17 July 2024 |
Operational review for the year ended 30 June 2024
Strong operational performance with record iron ore production and highest copper production in over 15 years.
“We finished the year with a strong fourth quarter, achieving several production records and we are meeting current production and unit cost guidance for all commodities.
WAIO continued its strong performance, delivering a second consecutive year of record production on the back of ongoing incremental improvements along its supply chain as we progress toward our medium-term goal of increasing production to greater than 305 Mtpa.
We achieved a strong performance across our copper business globally, underpinned by the highest production in four years at Escondida and another year of record production from Spence in Chile. Successful integration at Copper South Australia has delivered additional production tonnes, and exceeded the annualised synergies planned at the time of the OZL acquisition.
We successfully completed the sale of the Blackwater and Daunia metallurgical coal operations on 2 April 2024. After a challenging year at BMA, we have plans in place to increase production to between 43 and 45 Mtpa (100%) in the next five years.
We continued to execute against our strategy, progressing growth options in the commodities the world needs to meet the demands of the energy transition and population growth. This includes our Jansen potash mine in Canada, where construction of Stage 1 is now more than 50% complete and Stage 2 is underway. We will see first production in 2026 and will be a major global producer of potash by the end of the decade.
On 11 July we announced the temporary suspension of our Western Australia Nickel operations from October 2024 as a result of an oversupply in the global nickel market and protracted low nickel prices.”
Mike Henry
BHP Chief Executive Officer
Summary
| Operational excellence | Financial performance | ||||||||
| Record production at WAIO and Spence | Strong prices in key commodities | ||||||||
| FY24 production guidance achieved for all commodities, with metallurgical coal achieving the upper end of its revised guidance. Record production at WAIO, Spence and Carrapateena and the highest production in four years at Escondida. Total copper production increased 9% and is expected to increase a further 4% in FY25.1 | Average realised prices for copper and iron ore were higher in FY24, while metallurgical coal prices remained relatively stable, and nickel and energy coal prices were lower. Unit cost guidance for FY24 is expected to be met at Escondida, WAIO and Spence, and revised unit cost guidance is expected to be met at BMA. | ||||||||
| Portfolio | Decarbonisation | ||||||||
| Executing our strategy | Progress on Scope 1, 2 and 3 emissions | ||||||||
| We completed the divestment of Blackwater and Daunia, and commenced construction of Jansen Stage 2, with Jansen Stage 1 now >50% complete. We also completed the scheduled ramp up of both South Flank to full production capacity of 80 Mtpa (100% basis) and the Carrapateena Crusher 2 project. | We held an investor roundtable to provide an update on our decarbonisation progress, including our collaborationscollaboration with Rio Tinto, Caterpillar and Komatsu collaboration with Rio Tinto, Caterpillar and Komatsuto trial battery electric haul trucks in the Pilbara and investigate a pilot electric smelting furnace (ESF). | ||||||||
| Production | Quarter performance | YTD performance | Production guidance | ||||||
| Q4 FY24 | v Q3 FY24 | v Q4 FY23 | FY24 | v FY23 | FY24 guidance | FY25 guidance | FY25e v FY24 (actual) | ||
| Copper (kt) | 504.9 | 8% | 6% | 1,865.2 | 9% | 1,720 – 1,910 | 1,845 – 2,045 | (1%) – 10% | |
| Escondida (kt) | 309.2 | 7% | 6% | 1,125.3 | 7% | 1,080 – 1,180 | 1,180 – 1,300 | 5% – 16% | |
| Pampa Norte (kt) i | 65.9 | 7% | (4%) | 265.6 | (8%) | 210 – 250i | 240 – 270i | (6%) – 6%i | |
| Copper South Australia (kt) | 89.3 | 13% | 17% | 322.0 | 39% | 310 – 340 | 310 – 340 | (4%) – 6% | |
| Antamina (kt) | 38.3 | 13% | 5% | 143.9 | 4% | 120 – 140 | 115 – 135 | (20%) – (6%) | |
| Carajás (kt) | 2.2 | (31%) | 38% | 8.4 | – | – | – | ||
| Iron ore (Mt) | 69.2 | 13% | 6% | 259.7 | 1% | 254 – 264.5 | 255 – 265.5 | (2%) – 2% | |
| WAIO (Mt) | 68.2 | 13% | 6% | 254.9 | 1% | 250 – 260 | 250 – 260 | (2%) – 2% | |
| WAIO (100% basis) (Mt) | 76.8 | 13% | 6% | 287.0 | 1% | 282 – 294 | 282 – 294 | (2%) – 2% | |
| Samarco (Mt) | 1.0 | (11%) | (15%) | 4.7 | 5% | 4 – 4.5 | 5 – 5.5 | 5% – 16% | |
| Metallurgical coal – BMA (Mt) ii | 4.9 | (18%) | (42%) | 22.3 | (23%) | 21.5 – 22.5 | 16.5 – 19 | (26%) – (15%) | |
| BMA (100% basis) (Mt) | 9.8 | (18%) | (42%) | 44.6 | (23%) | 43 – 45 | 33 – 38 | (26%) – (15%) | |
| Energy coal – NSWEC (Mt) | 3.8 | (10%) | (21%) | 15.4 | 8% | 13 – 15 | 13 – 15 | (15%) – (2%) | |
| Nickel – Western Australia Nickel (kt) | 23.0 | 22% | 5% | 81.6 | 2% | 77 – 87 | – | – | |
i Production guidance for FY24 and FY25 is for Spence only and excludes Cerro Colorado which produced 11 kt in FY24 before entering care and maintenance in December 2023.
ii FY24 production includes 5 Mt (10 Mt on a 100% basis) from Blackwater and Daunia mines until their divestment on 2 April 2024. Refer to production and sales report and metallurgical coal for further information.
BHP | Operational review for the year ended 30 June 2024
Summary Of Disclosures
BHP expects its financial results for the second half of FY24 (H2 FY24) to reflect certain items 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 27 August 2024. Accordingly, the information in the table below contains preliminary information that is subject to update and finalisation.
| Description | H2 FY24 impacti (US$M) | Classificationii |
| Unit costs (at guidance FX) | ||
| Unit costs for FY24 are expected to be within the guidance range at Escondida, in the lower half of the revised guidance range at BMA, in the upper half of the guidance range at WAIO, and at the top end of the guidance range at Spence | – | Operating costs |
| Note: Average realised exchange rates for FY24 of AUD/USD 0.66 (guidance rate AUD/USD 0.67) and USD/CLP 907 (guidance rate USD/CLP 810). | ||
| Income statement | ||
| The Group’s adjusted effective tax rate for FY24 is expected to be around the midpoint of the guidance range of 30 – 35% | – | Taxation expense |
| Increase in closure and rehabilitation provision for closed sites (predominantly in Group and Unallocated) | ~100 | ↑ Operating costs |
| Cash flow statement | ||
| Working capital movements largely relating to the timing of receivables | ~150 – 350 | ↑ Operating cash flow |
| Cash tax paid | ~3,350 – 3,450 | ↓ Operating cash flow |
| Dividends received from equity-accounted investments | ~200 | ↑ Operating cash flow |
| Capital and exploration spend is expected to be approximately US$9.3 bn, below full year guidance of ~US$10 bn, primarily driven by favourable FX and cash preservation decisions at Western Australia Nickel | – | ↓ Investing cash flow |
| Proceeds received from the sale of BHP’s 50% interest in the Blackwater and Daunia minesiii | ~1,000 | ↑ Investing cash flow |
| Dividends paid to non-controlling interests | ~800 | ↓ Financing cash flow |
| Payment of the H1 FY24 dividend | ~3,600 | ↓ Financing cash flow |
| Exceptional items | ||
| Gain on sale of BHP’s 50% interest in the Blackwater and Daunia mines (after tax) | ~[650 – 750] | Exceptional item |
| Impairment of Western Australia Nickel following the decision to temporarily suspend operations. See Nickel section for further information. | ~300 | Exceptional item |
| Financial impact on BHP Brasil of the Samarco dam failure is subject to ongoing work. See Iron ore section for further information on Samarco operations. | – | Exceptional item |
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 A US$50 m deposit was received during H1 FY24. For detail on future payments in relation to the divestment please refer to: BHP completes the divestment of Daunia and Blackwater.
| Further information in Appendix 1 Detailed production and sales information for all operations in Appendix 2 |