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 30 JUNE 2022 .
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
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
Commission file number: |
(ABN 49 004 028 077) |
(Exact name of registrant as specified in its charter) |
VICTORIA, STRALIA |
(Jurisdiction of incorporation or organisation) |
VICTORIA STRALIA (Address of principal executive offices) |
BHP GROUP LIMITED RALIA TELEPHONE AUSTRALIA 1300 55 47 57TELEPHONE INTERNATIONAL + 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 | ||
| * | Evidenced by American Depositary Receipts. Each American Depositary Receipt represents two ordinary shares of BHP Group Limited. |
| ** | Not for trading, but only in connection with the listing of the 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 | ||
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 ☐ |
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
BHP Group Limited’s registered office and global headquarters are at 171 Collins Street, Melbourne, Victoria 3000, Australia.
‘BHP’, the ‘Company’, the ‘Group’, ‘our business’, ‘organisation’, ‘we’, ‘us’, ‘our’ and ‘ourselves’ refer to BHP Group Limited, and except where the context otherwise requires, our subsidiaries. Refer to Financial Statements note 28 ‘Subsidiaries’ for a list of our significant subsidiaries and to Exhibit 8.1 – List of Subsidiaries for a list of our subsidiaries. Those terms do not include
non-operated
assets. This Report covers functions and 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 or that have been owned as a joint venture
1
operated by BHP (referred to in this Report as ‘operated assets’ or ‘operations’) from 1 July 2021 to 30 June 2022. BHP also holds interests in assets that are owned as a joint venture but not operated by BHP (referred to in this Report as
‘non-operated
joint ventures’ or ‘non-operated
assets’). Notwithstanding that this 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 31 January 2022, we unified our company structure under BHP Group Limited, with a primary listing on the Australian Securities Exchange. BHP holds a standard listing on the London Stock Exchange, a secondary listing on the Johannesburg Stock Exchange and an ADR program listed on the New York Stock Exchange.
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 Report contains forward-looking statements, including: statements regarding trends in commodity prices and currency exchange rates; demand for commodities; reserves and resources and production forecasts; expectations, 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’, ‘ambition’, ‘aspiration’, ‘goal’, ‘target’, ‘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.
Examples of forward-looking statements contained in this Report include, without limitation, statements describing (i) our strategy, our values and how we define our success; (ii) our expectations regarding future demand for certain commodities, in particular copper, nickel, iron ore, metallurgical coal, steel and potash, and our intentions, commitments or expectations with respect to our supply of certain commodities, including copper, nickel, iron ore and potash; (iii) our future exploration and partnership plans and perceived benefits and opportunities, including our focus to grow our copper and nickel assets; (iv) the structure of our organisation and portfolio and perceived benefits and opportunities; (v) our outlook for long-term economic growth and other macroeconomic and industry trends; (vi) our projected and expected production and performance levels and development projects; (vii) our expectations regarding our investments, including in potential growth options and technology and innovation, and perceived benefits and opportunities; (viii) our reserves and resources; (ix) our plans for our major projects and related budget allocations; (x) our expectations, commitments and objectives with respect to sustainability, decarbonisation, natural resource management, climate change and portfolio resilience and timelines and plans to seek to achieve or implement such objectives, including our new 2030 ‘People, Planet and Prosperity’ goals, our approach to equitable change and transitions, 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 costs, benefits and 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 social value; (xiii) our commitments to sustainability reporting, frameworks, standards and initiatives; (xiv) our commitments to improve or maintain safe tailings storage management; (xv) our commitments to achieve certain inclusion and diversity targets, aspirations and outcomes; (xvi) our commitments to achieve certain targets and outcomes with respect to Indigenous peoples and the communities where we operate; and (xvii) our commitments to achieve certain health and safety targets and outcomes.
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
Forward-looking statements are based on management’s current expectations and reflect judgements, assumptions, estimates and other information available as at the date of this 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 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 the Ukrainian conflict and
COVID-19.
For example, our future revenues from our assets, projects or mines described in this Report will be based, in part, on the market price of the minerals or metals 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 and/or metals extracted to applicable markets; (ii) the impact of foreign currency exchange rates on the market prices of the minerals 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 OFR 9.1. 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 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 our Methodology tab in our ESG Standards and Databook.
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 |
|||||
| A | [Reserved] | — | ||||
| B | Capitalization and indebtedness | Not applicable | ||||
| C | Reasons for the offer and use of proceeds | Not applicable | ||||
| D | Risk factors | 9.1 | ||||
| 4. |
Information on the Company |
|||||
| A | History and development of the company | Cover page, Company details, Chair’s review, Chief Executive Officer’s review, Operating and Financial Review 1 to 10, Additional information 2, 4 to 9.4 | ||||
| B | Business overview | Operating and Financial Review 1 to 5, 10, Additional information 2, 4 to 8, 9.3, 9.8 and Note 1 to the Financial Statements | ||||
| C | Organizational structure | Additional information 9.3 and Note 28 to the Financial Statements | ||||
| D | Property, plants and equipment | Operating and Financial Review 3, 5.1, 5.2, 7 to 10, Additional information 2, 4 to 6 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 | Operating and Financial Review 4, 10, Additional information 9.8 | ||||
| B | Liquidity and capital resources | Operating and Financial Review 4, Financial Statements 1.4, Notes 11, 20 to 23 and 37 to the Financial Statements | ||||
| C | Research and development, patents and licenses, etc. | Operating and Financial Review 3, 5 to 10, Directors’ Report 10, Additional information 2, 5, 6 and Notes 11 and 15 to the Financial Statements | ||||
| D | Trend information | Chair’s review, Chief Executive Officer’s review, Operating and Financial Review 1 to 5, 7, 9, 10, Additional information 2, 4 to 7 | ||||
| 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 | Governance 4.1, 6.1, Directors’ Report 2.1 | ||||
| B | Compensation | Remuneration Report | ||||
| C | Board practices | Governance 4.1, 4.6, 5.2, 5.4, Remuneration Report | ||||
| D | Employees | Operating and Financial Review 6, Additional information 7 | ||||
| E | Share ownership | Remuneration Report, Directors’ Report 3, 4 and Notes 16, 17 and 25 to the Financial Statements | ||||
| 7. |
Major Shareholders and Related Party Transactions |
|||||
| A | Major shareholders | Additional information 9.5 | ||||
| B | Related party transactions | Remuneration Report and Notes 24 and 31 to the Financial Statements | ||||
| C | Interests of experts and counsel | Not applicable | ||||
| 8. |
Financial Information |
|||||
| A | Consolidated Statements and Other Financial Information | Operating and Financial Review 8, Additional information 8, 9.6, Financial Statements beginning on page F-1 in this Annual Report and Financial Statements 1A | ||||
| B | Significant Changes | Note 33 to the Financial Statements | ||||
| 9. |
The Offer and Listing |
|||||
| A | Offer and listing details | Additional information 9.2 | ||||
| B | Plan of distribution | Not applicable | ||||
| C | Markets | Additional information 9.2 | ||||
| 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 | Additional information 9.3, 9.4 | ||||
| C | Material contracts | Not applicable | ||||
| D | Exchange controls | Additional information 9.8 | ||||
| E | Taxation | Additional information 9.9 | ||||
| F | Dividends and paying agents | Not applicable | ||||
| G | Statement by experts | Not applicable | ||||
| H | Documents on display | Additional information 9.4 | ||||
| I | Subsidiary information | Note 28 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 | Additional information 9.7 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 |
|||||
| A | Additional information 9.3, 9.4 and Exhibits 1.1 and 2.1 | |||||
| B | Not applicable | |||||
| C | Not applicable | |||||
| D | Not applicable | |||||
| E | Not applicable | |||||
| 15. |
Controls and Procedures |
Governance 7.2 and Financial Statements 1A | ||||
| 16A. |
Audit committee financial expert |
Governance 5.2 | ||||
| 16B. |
Code of Ethics |
Governance 8.1 | ||||
| 16C. |
Principal Accountant Fees and Services |
Governance 7.2 and Note 34 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 |
Directors’ Report 3 | ||||
| 16F. |
Change in Registrant’s Certifying Accountant |
Not applicable | ||||
| 16G. |
Corporate Governance |
Governance | ||||
| 16H. |
Mine Safety Disclosure |
Not applicable | ||||
| 16I. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
Not applicable | ||||
| 17. |
Financial Statements |
Not applicable | ||||
| 18. |
Financial Statements |
Financial Statements begin on page F-1 in this Annual Report | ||||
| 19. |
Exhibits |
Exhibits | ||||
iii
BHP, bringing people and resources together to build a better world.
Our values
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
| 1 | ||||||
| 2 | ||||||
| 1 | Our business | 3 | ||||
| 2 | Delivering value | 5 | ||||
| 2.1 | Our business model | 5 | ||||
| 2.2 | How we create and grow value | 7 | ||||
| 3 | Positioning for the future | 13 | ||||
| 4 | Financial review | 16 | ||||
| 4.1 | Group overview | 16 | ||||
| 4.2 | Key performance indicators | 17 | ||||
| 4.3 | Financial results | 19 | ||||
| 4.4 | Debt and sources of liquidity | 22 | ||||
| 5 | Our assets | 25 | ||||
| 5.1 | Minerals Australia | 25 | ||||
| 5.2 | Minerals Americas | 30 | ||||
| 5.3 | Commercial | 34 | ||||
| 6 | People and culture | 35 | ||||
| 7 | Sustainability | 40 | ||||
| 7.1 | Our sustainability approach | 40 | ||||
| 7.2 | Our material sustainability issues | 42 | ||||
| 7.3 | Our sustainability performance: Non-financial key performance indicators | 43 | ||||
| 7.4 | Safety | 45 | ||||
| 7.5 | Sexual harassment | 47 | ||||
| 7.6 | Health | 50 | ||||
| 7.7 | Ethics and business conduct | 54 | ||||
| 7.8 | Climate change | 56 | ||||
| 7.9 | Value chain sustainability | 68 | ||||
| 7.10 | Community | 70 | ||||
| 7.11 | Human rights | 72 | ||||
v
vi
| 5 | Board Committees | 133 | ||||
| 5.1 | Nomination and Governance Committee | 133 | ||||
| 5.2 | Risk and Audit Committee | 134 | ||||
| 5.3 | Sustainability Committee | 135 | ||||
| 5.4 | Remuneration Committee | 136 | ||||
| 6 | Management | 137 | ||||
| 6.1 | Executive Leadership Team | 137 | ||||
| 6.2 | Senior management succession | 138 | ||||
| 6.3 | Performance evaluation of executives | 138 | ||||
| 7 | Risk management and assurance | 138 | ||||
| 7.1 | Risk management governance structure | 138 | ||||
| 7.2 | External audit and financial reporting | 139 | ||||
| 8 | Culture and conduct | 141 | ||||
| 8.1 | Our Code of Conduct and Our Charter | 141 | ||||
| 8.2 | Culture | 141 | ||||
| 8.3 | BHP’s EthicsPoint | 141 | ||||
| 8.4 | Diversity | 141 | ||||
| 9 | Shareholder and stakeholder engagement | 142 | ||||
| 10 | Market disclosure | 143 | ||||
| 11 | US requirements | 143 | ||||
| 1 | Review of operations, principal activities and state of affairs | 144 | ||||
| 2 | Directors | 144 | ||||
| 2.1 | Biographical details | 144 | ||||
| 2.2 | Director attendances at meetings | 145 | ||||
| 3 | Share capital and buy-back programs | 146 | ||||
| 4 | Share interests | 146 | ||||
| 5 | Secretaries | 147 | ||||
| 6 | Indemnities and insurance | 147 | ||||
| 7 | Dividends | 148 | ||||
| 8 | Auditors | 148 | ||||
| 9 | Non-audit services | 148 | ||||
vii
viii
| 1 | Financial information summary | 173 | ||||
| 2 | Information on mining operations | 174 | ||||
| 3 | Financial information by commodity | 193 | ||||
| 4 | Production | 196 | ||||
| 5 | Mineral resources and mineral reserves | 198 | ||||
| 6 | Major projects | 224 | ||||
| 7 | People – performance data | 225 | ||||
| 8 | Legal proceedings | 226 | ||||
9 |
231 | |||||
| 9.1 | History and development | 231 | ||||
| 9.2 | Markets | 231 | ||||
| 9.3 | Organisational structure | 231 | ||||
| 9.4 | Constitution | 232 | ||||
| 9.5 | Share ownership | 236 | ||||
| 9.6 | Dividends | 238 | ||||
| 9.7 | American Depositary Receipts fees and charges | 238 | ||||
| 9.8 | Government regulations | 239 | ||||
| 9.9 | Taxation | 242 | ||||
| 10 | Glossary | 247 | ||||
| 263 | ||||||
ix
Chair’s review
Dear Shareholders,
I am pleased to provide BHP’s Annual Report for FY2022 which was a transformational year for your company.
During the year BHP:
| • | unified our dual listed company structure under a single parent company listed on the Australian Securities Exchange |
| • | merged our Petroleum business with Woodside to create a top 10 energy provider and provide shareholders with further choice as to their exposure to oil and gas |
| • | simplified the coal portfolio through the sale of our interests in Cerrej ó |
| • | approved an investment of US$5.7 billion in our Jansen Potash Project in Canada, marking BHP’s entry into a new commodity which provides shareholders with exposure to the growing population megatrend |
Your Board would like to thank all shareholders for the trust you have shown in supporting these changes which set your company up to deliver value into the future.
That trust is built over time and through performance, and this year Mike Henry, his management team and all our people, have continued to deliver strong operational and financial performance through a challenging period of ongoing pandemic disruption, global supply chain challenges and cost pressures.
Safety and wellbeing
In terms of safety, FY2022 was the third consecutive year in which there were no workplace occupational fatalities, and the Group made strong progress on other leading safety indicators such as a 30 per cent reduction in high-potential injuries.
These are pleasing indicators of the progress we can make when our focus is unwavering. To achieve truly safe, inclusive and diverse workplaces for all our people we know we must bring this same focus to bear on all aspects of workplace safety including addressing sexual harassment, racism and bullying.
The value we create
It is against a backdrop of commitment to performance and continuous improvement, that BHP has delivered considerable value to you, our shareholders.
In FY2022, the Board determined dividends worth US$36 billion to shareholders (including the distribution of Woodside shares). This takes the total amount returned to shareholders over the past four years to more than US$50 billion.
But it is not just value to shareholders. This year, we also made substantial headway in our sustainability aspirations and focus on social value. We provided shareholders with the first ‘Say on Climate’ shareholder resolution in the Australian market, and our Climate Transition Action Plan (Plan) was supported by almost 85 per cent of shareholders. This Plan aligns our climate goals with our strategic goals, and provides a clear basis for measuring BHP’s climate performance.
We also launched a social value framework and scorecard with 2030 goals to bring additional transparency to our social value goals and outcomes. We are working hard to embed social value in our strategy, capital allocation decisions, plans, processes and culture. It is not only the right thing to do, but we believe it provides a significant competitive advantage for BHP and is vital to delivering long-term sustainable value.
As well as the value delivered to shareholders, this year, we made significant contributions to the communities where we operate, through employment, partnerships, and taxes and royalties paid to governments. This amounted to US$57.5 billion in Australia, US$7.7 billion in Chile and US$12.9 billion in the rest of the world, and our local procurement has increased 40 per cent over the past three years with US$2.7 billion directed to 2,700 local suppliers during FY2022.
Board succession
We welcomed Michelle Hinchliffe and Catherine Tanna to the BHP Board as independent
Non-executive
Directors. Both bring over 35 years’ experience to BHP – Michelle in financial controls and risk management, and Catherine in energy, long-life capital allocation and HSE. We are delighted to welcome Michelle and Catherine. At the other end of the succession process, we will farewell Malcolm Broomhead and John Mogford at the conclusion of the 2022 Annual General Meeting. Both have announced their intention to retire following exceptional periods of service, and I would like to thank Malcolm and John for their outstanding contribution to BHP and the Board.
FY2022 was a successful year of transformation for our business. I am confident we are building BHP for the future and to create enduring value for our shareholders and communities, customers, suppliers and partners.
Thank you for your continued support of BHP.
Ken MacKenzie
Chair
1
Chief Executive Officer’s review
Dear Shareholders,
BHP performed well in FY2022. Our strong production outcomes and solid cost control allowed us to capture the greatest benefit from the tailwind of high commodity prices during the year. It was pleasing to all of us at BHP to be able to deliver not only record returns to shareholders, but also record contributions to our other stakeholders. We paid record taxes and royalties during the year of US$17.3 billion, slightly higher than our cash returns to shareholders of US$16.4 billion.
Most importantly, we did so safely and sustainably. No one has lost their life while working at BHP for over three and a half consecutive years now. This is a very significant milestone, but we must guard against complacency. We will continue to prioritise our efforts to reduce fatal risk from our workplaces. We also reduced our operational greenhouse gas emissions by 24 per cent over the past two years and have reduced freshwater withdrawals by almost 30 per cent since 2017.
We were successful in partially mitigating the impacts of a number of external challenges, including the ongoing pandemic, to deliver well against our production and unit cost guidance for the year. We achieved record full-year shipments from our Western Australia Iron Ore business for the third year running, and we remain the world’s lowest cost major producer. In copper, our Escondida business in Chile had record material mined and near-record concentrator throughput, while Olympic Dam in South Australia performed strongly in the fourth quarter after our major smelter maintenance overhaul, which takes place every four years.
We anticipate the economic headwinds, including inflation and tight labour markets, and the impacts from
COVID-19
will continue through the year ahead. We aim to navigate these challenges better than our competitors and have the focus and capabilities in place to enable us to do so. Our continued high performance in the past year is thanks to 80,000 highly capable, diverse, engaged people across BHP, who have continued to show tremendous resilience in the face of the multiple challenges thrown at us by the external environment. We will be safer, more reliable, lower cost and more productive if we are able to more fully harness the experience, passion and ingenuity of everyone across BHP. This is being hard-wired through the BHP Operating System (BOS), which is building a continuous improvement culture and capability right through to the fingertips of the company. This shift, coupled with our progress on creating a more inclusive and diverse workforce is unlocking performance and achieving this in a way that is exciting for BHP and more fulfilling for our people.
I am proud to say that the proportion of females and Indigenous peoples at BHP continues to grow. Representation of female employees reached 32.3 per cent in FY2022 and the executive leadership team is fully balanced. Indigenous peoples now represent 8.3 per cent of our operational workforce in Australia, 8.7 per cent in Chile and 7.2 per cent in our Jansen Potash Project in Canada.
While we have made strong progress in improving the composition of our workforce, you will see in this year’s report increased disclosure in respect of cases of sexual harassment, racism and bullying that have occurred during the year in the company. I am ashamed that these behaviours still occur in BHP. We are fiercely determined to stop them from happening. During the year, we progressed work on upgrading our facilities, improving our processes, providing more support to impacted persons and bystanders, and shifting culture. In the past year, we invested more than US$200 million to improve the security and experience in our accommodation villages, established a global support service to provide dedicated, case coordination for anyone impacted by sexual harassment, and enhanced training programs, including for both leaders and bystanders. Most recently we took time out from work and production across all of BHP to discuss sexual harassment, racism and bullying. These Safety Stops involved the whole of the workforce globally and were intended to build awareness, understanding, capability, and collective commitment to action.
end-to-end
As well as building an even safer and more inclusive workplace at BHP, we must help to build a better world for all of our stakeholders. We aim to create social value, which is the positive contribution BHP makes to society: our people, partners, the economy, the environment and local communities for the mutual benefit of shareholders and the community. We see this as fundamental to our long-term success and a competitive advantage that will support growth. During the year, we launched our new social value framework and set short-term milestones as well as 2030 goals under each of our six social value pillars. Our commitment to social value contributes to the relevant United Nations (UN) Sustainable Development Goals and aligns with our continued support for the UN Global Compact and its 10 principles.
FY2022 was a year in which we also made significant progress transforming our business for the future through reshaping our portfolio and simplifying our corporate structure. We divested our Petroleum business and created a stronger, more resilient stand-alone business by merging it with Woodside, creating more choice and opportunity for value for shareholders. We further optimised our coal portfolio through the divestment of our stakes in BHP Mitsui Coal and in Cerrejón. We approved the Jansen Stage 1 Potash Project in Canada, opening up a new long-term growth front for the company in potash, a fertiliser that will enable more sustainable farming globally. Finally, we unified our corporate structure, removing the more complex dual listed structure in place since the BHP and Billiton merger of 2001.
We now have a leaner, more agile and more efficient BHP, with a portfolio more aligned to the global megatrends unfolding around us, and better positioned to grow value by supplying the commodities required for a decarbonising world.
I am excited about our plans for the year ahead and for the future. Despite external volatility, the fundamentals that underpin our business are positive and strongly position BHP for enduring success.
Thank you for your ongoing support.
Mike Henry
Chief Executive Officer
2
Operating and Financial Review
1 Our business
3
4
2 Delivering value
2.1 Our business model
5
6
2.2 How we create and grow value
We produce some of the essential resources needed to support global megatrends, such as decarbonisation, and we strive to produce them sustainably, efficiently and ethically.
We seek to create value with the communities where we operate and for our shareholders:
| • | We are committed to continuous improvement and we strive to operate more reliably and productively than our competitors. Being the best operator will help us safely generate better return on capital employed and outcompete others for new opportunities. |
| • | We have delivered strong and consistent results and returns through our portfolio and operating discipline. We achieved net operating cashflow on a Total operations basis of US$32.2 billion in FY2022, above US$15 billion for the sixth consecutive year. |
| • | We believe our focus on social value will lead to us being the partner of choice with communities, governments, suppliers, and customers. We seek respectful, mutually beneficial relationships with the communities where we operate and the suppliers, customers and governments we interact with. Our experience has been that engaging with those around us creates optionality, stronger relationships and access to more diverse thinking. It helps us be more creative and to find different ways to problem solve. It also means we are better able to see things coming towards us and can act pre-emptively. Aligning strongly with partners can prevent issues or delays with projects and, if issues do arise, means we are better able to collectively work on solutions. |
| • | We assess and rank decarbonisation projects across our operated assets through our Capital Allocation Framework (CAF). During FY2022, we integrated our 1.5°C Paris-aligned scenario into our strategy and capital allocation process, helping to ensure our capital expenditure plans are not misaligned with the Paris Agreement’s aim to pursue efforts to limit global warming to 1.5°C. |
| • | We recruit and retain the best people and empower them to run our operations safely and productively. We promote an inclusive and diverse environment where safety and wellbeing are the highest priorities, invest in development programs to build capability and improve performance and offer competitive remuneration. We invest in technology to manage risk, streamline processes and improve productivity. |
| • | The combination of our people, strategy and operational systems will help us to outperform our competitors and attract a lower cost of capital, while our CAF helps us make better use of this capital. |
We bring together essential resources, a strong balance sheet and a differentiated operating capability underpinned by our technical Centres of Excellence and the BHP Operating System (BOS).
This combination of operational excellence, a strong portfolio of large, long-life, quality assets and focus on social value will assist us to grow value more consistently for all stakeholders and underpin continued attractive returns and long-term value for our shareholders.
Our people
Health and safety
Our highest priority is the safety of our workforce and the communities where we operate. We achieved a third consecutive year without a fatality and have seen a sustained improvement in the high-potential injury frequency rate which fell by 30 per cent in FY2022 from FY2021.
We are committed to protecting the health and wellbeing of our workforce. Over the past five years, we have achieved a 68 per cent reduction in the total number of workers exposed to our most material occupational exposures. For more information refer to OFR 7.4 and 7.6.
Our focus on safety and health underpins our strong operational performance and this includes eliminating sexual harassment, racism and bullying. We are committed to eliminating incidents of sexual harassment in our workplaces and accommodation villages, and have strengthened our approach to prevention, reporting and response. Our focus on gender balance is an important factor in addressing this unacceptable behaviourFor more information refer to OFR 7.5.
.
7
Inclusion and diversity
We continue to build a more inclusive and diverse workforce that further enhances our performance and better reflects the communities where we operate:
| • | We remain on track to achieve our aspirational goal for a gender-balanced employee workforce globally by FY2025 . |
| • | We made progress during FY2022 against targets for increased Indigenous employment in our Minerals Australia operations, Minerals Americas operations in Chile and our Jansen Potash Project in Canada. |
Our portfolio
We are reshaping our portfolio to focus on higher-quality iron ore and metallurgical coal preferred by our steelmaking customers, copper for electrification and renewable energy, nickel for electric vehicles and potash to make food production and land use more efficient and sustainable. For more information refer to OFR 3.
Iron Ore
1
Western Australia Iron Ore (WAIO) is one of the lowest emissions intensity iron ore operations2
and is increasing its grade as the new South Flank mine ramps up. WAIO achieved record sales volumes in FY2022, allowing us to capitalise on the opportunity presented by higher iron ore prices. For more information refer to OFR 5.1. Copper
3
We are using technical innovation such as new floatation technology to help lower energy costs and unlock value and are looking to secure more copper resources through exploration, acquisition, and early-stage entry. Escondida in Chile is the world’s largest copper mine. Escondida had record material mined and near-record concentrator throughput in FY2022, while Olympic Dam in South Australia performed strongly in the June 2022 quarter after planned major smelter maintenance. For more information refer to OFR 5.1 and 5.2. Metallurgical coal
2
We believe that a wholesale shift away from blast furnace steel making, which uses metallurgical coal, is still decades in the future and that metallurgical coal will remain an essential input into the steelmaking process, which is critical to support decarbonisation infrastructure. We recently completed the sale of our interest in BHP Mitsui Coal (BMC), further focusing our coal portfolio on higher-quality coals for steelmaking with greater potential upside for quality premiums as steelmakers seek to improve blast furnace utilisation and reduce emissions intensity. For more information refer to OFR 5.1. Nickel
4
and our nickel operations in Western Australia have one of the lowest production emissions intensities of benchmarked mines.2
We achieved our first saleable production of nickel sulphate crystals for the lithium-ion
battery industry in the December 2021 quarter. We are growing value by supplying 87 per cent of BHP’s battery-suitable nickel to battery material suppliers in FY2022. We are seeking more nickel resources through exploration, acquisition and early-stage entry. For more information refer to OFR 5.1. Potash
Exceptional performance
Operational excellence
We seek to continuously improve performance by empowering our people through BOS principles, practices and tools. BOS is, at its heart, a people program. It is designed to provide a way of working that creates a culture at BHP where we make continuous improvement central to everyone’s role.
We continued to deploy BOS throughout our business in FY2022 and expect full deployment by the end of FY2024. BOS has delivered over US$2 billion in estimated, recurring and
one-time
cost and revenue improvements since we developed it in CY2018. Based on the success we are seeing, we believe it will deliver further gains in the future. 1 |
Based on published C1 unit costs of major iron ore producers. There may be differences in the manner that third parties calculate or report unit costs data compared to BHP, which means that third-party data may not be comparable to our data. |
2 |
For more information refer to OFR 7.8. |
3 |
Based on ownership interest. Peers include: Anglo American, Antofagasta, Codelco, First Quantum Minerals, Freeport, Glencore, Rio Tinto, Southern Copper and Teck. Source peers: Wood Mackenzie Ltd, Q1 2022. |
4 |
Based on ownership interest. Source peers: MinEx Consulting. |
8
What is the BHP Operating System?
The BHP Operating System (BOS) is a way of working that seeks to make improvement part of what we do every day through the application of BOS tools and practices. It is anchored in three principles that will help us deliver exceptional safety and productivity performance and an inclusive and empowered culture:
| • | Serve our customers |
| • | Pursue operating perfection |
| • | Empower our people |
Through BOS principles and practices we are delivering more to our employees and contractors, suppliers, shareholders, customers and the communities whose resources we develop.
Embracing technology and innovation
The power of data, innovation and technology, together with the BOS, have helped accelerate continuous improvement across our value chain, from the geoscience required in exploration through to the marketing of our products.
We have used technology to:
| • | maintain safe, predictable and productive operations |
| • | drive productivity improvements, with an emphasis on automation and real-time, data-driven insights and decision-making |
| • | help drive inclusion and diversity by providing greater opportunities for roles that were traditionally labour intensive |
| • | unlock the next stage of value growth at BHP, from realising greater margins at our existing operations to finding new assets |
| • | improve sustainability outcomes through innovation |
The use of technology such as in autonomous trucks, production innovation such as primary sulphide leaching at our copper assets (which has helped us to extract more copper from ore) and digital transformation across all parts of our business has helped to improve safety, increase productivity, reduce costs, build capability and accelerate value creation.
Examples of our application of technology and innovation in FY2022 include:
| • | We continued to automate our global trucking fleets. At South Flank we began to automate our fleet of 41 Komatsu haul trucks in the June 2022 quarter, with the program expected to be completed within 18 months. We continued deployment at Goonyella Riverside (expected to be completed by the end of December 2022) and completed the rollout at Daunia. We also commenced autonomous drilling at Spence. We expect to commence the rollout of automated trucks at Spence in FY2023. |
| • | We began testing two automated shiploaders at the Port Hedland export facility in Western Australia. In what we believe is a world first, 3D laser scan technology has been used in the A$50 million project. We intend to fully automate eight shiploaders by FY2024. The project is expected to enable an increase in production of more than 1 million tonnes of iron ore each year through greater precision, reduced spillage, faster load times and equipment optimisation. |
| • | Our in-house Grade Adjustment Model has been introduced at multiple WAIO sites and is expected to enable a US$22.8 million annual revenue uplift at WAIO. The model uses machine learning to target a reduction in iron ore grade variability across the supply chain. It uses data sources that capture movements of ore to map the iron ore grade coming from the mine to the iron grade shipped at port. |
| • | Through our Maintenance and Engineering Centre of Excellence, we continued the rollout of our Total Equipment Strategies (TES), which were initially applied to our mobile fleets and have been extended to our fixed plant. These strategies use mathematical analysis of breakdowns, maintenance patterns and original equipment manufacturer recommendations to recalibrate our maintenance programs to increase availability and reliability, and reduce maintenance costs and inventory values. For example, at our Newman iron ore operation in Western Australia, the mobile TES project for CAT 6060 excavators helped to extend the average equipment life by 40 per cent and delivered an availability uplift of 2 per cent. The outcome is 3.5 years of extra life which has helped to achieve capital productivity by deferral of US$120 million of capital expenditure over five years. |
9
Financial excellence
We use the Capital Allocation Framework (CAF) to assess the most effective and efficient way to deploy capital. This prioritises maintaining safe and reliable operations, meeting our social value and GHG emissions reductions targets, goals and strategies, keeping our balance sheet strong and delivering strong growth and returns for our shareholders. We then look at what would be the most valuable risk-adjusted use for any excess capital. We evaluate the range of investment opportunities and aim to optimise the portfolio based on our assessment of risk, returns and future optionality. We then develop a long-term capital plan and guidance for the Group.
Since the CAF’s introduction in FY2016, we have balanced reinvestment in the business with cash returns to shareholders. We want shareholders to see the short-term benefit of these cash returns and trust us to plan for the future by investing where it matters.
Social value
Social value is BHP’s positive contribution to society – our people, partners, the economy, the environment and local communities. It is about creating enduring, mutual benefit for BHP, our shareholders and the broader community.
Doing this well is essential to better business outcomes and long-term shareholder value, and will create a competitive advantage.
How social value can create competitive advantage
We recognise that decisions we make have the potential to positively or negatively impact those around us, and the environment. Our aim with social value is to be deliberate and proactive in taking into account social, environmental and financial impact in the choices we make.
Embedding social value into everything we do will open up opportunities, increase resilience and help us manage risk. It will influence our access to resources, partners, markets, the best talent, and capital.
Our commitment to social value
We have been committed to sustainability and social value for many years and are making progress in responsibly providing more of the resources the world needs:
| • | We have set GHG emissions reduction targets and goals (that are described in OFR 7.8) and our Climate Transition Action Plan 2021 (CTAP) received majority approval from shareholders in the ‘Say on Climate’ advisory vote at our 2021 Annual General Meetings. |
| • | We are working to create nature-positive 4 outcomes through the new goal we have set to have at least 30 per cent of the land and water we steward under conservation, restoration or regenerative practices by 2030. For more information refer to 2030 social value scorecard below and OFR 7.15. |
| • | We are working to transition our operations to renewable electricity. For more information, refer to OFR 5.1 and 7.8. |
| • | We are working with suppliers to drive innovation by participating in initiatives such as Komatsu’s GHG Alliance, which aims to develop commercially viable zero-GHG emissions haul trucks. For more information refer to OFR 7.8. |
| • | Our spend with Indigenous businesses increased by 75 per cent to US$149.9 million in FY2022 and the number of Indigenous vendors engaged rose by 53 per cent to 148. WAIO announced its intention to more than double its spend with Indigenous vendors to more than US$300 million by the end of FY2024. For more information refer to OFR 7.13. |
| • | We completed our most recent five-year sustainability targets in FY2022. Highlights included three years fatality-free, a reduction in the total number of workers exposed to our most material occupational exposures by 68 per cent, social investment of US$681.4 million over five years and a 29 per cent reduction in freshwater withdrawal volumes from our adjusted FY2017 baseline. For more information refer to OFR 7.3 and 7.8. |
| • | Our Chilean operations Escondida and Spence, and Olympic Dam in Australia were awarded the Copper Mark during FY2022 recognising responsible production practices. For more information on our social value performance refer to OFR 7. |
2030 social value scorecard
In June 2022, we launched our social value scorecard with 2030 goals, metrics and milestones (below). We believe it will enhance our opportunity to run our business in a way that delivers long-term, sustainable value to BHP, our shareholders and the broader community.
This scorecard provides clarity to our teams on our ambitions and allows us to measure progress, transparently report, and hold ourselves to account.
Our metrics will evolve over time and some are future metrics that will be developed in the coming years. They show where we are headed with measuring our performance.
At its core, this scorecard represents an emphasis on partnerships, listening and
co-design,
recognising that it is not for us alone to decide what is of value to communities or the environment, and that addressing challenges like climate change require collaboration. We will disclose our performance against this scorecard every year as part of our Annual Report, starting in FY2023.
10
11
Supporting local economic development
We aim to source and promote locally available goods and services as an important part of our external expenditure, to help local communities thrive. Our operated assets develop local procurement plans designed to identify opportunities for local suppliers, including small businesses.
In FY2022, BHP made US$18.8 billion in payments to suppliers globally, including US$17.6 billion in payments to more than 8,000 suppliers in the regions where we operate. Of the latter amount, US$2.7 billion, or 15.2 per cent, was paid to local suppliers in the communities where we operate. Our expenditure with local suppliers was primarily in Australia (59 per cent) and Chile (30 per cent). Of our total supplier spend, 94.4 per cent was in the regions where we operate.
12
3 Positioning for the future
Reshaping our corporate structure and portfolio
In FY2022, we took steps to create a simpler, more agile and efficient BHP, better able to capitalise on the megatrends shaping our world.
A simpler corporate structure
For the past two decades, we operated with a dual listed company (DLC) structure with two parent companies – BHP Group Limited in Australia with its shares listed on the Australian Securities Exchange and BHP Group Plc (now known as BHP Group (UK) Ltd) in the United Kingdom with its shares listed on the London Stock Exchange.
Following shareholder approval in January 2022, we unified our corporate structure to one parent company and one share price – under BHP Group Limited. We believe unification gives us a corporate structure that is simpler, more agile and more efficient.
Merging Petroleum with Woodside
During FY2022, we merged our Petroleum business with Woodside Energy Group Ltd (Woodside) to create a global top 10 independent energy company by production. Woodside acquired BHP’s Petroleum business in exchange for Woodside shares that were distributed to BHP shareholders through an in specie dividend.
Based on Woodside’s share price of US$21.39 (A$29.76) at 31 May 2022, the closing date of the transaction, the implied value of BHP’s Petroleum business was US$19.6 billion (A$27.2 billion).
BHP shareholders gained exposure to assets in Woodside through the transaction and greater choice about how to weight their exposure to the different investment and sector propositions. The transaction increased BHP’s portfolio weighting towards future facing commodities that support economic growth and have potential upside through the energy transition.
Consolidating our coal portfolio
In January 2022, we divested our 33.3 per cent interest in Cerrejón, a
non-operated
energy coal joint venture in Colombia, to Glencore, for a total cash consideration of approximately US$294 million. In May 2022, we divested our 80 per cent interest in BHP Mitsui Coal Pty Ltd (BMC), a metallurgical coal joint venture in Queensland operated by BMC, to Stanmore Resources Limited, for a total cash consideration of up to US$1.35 billion in paid and deferred amounts, plus a final completion adjustment amount.
In June 2022, we announced that, following a
two-year
review, we would retain New South Wales Energy Coal (NSWEC). We will be seeking approvals to continue mining at NSWEC beyond its current mining consent that expires in 2026 and intend to proceed with a managed process to cease mining at the asset by the end of FY2030. These portfolio changes are consistent with our strategy to focus on producing higher-quality metallurgical coal.
Investing in a new commodity – potash
Potash enables more efficient and sustainable farming, which we believe will be increasingly important in feeding a growing population, and potentially opens a new long-term growth front for BHP.
In August 2021, we approved US$5.7 billion in capital expenditure for Jansen Stage 1 in Saskatchewan, Canada, with first potash production expected in CY2027. We are working to bring forward Jansen Stage 1 first production and are assessing options to accelerate Jansen Stage 2.
The US$2.97 billion Jansen project to finish the excavation and lining of the production and service shafts, and to continue the installation of essential surface infrastructure and utilities, was completed in June 2022. For FY2023, approximately US$740 million in capital expenditure is planned for work at Jansen Stage 1, which will continue to focus on civil and mechanical construction on the surface and underground, as well as equipment procurement and port construction.
Unlocking growth potential at our assets
The large endowments we have under our control are becoming increasingly valuable as the resources industry finds high-quality, Tier 1 (large,
low-cost
and long-life) resources harder to access, deeper, of lower grade, or in countries with more challenging operating conditions. 13
Copper
We hold the largest copper endowment in the world at among the highest average grade.
1
| • | This includes 27 billion tonnes of ore at an average grade of 0.52 per cent at Escondida, where we are targeting an annual average of 1.2 million tonnes (Mt) of copper production over the medium term, a 20 per cent increase on Escondida’s FY2022 production of 1 Mt. |
| • | On the basis that tailings storage facility anomalies are resolved, production at Spence is expected to reach and average approximately 270 kilotonnes per annum (ktpa) of production for four years (including cathodes) following the completion of Spence Growth Option (SGO) plant modifications. This will be supported by capital expenditure of approximately US$100 million, which is planned for the SGO plant modifications and these are currently planned to be completed in CY2023, with further studies ongoing for additional capacity uplift. |
| • | At Olympic Dam, we have improved operating stability over time. Smelter operations have been strong following our planned major smelter maintenance, completed in January 2022. The next major rebuild is not expected for six years. |
Nickel
We hold the second-largest nickel sulphide endowment globally
2
and own the majority of tenements of known resource in the Agnew-Wiluna basin in Western Australia. | • | Our nickel sulphate plant at Nickel West delivered first crystals in October 2021, allowing us to add further value to our nickel production. We intend to capitalise on the expected ongoing global demand for nickel for the electric vehicle industry, as the method we use to produce nickel sulphate results in a product we believe is ideal for battery production. |
| • | We continue to explore ways to increase the scale of Nickel West. |
Iron Ore
We are one of the world’s largest iron ore producers and expect to increase production over the medium-term.
| • | We have secured an increase to our WAIO iron ore environmental licence to expand port operations up to 330 million tonnes per annum (Mtpa) subject to the outcomes of a standard appeals process. |
| • | The ramp up of WAIO’s US$3.6 billion South Flank mine is ahead of schedule and we have revised our medium term production guidance to more than 300 Mtpa. We are assessing expansion alternatives to take us toward 330 Mtpa of production. |
Growth through exploration, focused on copper and nickel
1 |
Based on ownership interest. Peers include: Anglo American, Antofagasta, Codelco, First Quantum Minerals, Freeport, Glencore, Rio Tinto, Southern Copper, and Teck. Source peers: Wood Mackenzie Ltd, Q1 2022. |
2 |
Based on ownership interest. Source peers: MinEx Consulting. |
14
Our exploration program is focused on copper and nickel. We look to identify and gain access to new search spaces to test targets capable of delivering high-quality, Tier 1 deposits, and maintain research and technology activities aligned with our exploration strategy.
Despite the slowdown and restrictions on movement due to the
COVID-19
pandemic, in FY2022 our field teams pursued copper opportunities in Chile, Colombia, Peru, Ecuador, the United States and Australia. This involved early-stage reconnaissance work through target definition and drill testing. Elsewhere for copper, we continued to seek, secure and test concessions in regions such as Ecuador, South Australia, Chile, Mexico and Peru. We have also increased the number of high-quality nickel projects within the exploration pipeline. We are actively exploring nickel targets in Western Australia, while in Canada, we continued our partnership with Midland Exploration Inc in Canada, through our 5 per cent interest and collaboration on a target generation program. BHP made a US$40 million investment in Kabanga Nickel in Tanzania in FY2022, which offers an opportunity to expand the immediate search space to add to the known resource.
Our business partnerships continued to deliver encouraging results. In Ecuador, we maintained a 13.6 per cent ownership in SolGold plc, the majority owner and operator of the Alpala porphyry copper-gold project. In Mexico, we continued our financial agreement with Riverside Resources, a US company with significant operating experience in Mexico, securing additional areas that are scheduled to be drill tested during FY2023. In Australia, we initiated work with Encounter Resources to explore for sediment-hosted copper deposits in the Northern Territory. We also entered into a Letter of Intent with Mundoro to cooperatively explore for copper resources in the highly prospective belt in Serbia and Bulgaria. Several drill-ready targets are scheduled to be tested during FY2023.
Exploration expenditure
Our resource assessment exploration expenditure increased by 30 per cent in FY2022 to US$179 million, while our greenfield expenditure increased by 43 per cent to US$77 million. Expenditure on resources assessment and greenfield exploration over the last three financial years is set out below.
| Year ended 30 June |
2022 US$M |
2021 US$M |
2020 US$M |
|||||||||
| Greenfield exploration |
77 |
54 | 44 | |||||||||
| Resources assessment |
179 |
138 | 132 | |||||||||
| |
|
|
|
|
|
|||||||
| Total metals exploration and assessment |
256 |
192 | 176 | |||||||||
| |
|
|
|
|
|
|||||||
Exploration expense
Exploration expense represents that portion of exploration expenditure that is not capitalised in accordance with our accounting policies, as set out in Financial Statements note 11 ‘Property, plant and equipment’.
Exploration expense for each segment over the last three financial years is set out below.
| Year ended 30 June |
2022 US$M |
2021 US$M |
2020 US$M |
|||||||||
| Exploration expense |
||||||||||||
| Copper |
85 |
53 | 54 | |||||||||
| Iron Ore |
54 |
55 | 47 | |||||||||
| Coal |
6 |
7 | 9 | |||||||||
| Group and unallocated items 1 |
54 |
19 | 13 | |||||||||
| |
|
|
|
|
|
|||||||
| Total Group |
199 |
134 | 123 | |||||||||
| |
|
|
|
|
|
|||||||
1 |
Group and unallocated items includes functions, other unallocated operations, including Potash, Nickel West and legacy assets (previously disclosed as closed mines in the Petroleum reportable segment), and consolidation adjustments. |
15
4 Financial review
4.1 Group overview
We prepare our Consolidated Financial Statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board. We publish our Consolidated Financial Statements in US dollars. All Consolidated Income Statement, Consolidated Balance Sheet and Consolidated Cash Flow Statement information below has been derived from audited Financial Statements. For more information refer to Financial Statements.
We use various
non-IFRS
financial information to reflect our underlying performance. Non-IFRS
financial information is not defined or specified under the requirements of IFRS however, is derived from the Group’s Consolidated Financial Statements prepared in accordance with IFRS. Non-IFRS
financial information is consistent with how management reviews financial performance of the Group with the Board and the investment community. OFR 11 ‘Non-IFRS
financial information’ includes our non-IFRS
financial information and OFR 11.1 ‘Definition and calculation of non-IFRS
financial information’ outlines why we believe non-IFRS
financial information is useful and the relevant calculation methodology. We believe non-IFRS
financial information provides useful information, however it should not be considered as an indication of, or as a substitute for, statutory measures as an indicator of actual operating performance (such as profit or net operating cash flow) or any other measure of financial performance or position presented in accordance with IFRS, or as a measure of a company’s profitability, liquidity or financial position. Summary of financial measures
| Year ended 30 June US$M |
2022 |
2021 | ||||||
| Consolidated Income Statement (Financial Statements 1.1) |
||||||||
| Revenue 1 |
65,098 |
56,921 | ||||||
| Profit/(loss) after taxation from Continuing operations 1 |
22,400 |
13,676 | ||||||
| Profit/(loss) after taxation from Continuing and Discontinued operations attributable to BHP shareholders |
30,900 |
11,304 | ||||||
| Dividends per ordinary share – paid during the period (US cents) |
350.0 |
156.0 | ||||||
| Dividends per ordinary share – determined in respect of the period (US cents) |
325.0 |
301.0 | ||||||
| In specie dividend on merger of Petroleum with Woodside (US cents) |
386.4 |
– | ||||||
| Basic earnings/(loss) per ordinary share (US cents) |
610.6 |
223.5 | ||||||
| Consolidated Balance Sheet (Financial Statements 1.3) |
||||||||
| Total assets |
95,166 |
108,927 | ||||||
| Net assets |
48,766 |
55,605 | ||||||
| Consolidated Cash Flow Statement (Financial Statements 1.4) |
||||||||
| Net operating cash flows |
32,174 |
27,234 | ||||||
| Capital and exploration expenditure 2 |
7,545 |
7,120 | ||||||
| Other financial information (OFR 11) |
||||||||
| Net debt |
333 |
4,121 | ||||||
| Underlying attributable profit |
23,815 |
17,077 | ||||||
| Underlying attributable profit – Continuing operations 1 |
21,319 |
16,985 | ||||||