BHP share price stumbles amid super-profit tax fears

BHP's management is worried the company could be in the crosshairs of treasurer Jim Chalmers as the government looks for additional revenue.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points
  • The BHP share price has dipped into the red on Monday
  • The ASX 200 miner is concerned it may be subjected to a federal ‘super profit’ tax akin to Queensland’s state coal royalties
  • BHP booked a half-year profit after tax of US$6.5 billion for the six months ending 31 December

The BHP Group Ltd (ASX: BHP) share price is sliding on Monday.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed on Friday trading for $48.32. At the time of writing, shares are swapping hands for $48.09, down 0.5%.

That's right about in line with the 0.4% loss posted by the S&P/ASX 200 Resource Index (ASX: XJR).

So, what's all this about super-profit tax fears?

Australian Strategic Materials employee wearing a hard hat at a mine looks into the distance as he checks a folder.

Image source: Getty Images

Why is the ASX 200 miner concerned about taxes?

The BHP share price is sliding amid news out from the ASX 200 miner's pre-budget submission to the federal government expressing concerns over the business outlook in Australia.

As The Australian reports, BHP's management is worried the company could be in the crosshairs of treasurer Jim Chalmers as the government looks for additional revenue.

The miner believes the federal government may take a page out of Queensland's book and legislate a super-profit tax.

As you likely recall, in 2022, Queensland's state government passed a controversial outsized increase to coal royalties amid rocketing prices for the black gold.

That move was not well received by the big miners. BHP's CEO Mike Henry went so far as to pause any new capex on mine expansions in Queensland.

And the Australian federal government is on notice it could face a similar cutback in new domestic project funding.

"Any attempt to address structural pressures on the budget by increasing the tax burden on business will result in a similar outcome: reduced investment, fewer jobs and, in the long term, lower living standards for Australians," BHP stated in its pre-budget submission.

While there are no clear indications yet of Chalmers' plans, BHP certainly has plenty of 'super-profits' the government might be interested in taking a slice of.

The ASX 200 miner's half-year results were down from the previous year's half and came in below some expectations, which saw the BHP share price close down 0.3% the day the company reported.

Yet revenue of US$25.7 billion and profit after tax of US$6.5 billion might be hard for the cash strapped Albanese government to ignore.

Stay tuned.

BHP share price snapshot

As you can see in the chart below, the BHP share price has rebounded strongly since early November and is currently up 6% in 2023.

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.

More on Resources Shares

Two miners standing together with a smile on their faces.
Resources Shares

These are the best ASX 200 mining shares to buy in March: Morgans

These mining shares are on Morgans' best ideas list in March.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Resources Shares

Rio Tinto share price dips despite copper mega-mine milestone

Rio Tinto owns 66% of what will soon become the world's fourth-largest copper mine.

Read more »

Miner looking at his notes.
ESG

'Not sure if that's the way we should go': Why BHP shares are making news today

BHP is trialling renewable diesel made from Hydrotreated Vegetable Oil (HVO) at its Western Australian Yandi iron ore mine.

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop
Resources Shares

Are Fortescue shares back on the menu amid job cuts?

Can cost reductions be the key to driving Fortescue ahead?

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Resources Shares

Could buying Fortescue shares at under $22 make me rich?

The iron ore miner Fortescue has seen volatility. Is it time to buy?

Read more »

Australian Strategic Materials employee wearing a hard hat at a mine looks into the distance as he checks a folder.
Resources Shares

Sayona Mining share price dumps 6% amid lithium lows

Lithium prices have fallen to their lowest level in more than a year.

Read more »

Rede arrow on a stock market chart going down.
Resources Shares

Why are ASX 200 lithium shares falling so hard today?

The lithium carbonate price has fallen to its lowest level in more than a year.

Read more »

A young man sits at his desk with a laptop and documents with a gas heater visible behind him as though he is considering the information in front of him. about the BHP share price
Resources Shares

Why is the BHP share price taking a flogging on Friday?

The commodity growth engine may not be firing on all cylinders.

Read more »