Form 6-K BHP Group Plc For: Jan 19 Filed by: BHP Group Ltd

January 19, 2022 6:47 AM EST

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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

January 19, 2022

 

 

 

BHP GROUP LIMITED

(ABN 49 004 028 077)

(Exact name of Registrant as specified in its charter)

 

VICTORIA, AUSTRALIA

(Jurisdiction of incorporation or organisation)

 

171 COLLINS STREET, MELBOURNE,

VICTORIA 3000 AUSTRALIA

(Address of principal executive offices)

 

BHP GROUP PLC

(REG. NO. 3196209)

(Exact name of Registrant as specified in its charter)

 

ENGLAND AND WALES

(Jurisdiction of incorporation or organisation)

 

NOVA SOUTH, 160 VICTORIA STREET

LONDON, SW1E 5LB

UNITED KINGDOM

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:  ☒ Form 20-F    ☐ Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:  ☐ Yes    ☒ No

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):    n/a

 

 

 


Table of Contents
NEWS RELEASE    LOGO

 

Release Time        

   IMMEDIATE

Date

   19 January 2022

Release Number

   02/22

BHP OPERATIONAL REVIEW

FOR THE HALF YEAR ENDED 31 DECEMBER 2021

Note: All guidance is subject to further potential impacts from COVID-19 during the 2022 financial year.

 

 

We remained fatality free at our operated assets for the third consecutive year.

 

 

WAIO achieved near record production for the half year and Escondida achieved record material mined, notwithstanding the impacts of significant wet weather and the COVID-19 Omicron variant on some operations.

 

 

Production guidance for the 2022 financial year remains unchanged for iron ore, energy coal and nickel. Full year total copper production is trending towards the low end of the guidance range, reflecting lower production guidance for Pampa Norte. Metallurgical coal guidance has been reduced as a result of significant wet weather impacts and COVID-19 related labour constraints.

 

 

Full year unit cost guidance(1) for WAIO, Escondida and NSWEC remains unchanged. Unit cost guidance for Queensland Coal has been increased, reflecting lower expected volumes for the full year.

 

 

Progress on the review of our lower grade metallurgical coal and thermal coal assets continues. The Cerrejón divestment to Glencore completed in January 2022 and the announced share sale agreement to divest BHP Mitsui Coal (BMC) is expected to complete in the middle of the 2022 calendar year.

 

 

Our potash major projects under development are tracking to plan. The Jansen shaft project is 98% complete and the Jansen Stage 1 project has commenced contract awards.

 

 

BHP announced a final decision to unify BHP’s corporate structure under its existing Australian parent company, BHP Group Limited. Shareholder meetings to vote on unification will be held on 20 January 2022. Subject to shareholder approval and UK Court sanction, unification is expected to complete by 31 January 2022.

 

 

Completion of the proposed merger of our Petroleum business with Woodside is expected in the June 2022 quarter subject to satisfaction of conditions precedent including approval by Woodside shareholders. The half year financial results are being prepared on the basis that the Petroleum business is a discontinued operation and restated financial information for the year ended 30 June 2021 and the half year ended 31 December 2020 is provided in Attachment 1.

 

Production

   Dec H21
(vs Dec H20)
     Dec Q21
(vs Sep Q21)
    

Dec Q21 vs Sep Q21 commentary

Copper (kt)

     742.0 (12%      365.5 (3%    Lower volumes at Olympic Dam due to the planned smelter maintenance campaign, completed in January 2022. This was partially offset by higher volumes at Antamina.

Iron ore (Mt)

     129.4 1%        66.1 4%      Higher volumes reflecting strong supply chain performance, increased ore car availability and the continued ramp up of South Flank. This was partially offset by the impact of temporary rail labour shortages due to COVID-19 related border restrictions.

Metallurgical coal (Mt)(2)

     17.7 (8%      8.8 0%      Volumes flat due to double the amount of rainfall recorded in this quarter impacting most operations and planned maintenance in the previous quarter.

Energy coal (Mt)(3)

     7.2 5%        3.0 (30%    Lower volumes due to three times the amount of rainfall in this quarter impacting stripping and mine productivity, partially offset by mining in lower strip ratio areas.

Nickel (kt)

     39.3 (15%      21.5 21%      Higher volumes due to planned maintenance across the supply chain in the previous quarter.

Discontinued operations

        

Petroleum (MMboe)

     53.2 5%        25.7 (7%    Lower volumes due to reduced seasonal gas demand at Bass Strait. This was partially offset by a Shenzi infill well brought online and higher production at North West Shelf.

Group copper equivalent production decreased by 4%(4) in the December 2021 half year largely due to lower copper and metallurgical coal volumes.

 

BHP Operational Review for the half year ended 31 December 2021    1


Table of Contents

Summary

BHP Chief Executive Officer, Mike Henry:

“BHP was fatality free at our operated assets for the third consecutive year. Our continuing focus on people and on operational reliability enabled us to achieve near record production in iron ore and to reduce the impacts of adverse weather and COVID-19 related labour constraints in our operations. Cost control remained strong across the business, in the face of a more inflationary environment. Unit cost guidance remains intact bar a change to metallurgical coal which is a function of the lowering of production guidance as a result of significant wet weather and in anticipation of Omicron headwinds in the early part of the second half of the financial year.

We completed major planned maintenance programs in our Iron Ore, Nickel West and Olympic Dam assets. In Nickel West, we achieved first saleable production of nickel sulphate crystals from the Kwinana plant, an exciting new addition to our product suite that will further enhance our offering into the battery electric vehicle market. The ramp-up of South Flank continues to progress well. The Spence Growth project is realising lower than expected recoveries and we are studying plant design modifications in order to lift recoveries to planned levels.

We continued to progress a number of actions related to our portfolio and corporate structure. We progressed the merger of our petroleum assets with Woodside and prepared for a shareholder vote on a unified corporate structure. We advanced the Jansen potash project and announced a share sale agreement of our interest in the BHP Mitsui Coal metallurgical coal joint venture. We bolstered options in future facing commodities investing in prospective copper assets in the Northern Territory and South Australia and we secured an early stage entry into a world-scale nickel sulphide resource in Tanzania.

Overall we made good progress in positioning our portfolio and performance to deliver returns for shareholders now and into the future.”

Operational performance

Production and guidance are summarised below.

Note: All guidance is subject to further potential impacts from COVID-19 during the 2022 financial year.

 

Production

   Dec
H21
     Dec
Q21
     Dec H21
vs

Dec H20
    Dec Q21
vs

Dec Q20
    Dec Q21
vs

Sep Q21
    Previous FY22
guidance
     Current FY22
guidance
    

 

 

Copper (kt)

     742.0        365.5        (12 %)      (15 %)      (3 %)      1,590 – 1,760        1,590 – 1,760        Low end  

Escondida (kt)

     488.3        244.6        (15 %)      (15 %)      0     1,000 – 1,080        1,020 – 1,080        Narrowed range  

Pampa Norte (kt)

     135.8        68.3        40     26     1     330 – 370        260 – 300        Lowered  

Olympic Dam (kt)

     43.7        14.2        (56 %)      (70 %)      (52 %)      140 – 170        140 – 150        Narrowed range  

Antamina (kt)

     74.2        38.4        1     (1 %)      7     120 – 140        120 – 140        Unchanged  

Iron ore (Mt)

     129.4        66.1        1     6     4     249 – 259        249 – 259     

WAIO (Mt)

     127.3        65.1        (1 %)      4     5     246 – 255        246 – 255        Unchanged  

WAIO (100% basis) (Mt)

     144.4        73.9        0     5     5     278 – 288        278 – 288        Unchanged  

Samarco (Mt)

     2.1        1.0        >100     >100     (2 %)      3 – 4        3 – 4        Unchanged  

Metallurgical coal (Mt)(i)

     17.7        8.8        (8 %)      (7 %)      0     39 – 44        38 – 41     

Queensland Coal (100% basis) (Mt)

     30.7        15.1        (10 %)      (11 %)      (3 %)      70 – 78        68 – 72        Lowered  

Energy coal – NSWEC (Mt)

     7.2        3.0        5     (8 %)      (30 %)      13 – 15        13 – 15        Unchanged  

Energy coal – Cerrejón (Mt)(ii)

     4.2        2.2        >100     >100     6     n/a        n/a     

Nickel (kt)

     39.3        21.5        (15 %)      (10 %)      21     85 – 95        85 – 95        Unchanged  

Discontinued operations

                    

Petroleum (MMboe)(iii)

     53.2        25.7        5     8     (7 %)      99 – 106        n/a     

 

(i)

We announced the share sale agreement to divest our interest in BHP Mitsui Coal (BMC) in November 2021, however will continue to report BMC as part of Queensland Coal. We maintain economic and operating control of BMC until the sale has completed.

(ii)

We have ceased providing Cerrejón production guidance due to the completion of the divestment of our interest. The transaction has an effective economic date of 31 December 2020 and volumes have been reported separately.

(iii)

Given our announcement of a binding share sale agreement for the merger of BHP’s oil and gas portfolio with Woodside in November 2021, no further annual production guidance for FY22 for Petroleum will be provided. However, until merger completion, we expect a production run rate broadly consistent with the original FY22 production guidance of between 99 and 106 MMboe.

 

BHP Operational Review for the half year ended 31 December 2021    2


Table of Contents

Summary of disclosures

BHP expects its December 2021 half year financial results to reflect certain items as summarised in the table below. The table does not provide a comprehensive list of all items impacting the period. The financial statements are the subject of ongoing work that will not be finalised until the release of the financial results on 15 February 2022. Accordingly the information in the table below contains preliminary information that is subject to update and finalisation.

 

Description

   H1 FY22
impact
US$M(i)
   

Classification(ii)

Unit costs for WAIO, Escondida and NSWEC are expected to be in line with full year guidance (at guidance exchange rates), with WAIO tracking towards the bottom end of guidance

Note: weaker Australian dollar and Chilean peso than guidance rates in the period(iii)

     —       Operating costs
Unit cost guidance for Queensland Coal has been increased to between US$85 and US$94 per tonne (at guidance exchange rates), reflecting lower expected volumes for the full year      —       h Operating costs
Exploration expense (minerals exploration programs)      80     Exploration expense
Higher depreciation and amortisation mainly at WAIO following South Flank commissioning and prior period update of closure provision at Yandi.      425 – 475     h Depreciation, amortisation and impairments
The Group’s adjusted effective tax rate for H1 FY22 is expected to be slightly below the full year guidance range of 32 to 37 per cent given Petroleum will be presented as a discontinued operation. An updated guidance range will be provided in the half year financial results      —       Taxation expense
Working capital movements relating to royalties, inventory builds, net price impacts on receivables and other movements.      2,000 – 2,500     ¯ Operating cash inflow
Dividends received from Cerrejón      ~240 (iv)     h Operating cash inflow
Dividends paid to non-controlling interests      ~1,250     h Financing cash outflow
Impairment of US deferred tax assets no longer expected to be recoverable after the Petroleum merger (after tax)      400 – 450     h Exceptional item charge
Financial impact on BHP Brasil of the Samarco dam failure     
Refer footnote
(v) 
 
  h Exceptional item charge

 

(i)

Numbers are not tax effected, unless otherwise noted.

(ii)

There will be a corresponding balance sheet, cash flow and/or income statement impact as relevant, unless otherwise noted.

(iii)

Average exchange rates for H1 FY22 of AUD/USD 0.73 (guidance rate AUD/USD 0.78) and USD/CLP 798 (guidance rate USD/CLP 727).

(iv)

There will be no net income statement impact in relation to Cerrejón for H1 FY22. While the dividends received will be recognised as other income, the associated adjustment to the proceeds to be received on sale completion results in an offsetting expense to reflect the reduction in the carrying value of the Cerrejón assets held for sale.

(v)

Financial impact is the subject of ongoing work and is not yet finalised. See corporate update section for further information on Samarco.

The December 2021 half year financial results are being prepared on the basis that BHP Petroleum will be reported as a discontinued operation. BHP Petroleum will be excluded from the consolidated Income Statement and will not be included when calculating the minimum dividend payout. BMC will continue to be consolidated with Queensland Coal as a continuing operation until the expected completion in the middle of the 2022 calendar year. On the Balance Sheet, both BMC and BHP Petroleum will be reclassified as assets held for sale and excluded from net operating assets.

Major development projects

At the end of December 2021, BHP had two major projects under development, the US$2.97 billion Jansen mine shafts project and the US$5.7 billion Jansen Stage 1 project.

 

BHP Operational Review for the half year ended 31 December 2021    3


Table of Contents

Average realised prices

The average realised prices achieved for our major commodities are summarised below.

 

Average realised prices(i)

   Dec H21      Dec H20      Jun H21      FY21      Dec H21
vs

Dec H20
    Dec H21
vs

Jun H21
    Dec H21
vs

FY21
 

Copper (US$/lb)

     4.31        3.32        4.34        3.81        30     (1 %)      13

Iron ore (US$/wmt, FOB)

     113.54        103.78        158.17        130.56        9     (28 %)      (13 %) 

Metallurgical coal (US$/t)

     259.71        97.61        114.81        106.64        166     126     144

Hard coking coal (US$/t)(ii)

     278.60        106.30        118.54        112.72        162     135     147

Weak coking coal (US$/t)(ii)

     218.65        73.17        104.40        89.62        199     109     144

Thermal coal (US$/t)(iii)

     137.68        44.35        70.83        58.42        210     94     136

Nickel metal (US$/t)

     19,651        15,140        17,537        16,250        30     12     21

Discontinued operations

                  

Oil (crude and condensate) (US$/bbl)

     74.26        41.40        63.05        52.56        79     18     41

Natural gas (US$/Mscf)(iv)

     5.80        3.83        4.86        4.34        51     19     34

LNG (US$/Mscf)

     15.10        4.45        7.04        5.63        239     114     168

 

(i)

Based on provisional, unaudited estimates. Prices exclude sales from equity accounted investments, third party product and internal sales, and represent the weighted average of various sales terms (for example: FOB, CIF and CFR), unless otherwise noted. Includes the impact of provisional pricing and finalisation adjustments.

(ii)

Hard coking coal (HCC) refers generally to those metallurgical coals with a Coke Strength after Reaction (CSR) of 35 and above, which includes coals across the spectrum from Premium Coking to Semi Hard Coking coals, while weak coking coal (WCC) refers generally to those metallurgical coals with a CSR below 35.

(iii)

Export sales only; excludes Cerrejón. Includes thermal coal sales from metallurgical coal mines.

(iv)

Includes internal sales.

The large majority of iron ore shipments were linked to index pricing for the month of shipment, with price differentials predominantly a reflection of market fundamentals and product quality. Iron ore sales were based on an average moisture rate of 7.2 per cent. The large majority of metallurgical coal and energy coal exports were linked to index pricing for the month of shipment or sold on the spot market at fixed or index-linked prices, with price differentials reflecting product quality. The majority of copper cathodes sales were linked to index pricing for quotation periods one month after the month of shipment, and three to four months after the month of shipment for copper concentrates sales with price differentials applied for location and treatment costs. The large majority of oil sales were linked to West Texas intermediate (WTI) or Brent based indices, with differentials applied for quality, locational and transportation costs.

At 31 December 2021, the Group had 333 kt of outstanding copper sales that were revalued at a weighted average price of US$4.42 per pound. The final price of these sales will be determined over the remainder of the 2022 financial year. In addition, 323 kt of copper sales from the 2021 financial year were subject to a finalisation adjustment in the current period. The provisional pricing and finalisation adjustments will increase Underlying EBITDA(5) by US$11 million in the December 2021 half year and are included in the average realised copper price in the above table.

Corporate update

Portfolio

In November 2021, BHP announced it had signed a Share Sale and Purchase Agreement with Stanmore Resources Limited to divest its 80 per cent interest in BHP Mitsui Coal Pty Ltd (BMC), an operated metallurgical coal joint venture in Queensland. The purchase price comprises US$1.1 billion cash on completion, US$100 million in cash six months after completion and the potential for up to US$150 million in a price-linked earn-out payable in the 2024 calendar year. Completion is expected in the middle of the 2022 calendar year subject to the satisfaction of certain conditions, including customary competition and regulatory conditions.

In November 2021, BHP signed a binding Share Sale Agreement for the merger of BHP’s oil and gas portfolio with Woodside to create a global top 10 independent energy company by production. It is proposed that Woodside will acquire BHP Petroleum in exchange for new Woodside shares. Completion of the merger is subject to satisfaction of conditions precedent including regulatory and competition authority approvals and approval by Woodside’s shareholders. The process remains on track and the Australian Competition and Consumer Commission provided informal clearance of the merger in December 2021. The Woodside shareholder meeting to vote on the merger as well as completion of the merger is targeted for the June 2022 quarter. In addition to its primary listing on the Australian Securities Exchange, Woodside is pursuing a standard listing on the London Stock Exchange and a listing of American Depositary Receipts on the New York Stock Exchange.

 

BHP Operational Review for the half year ended 31 December 2021    4


Table of Contents

In December 2021, BHP announced a final decision to unify BHP’s corporate structure under its existing Australian parent company, BHP Group Limited. The Board believes that unification is in the best interests of BHP shareholders. Unification will create a corporate structure that is simpler and more efficient, reduces duplication and streamlines BHP’s governance and internal processes. Shareholder meetings of BHP Group Limited and BHP Group Plc will take place on 20 January 2022 to approve unification. Unification is expected to complete by 31 January 2022 subject to shareholder approval of both BHP Group Limited and BHP Group Plc and UK Court sanction of the scheme.

In December 2021, BHP announced it would not increase or extend its offer to acquire Noront Resources. BHP is committed to its strict capital discipline framework and while the Eagle’s Nest deposit is a promising resource, we do not see adequate long-term value for BHP shareholders to support an increase in BHP’s offer to match the proposal from Wyloo Metals Pty Ltd.

In December 2021, BHP advanced its early-stage nickel interests by agreeing to invest in the Kabanga Nickel Project (Kabanga), a high-quality nickel sulphide deposit in Tanzania. Kabanga is a joint venture between Kabanga Nickel Limited (84 per cent interest) and the Government of Tanzania (16 per cent). BHP has made an initial investment of US$40 million in Kabanga, which will convert into an 8.9 per cent equity stake in Kabanga Nickel Limited once approvals and conditions are met. The proceeds will be used to accelerate drilling and study work. Further investments, including a second tranche of US$50 million, have been agreed in principle subject to the parties agreeing definitive documentation and certain other conditions. In parallel, BHP has invested US$10 million in Lifezone Limited to progress its low-carbon hydrometallurgical processing technology.

In January 2022, BHP completed the sale to Glencore of its 33.3 per cent interest in the Cerrejón joint venture in Colombia. The transaction was first announced on 29 June 2021 for a total cash consideration of US$294 million.

Samarco

Samarco’s Judicial Reorganisation process is continuing in the Commercial Courts of Belo Horizonte, State of Minas Gerais. The Judicial Reorganisation is a process for Samarco to restructure its financial debts in order to establish a sustainable independent financial position that would allow Samarco to continue its operations safely and meet its Renova Foundation obligations. BHP Brasil will continue to support Samarco in this process.

Negotiations are ongoing with State and Federal Prosecutors and certain other Brazilian public authorities in relation to the review of the Framework Agreement. The Framework Agreement was entered into between Samarco, Vale and BHP Brasil and the relevant Brazilian authorities in March 2016 and established the Renova Foundation to develop and implement environmental and socio-economic programs to remediate and provide compensation for damage caused by the Samarco dam failure.

In October 2021, the 12th Federal Court delivered a ruling that expanded the scope of eligible individuals of the court mandated compensation process (“Novel System”), extended its geographical scope and increased indemnification amounts for certain categories of damage. The decision is under appeal and applications have been made to clarify certain aspects of the ruling. BHP is currently reviewing the impact of the 12th Federal Court’s decision on the Group’s provision for the Samarco dam failure and it is possible that the provision could materially increase.

In December 2021, BHP agreed to fund US$700 million in further financial support for the Renova Foundation, which will be offset against the Group’s provision for the Samarco dam failure. Further funding requirements for the period to 31 December 2022 continue to be assessed and, will be subject to future approval by BHP.

We will provide an update to the ongoing potential financial impacts on BHP Brasil of the Samarco dam failure with the release of the financial results on 15 February 2022. Any financial impacts will continue to be treated as an exceptional item.

 

BHP Operational Review for the half year ended 31 December 2021    5


Table of Contents

Copper

Production

 

     Dec H21      Dec Q21      Dec H21
vs

Dec H20
    Dec Q21
vs

Dec Q20
    Dec Q21
vs

Sep Q21
 

Copper (kt)

     742.0        365.5        (12 %)      (15 %)      (3 %) 

Zinc (t)

     62,892        29,603        (18 %)      (29 %)      (11 %) 

Uranium (t)

     818        287        (55 %)      (70 %)      (46 %) 

Copper – Total copper production decreased by 12 per cent to 742 kt. Full year production is trending towards the low end of the guidance range for the 2022 financial year, which reflects lower production guidance at Pampa Norte, and narrowed guidance ranges for Escondida and Olympic Dam. Volumes will be weighted to the second half of the financial year as expected.

Uncertainty around impacts from COVID-19 remains as the pandemic evolves, despite an improved operating environment for our Chilean assets in the December 2021 half year due to high COVID-19 vaccination rates and continued use of successful control measures at our operating sites.

Escondida copper production decreased by 15 per cent to 488 kt due to concentrator feed grade decline despite a record performance for material mined. Guidance for the 2022 financial year has been narrowed to between 1,020 and 1,080 kt as concentrator feed grade is expected to improve in the June 2022 half year as the mine sequence moves towards higher grade areas. Concentrator feed grade decline remains forecasted at approximately two per cent for the 2022 financial year. Medium term guidance of an annual average of 1.2 Mt of copper production over the next five years remains unchanged, with production expected to be weighted towards the latter years.

Pampa Norte copper production increased by 40 per cent to 136 kt, reflecting the continued ramp up of the Spence Growth Option (SGO), partially offset by the impact of planned lower ore stacking grade, which is expected to decline by approximately 10 per cent for the 2022 financial year. SGO demonstrated full concentrator throughput of 95 ktpd in the December 2021 quarter. Guidance for the 2022 financial year has been reduced from between 330 and 370 kt to between 260 and 300 kt, as the result of a fatality at the third party desalination plant which impacted Spence operations, operational uncertainty related to Cerro Colorado water access and licencing, including water extraction, and lower than expected recoveries at SGO. Plant design modifications, including modifications to the rougher floatation circuit will be required to increase SGO recoveries to achieve planned copper production levels. The Spence guidance to average 300 ktpa (including cathodes) in the first four years of production will be subject to the timing of these modifications being completed.

Olympic Dam copper production decreased by 56 per cent to 44 kt as a result of the major smelter maintenance campaign in the period. The maintenance campaign was completed in January 2022 and ramp up to full capacity is now expected by April 2022 (previously March 2022), due to COVID-19 impacts on the availability of workforce. The full scope of the maintenance campaign was delivered, including the rebuild of the flash furnace and its ancillary equipment and refurbishment of the acid plant, which has resulted in significant plant improvements. Guidance for the 2022 financial year has been narrowed to between 140 and 150 kt as production is trending towards the low end of the original guidance range.

Antamina copper production increased by one per cent to 74 kt reflecting higher copper head grades and zinc production decreased by 18 per cent to 63kt reflecting lower zinc head grades. Guidance remains unchanged for the 2022 financial year, with copper production of between 120 and 140 kt, and zinc production of between 115 and 130 kt.

 

BHP Operational Review for the half year ended 31 December 2021    6


Table of Contents

Iron Ore

Production

 

     Dec H21      Dec Q21      Dec H21
vs

Dec H20
    Dec Q21
vs

Dec Q20
    Dec Q21
vs

Sep Q21
 

Iron ore production (kt)

     129,401        66,102        1     6     4

Iron ore – Total iron ore production increased by one per cent to 129 Mt. Guidance for the 2022 financial year remains unchanged at between 249 and 259 Mt.

WAIO finished the half year at near record production levels at 127 Mt (144 Mt on a 100 per cent basis), despite impacts of temporary labour constraints relating to COVID-19 border restrictions and the planned major maintenance on car dumper one and the Jimblebar train load out. This reflects continued strong supply chain performance including higher car dumper performance and improved rail cycle times. South Flank ramp up to full production capacity of 80 Mtpa (100 per cent basis) over three years remains on track with a peak rate of 45 Mtpa achieved in the half year contributing to record lump sales. In December 2021, we approved the South Flank Autonomous Haulage Project to automate the current fleet of Komatsu haul trucks. The project is scheduled to commence in the June 2022 quarter and is expected to be completed within 18 months. The proposed easing of Western Australia’s border restrictions on 5 February 2022 may introduce some short-term disruption to the operating environment as the COVID-19 pandemic evolves in the state.

Samarco production was 2.1 Mt (BHP share), following the recommencement of iron ore pellet production at one concentrator in December 2020. Guidance of between 3 and 4 Mt (BHP share) remains unchanged for the 2022 financial year.

Coal

Production

 

     Dec H21      Dec Q21      Dec H21
vs

Dec H20
    Dec Q21
vs

Dec Q20
    Dec Q21
vs

Sep Q21
 

Metallurgical coal (kt)(2)

     17,668        8,818        (8 %)      (7 %)      0

Energy coal (kt)(3)

     7,205        2,967        5     (8 %)      (30 %) 

Metallurgical coal – Metallurgical coal production decreased by eight per cent to 18 Mt (31 Mt on a 100 per cent basis). Guidance for the 2022 financial year has been reduced to between 38 and 41 Mt (68 and 72 Mt on a 100 per cent basis) from between 39 and 44 Mt (70 and 78 Mt on a 100 per cent basis). The revision is a result of significant La Niña related wet weather impacts during the December 2021 quarter coupled with COVID-19 related labour constraints. Workforce absenteeism arising from the COVID-19 Omicron variant is anticipated to continue into the early part of the second half of the 2022 financial year.

Queensland Coal production decreased due to significant wet weather, with double the amount of rainfall, coupled with COVID-19 related labour constraints impacting stripping and mine productivity across most operations. A longwall move was successfully executed at Broadmeadow and the Caval Ridge wash plant maintenance was also completed on time during the December 2021 quarter.

Following the recent easing of Queensland’s border restrictions, COVID-19 related absenteeism has increased and remains a risk for the remainder of the year.

Energy coal – Energy coal production increased by five per cent to 7 Mt. Guidance for the 2022 financial year remains unchanged at between 13 and 15 Mt. The divestment of our interest in Cerrejón was completed in January 2022 and Cerrejón volumes are no longer included in energy coal guidance.

NSWEC production increased as a result of increased stripping volumes enabled by continued truck productivity and mining in lower strip ratio areas, despite increased rainfall and COVID-19 related impacts. High quality products now make up approximately 80 per cent of sales compared to approximately 60 per cent of sales in the prior period.

 

BHP Operational Review for the half year ended 31 December 2021    7


Table of Contents

Other

Nickel production

 

     Dec H21      Dec Q21      Dec H21
vs

Dec H20
    Dec Q21
vs

Dec Q20
    Dec Q21
vs

Sep Q21
 

Nickel (kt)

     39.3        21.5        (15 %)      (10 %)      21

Nickel – Nickel West production decreased by 15 per cent to 39 kt, reflecting planned maintenance at the Kalgoorlie Smelter, Kwinana Refinery and the Leinster and Kambalda concentrators in the September 2021 quarter, and planned asset integrity work to support operational stability completed in the December 2021 quarter. Guidance for the 2022 financial year remains unchanged at between 85 and 95 kt, with volumes weighted towards the second half of the financial year. The first batch of nickel sulphate crystals were produced in the September 2021 quarter and customer certification continues. First saleable production was achieved in the December 2021 quarter.

Potash

Projects

 

Project and
ownership

   Capital
expenditure
US$M
    

Initial
production
target date

  

Capacity

  

Progress

Jansen Potash

(Canada)

100%

     2,972      CY27    Investment to finish the excavation and lining of the production and service shafts, and to continue the installation of essential surface infrastructure and utilities.    The project is 98% complete. Target project completion in CY22.

Jansen Stage 1

(Canada)

100%

     5,723      CY27    Design, engineering and construction of an underground potash mine and surface infrastructure, with capacity to produce 4.35 Mtpa.    Approved in August 2021, project is 3% complete

Minerals exploration

Minerals exploration expenditure for the December 2021 half year was US$110 million, of which US$80 million was expensed. We have continued to add to our early stage options in future facing commodities. Greenfield minerals exploration is being undertaken on advancing copper targets in Chile, Ecuador, Mexico, Peru, Canada, Australia and the south-west United States. Nickel targets are also being advanced in Canada and Australia. Specifically in copper, we are undertaking target drilling in Chile, Ecuador and the United States while further drilling is underway in Australia.

In October 2021, BHP executed its farm-in agreement for the early-stage prospective Elliott copper project covering 7,200 km2 in the Northern Territory, Australia. Under the terms of the agreement, BHP can earn up to 75 per cent interest in Elliott by spending up to A$25 million over 10 years.

Also in October 2021, BHP exercised its option to form an exploration joint venture with Red Tiger Resources for the Intercept Hill copper project, which borders Oak Dam in South Australia.

At Oak Dam in South Australia, BHP is continuing next stage resource definition drilling, after commencing the program in May 2021.

In December 2021, BHP advanced its early-stage nickel interests by investing in the Kabanga Nickel Project (Kabanga), a high-quality nickel sulphide deposit in Tanzania. Kabanga is a joint venture between Kabanga Nickel Limited (84 per cent interest) and the Government of Tanzania (16 per cent).

 

BHP Operational Review for the half year ended 31 December 2021    8


Table of Contents

Discontinued operations - Petroleum

Production

 

     Dec H21      Dec Q21      Dec H21
vs

Dec H20
    Dec Q21
vs

Dec Q20
    Dec Q21
vs

Sep Q21
 

Crude oil, condensate and natural gas liquids (MMboe)

     25.1        12.3        13     15     (3 %) 

Natural gas (bcf)

     168.5        80.1        (1 %)      2     (9 %) 

Total petroleum production (MMboe)

     53.2        25.7        5     8     (7 %) 

BHP announced on 22 November 2021 a binding share sale agreement for the proposed merger of BHP’s oil and gas portfolio with Woodside. Completion of the merger is expected in the June 2022 quarter subject to satisfaction of conditions precedent including approval by Woodside shareholders. The effective date of the merger is 1 July 2021. The half year financial results are being prepared on the basis that BHP Petroleum is a discontinued operation.

Total petroleum production increased by 5 per cent to 53 MMboe. No further guidance for the 2022 financial year will be provided for Petroleum given the business will be presented as a discontinued operation. However, until merger completion, we expect a production run rate broadly consistent with the original 2022 financial year production guidance of between 99 and 106 MMboe.

Crude oil, condensate and natural gas liquids production increased by 13 per cent to 25 MMboe, reflecting the additional 28 percent working interest acquired in Shenzi in November 2020, increased volumes from Ruby following first production in May 2021, and lower impact from weather events in the Gulf of Mexico, partially offset by natural field decline across the portfolio.

Natural gas production decreased by one per cent to 169 bcf, reflecting decreased production at North West Shelf and natural field decline across the portfolio, partially offset by increased volumes from Ruby and higher seasonal demand for gas at Bass Strait.

Projects

 

Project and

ownership

   Capital
expenditure
US$M
   Initial
production
target date
  

Capacity

  

Progress

Mad Dog Phase 2 (US Gulf of Mexico) 23.9% (non-operator)    2,154    Mid-CY22    New floating production facility with the capacity to produce up to 140,000 gross barrels of oil equivalent per day.    On schedule and budget. The overall project is 97% complete.
Shenzi North development (US Gulf of Mexico) 72% (operator)    392    CY24    A two-well subsea tie-in to the Shenzi platform, with the capacity to produce up to 30,000 gross barrels of oil equivalent per day.    On schedule and budget. The overall project is 5% complete.
Scarborough (Western Australia) 26.5% (non-operator)    1,500    CY26    New upstream facilities designed to deliver daily gas quantities to manufacture 8 Mtpa LNG and 180 TJ/day of domestic gas.    Sanctioned in November 2021. On schedule and budget. The overall project is 10% complete.

On 22 November 2021, we announced the approval of US$1.5 billion in capital expenditure for development of the Scarborough upstream project located in the North Carnarvon Basin, Western Australia. The approved capital expenditure represents BHP’s 26.5 per cent participating interest in Phase 1 of the upstream development. Final investment decisions have also been made by Woodside and the Scarborough Joint Venture.

In the December 2021 quarter, we completed the Ruby project in Trinidad & Tobago. The project was completed on schedule and within budget, and the Ruby field is currently producing both oil and gas.

The Mad Dog Phase 2 project’s semi-submersible platform, Argos, was towed to final location in the US Gulf of Mexico and moored. Offshore execution of construction and commissioning is in progress. First production from Mad Dog Phase 2 is expected from mid-calendar year 2022.

In December 2021, we reached a commercial milestone with the Trion project in Mexico with the filing of a Declaration of Commerciality with the National Hydrocarbons Commission. As announced in August 2021, we have moved Trion into the Front End Engineering Design (FEED) phase and work is progressing to plan. Studies are underway, focused on completion of the engineering, commercial arrangements and execution planning required to progress readiness for a Final Investment Decision from mid-calendar year 2022.

 

BHP Operational Review for the half year ended 31 December 2021    9


Table of Contents

Petroleum exploration

Exploration and appraisal wells drilled during the December 2021 quarter are summarised below.

 

Well

  

Location

   Target    Formation age    BHP equity    Spud date    Water
depth
   Total well
depth
   Status

Bongos-3X

   Trinidad & Tobago Block TTDAA 14    Gas    Late Miocene    70% (BHP
Operator)
   27 July 2021    2,114 m    5,174 m    Hydrocarbons
encountered

Bongos-3X ST01

   Trinidad & Tobago Block TTDAA 14    Gas    Late Miocene    70% (BHP
Operator)
   27 July 2021    2,114 m    5,169 m    Hydrocarbons
encountered

Bongos-4

   Trinidad & Tobago Block TTDAA 14    Gas    Late Miocene    70% (BHP
Operator)
   6 August
2021
   2,177 m    5,163 m    Hydrocarbons
encountered

Wasabi-1

   Gulf of Mexico GC124    Oil    Early Miocene    75% (BHP
Operator)
   7 October
2021
   764 m    2,673 m    Plugged and
abandoned

Wasabi-2

   Gulf of Mexico GC124    Oil    Early Miocene    75% (BHP
Operator)
   17 November
2021
   764 m    6,895 m    Drilling
ahead(i)

 

(i)

Well depth and status as at 31 December 2021.

In Trinidad and Tobago, the Calypso appraisal drilling programme concluded on 20 December 2021. All wells encountered hydrocarbons. Bongos-3 confirmed volumes downdip of prior penetrations and Bongos-4 established volumes in a new segment. The well results are currently under evaluation and will be incorporated into the development plan.

In the central Gulf of Mexico, the Wasabi-1 well encountered a mechanical difficulty and was plugged and abandoned on 13 November 2021. Wasabi-2 (GC124-002) was spud on 17 November 2021 and drilling operations continue.

In Barbados, a 3D seismic survey was acquired in November 2021 over a portion of the Bimshire and Carlisle Bay blocks(6). Processed data is expected to be delivered in mid-calendar year 2022.

BHP has acquired interests in offshore exploration blocks in the Red Sea in Egypt. In December 2021, the Minister of Energy in Egypt signed the Deed of Assignment for Red Sea Block 1, finalising the assignment of a 45 per cent participating interest from Chevron to BHP. The effective date of the transfer is 12 September 2021. This follows a separate agreement with Shell in March 2021 for BHP to acquire a 30 and 25 per cent non-operated working interest in Egypt’s Red Sea Blocks 3 and 4, respectively. The effective date of BHP’s participation in Blocks 3 and 4 is pending final government approvals.

Petroleum exploration expenditure for the December 2021 half year was US$243 million, of which US$112 million was expensed. An approximately US$540 million exploration and appraisal program is being executed for the 2022 financial year.

 

BHP Operational Review for the half year ended 31 December 2021    10


Table of Contents

Variance analysis relates to the relative performance of BHP and/or its operations during the December 2021 half year compared with the December 2020 half year, unless otherwise noted. Production volumes, sales volumes and capital and exploration expenditure from subsidiaries are reported on a 100 per cent basis; production and sales volumes from equity accounted investments and other operations are reported on a proportionate consolidation basis. Numbers presented may not add up precisely to the totals provided due to rounding. Copper equivalent production is based on 2021 financial year average realised prices.

The following footnotes apply to this Operational Review:

 

(1)

2022 financial year unit cost guidance: Escondida US$1.20-1.40/lb, WAIO US$17.50-18.50/t, Queensland Coal US$85-94/t and NSWEC US$62-70/t; based on exchange rates of AUD/USD 0.78 and USD/CLP 727.

 

(2)

We announced the divestment of our interest in BMC in November 2021, however will continue to report BMC production as part of Queensland Coal. We maintain economic and operating control of BMC until the sale has completed.

 

(3)

We have ceased providing Cerrejón production guidance due to the completion of the divestment of our interest. The transaction has an effective economic date of 31 December 2020 and volumes have been reported separately.

 

(4)

Excludes Petroleum production.

 

(5)

Underlying EBITDA is used to help assess current operational profitability excluding the impacts of sunk costs (i.e. depreciation from initial investment). Underlying EBITDA is earnings before net finance costs, depreciation, amortisation and impairments, taxation expense, discontinued operations and exceptional items. Underlying EBITDA includes BHP’s share of profit/(loss) from investments accounted for using the equity method including net finance costs, depreciation, amortisation and impairments and taxation expense/(benefit).

 

(6)

Permission for survey granted by the Barbados Ministry of Energy.

The following abbreviations may have been used throughout this report: barrels (bbl); billion cubic feet (bcf); cost and freight (CFR); cost, insurance and freight (CIF); dry metric tonne unit (dmtu); free on board (FOB); grams per tonne (g/t); kilograms per tonne (kg/t); kilometre (km); metre (m); million barrels of oil equivalent (MMboe); million barrels of oil per day (MMbpd); million cubic feet per day (MMcf/d); million tonnes (Mt); million tonnes per annum (Mtpa); ounces (oz); pounds (lb); thousand barrels of oil equivalent (Mboe); thousand barrels of oil equivalent per day (Mboe/d); thousand ounces (koz); thousand standard cubic feet (Mscf); thousand tonnes (kt); thousand tonnes per annum (ktpa); thousand tonnes per day (ktpd); tonnes (t); and wet metric tonnes (wmt).

In this release, the terms ‘BHP’, the ‘Group’, ‘BHP Group’, ‘we’, ‘us’, ‘our’ and ourselves’ are used to refer to BHP Group Limited, BHP Group plc and, except where the context otherwise requires, their respective subsidiaries as defined in note 30 ‘Subsidiaries’ in section 3.1 of BHP’s 30 June 2021 Annual Report and Form 20-F. Those terms do not include non-operated assets. Notwithstanding that this release may include production, financial and other information from non-operated assets, non-operated assets are not included in the BHP Group and, as a result, statements regarding our operations, assets and values apply only to our operated assets unless stated otherwise. Our non-operated assets include Antamina, Cerrejón, Samarco, Atlantis, Mad Dog, Bass Strait and North West Shelf. BHP Group cautions against undue reliance on any forward-looking statement or guidance in this release, particularly in light of the current economic climate and significant volatility, uncertainty and disruption arising in connection with COVID-19. These forward looking statements are based on information available as at the date of this release and are not guarantees or predictions of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control and which may cause actual results to differ materially from those expressed in the statements contained in this release.

 

BHP Operational Review for the half year ended 31 December 2021    11


Table of Contents

Further information on BHP can be found at: bhp.com

Authorised for lodgement by:

Stefanie Wilkinson

Group Company Secretary

 

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BHP Operational Review for the half year ended 31 December 2021    12


Table of Contents

Production summary

           Quarter ended      Year to date  
     BHP
interest
    Dec
2020
     Mar
2021
     Jun
2021
     Sep
2021
     Dec
2021
     Dec 2021      Dec 2020  

Copper (1)

                      

Copper

                      

Payable metal in concentrate (kt)

                      

Escondida (2)

     57.5     236.7        202.7        195.6        194.7        196.2        390.9        473.4  

Pampa Norte (3)

     100.0     0.7        5.6        21.1        26.4        24.2        50.6        0.7  

Antamina

     33.8     38.6        34.7        36.1        35.8        38.4        74.2        73.2  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       276.0        243.0        252.8        256.9        258.8        515.7        547.3  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cathode (kt)

                      

Escondida (2)

     57.5     50.9        46.6        51.1        49.0        48.4        97.4        98.8  

Pampa Norte (3)

     100     53.6        46.4        48.3        41.1        44.1        85.2        96.1  

Olympic Dam

     100     47.6        55.4        50.8        29.5        14.2        43.7        99.1  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       152.1        148.4        150.2        119.6        106.7        226.3        294.0  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total copper (kt)

       428.1        391.4        403.0        376.5        365.5        742.0        841.3  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Lead

                      

Payable metal in concentrate (t)

                      

Antamina

     33.8     993        468        381        378        277        655        1,683  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       993        468        381        378        277        655        1,683  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Zinc

                      

Payable metal in concentrate (t)

                      

Antamina

     33.8     41,909        33,299        35,483        33,289        29,603        62,892        76,307  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       41,909        33,299        35,483        33,289        29,603        62,892        76,307  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Gold

                      

Payable metal in concentrate (troy oz)

                      

Escondida (2)

     57.5     47,789        37,954        38,893        41,962        42,937        84,899        90,121  

Pampa Norte (3)

     100     —          —          4,728        6,967        5,776        12,743        —    

Olympic Dam (refined gold)

     100     23,837        37,075        48,478        26,277        37,805        64,082        60,445  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       71,626        75,029        92,099        75,206        86,518        161,724        150,566  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Silver

                      

Payable metal in concentrate (troy koz)

                      

Escondida (2)

     57.5     1,627        1,318        1,234        1,291        1,462        2,753        3,207  

Pampa Norte (3)

     100     —          —          214        273        215        488        —    

Antamina

     33.8     1,767        1,463        1,409        1,367        1,308        2,675        3,093  

Olympic Dam (refined silver)

     100     193        275        185        191        258        449        350  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       3,587        3,056        3,042        3,122        3,243        6,365        6,650  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Uranium

                      

Payable metal in concentrate (t)

                      

Olympic Dam

     100     945        834        614        531        287        818        1,819  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       945        834        614        531        287        818        1,819  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Molybdenum

                      

Payable metal in concentrate (t)

                      

Pampa Norte (3)

     100     —          —          —          —          —          —          —    

Antamina

     33.8     192        276        111        142        217        359        476  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       192        276        111        142        217        359        476  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

BHP Operational Review for the half year ended 31 December 2021    13


Table of Contents

Production summary

 

             
           Quarter ended      Year to date  
     BHP
interest
    Dec
2020
     Mar
2021
     Jun
2021
     Sep
2021
     Dec
2021
     Dec 2021      Dec 2020  

Iron Ore

                      

Iron Ore

                      

Production (kt) (4)

                      

Newman

     85     17,637        14,614        14,560        16,461        14,577        31,038        34,047  

Area C Joint Venture

     85     11,567        13,010        15,920        18,947        22,911        41,858        23,456  

Yandi Joint Venture

     85     16,413        16,112        18,405        11,834        12,261        24,095        34,079  

Jimblebar (5)

     85     16,740        15,241        15,337        15,009        15,324        30,333        36,815  

Samarco

     50     37        878        1,023        1,048        1,029        2,077        37  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       62,394        59,855        65,245        63,299        66,102        129,401        128,434  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Coal

                      

Metallurgical coal

                      

Production (kt) (6)

                      

BMA

     50     7,539        7,727        9,253        6,715        6,300        13,015        14,904  

BHP Mitsui Coal (7)(8)

     80     1,983        1,863        2,570        2,135        2,518        4,653        4,308  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       9,522        9,590        11,823        8,850        8,818        17,668        19,212  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Energy coal

                      

Production (kt)

                      

NSW Energy Coal

     100     3,229        2,981        4,492        4,238        2,967        7,205        6,853  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       3,229        2,981        4,492        4,238        2,967        7,205        6,853  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Production (kt)

                      

Cerrejón

     33.3     347        1,795        1,784        2,060        2,176        4,236        1,385  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       347        1,795        1,784        2,060        2,176        4,236        1,385  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Other

                      

Nickel

                      

Saleable production (kt)

                      

Nickel West

     100     24.0        20.4        22.4        17.8        21.5        39.3        46.2  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       24.0        20.4        22.4        17.8        21.5        39.3        46.2  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cobalt

                      

Saleable production (t)

                      

Nickel West

     100     236        273        241        177        220        397        474  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

       236        273        241        177        220        397        474  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Discontinued operations

                      

Petroleum (9)

                      

Production

                      

Crude oil, condensate and NGL (Mboe)

       10,729        11,601        12,205        12,751        12,345        25,096        22,236  

Natural gas (bcf)

       78.5        82.6        88.6        88.4        80.1        168.5        169.4  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total (Mboe)

       23,812        25,368        26,972        27,484        25,695        53,179        50,469  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Metal production is reported on the basis of payable metal.

(2)

Shown on a 100% basis. BHP interest in saleable production is 57.5%.

(3)

Includes Cerro Colorado and Spence.

(4)

Iron ore production is reported on a wet tonnes basis.

(5)

Shown on a 100% basis. BHP interest in saleable production is 85%.

(6)

Metallurgical coal production is reported on the basis of saleable product. Production figures include some thermal coal.

(7)

Shown on a 100% basis. BHP interest in saleable production is 80%.

(8)

We announced the divestment of our interest in BHP Mitsui Coal (BMC) in November 2021, but will continue to report BMC as part of Queensland Coal as we maintain economic and operating control of BMC until the sale has completed.

(9)

LPG and ethane are reported as natural gas liquids (NGL). Product-specific conversions are made and NGL is reported in barrels of oil equivalent (boe). Total boe conversions are based on 6 bcf of natural gas equals 1,000 Mboe.

Throughout this report figures in italics indicate that this figure has been adjusted since it was previously reported.

 

BHP Operational Review for the half year ended 31 December 2021    14


Table of Contents
Production and sales report                                                      
          Quarter ended      Year to date  
          Dec      Mar      Jun      Sep      Dec      Dec      Dec  
          2020      2021      2021      2021      2021      2021      2020  

Copper

                       

Metals production is payable metal unless otherwise stated.

                    

Escondida, Chile (1)

                       

Material mined

   (kt)      97,274        95,978        104,043        113,874        117,284        231,158        180,631  

Concentrator throughput

   (kt)      36,303        32,654        31,903        33,528        35,787        69,315        71,036  

Average copper grade - concentrator

   (%)      0.83      0.78      0.77      0.73      0.71      0.72      0.84

Production ex mill

   (kt)      246.1        207.8        202.8        201.2        203.6        404.8        490.0  

Production

                       

Payable copper

   (kt)      236.7        202.7        195.6        194.7        196.2        390.9        473.4  

Copper cathode (EW)

   (kt)      50.9        46.6        51.1        49.0        48.4        97.4        98.8  

- Oxide leach

   (kt)      18.0        16.1        14.5        14.8        13.1        27.9        33.3  

- Sulphide leach

   (kt)      32.9        30.5        36.6        34.2        35.3        69.5        65.5  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total copper

   (kt)      287.6        249.3        246.7        243.7        244.6        488.3        572.2  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Payable gold concentrate

   (troy oz)      47,789        37,954        38,893        41,962        42,937        84,899        90,121  

Payable silver concentrate

   (troy koz)      1,627        1,318        1,234        1,291        1,462        2,753        3,207  

Sales

                       

Payable copper

   (kt)      244.3        196.9        194.1        190.5        200.2        390.7        481.4  

Copper cathode (EW)

   (kt)      47.7        49.6        49.6        46.7        49.7        96.4        94.2  

Payable gold concentrate

   (troy oz)      47,789        37,954        38,893        41,962        42,937        84,899        90,121  

Payable silver concentrate

   (troy koz)      1,627        1,318        1,234        1,291        1,462        2,753        3,207  

 

(1)

Shown on a 100% basis. BHP interest in saleable production is 57.5%.

 

Pampa Norte, Chile

                       

Cerro Colorado

                       

Material mined

   (kt)      6,750        6,153        5,498        5,378        4,782        10,160        19,368  

Ore stacked

   (kt)      3,562        3,283        3,702        3,566        4,029        7,595        7,598  

Average copper grade - stacked

   (%)      0.58      0.58      0.58      0.60      0.62      0.61      0.62

Production

                       

Copper cathode (EW)

   (kt)      15.8        13.9        14.7        13.4        15.3        28.7        31.6  

Sales

                       

Copper cathode (EW)

   (kt)      16.6        13.2        15.4        12.1        16.0        28.1        31.2  

Spence

                       

Material mined

   (kt)      18,485        19,195        21,262        21,154        24,025        45,179        36,745  

Ore stacked

   (kt)      5,602        5,536        4,609        5,258        5,071        10,329        10,010  

Average copper grade - stacked

   (%)      0.83      0.64      0.72      0.64      0.66      0.65      0.95

Concentrator throughput

   (kt)      1,207        2,471        4,929        5,786        6,234        12,020        1,207  

Average copper grade - concentrator

   (%)      0        0.58      0.63      0.65      0.60      0.62      0  

Production

                       

Payable copper

   (kt)      0.7        5.6        21.1        26.4        24.2        50.6        0.7  

Copper cathode (EW)

   (kt)      37.8        32.5        33.6        27.7        28.8        56.5        64.5  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total copper

   (kt)      38.5        38.1        54.7        54.1        53.0        107.1        65.2  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Payable gold concentrate

   (troy oz)      —          —          4,728        6,967        5,776        12,743        —    

Payable silver concentrate

   (troy koz)      —          —          214        273        215        488        —    

Payable molybdenum

   (t)      —          —          —          —          —          —          —    

Sales

                       

Payable copper

   (kt)      —          1.8        20.8        28.4        24.9        53.3        —    

Copper cathode (EW)

   (kt)      40.9        30.7        34.1        27.7        31.2        58.9        65.0  

Payable gold concentrate

   (troy oz)      —          —          4,728.0        6,967.0        5,776        12,743        —    

Payable silver concentrate

   (troy koz)      —          —          214.0        273.0        215        488        —    

Payable molybdenum

   (t)      —          —          —          —          —          —          —    

 

BHP Operational Review for the half year ended 31 December 2021    15


Table of Contents
Production and sales report                              
          Quarter ended      Year to date  
          Dec      Mar      Jun      Sep      Dec      Dec      Dec  
          2020      2021      2021      2021      2021      2021      2020  

Copper (continued)

                       
Metals production is payable metal unless otherwise stated.                     

Antamina, Peru

                       

Material mined (100%)

   (kt)      57,029        53,762        63,393        66,581        58,179        124,760        102,487  

Concentrator throughput (100%)

   (kt)      14,083        12,651        13,466        13,219        13,011        26,230        27,285  

Average head grades

                       

- Copper

   (%)      0.97      0.94      0.93      0.97      1.00      0.98      0.96

- Zinc

   (%)      1.30      1.16      1.24      1.16      1.11      1.14      1.30

Production

                       

Payable copper

   (kt)      38.6        34.7        36.1        35.8        38.4        74.2        73.2  

Payable zinc

   (t)      41,909        33,299        35,483        33,289        29,603        62,892        76,307  

Payable silver

   (troy koz)      1,767        1,463        1,409        1,367        1,308        2,675        3,093  

Payable lead

   (t)      993        468        381        378        277        655        1,683  

Payable molybdenum

   (t)      192        276        111        142        217        359        476  

Sales

                       

Payable copper

   (kt)      40.7        31.7        37.3        32.7        41.9        74.6        74.5  

Payable zinc

   (t)      45,109        34,141        32,044        32,635        32,513        65,148        77,878  

Payable silver

   (troy koz)      1,728        1,342        1,540        1,103        1,405        2,508        3,038  

Payable lead

   (t)      945        689        556        232        344        576        1,693  

Payable molybdenum

   (t)      352        192        268        86        170        256        744  

Olympic Dam, Australia

                       

Material mined (1)

   (kt)      2,379        1,979        2,143        1,935        1,998        3,933        4,582  

Ore Milled

   (kt)      2,377        2,238        2,429        2,024        1,105        3,129        4,820  

Average copper grade

   (%)      2.01      2.02      1.95      2.03      2.17      2.08      2.02

Average uranium grade

   (kg/t)      0.60        0.61        0.56        0.55        0.55        0.55        0.56  

Production

                       

Copper cathode (ER and EW)

   (kt)      47.6        55.4        50.8        29.5        14.2        43.7        99.1  

Payable uranium

   (t)      945        834        614        531        287        818        1,819  

Refined gold

   (troy oz)      23,837        37,075        48,478        26,277        37,805        64,082        60,445  

Refined silver

   (troy koz)      193        275        185        191        258        449        350  

Sales

                       

Copper cathode (ER and EW)

   (kt)      46.6        55.6        52.7        29.1        17.9        47.0        96.1  

Payable uranium

   (t)      999        779        1,179        536        541        1,077        1,858  

Refined gold

   (troy oz)      21,390        38,852        47,300        24,654        38,768        63,422        57,444  

Refined silver

   (troy koz)      165        242        245        126        290        416        387  

 

(1)

Material mined refers to underground ore mined, subsequently hoisted or trucked to surface.

 

BHP Operational Review for the half year ended 31 December 2021    16


Table of Contents
Production and sales report                              
          Quarter ended      Year to date  
          Dec      Mar      Jun      Sep      Dec      Dec      Dec  
          2020      2021      2021      2021      2021      2021      2020  

Iron Ore

                       

Iron ore production and sales are reported on a wet tonnes basis.

                    

Western Australia Iron Ore, Australia

                       

Production

                       

Newman

   (kt)      17,637        14,614        14,560        16,461        14,577        31,038        34,047  

Area C Joint Venture

   (kt)      11,567        13,010        15,920        18,947        22,911        41,858        23,456  

Yandi Joint Venture

   (kt)      16,413        16,112        18,405        11,834        12,261        24,095        34,079  

Jimblebar (1)

   (kt)      16,740        15,241        15,337        15,009        15,324        30,333        36,815  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total production

   (kt)      62,357        58,977        64,222        62,251        65,073        127,324        128,397  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total production (100%)

   (kt)      70,407        66,695        72,848        70,587        73,852        144,439        144,559  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Sales

                       

Lump

   (kt)      16,703        15,593        16,410        17,546        17,827        35,373        33,759  

Fines

   (kt)      46,124        42,939        48,837        45,039        46,809        91,848        94,514  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   (kt)      62,827        58,532        65,247        62,585        64,636        127,221        128,273  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total sales (100%)

   (kt)      70,772        66,032        73,712        70,815        73,222        144,037        144,127  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)   Shown on a 100% basis. BHP interest in saleable production is 85%.

 

    

     

Samarco, Brazil (1)

                       

Production

   (kt)      37        878        1,023        1,048        1,029        2,077        37  

Sales

   (kt)      —          646        1,052        1,111        950        2,061        —    

 

(1)

Samarco commenced iron ore pellet production in December 2020 after meeting the licencing requirements to restart operations at the Germano complex in Minas Gerais and Ubu complex in Espírito Santo, Brazil.

 

BHP Operational Review for the half year ended 31 December 2021    17


Table of Contents
Production and sales report                
          Quarter ended      Year to date  
          Dec      Mar      Jun      Sep      Dec      Dec      Dec  
          2020      2021      2021      2021      2021      2021      2020  

Coal

                       

Coal production is reported on the basis of saleable product.

                    

Queensland Coal, Australia

                       

Production (1)

                       

BMA

                       

Blackwater

   (kt)      1,737        1,416        1,887        1,403        1,202        2,605        2,921  

Goonyella

   (kt)      2,152        2,232        2,752        1,798        1,797        3,595        4,464  

Peak Downs

   (kt)      1,213        1,595        1,597        1,223        960        2,183        2,700  

Saraji

   (kt)      1,043        1,238        1,391        999        1,081        2,080        1,860  

Daunia

   (kt)      464        496        478        377        304        681        954  

Caval Ridge

   (kt)      930        750        1,148        915        956        1,871        2,005  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total BMA

   (kt)      7,539        7,727        9,253        6,715        6,300        13,015        14,904  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total BMA (100%)

   (kt)      15,078        15,454        18,506        13,430        12,600        26,030        29,808  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

BHP Mitsui Coal (2) (3)

                       

South Walker Creek

   (kt)      1,118        1,031        1,500        1,462        1,535        2,997        2,356  

Poitrel

   (kt)      865        832        1,070        673        983        1,656        1,952  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total BHP Mitsui Coal

   (kt)      1,983        1,863        2,570        2,135        2,518        4,653        4,308  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Queensland Coal

   (kt)      9,522        9,590        11,823        8,850        8,818        17,668        19,212  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Queensland Coal (100%)

   (kt)      17,061        17,317        21,076        15,565        15,118        30,683        34,116  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Sales

                       

BMA

                       

Coking coal

   (kt)      6,531        6,752        7,801        5,415        4,875        10,290        12,718  

Weak coking coal

   (kt)      936        1,038        1,069        734        754        1,488        1,913  

Thermal coal

   (kt)      3        206        400        576        455        1,031        61  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total BMA

   (kt)      7,470        7,996        9,270        6,725        6,084        12,809        14,692  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total BMA (100%)

   (kt)      14,940        15,992        18,540        13,450        12,168        25,618        29,384  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

BHP Mitsui Coal (2) (3)

                       

Coking coal

   (kt)      604        357        535        313        458        771        1,275  

Weak coking coal

   (kt)      1,518        1,404        2,027        1,788        1,812        3,600        3,063  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total BHP Mitsui Coal

   (kt)      2,122        1,761        2,562        2,101        2,270        4,371        4,338  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Queensland Coal

   (kt)      9,592        9,757        11,832        8,826        8,354        17,180        19,030  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Queensland Coal (100%)

   (kt)      17,062        17,753        21,102        15,551        14,438        29,989        33,722  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(1)   Production figures include some thermal coal.

(2)   Shown on a 100% basis. BHP interest in saleable production is 80%.

(3)   We announced the divestment of our interest in BHP Mitsui Coal (BMC) in November 2021, but will continue to report BMC as part of Queensland Coal as we maintain economic and operating control of BMC until the sale has completed.

 

    

    

    

NSW Energy Coal, Australia

                       

Production

   (kt)      3,229        2,981        4,492        4,238        2,967        7,205        6,853  

Sales thermal coal - export

   (kt)      3,940        2,827        4,691        3,780        3,718        7,498        7,108  

Cerrejón, Colombia

                       

Production

   (kt)      347        1,795        1,784        2,060        2,176        4,236        1,385  

Sales thermal coal - export

   (kt)      370        1,746        1,619        2,180        2,012        4,192        1,364  

 

BHP Operational Review for the half year ended 31 December 2021    18


Table of Contents
Production and sales report                                                     
         Quarter ended      Year to date  
         Dec      Mar      Jun      Sep      Dec      Dec      Dec  
         2020      2021      2021      2021      2021      2021      2020  

Other

                      

Nickel production is reported on the basis of saleable product

                   

Nickel West, Australia

                      

Mt Keith

                      

Nickel concentrate

   (kt)     55.7        54.1        50.4        53.7        47.0        100.7        120.1  

Average nickel grade

   (%)     14.7        13.3        13.3        14.6        13.2        13.9        15.3  

Leinster

                      

Nickel concentrate

   (kt)     72.8        71.5        71.4        73.8        77.4        151.2        139.0  

Average nickel grade

   (%)     9.5        10.2        10.5        8.9        9.1        9.0        9.3  

Saleable production

                      
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Refined nickel (1)

   (kt)     20.4        15.2        17.1        14.4        18.2        32.6        37.7  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Nickel sulphate (2)

   (kt)     —          —          —          —          0.4        0.4        —    

Intermediates and nickel by-products (3)

   (kt)     3.6        5.2        5.3        3.4        2.9        6.3        8.5  

Total nickel

   (kt)     24.0        20.4        22.4        17.8        21.5        39.3        46.2  

Cobalt by-products

   (t)     236        273        241        177        220        397        474  

Sales

                      

Refined nickel (1)

   (kt)     20.9        15.0        17.8        13.8        16.9        30.7        38.0  

Nickel sulphate (2)

   (kt)     —          —          —          —          0.1        0.1        —    

Intermediates and nickel by-products (3)

   (kt)     2.6        5.9        4.0        3.9        3.1        7.0        7.2  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total nickel

   (kt)     23.5        20.9        21.8        17.7        20.1        37.8        45.2  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cobalt by-products

   (t)     237        273        241        177        220        397        475  

 

(1)

High quality refined nickel metal, including briquettes and powder.

(2)

Nickel sulphate crystals produced from nickel powder.

(3)

Nickel contained in matte and by-product streams.

 

BHP Operational Review for the half year ended 31 December 2021    19


Table of Contents

Production and sales report

 

           Quarter ended      Year to date  
         Dec
2020
     Mar
2021
     Jun
2021
     Sep
2021
     Dec
2021
     Dec
2021
     Dec
2020
 

Discontinued operations

                      

Petroleum (1)

                      

Bass Strait

                      

Crude oil and condensate

     (Mboe)       1,003        859        1,205        1,201        971        2,172        2,308  

NGL

     (Mboe)       1,057        1,035        1,563        1,655        1,140        2,795        2,717  

Natural gas

     (bcf)       23.4        22.7        32.8        35.8        25.8        61.6        57.5  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total petroleum products

     (Mboe)       5,960        5,677        8,235        8,823        6,411        15,234        14,608  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

North West Shelf

                      

Crude oil and condensate

     (Mboe)       1,180        1,183        933        973        1,027        2,000        2,395  

NGL

     (Mboe)       165        188        177        148        180        328        327  

Natural gas

     (bcf)       30.4        31.1        26.5        24.3        25.8        50.1        60.0  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total petroleum products

     (Mboe)       6,412        6,554        5,527        5,171        5,507        10,678        12,722  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Pyrenees

                      

Crude oil and condensate

     (Mboe)       826        679        690        710        723        1,433        1,663  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total petroleum products

     (Mboe)       826        679        690        710        723        1,433        1,663  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Macedon

                      

Crude oil and condensate

     (Mboe)       1        1        —          1        1        2        2  

Natural gas

     (bcf)       12.6        12.4        12.6        12.7        12.6        25.3        25.3  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total petroleum products

     (Mboe)       2,101        2,068        2,100        2,118        2,101        4,219        4,219  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Atlantis (2)

                      

Crude oil and condensate

     (Mboe)       2,385        2,590        3,117        3,171        3,222        6,393        4,806  

NGL

     (Mboe)       147        171        218        222        186        408        301  

Natural gas

     (bcf)       1.1        1.4        1.6        1.7        1.5        3.2        2.3  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total petroleum products

     (Mboe)       2,715        2,994        3,602        3,676        3,658        7,334        5,490  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Mad Dog (2)

                      

Crude oil and condensate

     (Mboe)       930        1,209        1,099        1,155        1,137        2,292        2,141  

NGL

     (Mboe)       38        57        77        46        56        102        86  

Natural gas

     (bcf)       0.1        0.2        0.2        0.2        0.1        0.3        0.3  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total petroleum products

     (Mboe)       985        1,299        1,209        1,234        1,210        2,444        2,277  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Shenzi (2) (3)

                      

Crude oil and condensate

     (Mboe)       1,764        2,328        2,023        2,016        2,335        4,351        3,159  

NGL

     (Mboe)       87        130        87        102        134        236        158  

Natural gas

     (bcf)       0.3        0.4        0.1        0.4        0.4        0.8        0.6  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total petroleum products

     (Mboe)       1,901        2,525        2,127        2,185        2,536        4,721        3,417  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Trinidad/Tobago

                      

Crude oil and condensate

     (Mboe)       96        139        236        491        396        887        198  

Natural gas

     (bcf)       10.5        14.4        14.7        13.3        13.9        27.2        23.3  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total petroleum products

     (Mboe)       1,846        2,539        2,686        2,708        2,713        5,421        4,081  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Other Americas (2) (4)

                      

Crude oil and condensate

     (Mboe)       190        187        104        83        81        164        402  

NGL

     (Mboe)       11        —          8        3        —          3        13  

Natural gas

     (bcf)       0.1        —          0.1        —          —          —          0.1  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total petroleum products

     (Mboe)       218        187        129        86        81        167        432  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Algeria

                      

Crude oil and condensate

     (Mboe)       849        845        668        774        756        1,530        1,560  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total petroleum products

     (Mboe)       849        845        668        774        756        1,530        1,560  
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

BHP Operational Review for the half year ended 31 December 2021    20


Table of Contents

Production and sales report

 

                                                      
           Quarter ended      Year to date  
         Dec
2020
     Mar
2021
     Jun
2021
     Sep
2021
     Dec
2021
     Dec
2021
     Dec
2020
 

Discontinued operations (continued)

                      

Petroleum (1)

                      

Total production

                      

Crude oil and condensate

     (Mboe)       9,224        10,020        10,075        10,575        10,649        21,224        18,634  

NGL

     (Mboe)       1,505        1,581        2,130        2,176        1,696        3,872        3,602  

Natural gas

     (bcf)       78.5        82.6        88.6        88.4        80.1        168.5        169.4  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     (Mboe)       23,812        25,368        26,972        27,484        25,695        53,179        50,469  
    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

Total boe conversions are based on 6 bcf of natural gas equals 1,000 Mboe. Negative production figures represent finalisation adjustments.

(2)

Gulf of Mexico volumes are net of royalties.

(3)

BHP completed the acquisition of an additional 28% working interest in Shenzi on 6 November 2020, taking its total working interest to 72%.

(4)

Other Americas includes Neptune, Genesis and Overriding Royalty Interest.

 

BHP Operational Review for the half year ended 31 December 2021    21


Table of Contents

LOGO


Table of Contents

Contents

 

Restated financial information    Page  

Basis of preparation of restated financial information

     24  

Consolidated Income Statement – Restated

     25  

Consolidated Statement of Comprehensive Income

     25  

Consolidated Balance Sheet

     26  

Consolidated Cash Flow Statement – Restated

     27  

Consolidated Statement of Changes in Equity

     28  

Restated supplementary financial information

     29  

 

BHP Operational Review for the half year ended 31 December 2021    23


Table of Contents

Basis of preparation of restated financial information

This financial information for the year ended 30 June 2021 and the half year ended 31 December 2020 for the Group is not audited and has been prepared to restate previously published information for the effects of applying IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ to the Group’s Petroleum business.

On 22 November 2021, the Group and Woodside Petroleum Ltd (‘Woodside’) signed a binding share sale agreement (SSA) for the merger of the Group’s oil and gas portfolio with Woodside (‘Merger’). The merger, which has an effective date of 1 July 2021, is subject to satisfaction of conditions precedent by 30 June 2022 or an agreed later date including shareholder, regulatory and other approvals.

Prior to completion, the Group will carry on its Petroleum business in the normal course and, while the effective date at which the right to net cash flows transferred to Woodside was 1 July 2021, the Group continues to control its Petroleum assets until the completion date of the transaction.

As such, the Group will continue to recognise its share of revenue, expenses, net finance costs and associated income tax expense related to the operation until the completion date. However, as at 31 December 2021, the Petroleum business will be classified as a disposal group held for sale and as a discontinued operation.

The nature of each change reflected in the attached restated financial information is as follows:

 

   

All income and expense items relating to the Petroleum Discontinued Operation have been removed from the individual line items in the Consolidated Income Statement. The post-tax loss of the Petroleum Discontinued Operation is presented as a single amount in the line item titled “Loss after taxation from Discontinued operations”; and

 

   

All cash flows and other items relating to the Petroleum Discontinued Operation have been removed from the individual line items in the Consolidated Cash Flow Statement. The net cash flows attributable to the operating, investing and financing activities of the Petroleum Discontinued Operation are each disclosed in single amounts in each section of the Consolidated Cash Flow Statement.

The Consolidated Balance Sheet, the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Changes in Equity for these periods are not required to be restated.

 

BHP Operational Review for the half year ended 31 December 2021    24


Table of Contents

Consolidated Income Statement – Restated

 

 

     Half year
ended
31 Dec 2020
US$M
    Year
ended
30 June 2021
US$M
 

Continuing operations

    

Revenue

     24,044       56,921  

Other income

     136       380  

Expenses excluding net finance costs

     (13,821     (30,871

Loss from equity accounted investments, related impairments and expenses

     (470     (915
  

 

 

   

 

 

 

Profit from operations

     9,889       25,515  
  

 

 

   

 

 

 

Financial expenses

     (922     (1,290

Financial income

     46       67  
  

 

 

   

 

 

 

Net finance costs

     (876     (1,223
  

 

 

   

 

 

 

Profit before taxation

     9,013       24,292  
  

 

 

   

 

 

 

Income tax expense

     (3,965     (10,376

Royalty-related taxation (net of income tax benefit)

     (28     (240
  

 

 

   

 

 

 

Total taxation expense

     (3,993     (10,616
  

 

 

   

 

 

 

Profit after taxation from Continuing operations

     5,020       13,676  
  

 

 

   

 

 

 

Discontinued operations

    

Loss after taxation from Discontinued operations

     (192     (225
  

 

 

   

 

 

 

Profit after taxation from Continuing and Discontinued operations

     4,828       13,451  
  

 

 

   

 

 

 

Attributable to non-controlling interests

     952       2,147  

Attributable to BHP shareholders

     3,876       11,304  
  

 

 

   

 

 

 

Basic earnings per ordinary share (cents)

     76.6       223.5  

Diluted earnings per ordinary share (cents)

     76.5       223.0  

Basic earnings from Continuing operations per ordinary share (cents)

     80.4       228.0  

Diluted earnings from Continuing operations per ordinary share (cents)

     80.3       227.5  
  

 

 

   

 

 

 

 

Consolidated Statement of Comprehensive Income

 

 

     Half year
ended
31 Dec 2020
US$M
    Year
ended
30 June 2021
US$M
 

Profit after taxation from Continuing and Discontinued operations

     4,828       13,451  

Other comprehensive income

    

Items that may be reclassified subsequently to the income statement:

    

Hedges:

    

Gains taken to equity

     1,074       863  

Gains transferred to the income statement

     (1,000     (837

Exchange fluctuations on translation of foreign operations taken to equity

     —         5  

Tax recognised within other comprehensive income

     (22     (8
  

 

 

   

 

 

 

Total items that may be reclassified subsequently to the income statement

     52       23  
  

 

 

   

 

 

 

Items that will not be reclassified to the income statement:

    

Re-measurement (losses)/gains on pension and medical schemes

     (4     58  

Equity investments held at fair value

     2       (2

Tax recognised within other comprehensive income

     1       (20
  

 

 

   

 

 

 

Total items that will not be reclassified to the income statement

     (1     36  
  

 

 

   

 

 

 

Total other comprehensive income

     51       59  
  

 

 

   

 

 

 

Total comprehensive income

     4,879       13,510  
  

 

 

   

 

 

 

Attributable to non-controlling interests

     953       2,158  

Attributable to BHP shareholders

     3,926       11,352  
  

 

 

   

 

 

 

 

BHP Operational Review for the half year ended 31 December 2021    25


Table of Contents

Consolidated Balance Sheet

 

     Half year     Year  
     ended     ended  
     31 Dec 2020     30 June 2021  
     US$M     US$M  

ASSETS

    

Current assets

    

Cash and cash equivalents

     9,291       15,246  

Trade and other receivables

     4,573       6,059  

Other financial assets

     227       230  

Inventories

     4,511       4,426  

Assets held for sale

     —         324  

Current tax assets

     295       279  

Other

     113       129  
  

 

 

   

 

 

 

Total current assets

     19,010       26,693  
  

 

 

   

 

 

 

Non-current assets

    

Trade and other receivables

     270       337  

Other financial assets

     2,269       1,610  

Inventories

     1,159       1,358  

Property, plant and equipment

     73,711       73,813  

Intangible assets

     1,508       1,437  

Investments accounted for using the equity method

     2,094       1,742  

Deferred tax assets

     3,178       1,912  

Other

     34       25  
  

 

 

   

 

 

 

Total non-current assets

     84,223       82,234  
  

 

 

   

 

 

 

Total assets

     103,233       108,927  
  

 

 

   

 

 

 

LIABILITIES

    

Current liabilities

    

Trade and other payables

     5,663       7,027  

Interest bearing liabilities

     3,560       2,628  

Liabilities directly associated with the assets held for sale

     —         17  

Other financial liabilities

     237       130  

Current tax payable

     1,184       2,800  

Provisions

     2,631       3,696  

Deferred income

     86       105  
  

 

 

   

 

 

 

Total current liabilities

     13,361       16,403  
  

 

 

   

 

 

 

Non-current liabilities

    

Interest bearing liabilities

     19,159       18,355  

Other financial liabilities

     1,187       1,146  

Non-current tax payable

     173       120  

Deferred tax liabilities

     3,603       3,314  

Provisions

     12,128       13,799  

Deferred income

     199       185  
  

 

 

   

 

 

 

Total non-current liabilities

     36,449       36,919  
  

 

 

   

 

 

 

Total liabilities

     49,810       53,322  
  

 

 

   

 

 

 

Net assets

     53,423       55,605  
  

 

 

   

 

 

 

EQUITY

    

Share capital – BHP Group Limited

     1,111       1,111  

Share capital – BHP Group Plc

     1,057       1,057  

Treasury shares

     (30     (33

Reserves

     2,335       2,350  

Retained earnings

     44,449       46,779  
  

 

 

   

 

 

 

Total equity attributable to BHP shareholders

     48,922       51,264  
  

 

 

   

 

 

 

Non-controlling interests

     4,501       4,341  
  

 

 

   

 

 

 

Total equity

     53,423       55,605  
  

 

 

   

 

 

 

 

BHP Operational Review for the half year ended 31 December 2021    26


Table of Contents

Consolidated Cash Flow Statement – Restated

 

     Half year     Year  
     ended     ended  
     31 Dec 2020     30 June 2021  
     US$M     US$M  

Operating activities

    

Profit before taxation from Continuing operations

     9,013       24,292  

Adjustments for:

    

Depreciation and amortisation expense

     2,405       5,084  

Impairments of property, plant and equipment, financial assets and intangibles

     629       2,507  

Net finance costs

     876       1,223  

Loss from equity accounted investments, related impairments and expenses

     470       915  

Other

     294       573  

Changes in assets and liabilities:

    

Trade and other receivables

     (1,049     (2,389

Inventories

     (296     (405

Trade and other payables

     45       1,149  

Provisions and other assets and liabilities

     (59     486  
  

 

 

   

 

 

 

Cash generated from operations

     12,328       33,435  

Dividends received

     355       728  

Interest received

     60       97  

Interest paid

     (447     (766
  

 

 

   

 

 

 

Settlement of cash management related instruments

     (202     (401

Net income tax and royalty-related taxation refunded

     47       222  

Net income tax and royalty-related taxation paid

     (2,993     (7,432
  

 

 

   

 

 

 

Net operating cash flows from Continuing operations

     9,148       25,883  
  

 

 

   

 

 

 

Net operating cash flows from Discontinued operations

     221       1,351  
  

 

 

   

 

 

 

Net operating cash flows

     9,369       27,234  
  

 

 

   

 

 

 

Investing activities

    

Purchases of property, plant and equipment

     (2,835     (5,612

Exploration expenditure

     (86     (192

Exploration expenditure expensed and included in operating cash flows

     56       134  

Net investment and funding of equity accounted investments

     (361     (553

Proceeds from sale of assets

     86       158  

Other investing

     (89     (260
  

 

 

   

 

 

 

Net investing cash flows from Continuing operations

     (3,229     (6,325
  

 

 

   

 

 

 

Net investing cash flows from Discontinued operations

     (980     (1,520
  

 

 

   

 

 

 

Net investing cash flows

     (4,209     (7,845
  

 

 

   

 

 

 

Financing activities

    

Proceeds from interest bearing liabilities

     218       568  

Proceeds from debt related instruments

     90       167  

Repayment of interest bearing liabilities

     (6,181     (8,357

Purchase of shares by Employee Share Ownership Plan (ESOP) trusts

     (174     (234

Dividends paid

     (2,767     (7,901

Dividends paid to non-controlling interests

     (762     (2,127
  

 

 

   

 

 

 

Net financing cash flows from Continuing operations

     (9,576     (17,884
  

 

 

   

 

 

 

Net financing cash flows from Discontinued operations

     (19     (38
  

 

 

   

 

 

 

Net financing cash flows

     (9,595     (17,922
  

 

 

   

 

 

 

Net (decrease)/increase in cash and cash equivalents from Continuing operations

     (3,657     1,674  

Net decrease in cash and cash equivalents from Discontinued operations

     (778     (207

Cash and cash equivalents, net of overdrafts, at the beginning of the financial year

     13,426       13,426  

Foreign currency exchange rate changes on cash and cash equivalents

     300       353  
  

 

 

   

 

 

 

Cash and cash equivalents, net of overdrafts, at the end of period

     9,291       15,246  
  

 

 

   

 

 

 

 

BHP Operational Review for the half year ended 31 December 2021    27


Table of Contents

Consolidated Statement of Changes in Equity for the half year ended 31 December 2020 and the year ended 30 June 2021

 

     Attributable to BHP shareholders              
     Share capital      Treasury shares                 Total equity
attributable
to BHP
shareholders
             

US$M

   BHP
Group
Limited
     BHP
Group
Plc
     BHP
Group
Limited
    BHP
Group
Plc
    Reserves     Retained
earnings
    Non-
controlling
interests
    Total
equity
 

Balance as at 1 July 2020

     1,111        1,057        (5     —         2,306       43,396       47,865       4,310       52,175  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

     —          —          —         —         53       3,873       3,926       953       4,879  

Transactions with owners:

                    

Purchase of shares by ESOP Trusts

     —          —          (171     (3     —         —         (174     —         (174

Employee share awards exercised net of employee contributions net of tax

     —          —          147       2       (106     (43     —         —         —    

Vested employee share awards that have lapsed, been cancelled or forfeited

     —          —          —         —         (2     2       —         —         —    

Accrued employee entitlement for unexercised awards net of tax

     —          —          —         —         84       —         84       —         84  

Dividends

     —          —          —         —         —         (2,779     (2,779     (762     (3,541
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at 31 December 2020

     1,111        1,057        (29     (1     2,335       44,449       48,922       4,501       53,423  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     Attributable to BHP shareholders              
     Share capital      Treasury shares                 Total equity
attributable
to BHP
shareholders
             

US$M

   BHP
Group
Limited
     BHP
Group
Plc
     BHP
Group
Limited
    BHP
Group
Plc
    Reserves     Retained
earnings
    Non-
controlling
interests
    Total
equity
 

Balance as at 1 July 2020

     1,111        1,057        (5     —         2,306       43,396       47,865       4,310       52,175