BHP’s Strategic Crossroads: Record Commodity Prices Meet Legal and Operational Challenges

The global mining giant BHP finds itself at a strategic inflection point, buoyed by soaring commodity revenues yet simultaneously navigating significant legal and operational headwinds. The company's financial outlook is being shaped by a confluence of record-breaking metal prices, a major asset transaction, and a substantial legal ruling.

A surge in copper prices is providing a powerful tailwind for BHP's earnings. The metal's price on the London Metal Exchange (LME) recently climbed to unprecedented levels, exceeding $11,770 per tonne. This represents an increase of more than 30% since the start of the year. As the world's largest copper producer, BHP reported output of approximately 500,000 tonnes for the third quarter of 2025. The metal's contribution to the company's underlying earnings (EBITDA) has seen a dramatic rise, reaching 45% for the 2025 fiscal year—a significant jump from 29% the previous year. Furthermore, BHP is channeling A$840 million into copper projects located in South Australia.

Asset Sale to Fuel Future Growth

In a move designed to enhance financial flexibility, BHP agreed in early December 2025 to divest a 49% stake in the power infrastructure supporting its iron ore operations in Western Australia. The buyer is an infrastructure fund managed by BlackRock, with the transaction valued at $2 billion. BHP will retain a 51% majority holding and maintain operational control. Scheduled for completion by mid-2026, this deal is intended to unlock capital for strategic growth investments, particularly in future-facing commodities like copper and potash. The proceeds are also earmarked to accelerate decarbonization efforts across its Pilbara operations.

A Substantial Legal Setback

The company faced a major legal challenge on 14 November 2025. The English High Court ruled that BHP is liable under Brazilian law for the 2015 Fundão dam collapse. The damages claim in this case is estimated at roughly £36 billion. The final compensation amount will be determined in subsequent proceedings, expected in 2028 or 2029. BHP has stated its intention to appeal the judgment. In a separate legal matter, an Australian court approved a settlement of A$110 million in a shareholder class action, with insurance expected to cover the majority of this cost.

Should investors sell immediately? Or is it worth buying BHP?

Divergent Analyst Views and Share Performance

Market experts present a mixed picture of BHP's equity. Analyst ratings are divided: while J.P. Morgan and Citi maintain neutral stances with price targets ranging between A$42 and A$46.27, firms like Ord Minnett and Morgan Stanley see further upside and recommend buying the shares. For its US-listed American Depositary Receipts (NYSE: BHP), the average price target currently stands at $48.50, accompanied by a consensus "Hold" rating.

Share performance has varied by exchange. The Sydney-listed stock (ASX: BHP) closed at A$45.59 on 12 December, marking a new 52-week high. Meanwhile, the US-listed ADRs (NYSE: BHP) were last quoted at $59.64.

The path forward for BHP's share price is likely to be dictated by three key factors: the trajectory of core commodity prices, the outcome of the dam collapse appeal, and the effective execution of its strategic growth initiatives.