BHP's 60% Surge Meets a Costly Canadian Project Setback

Fund managers say resolved China tensions and AI-driven copper demand drove the rally, though valuation and project costs now warrant care

20 Jul 2026 · 5 min read

The world's largest mining company by market capitalisation, BHP Group surged more than 60 per cent over the year to mid-2026, resolving a seven-month standoff with its largest Chinese customer and riding a copper price boom tied to AI data centre demand.

A resolved China standoff removes a major overhang

Antares Capital's May 2026 update reported the resolution of a prolonged iron ore contract dispute with China Mineral Resources Group, which represents around 80 per cent of Chinese steel mills. Pengana Capital Group described the episode as illustrating BHP's market power, resolving the seven-month standoff with Chinese iron ore customers on the back of its twin pillars of at-scale copper and iron ore production and a fortress balance sheet. Firetrail Investments confirmed the practical impact: the discount applied to the disputed products appeared to disappear from subsequent order flow once the standoff ended.

A copper thesis tied to the AI data centre boom

Hyperion Asset Management's May 2026 case study illustrated the scale of copper demand from AI infrastructure: a Microsoft data centre facility in Chicago used 27 tonnes of copper per megawatt hour of applied power, compared with around 2 tonnes per megawatt for a gas-fired power station or offshore wind. Endeavor Asset Management's own May update noted increasing speculation that BHP would be a major beneficiary of AI and data centre copper demand, with future demand growth requiring the equivalent of a new Escondida-sized mine.

BHP did a case study on a Microsoft data center facility in Chicago that was found to use 27 tons of copper for every megawatt hour of applied power compared to approximately 2 tons per megawatt for a gas fired power station or offshore wind requires.

— Hyperion Asset Management, Presentation, May 2026

Walking away from a $49 billion Anglo American bid

Contact Asset Management's May 2026 update reported BHP officially walked away from its $49 billion takeover bid for rival Anglo American after Anglo rejected a final request to extend the regulatory deadline. BHP had primarily been eyeing Anglo's copper assets, but BKI Investment Company noted the six-week pursuit ultimately did not clear the regulatory hurdles needed to proceed, leaving BHP to pursue its copper growth ambitions organically instead.

A commodity price surge across the portfolio

PM Capital's May 2026 update reported shares rallying 16 per cent that month on robust copper demand, describing BHP as central to its thesis on the structural necessity of critical minerals. Yarra Capital Management's own May update detailed the mix: higher copper, up 6 per cent, and hard coking coal, up 4 per cent, more than offset a 2.4 per cent decline in the benchmark 61 per cent iron ore price, while Perennial Partners noted iron ore continuing to hold above US$100 a tonne despite historically being viewed as the primary growth driver for diversified miners like BHP, with that role increasingly shifting to copper.

The deliberate allocation of capital to commodities continues to provide significant tailwinds, with key holding BHP rallying +16% over the month on robust copper demand. BHP remains central to our thesis on the structural necessity of critical minerals.

— PM Capital, Monthly Report, May 2026

A valuation debate as the rally matures

By June 2026, views had begun to diverge on how much further the rally could run. Plato Investment Management rated the stock a buy, noting its price to earnings ratio had come back in line with the market after resources stocks rose more than 50 per cent over the prior year, with a franking-inclusive yield of around 4.5 per cent. Investors Mutual Limited took a more cautious hold stance on valuation grounds, while still valuing BHP's diversification across iron ore, copper and metallurgical coal. ClearBridge Investments, having bought steadily since the second half of 2024, maintained a buy rating but flagged the need for greater valuation awareness given copper now contributes over half of group earnings.

A costly Canadian project blowout and a softer FY27 copper outlook

Pendal Group's June 2026 update reported a setback: BHP's Jansen Stage II potash project in Canada saw total capital expenditure increase to US$6.9 billion from US$4.9 billion, prompting a US$2.3 billion impairment. Pendal's July 2026 update added a further concern, with FY27 copper production forecasts coming in 12 per cent lower than FY26, below market expectations, even as fourth-quarter iron ore and copper production met expectations and net debt came in slightly better than forecast.