.8% per annum between 1965 and 2022. This is exactly double the return of the S&P 500 index over the same period.

And what a difference that extra 9.9% per annum has made.

Berkshire Hathaway’s return of 19.8% per annum has led to a total return of 3,787,464% for investors. To put that into context, a single dollar investment would have turned into over $3.75 million today.

As a comparison, a single dollar invested in the S&P 500 index would have turned into almost $25,000. While that’s nothing to turn your nose up to, I know which return I would prefer!

What’s the secret?

Warren Buffett revealed his secret in his latest letter to shareholders. Interestingly, the legendary investors quipped that most of his “capital-allocation decisions have been no better than so-so.”

The secret has been finding a few winners over the years and letting them run. He adds:

Our satisfactory results have been the product of about a dozen truly good decisions – that would be about one every five years – and a sometimes-forgotten advantage that favors long-term investors such as Berkshire.

The lesson for investors: The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders. And, yes, it helps to start early and live into your 90s as well.

What to look for with ASX shares

To follow in Buffett’s footsteps, I would look for ASX shares that are good value, have high quality business models, sustainable competitive advantages, and positive outlooks.

These qualities combined arguably put investors in a great position to generate market-beating returns over the long term.

The post I’m listening to Warren Buffett and loading up on cheap ASX shares appeared first on The Motley Fool Australia.

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More reading

• Forget day trading! I’d use Warren Buffett’s ‘secret sauce’ to build wealth
• Is now the time to be bold and snap up cheap ASX 200 dividend shares?
• Warren Buffett’s $35 billion warning to investors
• Forget inflation! Warren Buffett urges investors to focus on the big picture

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After ten monster interest rate rises over the past year, the real estate sector, as well as ASX real estate shares, has really taken a hammering.

But with the Reserve Bank nearing the end of its rate hike campaign, is it now time to pick up some bargains?

Wilson Asset Management senior equity analyst Shaun Weick has a couple of small-cap ideas:

Ready to cash in on ‘a very strong second half’

Lifestyle Communities Ltd (ASX: LIC) shares have been severely impacted by the weak sentiment for real estate, dropping almost 25% since 3 February.

But Weick reckons it can “buck the trend” of the negativity surrounding the property market.

“That’s a buy for us. We think stabilisation in interest rates is within sight, and that will put a floor under housing market sentiment,” he said in a Wilson video.

Lifestyle Communities provides residential communities for elderly clients. Weick feels like it will have a bumper finish to the 2023 financial year.

“The company has reiterated their FY23 settlements guidance, which implies a very strong second half and the FY24 period,” he said.

“[This] is at the same time when the communities under release is more than doubling, which will drive a material acceleration in earnings growth from here.”

After the recent dip, the share price is now looking ripe for pickups.

“The valuation on the stock is screaming attractive, at 17 times earnings with significantly above-market earnings growth.”

An undiscovered gem

Qualitas Ltd (ASX: QAL) is a real estate investment manager that deals with private credit and equity in commercial property.

“Qualitas is undiscovered, much like the private credit space. We think it’s a buy.”

The crisis in confidence in the sector has also impacted the Qualitas share price, causing it to freefall more than 18% since 13 March.

But the “underlying quality” is “very high”, according to Weick, citing 60% growth in its latest results.

“The banks are continuing to retreat from the private credit space, which is underpinning very strong deployment opportunities,” he said. 

“And globally, you’re seeing institutional investors want to access a nascent asset class here in Australia.”

The private credit industry also benefits when the official cash rates rise.

Weick is not the only one bullish about Qualitas. According to CMC Markets, all three analysts currently covering the stock rate it as a strong buy.

The post Wilson analysts tip 2 small-cap ASX real estate shares to buy for juicy returns appeared first on The Motley Fool Australia.

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More reading

• Brokers name 3 ASX shares to buy now
• 5 things to watch on the ASX 200 on Friday
• 7 ASX shares flying under the radar to buy now: Goldman Sachs
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Tony Yoo 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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If you’re looking for $10,000 of passive income, then ASX shares could certainly help you.

Listed below are a couple of ASX shares that you could buy to generate a nice income without lifting a finger. They are as follows:

ANZ Group Holdings Ltd (ASX: ANZ)

One positive from recent weakness in the banking sector is that it has made the potential yields on offer from bank shares that much sweeter. ANZ is no exception. Citi, which has a buy rating and $29.25 price target on its shares, is forecasting a $1.66 per share dividend in FY 2023. This is the equivalent of a ~7.4% dividend yield.

Based on this dividend estimate, investors would need to own 6,024 ANZ shares to receive $10,000 of income. This would take an investment of approximately $136,000.

BHP Group Ltd (ASX: BHP)

Goldman Sachs is bullish on this ASX mining giant and has a buy rating and $48.40 price target on its shares. In addition, it is forecasting a fully franked dividend of US$2.11 (A$3.16) per share in FY 2023, which equates to a 7.25% yield at current prices.

This means that if you wanted to generate $10,000 of income from its shares, you would need to pick up 3,164 BHP shares. This would require an investment of $138,000.

What if you don’t have this amount to invest?

If you don’t have the required amount to generate $10,000 of passive income from these ASX shares, don’t worry. Investors can make this a longer-term goal and focus on growing their wealth in the meantime.

As you can see above, investors will require in the region of $140,000 to generate this level of income. So, this will be our target.

Historically, the share market has provided investors with a return of 10% per annum. And while there’s no guarantee that this will happen in the future, it certainly is possible and, therefore, will be used in these calculations.

With that in mind, if you were to invest $2,200 into the share market each year and earn the market return, your portfolio would grow to be worth $140,000 after 20 years.

And if you want to get there sooner, you could increase your investment.

For example, $5,000 a year would get you there in just over 13 years, $10,000 a year would take eight and a half years, and $20,000 a year would see you hit your target in a touch over five years.

The post Want $10,000 of passive income? Check out these ASX shares appeared first on The Motley Fool Australia.

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More reading

• Own BHP shares? Here’s how the iron ore giant is cleaning up steelmaking’s act
• Should ASX 200 banks pay more for this implicit government backstop?
• Why is the BHP share price in the red today?
• ASX big four bank shares close the day ahead as financial fears linger
• Out with coal, in with nickel: Could BHP shares soon face a flurry of M&A activity?

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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Looking for exchange traded funds (ETF) to buy when the market reopens?

Well, depending on what your investment aim is, the two ETFs listed below could be worth considering.

Here’s what you need to know about these popular ETFs:

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

The first ETF to look at is the VanEck Vectors Morningstar Wide Moat ETF.

This ETF and the index it tracks has been a great place to invest over the last decade. Even after accounting for 2022’s difficulties, the index it tracks has generated an average annual return of 18.64% since 2013. This would have turned a $10,000 investment into over $55,000.

This strong performance has been driven by its focus on fairly priced US companies with sustainable competitive advantages or moats.

The fund changes its constituents periodically and removes stocks when they become overvalued. But generally, there are approximately 50 shares in the fund at any given time. At present, this includes Alphabet, Amazon, Meta Platforms, Microsoft, and Walt Disney.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

Another ETF for investors to consider buying next week is the Vanguard Australian Shares High Yield ETF. It could be a top option for investors that are looking for income.

That’s because this ETF provides investors with low-cost exposure to a diverse group of ASX listed shares that have higher forecast dividends relative to the rest of the market. This excludes Australian Real Estate Investment Trusts (A-REITS).

At present, the Vanguard Australian Shares High Yield ETF is trading with an estimated forward dividend yield of 5.4%. This would mean that a $10,000 investment provides a yield of $540.

Among the ASX shares that you’ll be owning with this ETF are blue chips such as BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS), and Woodside Energy Group Ltd (ASX: WDS).

The post Market beating returns and big yields: 2 ASX ETFs to buy next week appeared first on The Motley Fool Australia.

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More reading

• Buy this ASX ETF for retirement income
• Is a dividend ETF really better than an ASX index fund for income?
• 3 high quality ETFs for ASX investors to buy after the market selloff
• 3 reasons not investing at all could be riskier than trying to invest
• These ETFs could be top options for buy and hold investors

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 positions in and has recommended Telstra Group. The Motley Fool Australia has recommended VanEck Morningstar Wide Moat ETF and Vanguard Australian Shares High Yield ETF. 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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The Lynas Rare Earths Ltd (ASX: LYC) share price has lost a quarter of its value over the past four weeks.

The ASX rare earths share finished the session on Friday at $6.33, up 0.64% for the day.

A month ago it was trading around the $8.50 mark.

So, what’s happened?

Why is the Lynas share price tumbling?

The Lynas share price has reset its 52-week low seven times this month.

The newest low came yesterday when Lynas shares dipped to $6.18 in intraday trading.

Lynas’ fall began in early February when it was trading up around the $9.70 mark.

There has been a series of challenges.

In early February, Lynas’ Malaysian licence was renewed, but with an environmental condition that means Lynas will have to close its cracking and leaching plant at the end of FY23 if it can’t get an exemption.

The company has launched an appeal and time will tell us the outcome.

In late February, Lynas revealed a 32% cost increase in its 1H FY23 results, which of course the market didn’t like. Down the Lynas share price went.

A few days later, electric vehicle (EV) giant Telsa Inc announced it won’t use rare earths in its next-generation electric vehicles.

The market panicked, sending ASX rare earths shares tumbling. The Lynas share price dropped 6.8%.

Many experts said this was an overreaction, but as we all know, that sort of thing is common in markets! Negative sentiment and confusion can easily send share prices south.

What else is going on for Lynas?

The only price-sensitive news out of Lynas this month is actually positive. The company reported a $200 million investment by the Japanese Government on 7 March.

Not much else is going on, although yesterday Lynas did update the ASX on the holdings of its CEO Amanda Lacaze.

The notice revealed that Lacaze exercised some performance rights on Wednesday. This resulted in the acquisition of 147,433 Lynas shares through her family trust.

The post Why is the Lynas share price down 25% in a month? appeared first on The Motley Fool Australia.

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More reading

• The Lynas share price has clocked five 52-week lows this month. Broker tips 25% upside
• ‘Top quality’: Expert picks 2 ASX 200 shares to buy at a nice discount
• Lynas share price resets 52-week low twice in one week
• Tesla-induced sell-off of ASX rare earths shares like Lynas overblown: experts
• Lynas share price rebounds on $200m Japanese Government investment

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. 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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The S&P/ASX 200 Index (ASX: XJO) slipped lower on Friday, falling 0.19% to close at 6,955.2 points. That leaves the index 0.57% lower week on week.

It came on the back of rate hikes in the United Kingdom, Switzerland, and Norway overnight.

 Leading the ASX 200’s downturn on Friday was the S&P/ASX 200 Financials Index (ASX: XFJ). It dropped 1.1%.

Meanwhile, the S&P/ASX 200 Information Technology Index (ASX: XIJ) slumped 0.2% amid a disastrous performance from the Block Inc (ASX: SQ2) share price. The stock dumped 18.4% following a short seller attack.

Outperforming all others was the S&P/ASX 200 Utilities Index (ASX: XUJ), which jumped 0.7%.

But which ASX 200 share ended the week by posting the index’s biggest gain? Let’s take a look.

Top 10 ASX 200 shares countdown

Today’s top-performing ASX 200 share was Brainchip Holdings Ltd (ASX: BRN). It gained 6.1% to close at 43.5 cents despite only silence from the neuromorphic computing company.

These shares made today’s biggest gains:

ASX-listed company	Share price	Price change
Brainchip Holdings Ltd (ASX: BRN)	$0.435	6.1%
AGL Energy Limited (ASX: AGL)	$7.45	5.97%
Lake Resources NL (ASX: LKE)	$0.48	5.49%
Liontown Resources Ltd (ASX: LTR)	$1.49	4.2%
Perseus Mining Limited (ASX: PRU)	$2.33	4.02%
Imugene Limited (ASX: IMU)	$0.13	4%
Pilbara Minerals Ltd (ASX: PLS)	$3.56	3.79%
Ramelius Resources Ltd (ASX: RMS)	$1.115	3.59%
Core Lithium Ltd (ASX: CXO)	$0.785	3.29%
Evolution Mining Ltd (ASX: EVN)	$2.95	2.79%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• Is the AFIC share price a standout investment right now?
• Why Core Lithium, Estia Health, Kingsgate, and St Barbara shares are charging higher
• Passive income hack: 3 simple steps to help you get rich and retire early
• Investing in ASX 200 shares? Don’t bank on an RBA rate pause in April
• The first-ever Pilbara Minerals dividend is being paid today. Here’s what to expect

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block. The Motley Fool Australia has positions in and has recommended Block. 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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Australian Foundation Investment Co Ltd (ASX: AFI) (AFIC) has seen its share price fall more than 4% since 9 March 2023.

While that’s not exactly a major plummet, it adds to the decline the listed investment company (LIC) has seen over the last 12 months. It’s now down by close to 13%.

When an attractive business falls more than 10%, I think it’s worthwhile considering whether that investment is now good value.

While it is cheaper, I think investors also need to pay attention to how the AFIC share price is valued compared to its net tangible assets (NTA).

NTA premium?

A LIC’s job is to invest in other shares and assets. But, the value of its portfolio may not be the same as what the share price is trading at.

Imagine a LIC owns a portfolio of shares worth $100 million. The market capitalisation of the LIC could be $90 million, suggesting that it’s valued at a 10% discount to its assets. Or the market capitalisation could be $110 million – a 10% premium. The premium would mean people are buying a basket of shares for more than they buy those individual investments separately.

Sometimes we can see premiums or discounts in the LIC world of more than 20%, though that doesn’t happen with AFIC.

However, the latest update indicated that the AFIC share price for February was trading at a premium of around 5%. That’s one of the lower monthly premiums since the start of COVID-19, but it’s still a premium.

Sometimes investors may decide that it’s worthwhile to pay a premium for the NTA if they think the investment returns are going to outperform the share market.

But, at February 2023, AFIC’s net asset per share growth, plus dividends and franking, had underperformed the S&P/ASX 200 Accumulation Index (ASX: XAOA), including franking, by 2.7% over the prior year and 0.7% over the prior decade. The last three and five years showed an underperformance of the benchmark of 0.2% per annum.

However, the index returns don’t include management expenses or tax, which may be applicable if an investor chooses an exchange-traded fund (ETF) focused on the ASX 200 (or something similar).

What about the dividends?

LICs have the ability to smooth out dividend payments, in contrast to the potential volatility of distributions from ASX shares.

AFIC’s annual ordinary dividend had been 24 cents per share for a number of years. But, it decided to increase the FY23 interim dividend by 10% to 11 cents per share. So, that’s a positive.

It has been a consistent dividend payer for many years. There aren’t many ASX shares that have achieved that level of consistency.

How much is a consistent dividend worth? For investors in the accumulation phase of their life, I’d suggest it’s not an integral factor. But, for retirees, it’s a useful attribute.

Is the AFIC share price a good buy?

It owns a portfolio of ASX blue chip shares that may be able to deliver suitable total returns, including Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), CSL Limited (ASX: CSL), Macquarie Group Ltd (ASX: MQG), Transurban Group (ASX: TCL), Wesfarmers Ltd (ASX: WES) and so on.

I think its returns could continue to be pretty similar to the ASX 200 Accumulation Index while paying a resilient dividend.

But, with investors being able to buy individual ASX shares or an ETF for the actual cost rather than a premium, I don’t think it’s the best choice for total return growth.

The post Is the AFIC share price a standout investment right now? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has positions in and has recommended Macquarie Group and Wesfarmers. 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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BHP Group Ltd (ASX: BHP) might not be the first share one thinks of when it comes to sustainability.

But the S&P/ASX 200 Index (ASX: XJO) iron ore giant is taking a leap towards lowering its value chain emissions. It announced yesterday it’s considering building an electric smelting furnace (ESF) pilot plant in Australia.

The Big Australian has signed with engineering firm Hatch to design a demonstration facility capable of producing steel using renewable energy and hydrogen rather than coal.

Let’s take a look at what the news might mean for Pilbara-mined iron ore.

The BHP share price is $43.63 at the time of writing.

BHP moves to make steelmaking more sustainable

Own BHP shares? You might be interested in the monolith’s latest sustainability move – a planned ESF plant capable of lowering emissions associated with Pilbara iron ore’s journey to becoming steel.

The company is aiming to build a demonstration plant to test and optimise iron production from the ESF.

It hopes the small-scale plant will be used to collaborate with steel producers and technology providers, ultimately helping to speed up the scale-up of ESF plant designs.  

The technology is able to produce steel from renewable energy sources when combined with a direct reduced iron (DRI) step.

The ESF allows for greater flexibility in raw materials – a barrier to the adoption of other lower emissions production methods. It also has the potential to be integrated into a steel plant’s existing downstream production units, BHP noted.

It’s estimated that, by switching to the technology, conventional steelmakers – like many of BHP’s customers – could reduce their emissions by more than 80%.

BHP will consider several Australian locations for the facility.

News of the move comes as the ASX 200 giant works to reach net zero operational and value chain emissions by 2050. It also comes alongside news that iron ore rival Fortescue Metals Group Ltd (ASX: FMG) has made progress in producing ‘green iron’.

Commenting on the agreement, BHP chief commercial officer Vandita Pant said:

We see the ESF process as a critical breakthrough in significantly reducing the carbon emissions intensity of steel production and one that provides an opportunity for iron ore from our Pilbara mines. 

BHP share price snapshot

This year has been a rough one so far for the BHP share price.

The stock has fallen around 4% since its first close of 2023. Though, it’s trading relatively flat over the last 12 months.

Comparatively, the ASX 200 is trading flat year to date and has fallen 6% since this time last year.

The post Own BHP shares? Here’s how the iron ore giant is cleaning up steelmaking’s act appeared first on The Motley Fool Australia.

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• Could buying BHP shares under $44 make me rich?

Motley Fool contributor Brooke Cooper 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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