UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE FISCAL YEAR ENDED .
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Date of event requiring this shell company report
For the transition period from to
Commission file number: |
Commission file number: | |
(ABN 49 004 028 077) |
(REG. NO. 3196209) | |
(Exact name of Registrant as specified in its charter) |
(Exact name of Registrant as specified in its charter) | |
VICTORIA, |
ENGLAND AND WALES | |
(Jurisdiction of incorporation or organisation) |
(Jurisdiction of incorporation or organisation) | |
VICTORIA (Address of principal executive offices) |
||
(Address of principal executive offices) | ||
BHP GROUP LIMITED TELEPHONE AUSTRALIA 1300 55 47 57 TELEPHONE INTERNATIONAL + FACSIMILE + (Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person) |
BHP GROUP PLC TELEPHONE + FACSIMILE + (Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person) | |
Securities registered or to be registered pursuant to section 12(b) of the Act.
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | |||||
value US$0.50 each |
||||||||||
| * | Evidenced by American Depositary Receipts. Each American Depositary Receipt represents two ordinary shares of BHP Group Limited or BHP Group Plc, as the case may be. |
| ** | Not for trading, but only in connection with the listing of the applicable American Depositary Shares. |
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
BHP Group Limited |
BHP Group Plc | |||
Fully Paid Ordinary Shares |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ |
Accelerated filer |
¨ | ||||
Non-accelerated filer |
¨ |
Emerging growth company |
||||
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ¨ |
International Accounting Standards Board ☒ |
Other ¨ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Company details and terms of reference
BHP Group Limited is registered in Australia. Registered office: 171 Collins Street, Melbourne, Victoria 3000, Australia. BHP Group Plc. Registration number 3196209. Registered in England and Wales. Registered office: Nova South, 160 Victoria Street London SW1E 5LB United Kingdom. Each of BHP Group Limited and BHP Group Plc is a member of the Group. BHP is a Dual Listed Company structure comprising BHP Group Limited and BHP Group Plc. The two entities continue to exist as separate companies but operate as a combined group known as BHP.
The headquarters of BHP Group Limited and the global headquarters of the combined Group are located in Melbourne, Australia. The headquarters of BHP Group Plc are located in London, United Kingdom. Both companies have identical Boards of Directors and are run by a unified management team. Throughout this publication, the Boards are referred to collectively as the Board. Shareholders in each company have equivalent economic and voting rights in the Group as a whole.
In this Annual Report, the terms ‘BHP’, the ‘Company’, the ‘Group’, ‘our business’, ‘organisation’, ‘we’, ‘us’, ‘our’ and ‘ourselves’ refer to BHP Group Limited, BHP Group Plc and, except where the context otherwise requires, their respective subsidiaries included in note 30 ‘Subsidiaries’ in section 3.1.6 and in Exhibit 8.1 – List of Subsidiaries. Those terms do not include
non-operated
assets. This Annual Report covers BHP’s assets (including those under exploration, projects in development or execution phases, sites and closed operations) that have been wholly owned and/or operated by BHP and that have been owned as a joint venture
(1)
operated by BHP (referred to in this Annual Report as ‘operated assets’ or ‘operations’) during the period from 1 July 2020 to 30 June 2021. Our functions are also included. BHP also holds interests in assets that are owned as a joint venture but not operated by BHP (referred to in this Annual Report as
‘non-operated
joint ventures’ or ‘non-operated
assets’). Notwithstanding that this Annual Report 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. On 17 August 2021, we announced our proposal to adopt a single company structure under BHP Group Ltd, with a primary listing on the Australian Securities Exchange (ASX). The company would also hold a standard listing on the London Stock Exchange (LSE), a secondary listing on the Johannesburg Stock Exchange (JSE) and an ADR program listed on the New York Stock Exchange (NYSE). If implemented, eligible BHP Group Plc shareholders would receive one share in BHP Group Ltd for each BHP Group Plc share they hold. The holdings of BHP Group Ltd shareholders would not change. BHP’s dividend policy and ability to distribute fully franked dividends also would not change. Subject to final Board approval, BHP shareholders are expected to vote on unification at shareholder meetings planned for the first half of CY2022.
All references to websites in this Annual Report are intended to be inactive textual references for information only and any information contained in or accessible through any such website does not form a part of this Annual Report.
Forward-looking statements
This Annual Report contains forward-looking statements, including: statements regarding trends in commodity prices and currency exchange rates; demand for commodities; reserves and production forecasts; plans, strategies and objectives of management; climate scenarios; approval of certain projects and consummation of certain transactions; closure or divestment of certain assets, operations or facilities (including associated costs); anticipated production or construction commencement dates; capital costs and scheduling; operating costs and supply of materials and skilled employees; anticipated productive lives of projects, mines and facilities; provisions and contingent liabilities; and tax and regulatory developments.
Forward-looking statements may be identified by the use of terminology including, but not limited to, ‘intend’, ‘aim’, ‘project’, ‘see’, ‘anticipate’, ‘estimate’, ‘plan’, ‘objective’, ‘believe’, ‘expect’, ‘commit’, ‘may’, ‘should’, ‘need’, ‘must’, ‘will’, ‘would’, ‘continue’, ‘forecast’, ‘guidance’, ‘trend’ or similar words. These statements discuss future expectations concerning the results of assets or financial conditions, or provide other forward-looking information.
(1) |
References in this Annual Report to a ‘joint venture’ are used for convenience to collectively describe assets that are not wholly owned by BHP. Such references are not intended to characterise the legal relationship between the owners of the asset. |
i
Examples of forward-looking statements contained in this Annual Report include, without limitation, statements describing (i) our strategy, our values and how we define our success; (ii) the emerging uses of and our expectations regarding future demand for certain commodities, in particular copper, nickel, iron ore, metallurgical coal, steel, oil and gas and potash, and our intentions, commitments or expectations with respect to our supply of certain commodities; (iii) our expectations of a competitive advantage in certain commodities, in particular in copper, nickel and potash; (iv) the perceived synergies and other benefits of the proposed transaction between BHP and Woodside; (v) our future exploration and partnerships plans and the structure of our portfolio; (vi) our outlook for long-term economic growth and other macroeconomic and industry trends; (vii) our projected and expected production levels and development projects across our portfolio of assets; (viii) our reserves; (ix) our plans for our major projects and related budget allocations; (x) our expectations and objectives with respect to decarbonisation, climate change resilience and timelines to achieve such objectives, including our Climate Transition Action Plan, Climate Change Adaptation Strategy and goals, targets and strategies to seek to reduce or support the reduction of greenhouse gas emissions, and related perceived opportunities for BHP; (xi) the assumptions, beliefs and conclusions in our climate change-related statements and strategies, including in our Climate Change Report 2020, for example, in respect of future temperatures, energy consumption and greenhouse gas emissions, and climate-related impacts; (xii) our commitment to generating social value; (xiii) our commitments under sustainability frameworks, standards and initiatives; (xiv) our intention to improve tailings storage management; (xv) our intention to achieve certain inclusion and diversity targets; and (xvi) our intention to achieve certain targets and outcomes with respect to Indigenous peoples.
Forward-looking statements are based on management’s current expectations and reflect judgments, assumptions, estimates and other information available as at the date of this Annual Report and/or the date of BHP’s planning or scenario analysis processes. These statements do not represent guarantees or predictions of future financial or operational 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 Annual Report. BHP cautions against reliance on any forward-looking statements or guidance, including in light of the current economic climate and the significant volatility, uncertainty and disruption arising in connection with
COVID-19.
For example, our future revenues from our assets, projects or mines described in this Annual Report will be based, in part, on the market price of the minerals, metals or petroleum produced, which may vary significantly from current levels. These variations, if materially adverse, may affect the timing or the feasibility of the development of a particular project, the expansion of certain facilities or mines, or the continuation of existing assets.
Other factors that may affect the actual construction or production commencement dates, revenues, costs or production output and anticipated lives of assets, mines or facilities include: (i) our ability to profitably produce and transport the minerals, petroleum and/or metals extracted to applicable markets; (ii) the impact of foreign currency exchange rates on the market prices of the minerals, petroleum or metals we produce; (iii) activities of government authorities in the countries where we sell our products and in the countries where we are exploring or developing projects, facilities or mines, including increases in taxes; (iv) changes in environmental and other regulations; (v) the duration and severity of the
COVID-19
pandemic and its impact on our business; (vi) political or geopolitical uncertainty; (viii) labour unrest; and (viii) other factors identified in the risk factors set out in section 1.16. Except as required by applicable regulations or by law, BHP does not undertake to publicly update or review any forward-looking statements, whether as a result of new information or future events.
Past performance cannot be relied on as a guide to future performance.
Emissions and energy consumption data
Due to the inherent uncertainty and limitations in measuring greenhouse gas (GHG) emissions and operational energy consumption under the calculation methodologies used in the preparation of such data, all GHG emissions and operational energy consumption data or references to GHG emissions and operational energy consumption volumes (including ratios or percentages) in this Annual Report are estimates. There may also be differences in the manner that third parties calculate or report GHG emissions or operational energy consumption data compared to BHP, which means that third party data may not be comparable to our data. For information on how we calculate our GHG emissions and operational energy consumption data, see section 4.8.
The Strategic Report is made in accordance with a resolution of the Board.
Ken MacKenzie
Chair
Dated: 2 September 2021
ii
Form 20-F Cross Reference Table
Item Number |
Description |
Report section reference | ||||
1. |
Identity of Directors, Senior Management and Advisors |
Not applicable | ||||
2. |
Offer Statistics and Expected Timetable |
Not applicable | ||||
3. |
Key Information |
|||||
B |
Capitalization and indebtedness |
Not applicable | ||||
C |
Reasons for the offer and use of proceeds |
Not applicable | ||||
D |
Risk factors |
1.16 | ||||
4. |
Information on the Company |
|||||
A |
History and development of the company |
1.2 to 1.6, 1.8 to 1.17, 3.7, 4.3, 4.5 to 4.9, 4.10.1 to 4.10.5 and Corporate directory | ||||
B |
Business overview |
1.4 to 1.6, 1.8 to 1.11, 1.17, 3.7, 4.3, 4.5 to 4.9, 4.10.3, 4.10.4, 4.10.9 and Note 1 to the Financial Statements | ||||
C |
Organizational structure |
4.10.3 and Note 30 to the Financial Statements | ||||
D |
Property, plants and equipment |
1.10.1 to 1.10.4, 1.11, 1.13, 1.15, 1.16, 1.17, 3.7, 4.3, 4.5 to 4.7 and Notes 11, 15 and 21 to the Financial Statements | ||||
4A. |
Unresolved Staff Comments |
None | ||||
5. |
Operating and Financial Review and Prospects |
|||||
A |
Operating results |
1.8, 1.17 and 4.10.9 | ||||
B |
Liquidity and capital resources |
1.8, 3.1.4, Notes 11, 20 to 23, 34 and 39 to the Financial Statements | ||||
C |
Research and development, patents and licenses, etc. |
1.10 to 1.17, 2.3.14, 3.7, 4.3, 4.6, 4.7 and Notes 11 and 15 to the Financial Statements | ||||
D |
Trend information |
1.2 to 1.6, 1.13, 1.16 and 1.17 | ||||
E |
Critical Accounting Estimates |
IFRS is applied in the Financial Statements as issued by the IASB | ||||
6. |
Directors, Senior Management and Employees |
|||||
A |
Directors and senior management |
2.1.1, 2.1.2 and 2.1.5 | ||||
B |
Compensation |
2.2 | ||||
C |
Board practices |
2.1.2, 2.1.9, 2.1.10, 2.1.12 and 2.2 | ||||
D |
Employees |
1.12, 4.8 and Note 28 to the Financial Statements | ||||
E |
Share ownership |
2.2, 2.3.2, 2.3.5, 2.3.18 and Notes 16, 17 and 25 to the Financial Statements | ||||
7. |
Major Shareholders and Related Party Transactions |
|||||
A |
Major shareholders |
4.10.6 | ||||
B |
Related party transactions |
2.2 and Notes 24 and 33 to the Financial Statements | ||||
C |
Interests of experts and counsel |
Not applicable | ||||
8. |
Financial Information |
|||||
A |
Consolidated Statements and Other Financial Information |
1.15, 4.9, 4.10.7, 3.1, 3.2A and the Financial Statements beginning on page F-1 in this Annual Report | ||||
B |
Significant Changes |
Note 35 to the Financial Statements | ||||
9. |
The Offer and Listing |
|||||
A |
Offer and listing details |
4.10.2 | ||||
B |
Plan of distribution |
Not applicable | ||||
C |
Markets |
4.10.2 | ||||
D |
Selling shareholders |
Not applicable | ||||
E |
Dilution |
Not applicable | ||||
F |
Expenses of the issue |
Not applicable | ||||
10. |
Additional Information |
|||||
A |
Share capital |
Not applicable | ||||
B |
Memorandum and articles of association |
4.10.3 and 4.10.5 | ||||
C |
Material contracts |
4.10.4 | ||||
D |
Exchange controls |
4.10.9 | ||||
E |
Taxation |
4.10.10 | ||||
F |
Dividends and paying agents |
Not applicable | ||||
G |
Statement by experts |
Not applicable | ||||
H |
Documents on display |
4.10.5 | ||||
I |
Subsidiary information |
Note 30 to the Financial Statements and Exhibit 8.1 | ||||
11. |
Quantitative and Qualitative Disclosures About Market Risk |
Note 23 to the Financial Statements | ||||
12. |
Description of Securities Other than Equity Securities |
|||||
A |
Debt Securities |
Not applicable | ||||
B |
Warrants and Rights |
Not applicable | ||||
C |
Other Securities |
Not applicable | ||||
D |
American Depositary Shares |
4.10.8 and Exhibit 2.1 | ||||
13. |
Defaults, Dividend Arrearages and Delinquencies |
There have been no defaults, dividend arrearages or delinquencies | ||||
14. |
Material Modifications to the Rights of Security Holders and Use of Proceeds |
There have been no material modifications to the rights of security holders and use of proceeds since our last Annual Report | ||||
15. |
Controls and Procedures |
2.1.10 and 3.2A | ||||
16A. |
Audit committee financial expert |
2.1.10 | ||||
16B. |
Code of Ethics |
2.1.15 | ||||
16C. |
Principal Accountant Fees and Services |
2.1.10 and Note 36 to the Financial Statements | ||||
16D. |
Exemptions from the Listing Standards for Audit Committees |
Not applicable | ||||
16E. |
Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
2.3.2 | ||||
16F. |
Change in Registrant’s Certifying Accountant |
Not applicable | ||||
16G. |
Corporate Governance |
2 | ||||
16H. |
Mine Safety Disclosure |
Not applicable | ||||
16I. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
Not applicable | ||||
17. |
Financial Statements |
Not applicable as Item 18 complied with | ||||
18. |
Financial Statements |
The Financial Statements begin on page F-1 in this Annual Report | ||||
19. |
Exhibits |
5 | ||||
iii
We are BHP,
a leading global resources company
Our Purpose |
Our Values |
|||
Our purpose is to bring people and resources together to build a better world. |
Sustainability Putting health and safety first, being environmentally responsible and supporting our communities. | |||
Integrity Doing what is right and doing what we say we will do. | ||||
Respect Embracing openness, trust, teamwork, diversity and relationships that are mutually beneficial. | ||||
Performance Achieving superior business results by stretching our capabilities. | ||||
Simplicity Focusing our efforts on the things that matter most. | ||||
Accountability Defining and accepting responsibility and delivering on our commitments. | ||||
We are successful when: | ||||
• Our people start each day with a sense of purpose and end the day with a sense of accomplishment. | ||||
• Our teams are inclusive and diverse. | ||||
• Our communities, customers and suppliers value their relationships with us and are better off for our presence. | ||||
• Our asset portfolio is world class and sustainably developed. | ||||
• Our operational discipline and financial strength enables our future growth. | ||||
• Our shareholders receive a superior return on their investment. | ||||
• Our commodities support continued economic growth and decarbonisation. | ||||
iv
Contents
v
vi
vii
Section 1
Strategic Report
1.1 Our highlights
Not required for US reporting.
1.2 Chair’s review
I am pleased to provide our Annual Report for FY2021.
In a year that has seen
COVID-19
continue to challenge the lives and livelihoods of so many, I am proud of the resilience and commitment our people have demonstrated to deliver an outstanding set of results in FY2021. The strong operational performance driven by our teams across the world, combined with a diversified portfolio and disciplined approach to capital allocation, has seen the Board determine a dividend of US$3.01 per share for FY2021. This means we have returned US$15 billion to shareholders this year, and more than US$38 billion over the past three years. In a year of significant financial disruption across the globe, these results demonstrate the health of your company.
BHP is in a strong position and it is against this backdrop that we are making transformative changes.
We have announced our intention to unify BHP’s corporate structure to a single listing on the Australian Securities Exchange. Creating one BHP today positions the company to deliver on our strategy in the future. We will be more agile, efficient and flexible, while still enabling BHP shareholders around the world to support the company as they have done for decades.
We have also announced a number of strategic steps towards the future of your company, as we continue to grow our portfolio in future facing commodities. We have announced a US$5.7 billion investment in Jansen Stage 1, a top tier potash asset in Canada. BHP has also announced our intention to merge our Petroleum assets with Woodside. The resulting global top 10 independent oil and gas company will have the resilience and optionality to succeed in the energy transition.
The essential resources we produce at BHP are not only fundamental to the way we live now, they are fundamental to the way we will live in the future.
Based on the climate change scenario analysis we undertook last year, we believe that the more action the world takes to limit climate change, the better it will be for BHP.
Commodities like copper, nickel and iron ore will be essential for building the infrastructure and technology that will aid the world’s decarbonisation ambitions, and potash will help feed the world’s growing population.
Investing in future facing commodities creates great opportunities for BHP – it means our strategic goals align with our climate goals – but it also creates a challenge. The world needs to increase production of commodities that support the transition and do so ever more sustainably. BHP has made progress against our greenhouse gas emissions reductions targets and goals, but we intend to continue to challenge ourselves to reduce our own emissions, and work in partnership with our customers and suppliers to reduce emissions along the value chain.
Our response to climate change and the decarbonisation challenge is just one aspect of our broader commitment to deliver social value. Social value is the positive contribution we make to the environment and society. It goes hand in hand with financial value in our decision-making, and we believe this approach is in the long-term best interests of shareholders. We have been able to provide significant support to the communities in which we operate. This includes US$11.1 billion in taxes, royalties and other payments to governments in FY2021 – and US$84.0 billion over the past 10 years.
In FY2021, we continued to broaden our relationships with our Indigenous partners on whose land our operated assets lie. Our Cultural Heritage team has worked to ensure our operational decision-making is informed by reliable and contemporary heritage information, and any decision regarding cultural heritage is made by the most senior site leadership. We have also set out Regional Indigenous Peoples Plans that outline our commitment to agreement-making, Indigenous procurement, employment and social investment.
The delivery of the South Flank project was an important milestone for the Group in FY2021, and we would like to acknowledge the support of the Banjima people in helping us to deliver the project.
Our Board renewal process continued this year as we welcomed Xiaoqun Clever and Christine O’Reilly as independent
Non-executive
Directors in October 2020. We are pleased that Michelle Hinchliffe will join the BHP Board on 1 March 2022. Michelle has significant expertise in financial risk management and strong global experience, and we look forward to welcoming Michelle early next year. We have also announced that Anita Frew and Susan Kilsby will retire from the BHP Board at the end of the 2021 Annual General Meetings. Both Anita and Susan have recently accepted Chair roles at significant international companies, and we wish them well. I thank Anita and Susan for the invaluable contribution they have made to BHP. Gary Goldberg has replaced Susan as BHP’s Senior Independent Director, and Christine O’Reilly has been appointed Chair of the Remuneration Committee.
1
Finally, we achieve nothing unless we do it safely. While we are pleased that it has now been over two years since the last fatality at our operated assets, we know that a commitment to health and safety requires more than this. We are committed to stamping out sexual assault and harassment at all our sites. This is a critical issue for BHP and for our industry. We have been working on this for some time, but we know we must do more to make our workplaces safe and inclusive for everyone.
I am confident the decisions we are making to build our company for the future, together with continued strong operational performance and commitment to those who rely on us, will see us continue to grow BHP and create value for our shareholders and our broader stakeholders for decades to come.
Thank you for your continued support of BHP.
Ken MacKenzie
Chair
2
1.3 Chief Executive Officer’s review
Dear shareholders,
I am pleased to report that BHP performed strongly in FY2021, with no one fatally injured across BHP’s global operations, and record production and throughput in a number of businesses. We completed four major capital projects on time and on budget, a notable feat given the pandemic context, and our approach to capital allocation remained disciplined, generating strong returns for shareholders. I want to thank our employees and all those who supported us in delivering these outcomes.
Our operational and financial results provide the strong foundation upon which we have announced our investment in the Jansen Stage 1 potash project, the intended merger of BHP’s Petroleum business with Woodside Petroleum Ltd. (Woodside), and the intention to unify the BHP corporate structure under a single primary listing in Australia. These strategic steps are intended to underpin BHP’s ability to continue to grow shareholder value in the coming decades.
The future is clear. We believe that the world is going to need increasing supply of the essential commodities BHP produces in order to sustain global economic growth and in order to decarbonise the global economy. It is important for the world that this growing demand is met sustainably, and BHP is ideally positioned to do so given our portfolio of existing assets, our strong track record on sustainability and social value creation, our operating and financial discipline, and most importantly our people.
The intended unification of BHP’s corporate structure will position us even more strongly to be able to continue growing shareholder value. We will be a simpler, more efficient and more agile company. This is expected to enable us to be more competitive and to more quickly create and capitalise on opportunities to continue to grow value.
The intended merger of BHP’s Petroleum business with Woodside will create a global top 10 independent exploration and production company, with increased scale and resilience. We expect shareholders to benefit from significant synergies arising from the intended merger, and they will have greater choice in how to shape the relative commodity exposures in their own portfolios.
The decision to proceed with the Jansen Stage 1 potash project in Canada is a significant milestone for BHP. Potash is a future facing commodity that enables more efficient and sustainable farming, which will be increasingly important in feeding a growing global population and in meeting the world’s need to decarbonise. Jansen Stage 1 also opens up a new front for future growth for BHP. We will be ideally positioned to meet potential future growth in global demand for potash with Jansen Stages 2 through 4, which we anticipate will offer high returns and faster paybacks.
These decisions and intended steps are anticipated to result in around half of BHP’s revenues being derived from the future facing commodities of copper, potash and nickel by the end of this decade. We also expect the other half, comprising iron ore and higher-quality coking coal, to see upside as the world decarbonises.
BHP continues to take action on climate change. In the past year we announced a new suite of climate change related targets and goals, together with an assessment of the performance of BHP’s portfolio under different climate scenarios. The latter indicated that BHP’s overall portfolio is resilient and, in fact, many of our commodities would perform best under our Paris-aligned scenario that sees more rapid decarbonisation and an increase in average global temperature of no more than 1.5°C.
We progressed towards our operational emissions reduction targets and goal by entering into renewable power supply agreements for our Kwinana nickel refinery and Queensland Coal operations – adding to the Escondida and Spence copper mine agreements announced in FY2020.
With a focus on Scope 3 emissions, we entered into partnerships with major steel producers in China and Japan, targeting technologies to reduce emissions from steelmaking.
The combined output of these steel companies equates to around 10 per cent of reported global steel production. We also entered into a series of innovative initiatives that seek to help reduce emissions in bulk shipping.
Finally, we continue to invest in people. In FY2021, we trained more than 500 apprentices and trainees through our FutureFit Academy in Australia, and have committed to creating 2,500 new Australian apprenticeship and trainee positions over the next five years. We have continued our progress towards gender balance and female participation in our workforce increased to 29.8 per cent during the year, complementing our already gender-balanced Executive Leadership Team. Our Indigenous participation rate has also increased to 7.2 per cent in Australia and 7.5 per cent in Chile. We are leading the way in building the workforce of the future.
I hope that you can see that this has been a very good year for BHP. We have taken action to shape BHP’s future, while delivering very strong operational and financial results.
The combination of a clear strategic outlook, increasing operational excellence and greater exposure to future facing commodities is expected to enable us to deliver positive returns and grow more value for all of our stakeholders in the years ahead.
Thank you for your ongoing support.
Mike Henry
Chief Executive Officer
3
1.4 Our business today
Our business
Our purpose is to bring people and resources together to build a better world.
Our strategy is to deliver long-term value and returns through the cycle. We aim to do this through owning a portfolio of world class assets with exposure to highly attractive commodities that benefit from the mega-trends playing out in the world around us, by operating them exceptionally well, by maintaining a disciplined approach to capital allocation and through being industry leaders in sustainability and the creation of social value.
We are a global business with over 9,000 suppliers around the world, many of which are small to
medium-sized
businesses that are local to our assets. We have approximately 80,000 employees and contractors who work in more than 17 countries around the world.
The essential resources we produce are critical for continued economic growth and decarbonisation and we are committed to supplying them more safely, responsibly and efficiently.
In FY2021, we produced:
| • | the commodities to create the steel that goes into the infrastructure needed for growing cities around the world, including to support the energy transition |
| • | the copper and nickel required for electrification, such as copper-intensive electric vehicles and nickel-intensive batteries that can reduce the need for fossil fuels and support decarbonisation |
| • | the energy that heats homes, enables transport and powers many of the household products we use every day |
Future facing commodities |
Steelmaking commodities |
Oil & Gas | ||||||||
| Product |
Copper |
Nickel |
Iron ore |
Metallurgical coal* |
Petroleum | |||||
| FY2021 production |
1,635.7 kt |
89.0 kt |
253.5 Mt |
40.6 Mt |
102.8 MMboe | |||||
| Traditional usage |
Wiring, power cables, cars, smartphones, televisions, laptops, air conditioners | Stainless steel, refrigerators, cookware, homeware, medical equipment | Cities, hospitals, schools, houses, bridges, trains, cars, smartphones * Metallurgical coal is also known as steelmaking coal. |
Driving, air travel, heating, generating electricity, cleaning products, medical and hygiene products, roads | ||||||
| Emerging usage |
Electrification mega trends |
Supporting development and clean energy transition |
Supporting mobility and modern life | |||||||
| Wind turbines, electric vehicles, solar panels, battery charging, electric vehicle batteries, grid storage solutions | Wind turbines, carbon capture infrastructure and climate adaption to adjust to current or expected climate change and its effects | Low-emissions shipping, technology-related materials, pairing with renewables, and the transportation impacts of the e-commerce revolution | ||||||||
4
1.5 Positioning for the future
Growing value and positioning for the future
In August 2021, we announced proposed changes to our portfolio and corporate structure to position BHP for the future. These portfolio and capability changes are intended to enable us to even more strongly grow long-term value by sustainably producing the commodities the world needs for continued economic growth and decarbonisation. We seek to grow value while continuing to provide climate leadership and considering social value and financial value in the decisions we make. We seek to grow value while continuing to provide climate leadership and considering social value and financial value in the decisions we make.
Jansen Stage 1 potash project – entry into a
top-tier
potash basin BHP’s Board approved a US$5.7 billion investment in Jansen Stage 1 in Canada, which is aligned with our strategy of growing our exposure to future facing commodities in world class assets. The project is expected to produce 4.35 million tonnes of potash per year with initial production targeted for 2027, ramping up to full production over two years.
Jansen is located in the world’s best potash basin and is in an attractive investment jurisdiction. It opens up a new front for growth for BHP and is an expandable resource that can support a century or more of operations. Potash provides us with greater diversification by commodity, country, and customer.
Potash is a potassium-rich salt mainly used in fertiliser and potassium is an essential nutrient for plant growth.
Potash demand is underpinned by a growing global population and the requirement for more productive farming with a lower environmental footprint.
Jansen Stage 1 is expected to be low cost and one of the world’s most sustainable potash mines, designed for a
low-carbon
footprint and low water intensity. Jansen Stage 1 is expected to create 3,500 jobs during peak construction and 600 jobs in ongoing operations, and opportunities for local and Indigenous businesses. Our goal is for the Jansen workforce to be gender balanced and for First Nations employees to make up 20 per cent of the team. In the first of their kind in the potash industry, we have signed Opportunity Agreements with six First Nations communities around the site.
Petroleum business merger proposal – creating a global top 10 independent energy company
BHP and Woodside have entered into a merger commitment deed to combine their respective oil and gas portfolios by an
all-stock
merger. The proposed merger would create a global top 10 independent energy company by production, with a global top 10 position in the liquefied natural gas (LNG) industry, and would be the largest energy company listed on the Australian Securities Exchange (ASX). With the combination of two high-quality asset portfolios, the combined business would have a high-margin oil portfolio, long-life LNG assets and the financial resilience to help supply the energy needed for global growth and development over the energy transition.
The proposed merger is subject to confirmatory due diligence, negotiation and execution of full form transaction documents, and satisfaction of conditions precedent, including shareholder, regulatory and other approvals.
The proposed merger is expected to be completed in the first half of CY2022. On completion, it is expected that Woodside would be owned approximately 52 per cent and 48 per cent by existing Woodside and BHP shareholders respectively. The Woodside shares would be immediately distributed to BHP shareholders. Woodside intends to remain listed on the ASX with listings on additional exchanges being considered.
A unified corporate structure – flexibility for the future
BHP currently operates as a Dual Listed Company with two parent entities, both holding primary listings: BHP Group Limited (BHP Ltd) in Australia and BHP Group Plc (BHP Plc) in the United Kingdom.
We are proposing to adopt a single company structure under BHP Ltd, with a primary listing on the ASX. The company would hold a standard listing on the London Stock Exchange, a secondary listing on the Johannesburg Stock Exchange and an American Depositary Receipt program listed on the New York Stock Exchange.
We believe a simplified corporate structure would be more efficient and agile, better positioning the company for continued performance and growth.
One-off
unification costs are expected to range between US$400 to US$500 million. If a unified model is implemented, eligible BHP Plc shareholders would receive one share in BHP Ltd for each BHP Plc share they hold. The holdings of BHP Ltd shareholders would not change. BHP’s dividend policy and ability to distribute fully franked dividends also would not change.
Subject to final Board approval, BHP shareholders are expected to vote on unification at shareholder meetings planned for the first half of CY2022.
5
Adding to our early stage options in future facing commodities
Consistent with our strategy to secure further growth opportunities in future facing commodities, in July 2021 we made a public
all-cash
offer to acquire Noront Resources to gain access to a highly prospective nickel basin in an attractive region in Canada, following which Noront’s Board recommended shareholders accept BHP’s offer. During the year, we also signed an agreement for a nickel exploration alliance with Midland Exploration in Canada and exercised an option to sign a
farm-in
agreement with Encounter Resources for the Elliott copper project in Australia. Update on our
non-core
coal divestment process In August 2020, we announced plans to divest our interests in BHP Mitsui Coal (BMC), New South Wales Energy Coal and Cerrejón to focus our coal portfolio on higher-quality metallurgical coals used in steelmaking.
In June 2021, we announced the signing of a Sale and Purchase Agreement to divest our 33.3 per cent interest in Cerrejón for US$294 million cash consideration. Subject to the satisfaction of customary competition and regulatory requirements, this is expected to complete in the second half of FY2022.
The process for BMC and New South Wales Energy Coal is progressing, in line with the
two-year
timeframe set last year. We remain open to all options and continue consultation with relevant stakeholders. 6
1.6 Delivering value
1.6.1 Our business model
7
8
1.6.2 How we deliver value
Our people
Our global workforce is the foundation of our business. Supporting our people is vital for high performance and for furthering our competitive advantage. For more information on our culture, including our aspirational target of a gender-balanced workforce and progress in FY2021, refer to section 1.12.
Social value
We are committed to creating long-term value for our shareholders and consider social value and financial value in the decisions we make. Social value is our positive contribution to society – to our people, partners, economy, environment and local communities. We know that when we consider social impacts in our decision-making and when we build respectful and mutually beneficial relationships, we create value for all of our stakeholders and in particular for our shareholders.
We consider our social value work to be successful when the societies where we operate are better off through our presence; the communities we are par