Bank of America Global Metals, Mining & Steel Conference 2024
Mike Henry
Chief Executive Officer
Western Australia Iron Ore
Disclaimer
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Forward-looking statements
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Forward-looking statements may be identified by the use of terminology, including, but not limited to, 'intend', 'aim', 'project', 'see', 'anticipate', 'estimate', 'plan', 'objective', 'believe', 'expect', 'commit', 'may', 'should', 'need', 'must', 'will', 'would', 'continue', 'annualised', 'forecast', 'guidance', 'outlook', 'prospect', 'target', 'goal', 'ambition', 'aspiration', 'trend' or similar words. These statements discuss future expectations concerning the results of assets or financial conditions, or provide other forward-looking information.
Forward-looking statements are based on management's current expectations and reflect judgments, assumptions, estimates and other information available as at the date of this presentation and/or the date of the Group's planning processes or scenario analysis processes. There are inherent limitations with scenario analysis and it is difficult to predict which, if any, of the scenarios might eventuate. Scenarios do not constitute definitive outcomes for us. Scenario analysis relies on assumptions that may or may not be, or prove to be, correct and may or may not eventuate, and scenarios may be impacted by additional factors to the assumptions disclosed.
Additionally, forward-looking statements 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 presentation. BHP cautions against reliance on any forward-looking statements or guidance.
For example, our future revenues from our assets, projects or mines which may be described in this presentation will be based, in part, upon the market price of the minerals or metals produced, which may vary significantly from current levels. These variations, if materially adverse, may affect the timing or the feasibility of the development of a particular project, the expansion of certain facilities or mines, or the continuation of existing assets.
Other factors that may affect the actual construction or production commencement dates, costs or production output and anticipated lives of assets, mines or facilities include our ability to profitably produce and transport the minerals and/or metals extracted to applicable markets; the impact of foreign currency exchange rates on the market prices of the minerals and/or metals we produce; activities of government authorities in the countries where we sell our products and in the countries where we are exploring or developing projects, facilities or mines, including increases in taxes; changes in environmental and other regulations; political or geopolitical uncertainty; labour unrest; and other factors identified in the risk factors discussed in section 8.1 of the Operating and Financial Review in the BHP Annual Report 2023 and BHP's filings with the U.S. Securities and Exchange Commission (the 'SEC') (including in Annual Reports on Form 20-F) which are available on the SEC's website at www.sec.gov.
Except as required by applicable regulations or by law, BHP does not undertake to publicly update or review any forward-looking statements, whether as a result of new information or future events. Past performance cannot be relied on as a guide to future performance.
Presentation of information and data
Numbers presented may not add up precisely to the totals provided due to rounding. All footnote content is contained on slide 12 (for the presentation) and slide 18 (for the appendix).
Due to the inherent uncertainty and limitations in measuring greenhouse gas (GHG) emissions and operational energy consumption under the calculation methodologies used in the preparation of such data, all GHG emissions and operational energy consumption data or references to GHG emissions and operational energy consumption volumes (including ratios or percentages) in this presentation are estimates. Emissions calculation and reporting methodologies may change or be progressively refined over time resulting in the need to restate previously reported data. There may also be differences in the manner that third parties calculate or report GHG emissions or operational energy consumption data compared to BHP, which means that third-party data may not be comparable to our data. For information on how we calculate our GHG emissions and operational energy consumption data, refer to the BHP Scopes 1, 2 and 3 GHG Emissions Calculation Methodology 2023, available at bhp.com.
No offer of securities
Nothing in this presentation should be construed as either an offer or a solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, in any jurisdiction, or be treated or relied upon as a recommendation or advice by BHP. No offer of securities shall be made in the United States absent registration under the U.S. Securities Act of 1933, as amended, or pursuant to an exemption from, or in a transaction not subject to, such registration requirements.
Reliance on third party information
The views expressed in this presentation contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. This presentation should not be relied upon as a recommendation or forecast by BHP.
BHP and its subsidiaries
In this presentation, the terms 'BHP', the 'Company', the 'Group', 'BHP Group', 'our business', 'organisation', 'we', 'us' and 'our' refer to BHP Group Limited and, except where the context otherwise requires, our subsidiaries. Refer to note 30 'Subsidiaries' of the Financial Statements in the BHP Annual Report 2023 for a list of our significant subsidiaries. Those terms do not include non-operated assets. Notwithstanding that this presentation may include production, financial and other information from non-operated assets, non-operated assets are not included in the Group and, as a result, statements regarding our operations, assets and values apply only to our operated assets unless otherwise stated.
Bank of America Global Metals, Mining & Steel Conference | |
14 May 2024 | 2 |
Successfully executing our strategy
Delivering value and returns, shaping BHP for the future
• | Sanctioned Jansen Stages 1 & 2 | |
• | Acquired OZ Minerals | |
Winning | • | Petroleum merger with Woodside |
portfolio | ||
• | Unified the dual listed structure | |
• | Rationalised metallurgical coal portfolio | |
• | Consistently highest margin vs. competitors1 | |
Operational | • | Lowest cost major iron ore producer for the last 4 years2 |
excellence | ||
• | Most reliable delivery of production guidance vs. competitors3 | |
• | Improved HPI frequency rate4; ongoing fatality elimination focus | |
Social | • | Increased female employee representation to >36%5 |
value | ||
• | Doubled spend with indigenous businesses HY24 vs. HY23 | |
Note: HPI - High Potential Injury. | |
Bank of America Global Metals, Mining & Steel Conference | |
14 May 2024 | 3 |
Operational excellence in action: WAIO
Lowest cost producer, delivering >US$10/t greater free cash flow than competitors
Strategic actions
- Capital efficient growth from 240 Mtpa nameplate capacity
- Improved average product quality (Fe grade, lump)
- Improved cost position
Competitive resource endowment
- Larger mines
- Fewer processing hubs
- Low strip ratio
Value accretive growth
- Investing to grow production to >305 Mtpa in medium-term
- Progressing studies on potential growth to 330 Mtpa
Note: WAIO - Western Australia Iron Ore; FCF - free cash flow, calculated as realised price less all-in-cost.
Low operating costs and high realised prices lead to superior FCF generation2,6
(FCF, US$/dmt) | (C1 unit costs, US$/wmt) | |||||||
120 | 30 | |||||||
100 | 25 | |||||||
80 | 20 | |||||||
60 | 15 | |||||||
40 | 10 | |||||||
20 | 5 | |||||||
0 | 0 | |||||||
FY20 | FY21 | FY22 | FY23 | HY24 | ||||
BHP FCF/t | BHP C1 unit cost | |||||||
Competitor average FCF/t | Incremental competitor average C1 unit cost | |||||||
Note: Competitors include Fortescue, Rio Tinto (Pilbara operations), Vale.
Bank of America Global Metals, Mining & Steel Conference | |
14 May 2024 | 4 |
Jansen provides a platform for high value growth
Jansen Stages 1 & 2 position BHP to become a major potash producer, with multiple attractive growth options beyond
Attractive, future facing commodity
Low end of cost curve7
High EBITDA margins8
Advantaged resource9
Long-life, expandable10
Stages 1 & 2 competitively positioned against peers
(Average asset age in 2025)
80
Note: Bubble size represents | |
average asset production in 2025; | Europe and |
70 Jansen Stages 1 & 2 once ramped up |
Middle East
60
Canada
50
CIS
40 | ||
30 | China and | South America |
Southeast Asia
20
10
0
1st | 2nd | 3rd | 4th |
Clusters of single assets built over time
Average asset cost curve position (2025 equivalent CRU) (quartile)
Jansen Stages 1 & 2 | Peers |
Bank of America Global Metals, Mining & Steel Conference 14 May 2024
Note: Bubble size for Jansen represents expected production for Jansen Stages 1 & 2 once ramped up. Jansen is forecast to achieve first quartile on the cost curve once Stages 1 & 2 reach full production.
Source: BHP; CRU.
5
Progressing our copper growth
BHP is well positioned in a world where demand for copper is expected to grow strongly
BHP has a number of structural advantages… | … including a pipeline of multiple organic copper options under study | |||||
Illustrative timeline | FY24 FY25 | FY26 FY27 FY28 FY29 FY30+14 | ||||
Largest copper mineral resources11 | ||||||
Chilean copper brownfield options15 | ||||||
Includes expansions at existing concentrators, a potential new concentrator and multiple leaching technologies | ||||||
Consistent cash flow through the cycle12 | Copper South Australia growth options16 | |||||
Supports our aspiration to grow copper production to >500ktpa or >700ktpa on a copper equivalent basis with co-products | 17 | |||||
Studies | Potential FID | Execution | Targeted first production and ramp up |
With a track record of disciplined project delivery…
(Performance vs FID, %)13 45
30
15
0
(15)
Cost | Schedule | |
BHP average | Industry | |
Note: BHP average across all commodities. Industry range across multiple industries.
Source: Independent Project Analysis, BHP analysis.
… and additional levers to add further copper options
Technology & | Early-stage | |||||
Exploration | innovation | entry | M&A | |||
Prospecting for | Technologies with | Partnerships in | Acquiring | |||
Tier 1 assets in | potential to be | promising | businesses that | |||
attractive | game changers | development | will add long-term | |||
jurisdictions | projects | value |
Note: FID - Final investment decision.
Bank of America Global Metals, Mining & Steel Conference | |
14 May 2024 | 6 |
Proposal for Anglo American
An all-share combination to benefit both sets of shareholders
Creates value from the combination of two high quality businesses
Delivers immediate and ongoing value for Anglo American shareholders
Combination facilitates outcomes challenging for an independent Anglo American
Consistent with BHP's strategy, attractive for shareholders
Approach reflects BHP's value and capital discipline
Bank of America Global Metals, Mining & Steel Conference | |
14 May 2024 | 7 |
Value creation from combining two quality businesses
Confident in the delivery of incremental value from combined asset base and expanded growth pipeline
Complementary asset base…
- Long life, low cost, high margin, cash generative portfolio today
- Scalable, high growth copper portfolio
- High quality iron ore and metallurgical coal assets
- delivering high margins
Capacity to support significant growth
- Combines strong pipelines of attractive growth options
- Good balance of high return brownfield expansions and greenfield projects
- BHP has the balance sheet, cash flow and operational capability to develop options
Execution | Potential growth options |
80 | BHP | Anglo American | ||||||||
(%) | 70 | |||||||||
margin | 60 | |||||||||
50 | ||||||||||
EBITDA | ||||||||||
40 | ||||||||||
30 | ||||||||||
CY23 | 20 | |||||||||
10 | ||||||||||
0 | ||||||||||
- | Iron ore: | Copper: | Met coal: | Other18: | ||||||
42% / 2.6 Mt | 30% / 1.9 Mt | 15% / 0.9 Mt | 13% / 0.8 Mt | |||||||
CY23 production (CuEq Mt)19
Total CuEq: 6.3 Mt
Prominent Hill expansion
Carrapateena expansion
Escondida Full Sal
Copper
Collahuasi debottlenecking20
Collahuasi desalination
Jansen Stage 1
Potash Jansen Stage 2
WAIO >305 Mtpa
Iron ore
Escondida & Spence leaching | Antamina |
Escondida concentrator | Cerro Colorado |
Olympic Dam smelter | Oak Dam |
Quellaveco to 150 ktpd | Los Bronces |
Collahuasi expansion | Sakatti |
Jansen Stage 3 | |
Jansen Stage 4 | |
WAIO 330 Mtpa |
BHP | Anglo American |
Note: CuEq - Copper equivalent, calculated using long term real prices sourced from available brokers which provide price forecasts for all commodities.
Bank of America Global Metals, Mining & Steel Conference
14 May 2024 | 8 |
Value creation from combining two quality businesses
Potential for material synergies as we leverage the best of both organisations
Benefits from
BHP's
capabilities
- Demonstrated consistency in operational excellence
- Best delivery of production guidance vs. competitors3
- Track record of restructuring, M&A integration and disposals
- OZ Minerals acquisition, Petroleum merger and South32 demerger, coal divestments, unification
Assets in close proximity in key operating regions
South America | Queensland, Australia |
• Deep pool of talent within BHP and Anglo American | |
Leveraging | • Strong experience delivering on social value and ESG |
talent and | commitments |
expertise | • Advancing technology and innovation to support sustainable |
mining practices |
Unlocks unique and meaningful synergies
- Complementary asset bases in South America and Australia
- Synergies include sharing best practice, procurement, operational, marketing and eliminating duplication
- Delivery of meaningful synergies enhancing profitability and value
BHP | Anglo American |
Bank of America Global Metals, Mining & Steel Conference | |
14 May 2024 | 9 |
BHP positioned to deliver shareholder value into the future
Operational excellence and exposure to the right commodities
Portfolio | : | ||||||
Iron ore | Metallurgical coal | Potash | Nickel | ||||
Copper |
BHP's portfolio and operating excellence generates superior margins…21
(Underlying EBITDA margin, %) | (Bloomberg commodity index, rebased) | ||||
75 | 75 | ||||
60 | 60 | ||||
45 | 45 | ||||
30 | 30 | ||||
15 | 15 | ||||
0 | 0 | ||||
FY14 | FY16 | FY18 | FY20 | FY22 | HY24 |
… delivering consistently strong net operating cash flows22
(US$ bn)
38
30
23 | |||||||
15 | >US$15 bn | ||||||
8 | |||||||
0 | |||||||
FY10 | FY12 | FY14 | FY16 | FY18 | FY20 | FY22 | HY24 |
Bloomberg commodity index (quarterly) | Competitor range | Operating cash flow (H1) | Operating cash flow (H2) | |||||||||||
Note: Competitors include Anglo American, Glencore (excludes Marketing), Rio Tinto, Vale. | Note: Presented on a total operations basis. | |||||||||||||
Bank of America Global Metals, Mining & Steel Conference | ||||||||||||||
14 May 2024 | 10 |
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BHP Group Limited published this content on 14 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 May 2024 12:46:03 UTC.