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BHP Group Limited (JSE:BHG) News - Quarterly Activities Report
BHP Group Limited
BHP Group Limited
ABN 49 004 028 077
Registered in Australia
Registered Office: Level 18, 171 Collins Street Melbourne VIC 3000 Share code: BHG
ISIN: AU000000BHP4
NEWS RELEASE
Release Time IMMEDIATE
Date 19 July 2022
Release Number 24/22
BHP OPERATIONAL REVIEW
FOR THE YEAR ENDED 30 JUNE 2022
Note: All guidance is subject to further potential impacts from COVID-19 during
the 2023 financial year.
. We continue to deliver safe and reliable production. We remained fatality
free during the year and have delivered record sales volumes from Western
Australia Iron Ore (WAIO), allowing us to fully capitalise on the
opportunity presented by high iron ore prices.
. Full year production guidance for iron ore and energy coal were achieved,
as were revised guidance for copper and metallurgical coal. Full year
nickel production was lower than revised guidance due to a smelter outage
in the June 2022 quarter.
. Full year unit cost guidance/1/ is expected to be achieved for WAIO and
Escondida. New South Wales Energy Coal (NSWEC) unit costs are expected to
be towards the bottom end of revised guidance, which was updated to reflect
a targeted increase in the proportion of higher quality energy coal to
capture more value from record high prices. BMA unit costs are expected to
be marginally above revised guidance for Queensland Coal due to the impact
of the divestment of BMC.
. The Jansen shaft project was completed in the June 2022 quarter. Jansen
Stage 1 is tracking to plan, with activities progressing at the port and at
the Jansen site. We are working to bring forward Jansen Stage 1 first
production into 2026 and are assessing options to accelerate Jansen
Stage 2.
. The divestment of BHP's 80% interest in BMC to Stanmore and the merger of
BHP's oil and gas portfolio with Woodside Energy were completed during the
June 2022 quarter.
. BHP announced that it will retain NSWEC in its portfolio and seek relevant
approvals to enable mining beyond the current mining consent that expires
in 2026, towards a cessation of mining in 2030.
. The financial results for the second half of the 2022 financial year are
expected to reflect certain items as summarised in the table on page 3.
FY22 Jun Q22
Production (vs FY21) (vs Mar Q22) Jun Q22 vs Mar Q22 commentary
---------- -------------- ------------ -----------------------------
Copper (kt)..................... 1,573.5 461.8 Higher volumes at Escondida due to increased grade and
(4%) 25% concentrator throughput, at Spence due to improved leaching
performance and at Olympic Dam following major smelter
maintenance campaign impacts in the prior period.
Iron ore (Mt)................... 253.2 64.2 Higher volumes at WAIO reflecting record production from the
0% 8% Mining Area C hub with the continued ramp up of South Flank and
improved supply chain performance.
Metallurgical coal (Mt)/2/...... 29.1 8.2 Higher volumes driven by improved truck productivity, partially
(9%) 3% offset by heavy rainfall in the quarter.
Energy coal (Mt)/3/............. 13.7 3.9 Higher volumes due to less wet weather and reduced COVID-19
(4%) 52% related labour impacts.
Nickel (kt)..................... 76.8 18.8 Higher volumes due to reduced COVID-19 labour impacts, offset
(14%) 1% by an unplanned smelter outage.
Group copper equivalent production for the 2022 financial year decreased by
4%/4/ mainly due to lower copper and coal volumes. Group copper equivalent
production for the 2023 financial year is expected to increase by approximately
4% from the 2022 financial year.
--------------------------------------------------------------------------------
BHP Operational Review for the 1
year ended 30 June 2022
Summary
BHP Chief Executive Officer, Mike Henry:
“BHP produced a strong fourth quarter to cap off a year of significant progress. Our performance for the year has been underpinned
by safe, reliable operations and firm demand for our commodities. We completed another year fatality free and we are unwavering in
our effort to improve safety, and this includes addressing sexual assault and harassment, racism and bullying.
We delivered record full-year sales volumes at our iron ore business in Western Australia as a result of reliable operational
performance and the South Flank project which continued to ramp up. In copper, Escondida in Chile had record material mined and
near-record concentrator throughput, while Olympic Dam in South Australia performed strongly in the fourth quarter after planned smelter maintenance.
Queensland metallurgical coal delivered strong underlying performance for the quarter in the face of significant wet weather.
BHP is assessing the impacts on BMA economic reserves and mine lives as a result of the increase in coal royalties by the
Queensland Government. The near tripling of top end royalties has worsened what was already one of the world’s highest coal
royalty regimes, threatening investment and jobs in the state.
Our US$5.7 billion Jansen potash project in Canada is tracking to plan and we are working to bring first production forward to 2026.
Also during the year, we merged our petroleum business with Woodside, completed the sales of BMC and Cerrejón, and decided to retain
New South Wales Energy Coal until the cessation of mining in 2030 subject to relevant approvals. We also unified our corporate
structure, and added to our global options in copper and nickel.
Broader market volatility continues and we expect the lag effect of inflationary pressures to continue through the 2023 financial
year, along with labour market tightness and supply chain constraints. Over the year ahead, China is expected to contribute positively
to growth as stimulus policies take effect, however, the continuing conflict in the Ukraine, the unfolding energy crisis in Europe and policy
tightening globally is expected to result in an overall slowing of global growth. Our strong focus on safety, operational reliability, cost control and
social value will help us navigate these challenges and continue to deliver for all of our stakeholders.â€
Operational performance
Production and guidance are summarised below.
Note: All guidance is subject to further potential impacts from COVID-19 during
the 2023 financial year.
FY22 Jun Q22 Jun Q22
Jun vs vs vs FY23 FY23e
Production/i/ FY22 Q22 FY21 Jun Q21 Mar Q22 guidance vs FY22
------------ ------- ----- ---- ------- ------- -------------- -------------
Copper (kt)..................................... 1,573.5 461.8 (4%) 15% 25% 1,635 - 1,825 4% - 16%
Escondida (kt)............................... 1,004.0 289.3 (6%) 17% 28% 1,080 - 1,180 8% - 18%
Pampa Norte (kt)............................. 281.2 77.2 29% 11% 13% 240 - 290 (15%)- 3%
Olympic Dam (kt)............................. 138.4 55.7 (33%) 10% 43% 195 - 215 41% - 55%
Antamina (kt)................................ 149.9 39.6 4% 10% 10% 120 - 140 (20%) - (7%)
Iron ore (Mt)................................... 253.2 64.2 0% (2)% 8% 249 - 260 (2%) - 3%
WAIO (Mt).................................... 249.2 63.2 (1%) (2%) 8% 246 - 256 (1%) - 3%
WAIO (100% basis) (Mt)....................... 282.8 71.7 0% (2%) 7% 278 - 290 (2%) - 3%
Samarco (Mt)................................. 4.1 1.0 110% (2%) 1% 3 - 4 (26%) - (2%)
Metallurgical coal - BMA (Mt)................... 29.1 8.2 (9%) (12%) 3% 29 - 32 0% - 10%
Metallurgical coal - BMA (100% basis) (Mt)... 58.3 16.4 (9%) (12%) 3% 58 - 64 0% - 10%
Energy coal - NSWEC (Mt)........................ 13.7 3.9 (4%) (13%) 52% 13 - 15 (5%) - 9%
Nickel (kt)..................................... 76.8 18.8 (14%) (16%) 1% 80 - 90 4% - 17%
1 Excludes BMC and Petroleum production. The divestment of BHP's 80 per cent
interest in BMC to Stanmore Resources Limited and the merger of BHP's oil
and gas portfolio with Woodside Energy Group Limited were completed on 3
May 2022 and 1 June 2022 respectively. Production data for these assets are
below in the production and sales report.
--------------------------------------------------------------------------------
BHP Operational Review for the 2
year ended 30 June 2022
Summary of disclosures
BHP expects its financial results for the second half of the 2022 financial
year to reflect certain items as summarised in the table below. The table does
not provide a comprehensive list of all items impacting the period. The
financial statements are the subject of ongoing work that will not be finalised
until the release of BHP's financial results on 16 August 2022. Accordingly the
information in the table below contains preliminary information that is subject
to update and finalisation.
H2 FY22
Description impact US$M/i/ Classification/ii/
----------- ------------------- -----------------------------------
Unit costs for WAIO, Escondida and NSWEC are expected to be in line with -- Operating costs
full year guidance (at guidance exchange rates), with NSWEC tracking towards
the bottom end of revised guidance
Note: weaker Australian dollar and Chilean peso than guidance rates in the
period/iii/
Unit costs for BMA are expected to be marginally above full year revised -- (Up Arrow) Operating costs
guidance for Queensland Coal, due to the impact of the divestment of BMC, and
higher diesel and electricity prices (at guidance exchange rates)
Note: weaker Australian dollar than guidance rates in the period/iii/
Impairment charge related to an increase in closure and rehabilitation 400 - 450 (Up Arrow) Operating costs
provision at Cerro Colorado due to additional work required to re-profile
waste dumps for closure and an increase in scope for the closure
activities
Exploration expense (minerals exploration programs) 119 Exploration expense
The Group's adjusted effective tax rate for the full year is expected to be -- Taxation expense
within the guidance range of 30 to 35 per cent
Dividends paid to non-controlling interests 1,250 - 1,300 (Up Arrow) Financing cash outflow
Gain on sale of BHP's 80 per cent interest in BMC (after tax) 825 - 875 (Up Arrow) Exceptional item gain
Net proceeds/iv/ received from the sale of BHP's 80 per cent interest in BMC ~1,250 (Up Arrow) Investing cash inflow
Transaction costs related to Unification (after tax) ~430 (Up Arrow) Exceptional item charge
Financial impact on BHP Brasil of the Samarco dam failure Refer footnote/v/ Exceptional item
Discontinued operations
Gain on merger of BHP's oil and gas portfolio (after tax) 8,000 - 8,300 (Up Arrow) Exceptional item gain
Net cash payment to Woodside at completion of the merger and cash left in ~1,100 (Up Arrow) Investing cash outflow
the BHP Petroleum bank accounts to fund ongoing operations/vi/
i Numbers are not tax effected, unless otherwise noted.
ii There will be a corresponding balance sheet, cash flow and/or income
statement impact as relevant, unless otherwise noted.
iii Average exchange rates for FY22 of AUD/USD 0.73 (guidance rate AUD/USD
0.78) and USD/CLP 811 (guidance rate USD/CLP 727).
iv Net of cash remaining in BMC on completion of US$63 million.
v Financial impact is the subject of ongoing work and is not yet finalised.
See corporate update section for further information on Samarco.
vi As part of completion, BHP made a net cash payment of US$0.7 billion to
Woodside. The net payment to Woodside is subject to a customary
post-completion review which may result in an adjustment to the amount
paid. In addition, US$0.4 billion in cash was left in the BHP Petroleum
bank accounts.
Major development projects
In June 2022, we completed the US$2.97 billion Jansen mine shafts project.
At the end of the 2022 financial year, BHP had one major project under
development, the US$5.7 billion Jansen Stage 1 project, which is tracking to
plan.
--------------------------------------------------------------------------------
BHP Operational Review for the 3
year ended 30 June 2022
Average realised prices
The average realised prices achieved for our major commodities are summarised
below.
FY22 Jun H22 Jun H22
vs vs vs
Average realised prices/i/ Jun H22 Dec H21 FY22 FY21 FY21 Jun H21 Dec H21
-------------------------- ------- ------- ------ ------ ---- ------- -------
Copper (US$/lb)........................ 4.02 4.31 4.16 3.81 9% (7%) (7%)
Iron ore (US$/wmt, FOB)................ 112.65 113.54 113.10 130.56 (13%) (29%) (1%)
Metallurgical coal (US$/t)............. 423.82 259.71 347.10 106.64 225% 269% 63%
Hard coking coal (US$/t)/ii/........ 437.60 278.60 366.82 112.72 225% 269% 57%
Weak coking coal (US$/t)/ii/........ 382.56 218.65 296.51 89.62 231% 266% 75%
Thermal coal (US$/t)/iii/.............. 302.60 137.68 216.78 58.42 271% 327% 120%
Nickel metal (US$/t)................... 27,399 19,651 23,275 16,250 43% 56% 39%
i Based on provisional, unaudited estimates. Prices exclude sales from equity
accounted investments, third party product and internal sales, and
represent the weighted average of various sales terms (for example: FOB,
CIF and CFR), unless otherwise noted. Includes the impact of provisional
pricing and finalisation adjustments.
ii Hard coking coal (HCC) refers generally to those metallurgical coals with a
Coke Strength after Reaction (CSR) of 35 and above, which includes coals
across the spectrum from Premium Coking to Semi Hard Coking coals, while
weak coking coal (WCC) refers generally to those metallurgical coals with a
CSR below 35.
iii Includes thermal coal sales from metallurgical coal mines.
The large majority of iron ore shipments were linked to index pricing for the
month of shipment, with price differentials predominantly a reflection of
market fundamentals and product quality. Iron ore sales for the June 2022 half
year were based on an average moisture rate of 6.9 per cent. The large majority
of metallurgical coal and energy coal exports were linked to index pricing for
the month of scheduled shipment or priced on the spot market at fixed or
index-linked prices, with price differentials reflecting product quality. The
majority of copper cathodes sales were linked to index price for quotation
periods one month after month of shipment, and three to four months after month
of shipment for copper concentrates sales with price differentials applied for
location and treatment costs.
At 30 June 2022, the Group had 354 kt of outstanding copper sales that were
revalued at a weighted average price of US$3.75 per pound. The final price of
these sales will be determined in the 2023 financial year. In addition, 323 kt
of copper sales from the 2021 financial year were subject to a finalisation
adjustment in the current financial year. The provisional pricing and
finalisation adjustments will decrease Underlying EBITDA by US$473 million in
the 2022 financial year and are included in the average realised copper price
in the above table.
Corporate update
Portfolio
In April 2022, we signed a letter of intent with a consortium led by the Global
Maritime forum to assess the development of an iron ore Green Corridor between
Australia and East Asia. Green Corridors are specific shipping routes where the
economics, infrastructure and logistics of zero or near-zero emission shipping
are more feasible and where deployment can be supported by targeted policy and
industry action. The new consortium will facilitate a robust public-private
dialogue to investigate conditions that need to be in place to mobilise demand
and to feasibly scale zero or near-zero- greenhouse gas emission shipping on
the corridor.
On 3 May 2022, BHP completed the sale of its 80 per cent interest in BMC to
Stanmore Resources Limited. Stanmore Resources paid US$1.1 billion cash
consideration at completion plus a preliminary completion adjustment of
approximately US$200 million for working capital. US$100 million cash remains
payable to BHP on 3 November 2022 with potential for an additional amount of up
to US$150 million in a price-linked earnout payable to BHP in the 2024 calendar
year. The total cash consideration for the transaction could be up to
US$1.35 billion plus the final completion adjustment amount. The Group expects
to recognise a net gain on sale of between US$825 million and US$875 million
post-tax as an exceptional item in the 2022 financial year.
On 1 June 2022, the merger of BHP's oil and gas portfolio with Woodside was
completed. BHP paid a fully franked in specie dividend and distributed Woodside
shares to eligible BHP shareholders. The implied value of the in specie
dividend was approximately US$19.6 billion or US$3.86 per BHP share. The sale
of the Woodside shares of ineligible overseas shareholders and BHP shareholders
that elected to participate in the sale facility, was completed and the
proceeds have been distributed to participating shareholders. As part of
completion, BHP made a net cash payment of approximately US$0.7 billion to
Woodside. The net payment to Woodside is subject to a customary post-completion
review which may result in an adjustment to the amount paid. The Group expects
to recognise a net gain on the merger of between US$8.0 billion and
US$8.3 billion post-tax as an exceptional item in the 2022 financial
year/5/.
--------------------------------------------------------------------------------
BHP Operational Review for the 4
year ended 30 June 2022
On 16 June 2022, BHP announced that we will retain New South Wales Energy Coal
(NSWEC) in our portfolio, seek the relevant approvals to continue mining beyond
its current mining consent that expires in 2026 and proceed with a managed
process to cease mining at the asset by the end of the 2030 financial year. A
trade sale process for NSWEC was conducted however the process did not result
in a viable offer. Assessment of the resource economics, geotechnical profile
and future investment requirements determined that continued mining in the near
term and moving to closure in 2030 provides the optimal financial outcome when
compared to alternate options. Continuation of mining to the end of the 2030
financial year will afford eight years to work with our people, state and
federal governments and local communities in the Hunter Valley region on a
transition approach that supports long-term community sustainability.
Samarco
Samarco's Judicial Reorganisation process is continuing in the Commercial
Courts of Belo Horizonte, State of Minas Gerais. The Judicial Reorganisation is
a process for Samarco to restructure its financial debts in order to establish
a sustainable independent financial position that would allow Samarco to, among
other things, continue its operations safely and meet its Renova Foundation
obligations. BHP Brasil will continue to support Samarco in this process. The
Judicial Reorganisation is not expected to affect Samarco's obligation or
commitment to make full redress for the 2015 Fundao dam failure, and it does
not impact Renova Foundation's ability to undertake remediation and
compensation works.
Separately, negotiations are also ongoing with State and Federal Prosecutors
and other Brazilian public authorities on the review of the Framework
Agreement/6/, seeking a definitive and substantive settlement of Brazilian
claims relating to the dam failure.
On 8 July 2022, the United Kingdom (UK) Court of Appeal decided to allow the
group action in the UK against BHP seeking compensation on behalf of
individuals, municipalities, private businesses and indigenous peoples in
Brazil to continue in the UK. The judgment overturns the earlier decision of
the High Court that dismissed the group action. BHP has sought permission to
appeal the judgment to the UK Supreme Court. The judgment is not a decision in
relation to the merits of the claims made in the group action. It is concerned
with the preliminary question of whether the group action can continue against
BHP in the United Kingdom.
The impact of this decision and recent legal decisions in Brazil on the Group's
Samarco provision is currently being assessed.
We will provide an update to the ongoing potential financial impacts on BHP
Brasil of the Samarco dam failure with the release of the financial results on
16 August 2022. Any financial impacts will continue to be treated as an
exceptional item.
--------------------------------------------------------------------------------
BHP Operational Review for the 5
year ended 30 June 2022
Copper
Production
FY22 Jun Q22 Jun Q22
vs vs vs
FY22 Jun Q22 FY21 Jun Q21 Mar Q22
--------- ------- ----- ------- -------
Copper (kt)............ 1,573.5 461.8 (4%) 15% 25%
Zinc (t)............... 123,200 27,576 (15%) (22%) (16%)
Uranium (t)............ 2,375 776 (27%) 26% (1%)
Copper - Total copper production decreased by four per cent to 1,574 kt.
Production for the 2023 financial year is expected to be between 1,635 and
1,825 kt.
Escondida copper production decreased by six per cent to 1,004 kt primarily due
to higher than expected concentrator feed grade decline of four per cent,
public road blockades affecting access to site for both workers and supplies, and
the impact of a reduced operational workforce from COVID-19. Despite these
challenges, Escondida achieved record material mined for the 2022 financial year
and near record concentrator throughput of 367 ktpd. Production is expected to increase to
between 1,080 and 1,180 kt for the 2023 financial year and reflects an expected increase in
concentrator feed grade compared to the 2022 financial year. Medium term
guidance of 1.2 Mtpa of copper production on average over the next five years
remains unchanged, with production expected to be weighted towards the latter
years.
Pampa Norte copper production increased by 29 per cent to 281 kt reflecting the
ramp up of the Spence Growth Option (SGO), partially offset by the impact of
lower cathode production as a result of a 14 per cent decline in Pampa Norte
stacking feed grade. Production for the 2023 financial year is expected to be
between 240 and 290 kt. This reflects a forecast decline in stacking feed grade
at Pampa Norte, the commencement of plant design modifications at SGO and the continued
transition towards the planned closure of Cerro Colorado
at the end of the 2023 calendar year.
Olympic Dam copper production decreased by 33 per cent to 138 kt as a result of
the major smelter maintenance campaign (SCM21), which included COVID-19 impacts
on the availability of workforce and was subsequently completed in January
2022. Near record production in the June 2022 quarter followed the successful
ramp up of the smelter to full capacity in April 2022. Average copper grade of
2.14 per cent was achieved in the 2022 financial year as the majority of
material mined is from the Southern Mine Area. Production for the 2023
financial year is expected to increase to between 195 and 215 kt.
Antamina copper production increased by four per cent to 150 kt, reflecting
higher copper head grades. Zinc production decreased by 15 per cent to 123 kt
reflecting lower zinc head grades. Copper production of between 120 and 140 kt,
and zinc production of between 115 and 135 kt is expected for the 2023
financial year.
--------------------------------------------------------------------------------
BHP Operational Review for the 6
year ended 30 June 2022
Iron Ore
Production
FY22 Jun Q22 Jun Q22
vs vs vs
FY22 Jun Q22 FY21 Jun Q21 Mar Q22
------- ------- ---- ------- -------
Iron ore production (kt)...... 253,247 64,162 0% (2)% 8%
Iron ore - Total iron ore production was in line with the prior period at
253 Mt. Production for the 2023 financial year is expected to be between 249
and 260 Mt.
WAIO production of 249 Mt (283 Mt on a 100 per cent basis) was in line with the
prior period, reflecting continued strong supply chain performance and
favourable weather compared to the prior period, offset by the impacts of
temporary labour constraints relating to COVID-19, planned track renewal works
in the March 2022 quarter and the planned major maintenance on the Jimblebar
train load out and car dumper one in the first half. Our preventative
maintenance programs continue to underpin the strength of the WAIO supply
chain, delivering increased car dumper, reclaimer and ship loader availability
year on year and enabling record sales volumes of 284 Mt (100 per cent basis).
South Flank ramp up to full production capacity of 80 Mtpa (100 per cent basis)
is ahead of schedule with an average rate of 67 Mtpa achieved in the June
2022 quarter contributing to record production from the Mining Area C (MAC) hub
and record lump sales.
WAIO production for the 2023 financial year is expected to be between 246 and
256 Mt (278 and 290 Mt on a 100 per cent basis) reflecting the tie-in of the
port debottlenecking project (PDP1) and the continued ramp up of South Flank.
Samarco production of 4.1 Mt (BHP share) reflected the ramp up of production to
capacity, following the recommencement of iron ore pellet production at one
concentrator in December 2020. Production for the 2023 financial year is
expected to be between 3 and 4 Mt (BHP share).
Coal
Production
FY22 Jun Q22 Jun Q22
vs vs vs
FY22 Jun Q22 FY21 Jun Q21 Mar Q22
------- ------- ---- ------- -------
Metallurgical coal (kt)/2/..... 29,142 8,183 (9%) (12%) 3%
Energy coal (kt)/3/............ 13,701 3,919 (4%) (13%) 52%
Metallurgical coal - BMA production decreased by nine per cent to 29 Mt (58 Mt
on a 100 per cent basis). Significant wet weather impacts across most BMA
operations and labour constraints, including COVID-19 related absenteeism which
impacted stripping and mine productivity, more than offset record production at
the Broadmeadow mine. Following the automation of Daunia's truck fleet in
November 2021, the automation of Goonyella's pre-strip truck fleet was
completed in March 2022 with the Goonyella coal truck fleet expected to be
fully autonomous by the end of the December 2022 quarter. Production for the 2023
financial year is expected to be between 29 and 32 Mt (58 and 64 Mt on a
100 per cent basis). A long wall move at Broadmeadow mine is scheduled for the
September 2022 quarter.
The divestment of our interest in BMC was completed on 3 May 2022 and BMC
volumes are no longer included in metallurgical coal volumes.
Following the announcement of the change to the Queensland royalty regime from
1 July 2022, we will assess the impact on production, jobs and the communities
of Central Queensland. At spot metallurgical coal prices/7/, the effective
pre-tax royalty rate has increased by approximately 7 percentage points to
19 per cent. This further cost pressure will discourage investment, operational
growth, job creation and local business spending across the state. The new tax
damages Queensland's reputation as a stable place to invest, and will make it
harder for the state to compete against other global jurisdictions in
attracting major new investments that would deliver longer term value to
communities and the state economy.
--------------------------------------------------------------------------------
BHP Operational Review for the 7
year ended 30 June 2022
Energy coal - NSWEC production decreased by four per cent to 14 Mt, reflecting
lower volumes due to an increased proportion of washed coal to capitalise on higher
margins for higher quality coals, COVID-19 related labour constraints which impacted stripping
performance and mine productivity, and wet weather. Higher quality coals now make up almost 90 per
cent of sales compared to approximately 60 per cent of sales in the prior year.
Production for the 2023 financial year is expected to be between 13 and 15 Mt reflecting a continued
focus on higher quality coals.
Other
Nickel production
FY22 Jun Q22 Jun Q22
vs vs vs
FY22 Jun Q22 FY21 Jun Q21 Mar Q22
------- ------- ------ ------- -------
Nickel (kt)................... 76.8 18.8 (14%) (16%) 1%
Nickel - Nickel West production decreased by 14 per cent to 77 kt due to the
significant impacts of COVID-19 related labour absenteeism and workforce
shortages, and unplanned downtime at the oxygen plant leading to a 15 day
smelter outage in the June 2022 quarter. Production for the 2023 financial year
is expected to be between 80 and 90 kt, weighted to the second half of the year
due to planned smelter maintenance in the first half.
Potash - Our major potash project under development is tracking to plan.
Projects
Capital Initial
Project and expenditure production
ownership US$M target date Capacity Progress
----------- ----------- ----------- ------------------------------------- ----------------------------------
Jansen Potash 2,972 CY27 Investment to finish the excavation 100% complete. This project will
(Canada) and lining of the production and not be reported in the projects
100% service shafts, and to continue the section of future Operational
installation of essential surface Reviews.
infrastructure and utilities.
Jansen Stage 1 5,723 CY27 Design, engineering and construction Approved in August 2021, project
(Canada) of an underground potash mine and is 8% complete
100% surface infrastructure, with capacity
to produce 4.35 Mtpa.
----------------------------------------------------------------------------------------------------------------------------
Minerals exploration
Total minerals exploration expenditure for 2022 financial year was
US$256 million, of which US$199 million was expensed.
Work continues on existing exploration projects, joint ventures and farm-in
agreements, as well as leveraging technology to both look deeper in mature
exploration jurisdictions and delineate new high potential search spaces
globally. Greenfield minerals exploration is being undertaken on advancing
copper targets in Chile, Ecuador, Mexico, Peru, Canada, Australia and the
south-west United States. Nickel targets are also being advanced in Canada and
Australia.
We continued to progress our early stage options in future facing commodities
throughout the year. Work continued on the farm-in agreement executed in
October 2021 for the early-stage Elliott copper project covering 7,200 km/2/ in
the Northern Territory, Australia, and in April 2022 we agreed to fund a nickel
exploration program in Nunavik, Quebec, as part of our strategic alliance with
Midland Exploration/8/.
At Oak Dam in South Australia, BHP is continuing next stage resource definition
drilling with six drill rigs.
--------------------------------------------------------------------------------
BHP Operational Review for the 8
year ended 30 June 2022
Variance analysis relates to the relative performance of BHP and/or its
operations during the 2022 financial year compared with the 2021 financial
year, unless otherwise noted. Production volumes, sales volumes and capital and
exploration expenditure from subsidiaries are reported on a 100 per cent basis;
production and sales volumes from equity accounted investments and other
operations are reported on a proportionate consolidation basis. Numbers
presented may not add up precisely to the totals provided due to rounding.
Copper equivalent production is based on 2022 financial year average realised
prices.
The following footnotes apply to this Operational Review:
1 2022 financial year unit cost guidance: Escondida US$1.20-1.40/lb, WAIO
US$17.50-18.50/t, Queensland Coal US$85-94/t (which includes BMA of US$88-96/t;
divestment of BMC was completed on 3 May 2022), and NSWEC US$76-81/t;
based on exchange rates of AUD/USD 0.78 and USD/CLP 727.
2 BHP completed the sale of BMC on 3 May 2022. The transaction has an
effective economic date of 3 May 2022 and volumes have been reported
separately in the production and sales report.
3 BHP completed the sale of its 33.3 per cent interest in Cerrejon on 11
January 2022. The transaction has an effective economic date of 31 December
2020 and volumes have been reported separately in the production and sales
report.
4 Excludes production from Cerrejon (divestment completed 11 January 2022),
BMC (divestment completed 3 May 2022) and Petroleum (merger completed 1 June
2022).
5 The net gain on merger will be included as an exceptional item in profit
after taxation from discontinued operations in the financial statements.
6 The Framework Agreement was entered into between Samarco, Vale and BHP
Brasil and the relevant Brazilian authorities in March 2016 and established
the Renova Foundation to develop and implement environmental and
socio-economic programs to remediate and provide compensation for damage
caused by the Samarco dam failure.
7 PLV FOB spot price of US$243.50/t as at 13 July 2022. Source: Platts
8 BHP signed an agreement for a nickel exploration alliance with Midland
Exploration in August 2020.
The following abbreviations may have been used throughout this report: barrels
(bbl); billion cubic feet (bcf); cost and freight (CFR); cost, insurance and
freight (CIF); dry metric tonne unit (dmtu); free on board (FOB); grams per
tonne (g/t); kilograms per tonne (kg/t); kilometre (km); metre (m); million
barrels of oil equivalent (MMboe); million barrels of oil per day (MMbpd);
million cubic feet per day (MMcf/d); million tonnes (Mt); million tonnes per
annum (Mtpa); ounces (oz); pounds (lb); thousand barrels of oil equivalent
(Mboe); thousand barrels of oil equivalent per day (Mboe/d); thousand ounces
(koz); thousand standard cubic feet (Mscf); thousand tonnes (kt); thousand
tonnes per annum (ktpa); thousand tonnes per day (ktpd); tonnes (t); and wet
metric tonnes (wmt).
In this release, the terms 'BHP', the 'Group', 'BHP Group', 'we', 'us', 'our'
and ourselves' are used to refer to BHP Group Limited and, except where the
context otherwise requires, the respective subsidiaries as defined in note 30
'Subsidiaries' in section 3.1 of BHP's 30 June 2021 Annual Report and Form
20-F. Those terms do not include non-operated assets. Notwithstanding that this
release may include production, financial and other information from
non-operated assets, non-operated assets are not included in the BHP Group and,
as a result, statements regarding our operations, assets and values apply only
to our operated assets unless stated otherwise. Our non-operated assets include
Antamina and Samarco. BHP Group cautions against undue reliance on any
forward-looking statement or guidance in this release, particularly in light of
the current economic climate and significant volatility, uncertainty and
disruption arising in connection with COVID-19. These forward looking
statements are based on information available as at the date of this release
and are not guarantees or predictions of future performance and involve known
and unknown risks, uncertainties and other factors, many of which are beyond
our control and which may cause actual results to differ materially from those
expressed in the statements contained in this release.
--------------------------------------------------------------------------------
BHP Operational Review for the 9
year ended 30 June 2022
Further information on BHP can be found at: bhp.com
Authorised for lodgement by:
Stefanie Wilkinson
Group Company Secretary
Sponsor: J.P. Morgan Equities South Africa Proprietary
Media Relations Investor Relations
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--------------------------------------------------------------------------------
BHP Operational Review for the 10
year ended 30 June 2022
Production summary
Quarter ended Year to date
------------------------------------ ---------------
Jun Sep Dec Mar Jun Jun Jun
BHP 2021 2021 2021 2022 2022 2022 2021
interest ------ ------- ------- ------ ------ ------- -------
Copper /1/
Copper
Payable metal in concentrate (kt)
Escondida /2/ ......................... 57.5% 195.6 194.7 196.2 178.2 233.5 802.6 871.7
Pampa Norte /3/ ....................... 100.0% 21.1 26.4 24.2 32.4 28.2 111.2 27.4
Antamina .............................. 33.8% 36.1 35.8 38.4 36.1 39.6 149.9 144.0
------ ------- ------- ------ ------ ------- -------
Total ................................. 252.8 256.9 258.8 246.7 301.3 1,063.7 1,043.1
------ ------- ------- ------ ------ ------- -------
Cathode (kt)
Escondida /2/ ......................... 57.5% 51.1 49.0 48.4 48.2 55.8 201.4 196.5
Pampa Norte /3/ ....................... 100% 48.3 41.1 44.1 35.8 49.0 170.0 190.8
Olympic Dam ........................... 100% 50.8 29.5 14.2 39.0 55.7 138.4 205.3
------ ------- ------- ------ ------ ------- -------
Total ................................. 150.2 119.6 106.7 123.0 160.5 509.8 592.6
------ ------- ------- ------ ------ ------- -------
Total copper (kt) ........................ 403.0 376.5 365.5 369.7 461.8 1,573.5 1,635.7
------ ------- ------- ------ ------ ------- -------
Lead
Payable metal in concentrate (t)
Antamina .............................. 33.8% 381 378 277 282 181 1,118 2,532
------ ------- ------- ------ ------ ------- -------
Total ................................. 381 378 277 282 181 1,118 2,532
------ ------- ------- ------ ------ ------- -------
Zinc
Payable metal in concentrate (t)
Antamina .............................. 33.8% 35,483 33,289 29,603 32,732 27,576 123,200 145,089
------ ------- ------- ------ ------ ------- -------
Total ................................. 35,483 33,289 29,603 32,732 27,576 123,200 145,089
------ ------- ------- ------ ------ ------- -------
Gold
Payable metal in concentrate (troy oz)
Escondida /2/ ......................... 57.5% 38,893 41,962 42,937 36,303 45,770 166,972 166,968
Pampa Norte /3/ ....................... 100% 4,728 6,967 5,776 7,929 8,198 28,870 4,728
Olympic Dam (refined gold) ............ 100% 48,478 26,277 37,805 29,355 26,080 119,517 145,998
------ ------- ------- ------ ------ ------- -------
Total ................................. 92,099 75,206 86,518 73,587 80,048 315,359 317,694
------ ------- ------- ------ ------ ------- -------
Silver
Payable metal in concentrate (troy koz)
Escondida /2/ ......................... 57.5% 1,234 1,291 1,462 1,270 1,311 5,334 5,759
Pampa Norte /3/ ....................... 100% 214 273 215 261 262 1,011 214
Antamina .............................. 33.8% 1,409 1,367 1,308 1,191 1,212 5,078 5,965
Olympic Dam (refined silver) .......... 100% 185 191 258 149 145 743 810
------ ------- ------- ------ ------ ------- -------
Total ................................. 3,042 3,122 3,243 2,871 2,930 12,166 12,748
------ ------- ------- ------ ------ ------- -------
Uranium
Payable metal in concentrate (t)
Olympic Dam ........................... 100% 614 531 287 781 776 2,375 3,267
------ ------- ------- ------ ------ ------- -------
Total ................................. 614 531 287 781 776 2,375 3,267
------ ------- ------- ------ ------ ------- -------
Molybdenum
Payable metal in concentrate (t)
Pampa Norte /3/ ....................... 100% -- -- -- -- 71 71 --
Antamina .............................. 33.8% 111 142 217 190 249 798 863
------ ------- ------- ------ ------ ------- -------
Total ................................. 111 142 217 190 320 869 863
------ ------- ------- ------ ------ ------- -------
--------------------------------------------------------------------------------
BHP Operational Review for the 11
year ended 30 June 2022
Production summary
Quarter ended Year to date
------------------------------------ ---------------
Jun Sep Dec Mar Jun Jun Jun
BHP 2021 2021 2021 2022 2022 2022 2021
interest ------ ------- ------- ------ ------ ------- -------
Iron Ore
Iron Ore
Production (kt) /4/
Newman ................................ 85% 14,560 16,461 14,577 11,940 14,063 57,041 63,221
Area C Joint Venture .................. 85% 15,920 18,947 22,911 24,888 27,685 94,431 52,386
Yandi Joint Venture ................... 85% 18,405 11,834 12,261 8,418 6,409 38,922 68,596
Jimblebar /5/ ......................... 85% 15,337 15,009 15,324 13,444 15,005 58,782 67,393
Samarco ............................... 50% 1,023 1,048 1,029 994 1,000 4,071 1,938
------ ------- ------- ------ ------ ------- -------
Total ................................. 65,245 63,299 66,102 59,684 64,162 253,247 253,534
------ ------- ------- ------ ------ ------- -------
Coal
Metallurgical coal
Production (kt) /6/
BHP Mitsubishi Alliance (BMA) ......... 50% 9,253 6,715 6,300 7,944 8,183 29,142 31,884
------ ------- ------- ------ ------ ------- -------
Total ................................. 9,253 6,715 6,300 7,944 8,183 29,142 31,884
------ ------- ------- ------ ------ ------- -------
Production (kt) /6/
BHP Mitsui Coal (BMC) /7 8/ ........... 80% 2,570 2,135 2,518 2,618 651 7,922 8,741
------ ------- ------- ------ ------ ------- -------
Total ................................. 2,570 2,135 2,518 2,618 651 7,922 8,741
------ ------- ------- ------ ------ ------- -------
Energy coal
Production (kt)
NSW Energy Coal ....................... 100% 4,492 4,238 2,967 2,577 3,919 13,701 14,326
------ ------- ------- ------ ------ ------- -------
Total ................................. 4,492 4,238 2,967 2,577 3,919 13,701 14,326
------ ------- ------- ------ ------ ------- -------
Production (kt)
Cerrejon /9/ .......................... 33.3% 1,784 2,060 2,176 -- -- 4,236 4,964
------ ------- ------- ------ ------ ------- -------
Total ................................. 1,784 2,060 2,176 -- -- 4,236 4,964
------ ------- ------- ------ ------ ------- -------
Other
Nickel
Saleable production (kt)
Nickel West ........................... 100% 22.4 17.8 21.5 18.7 18.8 76.8 89.0
------ ------- ------- ------ ------ ------- -------
Total ................................. 22.4 17.8 21.5 18.7 18.8 76.8 89.0
------ ------- ------- ------ ------ ------- -------
Cobalt
Saleable production (t)
Nickel West ........................... 100% 241 177 220 125 110 632 988
------ ------- ------- ------ ------ ------- -------
Total ................................. 241 177 220 125 110 632 988
------ ------- ------- ------ ------ ------- -------
Discontinued operations
Petroleum /10 11/
Production
Crude oil, condensate and NGL (Mboe) .. 12,205 12,751 12,345 11,367 7,057 43,520 46,042
Natural gas (bcf) ..................... 88.6 88.4 80.1 75.9 58.8 303.2 340.6
------ ------- ------- ------ ------ ------- -------
Total (Mboe) .......................... 26,972 27,484 25,695 24,017 16,857 94,053 102,809
------ ------- ------- ------ ------ ------- -------
1 Metal production is reported on the basis of payable metal.
2 Shown on a 100% basis. BHP interest in saleable production is 57.5%.
3 Includes Cerro Colorado and Spence.
4 Iron ore production is reported on a wet tonnes basis.
5 Shown on a 100% basis. BHP interest in saleable production is 85%.
6 Metallurgical coal production is reported on the basis of saleable product.
Production figures may include some thermal coal.
7 Shown on a 100% basis. BHP interest in saleable production is 80%.
8 BHP completed the sale of its 80 per cent interest in BHP Mitsui Coal (BMC)
on 3 May 2022. Production reported until 30 April 2022.
9 BHP completed the sale of its 33.3 per cent interest in Cerrejon on 11
January 2022. Production reported until 31 December 2021.
10 The merger of BHP's oil and gas portfolio with Woodside was completed on 1
June 2022. Production reported until 31 May 2022.
11 LPG and ethane are reported as natural gas liquids (NGL). Product-specific
conversions are made and NGL is reported in barrels of oil equivalent
(boe). Total boe conversions are based on 6 bcf of natural gas equals 1,000
Mboe.
Throughout this report figures in italics indicate that this figure has
been adjusted since it was previously reported.
--------------------------------------------------------------------------------
BHP Operational Review for the 12
year ended 30 June 2022
Production and sales report
Quarter ended Year to date
------------------------------------------- ----------------
Jun Sep Dec Mar Jun Jun Jun
2021 2021 2021 2022 2022 2022 2021
------- ------- ------- ------- ------- ------- -------
Copper
Metals production is payable metal unless otherwise stated.
Escondida, Chile /1/
Material mined ................................ (kt) 104,043 113,874 117,284 107,676 115,409 454,243 380,652
Concentrator throughput ....................... (kt) 31,903 33,528 35,787 30,235 34,318 133,868 135,593
Average copper grade - concentrator ........... (%) 0.77% 0.73% 0.71% 0.80% 0.88% 0.78% 0.81%
Production ex mill ............................ (kt) 202.8 201.2 203.6 191.5 239.5 835.8 900.6
Production
Payable copper ................................ (kt) 195.6 194.7 196.2 178.2 233.5 802.6 871.7
Copper cathode (EW) ........................... (kt) 51.1 49.0 48.4 48.2 55.8 201.4 196.5
- Oxide leach ................................ (kt) 14.5 14.8 13.1 12.2 17.5 57.6 63.9
- Sulphide leach ............................. (kt) 36.6 34.2 35.3 36.0 38.3 143.8 132.6
------- ------- ------- ------- ------- ------- -------
Total copper .................................. (kt) 246.7 243.7 244.6 226.4 289.3 1,004.0 1,068.2
------- ------- ------- ------- ------- ------- -------
Payable gold concentrate ...................... (troy oz) 38,893 41,962 42,937 36,303 45,770 166,972 166,968
Payable silver concentrate .................... (troy koz) 1,234 1,291 1,462 1,270 1,311 5,334 5,759
Sales
Payable copper ................................ (kt) 194.1 190.5 200.2 177.0 230.4 798.1 872.4
Copper cathode (EW) ........................... (kt) 49.6 46.7 49.7 47.2 58.9 202.5 193.4
Payable gold concentrate ...................... (troy oz) 38,893 41,962 42,937 36,303 45,770 166,972 166,968
Payable silver concentrate .................... (troy koz) 1,234 1,291 1,462 1,270 1,311 5,334 5,759
1 Shown on a 100% basis. BHP interest in saleable production is 57.5%.
Pampa Norte, Chile
Cerro Colorado
Material mined ................................ (kt) 5,498 5,378 4,782 3,516 3,604 17,280 31,019
Ore stacked ................................... (kt) 3,702 3,566 4,029 3,181 4,259 15,035 14,583
Average copper grade - stacked ................ (%) 0.58% 0.60% 0.62% 0.53% 0.55% 0.58% 0.60%
Production
Copper cathode (EW) ........................... (kt) 14.7 13.4 15.3 11.6 14.7 55.0 60.2
Sales
Copper cathode (EW) ........................... (kt) 15.4 12.1 16.0 10.5 16.2 54.8 59.8
Spence
Material mined ................................ (kt) 21,262 21,154 24,025 24,040 26,749 95,968 77,202
Ore stacked ................................... (kt) 4,609 5,258 5,071 5,055 5,099 20,483 20,155
Average copper grade - stacked ................ (%) 0.72% 0.64% 0.66% 0.67% 0.66% 0.66% 0.81%
Concentrator throughput ....................... (kt) 4,929 5,786 6,234 6,512 6,311 24,843 8,607
Average copper grade - concentrator ........... (%) 0.63% 0.65% 0.60% 0.65% 0.66% 0.64% 0.59%
Production
Payable copper ................................ (kt) 21.1 26.4 24.2 32.4 28.2 111.2 27.4
Copper cathode (EW) ........................... (kt) 33.6 27.7 28.8 24.2 34.3 115.0 130.6
------- ------- ------- ------- ------- ------- -------
Total copper .................................. (kt) 54.7 54.1 53.0 56.6 62.5 226.2 158.0
------- ------- ------- ------- ------- ------- -------
Payable gold concentrate ...................... (troy oz) 4,728 6,967 5,776 7,929 8,198 28,870 4,728
Payable silver concentrate .................... (troy koz) 214 273 215 261 262 1,011 214
Payable molybdenum ............................ (t) -- -- -- -- 71 71 --
--------------------------------------------------------------------------------
BHP Operational Review for the 13
year ended 30 June 2022
Production and sales report
Quarter ended Year to date
------------------------------------------- ----------------
Jun Sep Dec Mar Jun Jun Jun
2021 2021 2021 2022 2022 2022 2021
------- ------- ------- ------- ------- ------- -------
Sales
Payable copper ................................ (kt) 20.8 28.4 24.9 28.1 28.1 109.5 22.6
Copper cathode (EW) ........................... (kt) 34.1 27.7 31.2 20.2 35.4 114.5 129.8
Payable gold concentrate ...................... (troy oz) 4,728 6,967 5,776 7,929 8,198 28,870 4,728
Payable silver concentrate .................... (troy koz) 214 273 215 261 262 1,011 214
Payable molybdenum ............................ (t) -- -- -- -- 25 25 --
Antamina, Peru
Material mined (100%) ......................... (kt) 63,393 66,581 58,179 58,118 64,026 246,904 219,642
Concentrator throughput (100%) ................ (kt) 13,466 13,219 13,011 13,135 13,131 52,496 53,402
Average head ...
