In today’s Exponential Investor

  • A mega-merger in oil & gas
  • Buying UK batteries
  • Self-driving crashes

In trading on the London Stock Exchange (LSE) on Tuesday, BHP Group (LSE:BHP) spiked almost 10% to an early high of 2,505GBp.

Now I will admit, usually a 10% spike in a stock isn’t too much for me to take a great deal of notice in.

However, when it’s a £114 billion global mining giant like BHP, you can’t help but sit up a bit. Giant mining “blue chips” like BHP aren’t prone to large daily jumps unless something big is up.

And it’s something big indeed.

BHP’s megadeal

BHP announced on Tuesday that it is combining its oil and gas portfolios with another Australian mining giant, Woodside Petroleum (ASX:WPL).

This oil and gas merger will “… create a global top 10 independent energy company by production,” according to BHP.

This deal looks to have made the market pretty happy. The announcement came out at 5pm Australian time, which means the Australian Stock Exchange (ASX) was closed. But on the open here in the UK, BHP’s stock price leapt higher on the news.

So the question that comes from this is simply, why?

Why is the one of the world’s largest miners offloading its oil and gas business in a merger with Woodside?

Does this mean that BHP is starting to trim the fat (so to speak) as the company looks to more “future proof” assets, with the result that the miner is a more attractive prospect for investors now?

Is BHP going to be looking to greener, cleaner pastures for its global portfolio?

The company must be, because one of the points mentioned in the announcement is that this deal and merger will result in, “Shared values and focus on sustainable operations, carbon management and ESG leadership.”

Clearly there’s change afoot in global mining and resource companies. Perhaps this deal is a sign of more change to come, not just for BHP but for the whole industry.

My take is that this is likely the start of the process. A catalyst worth keeping note of. Certainly, it has turned our attention once again to mining and resources in the hunt for opportunities that may come off the back of this megadeal.

Glencore’s Gigadeal

While on the subject of the biggest players in global mining and resources, Glencore (LSE:GLEN), the £43 billion giant, has also just made a savvy, strategic move.

However, this one barely moved the needle in the market.

Glencore has signed a strategic partnership for the long-term supply of cobalt to Britishvolt. Britishvolt is a UK-based developer and innovator of lithium-ion battery cells.

Britishvolt is looking to build a “Gigaplant” with up to 30GWh of capacity in Northumberland by the end of 2027. The company expects it to be the “first large full cycle Gigaplant in the UK.”

The other interesting part about this is that Glencore also made an undisclosed investment into Britishvolt as well.

That means Britishvolt will now be using Glencore cobalt as well as getting a little boost of capital to help accelerate its plans.

This isn’t completely surprising. Glencore is one of the world’s largest suppliers of materials to the battery industry. And this isn’t its first deal to supply a company looking to bring a Gigafactory online.

But it is a sign of its commitment to a leading battery company in the UK. And that’s also worth paying attention to.

Of course, the upside here is probably more for Britishvolt than Glencore, which is something, it seems, that the market agrees with.

The only downside is that Britishvolt isn’t currently a company you can invest in through the stock market.

Perhaps it will be soon, we don’t know.

Autocrashing: a big deal… or not?

Now, where would we be, talking about clean, green and battery technology without touching on our friends at Tesla?

Of course Tesla is somewhat of a posterchild for the green energy revolution. It is the electric vehicle (EV) company that changed the world.

There are no arguments from me about that fact. Without Tesla there is no way the automotive industry would have shown such acceleration to dropping internal combustion engine (ICE) cars, moving to electric power.

However, Tesla does come with some baggage… not least its continuous push towards autonomous vehicles. We like to call them self-driving cars here.

Tesla’s in-house self-driving car tech, which it calls “Autopilot”, has been a bit of a hit-and-miss technology for the company.

And really, a self-driving car isn’t an area of manufacturing where you want the technology to “miss”.

In fact, the Autopilot in Tesla has been so bad that the US National Highway Traffic Safety Administration (NHTSA) has officially opened investigations into Tesla’s autonomous car technology.

The reason for this interest from the NHTSA is 11 Tesla crashes into emergency vehicles since 2018.

What the NHTSA is saying is that it suspects that Autopilot is incapable of recognising an emergency vehicle (police car, ambulance, fire truck, etc) and hence crashes into them.

Oh dear…

We doubt that this investigation will damage the stock too much. And we’re sure online the Teslarati (Tesla fans) will blame the emergency vehicles for these crashes.

The truth is, though, Tesla long ago decided to bring the Autopilot tech inhouse; since that decision, it has faced one crisis after another with its development. And a lot of crashes too.

We’ll see how all this plays out in due course. However, if I had a Tesla, and I had Autopilot, I certainly wouldn’t be using it any time soon.

Until next time…

Sam Volkering
Editor, Exponential Investor

PS Deal or no deal, different types of stocks do different things at different times. Charlie Morris, one of Southbank Investment Research’s investment gurus, has developed an effective Money Map to guide you through financial markets. For more details, click here.