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BHP Group plc (JSE:BHG) News - Operational Review nine months ended 31 March 2022
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 LOGO
Release Time IMMEDIATE
Date 21 April 2022
Release Number 12/22
BHP OPERATIONAL REVIEW
FOR THE NINE MONTHS ENDED 31 MARCH 2022
Note: All guidance is subject to further potential impacts from COVID-19 during
the 2022 financial year.
. We continue to deliver safe, reliable production and navigate the COVID-19
challenges as the pandemic evolves.
. Production guidance for the 2022 financial year remains unchanged for iron
ore, metallurgical coal and energy coal. Full year total copper production
guidance has been lowered to between 1,570 and 1,620 kt, reflecting lowered
production guidance for Escondida. Full year nickel production guidance has
been lowered to between 80 and 85 kt due to COVID-19 related labour
constraints.
. Full year unit cost guidance/(1)/ for Western Australia Iron Ore (WAIO),
Escondida and Queensland Coal remains unchanged. Full year unit cost
guidance for New South Wales Energy Coal (NSWEC) has been increased to
between US$76 and US$81 per tonne, reflecting a targeted increase in the
proportion of higher quality coal to capture more value from the record
high prices for higher quality thermal coal.
. Our potash major projects under development are tracking to plan. The
Jansen shaft project is 99% complete while Jansen Stage 1 activities
continue to progress at the port, the Jansen site and for the underground
mining systems.
. The divestment of BHP's interest in BHP Mitsui Coal (BMC) to Stanmore
Resources Limited is expected to complete on 3 May 2022.
. Completion of the proposed merger of BHP's oil and gas portfolio with
Woodside Petroleum Ltd is targeted for 1 June 2022, subject to the
satisfaction of conditions precedent including approval by Woodside
shareholders at the Woodside general meeting on 19 May 2022.
Mar YTD22 Mar Q22
Production (vs Mar YTD21) (vs Dec Q21) Mar Q22 vs Dec Q21 commentary
---------- -------------- ------------ -----------------------------
Copper (kt)..................... 1,111.7 369.7 Higher volumes at Olympic Dam following completion of the planned
(10%) 1% smelter maintenance campaign. This was partially offset by lower
volumes at Escondida mainly due to COVID-19 workforce impacts and
public road blockades as a result of social unrest.
Iron ore (Mt)................... 189.1 59.7 Lower volumes at WAIO reflecting temporary labour constraints due to
0% (10%) COVID-19, train driver shortages and planned maintenance activities.
This was partially offset by record production from the MAC hub with
the continued ramp up of South Flank.
Metallurgical coal (Mt)/(2)/.... 28.2 10.6 Increased volumes as a result of lower rainfall than the prior period
(2%) 20% coupled with strong operational performance driven by improved truck
productivity.
Energy coal (Mt)/(3)/........... 9.8 2.6 Lower volumes due to continued wet weather and COVID-19 related
(1%) (13%) absenteeism impacting stripping and mine productivity, as well as an
increased proportion of higher quality products.
Nickel (kt)..................... 58.0 18.7 Lower volumes reflecting temporary labour constraints due to
(13%) (13%) COVID-19 related absenteeism and workforce shortages.
Discontinued operations
Petroleum (MMboe)............... 77.3 24.1 Lower volumes due to reduced seasonal gas demand at Bass Strait and
2% (6%) lower well productivity at Atlantis.
Group copper equivalent production decreased by 3%/(4)/ over the nine months
ended 31 March 2022 mainly due to lower copper volumes.
--------------------------------------------------------------------------------
BHP Operational Review for the 1
nine months ended 31 March 2022
Summary
BHP Chief Executive Officer, Mike Henry:
"BHP delivered safe and reliable production in the third quarter. Our WA iron
ore business continues to perform strongly as we navigate the state's first
major COVID-19 wave, and we remain on track to achieve full year volume and
cost guidance. Amid record high prices, our Queensland metallurgical coal
business delivered strong underlying performance and benefited from better
weather in the quarter.
In copper, Spence production is increasing and the Olympic Dam smelter is
performing strongly as it returns to full production following planned
maintenance. These gains have been more than offset at Escondida by impacts
from COVID-19 and public road blockades in Antofagasta, which are reflected in
a revision to overall production guidance.
Our Jansen potash project is on track, with good progress on the shafts, in the
underground mining systems and at the port. The merger of our petroleum assets
with Woodside has progressed and is set for completion in June 2022, while the
divestment of our BMC business to Stanmore should complete in May 2022.
Market volatility and inflationary pressures have increased further as a result
of the Russian invasion of Ukraine. We continue our work to mitigate cost
pressures through a sharp focus on operational reliability and cost discipline.
While we expect conditions to improve during the course of the 2023 calendar
year, we anticipate the skills shortages and overall labour market tightness in
Australia and Chile to continue in the period ahead.
Our hearts go out to all those impacted by the tragic events in Ukraine. The
BHP Foundation has donated US$5 million to aid the response to the humanitarian
crisis."
Operational performance
Production and guidance are summarised below.
Note: All guidance is subject to further potential impacts from COVID-19 during
the 2022 financial year.
Mar YTD22 Mar Q22 Mar Q22 Previous Current
Mar Mar vs vs vs FY22 FY22
Production YTD22 Q22 Mar YTD21 Mar Q21 Dec Q21 guidance guidance
---------- ------- ----- --------- ------- ------- -------------- -------------
Copper (kt)............................ 1,111.7 369.7 (10%) (6%) 1% 1,590 - 1,760 1,570 - 1,620 Lowered
Escondida (kt)...................... 714.7 226.4 (13%) (9%) (7%) 1,020 - 1,080 1,000 - 1,030 Lowered
Pampa Norte (kt).................... 204.0 68.2 37% 31% 0% 260 - 300 260 - 300 Unchanged
Olympic Dam (kt).................... 82.7 39.0 (46%) (30%) >100% 140 - 150 140 - 150 Lower end
Antamina (kt)....................... 110.3 36.1 2% 4% (6%) 120 - 140 120 - 140 Upper end
Iron ore (Mt).......................... 189.1 59.7 0% 1% (10%) 249 - 259 249 - 259
WAIO (Mt)........................... 186.0 58.7 (1%) 0% (10%) 246 - 255 246 - 255 Unchanged
WAIO (100% basis) (Mt).............. 211.1 66.7 0% 0% (10%) 278 - 288 278 - 288 Unchanged
Samarco (Mt)........................ 3.1 1.0 >100% 13% (3%) 3 - 4 3 - 4 Upper end
Metallurgical coal (Mt)/(i)/........... 28.2 10.6 (2%) 10% 20% 38 - 41 38 - 41 Unchanged
BMA (Mt)............................ 21.0 7.9 (7%) 3% 26% - 29 - 31
BHP Mitsui Coal (100% basis) (Mt)... 7.3 2.6 18% 41% 4% - 9 - 10
Queensland Coal (100% basis) (Mt)... 49.2 18.5 (4%) 7% 22% 68 - 72 68 - 72 Unchanged
Energy coal - NSWEC (Mt)............... 9.8 2.6 (1%) (14%) (13%) 13 - 15 13 - 15 Unchanged
Nickel (kt)............................ 58.0 18.7 (13%) (8%) (13%) 85 - 95 80 - 85 Lowered
Discontinued operations
Petroleum (MMboe)/(ii)/................ 77.3 24.1 2% (5%) (6%) - -
(i) Completion of the divestment of BMC is expected on 3 May 2022. Full year BMA and BMC
production guidance has been itemised under Queensland Coal, however
economic and operating control of BMC will transfer to Stanmore Resources Limited
once the sale has completed.
(ii) Given our announcement of a binding share sale agreement for the proposed
merger of BHP's oil and gas portfolio with Woodside in November 2021 with
completion of the merger expected to occur on 1 June 2022, no further
annual production guidance for Petroleum will be provided. The effective
date of the merger is 1 July 2021.
--------------------------------------------------------------------------------
BHP Operational Review for the 2
nine months ended 31 March 2022
Major development projects
At the end of March 2022, BHP had two major projects under development, the
US$2.97 billion Jansen mine shafts project and the US$5.7 billion Jansen Stage
1 project. Our major projects under development are tracking to plan.
Corporate update
Portfolio
In February 2022, BHP advanced its early-stage copper interests by investing
C$100 million to acquire a five per cent equity interest in Filo Mining, a
Toronto Stock Exchange listed exploration and development company. Filo Mining
owns the Filo del Sol project located in the Atacama Region of Chile and
adjacent to the San Juan Province in Argentina, which is in the advanced
exploration stage. The proceeds from BHP's investment will be used for
exploration and project studies. Filo Mining and BHP have agreed to form a
joint advisory committee to share expertise, exploration concepts, and discuss
future project development options.
All conditions precedent under the Share Sale and Purchase Agreement for the
divestment of BHP's 80 per cent interest in BMC to Stanmore Resources Limited
have been satisfied, and completion is expected to occur on 3 May 2022. The
purchase price comprises US$1.1 billion cash on completion, US$100 million in
cash six months after completion and the potential for up to US$150 million in
a commodity price-linked earnout payable in the 2024 calendar year.
Completion of the merger of BHP's oil and gas portfolio with Woodside is
targeted for 1 June 2022, subject to satisfaction of conditions precedent
including approval by Woodside shareholders at the Woodside general meeting on
19 May 2022. All required regulatory and competition approvals have been
obtained, other than the National Offshore Petroleum Titles Administrator
approval which is expected prior to completion. BHP is expected to receive
914,768,948 newly issued Woodside shares at completion and determine a
fully franked in specie dividend of the Woodside shares to BHP shareholders.
BHP shareholders are expected to be entitled to one Woodside share for every
5.5340 BHP shares they hold on the BHP register at the record date of 26 May
2022. Additional information on the proposed in specie dividend and share
distribution can be found in our announcement on 8 April 2022.
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
continue its operations safely and meet its Renova Foundation obligations. BHP
Brasil will continue to support Samarco in this process. The Judicial
Reorganisation does not 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. BHP
Brasil and Vale each hold a 50 per cent interest in Samarco.
Separately, negotiations are also ongoing with State and Federal Prosecutors
and other Brazilian public authorities on the review of the Framework
Agreement/(5)/, seeking a definitive and substantive settlement of Brazilian
claims relating to the dam failure.
--------------------------------------------------------------------------------
BHP Operational Review for the 3
nine months ended 31 March 2022
Copper
Production
Mar YTD22 Mar Q22 Mar Q22
vs vs vs
Mar YTD22 Mar Q22 Mar YTD21 Mar Q21 Dec Q21
--------- ------- --------- ------- -------
Copper (kt)............ 1,111.7 369.7 (10%) (6%) 1%
Zinc (t)............... 95,624 32,732 (13%) (2%) 11%
Uranium (t)............ 1,599 781 (40%) (6%) >100%
Copper - Total copper production decreased by 10 per cent to 1,112 kt. Guidance
for the 2022 financial year has been lowered to between 1,570 and 1,620 kt,
from between 1,590 and 1,760 kt, which reflects lowered production guidance for
Escondida.
Our Chilean assets experienced a challenging operating environment in the March
2022 quarter due to a reduction in our operational workforce as a result of a
significant increase in COVID-19 cases in Chile, particularly the Omicron
variant, and the mitigation measures implemented. This is despite high COVID-19
vaccination rates and continued use of control measures at our operating sites.
Escondida copper production decreased by 13 per cent to 715 kt primarily due to
grade decline in the current mining area, the impact of a reduced operational
workforce from COVID-19 and public road blockades associated with social unrest
affecting access to site for both workers and supplies. Escondida achieved
record material mined for the nine months to March 2022 despite these
challenges. Production guidance for the 2022 financial year has been lowered to
between 1,000 and 1,030 kt, from between 1,020 and 1,080 kt, reflecting the
impact of increased COVID-19 cases and related supply constraints, as well as
the road blockades. Concentrator feed grade decline in the current mining area
remains forecast at approximately 2 per cent for the year. Medium term guidance
of an annual average of 1.2 Mt of copper production over the next five years
remains unchanged, with production expected to be weighted towards the latter
years.
Pampa Norte copper production increased by 37 per cent to 204 kt, reflecting
the continued ramp up of the Spence Growth Option (SGO), partially offset by
the impact of lower cathode production as a result of grade decline and the
public road blockades. Ore stacking grade for cathodes is now expected to
decline by approximately 15 per cent for the 2022 financial year due to a
change in mine sequencing. Production guidance for the 2022 financial year
remains unchanged at between 260 and 300 kt. We continue to progress the plant
design modifications required at SGO to achieve planned copper production
levels. The Spence guidance to average 300 ktpa (including cathodes) in the
first four years of production will be subject to the timing of these
modifications being completed.
Olympic Dam copper production decreased by 46 per cent to 83 kt as a result of
the execution of the major smelter maintenance campaign which was completed in
January 2022. The subsequent smelter ramp up to full capacity was achieved in
April 2022, and has delivered 17 per cent higher smelted tonnes compared to the
ramp up after the prior maintenance campaign in 2017. Production for the 2022
financial year is expected to be at the lower end of the guidance range of
between 140 and 150 kt primarily as a result of COVID-19 related impacts to the
completion of the smelter maintenance campaign.
Antamina copper production increased by two per cent to 110 kt, reflecting
higher copper head grades. Zinc production decreased by 13 per cent to 96 kt
reflecting lower zinc head grades. Production guidance remains unchanged, with
copper production expected to be at the upper end of the 120 to 140 kt guidance
range, and zinc production between 115 and 130 kt.
--------------------------------------------------------------------------------
BHP Operational Review for the 4
nine months ended 31 March 2022
Iron Ore
Production
Mar YTD22 Mar Q22 Mar Q22
vs vs vs
Mar YTD22 Mar Q22 Mar YTD21 Mar Q21 Dec Q21
--------- ------- --------- ------- -------
Iron ore production (kt)...... 189,101 59,700 0% 1% (10%)
Iron ore - Total iron ore production in line with the prior period at 189 Mt.
Production guidance for the 2022 financial year remains unchanged at between
249 and 259 Mt.
WAIO production of 186 Mt (211 Mt on a 100 per cent basis) was in line with the
prior period. The impacts of temporary labour constraints relating to COVID-19,
train driver shortages, planned track renewal works in the March 2022 quarter,
and the planned major maintenance on car dumper one and the Jimblebar train
load out in the first half were offset by continued strong supply chain
performance, including higher car dumper performance, and favourable weather
compared to the prior period. South Flank ramp up to full production capacity
of 80 Mtpa (100 per cent basis) over three years remains on track with an
average rate of 58 Mtpa achieved in the March 2022 quarter contributing to
record production from the MAC hub and record lump sales.
Production guidance for the 2022 financial year remains unchanged at between
246 and 255 Mt (278 and 288 Mt on a 100 per cent basis). Production in the June
2022 quarter is expected to be impacted by continued COVID-19 related
absenteeism as Western Australia approaches anticipated peak case numbers, and
planned car dumper maintenance.
Samarco production was 3.1 Mt (BHP share), following the recommencement of iron
ore pellet production at one concentrator in December 2020. Production guidance
for the 2022 financial year remains unchanged at between 3 and 4 Mt (BHP
share), with production expected to be at the upper end of the guidance range.
Coal
Production
Mar YTD22 Mar Q22 Mar Q22
vs vs vs
Mar YTD22 Mar Q22 Mar YTD21 Mar Q21 Dec Q21
--------- ------- --------- ------- -------
Metallurgical coal (kt)/(2)/... 28,230 10,562 (2%) 10% 20%
Energy coal (kt)/(3)/.......... 9,782 2,577 (1%) (14%) (13%)
Metallurgical coal - Metallurgical coal production decreased by two per cent to
28 Mt (49 Mt on a 100 per cent basis). Queensland Coal production guidance for
the 2022 financial year remains unchanged at between 38 and 41 Mt (68 and 72 Mt
on a 100 per cent basis), of which BMA is expected to contribute between 29 and
31 Mt, and BMC is expected to contribute between 9 and 10 Mt. The divestment of
BHP's 80 per cent interest in BMC to Stanmore Resources Limited is expected to
complete on 3 May 2022 upon which date the economic interest in and operating
control of BMC transfers to Stanmore Resources Limited.
At Queensland Coal, strong underlying operational performance, including
improvements in underlying truck productivity, have been offset by significant
wet weather impacts across most operations in the first half of the year and
labour constraints, including COVID-19 related absenteeism, impacting stripping
and mine productivity. Labour shortages and COVID-19 related absenteeism remain
a risk for the remainder of the year.
Energy coal - Energy coal production is broadly in line with the prior period
at 10 Mt. Production guidance for the 2022 financial year remains unchanged at
between 13 and 15 Mt.
At NSWEC, continued wet weather and COVID-19 related labour constraints
impacted stripping performance and mine productivity in the March 2022 quarter,
offsetting the strong first half operational performance. Higher quality
products now make up almost 90 per cent of sales compared to approximately 65
per cent of sales in the prior period, maximising the benefit from the widening
price spread.
--------------------------------------------------------------------------------
BHP Operational Review for the 5
nine months ended 31 March 2022
Other
Nickel production
Mar YTD22 Mar Q22 Mar Q22
vs vs vs
Mar YTD22 Mar Q22 Mar YTD21 Mar Q21 Dec Q21
--------- ------- --------- ------- -------
Nickel (kt)................ 58.0 18.7 (13%) (8%) (13%)
Nickel - Nickel West production decreased by 13 per cent to 58 kt due to the
impacts of COVID-19 related labour absenteeism and workforce shortages in the
March 2022 quarter, planned asset integrity work to support operational
stability completed in the December 2021 quarter, as well as planned
maintenance in the September 2021 quarter. Production guidance for the 2022
financial year has been lowered to between 80 and 85 kt from between 85 and 95
kt, largely reflecting the impact from COVID-19 related labour constraints.
Potash - Our potash major projects under development are 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 The project is 99% complete.
(Canada) and lining of the production and Target project completion in CY22.
100% service shafts, and to continue the
installation of essential surface
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 5% complete
100% surface infrastructure, with capacity
to produce 4.35 Mtpa.
----------------------------------------------------------------------------------------------------------------------------
Minerals exploration
Total minerals exploration expenditure for the nine months to March 2022 was
US$170 million, of which US$127 million was expensed.
Work continues on existing 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.
Specifically in copper, we are testing targets with drilling in Chile, Ecuador,
the United States and Australia.
In April 2022, BHP agreed to fund a new C$2 million nickel exploration program
in Nunavik, Quebec as part of its strategic alliance with Midland
Exploration/(6)/. The exploration program will run during the 2022 calendar
year and consist of regional magnetotelluric surveys, as well as two phases of
prospecting.
At Oak Dam in South Australia, BHP is continuing next stage resource definition
drilling with four drill rigs now active on site, an increase from two drill
rigs previously, after commencing the program in May 2021.
--------------------------------------------------------------------------------
BHP Operational Review for the 6
nine months ended 31 March 2022
Discontinued operations - Petroleum
Production
Mar YTD22 Mar Q22 Mar Q22
vs vs vs
Mar YTD22 Mar Q22 Mar YTD21 Mar Q21 Dec Q21
--------- ------- --------- ------- -------
Crude oil, condensate and natural gas liquids (MMboe)..... 36.6 11.5 8% (1%) (7%)
Natural gas (bcf)......................................... 244.4 75.9 (3%) (8%) (5%)
Total petroleum production (MMboe)........................ 77.3 24.1 2% (5%) (6%)
Completion of the proposed merger of BHP's oil and gas portfolio with Woodside
Petroleum Ltd is targeted for 1 June 2022, subject to the satisfaction of
conditions precedent including approval by Woodside shareholders at the
Woodside general meeting on 19 May 2022. The effective date of the merger is
1 July 2021. The half year financial results for 31 December 2021 were prepared
on the basis that BHP Petroleum is a discontinued operation.
Total petroleum production increased by two per cent to 77 MMboe. No further
production guidance for the 2022 financial year will be provided for Petroleum
given the business is presented as a discontinued operation.
Crude oil, condensate and natural gas liquids production increased by eight per
cent to 37 MMboe, reflecting the additional 28 percent working interest
acquired in Shenzi in November 2020, new production from Atlantis and Shenzi,
increased volumes from Ruby following first production in May 2021, and lower
impact from weather events in the Gulf of Mexico. The increase was partially
offset by natural field decline across the portfolio.
Natural gas production decreased by three per cent to 244 bcf, reflecting
natural field decline, decreased production at North West Shelf and unplanned
downtime at Angostura. The decline in production has been partially offset by
increased volumes from Ruby and higher seasonal demand for gas at Bass Strait.
Projects
Capital Initial
Project and expenditure production
ownership US$M target date Capacity Progress
----------- ----------- ----------- ------------------------------------- ----------------------------------
Mad Dog Phase 2 2,154 H2 CY22 New floating production facility with First production is expected in
(US Gulf of Mexico) the capacity to produce up to 140,000 the second half of the 2022
23.9% (non-operator) gross barrels of oil equivalent per calendar year. On budget. The
day. overall project is 98% complete.
Shenzi North development 392 CY24 A two-well subsea tie-in to the On schedule and budget. The
(US Gulf of Mexico) Shenzi platform, with the capacity to overall project is 8% complete.
72% (operator) produce up to 30,000 gross barrels of
oil equivalent per day.
Scarborough 1,500 CY26 New upstream facilities designed to On schedule and budget. The
(Western Australia) deliver daily gas quantities to overall project is 13% complete.
26.5% (non-operator) manufacture 8 Mtpa LNG and 180 TJ/day
of domestic gas.
----------------------------------------------------------------------------------------------------------------------------
The divestment of our interest in the ROD Integrated Development in Algeria was
completed in April 2022.
Petroleum exploration
Exploration and appraisal wells drilled during the March 2022 quarter are
summarised below.
Water Total well
Well Location Target Formation age BHP equity Spud date depth depth Status
----------- --------------- ------ -------------- ---------- ----------------- ----- ---------- ---------------------
Wasabi-2.... Gulf of Mexico Oil Early Miocene 75% (BHP 17 November 2021 764 m 10,114 m Plugged & Abandoned;
GC124 Operator) Encountered
sub-commercial
hydrocarbons
In the central Gulf of Mexico, the Wasabi-2 well encountered sub-commercial
hydrocarbons and was plugged and abandoned. This completes the Wasabi
exploration program, with results under evaluation to determine next steps.
On 2 March, 2022, BHP signed a farm-out agreement with a subsidiary of Shell
plc. to assign 40 per cent equity in each of the two Barbados offshore
Exploration Licences - the Bimshire and Carlisle Bay Blocks. The agreement is
subject to customary regulatory approvals and third-party consents. Completion
of the deal is expected by the end of the June 2022 quarter.
--------------------------------------------------------------------------------
BHP Operational Review for the 7
nine months ended 31 March 2022
Petroleum exploration expenditure for nine months ended March 2022 was
US$362 million, of which US$261 million was expensed. An approximately
US$540 million exploration and appraisal program is being executed for the 2022
financial year.
--------------------------------------------------------------------------------
BHP Operational Review for the 8
nine months ended 31 March 2022
Variance analysis relates to the relative performance of BHP and/or its
operations during the nine months ended March 2022 compared with the nine
months ended March 2021, 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 2021 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 however economic and operating
control of BMC is expected to transfer to Stanmore Resources Limited on
3 May 2022, and NSWEC US$76-81/t (revised from US$62-70/t); based on exchange
rates of AUD/USD 0.78 and USD/CLP 727.
(2) We announced the divestment of our interest in BMC in November 2021,
however will continue to report BMC production as part of Queensland Coal.
We maintain economic and operating control of BMC until the sale has
completed, which is expected to occur on 3 May 2022.
(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 Petroleum production.
(5) 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.
(6) 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, BHP Group plc and,
except where the context otherwise requires, their 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, Samarco, Atlantis, Mad Dog,
Bass Strait and North West Shelf. 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
nine months ended 31 March 2022
Further information on BHP can be found at: bhp.com
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Authorised for lodgement by:
Stefanie Wilkinson
Group Company Secretary
Media Relations Investor Relations
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BHP Operational Review for the 10
nine months ended 31 March 2022
Production summary
Quarter ended Year to date
------------------------------------ ---------------
Mar Jun Sep Dec Mar Mar Mar
BHP 2021 2021 2021 2021 2022 2022 2021
interest ------ ------- ------- ------ ------ ------- -------
Copper /(1)/
Copper
Payable metal in concentrate (kt)
Escondida /(2)/........................ 57.5% 202.7 195.6 194.7 196.2 178.2 569.1 676.1
Pampa Norte /(3)/...................... 100.0% 5.6 21.1 26.4 24.2 32.4 83.0 6.3
Antamina............................... 33.8% 34.7 36.1 35.8 38.4 36.1 110.3 107.9
------ ------- ------- ------ ------ ------- -------
Total.................................. 243.0 252.8 256.9 258.8 246.7 762.4 790.3
------ ------- ------- ------ ------ ------- -------
Cathode (kt)
Escondida /(2)/........................ 57.5% 46.6 51.1 49.0 48.4 48.2 145.6 145.4
Pampa Norte /(3)/...................... 100% 46.4 48.3 41.1 44.1 35.8 121.0 142.5
Olympic Dam............................ 100% 55.4 50.8 29.5 14.2 39.0 82.7 154.5
------ ------- ------- ------ ------ ------- -------
Total.................................. 148.4 150.2 119.6 106.7 123.0 349.3 442.4
------ ------- ------- ------ ------ ------- -------
------ ------- ------- ------ ------ ------- -------
Total copper (kt)......................... 391.4 403.0 376.5 365.5 369.7 1,111.7 1,232.7
------ ------- ------- ------ ------ ------- -------
Lead
Payable metal in concentrate (t)
Antamina............................... 33.8% 468 381 378 277 282 937 2,151
------ ------- ------- ------ ------ ------- -------
Total.................................. 468 381 378 277 282 937 2,151
------ ------- ------- ------ ------ ------- -------
Zinc
Payable metal in concentrate (t)
Antamina............................... 33.8% 33,299 35,483 33,289 29,603 32,732 95,624 109,606
------ ------- ------- ------ ------ ------- -------
Total.................................. 33,299 35,483 33,289 29,603 32,732 95,624 109,606
------ ------- ------- ------ ------ ------- -------
Gold
Payable metal in concentrate (troy oz)
Escondida /(2)/........................ 57.5% 37,954 38,893 41,962 42,937 36,303 121,202 128,075
Pampa Norte /(3)/...................... 100% -- 4,728 6,967 5,776 7,929 20,672 --
Olympic Dam (refined gold)............. 100% 37,075 48,478 26,277 37,805 29,355 93,437 97,520
------ ------- ------- ------ ------ ------- -------
Total.................................. 75,029 92,099 75,206 86,518 73,587 235,311 225,595
------ ------- ------- ------ ------ ------- -------
Silver
Payable metal in concentrate (troy koz)
Escondida /(2)/........................ 57.5% 1,318 1,234 1,291 1,462 1,270 4,023 4,525
Pampa Norte /(3)/...................... 100% -- 214 273 215 261 749 --
Antamina............................... 33.8% 1,463 1,409 1,367 1,308 1,191 3,866 4,556
Olympic Dam (refined silver)........... 100% 275 185 191 258 149 598 625
------ ------- ------- ------ ------ ------- -------
Total.................................. 3,056 3,042 3,122 3,243 2,871 9,236 9,706
------ ------- ------- ------ ------ ------- -------
Uranium
Payable metal in concentrate (t)
Olympic Dam............................ 100% 834 614 531 287 781 1,599 2,653
------ ------- ------- ------ ------ ------- -------
Total.................................. 834 614 531 287 781 1,599 2,653
------ ------- ------- ------ ------ ------- -------
Molybdenum
Payable metal in concentrate (t)
Pampa Norte /(3)/...................... 100% -- -- -- -- -- -- --
Antamina............................... 33.8% 276 111 142 217 190 549 752
------ ------- ------- ------ ------ ------- -------
Total.................................. 276 111 142 217 190 549 752
------ ------- ------- ------ ------ ------- -------
--------------------------------------------------------------------------------
BHP Operational Review for the 11
nine months ended 31 March 2022
Production summary
Quarter ended Year to date
------------------------------------ ---------------
Mar Jun Sep Dec Mar Mar Mar
BHP 2021 2021 2021 2021 2022 2022 2021
interest ------ ------- ------- ------ ------ ------- -------
Iron Ore
Iron Ore
Production (kt) /(4)/
Newman................................. 85% 14,614 14,560 16,461 14,577 11,847 42,885 48,661
Area C Joint Venture................... 85% 13,010 15,920 18,947 22,911 24,888 66,746 36,466
Yandi Joint Venture.................... 85% 16,112 18,405 11,834 12,261 8,418 32,513 50,191
Jimblebar /(5)/........................ 85% 15,241 15,337 15,009 15,324 13,553 43,886 52,056
Samarco................................ 50% 878 1,023 1,048 1,029 994 3,071 915
------ ------- ------- ------ ------ ------- -------
Total.................................. 59,855 65,245 63,299 66,102 59,700 189,101 188,289
------ ------- ------- ------ ------ ------- -------
Coal
Metallurgical coal
Production (kt) /(6)/
BMA.................................... 50% 7,727 9,253 6,715 6,300 7,944 20,959 22,631
BHP Mitsui Coal /(7) (8)/.............. 80% 1,863 2,570 2,135 2,518 2,618 7,271 6,171
------ ------- ------- ------ ------ ------- -------
Total.................................. 9,590 11,823 8,850 8,818 10,562 28,230 28,802
------ ------- ------- ------ ------ ------- -------
Energy coal
Production (kt)
NSW Energy Coal........................ 100% 2,981 4,492 4,238 2,967 2,577 9,782 9,834
------ ------- ------- ------ ------ ------- -------
Total.................................. 2,981 4,492 4,238 2,967 2,577 9,782 9,834
------ ------- ------- ------ ------ ------- -------
Production (kt)
Cerrejon /(9)/......................... 33.3% 1,795 1,784 2,060 2,176 -- 4,236 3,180
------ ------- ------- ------ ------ ------- -------
Total.................................. 1,795 1,784 2,060 2,176 -- 4,236 3,180
------ ------- ------- ------ ------ ------- -------
Other
Nickel
Saleable production (kt)
Nickel West............................ 100% 20.4 22.4 17.8 21.5 18.7 58.0 66.6
------ ------- ------- ------ ------ ------- -------
Total.................................. 20.4 22.4 17.8 21.5 18.7 58.0 66.6
------ ------- ------- ------ ------ ------- -------
Cobalt
Saleable production (t)
Nickel West............................ 100% 273 241 177 220 125 522 747
------ ------- ------- ------ ------ ------- -------
Total.................................. 273 241 177 220 125 522 747
------ ------- ------- ------ ------ ------- -------
Discontinued operations
Petroleum /(10) (11)/
Production
Crude oil, condensate and NGL (Mboe)... 11,601 12,205 12,751 12,345 11,456 36,552 33,837
Natural gas (bcf)...................... 82.6 88.6 88.4 80.1 75.9 244.4 252.0
------ ------- ------- ------ ------ ------- -------
Total (Mboe)........................... 25,368 26,972 27,484 25,695 24,106 77,285 75,837
------ ------- ------- ------ ------ ------- -------
(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 include some thermal coal.
(7) Shown on a 100% basis. BHP interest in saleable production is 80%.
(8) BHP announced the divestment of its interest in BHP Mitsui Coal (BMC) in
November 2021, but will continue to report BMC as part of Queensland Coal
as BHP maintain economic and operating control of BMC until the sale has
completed, which is expected to occur on 3 May 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) BHP announced a binding share sale agreement for the proposed merger of
BHP's oil and gas portfolio with Woodside in November 2021 with completion
expected on 1 June 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
nine months ended 31 March 2022
Production and sales report
Quarter ended Year to date
------------------------------------------- ----------------
Mar Jun Sep Dec Mar Mar Mar
2021 2021 2021 2021 2022 2022 2021
------- ------- ------- ------- ------- ------- -------
Copper
Metals production is payable metal unless otherwise stated.
Escondida, Chile /(1)/
Material mined................................. (kt) 95,978 104,043 113,874 117,284 107,676 338,834 276,609
Concentrator throughput........................ (kt) 32,654 31,903 33,528 35,787 30,235 99,550 103,690
Average copper grade - concentrator............ (%) 0.78% 0.77% 0.73% 0.71% 0.80% 0.74% 0.82%
Production ex mill............................. (kt) 207.8 202.8 201.2 203.6 191.5 596.3 697.8
Production
Payable copper................................. (kt) 202.7 195.6 194.7 196.2 178.2 569.1 676.1
Copper cathode (EW)............................ (kt) 46.6 51.1 49.0 48.4 48.2 145.6 145.4
- Oxide leach................................. (kt) 16.1 14.5 14.8 13.1 12.2 40.1 49.4
- Sulphide leach.............................. (kt) 30.5 36.6 34.2 35.3 36.0 105.5 96.0
------- ------- ------- ------- ------- ------- -------
Total copper................................... (kt) 249.3 246.7 243.7 244.6 226.4 714.7 821.5
------- ------- ------- ------- ------- ------- -------
Payable gold concentrate....................... (troy oz) 37,954 38,893 41,962 42,937 36,303 121,202 128,075
Payable silver concentrate..................... (troy koz) 1,318 1,234 1,291 1,462 1,270 4,023 4,525
Sales
Payable copper................................. (kt) 196.9 194.1 190.5 200.2 177.0 567.7 678.3
Copper cathode (EW)............................ (kt) 49.6 49.6 46.7 49.7 47.2 143.6 143.8
Payable gold concentrate....................... (troy oz) 37,954 38,893 41,962 42,937 36,303 121,202 128,075
Payable silver concentrate..................... (troy koz) 1,318 1,234 1,291 1,462 1,270 4,023 4,525
(1) Shown on a 100% basis. BHP interest in saleable production is 57.5%.
Pampa Norte, Chile
Cerro Colorado
Material mined................................. (kt) 6,153 5,498 5,378 4,782 3,516 13,676 25,521
Ore stacked.................................... (kt) 3,283 3,702 3,566 4,029 3,181 10,776 10,881
Average copper grade - stacked................. (%) 0.58% 0.58% 0.60% 0.62% 0.53% 0.59% 0.61%
Production
Copper cathode (EW)............................ (kt) 13.9 14.7 13.4 15.3 11.6 40.3 45.5
Sales
Copper cathode (EW)............................ (kt) 13.2 15.4 12.1 16.0 10.5 38.6 44.4
Spence
Material mined................................. (kt) 19,195 21,262 21,154 24,025 24,040 69,219 55,940
Ore stacked.................................... (kt) 5,536 4,609 5,258 5,071 5,055 15,384 15,546
Average copper grade - stacked................. (%) 0.64% 0.72% 0.64% 0.66% 0.67% 0.66% 0.84%
Concentrator throughput........................ (kt) 2,471 4,929 5,786 6,234 6,512 18,532 3,678
Average copper grade - concentrator............ (%) -- 0.63% 0.65% 0.60% 0.65% 0.63% --
Production
Payable copper................................. (kt) 5.6 21.1 26.4 24.2 32.4 83.0 6.3
Copper cathode (EW)............................ (kt) 32.5 33.6 27.7 28.8 24.2 80.7 97.0
------- ------- ------- ------- ------- ------- -------
Total copper................................... (kt) 38.1 54.7 54.1 53.0 56.6 163.7 103.3
------- ------- ------- ------- ------- ------- -------
Payable gold concentrate....................... (troy oz) -- 4,728 6,967 5,776 7,929 20,672 --
Payable silver concentrate..................... (troy koz) -- 214 273 215 261 749 --
Payable molybdenum............................. (t) -- -- -- -- -- -- --
--------------------------------------------------------------------------------
BHP Operational Review for the 13
nine months ended 31 March 2022
Production and sales report
Quarter ended Year to date
------------------------------------------- ----------------
Mar Jun Sep Dec Mar Mar Mar
2021 2021 2021 2021 2022 2022 2021
------- ------- ------- ------- ------- ------- -------
Sales
Payable copper................................. (kt) 1.8 20.8 28.4 24.9 28.1 81.4 1.8
Copper cathode (EW)............................ (kt) 30.7 34.1 27.7 31.2 20.2 79.1 95.7
Payable gold concentrate....................... (troy oz) -- 4,728.0 6,967.0 5,776.0 7,929 20,672 --
Payable silver concentrate..................... (troy koz) -- 214.0 273.0 215.0 261 749 --
Payable molybdenum............................. (t) -- -- -- -- -- -- --
Antamina, Peru
Material mined (100%).......................... (kt) 53,762 63,393 66,581 58,179 58,118 182,878 156,249
Concentrator throughput (100%)................. (kt) 12,651 13,466 13,219 13,011 13,135 39,365 39,936
Average head grades
- Copper...................................... (%) 0.94% 0.93% 0.97% 1.00% 0.94% 0.97% 0.95%
- Zinc........................................ (%) 1.16% 1.24% 1.16% 1.11% 1.13% 1.13% 1.26%
Production
Payable copper................................. (kt) 34.7 36.1 35.8 38.4 36.1 110.3 107.9
Payable zinc................................... (t) 33,299 35,483 33,289 29,603 32,732 95,624 109,606
Payable silver................................. (troy koz) 1,463 1,409 1,367 1,308 1,191 3,866 4,556
Payable lead................................... (t) 468 381 378 277 282 937 2,151
Payable molybdenum............................. (t) 276 111 142 217 190 549 752
Sales
Payable copper................................. (kt) 31.7 37.3 32.7 41.9 32.9 107.5 106.2
Payable zinc................................... (t) 34,141 32,044 32,635 32,513 29,920 95,068 112,019
Payable silver................................. (troy koz) 1,342 1,540 1,103 1,405 1,078 3,586 4,380
Payable lead................................... (t) 689 556 232 344 269 845 2,382
Payable molybdenum............................. (t) 192 268 86 170 199 455 936
Olympic Dam, Australia
Material mined /(1)/........................... (kt) 1,979 2,143 1,935 1,998 2,424 6,357 6,561
Ore Milled..................................... (kt) 2,238 2,429 2,024 1,105 2,122 5,251 7,058
Average copper grade........................... (%) 2.02% 1.95% 2.03% 2.17% 2.21% 2.13% 2.02%
Average uranium grade.......................... (kg/t) 0.61 0.56 0.55 0.55 0.62 0.58 0.58
Production
Copper cathode (ER and EW)..................... (kt) 55.4 50.8 29.5 14.2 39.0 82.7 154.5
Payable uranium................................ (t) 834 614 531 287 781 1,599 2,653
Refined gold................................... (troy oz) 37,075 48,478 26,277 37,805 29,355 93,437 97,520
Refined silver................................. (troy koz) 275 185 191 258 149 598 625
Sales
Copper cathode (ER and EW)..................... (kt) 55.6 52.7 29.1 17.9 36.3 83.3 151.7
Payable uranium................................ (t) 779 1,179 536 541 236 1,313 2,637
Refined gold................................... (troy oz) 38,852 47,300 24,654 38,768 30,935 94,357 96,296
Refined silver................................. (troy koz) 242 245 126 290 182 598 629
(1) Material mined refers to underground ore mined, subsequently hoisted or
trucked to surface.
--------------------------------------------------------------------------------
BHP Operational Review for the 14
nine months ended 31 March 2022
Production and sales report
Quarter ended Year to date
------------------------------------------- ----------------
Mar Jun Sep Dec Mar Mar Mar
2021 2021 2021 2021 2022 2022 2021
------- ------- ------- ------- ------- ------- -------
Iron Ore
Iron ore production and sales are reported on a wet tonnes basis.
Western Australia Iron Ore, Australia
Production
Newman......................................... (kt) 14,614 14,560 16,461 14,577 11,847 42,885 48,661
Area C Joint Venture........................... (kt) 13,010 15,920 18,947 22,911 24,888 66,746 36,466
Yandi Joint Venture............................ (kt) 16,112 18,405 11,834 12,261 8,418 32,513 50,191
Jimblebar /(1)/................................ (kt) 15,241 15,337 15,009 15,324 13,553 43,886 52,056
------- ------- ------- ------- ------- ------- -------
Total production............................... (kt) 58,977 64,222 62,251 65,073 58,706 186,030 187,374
------- ------- ------- ------- ------- ------- -------
Total production (100%)........................ (kt) 66,695 72,848 70,587 73,852 66,674 211,113 211,254
------- ------- ------- ------- ------- ------- -------
Sales
Lump........................................... (kt) 15,593 16,410 17,546 17,827 16,966 52,339 49,352
Fines.......................................... (kt) 42,939 48,837 45,039 46,809 42,187 134,035 137,453
------- ------- ------- ------- ------- ------- -------
Total.......................................... (kt) 58,532 65,247 62,585 64,636 59,153 186,374 186,805
------- ------- ------- ------- ------- ------- -------
Total sales (100%)............................. (kt) 66,032 73,712 70,815 73,222 67,110 211,147 210,159
------- ------- ------- ------- ------- ------- -------
(1) Shown on a 100% basis. BHP interest in saleable production is 85%.
Samarco, Brazil
Production..................................... (kt) 878 1,023 1,048 1,029 994 3,071 915
Sales.......................................... (kt) 646 1,052 1,111 950 943 3,004 646
--------------------------------------------------------------------------------
BHP Operational Review for the 15
nine months ended 31 March 2022
Production and sales report
...
