Shares in the world’s largest miner, BHP, have hit their highest closing price in 31 months and are moving closer to the $30 mark, as investors back the major miners and the “Santa rally” rolls on.
BHP closed on Friday up 26?? to $29.10, its highest closing price since May 2015, and more than double the levels it plumbed in February 2016 when it was languishing around $14.20.
The Christmas enthusiasm for resources stocks on Friday also lifted Rio Tinto, which rose 62?? to $74.28, and Mineral Resources, up 52?? to $20.63.
BHP’s 2??-year high came as the miner delivered an update regarding financial support to be paid in response to the dam collapse in Brazil in November 2015, which claimed 19 lives.
In a statement to the ASX, BHP said it had agreed to fund a total of up to $US181 million ($235 million) in “financial support” for the Renova Foundation and Samarco, a joint venture between BHP and Vale that operated the dam.
It said $US133 million would be allocated to the Renova Foundation for “remediation and compensation programs” identified in an agreement reached in March 2016.
Last month, the miner said that it and Vale had already committed about “$US1 billion to remediation and compensation since the dam failure” in Brazil.
Negotiations over public civil claims in excess of $US50 billion are continuing.
BHP’s stock price has moved consistently higher since the middle of 2017, when its lowest closing price was $22.10 on June 21. It has climbed more than 30 per cent since then and analysts are generally optimistic about the stock.
According to Bloomberg, 16 of 18 analysts who cover the stock have either a buy (10) or hold rating on it.
Bloomberg says Macquarie has a target price of $32.40 on BHP and an “outperform” recommendation, UBS a target price of $31.50 and a buy rating, and Morgan Stanley has a bullish $34.25 target price.
The miner has benefited from rising iron ore prices in recent months. The benchmark price for iron ore was hovering around $US54-$US55 for much of June, but this week was trading around $US70.