BHP Group Limited, formerly known as BHP Billiton Limited, is an international minerals resources operation that was formed in 2001 by the merger of BHP Ltd. and Billiton PLC. The company was founded in 1885 and is headquartered in Melbourne, Australia. Together with the UK-based BHP Group Plc, previously BHP Billiton Plc, it forms the BHP Group, which has a primary listing on the ASX (ASX: BHP). In 2021, BHP announced it would leave the FTSE 100 index (FTSE) as it plans to discontinue the dual listing of its shares in London and Australia. BHP Group ADRs (American Depositary Receipts) are traded on the New York Stock Exchange (NYSE).
Here is a complete guide to buying shares in BHP Group from Australia.
About the company
BHP Group's overview
As one of the world's largest mining companies, BHP Group is involved in minerals exploration, mining and processing, including coal, iron ore, copper and manganese ore. It is also involved in hydrocarbon (oil and gas) exploration, production and refining. Additionally, the company has interests in the engineering and transportation sectors. BHP Group has operations in more than 90 locations around the world.
BHP Billiton Plc was a mining heavyweight on the FTSE 100 index on the London Stock Exchange. A move to simplify its listing structure has resulted in its removal from the FTSE 100 index. However, the company's shares will remain listed on the London exchange. BHP Group ADRs (American Depositary Receipts) are traded on the New York Stock Exchange (NYSE). ADRs allow foreign companies to list shares on US stock exchanges.
BHP subsidiaries include BHP Minerals Europe Limited, Hunter Valley Energy Coal Pty Ltd, BHP Minerals Pty Ltd and BHP Billiton Finance Limited, among others.
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Step 1: Choose a broker
If you purchase shares online you must do it through an intermediary known as broker. There are many online brokers, offering different choices of markets and services.
Here are a few key characteristics to consider when selecting the best broker online:
Access to international markets
Australia's Australian Securities Exchange (ASX) is the primary listing platform for BHP Group Limited. However, BHP Group Plc has a premium listing on the UK Listing Authority's Official List, and its ordinary shares trade on the London Stock Exchange (LSE) in the United Kingdom, as well as on the Johannesburg Stock Exchange (JSE) in South Africa. Additionally, BHP Group Limited American Depositary Receipts (ADRs) and BHP Group Plc ADRs trade on the New York Stock Exchange (NYSE) in the United States. BHP shares can be purchased and sold through a broker who is licensed to trade in any of the above markets.
Many share trading apps are limited to either Australian or US markets, so check which markets your broker has access to before opening an account.
The rise of share trading online has led to a drop in brokerage costs. If you do your research, you'll find online platforms that provide affordable brokerage rates.
Make sure to evaluate the costs of brokerage against other services that an online trader might or might not provide.
A simple-to-use trading platform
Share trading doesn't have to be difficult, so look for a platform that is easy to use.
Research and analysis
Choose a platform with robust research and reporting sections that will provide essential information regarding BHP Group, including the company overview, history of prices and recommendations, as well as price forecasts.
Step 2: Funding your account
It's now time to transfer money to your account in order to make trades. Be mindful of the minimum transaction amount required for a first investment, which differs between brokers.
You'll need to transfer money and it can take up to three days for funds to be cleared. Some payment methods are faster and more convenient than others.
Step 3. Decide on the amount you'd like to invest
Determining how much risk you are willing to take on your investments is a pretty basic first step, but it's a very important one. Set a budget for purchasing shares, and only invest the amount you are able to risk losing.
Step 4: Choose between buying shares or an ETF
Another option for more prudent investors is to invest in an ETF ( Exchange Traded Fund), which lets you invest in the market as a whole, or one specific commodity, rather than an individual company such as BHP Group. An ETF monitors a specified market or market range, which means it's less likely to see abrupt drops or rises. However, it does mean it's more difficult to earn the kinds of significant gains you could get from shares.
For exposure to BHP Group in an ETF, consider iShares GSCI Commodity Dynamic Roll Strategy ETF (COMT), Amplify Lithium & Battery Technology ETF (BATT), and Avantis International Equity ETF (AVDE).
Step 5: Select the type of order you want to place
Once you've decided to purchase BHP Group shares, these are the main types of orders that you can choose from.
This is an order to purchase shares at the latest price. In markets that are constantly changing the price can fluctuate while you are setting up your order. Let's say you put in an order to purchase BHP Group shares at $40.70. You make an order, but when it is executed, the price is down to $40.67. You'll receive your shares at the lower price. Similar situations occur when the price of a share rises while the order is being completed.
With a limit order, your trade will only be executed once the price of shares reaches the price that you choose. Let's suppose you decide that you're only interested in buying BHP Group shares at $40.50 or less. If the price drops to $40.50 then your limit order will kick in.
You can set a price range within which you are prepared to buy or sell your shares. Once the price is reached, your order is executed, but only to the extent that it can be completed while remaining within your price range. As an example, you decide that you want to sell your BHP shares if the price falls to $40.90, but hang on to any shares that cannot be sold before it drops to $40.80. The stop limit order kicks in when the price reaches $40.90, but if it continues to fall below $40.80 before your entire order is completed, your broker may only sell a part of your holding.
A stop loss order specifies the price at which you wish to sell your shares if the market price suddenly falls. The stop loss will help you automatically and quickly sell out if the share price plummets. This may help limit your losses.
Step 6: Place your order
Once you've decided on all your options, it's time to make your purchase. Open the trading system you're using, input your BHP Group share code (ASX: BHP) and place your order. This can be as simple as pressing a button.
Whether you are buying shares to gain from price fluctuations or to hold them as long term investments, you still need to watch for reporting on company performance and keep a close eye on business fundamentals and the company’s share price movements.
Track BHP’s performance
BHP is a dividend-paying company. Watch for dividend announcements and trends in dividend payments.
Watch for developments in the mining and natural resources sector
BHP operates in a globally competitive sector. However, as one of the largest operators in this field, and a highly diversified operation at that, BHP is more likely to make news as an industry leader than be affected by the actions of others. While revenues and profits are growing, concerns on ESG (Environmental, Social and Governance) issues may pose a challenge for the company.
ASX lists IGO Limited (ASX: IGO), Mineral Resources Limited (ASX: MIN), and South32 Ltd (ASX: S32) as peers of BHP. South32 is a mining and metals company spun out of BHP Billiton in 2015.
On the NYSE, the main competitors of BHP Group include Rio Tinto Group (NYSE: RIO), Vale SA (NYSE: VALE), Freeport-McMoRan (NYSE: FCX), Southern Copper (NYSE: SCCO), Vedanta (NYSE: VEDL), Cleveland-Cliffs (NYSE: CLF), MP Materials (NYSE: MP), Turquoise Hill Resources (NYSE: TRQ), Lithium Americas (NYSE: LAC), and Compania de Minas Buenaventura S.A.A. (NYSE: BVN). All of these are part of the metals and mining sector.