The Boardperformance of executives and other senior employees is committedreviewed on an annual basis. The annual performance review process considers the performance of executives against criteria designed to ensuring a majoritycapture ‘what’ is achieved and ‘how’ it is achieved. All performance assessments of Directors are independent.executives include how effective they have been in undertaking their role and what they have achieved against their specified key performance indicators.
The Board has adopted a policy that it uses to determine the independence of its Directors. This determination is carried out upon appointment, annually and at any other time where the change in circumstances of a Director warrant reconsideration. The Board confirms that it considersA performance evaluation was conducted for all
members of the
currentELT during FY2022. For the CEO, the performance evaluation was led by the Chair of the Board on behalf of all theNon-executive
Directors
includingand was discussed with the
Chair, to be independent ofRemuneration Committee.7 Risk management and free from any business relationship or other circumstance that could materially interfere with the exercise of objective, unfettered or independent judgement.
A copy of the policy on Independence of Directors is available at bhp.com/governance.
At the end of FY2021, Malcolm Broomhead, who was appointed in March 2010, had served on the Board for more than nine years. In light of the retirement of both Susan Kilsby and Anita Frew at the end of the 2021 AGMs, the Board has requested that Mr Broomhead seekre-election
at the 2021 AGMs for a further year. Mr Broomhead would step down from the Sustainability Committee and Nomination and Governance Committee following the AGMs but remain on the Board. The Board supports Mr Broomhead’sre-election
given his extensive knowledge of BHP and the mining and resources sector and the proposed corporate transaction that the Group is undertaking at this time. The Board does not believe his tenure interferes with his ability to act in the best interests of BHP. The Board believes he continues to demonstrate strong independence of character and judgement, and has not formed associations with management (or others) that might compromise his ability to exercise independent judgement or act in the best interests of the Group. The Board has been undergoing a process of renewal and, recognising the importance of continuity on the Board and Mr Broomhead’s expertise, considers his continued service to be in the best interests of shareholders.Relationships and associations
Some of the Directors hold or have previously held positions in companies that BHP has commercial relationships with. Those positions and companies are listed in the Director profiles in section 2.1.2 and in past Annual Reports. The Board has assessed the relationships between the Group and the companies in which our Directors hold or held positions and has concluded that the relationships do not interfere with the Directors’ exercise of objective, unfettered or independent judgement or their ability to act in the best interests of BHP.
For example, Mr Broomhead was a Director of Orica Limited (a company BHP has commercial dealings with) during FY2021, and Mr Cockerill was also a Director of Orica until August 2019. Orica provides commercial explosives, blasting systems and mineral processing chemicals and services to the mining and resources industry, among others. Mr Cockerill was appointed to the Orica Board in 2010 (prior to his appointment to the BHP Board) and Mr Broomhead was appointed to the Orica Board in 2016 (after his appointment to the BHP Board). At the time of Mr Broomhead’s appointment to the Board of Orica, and at the time of Mr Cockerill’s appointment to the Board of BHP, the BHP Board assessed the relationship between BHP and Orica and determined (and remains satisfied) that Mr Broomhead and Mr Cockerill were (and Mr Broomhead remains during FY2021) able to apply objective, unfettered and independent judgement and to act in the best interests of BHP.
BHP Group Plc’s Articles of Association allow the Directors to authorise conflicts and potential conflicts where appropriate. A procedure operates to ensure the disclosure of conflicts and for the consideration and, if appropriate, the authorisation of those conflicts bynon-conflicted
Directors. The Nomination and Governance Committee supports the Board in this process by reviewing requests from Directors for authorisation of situations of actual or potential conflict and making recommendations to the Board. It also regularly reviews any situations of actual or potential conflict that have previously been authorised by the Board and makes recommendations on whether the authorisation remains appropriate. In addition, in accordance with Australian law, if a situation arises for consideration where a Director has a material personal interest, the affected Director takes no part in decision-making unless authorised bynon-interested
Directors. Provisions for Directors’ interests are set out in the Constitution of BHP Group Limited.2.1.10 Risk and Audit Committee Reportassurance
Role and focus7.1 Risk management governance structure
The Risk and Audit Committee (RAC) oversees and monitors financial reporting, other periodic reporting, external and internal audit, capital management, and risk (including effectiveness ofRAC assists the systemsBoard with the oversight of risk management and internal control).the Board retains accountability for BHP’s risk profile. The Board requires the CEO to implement a system of control for identifying and managing risk. The Risk team is accountable for this system, known as BHP’s Risk Framework, and also supports, challenges and verifies risk management activities to give assurance to management and the Board. The Directors, through the RAC, monitor our Risk Framework and review it at least annually to satisfy themselves that the Risk Framework continues to be sound and that BHP is operating with regard to the risk appetite set by the Board. For more information refer to OFR 9.
More informationInternal Audit
The Internal Audit team provides assurance to the Board, CEO and Executive Leadership Team on whether risk management, internal control and governance processes are adequate and functioning. The Internal Audit team is independent of the roleExternal Auditor. The RAC evaluates and, responsibilitiesif thought fit, approves the Terms of Reference of the Internal Audit team and the annual internal audit plan and monitors the effectiveness of the internal audit activities.
As of 1 August 2022, the Risk team and Internal Audit team were combined to form a Risk and Internal Auditsub-function,
led by a Chief Risk and Audit Officer. The Risk team and Internal Audit team will continue to operate in the second and third lines respectively. Refer to OFR 9 for more information. The RAC approves the appointment and dismissal of the Chief Audit Officer and assesses their performance, independence and objectivity. During FY2022, the Group Audit Officer reported directly to the RAC and functional oversight of the Internal Audit team was provided by the Chief Legal, Governance and External Affairs Officer. As of 1 August 2022, functional oversight of the Risk and
Internal Audit
Committee can be found in its terms of reference, which are available at bhp.com/governance.sub-function
UK committee membership requirements
The Board is satisfied that Terry Bowen meets the criteria for recent and relevant financial experience as outlined in the UK Code, the competence in accounting and auditing as requiredprovided by the Chief Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rules and the audit committee financial expert requirements under the US Securities and Exchange Commission Rules. In addition, he is the Board’s nominated ‘audit committee financial expert’ for the purposes of the US Securities and Exchange Commission Rules.
The Board is satisfied that the members of the Committee as a whole have competence relevant to the mining sector for the purposes of the FCA Disclosure Guidance and Transparency Rules. The Board is also satisfied that the Committee meets the independence criteria under Rule10A-3
of the Exchange Act. For information on Committee members’ qualifications, which include competence relevant to the mining sector, refer to section 2.1.2.Committee activities in FY2021 included:
Integrity of Financial Statements and funding matters
Accounting matters for consideration, materiality limits, half-year and full-year results
Sarbanes-Oxley Act of 2002 (SOX) compliance
Financial governance procedures
Funding, loans and guarantees updates
External auditor and integrity of the audit process
Management and external auditor closed sessions
Audit plan, review of performance and quality of service
External auditor independence andnon-audit
servicesOfficer.
Effectiveness of systems of internal control and risk management
In delegating authority to the CEO, the Board has established CEO limits, outlined in theBoard Governance Document
The RAC oversees and reviews the internal controls and risk management systems (including procedures, processes and systems for, among other things, budgeting and forecasting, provisions, financial controls, financial reporting and reporting of reserves and resources, compliance, preventing fraud and serious breaches of business conduct,speak-up
procedures, and protecting information and data systems). Any material breaches of, including breaches of our anti-bribery and corruption requirements and any material incidents reported under ourspeak-up
procedures are reported quarterly to the RAC by the Chief Compliance Officer. These reports are then communicated to the Board through thereport-out
process. During FY2022, management presented an assessment of the material risks facing BHP and the effectiveness of the Group’s systems of risk management. The reviews were overseen by the RAC, with findings and recommendations reported to the Board. In addition to considering key risks facing BHP, the Board assessed the effectiveness of internal controls over key risks identified through the work of the Board Committees.
Having carried out a review during FY2022, the Board is satisfied with the effectiveness of BHP’s risk management and internal control systems.
Material risk reportsEnvironmental and consideration of approach to emergingsocial risks
GroupBHP’s risk profilefactors (including material exposure to environmental and monitoring performance against risk appetite through key risk indicators
Internal audit reports, annual internal audit plansocial risks) and review of performance of the Internal Audithow we manage these risks are described in OFR 9 and Advisory team
Ethics and Investigations reports including on sexual harassment, compliance reports, and grievance and investigation processes
Risks of climate change and its potential impacts on measurement in the financial statements
9.1.Climate change financial statement disclosures138
Climate change considerations in key judgements7.2 External audit and estimates
Consistency between narrativefinancial reporting on climate risks with the accounting assumptions
Samarco dam failure provision, closure and rehabilitation provision
Disputes and litigation updates
Closure, rehabilitation and reserves updates
Fair, balanced and understandable
The RAC confirmed its view to the Board that BHP’s 2021 Annual Report taken as a whole is fair, balanced and understandable. For the Board’s statement on the Annual Report, refer to the Directors’ Report in section 2.3.
In making this assessment, the RAC considers the substantial governance framework that is in place for the Annual Report. This includes management representation letters, certifications, RAC oversight of the Financial Statements and other financial governance procedures focused on the financial section of the Annual Report, together with verification procedures for the narrative reporting section of the Annual Report.
Integrity of Financial Statements
The RAC assists the Board in assuring the integrity of the Financial Statements. The RAC evaluates and makes recommendations to the Board about the appropriateness of accounting policies and practices, areas of judgement, compliance with accounting standards, stock exchange and legal requirements and the results of the external audit.
For the FY2021FY2022 full year and half year, the CEO and CFO have certified that in their opinion, BHP’s financial records have been properly maintained and the FY2021FY2022 Financial Statements present a true and fair view of our financial condition and operating results and are in accordance with accounting standards and applicable regulatory requirements.
The CEO and CFO have also certified to the Board that this opinion was formed on the basis of a sound system of risk management and internal control and the system is operating efficiently and effectively. The RAC considered these certifications when recommending the Financial Statements to the Board for approval.
In addition to the Group’s key judgements and estimates disclosed throughout the FY2021 Financial Statements, the Committee also considered the following significant issues relating to financial reporting:
Divestment of interests in certain of the Group’s assets
The Committee examined management’s review of impairment triggers and potential impairment charges for certain of the Group’s assets that were subject to divestment processes throughout the year. While the processes were underway, prior to receipt of bids, considerations were consistent with the approach to the Group’s other long-term assets as presented below.
The Committee concurred with management’s conclusion on significant impairments recognised in relation to New South Wales Energy Coal and Cerrejón, including associated deferred tax assets.
The Committee also reviewed other potential Financial Statements impacts, including classification and disclosure as assets held for sale and Discontinued operations.
Conclusions from these reviews are reflected in notes 3 ‘Exceptional items’, 13 ‘Impairment ofnon-current
assets’ and 31 ‘Investments accounted for using the equity method’ in section 3.Carrying value of other long-term assets
The assessment of carrying values of long-term assets uses a number of significant judgements and estimates.
The Committee examined management’s review of impairment triggers and potential impairment charges or reversals for the Group’s cash generating units.
Specific consideration was given to market conditions for the Group’s commodities, including the impacts of climate change, along with key assumptions underpinning asset valuations. Assumptions include the most recent short, medium and long-term price forecasts, expected production volumes and updated development plans, operating and capital costs, discount rates and other market indicators of fair value.
The Committee concurred with management’s conclusion on the significant impairment recognised in relation to the Group’s Potash assets, including associated deferred tax assets, and that no impairment reversals were appropriate.
The results of the Olympic Dam impairment assessment were reviewed and the Committee concurred with management that no impairment was required.
Conclusions from these reviews are reflected in note 13 ‘Impairment ofnon-current
assets’ in section 3.Climate change in financial reporting
While the Group’s understanding of evolving climate risks continues to develop, the potential financial implications, along with appropriate disclosure, are an area of focus for the Committee.
The Committee was informed of and acknowledged global trends, including increased disclosure within financial statements and more broadly. Specifically, the Committee considered a request from the Institutional Investors Group on Climate Change (IIGCC) for Paris-aligned financial statements and disclosure of material climate risks and the potential impacts to financial statements.
The Committee considered financial statement disclosures and how the Group’s greenhouse gas emissions reduction commitments and climate change scenarios, including those aligned with the Paris Agreement goals, are reflected in the Group’s key judgements and estimates used in the preparation of the Group’s FY2021 finance statements. This included consideration of portfolio impacts, demand for the Group’s commodities and associated price outlooks, costs of decarbonisation and Scope 3 emissions considerations. Specific focus was also given to the potential impact on impairment assessments and the expected timing and cost of closure activities.
The Committee reviewed the approach proposed by management to provide additional disclosure in relation to the potential financial statement impacts of climate change, including under a Paris-aligned 1.5°C scenario.
The Committee, recognising the evolving nature of climate change risks and responses, concluded that climate change has been appropriately considered by management in key judgements and estimates and concurred with the disclosures proposed by management.
For more information, refer to the Basis of Preparation in section 3 and the Climate change risk factor in section 1.16.
On 5 November 2015, the Samarco Mineração S.A (Samarco) iron ore operation in Minas Gerais, Brazil experienced a tailings dam failure that resulted in a release of mine tailings, flooding the community of Bento Rodrigues and impacting other communities downstream. Samarco is jointly owned by BHP Brasil and Vale S.A.
BHP Brasil’s 50 per cent interest in Samarco is accounted for as an equity accounted joint venture investment.
Samarco’s provisions and contingent liabilities
The Committee reviewed updates to matters relating to the Samarco dam failure, including developments on existing and new legal proceedings, judicial reorganisation and changes to the estimated costs of remediation and compensation.
BHP Brasil’s loss from Equity Accounted Investments includes impairments arising from working capital funding provided to Samarco and revisions to the Samarco dam failure and Germano decommissioning provisions during the year ended 30 June 2021.
Potential direct financial impacts to BHP Brasil
The Committee considered:
changes to the estimated cost of remediation and compensatory programs under the Framework Agreement
developments in existing and new legal proceedings, including judicial reorganisation, on the provision related to the Samarco dam failure and related disclosures
the provisions recognised and contingent liabilities disclosed by BHP Brasil or other BHP entities
Based on currently available information, the Committee concluded that the accounting for the equity investment in Samarco, the provision recognised by BHP Brasil (including the decommissioning of the Germano tailings dam complex) and contingent liabilities disclosed in the Group’s Financial Statements are appropriate.
For more information, refer to note 4 ‘Significant events – Samarco dam failure’ in section 3.
Closure and rehabilitation provisions
Determining the closure and rehabilitation provision is a complex area requiring significant judgement and estimates, particularly given the timing and quantum of future costs, the unique nature of each site and the long timescales involved.
The Committee considered the various changes in estimates for closure and rehabilitation provisions recognised during the year, including a reduction to the discount rates applied.
Specific consideration was given to ongoing and recently completed study, survey and characterisation activity, changes to current cost estimates and the expected timing of closure activities. The Committee concluded that the assumptions and inputs for closure and rehabilitation cost estimates were reasonable and the related provisions recorded were appropriate.
For more information, refer to note 15 ‘Closure and rehabilitation provisions’ in section 3.
Impact of amended accounting standards and changes to accounting policies
The Group implemented the IFRS Interpretations Committee agenda decision ‘Income Taxes – Multiple tax consequences of recovering an asset’ on a retrospective basis. The Committee reviewed management’s analysis of the accounting outcomes, including the recognition of goodwill relating to Olympic Dam.
In addition, the Committee considered and approved the early adoption, for FY2021, of further amendments to certain accounting standards relating to interest rate benchmark reforms.
For more information, refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’ in section 3.
The Committee considered the impacts of the globalCOVID-19
pandemic on the Group’s FY2021 financial reporting, including the recognition and disclosure of costs incurred by the Group that are directly attributable toCOVID-19.
The Committee concluded that the disclosure of costs directly attributable toCOVID-19
was appropriate. For more information, refer to note 3 ‘Exceptional items’ in section 3.
United Kingdom (UK) Financial Reporting Council (FRC) reviews
Audit Quality Review of the audit of the Company’s 2019 Financial Statements
During 2020, the Audit Quality Review Team (AQRT) from the UK FRC undertook a review of KPMG LLP’s (KPMG) audit of BHP Group Plc’s financial statements for the year ended 30 June 2019. KPMG were the auditors of BHP Group prior to Ernst & Young (EY). There were no key findings arising from the AQRT’s review. The review findings, which were not considered to be significant, were discussed with KPMG. The company made EY aware of the actions that KPMG had proposed to implement had they still been the auditors of the company and if similar circumstances were to prevail.
Review of BHP Group’s Annual Report and Accounts
The UK FRC carried out a review of the Group’s published Annual Report and Accounts for the year ended 30 June 2020. This review considered compliance with reporting requirements and, given the inherent limitations of the review, provided no assurance that the Annual Report and Accounts were correct in all material respects. There were no exchanges of substantive correspondence as a result of this review and the FRC confirmed, based on the review performed, it had no questions or queries that it wished to raise.
External AuditorInternal Audit
The RAC managesInternal Audit team provides assurance to the relationship with the External AuditorBoard, CEO and Executive Leadership Team on behalf of the Board. It considers the independencewhether risk management, internal control and reappointmentgovernance processes are adequate and functioning. The Internal Audit team is independent of the External Auditor each year, as well as remuneration and other terms of engagement and makes a recommendation to the Board.
Audit tender and transition
BHP confirms that during FY2021, it was in compliance with the provisions of The Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014.
Consistent with the UK and EU requirements in regard to audit firm tender and rotation, the Committee conducted an audit tender process during FY2017 to appoint a new external auditor to replace KPMG, resulting in the appointment of EY in 2019.
Evaluation of External Auditor and external audit process
Auditor. The RAC evaluates and, if thought fit, approves the objectivity and independenceTerms of Reference of the External AuditorInternal Audit team and the qualityannual internal audit plan and effectiveness of the external audit arrangements. As part of this evaluation, the RAC considers specified criteria, including delivering value to shareholders and BHP, and also assesses the adequacy of the external audit process with emphasis on quality, effectiveness and performance. It does so through a range of means, including:
the Committee considers the External Audit Plan, in particular to gain assurance that it is tailored to reflect changes in circumstances from the prior year
throughout the year, the Committee meets with the audit partners, particularly the lead Australian and UK audit engagement partners, without management present
following the completion of the audit, the Committee considers the quality of the External Auditor’s performance drawing on survey results. The survey is based on atwo-way
feedback model where the BHP and EY teams assess each other against a range of criteria. The criteria against which the BHP team evaluates EY’s performance include ethics and integrity, insight, service quality, communication, reporting and responsivenessreviewing the terms of engagement of the External Auditor
discussing with the audit engagement partners the skills and experience of the broader audit team
reviewing audit quality inspection reports on EY published by the UK Financial Reporting Council in consideringmonitors the effectiveness of the internal audit
activities.In addition,As of 1 August 2022, the
RAC reviewsRisk team and Internal Audit team were combined to form a Risk and Internal Auditsub-function,
led by a Chief Risk and Audit Officer. The Risk team and Internal Audit team will continue to operate in the
integrity, independencesecond and
objectivity of the External Auditor and assesses whether there is any element of the relationship that impairs or appearsthird lines respectively. Refer to
impair the External Auditor’s judgement or independence. The External Auditor also certifies its independence to the RAC.Although the External Auditor does provide somenon-audit
services, the objectivity and independence of the External Auditor are safeguarded through restrictions on the provision of these services with some services prohibited from being undertaken.
OFR 9 for more information. The RAC
has adopted a policy entitled ‘Provisionapproves the appointment and dismissal of
the Chief Audit
Officer and
Other Servicesassesses their performance, independence and objectivity. During FY2022, the Group Audit Officer reported directly to the RAC and functional oversight of the Internal Audit team was provided by the
Chief Legal, Governance and External
Auditor’ covering the RAC’spre-approval
policies and procedures to maintain the independenceAffairs Officer. As of 1 August 2022, functional oversight of the
External Auditor, which reflects the requirements for External Auditors contained in the Ethical Standards publishedRisk and Internal Auditsub-function
is provided by the
UKChief Financial
Reporting Council.Officer.Effectiveness of systems of internal control and risk management
In delegating authority to the CEO, the Board has established CEO limits, outlined in theBoard Governance Document
The
categoriesRAC oversees and reviews the internal controls and risk management systems (including procedures, processes and systems for, among other things, budgeting and forecasting, provisions, financial controls, financial reporting and reporting of
reserves and resources, compliance, preventing fraud and serious breaches of business conduct,‘pre-approved’speak-up
services are:Audit services – work that constitutes the agreed scope, including breaches of the statutory auditour anti-bribery and includes the statutory audits of BHPcorruption requirements and its entities (including interim reviews). This category also includes work that is reasonably related to the performance of an audit or review and is a logical extension of the audit or review scope. The RAC monitors the audit services engagements and if necessary, approves any changes in terms and conditions resulting from changes in audit scope, Group structure or other relevant events.
Audit-related and other assurance services – work that is outside the scope of the statutory audit but is consistent with the role of the external statutory auditor, is of an assurance or compliance nature, is work the External Auditor must or is best placed to undertake and is permissiblematerial incidents reported under
the relevant applicable standard.ourspeak-up
Activities outside the scope of the categories above are not‘pre-approved’
and must be approved by the RAC prior to engagement, regardless of the dollar value involved. In addition, any engagement for other services with a value over US$100,000, even if listed as a‘pre-approved’
service, requires the approval of the RAC.All engagements for other services whether‘pre-approved’
or not and regardless of the dollar value involvedprocedures are reported quarterly to the
RAC. While not prohibitedRAC by
BHP’s policy, any proposedthe Chief Compliance Officer. These reports are then communicated to the Board through thenon-auditreport-out
engagementprocess.During FY2022, management presented an assessment of the
External Auditor relating to internal control (such as a review of internal controls) requires specific prior approval frommaterial risks facing BHP and the
RAC. With the exceptioneffectiveness of the
external auditGroup’s systems of
BHP’s Financial Statements, any engagement identified that contains an internal control-related element is not considered to bepre-approved.
In addition, while the categories of‘pre-approved’
services include a list of certainpre-approved
services, the use of the External Auditor to perform these services will always be subject to our overriding governance practices as articulated in the policy. In addition,risk management. The reviews were overseen by the RAC,
did not approve any services during the year ended 30 June 2021 pursuant to paragraph (c)(7)(i)(C) of Rule2-01
of SEC RegulationS-X
(provision of services other than audit).Fees paid to BHP’s external auditor during FY2021 for auditwith findings and other services were US$15.5 million, of which 77 per cent comprised audit fees (including in relation to SOX matters), 11 per cent for audit-related fees and 12 per cent for all other fees. No fees were paid in relation to tax services. Details of the fees paid are set out in note 36 ‘Auditor’s remuneration’ in section 3.
Our policy on Provision of Audit and Other Services by the External Auditor is available at bhp.com/governance.
Business Risk and Audit Committees
Business Risk and Audit Committees (Business RACs), covering each asset group, assist management in providing the information to enable the RAC to fulfil its responsibilities. They are management committees and perform an important monitoring function in the governance of BHP. Meetings take place annually as part of our financial governance framework.
As management committees, the appropriate member of the ELT participates, but the Committee is chaired by a member of the RAC. Each Committee also includes the Group Financial Controller, the Chief Risk Officer and the Group Assurance Officer.
Significant operational and risk matters raised at Business RAC meetings arerecommendations reported to the RAC by management.Board. In addition to considering key risks facing BHP, the Board assessed the effectiveness of internal controls over key risks identified through the work of the Board Committees.
Having carried out a review during FY2022, the Board is satisfied with the effectiveness of BHP’s risk management and internal control systems.
Risk functionEnvironmental and social risks
The Risk function’s role isBHP’s risk factors (including material exposure to createenvironmental and maintain the Group’s Risk Framework,social risks) and to support, verify, overseehow we manage these risks are described in OFR 9 and provide insight on the effective application9.1.
7.2 External audit and emerging risks.financial reporting
Integrity of Financial Statements
The RAC assists the Board in assuring the integrity of the Financial Statements. The RAC evaluates and makes recommendations to the Board about the appropriateness of accounting policies and practices, areas of judgement, compliance with accounting standards, stock exchange and legal requirements and the oversightresults of the external audit.
For the FY2022 full year and half year, the CEO and CFO have certified that in their opinion, BHP’s financial records have been properly maintained and the FY2022 Financial Statements present a true and fair view of our financial condition and operating results and are in accordance with accounting standards and applicable regulatory requirements.
The CEO and CFO have also certified to the Board that this opinion was formed on the basis of a sound system of risk management althoughand internal control and the Board retains accountability for BHP’s risk profile. In addition, the Board requires the CEO to implement a system of control for identifyingis operating efficiently and managing risk. The Directors, through the RAC, review the systems that have been established, regularly review the effectiveness of those systems and monitor that necessary actions have been taken to remedy any significant failings or weaknesses identified from that review.effectively. The RAC regularly reportsconsidered these certifications when recommending the Financial Statements to the Board to enable the Board to review our Risk Framework at least annually to confirm that the Risk Framework continues to be sound and that BHP is operating with regard to the risk appetite set by the Board. A review was undertaken during FY2021, resulting in refinements to BHP’s Risk Framework. For more information, refer to section 1.9.for approval.
Internal AuditReview of the HSE function and Group HSE Officer
The Internal Audit function is carried out by the Internal Audit and Advisory team (IAA). IAA provides assurance on whether risk management, internal control and governance processes are adequate and functioning. The Internal Audit function is independent of the External Auditor. The RAC evaluates and, if thought fit, approves the terms of reference of IAA, the staffing levels and its scope of work to ensure it is appropriate in light of the key risks we face. It also reviews and approves the annual internal audit plan and monitors and reviews the effectiveness of the internal audit activities.
The RAC approves the appointment and dismissal of the Group Assurance Officer and assesses their performance, independence and objectivity. During FY2021, the Group Assurance Officer reported directly to the RAC, and functional oversight of IAA was provided by the Chief Legal, Governance and External Affairs Officer.
Effectiveness of systems of internal controlCompliance and risk management (RAC and Board)
In delegating authority to the CEO, the Board has established CEO limits, outlined in theBoard Governance Document
. Limits on the CEO’s authority require the CEO to ensure there is a system of control in place for identifying and managing risk in BHP. Through the RAC, the Directors regularly review these systems for their effectiveness. These reviews include assessing whether processes continue to meet evolving external governance requirements.The RAC oversees and reviews the internal controls and risk management systems (including procedures, processes and systems for, among other things, budgeting and forecasting, provisions, financial controls, financial reporting and reporting of reserves, compliance, preventing fraud and serious breaches of business conduct and whistle-blowing procedures, protecting information and data systems, and operational effectiveness of the Business RAC structures). Any material breaches of, including breaches of our anti-bribery and corruption requirements, as well as any material incidents reported under our ‘speaking up with confidence’ requirements are reported quarterly to the RAC by the Chief Compliance Officer. These reports are then communicated to the Board through thereport-out
process.During FY2021, management presented an assessment of the material risks facing BHP and the level of effectiveness of risk management over the material business risks. The reviews were overseen by the RAC, with findings and recommendations reported to the Board. In addition to considering key risks facing BHP, the Board assessed the effectiveness of internal controls over key risks identified through the work of the Board Committees.
Having carried out a review during FY2021, the Board is satisfied with the effectiveness of risk management and internal control systems.
Management’s assessment of internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule13a-15(f)
and Rule15d-15(f)
under the Exchange Act).Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and, even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our CEO and CFO, the effectiveness of BHP’s internal control over financial reporting was evaluated based on the framework and criteria established in Internal Controls – Integrated Framework (2013), issued by the Committee of the Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that internal control over financial reporting was effective as at 30 June 2021. There were no material weaknesses in BHP’s internal controls over financial reporting identified by management as at 30 June 2021.
BHP has engaged our independent registered public accounting firm, EY, to issue an audit report on our internal control over financial reporting for inclusion in the Financial Statements section of the Annual Report and the Annual Report on Form20-F
as filed with the Securities Exchange Commission (SEC).There were no changes in our internal control over financial reporting during FY2021 that materially affected or were reasonably likely to materially affect our internal control over financial reporting. This includedCOVID-19,
which only had a minor impact on internal controls over financial reporting in relation to the number and nature of controls that were impacted.During FY2021, the RAC reviewed our compliance with the obligations imposed by SOX, including evaluating and documenting internal controls as required by section 404 of SOX.
136Review of sustainability reporting, including consideration of processes for preparation and assurance provided by EY
Review of BHP’s Modern Slavery Statement
Review of BHP’s performance on HSEC matters, including cultural heritage, community relations, greenhouse gas emissions targets and goals, closure and rehabilitation, biodiversity and human rights
Monitoring against the FY2018–FY2022 HSEC targets
Approving and recommending to the Board, the Group’s 2030 goals which form part of the new social value framework
Review of performance outcomes under the FY2022 HSEC performance metrics and considering HSEC performance metrics for FY2023
For information on sustainability matters refer to OFR 7.
Management’s assessment of disclosure controls and procedures5.4 Remuneration Committee
Management, with the participation of our CEO and CFO, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as at 30 June 2021. Disclosure controls and procedures are designed to provide reasonable assurance that the material financial andnon-financial
information required to be disclosed by BHP, including in the reports it files or submits under the Exchange Act, is recorded, processed, summarised and reported on a timely basis. This information is accumulated and communicated to BHP’s management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on the evaluation, management (including the CEO and CFO) concluded that, as at 30 June 2021, our disclosure controls and procedures are effective in providing that reasonable assurance.There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
In the design and evaluation of our disclosure controls and procedures, management was required to apply its judgement in evaluating the cost-benefit relationship of possible controls and procedures.
2.1.11 Sustainability Committee ReportMembers
Christine O’Reilly (Chair), Catherine Tanna, Dion Weisler
The SustainabilityRemuneration Committee oversees and monitors material HSECthe remuneration framework and practices (including the adoption of incentive plans and levels of reward for the CEO and other ELT members), compliance with applicable requirements associated with remuneration matters including the adequacy of the Group’s HSEC Framework and HSEC Management Systems, and the Group’s HSEC reporting and performance. This includes considerationreview, at least annually, of existing HSEC issues, such as climate, safety and Indigenous and human rights, as well as emerging areas of HSEC risk for the Group.remuneration by gender.
More information on the role and responsibilities of the SustainabilityRemuneration Committee can be found in its termsTerms of reference,Reference, which areis available at bhp.com/governance.
HSEC FrameworkCommittee activities in FY2022 included:
The Group’s HSEC Framework consists of:Remuneration of the ELT and the Board
the Sustainability Committee, which is responsible for assisting the Board in overseeing the adequacyRemuneration of the Group’s HSEC Framework and HSEC Management Systems (amongCEO, other things)
theBoard Governance Document
, which establishes the remit of the Board and delegates authority to the CEO, including in respect of the HSEC Management Systemsthe HSEC Management Systems, established by management in accordance with the CEO’s delegated authority. The HSEC Management Systems provide the processes, resources, structures and performance standards for the identification, management and reporting of HSEC risksELT members and the investigation of any HSEC incidentsGroup Company Secretary
a robustRemuneration arrangements for ELT members upon appointment
The impact of theCOVID-19
pandemic on remuneration Considering remuneration implications of unification and independent internal audit process overseen by the RAC, in accordance with its termsmerger of referencePetroleum and Woodside Energy Group Limited
independent advice on HSEC matters, which may be requested by the BoardPerformance measures, performance levels and its Committees where deemed necessary in order to meet their respective obligations
Our approach to sustainability is reflected in, which defines our values, purpose and how we measure success, and in our sustainability performance targets, which define our public commitments to HSEC. HSEC considerations are also taken into account in employee and executive remuneration. For more information, refer to Sustainability in section 1.13 and section 2.2.Committee activities in FY2021 included:
Assurance and adequacy of HSEC Framework and HSEC Management Systems
Key HSEC risks, including tailings storage facility failure, climate change related risks, fatalities, aviation and underground fire or explosionincentive award outcomes
Asset deep dives providing updates on key HSEC matters and HSEC performanceLong-Term Incentive Plan sector peer group review
Audit planning and reporting on HSEC risks and processesChair fees
Other remuneration matters
Annual Remuneration Report
Shareplus enrolment update
Induction, training and development program
Board Committee procedures, including closed sessions
The Sustainability Committee and the RAC assist the Remuneration Committee in determining appropriate HSEC and financial metrics, respectively, to be included in senior executive scorecards and in assessing performance against those measures.
For more information on the Remuneration Committee’s work refer to the 2022 Remuneration Report.
Below the level of the Board, key management decisions are made by the CEO, the ELT, management committees and members of management in accordance with their delegated authority.
6.1 Executive Leadership Team
6.2 Senior management succession
A senior management succession process is conducted to support pipeline stability for critical roles. A talent deep dive is conducted by the Board at least once a year to evaluate these pipelines, including the diversity of the pipeline.
Senior management succession is viewed from a five-year perspective that considers the readiness of successors across time horizons, contexts and future capability demands. Select Board members are involved in the interview process for executive-level appointments one level below the CEO and occasionally for roles two levels below the CEO. Appropriate checks are undertaken before appointing a member of the ELT. BHP has a written agreement with each ELT member setting out the terms of their appointment.
In May 2022, the Board approved the appointment of Jad Vodopija as the Chief People Officer, effective 1 July 2022 and replacing Athalie Williams.
6.3 Performance evaluation of executives
The performance of executives and other senior employees is reviewed on an annual basis. The annual performance review process considers the performance of executives against criteria designed to capture ‘what’ is achieved and ‘how’ it is achieved. All performance assessments of executives include how effective they have been in undertaking their role and what they have achieved against their specified key performance indicators.
A performance evaluation was conducted for all members of the ELT during FY2022. For the CEO, the performance evaluation was led by the Chair of the Board on behalf of all theNon-executive
Directors and was discussed with the Remuneration Committee. 7 Risk management and assurance
7.1 Risk management governance structure
The RAC assists the Board with the oversight of risk management and the Board retains accountability for BHP’s risk profile. The Board requires the CEO to implement a system of control for identifying and managing risk. The Risk team is accountable for this system, known as BHP’s Risk Framework, and also supports, challenges and verifies risk management activities to give assurance to management and the Board. The Directors, through the RAC, monitor our Risk Framework and review it at least annually to satisfy themselves that the Risk Framework continues to be sound and that BHP is operating with regard to the risk appetite set by the Board. For more information refer to OFR 9.
Review of the HSE function and Group HSE Officer
Compliance with HSEC legal and regulatory requirements and updates on key legal and regulatory changes
SustainabilityReview of sustainability reporting, including consideration of processes for preparation and assurance provided by EY
Review of BHP’s Modern Slavery Statement
PerformanceReview of BHPBHP’s performance on HSEC matters, including cultural heritage, community relations, greenhouse gas emissions targets and goals, closure and rehabilitation, biodiversity and human rights
Monitoring against the FY2018–FY2022 HSEC performance targets and goals
Performance outcomes underApproving and recommending to the HSEC performance targets and setting targets for FY2021
Training and developmentBoard, the Group’s 2030 goals which form part of Committee membersthe new social value framework
Updates toReview of performance outcomes under the Committee’s terms of referenceFY2022 HSEC performance metrics and considering HSEC performance metrics for FY2023
Members of the Sustainability Committee also participated in several site visits during FY2021. Where not limited byCOVID-19
travel restrictions, these werein-person
site visits, but otherwise were attended virtually. During these site visits, Committee members received briefings on HSEC matters and the management of material HSEC risks, and met with key personnel. These visits offer access to a diverse cross-section of the workforce from frontline through to the leadership team, including, where possible, risk and control owners.For information on the key areas of focus for the Committee, management and the HSE and Community functions,sustainability matters refer to section 1.13.OFR 7.
5.4 Remuneration Committee
Sustainability disclosuresMembers
The Sustainability Committee oversees the preparation and presentation of sustainability disclosures by management. This year, BHP has again included material sustainability content in this Annual Report. The Sustainability Committee reviewed and recommended to the Board the approval of these disclosures in section 1.12 and 1.13, along with the FY2021 Modern Slavery Statement. These disclosures identify our targets for HSEC matters and our performance against those targets. Our targets rely on fact-based measurement and quality data, and reflect a desire to move BHP to a position of industry leadership.
Our sustainability reporting, including additional case studies and a databook of key ESG and sustainability data is available at bhp.com.For information on our material exposure to environmental and social risks and how we manage or intend to manage those risks, refer to sections 1.9 and 1.16.
2.1.12 Remuneration Committee Report
Christine O’Reilly (Chair), Catherine Tanna, Dion WeislerThe Remuneration Committee oversees and monitors the remuneration policyframework and practices (including the adoption of incentive plans and levels of reward for the CEO and other ELT members), compliance with applicable requirements associated with remuneration matters and the review, at least annually, of remuneration by gender.
More information on the role and responsibilities of the Remuneration Committee can be found in its termsTerms of reference,Reference, which areis available at bhp.com/governance.
UK committee membership requirements
Christine O’Reilly was appointed Chair of the Remuneration Committee with effect from 1 March 2021. She served on the Committee from her appointment to the Board in October 2020, which provided an appropriate transition to become Chair. She has relevant skills and experience, including her former appointment as a member of the Human Resources and Remuneration Committee of CSL Limited. She therefore satisfies the position in the UK Code that the incoming Chair should have served on a remuneration committee for at least 12 months.
Committee activities in FY2021FY2022 included:
Remuneration of the ELT and the Board
Remuneration of the CEO, other ELT members and the Group Company Secretary
Remuneration arrangements for new ELT members upon appointment
The impact of the
COVID-19
pandemic on remuneration
Considering remuneration implications of unification and the merger of Petroleum and Woodside Energy Group Limited
Performance measures, performance levels and incentive award outcomes
Long-Term Incentive Plan sector peer group review
Other remuneration matters
Workforce remuneration, policies, practices and engagement
Annual remuneration reportRemuneration Report
Corporate Governance Code provisions compliance
Shareplus enrolment update
Induction, training and development program
Board Committee procedures, including closed sessions
Update of the Committee terms of reference
The Sustainability Committee and the RAC assist the Remuneration Committee in determining appropriate HSEC and financial metrics, respectively, to be included in senior executive scorecards and in assessing performance against those measures.
For more information on the Remuneration Committee’s work refer to the 2022 Remuneration Report in section 2.2.Report.
2.1.13 Risk management governance structure136
ContentsBelow the level of the Board, key management decisions are made by the CEO, the ELT, management committees and members of management who havein accordance with their delegated authority.
Management committees consider BHP’s risks and controls. Strategic risks (threats and opportunities) arising from changes in our business environment are regularly reviewed6.1 Executive Leadership Team
6.2 Senior management succession
A senior management succession process is conducted to support pipeline stability for critical roles. A talent deep dive is conducted by the Board at least once a year to evaluate these pipelines, including the diversity of the pipeline.
Senior management succession is viewed from a five-year perspective that considers the readiness of successors across time horizons, contexts and future capability demands. Select Board members are involved in the interview process for executive-level appointments one level below the CEO and occasionally for roles two levels below the CEO. Appropriate checks are undertaken before appointing a member of the ELT. BHP has a written agreement with each ELT member setting out the terms of their appointment.
In May 2022, the Board approved the appointment of Jad Vodopija as the Chief People Officer, effective 1 July 2022 and discussed by the Board.replacing Athalie Williams.
6.3 Performance evaluation forof executives
The performance of executives and other senior employees is reviewed on an annual basis.
For the members of the ELT, this review includes their contribution, engagement and interaction at Board level. The annual performance review process considers the performance of executives against criteria designed to capture ‘what’ is achieved and ‘how’ it is achieved. All performance assessments of executives include how effective they have been in undertaking their
role;role and what they have achieved against their specified key performance
indicators; how they match up to the behaviours prescribed in our leadership model; and how those behaviours align withvalues.A performance evaluation was conducted for all members of the ELT during
FY2021.FY2022. For the CEO, the performance evaluation was led by the Chair of the Board on behalf of all the
Non-executive
Directors and was discussed with the Remuneration Committee.
7 Risk management and assurance
The RAC assists the Board with the oversight of risk management and the Board retains accountability for BHP’s risk profile. The Board requires the CEO to implement a system of control for identifying and managing risk. The Risk team is accountable for this system, known as BHP’s Risk Framework, and also supports, challenges and verifies risk management activities to give assurance to management and the Board. The Directors, through the RAC, monitor our Risk Framework and review it at least annually to satisfy themselves that the Risk Framework continues to be sound and that BHP is operating with regard to the risk appetite set by the Board. For more information refer to OFR 9.
The Internal Audit team provides assurance to the Board, CEO and Executive Leadership Team on whether risk management, internal control and governance processes are adequate and functioning. The Internal Audit team is independent of the External Auditor. The RAC evaluates and, if thought fit, approves the Terms of Reference of the Internal Audit team and the annual internal audit plan and monitors the effectiveness of the internal audit activities.
As of 1 August 2022, the Risk team and Internal Audit team were combined to form a Risk and Internal Auditsub-function,
led by a Chief Risk and Audit Officer. The Risk team and Internal Audit team will continue to operate in the second and third lines respectively. Refer to OFR 9 for more information. The RAC approves the appointment and dismissal of the Chief Audit Officer and assesses their performance, independence and objectivity. During FY2022, the Group Audit Officer reported directly to the RAC and functional oversight of the Internal Audit team was provided by the Chief Legal, Governance and External Affairs Officer. As of 1 August 2022, functional oversight of the Risk and Internal Auditsub-function
is provided by the Chief Financial Officer. Effectiveness of systems of internal control and risk management
In delegating authority to the CEO, the Board has established CEO limits, outlined in theBoard Governance Document
The RAC oversees and reviews the internal controls and risk management systems (including procedures, processes and systems for, among other things, budgeting and forecasting, provisions, financial controls, financial reporting and reporting of reserves and resources, compliance, preventing fraud and serious breaches of business conduct,speak-up
procedures, and protecting information and data systems). Any material breaches of, including breaches of our anti-bribery and corruption requirements and any material incidents reported under ourspeak-up
procedures are reported quarterly to the RAC by the Chief Compliance Officer. These reports are then communicated to the Board through thereport-out
process. During FY2022, management presented an assessment of the material risks facing BHP and the effectiveness of the Group’s systems of risk management. The reviews were overseen by the RAC, with findings and recommendations reported to the Board. In addition to considering key risks facing BHP, the Board assessed the effectiveness of internal controls over key risks identified through the work of the Board Committees.
Having carried out a review during FY2022, the Board is satisfied with the effectiveness of BHP’s risk management and internal control systems.
Environmental and social risks
BHP’s risk factors (including material exposure to environmental and social risks) and how we manage these risks are described in OFR 9 and 9.1.
7.2 External audit and financial reporting
Integrity of Financial Statements
The RAC assists the Board in assuring the integrity of the Financial Statements. The RAC evaluates and makes recommendations to the Board about the appropriateness of accounting policies and practices, areas of judgement, compliance with accounting standards, stock exchange and legal requirements and the results of the external audit.
For the FY2022 full year and half year, the CEO and CFO have certified that in their opinion, BHP’s financial records have been properly maintained and the FY2022 Financial Statements present a true and fair view of our financial condition and operating results and are in accordance with accounting standards and applicable regulatory requirements.
The CEO and CFO have also certified to the Board that this opinion was formed on the basis of a sound system of risk management and internal control and the system is operating efficiently and effectively. The RAC considered these certifications when recommending the Financial Statements to the Board for approval.
The RAC manages the relationship with the External Auditor on behalf of the Board. It considers the independence and reappointment of the External Auditor each year, as well as remuneration and other terms of engagement and makes a recommendation to the Board.
Evaluation of External Auditor and external audit process
The RAC evaluates the objectivity and independence of the External Auditor and the quality and effectiveness of the external audit arrangements, including through:
reviewing the terms of engagement of the External Auditor
considering the external audit plan, in particular to gain assurance that it is tailored to reflect changes in circumstances from the prior year
meeting with the audit partners, particularly the lead audit engagement partners, throughout the year and without management present
discussing with the audit engagement partners the skills and experience of the broader audit team
considering the quality of the External Auditor’s performance following the completion of the audit
In addition, the RAC reviews the integrity, independence and objectivity of the External Auditor and assesses whether there is any element of the relationship that impairs or appears to impair the External Auditor’s judgement or independence. The External Auditor also certifies its independence to the RAC.
Although the External Auditor provides somenon-audit
services to the Group, the objectivity and independence of the External Auditor are safeguarded through restrictions on the provision of these services with some services prohibited from being undertaken. The RAC has adopted a policy entitled Provision of Audit and Other Services by the External Auditor covering the RAC’spre-approval
policies and procedures to maintain the independence of the External Auditor. The categories of‘pre-approved’
services are: Audit services – work that constitutes the agreed scope of the statutory audit and includes the statutory audits of BHP and its entities (including interim reviews).The RAC monitors the audit services engagements and if necessary, approves any changes in terms and conditions resulting from changes in audit scope, Group structure or other relevant events.
Audit-related and other assurance services – work that is outside the scope of the statutory audit but is consistent with the role of the external statutory auditor. This category includes work that is reasonably related to the performance of an audit or review and is a logical extension of the audit or review scope, is of an assurance or compliance nature and is work that the external auditors must or are best placed to undertake and is permissible under the relevant applicable standard.
Activities outside the scope of the categories above are not‘pre-approved’
and must be approved by the RAC prior to engagement, regardless of the dollar value involved. In addition, any engagement for other services with a value over US$250,000, even if listed as a‘pre-approved’
service, requires the approval of the RAC. All engagements fornon-audit
services, whether‘pre-approved’
or not and regardless of the dollar value involved, are reported quarterly to the RAC. While not prohibited by BHP’s policy, any proposed engagement of the External Auditor that contains an internal control element requires specific prior approval from the RAC. In addition, while the categories of‘pre-approved’
services include a list of certainpre-approved
services, the use of the External Auditor to perform these services will always be subject to our overriding governance practices as articulated in the policy. In addition, the RAC did not approve any services during the year ended 30 June 2022 pursuant to paragraph (c)(7)(i)(C) of Rule2-01
of SEC RegulationS-X
(provision of services other than audit). Fees paid to BHP’s External Auditor during FY2022 for audit and other services were US$20.3 million, of which 51 per cent comprised audit fees (including in relation to SOX matters), 10 per cent for audit-related fees and 39 per cent for all other fees. No fees were paid in relation to tax services. Details of the fees paid are set out in Financial Statements note 34 ‘Auditor’s remuneration’.
Our policy on Provision of Audit and Other Services by the External Auditor is available at bhp.com/governance.
Management’s assessment of internal control over financial reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule13a-15(f)
and Rule15d-15(f)
under the Exchange Act). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and, even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our CEO and CFO, the effectiveness of BHP’s internal control over financial reporting was evaluated based on the framework and criteria established in Internal Controls – Integrated Framework (2013), issued by the Committee of the Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that internal control over financial reporting was effective as at 30 June 2022. There were no material weaknesses in BHP’s internal controls over financial reporting identified by management as at 30 June 2022.
BHP has engaged our independent registered public accounting firm, EY, to issue an audit report on our internal control over financial reporting for inclusion in the Financial Statements of the Annual Report and the Annual Report on Form20-F
as filed with the SEC. There were no changes in our internal control over financial reporting during FY2022 that materially affected or were reasonably likely to materially affect our internal control over financial reporting.
During FY2022, the RAC reviewed our compliance with the obligations imposed by SOX, including evaluating and documenting internal controls as required by section 404 of SOX.
Management’s assessment of disclosure controls and procedures
Management, with the participation of our CEO and CFO, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as at 30 June 2022. Disclosure controls and procedures are designed to provide reasonable assurance that the material financial andnon-financial
information required to be disclosed by BHP, including in the reports it files or submits under the Exchange Act, is recorded, processed, summarised and reported on a timely basis. This information is accumulated and communicated to BHP’s management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based on the evaluation, management (including the CEO and CFO) concluded that, as at 30 June 2022, our disclosure controls and procedures are effective in providing that reasonable assurance. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
In the design and evaluation of our disclosure controls and procedures, management was required to apply its judgement in evaluating the cost-benefit relationship of possible controls and procedures.
2.1.15 Our8 Culture and conduct
Successful delivery of our strategy relies on workforce capability and a strong culture, and the Board, together with management plays a critical role in setting the culture of the Group. Supporting our people’s wellbeing, creating and promoting an inclusive and diverse environment for our people to work, and keeping them safe in the workplace are critically important and core to our values.
8.1 Our Code of Conduct and Our Charter
Our Code of Conduct (Our Code)
is
approved by the Board and is based on
values.
includes our policies on speaking up and anti-bribery and corruption, sets out standards of behaviour for our people and
includes our policies on speaking up, anti-briberyis an important statement of the culture at BHP.During FY2022, we began work to refreshto align it with global best practice and
corruption.to provide an effective basis for standard setting and enforcement. We expect to launch the refreshed version ofin FY2023. and
are accessible
to all our people and external stakeholdersat bhp.com.
The Board, supported by the Committees, considers a range of qualitative and quantitative information in relation to culture at BHP and monitors and assesses culture on an ongoing basis for alignment with our strategy, purpose and values. Board and Committee papers include workforce planning in the context ofCOVID-19,
Employee Perception Survey results, updates on sexual harassment controls, inclusion and diversity updates, RAC report-outs oninvestigations, the culture and capability required to execute our strategy, and culture as a part of asset reviews. Recognising our culture cannot be measured using a single number or index, a culture dashboard is used to provide the Board with a tool to monitor our culture. The dashboard includes simple measures to provide key signposts on the health of our culture. This data, combined with the Employee Perception Survey results, provides the Board with insight on safety, engagement and enablement. Directors also gain insights into culture through direct engagement with a cross-section of the workforce where they can gain direct feedback on a range of issues, including sexual harassment, ongoingCOVID-19
impacts, diversity, HSEC topics and social value. We have mechanisms in place for anyone to raise a query about
, or make a report if they feel
has been breached.
EthicsPoint is our
system24-hour
confidential reporting tool for reporting misconduct and can be used by employees, contractors and external stakeholders, including members of the public to raise concerns about misconduct that has either happened to them or they have witnessed.
Reports can be raised in EthicsPoint directly, via an employee or contractor’s line leader or via the24-hour,
multilingual call service. Reporters of misconduct can choose to raise their concern anonymously.Reports received are assigned by the Ethics Team to an investigator, line leader or team for investigation or resolution as appropriate, in accordance with internal policy and process documents. The reporting and investigations processes are transparent and summary information is accessible to all BHP employees via BHP’s intranet.
All reports received in EthicsPoint are reviewed and categorised by the Ethics Team.team. Once categorised, reports are assigned in accordance with internal policy and processes to an investigator, line leader or appropriate team for resolution. The processes for reporting and investigation are transparent and BHP employees and contractors can access this information via BHP’s intranet. External stakeholders can access this via the BHP website.
Reports raised via EthicsPoint provide valuable insight into culture and organisational learning. All significant
matters and key trends from investigations are reported to the RAC. These are then reported to the Board as part of its
report-out
as setprocess.The Board and management believe diversity is required to meet our purpose and strategy. Diversity is key to supporting the Board and its Committees to have the right blend of perspectives so that the Board oversees BHP effectively for shareholders.
We have adopted an Inclusion and Diversity Position Statement, which sets out
our diversity policy in
section 2.1.5. The most serious breaches ofare also reportedrelation to the
Integrity Working Group, which Board, senior management and our workforce, and our priorities to accelerate the development of a more inclusive work environment and enhanced overall workplace diversity. BHP’s Inclusion and Diversity Position Statementis
accountable for oversightavailable at bhp.com/careers/inclusion-diversity and is summarised in OFR 6. As described in our Inclusion and Diversity Position Statement, our aspiration is to achieve gender balance (which we define as a minimum 40 per cent women and 40 per cent men, in line with the definition used by entities such as the International Labour Organization) on our Board, among our senior executives and across our workforce by FY2025. Currently 33 per cent of Directors are female and we therefore satisfy the guidance of having at least 30 per cent of Directors of each gender in accordance with the ASX Fourth Edition. When Mr Broomhead and Mr Mogford retire from the Board at the conclusion of the operational effectiveness2022 AGM, 40 per cent of Directors will be female. We also continue to seek additional ethnic diversity on our Board and throughout BHP.
Part of the Investigations Framework,Board’s role continues to be to consider and approve BHP’s measurable objectives for diversity on its Board, among its senior executives and general workforce each financial year and to oversee our progress in achieving those objectives. For more information, including oversightour progress against our FY2022 measurable objectives and our employee profile more generally, refer to OFR 6.
The diagram below illustrates the diversity that is currently represented on the Board.
9 Shareholder and stakeholder engagement
Part of the Board’s commitment to high-quality governance is expressed through the approach BHP takes to engaging and communicating with our shareholders. As part of our investor relations program to facilitate effectivetwo-way
communication with investors, the Board uses formal and informal communication channels to understand and take into account the views of shareholders. BHP provides information about itself and its governance to investors via its website at bhp.com. We encourage shareholders to make their views known to us. Shareholders can contact us at any time through our Investor Relations team, with contact details available at bhp.com. In addition, shareholders can communicate with us and our registrar electronically.
We facilitate and encourage shareholder participation at our AGM. The AGM provides an update for shareholders on our performance and offers an opportunity for shareholders to ask questions and vote. The External Auditor will also be available to answer questions at the AGM.
Information on our AGM is available at bhp.com/meetings.
Before the AGM, shareholders are provided with all material information in BHP’s possession relevant to their decision on whether or not to elect orre-elect
a Director. Copies of the speeches delivered by the
Central Investigations team. Chair and CEO at the AGM are released to the relevant stock exchanges and posted on our website. Proceedings at shareholder meetings are webcast live from our website. Substantive resolutions at general meetings are decided by a poll rather than by a show of hands.
A summary of proceedings and the outcome of voting on the items of business are released to the relevant stock exchanges and posted on our website as soon as they are available.
During FY2022, key shareholder engagement initiatives included:
discussions with major institutional investors and proxy advisers in relation to the Climate Transition Action Plan 2021, and obtaining shareholder approval at the 2021 AGMs
presentations and briefings provided to investors about the merger of BHP’s Petroleum business with Woodside
communications to investors about the unification of our Dual Listed Company structure, including General Meetings in Australia and London for investors to directly engage with the Board on this topic
live webcasts and Q&A sessions with senior leaders for shareholders to directly ask questions of management
an investor briefing on social value which included the launch of our 2030 social value goals
The Integrity Working Group is chaired byBoard considers effective stakeholder engagement a key element of its governance and oversight role.
There are multiple ways the
views of stakeholders, beyond shareholders, are brought to the Board and its Committees. For example, site visits (physical and virtual where necessary) involving engagement with the workforce, community members and government, Employee Perception Survey findings, gender pay gap reports, updates from the CEO and Chief
CompliancePeople Officer and
comprisesengagement with the Forum on Corporate Responsibility. In addition, the RAC and Sustainability Committee receive reports on engagement with regulators. They also receive reports on material litigation and disputes with third parties and complaints raised through thespeak-up
hotline, EthicsPoint, which allows our workforce to raise concerns in confidence. The strategic framework, focus on social value, our purpose and Risk Appetite Statement reflect the significance of a number of senior leaders across BHP.external stakeholders in decision making.
2.1.1610 Market disclosure
We have disclosure controls in place for periodic disclosures, including the Operational Review, our results announcements, debt investor documents (such as the prospectus for the Euro or Australian Medium Term Notes) and Annual Report documents, which must comply with relevant regulatory requirements.
More information about these verification processes can be found in the Periodic Disclosure – Disclosure Controls document available at bhp.com.bhp.com/governance.
To safeguard the effective dissemination of information, we have developed mandatory minimum performance requirements for market disclosure, which outline how we identify and distribute information to shareholders and market participants and sets out the role of the Disclosure Committee in managing compliance with market disclosure obligations. In addition, where an announcement is determined to be material by the Disclosure Committee, the Board receives a copy promptly after it has been made. Where BHP gives a new and substantive investor or analyst presentation, it releases a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation.
In response toCOVID-19,
we have introduced extra monitoring and disclosure controls. These have included: increasing the regularity and breadth of information gathered from management (including the Finance, Supply, Marketing, Legal, and Operational teams); more regular updates to the Disclosure Committee; and more regular discussions with UBS (our corporate broker in the UK), as well as our Investor Relations team. This enables BHP to assess the materiality of developments and stay across market expectations, dynamics and emerging best practice.A copy of the
market disclosureMarket Disclosure and
communications documentCommunications Policy is available at bhp.com/governance.
Copies of announcements to the stock exchanges on which BHP is listed, investor briefings, Financial Statements, the Annual Report and other relevant information can be found at bhp.com
To receive email alerts of news releases, subscribe at bhp.com.
2.1.17 Conformance with corporate governance standards
Our compliance with the governance standards in our home jurisdictions of Australia and the United Kingdom, and with the governance requirements that apply to us as a result of our New York Stock Exchange (NYSE) listing and our registration with the Securities Exchange Commission (SEC) in the United States is summarised in this Corporate Governance Statement, the Remuneration Report, the Directors’ Report and the Financial Statements.
The UK Code (available at frc.org.uk) and the ASX Principles and Recommendations (available atasx.com.au
) require the Board to consider the application of the relevant corporate governance principles, while recognising departures from those principles are appropriate in some circumstances. The Board considers that during FY2021 it applied the Principles and complied with the provisions set out in the 2018 edition of the UK Code and complied with the ASX Fourth Edition, with no exceptions.Our Appendix 4G, which summarises our compliance with the ASX Fourth Edition is available at bhp.com/governance.
BHP Group Limited and BHP Group Plc are registrantsis a registrant with the SEC in the United States. Each companyIt is classified as a foreign private issuer and each has American Depositary Shares listed on the NYSE.
We have reviewed the governance requirements applicable to foreign private issuers under SOX, including the rules promulgated by the SEC and the rules of the NYSE, and are satisfied that we comply with those requirements.
Under NYSE rules, foreign private issuers such as BHP are required to disclose any significant ways our corporate governance practices differ from those followed by US companies under the NYSE corporate governance standards. After a comparison of our corporate governance practices with the requirements of Section 303A of the NYSE-Listed Company Manual followed by US companies, a significant difference was identified:
Rule
10A-3
of the Exchange Act requires NYSE-listed companies to ensure their audit committees are directly responsible for the appointment, compensation, retention and oversight of the work of the External Auditor unless the company’s governing law or documents or other home country legal requirements require or permit shareholders to ultimately vote on or approve these matters.
While the RAC is directly responsible for remuneration and oversight of the External Auditor,Prior to unification, the ultimate responsibility for
the appointment and retention of the External Auditor
restsrested with our shareholders in accordance with UK law
(and our constitutional documents reflected this legal requirement). The RAC was then directly responsible for the compensation and oversight of the work of the External Auditor throughout the year. Following the unification of our corporate structure, BHP is no longer subject to the UK requirement tore-appoint
the External Auditor by shareholder vote annually and our
constitutional documents. However, the RAC does make recommendationsconstitution has been amended to
the Board on these matters, which are reported to shareholders.
| | |
Compliance with the UK Code
This table describes how BHP has applied the Principles of the UK Code
|
Board leadership and our purpose
• Long-term sustainable success – we believe we put the long-term sustainable success of BHP at the centre of what we do (sections 1.6 and 1.14).
• Purpose, values, strategy and culture – we renewed our purpose in FY2019 to better capture the aspirations of all our stakeholders (sections 1.6, 1.14, 1.13, 2.1.5 and 2.1.7).
• Performance measurement and control framework (section 4.8).
• Responsibilities to shareholders and stakeholders (sections 1.14, 1.12 and 2.1.6).
• Workforce policies and practices (sections 1.6.2, 1.14, 1.12 and 2.1.6).
| | Composition, succession and evaluation
• Appointments and succession planning – we have a rigorous process in place for Board appointments and to consider succession having regard to diversity of gender, social and ethnic backgrounds and personal strengths (section 2.1.9).
• Skills matrix – we have an appropriate mix of skills, experience and knowledge on the Board and in 2018 revised our skills matrix (section 2.1.7). Section 2.1.9 provides information on tenure and Board renewal.
• Director review – reviews are undertaken on the contribution of each Director to the work of the Board and its Committees, the expectations of Directors as specified in BHP’s governance framework and the performance of Directors. The review confirmed that each Director continues to contribute effectively (section 2.1.8).
|
| |
Division of responsibilities
• Chair of the Board – the Chair leads the Board and isremove this requirement. From January 2022 our shareholders remain ultimately responsible for its effectiveness and the effective contribution from allNon-executive
Directors (section 2.1.3).• Board composition – the Board operates effectively with the appropriate balance of executives andnon-executives
and believes the roles of the Chair and the CEO should be separated (section 2.1.3).• Non-executive
Directors have sufficient time to meet their responsibilities – when we appoint new Directors we ensure they have sufficient time to undertake their responsibilities and are able to offer challenge, strategic guidance and specialist advice (sections 2.1.2 and 2.1.7).• Time and resources – the Board ensures it has the necessary time, resources, policies and processes in place as part of its evaluation process (sections 2.1.3 and 2.1.8).
| | Audit Risk and Internal Control
• Internal and external audit independence – we understand the importance of ensuring these lines of defence remain independent (section 2.1.10).
• Fair balanced and understandable – the Board presents a fair balanced and understandable assessment of BHP’s position and prospects (section 2.1.10).
• Management and oversight of risk – our risk and control environment is monitored and overseen by the Risk and Audit Committee. The Board, Risk and Audit Committee, and Sustainability Committee considered emerging and principal risk during the year (sections 1.9, 2.1.5, 2.1.10 and 2.1.11).
|
| • Policies and practices – remuneration is designed to support our strategy and long-term sustainable success (section 2.2).
• Formal and transparent procedure – we have formal and transparent procedures in place, and routinely engage with investors for their feedback (section 2.2 and ‘Shareholder engagement’ in section 2.1.6).
• Use of discretion – we have used discretion to adjust the formulaic remuneration outcomes (section 2.2).
|
2.1.18 Additional UK disclosure
The information specified in the UK FCA Disclosure Guidance and Transparency Rules, DTR 7.2.6, is located elsewhere in this Annual Report. The Directors’ Report in section 2.3 provides cross-references to where the information is located.
This Corporate Governance Statement was current and approved by the Board on 2 September 2021 and signed on its behalf by:
This Remuneration Report describes the remuneration policies, practices, outcomes and governance for the KMPappointment and retention of BHP.
BHP’s DLC structure means that wethe External Auditor and are subjectrequired to remuneration disclosure requirements in the United Kingdom and Australia. This results in some complexity in our disclosures, as there are some key differences in the requirements and the information that must be disclosed. For example, UK requirements give shareholders the right to a binding vote on the remuneration policy every three years and as a result, the remuneration policy needs to be described in a separate section in the Remuneration Report. Our remuneration policy is set out in section 2.2.2. In Australia, BHP is required to make certain disclosures for KMP as defined by the Australian Corporations Act 2001, Australian Accounting Standards and IFRS.
The UK requirements focus on the remuneration of Executive andNon-executive
Directors. At BHP, this is our Board, including the CEO, who is our sole Executive Director. In contrast, the Australian requirements focus on the remuneration of KMP, defined as those who have authority and responsibility for planning, directing and controlling the activitiesappointment of the
Group directly or indirectly. KMP includes the Board, as well as certain members of our senior executive team.After due consideration, the Committee has determined the KMP for FY2021 comprised the following roles: allNon-executive
Directors, the CEO, the Chief Financial Officer, the President Minerals Australia, the President Minerals Americas,External Auditor from time to time (as required under Australian law), and the
President Petroleum.The following individuals have held their positions and were KMPRAC remains directly responsible for the wholecompensation and oversight of FY2021, unless stated otherwise:
Mike Henry, CEO and Executive Director
Edgar Basto, President Minerals Australia
Peter Beaven, Chief Financial Officer (to 30 November 2020)
David Lamont, Chief Financial Officer (from 1 December 2020)
Daniel Malchuk, President Minerals Americas (to 31 October 2020)
Geraldine Slattery, President Petroleum
Ragnar Udd, President Minerals Americas (from 1 November 2020)
Non-executive
Directors - see ‘Remuneration forNon-executive
Directors’ in section 2.2.3 for detailsthe work of the
Non-executive
Directors, including dates of appointment or cessation (where relevant) External Auditor.
The information presented by the Directors in this Directors’ Report relates to BHP Group Limited and its subsidiaries. The Operating and Financial Review (OFR), the Remuneration Report, and the ‘Lead Auditor’s Independence Declaration’ are incorporated by reference into, and form part of, this Directors’ Report.
1 Review of operations, principal activities and state of affairs
A review of the operations of BHP during FY2022, the results of those operations during FY2022 and the expected results of those operations in future financial years are set out in the OFR. Information on the development of BHP and likely developments in future years also appears in this section.
Our principal activities, including significant changes in the nature of BHP’s principal activities during FY2022 are disclosed in the OFR.
There were no significant changes in BHP’s state of affairs that occurred during FY2022 and no significant post balance date events other than as disclosed in the OFR and Financial Statements note 33 ‘Subsequent events’.
No other matter or circumstance has arisen since the end of FY2022 that has significantly affected or is expected to significantly affect the operations, the results of operations or state of affairs of BHP in future years.
The Directors who served at any time during FY2022 or up until the date of this Directors’ Report are listed in the Board and Board Committee attendance table in Directors’ Report 2.2. Information on the current Directors is set out in Directors’ Report 2.1.
2.2 Director attendances at meetings
The Board meets as often as required. During FY2022, the Board met 15 times.
Members of the Executive Leadership Team and other members of senior management attend meetings of the Board by invitation.
Each Board Committee provides a standing invitation for anyNon-executive
Director to attend Committee meetings (rather than just limiting attendance to Committee members). Committee agendas and papers are provided to all Directors to ensure they are aware of matters to be considered. Board and Board Committee attendance in FY2022
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Nomination
and Governance
Committee | | | | | | | |
| | | 15/15 | | | | 11/11 | | | | 5/5 | | | | – | | | | – | |
| | | 15/15 | | | | – | | | | 2/2 | 1 | | | – | | | | 2/2 | 1 |
| | | 15/15 | | | | 11/11 | | | | – | | | | – | | | | – | |
| | | 15/15 | | | | 11/11 | | | | – | | | | – | | | | 5/5 | |
| | | 7/7 | | | | 5/5 | | | | – | | | | 2/2 | | | | – | |
| | | 15/15 | | | | – | | | | 5/5 | | | | 5/5 | | | | 5/5 | |
| | | 15/15 | | | | – | | | | – | | | | – | | | | – | |
| | | 4/4 | | | | 2/2 | | | | – | | | | – | | | | – | |
| | | 7/7 | | | | – | | | | – | | | | 2/2 | 5 | | | – | |
| | | 15/15 | | | | – | | | | 5/5 | | | | – | | | | – | |
| | | 15/15 | | | | – | | | | 5/5 | | | | – | | | | 5/5 | |
| | | 15/15 | | | | 11/11 | | | | 5/5 | | | | 5/5 | | | | – | |
| | | 3/3 | | | | – | | | | – | | | | 2/2 | | | | 2/2 | |
| | | 15/15 | | | | – | | | | – | | | | 5/5 | | | | 3/3 | 8 |
| 1 | Malcolm Broomhead ceased being a member of the Nomination and Governance Committee and Sustainability Committee on 11 November 2021 |
| 2 | Anita Frew served as aNon-executive Director from 15 September 2015 until her retirement as a member of the Board, Risk and Audit Committee and Remuneration Committee on 11 November 2021 |
| 3 | Gary Goldberg ceased being a member of the Remuneration Committee on 17 June 2022. He became Chair of the Sustainability Committee on 18 June 2022 |
| 4 | Michelle Hinchliffe became a member of the Board and the Risk and Audit Committee on 1 March 2022 |
| 5 | Susan Kilsby served as aNon-executive Director from 1 April 2019 until her retirement as a member of the Board and the Remuneration Committee on 11 November 2021 |
| 6 | John Mogford ceased being a member of the Nomination and Governance Committee on 17 June 2022. He ceased being the Chair of the Sustainability Committee on 17 June 2022, but remains a member of this Committee |
| 7 | Catherine Tanna became a member of the Board, Remuneration Committee and Sustainability Committee on 4 April 2022 |
| 8 | Dion Weisler became a member of the Sustainability Committee on 12 November 2021 |
3 Share capital andbuy-back
programs At the Annual General Meetings held in 2019, 2020 and 2021, shareholders authorised BHP Group Plc to makeon-market
purchases of up to 211,207,180 of its ordinary shares, representing 10 per cent of BHP Group Plc’s issued share capital at that time. During FY2022, we did not make anyon-market
oroff-market
purchases of BHP Group Limited or BHP Group Plc ordinary shares under any sharebuy-back
program. As at the date of this Directors’ Report, there were no currenton-market
buy-backs.
BHP Group Plc (now BHP Group (UK) Limited) is no longer able to makeon-market
purchases of its ordinary shares as a result of its delisting in connection with the unification transaction with BHP Group Limited and as such it can no longer utilise the shareholder authorisation in relation toon-market
purchases obtained at the Annual General Meeting in 2021. Some of our executives receive rights over BHP shares as part of their remuneration arrangements. Entitlements may be satisfied by the transfer of existing shares, which are acquiredon-market
by the Employee Share Ownership Plan (ESOP) Trusts or, in respect of some entitlements, by the issue of shares. The number of shares referred to in column A below were purchased to satisfy awards made under the various BHP Group employee share schemes during FY2022.
| | | | | | | | | | | | | | | | | | | | |
| |
| | |
| | |
| | |
Maximum number of
shares that may yet be
purchased under the
| |
| | | | | | | | | | | | | | | | |
1 Jul 2021 to 31 Jul 2021 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | 3 |
1 Aug 2021 to 31 Aug 2021 | | | 63,567 | | | | 32.08 | | | | – | | | | – | | | | 211,207,180 | 3 |
1 Sep 2021 to 30 Sep 2021 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | 3 |
1 Oct 2021 to 31 Oct 2021 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | 3 |
1 Nov 2021 to 30 Nov 2021 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | 3 |
1 Dec 2021 to 31 Dec 2021 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | 3 |
1 Jan 2022 to 31 Jan 2022 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | 3,4 |
1 Feb 2022 to 28 Feb 2022 | | | – | | | | – | | | | – | | | | – | | | | – | |
1 Mar 2022 to 31 Mar 2022 | | | 3,354,850 | | | | 35.95 | | | | – | | | | – | | | | – | |
1 Apr 2022 to 30 Apr 2022 | | | – | | | | – | | | | – | | | | – | | | | – | |
1 May 2022 to 31 May 2022 | | | – | | | | – | | | | – | | | | – | | | | – | |
1 Jun 2022 to 30 Jun 2022 | | | 949,819 | | | | 28.37 | | | | – | | | | – | | | | – | |
| | | | | | | | | | | | | | | | | | | | |
| | | 4,368,236 | | | | 34.24 | | | | – | | | | – | | | | – | |
| | | | | | | | | | | | | | | | | | | | |
| 1 | The shares were purchased in the currency of the stock exchange on which the purchase took place and the sale price has been converted into US dollars using the average weekly exchange rate of the week that such purchases took place for purchases on the ASX, and the average monthly exchange rate of the month that such purchases took place for purchases on the LSE |
| 2 | BHP Group Limited is able tobuy-back and cancel BHP Group Limited shares within the ‘10/12 limit’ without shareholder approval in accordance with section 257B of the Australian Corporations Act 2001. Any futureon-market sharebuy-back program would be conducted in accordance with the Australian Corporations Act 2001 and with the ASX Listing Rules |
| 3 | At the Annual General Meetings held during 2019, 2020 and 2021, shareholders authorised BHP Group Plc to makeon-market purchases of up to 211,207,180 of its ordinary shares, representing 10 per cent of BHP Group Plc’s issued capital at the time |
| 4 | BHP Group Plc (now BHP Group (UK) Limited) is no longer able to makeon-market purchases of its ordinary shares as a result of its delisting in connection with the unification transaction with BHP Group Limited and as such it can no longer utilise the shareholder authorisation in relation toon-market purchases obtained at the Annual General Meeting in 2021 |
As at the date of this Directors’ Report, there were 15,846,572 unvested equity awards outstanding in relation to BHP Group Limited ordinary shares held by 20,790 holders. The expiry dates of these unvested equity awards range between August 2022 and August 2026 and there is no exercise price. 4,400,000 fully paid ordinary shares in BHP Group Limited were issued as a result of the exercise of rights over unissued shares during or since the end of FY2022.No options over unissued shares or unissued interests in BHP have been granted during or since the end of FY2022 and no shares or interests were issued as a result of the exercise of an option over unissued shares or interests during or since the end of FY2022. For more information refer to Financial Statements note 25 ‘Employee share ownership plans’. For information on movements in share capital during and since the end of FY2022 refer to Financial Statements note 16 ‘Share capital’. ‘Ordinary shareholdings and transactions’ in the Remuneration Report 5.4 sets out the relevant interests in shares in BHP Group Limited of the Directors who held office during FY2022, at the beginning and end of FY2022. No rights or options over shares in BHP Group Limited are held by any of theNon-executive
Directors. Interests held by the Executive Director under employee equity plans as at 30 June 2022 are set out in the tables showing interests in incentive plans contained in ‘Equity awards’ in the Remuneration Report 5.2. Except for Mike Henry, as at the date of this Directors’ Report, the information pertaining to shares in BHP Group Limited and held directly, indirectly or beneficially by Directors is the same as set out in the table in ‘Ordinary shareholdings and transactions’ in the Remuneration Report 5.4. Where applicable, the information includes shares held in the name of a spouse, superannuation fund, nominee and/or other controlled entities. All Directors have met the minimum shareholding requirement under their Terms of Appointment.
As at the date of this Directors’ Report, Mike Henry held:
(either directly, indirectly or beneficially) 521,592 shares in BHP Group Limited
rights and options over 978,790 shares in BHP Group Limited
Where applicable, the above information includes shares held in the name of a spouse, superannuation fund, nominee and/or other controlled entities.
We have not made available to any Directors any interest in a registered scheme.
Executive Key Management Personnel
Interests held by members of the Executive KMP under employee equity plans as at 30 June 2022 are set out in the tables contained in the ‘Equity awards’ section in the Remuneration Report 5.2.
The table below sets out the relevant interests in shares in BHP Group Limited held directly, indirectly or beneficially, as at the date of this Directors’ Report by those senior executives who were Executive Key Management Personnel (KMP) (other than the Executive Director) on that date. Where applicable, the information also includes shares held in the name of a spouse, superannuation fund, nominee and/or other controlled entities.
| | | | |
| |
| |
| | | 130,038 | |
| | | 6,345 | |
| | | 127,232 | |
| | | 118,955 | |
Stefanie Wilkinson is the Group Company Secretary. For details of her qualifications and experience refer to the Biographical details in Directors’ Report 2.1. The following people also acted during FY2022 as Company Secretaries of BHP Group Limited: Geof Stapledon, BEc, LLB (Hons), DPhil, FCIS, until 7 July 2021, Prakash Kakkad, LLB, LPC, from 7 July 2021, John-Paul Santamaria, BEng (Civil) (Hons), LLB, from 7 July 2021.
Each individual has experience in a company secretariat role or other relevant fields arising from time spent in roles within BHP, other large listed companies or other relevant entities.
6 Indemnities and insurance
Rule 146 of the BHP Group Limited Constitution requires the company to indemnify, to the extent permitted by law, each Officer of BHP Group Limited against liability incurred in, or arising out of, the conduct of the business of BHP or the discharge of the duties of the Officer. The Directors named in 2.1 of the Directors’ Report, the Company Secretaries and other Officers of BHP Group Limited have the benefit of this requirement, as do individuals who formerly held one of those positions.
In accordance with this requirement, BHP Group Limited has entered into Deeds of Indemnity, Access and Insurance (Deeds of Indemnity) with its Directors.
We have a policy that BHP will, as a general rule, support and hold harmless an employee, including an employee appointed as a Director of a subsidiary who, while acting in good faith, incurs personal liability to others as a result of working for BHP.
In addition, as part of the arrangements to effect the demerger of South32, we agreed to indemnify certain former Officers of BHP who transitioned to South32 from certain claims and liabilities incurred in their capacity as Directors or Officers of South32.
The terms of engagement for certain services include that we must compensate and reimburse EY for, and protect EY against, any loss, damage, expense, or liability incurred by EY in respect of third-party claims arising from a breach by BHP of any obligation under the engagement terms.
We have insured against amounts that we may be liable to pay to Directors, Company Secretaries or certain employees (including former Officers) pursuant to Rule 146 of the Constitution of BHP Group Limited or that we otherwise agree to pay by way of indemnity. The insurance policy also insures Directors, Company Secretaries and some employees (including former Officers) against certain liabilities (including legal costs) they may incur in carrying out their duties. For this Directors’ and Officers’ insurance, we paid premiums of US$21,772,900 excluding taxes during FY2022.
No indemnity in favour of a current or former officer of BHP Group Limited, or in favour of the External Auditor, was called on during FY2022.
A final dividend of 175 US cents per share will be paid on 22 September 2022, resulting in total cash dividends determined in respect of FY2022 of 325 US cents per share.
The merger of BHP’s oil and gas portfolio with Woodside Energy was completed on 1 June 2022 and BHP paid a fully franked in specie dividend of US$3.86 per share or US$19.6 billion.
For information on the dividends paid refer to Financial Statements note 16 ‘Share capital’ and note 18 ‘Dividends’.
No current officer of BHP has held the role of director or partner of the Group’s current external auditor.
For information on thenon-audit
services undertaken by BHP’s External Auditor, including the amounts paid fornon-audit
services, refer to Financial Statements note 34 ‘Auditor’s remuneration’. Allnon-audit
services were approved in accordance with the process set out in the Policy on Provision of Audit and Other Services by the External Auditor. Nonon-audit
services were carried out that were specifically excluded by the Policy on Provision of Audit and Other Services by the External Auditor. Based on advice provided by the Risk and Audit Committee, the Directors have formed the view that the provision ofnon-audit
services is compatible with the general standard of independence for auditors, and that the nature ofnon-audit
services means that auditor independence was not compromised. The reason for this view is that the objectivity and independence of the External Auditor are safeguarded through restrictions on the provision of these services with some services prohibited from being undertaken. For a more information about our policy in relation to the provision ofnon-audit
services by the external auditor refer to 7.2 ‘External audit and financial reporting’ of our Corporate Governance Statement. 10 Exploration, research and development
Companies within the Group carry out exploration and research and development necessary to support their activities. Details are provided in OFR 5 ‘Our assets’, OFR 10 ‘Performance by commodity’ and Resources and Reserves in the Annual Report.
11 ASIC Instrument 2016/191
BHP Group Limited is an entity to which Australian Securities and Investments Commission (ASIC) Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 dated 24 March 2016 applies. Amounts in this Directors’ Report and the Financial Statements, except estimates of future expenditure or where otherwise indicated, have been rounded to the nearest million dollars in accordance with ASIC Instrument 2016/191.
12 Proceedings on behalf of BHP Group Limited
No proceedings have been brought on behalf of BHP Group Limited, nor has any application been made, under section 237 of the Australian Corporations Act 2001.
13 Performance in relation to environmental regulation
BHP seeks to be compliant with all applicable environmental laws and regulations relevant to its operations. We monitor compliance on a regular basis, including through external and internal means, to minimise the risk ofnon-compliance.
For more information on BHP’s performance in relation to health, safety and the environment refer to OFR 7.4, 7.6 and 7.15. For the purposes of section 299 (1)(f) of the Australian Corporations Act 2001, in FY2022 BHP was levied four fines in relation to environmental laws and regulations at our operated assets, the total amount payable being US$22,514.
14 Additional information
BHP Group Limited has a branch registered in the United Kingdom. The Group, through various subsidiaries, has also established branches in a number of other countries.
The Directors’ Report is approved in accordance with a resolution of the Board. | | |
| | |
| Chair | | Chief Executive Officer |
| Dated: 16 August 2022 | | |
| | |
| | |
| | Annual General Meeting |
| |
| | Cash and Deferred Plan |
| |
| | Chief Executive Officer |
| |
| | Dividend Equivalent Payment |
| |
| | Dual Listed Company |
| |
| | Executive Leadership Team |
| |
| | Greenhouse Gasgas |
| |
| | Health, Safety, Environmentsafety, environment and Communitycommunity |
| |
| | International Financial Reporting Standards |
| |
| | Key Management Personnel |
| |
| | Key Performance Indicator |
| |
| LTIP | | Long-Term Incentive Plan |
| |
| MAP | | Management Award Plan |
| |
| MSR | | Minimum Shareholding Requirementshareholding requirement |
| |
| ROCE | | Return on Capital Employed |
| |
| STIP | | Short-Term Incentive Plan |
| |
| TSR | | Total Shareholder Return |
2.2.1 Annual statement by the Remuneration Committee Chair
‘The Committee believes the remuneration outcomes for FY2021 are aligned with BHP’s performance and the experience of shareholders, and are also fair in terms of the wider context of global circumstances.’ Letter to Shareholders
I am pleased to introduce BHP’s Remuneration Report for the financial year to 30 June
2021, my first as Chair of BHP’s2022. During FY2022, the Remuneration
Committee. During FY2021, the Committee
() continued its focus on achieving remuneration outcomes that fairly reflect the performance of BHP and the contribution of our employees, and which are aligned to the interests of shareholders and other key stakeholders.
During FY2021,COVID-19
has remained a significant source of uncertainty across the world. While the emergence and deployment of successful vaccines is reason for optimism, the pandemic continues to have widespread impacts on lives, society and the global economy. In the face of this, BHP employees have operated in line with our purpose and values, working effectively to keep the business performing strongly, and keeping each other safe.Our approach and framework
sets out our values
placing health and safety first, upon which the
Remuneration Committee places great weight in the determination of performance-based remuneration outcomes for BHP executives.
also setsplaces health and safety at the forefront of our values while setting out our purpose, our strategy and how we measure success. The Committee
is guided byand aims to support our executives
in takingto take a long-term approach to decision-making in order to build a sustainable and value-adding business.
The Committee is focused on having and applying a remuneration policyframework and approach that supports the Group’s strategy and enables us to attract, retain and motivate theour executives located in different geographiesgeographies. This is critical to delivering the best outcomes for all BHP stakeholders. In addition, asAs BHP is a global organisation, the Committee is cognisantalso mindful of the need to navigatenavigating the priorities and expectations of multiple jurisdictions.
Our policy and approach to remuneration remains unchanged; however,At the 2021 AGMs, we continue to strive for simplification in our programs. We were pleased to again receivereceived strong support for our remuneration policy at the 2020 AGMs,framework and outcomes, with over 9597 per cent voting ‘for’in favour of the Remuneration Report, and, on average, over 96 per cent supportReport. This means that over the past five years.years we have received an average of approximately 96 per cent support. The Committee and the Board continue to incorporate shareholder feedback into our deliberations on paytheir approach to ensure it supports BHP’s strategy.
remuneration.FY2021FY2022 represents the secondthird year of applicationoperation of theour revised remuneration policy, which was approved by shareholders at the 2019 AGMs with almost 94 per cent of votes in favour. Weframework and we believe the policyframework is servingcontinuing to serve stakeholders well. The key changes approved in 2019 for the CEO, whichto variable remuneration that took effect from 1 July 2019 were:
a change infor the balance of incentive arrangements comprising:
aCEO were to significantly reducedreduce the LTIP grant size of 200from 400 per cent of base salary (on a face value basis), down from 400 to 200 per cent,
and a rebalancing to a CDP award with a
longerlong term
focus than the former STIP.focus. The CDP outcome is delivered
one-third
as a cash award, with
two-thirds
delivered in equity
asthat is deferred equally fortwo-year
and five-year
deferred share awards each of equivalent value to the cash award.periods. This
structure aligns participants’ incentive remuneration with performance over the short, medium and
long-term long term.
this rebalancing from LTIPWe continue to CDP reduced the leverage in the overall pay arrangements resulting in a 12 per cent reduction in the maximum remuneration for a year
a significant reduction in the pension contribution rate to 10 per cent of base salary, down from 25 per cent (noting the estimated workforce average is approximately 11.5 per cent of base salary). As a result of this change, fixed remuneration forbenchmark the CEO role was reduced by 12 per cent and overall target remuneration reduced by 4 per cent
the introduction of atwo-year
post-retirement shareholding requirement for the CEOA consequence of the transition to the revised remuneration policy is that the FY2021 single total figure of remuneration for the CEO under UK requirements requires disclosure of the total amount of the CDP award earned during FY2021 (i.e. irrespective that some elements of the CDP award are deferred and five-year deferred shares were not a feature of the former STIP), together with the full amount of thepre-existing
LTIP award vesting at the end of FY2021, which was granted in 2016 when the CEO was President Operations, Minerals Australia (i.e. when the LTIP award size was double the current grant size). This legacy consequence of remuneration policy transition will continue each year through to FY2024.The Committee strives to implement the remuneration policy in a considered way. We test the CEO’sother executives’ remuneration against CEO and executive roles in other global companies of similar complexity, size, reach and industry. The remuneration also reflects the CEO’s responsibilities, location, skills, performance, qualifications and experience. This detailed benchmarking ensures BHP’s executive remuneration packages areframework remains competitive enough to attract, motivate and retain key talented executives without being excessive. External benchmarking showsand is consistent with the CEO’s target remuneration package is below the average for similar global companies. Importantly, a significant portionmarket.
The majority of the CEO’s target remuneration package can onlycontinues to be realised as actual remuneration if performance targets are met.
In addition,delivered in BHP equity, not in cash, and the CEO’s remuneration is deliberately tied to the performance of the
business, withbusiness. In addition, the
majority of the remuneration package intendedCEO is required to
be delivered in BHP equity, not cash. The CEO also hasmeet a
minimum shareholding requirementMSR of five times
pre-tax
base salary
which continuesand this applies for two years post-retirement. This
alignsensures that the
CEOCEO’s remuneration is aligned to the experience of BHP’s shareholders.
As at the date of this Report, the CEO’s BHP shareholding is in excess of his MSR.
Given the strong link at BHP between executive remuneration and performance, I am pleased to be able to report BHPsay BHP’s performance for FY2022 has performed strongly across a wide range of areas in FY2021.
Our people have continued their focus on safety. Our global safety improvement programs are progressing wellbeen underpinned by safe, reliable operations and firm demand for our safety leading indicators have continued a strong positive trend underpinning the current safety performance.commodities. We have now had over two and a half years without acompleted another year fatality at our operated assetsfree and we continueare unwavering in our effort to focus on fostering a cultureimprove safety, including the elimination of respectsexual harassment, racism and ensuring our workplace is safe at all times.bullying.
We have delivered strong underlyingreliable operational performance during the year, with record volumes achieved at Western Australia Iron Ore, Goonyellawith record sales for a third consecutive year and the South Flank project ramp up ahead of schedule. In copper, Escondida in Chile achieved record material mined and near-record concentrator throughput, while Olympic Dam and Escondida maintained average concentrator throughput at record levels. We successfully achieved first production at four major development projects:in South Flank, Spence Growth Option, Atlantis Phase 3 and Ruby, allAustralia performed strongly in the fourth quarter after planned smelter maintenance. Queensland metallurgical coal ended the year with strong underlying performance in the face of which were delivered on or ahead of schedule and on budget. We have also progressed significant strategic initiatives during FY2021, including preparing for the investment in Jansen Stage 1, pursuing a merger of our Petroleum business with Woodside, and unifying our corporate structure.wet weather.
We have made strong progress on actions required to meet our commitments to reduce operational GHG emissions.emissions, which are down by 15 per cent since FY2017. We have established significant renewable power supply agreements forfurther progressed our Kwinana nickel refinery, Queensland Coal operations, and Escondida and Spence copper mines. We have established emissionsemission reduction partnerships with three major steelmakers in China and Japan whoseand we also entered a new partnership with a fourth steelmaker in South Korea. The combined output of these four steelmakers equates to around 1012 per cent of global steel production.
Our US$5.7 billion Jansen potash project in Canada is tracking to plan and opportunities to bring forward first potash production at Jansen continue to be assessed. In shipping,addition, during FY2022, we havemerged our Petroleum business with Woodside, completed the sales of our interests in BMC and Cerrejón, and following a strategic review decided to retain New South Wales Energy Coal. As a consequence, we will seek approvals to continue mining until 2030. We also taken a numberunified our corporate structure, and added to our global options in copper and nickel.
COVID-19
continued to impact in FY2022, particularly in the areas of
actions to help reduce emissions in our value chain: awarded the world’s first liquified natural gas fuelled bulk carriers contractlabour and
took part in a successful marine biofuel trial.With respect toCOVID-19,
wesupply chain constraints. We remain vigilant
and will continue with
continued social distancing and hygiene practices, and other additional protocols as appropriate to protect our workforce and communities.
Our Australian operations have effectively managed the rapidly changing environment relating to interstate travel and border access. In Chile, the operating environment is expected to continue to be challenging. The Remuneration Committee is proud of the way BHP’s employees have continued to collaborate to solve problems and support each other and their communities.Despite the challenges
that the
COVID-19
pandemic
has presented,continues to present, in
FY2021FY2022 BHP
has againcontinued its approach to not
needed to furlough any employees,
without pay, did not seek any government assistance, and did not raise additional equity. In addition, BHP’s
strong, safe
and reliable operational performance through this year, together with strong profitability, enabled the Board to announce record dividends for
FY2021.FY2022. This continues the delivery of strong and consistent returns to shareholders.
The CDP scorecard used to assess Mike Henry’s annual performance comprises stretching performance measures, including HSEC, financial and individual performance elements. For FY2022, the Committee has assessed the CEO’s performance and determined a CDP outcome of 96 per cent against a target of 100 per cent (and 64 per cent of the maximum).
For the HSEC element, the outcome took into account BHP’s strong HSEC performance during the year, with no fatalities recorded, the strong progress against our Fatality Elimination Program and delivery of our cultural heritage commitments. This year we have also made progress on the implementation of controls for sexual harassment, although there remains more to be done. We also saw strong progress against our climate change targets, and our progress in the management of priority tailings storage facilities was pleasing. The CDP outcome for the HSEC measures was 31 per cent out of a target of 25 per cent.
Our financial performance was strong, and during FY2022 shareholders have again benefitted through record dividends. However, after fully eliminating the positive impacts of commodity prices during the year, operating performance at our assets was below the challenging internal targets set at the commencement of the year. This is in part due to higher than expected unplanned costs and other impacts of the COVID-19 pandemic, which flowed through into CDP outcomes without moderation for FY2022. This is a similar approach that was applied in FY2021 and FY2020 and has the effect of reducing the remuneration outcomes for executives. The CDP outcome for the financial measure was 40 per cent out of a target of 50 per cent.
Finally, from a personal performance perspective, the Committee considered Mike Henry’s performance against his individual measures. These included projects and initiatives in respect of social value (long term growth in value and returns for all stakeholders), people (right people, right skills, coming together in the right way to support exceptional performance), performance (material improvement in the system that supports exceptional performance) and portfolio (material progress on our strategic objectives to create a portfolio that will set BHP up for the next 20 years). The Committee considered Mike’s performance against his individual objectives met expectations and warranted an outcome aligned with the target of 25 per cent.
The CDP scorecard outcomes for other Executive KMP and the short-term incentive pool applicable to the majority of BHP employees below the ELT level, were, like the CEO, slightly below the 100 per cent target.
The vesting outcome for the 2017 LTIP award was 100 per cent. The LTIP performance condition is relative TSR and BHP outperformed both the sector peer group and the MSCI World Index. This level of vesting is aligned with the projected vesting outcome that was communicated to shareholders in the Remuneration Report at the time the changes to our remuneration framework were approved by shareholders at the 2019 AGMs. The table below outlines the level of vesting each year from 2009 to 2022, together with the vesting outcomes projected in 2019.
As shareholders will recall, one of the key elements of our revised remuneration framework was to reduce the weighting of future LTIP grants in the overall CEO remuneration package from FY2020. Pre-existing grants remained on foot and their vesting would be determined on the basis of existing service and performance conditions.
The value of the vested 2017 LTIP award is higher than the value of the award at the time it was granted due to the increase in share price during the five-year vesting period and strong dividends. In terms of value realised, 44 per cent is due to the value at the time the awards were granted and 56 per cent is due to share price appreciation and dividends. This reflects the experience of shareholders over the period.
Consistent with its normal practice, in considering vesting, the Board and Committee have also conducted a holistic review of business performance over the five years since the award was granted to ensure this level of vesting was appropriate. More information on the 2017 LTIP vesting outcome, including the five-year holistic business review covering HSEC performance, profitability, cash flow, balance sheet health, returns to shareholders, corporate governance and conduct, is included in 3.3 LTIP performance outcomes and 3.4 Overarching discretion and vesting underpin.
More information on the overall remuneration outcomes for the CEO for the year, and how the outcomes are aligned to performance during FY2022, is provided in 3.1 FY2022 Remuneration received by the CEO. Having considered the overall remuneration outcomes for the CEO carefully, as set out above and in 3.1, the Committee concluded it was a fair reflection of performance and the experience of shareholders, and the application of any downwards discretion was not warranted.
For FY2023, the Committee determined that the CEO’s base salary would increase by 3 per cent, effective 1 September 2022. This was assessed as appropriate having conducted updated benchmarking and considered the external market demand for senior executive talent. The Committee considers the increase modest in this context, as well as being below the median salary increase applied for other BHP employees of approximately 4 per cent. Other components of the CEO’s total target remuneration (pension contributions, benefits, CDP and LTIP) remain unchanged and, where relevant, as percentages of base salary. A summary of the CEO’s arrangements for FY2023 is set out below.
| | | | |
| | | | |
• Base salary US$1.750 million per annum, an increase of 3% from 1 September 2022. • Pension contribution 10% of base salary. | | • Target cash award of 80% of base salary (maximum 120%). • Plus two awards of deferred shares each of equivalent value to the cash award, vesting in two and five years, respectively. • Three performance categories: | | • The LTIP grant is based on a face value of 200% of base salary. • Our LTIP awards have rigorous relative TSR performance hurdles measured over five years. |
The Committee has also reviewed the base salaries and total target remuneration packages for other Executive KMP. The Committee determined they would also increase by 3 per cent, effective 1 September 2022. An additional increase has been determined for Ragnar Udd reflecting his performance and development in role (for more information regarding base salaries for FY2023 refer to 3.7 FY2023 remuneration for the CEO and other Executive KMP). Other aspects of other Executive KMP remuneration arrangements remain unchanged.
Remuneration outcomes for the Chair andNon-executive
Directors Fees for the Chair and Non-executive Directors are reviewed annually and are benchmarked against peer companies. No changes to the Chair’s fee will be made for FY2023. The Chair fee has remained unchanged since 1 July 2017. In 2017, a decision was made to reduce the Chair’s annual fee by approximately 8 per cent from US$0.960 million to US$0.880 million with effect from 1 July 2017. This followed an earlier reduction on 1 July 2015 of approximately 13 per cent from US$1.100 million to US$0.960 million.
Base fee levels for Non-executive Directors will also remain unchanged. The fees of Non-executive Directors were also reduced on 1 July 2015 by approximately 6 per cent, from US$0.170 million to US$0.160 million per annum.
In FY2022, BHP undertook a series of major transactions. As a consequence, modest fees were paid to certain Non-executive Directors for additional or extra services performed in FY2022 in connection with major transactions undertaken by the Group.
This year theCOVID-19
pandemic continued to impact not only BHP, but our customers, suppliers, governments, employees, families and communities across the world. On behalf of the Committee, I would like to
thankrecognise the continued hard work, dedication and sacrifices of our employees. Through their steadfast commitment, they have enabled BHP to generate strong results for all
stakeholders and continued to support their communities. We deliberately align our executive remuneration with performance, with a significant component of possible remuneration structured as variable pay. We are confident that the outcomes this year are consistent with our long held approach of remuneration outcomes reflecting the performance of BHP and the experience of our shareholders. Given our critical need to attract, motivate and retain our executives in order to progress our strategic objectives and deliver the best outcomes for all BHP stakeholders, this is a pleasing result for all concerned.
We look forward to ongoing dialogue with and the support of BHP’s shareholders. As always, we welcome your feedback and comments on any aspect of this Report.
Chair, Remuneration Committee
1 Remuneration governance
The Board is responsible for ensuring the Group’s remuneration arrangements are equitable and aligned with the long-term interests of BHP and its shareholders. In performing this function, it is critical the Board is independent of management when making decisions affecting remuneration of the CEO, other Executive KMP and the Group’s employees.
The Board has established the Committee to assist it in making such decisions. The Committee is comprised solely ofNon-executive
Directors, all of whom are independent. The Committee has extensive access to members of senior management and regularly invites them to attend meetings to provide reports and updates. However, members of management are not present when decisions are considered or taken concerning their own remuneration. The Committee can also draw on services from a range of external sources, including independent remuneration advisers. The activities of the Committee are governed by its Terms of Reference which is available at bhp.com. The current members of the
Remuneration Committee
for their contributionsare: Christine O’Reilly (Chair), Catherine Tanna (member from 4 April 2022) and Dion Weisler. The following present and formerNon-executive
Directors served as members of the Committee during the
past year. In particular, I would likeyear: Gary Goldberg (member to
express my appreciation17 June 2022), Anita Frew (member to
my predecessor as Chair,11 November 2021) and Susan Kilsby
who has provided strong leadership(member to 11 November 2021). The role and
guidance during her term, as BHP navigated onefocus of the
most tumultuous periodsCommittee and details of meeting attendances can be found in
our history. 2.2 Directors’ Report.A key element of the Committee’s work during the year was the remuneration implications of changes to the BHP ELT, with a number of appointments and departures taking place. David Lamont, Edgar Basto and Ragnar Udd join Mike Henry and Geraldine Slattery as Executive KMP for the purposes of this Remuneration Report, and Peter Beaven and Daniel Malchuk departed BHP having been Executive KMP during FY2021. Information on remuneration arrangements for David, Edgar and Ragnar and the departure arrangements for Peter and Daniel is set out in ‘Arrangements for KMP leaving and joining the Group’ and ‘Executive KMP remuneration table’ in section 2.2.3.
Other keyKey decisions and activities of the Committee during FY2021FY2022 included:
considering and approving remuneration for members of the ELT and the Group Company Secretary
setting targets for and reviewing outcomes against performance measures and conditions of relevant incentive plans, including the Committee considering its discretion over FY2021FY2022 plan outcomes
reviewing the fee for the BHP Chair, which remains unchanged
commencing early preparations forconsidering remuneration and remuneration reporting implications of unification and the
re-approval
merger of the
remuneration policy at the 2022 AGMsPetroleum business and Woodside reviewing and adopting changes and improvements flowing from regulatory requirements and guidance, which in turn helps us improve our processes and approaches
engaging with shareholders and other key stakeholders
undertaking regular reviews of workforce engagement, workforce remuneration and related policies, remuneration by gender and the annual Shareplus enrolment
FY2021 CDPEngagement of independent remuneration advisers
The scorecard against which Mike Henry’s annual performance asCommittee seeks and considers advice from independent remuneration advisers where appropriate. Remuneration consultants are engaged by and report directly to the Committee. Potential conflicts of interest are taken into account when remuneration consultants are selected and their terms of engagement regulate their level of access to, and require their independence from, BHP’s CEO is assessed comprises stretching performance measures, including HSEC, financial and individual performance elements. For FY2021, the Remuneration Committee has assessed the CEO’s performance and determined a CDP outcome of 115 per cent, against the target of 100 per cent (and the maximum of 150 per cent).management.
These outcomes took into account BHP’s strong HSEC performance during the year, with no fatalities recorded, and good progress against our Fatality Elimination Program. We also saw positive progress against our climate change targets, which were expanded and strengthened for FY2021 from prior years, and our progress in the management of priority tailings storage facilities was pleasing.
As previously mentioned,sets out our values, placing health and safety first, upon which the Remuneration Committee places great weight in determining performance-based remuneration outcomes for BHP executives. Good progressPwC has been
made atappointed to act as an independent remuneration adviser and is currently the only remuneration adviser appointed by the Committee. In that capacity, they may provide remuneration recommendations in relation to KMP, however, they did not provide any remuneration recommendations in FY2022.This Remuneration Report describes the remuneration policies, practices, outcomes and governance for the KMP of BHP. At BHP,
through significant efforts since 2018 to address sexual assaultKMP consists of our Board (including the CEO), as well as certain members of our ELT who have authority and
sexual harassment inresponsibility for planning, directing and controlling the
workplace, and completionactivities of
work to implement controls has been incorporated into the
FY2022 CDP HSEC scorecard. The Committee considers that the efforts to address the risk of sexual assault and sexual harassment could have been further accelerated through stronger coordination of work streams and integrated planning. Accordingly,Group directly or indirectly. After due consideration, the Committee
has exercised its discretion to make a downwards adjustment todetermined the
HSEC outcome ofKMP for FY2022 comprised allNon-executive
Directors and the
CDP scorecard by 10 per cent from an initial 33 per cent to a final outcome of 30 per cent out of a target of 25 per cent. This downwards adjustment was applied tofollowing Executive KMP: the CEO,
and all other ELT members. the Chief Financial and operating performance was strong, even after fully eliminatingOfficer, the very positive impacts of commodity prices duringPresident Minerals Australia, the year, particularly for iron ore. Accordingly, performance was better than the stretching targets set at the commencement of the year.
While theCOVID-19
pandemic continued to impact BHP, societyPresident Minerals Americas and the
global economy, the Group maintained continuity of operations while keeping employees healthy and safe. Despite this, as occurred in FY2020, there were costs and other impacts ofCOVID-19
to BHP’s financial results for FY2021. The direct costs have been recorded as an exceptional item in the Financial Statements, as they were in FY2020. Nevertheless, the Committee concluded that, to the extent theCOVID-19
related costs were higher than those included in the approved budget, they should flow through to the financial measures for CDP scorecard purposes, thereby reducing the remuneration outcome for executives from what they would have otherwise been. The Committee considered this was appropriate in light of the global impacts of theCOVID-19
pandemic. The CDP outcome for the financial measure was 60 per cent out of a target of 50 per cent.Senior Executive Officer (i.e. President Petroleum until 31 May 2022).The Committee also considered Mike’s performance against his individual objectives. These included projectsfollowing individuals have held their positions and initiatives in respect of performance (material improvement in the system that supports exceptional performance), social value (long-term growth in value and returns for all stakeholders), people (right people, right skills, coming together in the right way to support exceptional performance) and portfolio (progress on our strategic objectives to create a winning portfolio and set BHP upwere KMP for the next 20 years). The Committee considered Mike’s performance against his individual objectives to be in line with the targetwhole of 25 per cent.
While the CEO’s CDP scorecard outcome was determined at 115 per cent of target, the CDP scorecard outcomes for other Executive KMP were also on average ahead of target. Likewise, the short-term incentive pool applicable to the majority of BHP employees below the ELT level was above target. These outcomes were considered appropriate and due recognition, given the excellent performance across BHP’s whole workforce in the face of the continuingCOVID-19
pandemic, where strong safety performance and operational continuity were achieved during FY2021.The vesting outcome for the 2016 LTIP award against the relative TSR performance conditions was 100 per cent. BHP outperformed both the sector peer group and the MSCI World Index significantly. This 100 per cent level of vesting is aligned with the projected vesting outcome communicated to shareholders in the 2019 Remuneration Report at the time of the changes to our remuneration policy, which were approved by shareholders at the 2019 AGMs, and is set out in the chart below.
FY2022, unless stated otherwise:
As shareholders will recall, one of the key elements of our revised remuneration policy was to reduce the weighting of future LTIP grants as part of the overall CEO remuneration package; however,pre-existing
grants would stay on foot and their vesting would be determined with existing service and performance conditions.The Committee is conscious that the granting of the 2016 LTIP awards and the early part of the five-year performance period coincided with a period of lower share prices, driven in part by the Samarco dam failure having occurred on 5 November 2015.
At the time of the grant of the 2016 LTIP award, the Committee sought to ensure the Samarco dam failure did not result in an inappropriate LTIP award size due to the lower share price, and reduced the number of awards by 26 per cent from that which would have resulted from the standard grant size calculation. The Committee has reviewed this approach and concluded it was appropriate. In reaching this conclusion, the Committee noted the positive feedback received from shareholders and other investor groups in 2016 on the approach adopted.
Having considered the LTIP grant size, the Committee undertook a further exercise to satisfy itself that the TSR performance, which formulaically would result in 100 per cent vesting, had not been inappropriately enhanced by the starting position of the performance period being lower as a consequence of a fall in share price following the Samarco dam failure. This analysis included estimating and removing the impact of the dam failure from the start of the performance period (i.e. removing the impact this would have otherwise had on the TSR outcome due to the lower starting position), reducing the TSR outcome for estimated payments in relation to the Samarco dam failure that may take place beyond the end of the performance period and examining the construct of the comparator group against which TSR performance is measured.
While this analysis uses inputs and assumptions that are theoretical, the Committee concluded the analysis was sufficiently robust to provide confidence that the underlying TSR performance was sufficient to support the formulaic vesting of the 2016 LTIP award at 100 per cent.
The Committee notes the value of the vested 2016 LTIP award is higher than the value of the award at the time it was granted. With the share price having risen appreciably during the five-year period and strong dividends, 36 per cent of the value realised is the value at grant time and 64 per cent of the value realised is due to share price appreciation and dividends. This value increment due to share price appreciation and dividends is consistent with the experience of shareholders over the period.
Consistent with prior practice, the Board and Committee has also conducted a holistic review of business performance over the five years since grant to ensure this level of vesting was appropriate. More information on the 2016 LTIP vesting outcome, including the five-year holistic business review covering HSEC performance, profitability, cash flow, balance sheet health, returns to shareholders, corporate governance and conduct, is included in ‘LTIP performance outcomes’ and ‘Overarching discretion and vesting underpin’ in section 2.2.3.
More information on the overall remuneration outcomes for the CEO for the year, and how the outcomes are aligned to performance during FY2021, is provided in ‘Single total figure of remuneration’ in section 2.2.3. Having considered the overall remuneration outcomes for the CEO carefully, as set out above and in section 2.2.3, the Committee concluded it was a fair reflection of performance and the experience of shareholders, and the application of any downwards discretion was not warranted. As at the date of this Report, the CEO’s BHP shareholding is in excess of his minimum shareholding requirement of five timespre-tax
base salary.For FY2022, the Committee determined that the CEO’s base salary remains unchanged at US$1.700 million per annum, as it was at the time of his appointment at the beginning of 2020. In addition, the other components of his total target remuneration (pension contributions, benefits, CDP and LTIP) also remain unchanged. A summary of the CEO’s arrangements for FY2022 is set out below.
The Committee has also reviewed the base salaries and total target remuneration packages for other Executive KMP and determined there would be no changes to base salaries in September 2021, and other aspects of their remuneration arrangements would also remain unchanged.
148David Lamont, Chief Financial Officer
Geraldine Slattery, President Petroleum from 1 July 2021 to 31 May 2022 and Senior Executive Officer from 1 June to 30 June 2022
Ragnar Udd, President Minerals Americas
Non-executive
Directors – for detailsofNon-executive
Directors, including dates of appointment or cessation (where relevant), refer to 2.2 Directors’ Report.
Remuneration outcomes for the Chair andNon-executive
DirectorsFees for the Chair andNon-executive
Directors are reviewed annually and are benchmarked against peer companies. No changes to the Chair’s fee will be made for FY2022. This follows a review in 2017, where a decision was made to reduce the Chair’s annual fee by approximately 8 per cent from US$0.960 million to US$0.880 million with effect from 1 July 2017, which followed an earlier reduction, effective 1 July 2015,Table of approximately 13 per cent from US$1.100 million to US$0.960 million.ContentsBase fee levels forNon-executive
Directors will also remain unchanged, after they were also reduced effective 1 July 2015 by approximately 6 per cent, from US$0.170 million to US$0.160 million per annum. Prior to the above reductions in fee levels for the Chair andNon-executive
Directors, their fees had remained unchanged since 2011.It is with much pleasure that I note the strong performance by BHP across a wide range of areas during FY2021. We deliberately align our executive remuneration outcomes to performance – in particular, in our incentive plans where executives’ variable remuneration will reflect circumstances where shareholders have been rewarded very well, as delivered this year and measured in share price and dividend performance. As such, the remuneration outcomes for our executives in FY2021 reflect BHP’s strong performance, even after favourable commodity price movements for the year are backed out in full under the CDP. Given our need to attract, retain and motivate the executives critical to delivering the best outcomes for all BHP stakeholders, this is an especially pleasing result this year for all concerned, after recent years where the variable pay outcomes have been at the lower end for our executive team.
With theCOVID-19
pandemic continuing to impact this year, not only for BHP, but also for many other companies, governments, employees, families and communities across the world, I note the ongoing challenges. On behalf of the Remuneration Committee, I would like to recognise the hard work, dedication and sacrifices of our employees. Through their steadfast commitment, they have remained safe and healthy, continued to support their communities, and enabled BHP to generate strong results for all stakeholders.The Committee believes the remuneration outcomes for FY2021 are aligned with BHP’s performance and the experience of shareholders, and are also fair in terms of the wider context of global circumstances. We are confident shareholders will recognise this as a continuation of our long-held approach. We look forward to ongoing dialogue with and the support of BHP’s shareholders, and I very much look forward to meeting shareholderswhen we are able to do so. As always, we welcome your feedback and comments on any aspect of this Report.Chair, Remuneration Committee
2.2.22 Remuneration
policy reportframeworkBHP has an overarching remuneration policyframework that guides the Remuneration Committee’s decisions. Under UK legislation,decisions and is designed to support our strategy and reinforce our culture and values.
2.1 How the remuneration framework is set
The Committee sets the remuneration framework for the Executive KMP, including the CEO. The Committee is briefed on and considers prevailing market conditions, the competitive environment and the positioning and relativities of pay and employment conditions across the wider BHP workforce. The Committee takes into account the annual base salary increases for our employee population when determining any change in the Executive KMP’s base salary. The salary increases in locations where our Executive KMP are based are particularly relevant when reviewing their remuneration to ensure that their remuneration also reflects the local economic conditions.
The principles that underpin the remuneration framework for Executives are the same as those that apply to other employees, however Executive KMP arrangements have a greater emphasis on and a higher proportion of remuneration that is at risk as performance-related variable pay. The performance measures used to determine variable pay outcomes for the Executive KMP and all other employees are linked to the delivery of our strategy and behaviours that are aligned tovalues As part of the Board’s commitment to good governance, the Committee considers shareholder views and those of the wider community when setting the remuneration framework for the Executive KMP. We are committed to engaging and communicating with shareholders haveregularly and, as our shareholders are spread across the opportunityglobe, we are proactive with our engagement on remuneration and governance matters with institutional shareholders and investor representative organisations. Feedback from shareholders and investors is used as input into decision-making by the Board and the Committee in relation to vote on our remuneration policy every three years, with binding effect in regardframework and its application. The Committee considers that this approach provides a robust mechanism to theensure Directors (including the CEO). Under Australian legislation,are aware of matters raised, have a deep understanding of current shareholder views and can formulate frameworks and make decisions as appropriate. We encourage shareholders also have the opportunity to vote onmake their views known to us by directly contacting our Investor Relations team (contact details available at bhp.com).
2.2 Remuneration framework operation
Our approved remuneration policy
was adopted by shareholders in
conjunction2019 for a three-year period in accordance with
UK requirements and following the
broader Remuneration Report each year at the AGMs as it appliesunification of our corporate structure in early 2022 BHP is no longer required to
all KMP under anon-binding
advisory vote. Our remunerationhave our policy
which was approved by shareholders
atevery three years. However, the
2019 AGMs, has not changed and is repeated below. Remuneration policy for the Executive DirectorThis section only refers to the remuneration policy for our CEO, who is our sole Executive Director. If any other executive were to be appointed an Executive Director, this remuneration policy would apply to that new role.
Components of remuneration
The following table shows the current components of totalour remuneration framework, which is consistent with the link to strategy, the applicable operation and performance frameworks, and the maximum opportunity for each component.prior approved remuneration policy.
| | | | | | |
| | Remuneration component
and link to strategy Fixed remuneration
| | Operation and performance frameworkCDP
| | |
Base salaryPurpose and link to strategy
| | Market competitive base salaryfixed remuneration is paid in order to attract, motivate and retain a high-quality and experienced CEO,executives, and to provide appropriate remuneration for thisthese important roleroles in the Group. | | The CDP encourages and focuses executives’ efforts for the relevant financial year on the delivery of the Group’s strategic priorities, balancing financial and non-financial performance, to deliver short, medium and long-term success aligned to our purpose and, and to motivate executives to strive to achieve stretch performance objectives. | | The purpose of the LTIP is to focus executive’s efforts on the achievement of sustainable long-term value creation and success of the Group (including appropriate management of business risks). |
| | | |
Remuneration components and link to performance | | • BaseFixed remuneration comprises base salary, denominated in US dollars,pension contributions and benefits.
Competitive fixed remuneration is broadly aligned with salaries for comparable roles in global companies of similarto global complexity, size, reach and industry, and reflects the CEO’sexecutives’ responsibilities, location, skills, performance, qualifications and experience. • Base salary is reviewed annually with effect from 1 September. Reviews are informed, but not led, by benchmarking to comparable roles (as above), changes in responsibility and general economic conditions. Substantial weight is also given to the general base salary increases for employees.
• Base salary is not subject to separate performance conditions.
| | 8% increase per annum (annualised) or inflation if higher in Australia. |
Provides a market-competitive levelAnnual variable pay opportunity linked to execution of post-employment benefits provided to attract and retain a high-quality and experienced CEO.
| | • Pension contributions are benchmarked to comparable roles in global companies and have been determined after considering the pension contributions provided to the wider workforce.
•business strategy. A choicebalanced scorecard of funding vehicles is offered, including a defined contribution plan, an unfunded retirement savings plan, an international retirement plan or a self-managed superannuation fund. Alternatively, a cash payment may be provided in lieu.
| | A pension contribution rate of 10% of base salary applies. |
Provides personal insurances, relocation benefits and tax assistance where BHP’s structure gives rise to tax obligations across multiple jurisdictions, and a market-competitive level of benefits to attract and retain a high-quality and experienced CEO.
| | • Benefits may be provided, as determined by the Committee, and currently include costs of private family health insurance, death and disability insurance, car parking and personal tax return preparation in the required countries where BHP has requested the CEO relocate internationally, or where BHP’s DLC structure requires personal tax returns in multiple jurisdictions.
• Costs associated with business-related travel for the CEO’s spouse/partner, including for Board meetings, may be covered. Where these costs are deemed to be taxable benefits for the CEO, BHP may reimburse the CEO for these tax costs.
• The CEO is eligible to participate in Shareplus, BHP’sall-employee
share purchase plan.• A relocation allowance and assistance is provided only where a change of location is made at BHP’s request. The Group’s mobility policies generally provide for‘one-off’
payments with no material trailing entitlements. | | Benefits as determined by the Committee but to a limit not exceeding 10% of base salary and (if applicable) aone-off
taxable relocation allowance up to US$700,000. |
Remuneration component
and link to strategy
| | Operation and performance framework
| | |
The purpose of the CDP is to encourage and focus the CEO’s efforts on the delivery of the Group’s strategic priorities for the relevant financial year to deliver short, medium and long-term success,elements including HSEC (25% weighting), financial (50% weighting) and to motivate the CEO to strive to achieve stretch performance objectives.
Theindividual performance measures for each year(25% weighting) are chosen on the basis that they are expected to have a significant short, medium and long-term impact on the success of the Group.
Delivery oftwo-thirds
of CDP awards in deferred shares encourages a longer-term focus aligned to that of shareholders. | | Setting performance measures andGroup, with appropriate targets
• The Committee sets a balanced scorecard of short, medium and long-term elements including HSEC, financial and individual performance measures, with targets and relative weightings at the beginning of the financial year in order to for each measure which will appropriately motivate the CEOExecutive KMP to achieve outperformance that contributes to the long-term sustainability of the Group and shareholder wealth creation.
| | Annual long-term variable pay opportunity based on grants of five-year performance rights designed to align executives’ reward with sustained shareholder wealth creation in excess of relevant comparator group(s), through the relative TSR performance condition. • Specific financial measures will constitute the largest weighting and are derived from the annual budgetRelative TSR has been chosen as approved by the Board for the relevant financial year.an appropriate measure as it enables an objective external assessment over a sustained period on a basis that is familiar to shareholders.
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• Appropriate HSEC measures that are consistent with the Group’s long-term five-year public HSEC targets, and their weightings, are determined by the Remuneration Committee with the assistance of the Sustainability Committee.
• Individual measures are an important element of effective performance management, and are a combination of quantitative and qualitative targets. They are aligned with medium and long-term strategy aspirations that are intended to drive long-term value for shareholders and other stakeholders.
• For HSEC and for individual measures the target is ordinarily expressed in narrative form and will be disclosed near the beginning of the performance period. However, the target for each financial measure will be disclosed retrospectively. In the rare instances where this may not be prudent on grounds of commercial sensitivity, we will seek to explain why and give an indication of when the target may be disclosed.
• Should any other performance measures be added at the discretion of the Committee, we will determine the timing of disclosure of the relevant target with due consideration of commercial sensitivity.
| | | | |
| | | | |
Assessment of performance | | • At the conclusion of the financial year, the CEO’s achievementAchievement against each scorecard measure is assessed by the Remuneration Committee and the Board, with guidance provided by other relevant Board Committees in respect of HSEC, financial and other measures, and a CDP award determined.
If performance is below the threshold level for any measure, no CDP award will be provided in respect of that portion of the CDP award opportunity. • The Board believes this method of assessment is transparent, rigorous and balanced, and provides an appropriate, objective and comprehensive assessment of performance.
• In the event that the Remuneration Committee does not consider the outcomeoutcomes that would otherwise apply to be a true reflection of the performance of the Group or should it consider that individual performance or other circumstances makes this an inappropriate outcome, it retains the discretion to not provide all or a part of any CDP award. This is an important mitigation against the risk of unintended award outcomes.
| | MaximumVesting of the LTIP award
A cash award of 120% of base salary plus two awards of deferred shares each of equivalent value is dependent on BHP’s TSR relative to the cash award, vesting in two and five years respectively.TSR of relevant comparator group(s) over a five-year performance period.
A cash25% of the award of 80% of base salary plus two awards of deferred shares each of equivalent valuewill vest where BHP’s TSR is equal to the cash award, vesting in two and five years respectively, for targetmedian TSR of the relevant comparator group(s), as measured over the performance on all measures.period. Where TSR is below the median, awards will not vest.
A cashVesting occurs on a sliding scale between the median TSR of the relevant comparator group(s) up to a nominated level of TSR outperformance over the relevant comparator group(s), as determined by the Committee, above which 100% of the award of 40% of base salary plus two awards of deferred shares each of equivalent value to the cash award, vesting in two and five years respectively, for threshold performance on all measures.will vest.
MinimumWhere the TSR performance condition is not met, there is no retesting and awards will lapse. The Committee also retains discretion to lapse any portion or all of the award
Zero. where it considers the vesting outcome is not appropriate given Group or individual performance. This is an important mitigation against the risk of unintended outcomes.
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| | | | |
Remuneration component
Delivery and link to strategy
vesting | | Operation and performance framework
| | |
| | • CDP awards are provided under the CDP as cash and two awards of deferred shares, each of equivalent value to the cash award, vesting in two and five years respectively.
• The awardsAwards of deferred shares comprise rights to receive ordinary BHP shares in the future at the end of the deferral periods. Before the awards vest (or are exercised), these rights are not ordinary shares and do not carry entitlements to ordinary dividends or other shareholder rights; however, a DEP is provided on vested awards. The Committee also has a discretion to settle CDP awards in cash.
Underpin, malus and clawback
• To ensure any vestingVesting of five-year deferred shares under the CDP is underpinned by satisfactory performance post-grant, the vesting will be subject to an underpin. This will encompass a holistic review of performance at the end of the five-year vesting period, including a five-year view onreview of HSEC performance, profitability, cash flow, balance sheet health, returns to shareholders, corporate governance and conduct.
• Both cash and deferred share CDP awards are subject to malus and clawback as described in ‘Malus and clawback’ in this section 2.2.2.
| | |
The purpose of the LTIP is to focus the CEO’s efforts on the achievement of sustainable long-term value creation and success of the Group (including appropriate management of business risks).
It also encourages retention through long-term share exposure for the CEOconduct over the five-year performance period (consistent with the long-term nature of resources), and aligns the long-term interests of the CEO and shareholders.
The LTIP aligns the CEO’s reward with sustained shareholder wealth creation in excess of that of relevant comparator group(s), through the relative TSR performance condition.period.
| | Relative TSR performance condition
• The LTIP award is conditional on achieving five-year relative TSR(3)
performance conditions as set out below.• The relevant comparator group(s) and the weighting between relevant comparator group(s) will be determined by the Committee in relation to each LTIP grant.
Level of performance required for vesting
• Vesting of the award is dependent on BHP’s TSR relative to the TSRof relevant comparator group(s) over a five-year performance period.• 25% of the award will vest where BHP’s TSR is equal to the median TSR of the relevant comparator group(s), as measured over the performance period. Where TSR is below the median, awards will not vest.
• Vesting occurs on a sliding scale between the median TSR of the relevant comparator group(s) up to a nominated level of TSR outperformance(4)
over the relevant comparator group(s), as determined by the Committee, above which 100% of the award will vest.• Where the TSR performance condition is not met, there is no retesting and awards will lapse. The Committee also retains discretion to lapse any portion or all of the award where it considers the vesting outcome is not appropriate given Group or individual performance. This is an important mitigation against the risk of unintended outcomes.
| | Face value of 200% of base salary.(6)
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| | | | |
Remuneration component
and link to strategy
| | Operation and performance framework
| | |
Relative TSR has been chosen as an appropriate measure as it allows for an objective external assessment over a sustained period on a basis that is familiar to shareholders. | | Further performance measures
• The Committee may add further performance conditions, in which case the vesting of a portion of any LTIP award may instead be linked to performance against the new condition(s). However, the Committee expects that in the event of introducing an additional performance condition(s), the weighting on relative TSR would remain the majority weighting.
• LTIP awards are provided under the LTIP approved by shareholders at the 2013 AGMs. When considering the value of the award to be provided, the Committee primarily considers the face value of the award, and also considers its fair value which includes consideration of the performance conditions.(5)
• LTIP awards consist of rights to receive ordinary BHP shares in the future if the performance and service conditions are met.
Before vesting (or exercise), these rights are not ordinary shares and do not carry entitlements to ordinary dividends or other shareholder rights; however, a DEP is provided on vested awards. The Committee has a discretion to settle LTIP awards in cash. Underpin, malus and clawback
• IfVesting of five-year performance rights under the specified performance conditions are satisfied in part or in full, to ensure any vesting of LTIP awards is underpinned by satisfactory performance through the performance period, the vesting will be subject to an underpin. This will encompass a holistic review of performance at the end of the five-year performance period, including a five-year view onreview of HSEC performance, profitability, cash flow, balance sheet health, returns to shareholders, corporate governance and conduct.conduct over the five-year period.
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| | |
| | On cessation of employment, a ‘good leaver’ 1 may receive apro-rated cash award based on performance for that year. For a ‘good leaver’, their unvested CDP deferred awards generally remain on foot (wholly or in part) unless the Committee determine otherwise. If the executive is not a ‘good leaver’, all unvested CDP deferred awards will lapse. | | On cessation of employment, for a ‘good leaver’ 1 their unvested LTIP awards generally remain on foot on termination and arepro-rated for the portion of the vesting period served. These awards are eligible for vesting in the ordinary course, subject to any applicable performance conditions. If the executive is not a ‘good leaver’, all unvested LTIP awards will lapse. |
| |
| | CDP awards (including cash and deferred share awards) and LTIP awards are subject to the Group’s malus and clawback as described in ‘Malus and clawback’ in this section 2.2.2. | | policy (see below). |
(1)1 | UK regulations require‘Good leaver’ treatment may apply where the disclosurereason for the cessation of employment with BHP is due to forced early retirement, retrenchment or redundancy, termination by mutual agreement or retirement with the agreement of the maximumGroup, or such other circumstances that may be paid in respect of each remuneration component. Where that is expressed as a maximum annual percentage increase that is annualised it shoulddo not be interpreted that it is BHP’s current intention to award an increase of that size in total in any one year,constitute resignation or in each year, and instead it is a maximum required to be disclosed under the regulations.termination for cause.
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(2) | Pension contributions maximum column wording has been updated to reflect the leadership transition of Executive Director and CEO on 1 January 2020 and the current application of policy with respect to pension contribution rate for Mike Henry. The FY2019 remuneration report policy table wording reflected the application of Andrew Mackenzie’s contribution rate: ‘For the existing CEO, the current pension contribution rate of 25 per cent of base salary will reduce as follows: 25 per cent of base salary to 30 June 2020; 20 per cent of base salary from 1 July 2020; 15 per cent of base salary from 1 July 2021; 10 per cent of base salary from 1 July 2022 onwards. For a new appointment, the pension contribution rate will be 10 per cent of base salary immediately.’
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(3) | BHP’s TSR is a weighted average of the TSRs of BHP Group Limited and BHP Group Plc.
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(4) | Maximum vesting is determined with reference to a position against each comparator group.
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(5) | Fair value is calculated by the Committee’s independent adviser and is different to fair value used for IFRS disclosures (which do not take into account forfeiture conditions on the awards). It reflects outcomes weighted by probability, taking into account the difficulty of achieving the performance conditions and the correlation between these and share price appreciation, together with other factors, including volatility and forfeiture risks. The current fair value is 41 per cent of the face value of an award, which may change should the Committee vary elements (such as adding a performance measure or altering the level of relative TSR outperformance).
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(6) | In order to ensure there was a fair transitional outcome for participants, the LTIP grant made in late CY2019 was based on 400 per cent face value basis in accordance with the remuneration policy approved by shareholders in 2017, with potential vesting five years later inmid-CY2024.
The first five-year deferred shares that result from performance under the CDP for FY2020 were granted in late CY2020 and will first vest five years later inmid-CY2025.
The LTIP grant in late CY2020 was made on the reduced 200 per cent face value basis, with potential vesting five years later inmid-CY2025.
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The Remuneration Committee’s discretion in respect of each remuneration component applies up to the maximum shown in the table above. Any remuneration elements awarded or granted under the previous remuneration policies approved by shareholders in 2014 and 2017, but which have not yet vested or been awarded or paid, shall continue to be capable of vesting, awarded or payment made on their existing terms.
TheAs has been set out in prior Remuneration Reports, for many years we have had malus and clawback provisions in place. During FY2022, we enhanced our malus and clawback policy covering awards made from 2021 under the CDP STIP and LTIP rule provisions allowLTIP. This enhanced policy further clarified the circumstances in which the Committee is able to reduce or clawback awards, in the following circumstances:which include:
an error in the Group’s Financial Statements that requires a material downward restatement
performance of a participant, acting fraudulently or dishonestlyof the business or beingof the Group does not justify vesting or where the participant’s conduct or performance has been in material breach of their obligationsemployment contract, any laws, rules, codes of conduct or policies applicable to them or the standards reasonably expected of a person in their position
misstatement or misrepresentation of the performance of the company
where any team, business area, member of the Group or profit centre in which the participant works or worked has been found guilty in connection with any regulatory investigation or has been in breach of any laws, rules, codes of conduct or policies applicable to it or the standards reasonably expected of it
an event that has had, or may have a material adverse effect on the value or reputation of any member of the Group
where BHP becomes awarethe Committee determines there has been material damage to the Group’s social licence to operate
a catastrophic health, safety, environment or community event or events occurring in any part of a material misstatement or omission in the Financial Statements of a Group company or the Group
any circumstances occur that the Committee determines in good faithan act, omission or event occurs which constitutes a material failure of risk management or of other operational systems and controls
a participant is found to have resulted in an unfair benefitcontributed to the participantcircumstances that give rise to a material loss for any Group Company
These malus and clawback provisions apply whether or not awards are made in the form of cash or equity, whether or not the equity has vested, and whether or not employment is ongoing.
Potential remuneration outcomesService contracts
The Remuneration Committee recognises market forces necessarily influence remuneration practices and it strongly believes the fundamental driverterms of remuneration outcomes should be business performance. It also believes overall remuneration should be fair to the individual, such that remuneration levels accurately reflect the CEO’s responsibilities and contributions, and align with the expectations of our shareholders, while considering the positioning and relativities of pay and employment conditions across the wider BHP workforce.
The amount of remuneration actually received each year depends on the achievement of superior business and individual performance generating sustained shareholder value. Before deciding on the final incentive outcomes for the CEO
the Committee first considers the achievement against thepre-determined
performance conditions.and Executive KMP are formalised in their employment contracts. The
Committee then applies its overarching discretion on the basis of what it considers to be a fair and commensurate remuneration level to decide if the outcome should be reduced. When the CEO was appointed in January 2020 the Board advised him the Committee would exercise its discretion on the basis of what it considered to be a fair and commensurate remuneration level to decide if the outcome should be reduced.In this way, the Committee believes it can set a remuneration level for the CEO that is sufficient to incentivise him and is also fair to him and commensurate with shareholder expectations and prevailing market conditions.
The diagram below provides the scenario for the potential total remunerationcurrent contracts of the CEO at different levels of performance.
: consists ofand Executive KMP are not fixed
remuneration, which comprises base salary (US$1.700 million), pension contributions (10 per cent of base salary) and other benefits (notional 10 per cent of base salary).: consists of fixed remuneration, target CDP (a cash award of 80 per cent ofterm. BHP may choose to terminate a contract on up to 12 months’ notice. BHP can require an executive to work through the notice period or may terminate the individual’s contract immediately by paying base salary plus
two awards of deferred shares each of equivalent value to the cash award, vestingpension contributions in
two and five years respectively) and target LTIP. The LTIP target value is based on the fair valuelieu of the
award, which is 41 per cent of the face value of 200 per cent of base salary.notice period. The
potential impact of future share price movements is not included in the value of deferred CDP awards or LTIP awards.MaximumCEO and Executive KMP must provide up to 12 months’ notice for voluntary resignation.
: consists of fixed remuneration, maximum CDP (a cash award of 120 per cent of base salary plus two awards of deferred shares each of equivalent value to the cash award, vesting in two and five years respectively), and maximum LTIP (face value of 200 per cent of base salary). The potential impact of future share price movements is not included in the value of deferred CDP awards or LTIP awards. All other things being equal, if the share price at vesting of LTIP awards was 50 per cent higher than the share price at grant, then the total maximum value would be US$13.260 million.The maximum opportunity represented above is the most that could potentially be paid of each remuneration component, as required by UK regulations. It does not reflect any intention by the Group to award that amount. The Remuneration Committee reviews relevant benchmarking data and industry practices, and believes the maximum remuneration opportunity is appropriate.
Approach to recruitment and promotion remuneration
The remuneration policy as set out in ‘Components of remuneration’ in this section 2.2.2 will apply to the remuneration arrangements for a newly recruited or promoted CEO, or for another Executive Director should one be appointed. A market-competitive level of base salary will be provided. The pension contributions, benefits and variable pay will be in accordance with the remuneration policy table in ‘Components of remuneration’ in this section 2.2.2.
For external appointments,candidates that are appointed Executive KMP, the Remuneration Committee may determine that it is appropriate to provide additional cash and/or equity components to replace any remuneration forfeited or not received from a former employer. It is anticipated any foregone equity awards would be replaced by equity. The value of the replacement remuneration would not be any greater than the fair value of the awards foregone or not received (as determined by the Committee’s independent adviser). The Committee would determine appropriate service conditions and performance conditions within BHP’s remuneration framework, taking into account the conditions attached to the foregone awards. The Committee is mindful of limiting such payments and not providing any more compensation than is necessary. For any internal CEO (or another Executive Director)KMP appointment, any entitlements provided under former arrangements will be honoured and remain on foot according to their existing terms.
Service contracts and policy on loss of office2.3 Potential remuneration outcomes
The termsCommittee recognises market forces influence remuneration practices and it strongly believes the fundamental driver of employment for the CEO are formalised in his employment contract. Key terms of the current contract and relevant payments on loss of office are shown below. If a new CEO or another Executive Director was appointed, similar contractual terms would apply, other than where the Remuneration Committee determinesremuneration outcomes should be performance. It also believes that different termsoverall remuneration should apply for reasons specificbe fair to the individual, or circumstances.
The CEO’s current contract has no fixed term. It can be terminated by BHP on 12 months’ notice. BHP can terminate the contract immediately by paying base salary plus pension contributions for the notice period. The CEO must give 12 months’ notice for voluntary resignation(1)
. The table below sets out the basis on which payments on loss of office may be made. | | | | | | | | |
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| | | | | | | | Cessation of
employment as agreed
with the Board(4)
|
| | • Paid as a lump sum for the notice period or progressively over the notice period.
| | • No payment will be made.
| | • Paid for a period of up to six months, after which time employment may cease.
| | • Paid as a lump sum for the notice period or progressively over the notice period.
|
| | • Paid as a lump sum for the notice period or progressively over the notice period.
| | • No contributions will be provided.
| | • Paid for a period of up to six months, after which time employment may cease.
| | • Paid as a lump sum for the notice period or progressively over the notice period.
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| | | | |
| | • May continue to be provided during the notice period.
• Accumulated annual leave entitlements and any statutory payments will be paid.
• May pay repatriation expenses to the home location where a relocation was at the request of BHP.
• Any unvested Shareplus matched shares held will lapse.
| | • No benefits will be provided.
• Accumulated annual leave entitlements and any statutory payments will be paid.
• May pay repatriation expenses to the home location where a relocation was at the request of BHP.
• Any unvested Shareplus matched shares held will lapse.
| | • May continue to be provided for a period of up to six months, after which time employment may cease.
• Accumulated annual leave entitlements and any statutory payments will be paid.
• May pay repatriation expenses to the home location where a relocation was at the request of BHP.
• Any unvested Shareplus matched shares held will vest in full.
| | • May continue to be provided for year in which employment ceases.
• Accumulated annual leave entitlements and any statutory payments will be paid.
• May pay repatriation expenses to the home location where a relocation was at the request of BHP.
• Any unvested Shareplus matched shares held will vest in full.
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| | | | | | | | |
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| | | | | | | | Cessation of
employment as agreed
with the Board(4)
|
CDP/STIP – cash and deferred shares
Where the CEO leaves either during or after the end of the financial year, but before an award is provided.
| | • No cash award will be paid.
• Unvested CDP/STIP deferred shares will lapse.
• Vested but unexercised CDP/STIP deferred shares will remain exercisable for the remaining exercise period unless the Committee determines they will lapse.
• Vested but unexercised CDP/STIP awards remain subject to malus and clawback.
| | • No cash award will be paid.
• Unvested CDP/STIP deferred shares will lapse.
• Vested but unexercised CDP/STIP deferred shares will remain exercisable for the remaining exercise period unless the Committee determines they will lapse.
• Vested but unexercised CDP/STIP awards remain subject to malus and clawback.
| | • The Committee has discretion to pay and/or award an amount in respect ofand remuneration levels should accurately reflect the CEO’s performance for that year.
• Unvested CDP/STIP deferred shares will vest in full and, where applicable become exercisable.
• Vested but unexercised CDP/STIP deferred shares will remain exercisable for the remaining exercise period.
• Unvested and vested but unexercised CDP/STIP awards remain subject to malus and clawback.
| | • The Committee has discretion to pay and/or award an amount in respect of the CEO’s performance for that year.
• Unvestedtwo-year
CDP/STIP deferred shares and a pro rata portion (based on the proportion of the vesting period served) of unvested five-year CDP deferred shares continue to be held on the existing terms for the deferral period before vesting (subject to Committee discretion to lapse some or all of the award).• Vested but unexercised CDP/STIP deferred shares remain exercisable for the remaining exercise period, or a reduced period, or may lapse, as determined by the Committee.
• Unvested and vested but unexercised CDP/STIP awards remain subject to malus and clawback.
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| | | | | | | | |
|
| | | | | | | | Cessation of
employment as agreed
with the Board(4)
|
| | • Unvested awards will lapse.
• Vested but unexercised awards will remain exercisable for the remaining exercise period, or for a reduced period, or may lapse, as determined by the Committee.
• Vested but unexercised awards remain subject to malus and clawback.
| | • Unvested awards will lapse.
• Vested but unexercised awards will remain exercisable for the remaining exercise period, or for a reduced period, or may lapse, as determined by the Committee.
• Vested but unexercised awards remain subject to malus and clawback.
| | • Unvested awards will vest in full.
• Vested but unexercised awards will remain exercisable for remaining exercise period.
• Unvested and vested but unexercised awards remain subject to malus and clawback.
| | • A pro rata portion of unvested awards (based on the proportion of the performance period served) will continue to be held subject to the LTIP rules and terms of grant. The balance will lapse.
• Vested but unexercised awards will remain exercisable for the remaining exercise period, or for a reduced period, or may lapse, as determined by the Committee.
• Unvested and vested but unexercised awards remain subject to malus and clawback.
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(1) | Notice period for voluntary resignation updated to reflect the terms of the new Executive Director and CEO employment contract effective on 1 January 2020.
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(2) | If the Committee deems it necessary, BHP may enter into agreements with a CEO, which may include the settlement of liabilities in return for payment(s), including reimbursement of legal fees subject to appropriate conditions; or to enter into new arrangements with the departing CEO (for example, entering into consultancy arrangements).
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(3) | In the event of a change in control event (for example, takeover, compromise or arrangement, winding up of the Group) as defined in the CDP, STIP and LTIP rules:
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base salary, pension contributions and benefits will be paid until the date of the change of control event
in relation to the CDP and STIP: the Committee may determine that a cash payment be made in respect of performance during the current financial year and all unvestedtwo-year
deferred shares would vest in full and, in relation to the CDP, all unvested five-year deferred shares would vest pro rata (based on the proportion of the vesting period served up to the date of the change of control event)the Committee may determine unvested LTIP awards will either (i) be prorated (based on the proportion of the performance period served up to the date of the change of control event) and vest to the extent the Committee determines appropriate (with reference to performance against the performance condition up to the date of the change of control event and expectations regarding future performance) or (ii) be lapsed if the Committee determines the holders will participate in an acceptable alternative employee equity plan as a term of the change of control event
(4) | Defined as occurring when a participant leaves BHP due to forced early retirement, retrenchment or redundancy, termination by mutual agreement or retirement with the agreement of the Group, or such other circumstances that do not constitute resignation or termination for cause.
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Remuneration policy forNon-executive
DirectorsOurNon-executive
Directors are paid in line with the UK Corporate Governance Code (2018 edition) and the Australian Securities Exchange Corporate Governance Council’s Principles and Recommendations (3rd
Edition).
Components of remuneration
The following table shows the components of total remuneration, the link to strategy, the applicable operation and performance frameworks, and the maximum opportunity for each component
| | | | |
Remuneration component
and link to strategy
| | Operation and performance framework
| | |
Competitive base fees are paid in order to attract and retain high-quality individuals, and to provide appropriate remuneration for the role undertaken.
Committee fees are provided to recognise the additional responsibilities, time and commitment required.
| | • The Chair is paid a single fee for all responsibilities.
• Non-executive
Directors are paid a base fee and relevant committee membership fees.• Committee Chairs and the Senior Independent Director are paid an additional fee to reflect their extra responsibilities.
• All fee levels are reviewed annually and any changes are effective from 1 July.
• Fees are set at a competitive level based on benchmarks and advice provided by external advisers. Fee levels reflect the size and complexity of the Group, the multi-jurisdictional environment arising from the DLC structure, the multiple stock exchange listings and the geographies in which the Group operates. The economic environment and the financial performance of the Group are taken into account. Consideration is also given to salary reviews across the rest of the Group.
• Where the payment of pension contributions is required by law, these contributions are deducted from the Director’s overall fee entitlements.
| | 8% increase per annum (annualised), or inflation if higher in the location in which duties are primarily performed, on a per fee basis. |
| | |
Competitive benefits are paid in order to attract and retain high-quality individuals and adequately remunerate them for the role undertaken, including the considerable travel burden.
| | • Travel allowances are paid on aper-trip
basis reflecting the considerable travel burden imposed on members of the Board as a consequence of the global nature of the organisation and apply when a Director needs to travel internationally to attend a Board meeting or site visits at our multiple geographic locations.• As a consequence of the DLC structure,Non-executive
Directors are required to prepare personal tax returns in Australia and the UK, regardless of whether they reside in one or neither of those countries. They are accordingly reimbursed for the costs of personal tax return preparation in whichever of the UK and/or Australia is not their place of residence (including payment of the tax cost associated with the provision of the benefit). | | 8% increase per annum (annualised), or inflation if higher in the location in which duties are primarily performed, on aper-trip
basis.Up to a limit not exceeding 20% of fees.
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| | |
Variable pay (CDP and LTIP)
| | • Non-executive
Directors are not eligible to participate in any CDP or LTIP award arrangements. | | |
| | |
Payments on early termination
| | • There are no provisions in any of theNon-executive
Directors’ appointment arrangements for compensation payable on early termination of their directorship. | | |
(1) | UK regulations require the disclosure of the maximum that may be paid in respect of each remuneration component. Where that is expressed as a maximum annual percentage increase that is annualised, it should not be interpreted that it is BHP’s current intention to award an increase of that size in total in any one year, or in each year, and instead it is a maximum required to be disclosed under the regulations.
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Approach to recruitment remuneration
The ongoing remuneration arrangements for a newly recruitedNon-executive
Director will reflect the remuneration policy in place for otherNon-executive
Directors, comprising fees and benefits as set out in the table above. No variable remuneration (CDP and LTIP award arrangements) will be provided to newly recruitedNon-executive
Directors.Letters of appointment and policy on loss of office
The standard letter of appointment forNon-executive
Directors is available on our website. The Board has adopted a policy consistent with the UK Corporate Governance Code, under which allNon-executive
Directors must seekre-election
by shareholders annually if they wish to remain on the Board. As such, noNon-executive
Directors seekingre-election
have an unexpired term in their letter of appointment. ANon-executive
Director may resign on reasonable notice. No payments are made toNon-executive
Directors on loss of office.
How remuneration policy is set
The Remuneration Committee sets the remuneration policy for the CEO and other Executive KMP. The Committee is briefed onKMP’s responsibilities and considers prevailing market conditions,contributions, while aligning with the competitive environmentexpectations of our shareholders and considering the positioning and relativities of pay and employment conditions across the wider BHP workforce. The Committee takes into account the annual base salary increases for our employee population when determining any change in the CEO’s base salary. Salary increases in Australia, where the CEO is located, are particularly relevant as they reflect the local economic conditions.
The
principles that underpin the remuneration policy for the CEO are the same as those that apply to other employees, although the CEO’s arrangements have a greater emphasis on and a higher proportionamount of remuneration
inactually received each year depends on the
formachievement of
performance-related variable pay. Similarly,business and individual performance that generate sustained shareholder value. Before deciding on the
performance measures used to determine variable payfinal incentive outcomes
for the CEO and all other employees are linked to the delivery of our strategy and behaviours that are aligned to the values inAlthough BHP does not consult directly with employees on CEO and other Executive KMP remuneration, the Group conducts regular employee engagement surveys that give employees an opportunity to provide feedback on a wide range of employee matters. Further, many employees are ordinary shareholders through ourall-employee
share purchase plan, Shareplus, and therefore have the opportunity to vote on AGM resolutions. In addition, in line with changes to the UK Corporate Governance Code, the Remuneration Committee is considering additional means of engaging with the workforce to explain how executive remuneration aligns with wider Group pay policy.As part of the Board’s commitment to good governance, the Committee also considers shareholder views, together with those of the wider community, when setting the remuneration policy for the CEO and other Executive
KMP, the Committee first considers the achievement ofpre-determined
performance conditions. The Committee then applies its overarching discretion to determine what it considers to be a fair and commensurate remuneration level in order to decide if the outcome should be reduced. In this way, the Committee believes it can set a remuneration level for the CEO and other Executive KMP that is sufficient to incentivise and is also fair and commensurate with shareholder expectations and prevailing market conditions.The diagram below provides the scenarios for the potential total remuneration of the CEO and other Executive KMP at different levels of performance.
: consists of fixed remuneration, which comprises base salary, pension contributions (10 per cent of base salary) and other benefits (notional 10 per cent of base salary), details of which are set out in 5.1 KMP remuneration table. : consists of fixed remuneration, target CDP (a cash award of 80 per cent of base salary plus two awards of deferred shares each of equivalent value to the cash award, vesting in two and five years, respectively) and target LTIP. The LTIP target value in the chart above is based on the fair value of the award, which is 41 per cent of the face value of 200 per cent of base salary for the CEO and 175 per cent for other Executive KMP.
We are committedThe potential impact of future share price movements is not included in the value of deferred CDP awards or LTIP awards.
: consists of fixed remuneration, maximum CDP (a cash award of 120 per cent of base salary plus two awards of deferred shares each of equivalent value to
engagingthe cash award, vesting in two and
communicating with shareholders regularlyfive years respectively), and
as our shareholders are spread acrossmaximum LTIP (in the
globe, we are proactive with our engagementchart above based on
the face value of 200 per cent of base salary for the CEO and 175 per cent for other Executive KMP). The potential impact of future share price movements is not included in the value of deferred CDP awards or LTIP awards. The maximum opportunity represented above is the most that could potentially be paid for each remuneration and governance matters with institutional shareholders and investor representative organisations. Feedback from shareholders and investors is shared with and used as input into decision-makingcomponent. It does not reflect any intention by the BoardGroup to award that amount. In determining the maximum remuneration opportunity, the Committee reviews relevant benchmarking data and Remuneration Committee in respect of ourindustry practices and believes the maximum remuneration policy and its application. The Committee considers that this approach provides a robust mechanism to ensure Directors are aware of matters raised, have a good understanding of current shareholder views and can formulate policy and make decisions asopportunity is appropriate. We encourage shareholders to always make their views known to us by directly contacting our Investor Relations team (contact details available at bhp.com).
3 Remuneration for the CEO and other Executive KMP
2.2.3 Annual report on remunerationThis section of3.1 FY2022 remuneration received by the Report shows the impactCEO
The table below is a voluntarynon-statutory
disclosure of the remuneration
policy in FY2021received by the CEO during FY2022 and
howFY2021. This table is unaudited and differs from the audited remuneration
outcomes are linked to actual performance. Remuneration for the Executive Directors (the CEOs)Single total figure of remuneration
This section shows a single total figure of remuneration as prescribed under UK requirements. It is a measure of actual remuneration received, rather than a figure calculated in accordance with IFRS (which is detailedthe Australian Accounting Standards (refer to 5.1 KMP remuneration table and in Financial Statements note 24 ‘Employee25 Employee share ownership plan’plans).
The difference between the disclosure in section 3.1)the table below and remuneration calculated in accordance with Australian Accounting Standards relates to the CDP and LTIP. The remuneration calculated in accordance with Australian Accounting Standards require the fair value of the CDP and LTIP to be calculated at the time of grant and to be amortised over the relevant vesting periods regardless of the performance outcome. This may not reflect what the executive receives. In the table below, the CDP and LTIP values relate to the performance outcomes and actual amount received each year under the CDP (i.e. against the CDP scorecard) and the LTIP (i.e. the LTIP vesting outcome). The
This table is designed to provide greater transparency for shareholders on the remuneration for the CEO during FY2022 and FY2021 as it has a stronger link to performance, with the CDP and LTIP included below representing those amounts that have been received as a consequence of satisfying performance conditions in the relevant financial year.
Details of the components of remuneration are detailedcontained in 2.2 Remuneration framework operation and the values in the remuneration policy table are explained further in section 2.2.2.the notes below.
| | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2020 | (5) | | 850 | | | | 6 | | | | 85 | | | | 941 | | | | 1,959 | | | | 3,169 | | | | 5,128 | | | | 6,069 | | | | FY2021 | | | | 1,700 | | | | 120 | | | | 170 | | | | 4,692 | | | | 7,939 | | | | 14,621 | |
| | | FY2020 | (5) | | 850 | | | | 55 | | | | 213 | | | | 1,118 | | | | 1,306 | | | | – | | | | 1,306 | | | | 2,424 | | |
(1)1 | Benefits areIncludesnon-pensionable
and include net movements in leave balances, private family health insurance, spouse business-related travel, car parking, fringe benefits tax and personal tax return preparation in required countries. |
(2)2 | Mike Henry’s FY2021FY2022 and FY2020FY2021 pension contributions were made in accordance with the remuneration policy approved by shareholders in 2019 (i.e.provided based on 10 per cent of base salary which applied for a new Executive Director appointment). Pension contributions for Andrew Mackenzie in FY2020 (until the date he ceased as CEO and Executive Director) were also made in accordance with the remuneration policy approved by shareholders in 2019 (i.e. based on 25 per cent of base salary). Pension contributions for both were made into an international retirement plan.salary. |
(3)3 | FY2021The values shown are the full CDP value (cash and deferred equity) earned as a consequence of performance during FY2022 and FY2021. The FY2022 CDP award iswill be provided one-third in cash in September 2022 and two-thirds in deferred equity, withone-third due to vest in FY2025 andone-third due to vest in FY2027 (on the terms of the CDP) as shown . The FY2021 CDP award was providedone-third in cash in September 2021 andtwo-thirds in deferred equity, withone-third due to vest in FY2024 andone-third due to vest in FY2026 (on the table below. No discretion was applied to STIP awards when determining vestingterms of awards in FY2021 or FY2020.the CDP). |
(4)4 | Mike Henry’s LTIP award valuevalues for FY2022 and FY2021 is(refer below) are based on the full awardawards he received in 2017 and 2016 respectively when he was President Operations, Minerals Australia (prior to becoming and with no proration applied for time as CEOCEO), and Executive Director). The value is based on 100 per cent of the awards vesting. For FY2022 the LTIP award vesting, including a DEP amount of US$1.291 million paid in shares. The value delivered throughis calculated on the average share price appreciation betweenfor the datemonth of grant andJuly 2022 (which will be updated for the actual share price on the vesting date as prescribed under UK requirements was US$3.800 million. Mike Henry’sin the 2023 Remuneration Report); whereas the LTIP award value for FY2020 is basedFY2021 was calculated on the full award he received in 2015 when he was President Coal (prior to becoming, and with no proration applied for time as, CEO and Executive Director). The value is based on 48 per cent of the award vesting, including a DEP amount of US$0.548 million paid in shares. The value delivered throughactual share price appreciation between the date of grant andon the vesting date was US$0.774 million.date. |
(5) | For Mike Henry, the single total figure of remuneration is calculated on the basis of his appointment on 1 January 2020. There have been no changes to his base salary, benefit entitlements or pension contributions since that date. For Andrew Mackenzie, the single total figure of remuneration is calculated on the basis of his period as CEO and Executive Director up until 31 December 2019. There were no changes to his base salary, benefit entitlements or pension contributions prior to the date of his cessation as CEO and Executive Director.
|
A
consequence of the transition to the revised remuneration
policy approved by shareholders at the 2019 AGMs whichframework took effect from 1 July 2019
is thatand significantly reduced the
FY2021 single total figureLTIP grant size for the CEO from 400 per cent of
base salary (on a face value basis) to 200 per cent and a rebalancing to a CDP award with a long-term focus. As a result, the remuneration for Mike Henry
requires disclosure ofreported above reflects the transition to this structure and includes the full
amountamounts of the CDP award earned during
FY2022 and FY2021 (i.e. irrespective that some elements of the CDP award are
deferred and five-year deferred shares were not a feature of the former STIP)deferred) together with the full
amountamounts of the
pre-existing
LTIP
awardawards vesting at the end of
FY2022 and FY2021 which
waswere granted in
2017 and 2016,
respectively (i.e. when the LTIP award size was double the current grant size).
Had the current approved remuneration policyframework been in place when Mike’s 2017 and 2016 LTIP grant was made,awards were granted and a reduced size awarded, the reported LTIP value for FY2021values would have been US$4.356 million for FY2022 and US$3.970 million for FY2021 (instead of US$8.712 million and US$7.939 million in the table above). The reported total remuneration would have therefore been US$10.311 million for FY2022 and the reported single total figure of remunerationUS$10.652 million for FY2021 would have been US$10.552 million (instead of US$14.52114.667 million and US$14.621 million in the table above).
Changes from prior year outcomes of CDP/STIP and LTIP are set out below.
| | | | | | |
| | | | | | |
| | | | CDP awarded for FY2021 performance.One-third
was provided in cash in September 2021,one-third
deferred in an equity award that is due to vest in FY2024, andone-third
deferred in an equity award that is due to vest in FY2027. | | Based on performance during the five-year period to 30 June 2021, 100% of Mike’s 192,360 awards from the 2016 LTIP (granted to him when he was President Operations, Minerals Australia before he was appointed CEO and Executive Director) have vested. The value of the vested awards is inclusive of a DEP, which is paid in shares. |
| | FY2020 | | CDP awarded for FY2020 performance.One-third
was provided in cash in September 2020,one-third
deferred in an equity award that is due to vest in FY2023, andone-third
deferred in an equity award that is due to vest in FY2026. | | Based on performance during the five-year period to 30 June 2020, 48% of Mike’s 192,360 awards from the 2015 LTIP (granted to him when he was President Coal before he was appointed CEO and Executive Director) vested, and the remaining awards lapsed. The value of the vested awards is inclusive of a DEP, which is paid in shares. |
Andrew Mackenzie | | FY2020 | | Prorated CDP awarded for FY2020 performance.Two-thirds
of the award was paid in cash in September 2020 covering the cash andtwo-year
deferred equity portion. Nothing has been or will be granted or paid in respect of the remainingone-third
of the award i.e. the five-year deferred equity portion. | | Details of Andrew’s vested 2015 LTIP award (which vested after Andrew retired from BHP) are set out in section 3.3.24 of the 2020 Annual Report. |
The FY2022 CEO pay ratio, calculated using the reported total fixed and variable remuneration above for the CEO, and compared to the median remuneration for all of our employees worldwide was 123:1 (FY2021 – 130:1). The remuneration calculation for all employees is based on actual earnings for the 12 months to 31 March 2022, including annual incentive payments for employees calculated using the Group performance outcome, and vested equity received if applicable. Pension contributions are calculated as the total cost of contributions made by the Group over the12-month
period. Employees on international assignments have been excluded from the analysis as their remuneration structures are generally not consistent with the remuneration received by the CEO as noted in the table above. The FY2022 ratio of 123:1 at the median compared to the FY2021 ratio of 130:1 reflects the proportion of the CEO’s pay being more heavily weighted to variable pay, including share-based long-term incentives, than for other employees. The change from FY2021 to FY2022 is driven by a lower FY2022 CDP outcome of 96 per cent (FY2021: 115 per cent) for the CEO, a higher value of the CEO’s vested LTIP award in FY2022 compared to FY2021 and an increase in the median remuneration for all of our employees worldwide.
The Group believes the median pay ratio reflects the diversity of our global business footprint and employee population. BHP’s remuneration policies and practices are based on a high degree of alignment and consistency, with total remuneration at all levels providing a competitive package that enables the attraction and retention of talent while also providingat-risk
remuneration based on performance. 3.2 FY2022 CDP performance outcomes
The Board and Remunerationthe Committee assessed the CEO’sExecutive KMP’s CDP outcomeoutcomes in light of the Group’s performance in FY2021, takingFY2022 and took into account the CEO’s performance against the KPIsmeasures in hiseach Executive KMP’s CDP scorecard. Having recorded strong safety, operational and financial performance in FY2021 (after fully eliminatingFor the very positive impacts of commodity prices during the year, particularly for iron ore), when assessing performance against the targets set at the commencement of the yearCEO, the Board and the Committee determined thea CDP outcome for the CEO for FY2021FY2022 at 11596 per cent against the target of 100 per cent (which represents an outcome of 7764 per cent against maximum). The Board and Committee believe this outcome is appropriately aligned with the shareholder experience and the interests of the Group’s other stakeholders.
The CEO’s CDP scorecard outcomesoutcome for FY2021 areFY2022 is summarised in the following tables, including a narrative description of each performance measure and the CEO’s level of achievement, as determined by the Remuneration Committee and approved by the Board. The level of performance for each measure is determined based on a range of threshold (the minimum necessary to qualify for any reward outcome), target (where the performance requirements are met), and maximum (where the performance requirements are significantly exceeded).
SummaryRemuneration Committee
The activities of
outcomes for the
CEOCommittee are governed by its Terms of Reference which is available at bhp.com. The current members of the Committee are: Christine O’Reilly (Chair), Catherine Tanna (member from 4 April 2022) and Dion Weisler. The following present and formerNon-executive
Directors served as members of the Committee during the year: Gary Goldberg (member to 17 June 2022), Anita Frew (member to 11 November 2021) and Susan Kilsby (member to 11 November 2021). The role and focus of the Committee and details of meeting attendances can be found in 2.2 Directors’ Report. Key decisions and activities of the Committee during FY2022 included:
HSECsetting targets for and reviewing outcomes against performance measures and conditions of relevant incentive plans, including the Committee considering its discretion over FY2022 plan outcomes
reviewing the fee for the BHP Chair, which remains unchanged
considering remuneration and remuneration reporting implications of unification and the merger of the Petroleum business and Woodside
reviewing and adopting changes and improvements flowing from regulatory requirements and guidance, which in turn helps us improve our processes and approaches
engaging with shareholders and other key stakeholders
undertaking reviews of remuneration by gender and the annual Shareplus enrolment
Engagement of independent remuneration advisers
The HSEC targetsCommittee seeks and considers advice from independent remuneration advisers where appropriate. Remuneration consultants are engaged by and report directly to the Committee. Potential conflicts of interest are taken into account when remuneration consultants are selected and their terms of engagement regulate their level of access to, and require their independence from, BHP’s management.
PwC has been appointed to act as an independent remuneration adviser and is currently the only remuneration adviser appointed by the Committee. In that capacity, they may provide remuneration recommendations in relation to KMP, however, they did not provide any remuneration recommendations in FY2022.
This Remuneration Report describes the remuneration policies, practices, outcomes and governance for the
KMP of BHP. At BHP, KMP consists of our Board (including the CEO), as well as certain members of our ELT who have authority and responsibility for planning, directing and controlling the activities of the Group directly or indirectly. After due consideration, the Committee determined the KMP for FY2022 comprised allNon-executive
Directors and the following Executive KMP: the CEO,
are alignedthe Chief Financial Officer, the President Minerals Australia, the President Minerals Americas and the Senior Executive Officer (i.e. President Petroleum until 31 May 2022). The following individuals have held their positions and were KMP for the whole of FY2022, unless stated otherwise:
Mike Henry, CEO and Executive Director
Edgar Basto, President Minerals Australia
David Lamont, Chief Financial Officer
Geraldine Slattery, President Petroleum from 1 July 2021 to 31 May 2022 and Senior Executive Officer from 1 June to 30 June 2022
Ragnar Udd, President Minerals Americas
Non-executive
Directors – for detailsofNon-executive
Directors, including dates of appointment or cessation (where relevant), refer to 2.2 Directors’ Report.
BHP has an overarching remuneration framework that guides the Group’s suite of HSEC five-year public targets asCommittee’s decisions and is designed to support our strategy and reinforce our culture and values.
2.1 How the remuneration framework is set out in section 1.13. As it has done for several years, the Remuneration Committee seeks guidance each year from the Sustainability Committee when assessing HSEC performance against scorecard targets. The Remuneration Committee has taken a holistic view of Group performance in critical areas, including any matters outside the scorecard targets that the Sustainability Committee considers relevant.
The performance commentary belowCommittee sets the remuneration framework for the Executive KMP, including the CEO. The Committee is provided againstbriefed on and considers prevailing market conditions, the HSEC scorecard targets, which were updated in FY2021 as a consequencecompetitive environment and the positioning and relativities of pay and employment conditions across the wider BHP workforce. The Committee takes into account the annual base salary increases for our commitment to clarify and strengthen the links between climate change and executive remuneration. This resulted in a weighting for climate change of 10 per cent under the CDP, which compares to around 4 per cent allocated to climateemployee population when determining any change in the Executive KMP’s base salary. The salary increases in locations where our Executive KMP are based are particularly relevant when reviewing their remuneration to ensure that their remuneration also reflects the local economic conditions.
The principles that underpin the remuneration framework for Executives are the same as those that apply to other employees, however Executive KMP arrangements have a greater emphasis on and a higher proportion of remuneration that is at risk as performance-related variable pay. The performance measures used to determine variable pay outcomes for the Executive KMP and all other employees are linked to the delivery of our strategy and behaviours that are aligned tovalues As part of the Board’s commitment to good governance, the Committee considers shareholder views and those of the wider community when setting the remuneration framework for the Executive KMP. We are committed to engaging and communicating with shareholders regularly and, as our shareholders are spread across the globe, we are proactive with our engagement on remuneration and governance matters with institutional shareholders and investor representative organisations. Feedback from shareholders and investors is used as input into decision-making by the Board and the Committee in relation to our remuneration framework and its application. The Committee considers that this approach provides a robust mechanism to ensure Directors are aware of matters raised, have a deep understanding of current shareholder views and can formulate frameworks and make decisions as appropriate. We encourage shareholders to make their views known to us by directly contacting our Investor Relations team (contact details available at bhp.com).
2.2 Remuneration framework operation
Our approved remuneration policy was adopted by shareholders in 2019 for a three-year period in accordance with UK requirements and following the unification of our corporate structure in early 2022 BHP is no longer required to have our policy approved by shareholders every three years. However, the following table shows the current components of our remuneration framework, which is consistent with the prior STIP. The targets were set on the basis of operated assets only.approved remuneration policy.
| | | | | | |
| | HSEC measuresFixed remuneration
| | | | Performance against scorecard targetsLTIP
|
Purpose and link to strategy | | |
Significant eventsMarket competitive fixed remuneration is paid in order to attract, motivate and retain high-quality and experienced executives, and provide appropriate remuneration for these important roles in the Group. | | No significant (actual level 4) health, safety (including fatalities)The CDP encourages and focuses executives’ efforts for the relevant financial year on the delivery of the Group’s strategic priorities, balancing financial andnon-financial performance, to deliver short, medium and long-term success aligned to our purpose and, environment or community events during the year.and to motivate executives to strive to achieve stretch performance objectives. | | • There were no fatalities or other significant HSEC events during FY2021 at operated assets.
• In addition, for a maximum outcomeThe purpose of the LTIP is to be awarded, strong progress was requiredfocus executive’s efforts on the developmentachievement of sustainable long-term value creation and implementationsuccess of BHP’s Fatality Elimination Program in all regions, and this was largely achieved for FY2021.
| | Close to maximum.the Group (including appropriate management of business risks). |
| | | |
Climate changeRemuneration components and link to performance | | Steps in place to achieve reported GHG emissions in FY2022 at FY2017 level.Fixed remuneration comprises base salary, pension contributions and benefits.
Decarbonisation plans developedCompetitive fixed remuneration is aligned to global complexity, size, reach and industry, and reflects executives’ responsibilities, location, skills, performance, qualifications and experience.
| | Annual variable pay opportunity linked to execution of business strategy. A balanced scorecard of short, medium and long-term elements including HSEC (25% weighting), financial (50% weighting) and individual performance measures (25% weighting) are chosen on the basis that they are expected to have a significant short, medium and long-term impact on the success of the Group, with appropriate targets for each measure which will appropriately motivate Executive KMP to achieve outperformance that contributes to the long-term sustainability of the Group and shareholder wealth creation. | | Annual long-term variable pay opportunity based on grants of five-year performance rights designed to align executives’ reward with sustained shareholder wealth creation in line with pathways to net zero and incorporated intoexcess of relevant comparator group(s), through the capital allocation plan process.relative TSR performance condition. Two partnerships formalised with strategic customers in the steel sector.Relative TSR has been chosen as an appropriate measure as it enables an objective external assessment over a sustained period on a basis that is familiar to shareholders.
| | • For FY2021, we improved on our operational GHG emissions target of 17.0Mt, with an actual result of 16.2Mt.
• All operated assets completed the development of decarbonisation plans which were incorporated in the capital allocation process. The new renewable power purchase agreements at Escondida and Spence, both in Chile, remain on track for first power supply in the first half of FY2022. In addition, in FY2021 we also entered into renewable power purchase agreements for Queensland Coal and Kwinana nickel refinery in Australia.
• During the year, memorandums of understanding were signed with China Baowu (China), JFE Steel Corporation (Japan) and HBIS Limited (China) to partner on emissions intensity reduction in integrated steelmaking. We have significantly progressed developing a Phase 1 research and development agreement with China Baowu (which we anticipate will be signed in FY2022) and significant work is also being undertaken in collaboration with our partners to convert the remaining two memorandums of understanding into executed definitive contracts.
| | Slightly above target. |
| | | |
Management of priority Tailings Storage Facilities (TSFs) | | All priority TSFs are assessed based on key risk indicator data, and are either within appetite or continued operation outside appetite is approved with remediation progressing to plan. | | • All priority TSFs are now either within appetite based on key risk indicator data or continued operation outside appetite is approved with remediation progressing to plan.
• We have continued improving our key risk indicator performance with 84% of all key risk indicators for priority TSFs rated either on target or less risk being taken than target, against a target of 80%.
| | Slightly above target. |
However, having assessed performance against the FY2021 HSEC KPI, the Sustainability Committee also considered sexual assault and sexual harassment and noted:
Good progress has been made in relation to preventing, managing and responding to risks of sexual assault and sexual harassment through significant efforts since 2018, including enhancing controls to prevent incidents, improved reporting processes and in the creation and commencement of a dedicated support service to assist impacted persons.
Management acknowledges there were areas where coordination of work streams and integrated planning in relation to work regarding sexual assault and sexual harassment could have been improved, and this may have allowed certain actions to have been taken sooner, including the introduction of increased alcohol restrictions in camps.
Aligned targets for implementation of controls have been incorporated into the FY2022 CDP HSEC scorecard with support from a dedicated project management office.
In recognition of the opportunity to have enhanced coordination of work streams and integrated planning in relation to sexual assault and sexual harassment, and with the Remuneration Committee being mindful that this is a critical health and safety matter, the Committee, upon the recommendation of the Sustainability Committee, determined a 10 per cent reduction in the overall FY2021 CDP HSEC KPI outcome from 33 per cent to a final outcome of 30 per cent out of the target of 25 per cent.
ROCE is underlying profit after taxation (excluding after-taxation finance costs and exceptional items) divided by average capital employed. ROCE is the key financial KPI against which CDP outcomes for our senior executives are measured and is, in our view, a relevant measure to assess the financial performance of the Group for this purpose. While ROCE excludes exceptional items, the Remuneration Committee reviews each exceptional item to assess if it should be included in the result for the purposes of deriving the ROCE CDP outcome.
When we are assessing management’s performance, we make adjustments to the ROCE result to allow for changes in commodity prices, foreign exchange movements and other material items to ensure the assessment appropriately measures outcomes that are within the control and influence of the Group and its executives. Of these, changes in commodity prices have historically been the most material due to volatility in prices and the impact on Group revenue and ROCE.
| | | | |
| |
| | |
Assessment of performance | | PerformanceAchievement against each scorecard targetsmeasure is assessed by the Committee and the Board, with guidance provided by other relevant Board Committees in respect of HSEC, financial and other measures, and a CDP award determined.
If performance is below the threshold level for any measure, no CDP award will be provided in respect of that portion of the CDP award opportunity. In the event the Committee does not consider the outcomes that would otherwise apply to be a true reflection of the performance of the Group or should it consider that individual performance or other circumstances makes this an inappropriate outcome, it retains the discretion to not provide all or a part of any CDP award. This is an important mitigation against the risk of unintended award outcomes. | | |
ROCE | | For FY2021, the target for ROCE was 13.5%, with a threshold of 11.6% and a maximum of 15.0%.
The target ROCE is derived from the Group’s approved annual budget. It is the Group’s practice to build a material element of stretch performance into the budget. Achievement of this stretching ROCE target will result in a target CDP outcome. The threshold and maximum are a fair range of ROCE outcomes that represent a lower limit of underperformance below which no CDP award should be made, and an upper limit of outperformance that would represent the maximum CDP award.
Because a material element of stretch performance is built into the budget (and hence the ROCE target derived from the budget), together with physical and regulatory asset constraints, the performance range around target is subject to a greater level of downside risk than there is upside opportunity. Accordingly, the range between threshold and target is greater than that between target and maximum. For maximum, the Committee takes care not to create leveraged incentives that encourage executives to push for short-term performance that goes beyond our risk appetite and current operational capacity. The Committee retains, and has a track record of applying, downward discretion to ensure the CDP outcome is appropriately aligned with the overall performanceVesting of the Group for the year, andLTIP award is fair to management and shareholders.
| | ROCE of 32.5% was reported by BHP for FY2021. Adjusted for the factors outlined below, ROCE is 14.3%, which is above target. The following adjustments were made to ensure the outcomes appropriately reflect the performance of management for the year:
• The full elimination of the impacts of very positive movements in commodities prices (particularly iron ore) and exchange rates decreased ROCE by 17.4 percentage points.
• Having reviewed the FY2021 exceptional items (as described in note 3 ‘Exceptional items’ in section 3), the Committee determined they should not be considered for the purposes of determining the FY2021 ROCE CDP outcome, with the exception of the exceptional item in relation to the costs of theCOVID-19
pandemicdependent on BHP’s FY2021 results. The Committee concluded the above-budget portion of additional direct costs ofCOVID-19
should flow through to the ROCE outcomes for CDP scorecard purposes. The Committee considered this was appropriate in light of the continuing global impacts of theCOVID-19
pandemic. This adjustment reduced ROCE by 0.3 percentage points. Beyond this, the Committee concluded no further action was required in respect of exceptional items.• Adjustments for other material items ordinarily made to ensure the outcomes reflect the performance of management for the year decreased ROCE by 0.5 percentage points. This was mainly due to the elimination of the positive effect on ROCE outcomes of the reduction in the closing balance sheet due to exceptional items.
| | Between
target and
maximum. |
| | | | The key drivers of the FY2021 ROCE outcome of 14.3% being above the target for FY2021 of 13.5% set at the commencement of the year were:
• In Minerals Australia, operational performance was strong, with Western Australia Iron Ore achieving record production, Olympic Dam achieving its highest annual copper production level since our acquisition in 2005 on the back of improved smelter stability and strong underground mine performance, and Queensland Coal achieving record production at Goonyella. However, this was more than offset by higher than budgeted depreciation across most assets and the inclusion of the above-budget portion of additional direct costs ofCOVID-19,
resulting in a slight overall below-target ROCE outcome for Minerals Australia. | | |
| | | | • In Minerals Americas, driven mainly by Escondida maintaining average concentrator throughput at record levels by managingCOVID-19
impacts and optimisation of materials fed to the concentrators. This was partially offset by the slower than planned Spence Growth Option concentratorramp-up
due to tailings work, permits and water availability, and the inclusion of the above-budget portion of additional direct costs ofCOVID-19.
• In Petroleum, driven mainly by higher than expected gas demand and improved performance in Australia, combined with lower maintenance activity at Australian operations, partially offset by the inclusion of the above-budget portion of additional direct costs ofCOVID-19.
| | |
The outcome against the ROCE KPI for FY2021 was 60 per cent out of the target of 50 per cent.
Individual measures for the CEO
Individual measures for the CEO are determined at the commencement of the financial year. The application of personal measures remains an important element of effective performance management. These measures seek to provide a balance between the financial andnon-financial
performance requirements that maintain our position as a leader in our industry. The CEO’s individual measures for FY2021 included contribution to BHP’s overall performance and the management team, and also the delivery of projects and initiatives within the scope of the CEO role as specified by the Board, as set out in the table below. | | | | | | |
| | Individual scorecard targets
| | Performance against scorecard targets
| | |
Performance | | • BHP Operating System deployment on track.
• Enterprise-wide improvement initiatives established and progressed to plan.
| | • The deployment of the BHP Operating System is tracking better than target on the schedule and costs of implementation, and the improvement value identified and delivered to date is in excess of target.
• The accelerated delivery of cost savings targeted by the end of FY2021 has been achieved, andin-flight
initiatives are progressing to plan. | | Between target and maximum. |
| | | |
Social value | | • Social value plans established for each asset.
• Reframing the social value narrative plan agreed and underway.
• Restructure of the leadership of Samarco/Fundação Renova oversight.
• Progress on Samarco claims.
| | • All assets have established social value plans, and also delivered the FY2021 actions set out in those plans.
• ‘Reframing the Narrative’, marketing segmentation strategy, audience testing and creative concepts were presented to the Board throughout FY2021, approved as necessary, and implemented, with strong results received so far.
• Samarco/Fundação Renova leadership was successfully restructured to have Samarco/Fundação Renova overseen by a dedicated person reporting directly to the regional President Minerals Americas, and a dedicated external affairs team was also established.
• Good progress on Fundação Renova compensation programs, and we have continued to amplify our communications and stakeholder engagement in Brazil, with positive feedback received.
| | Target. |
| | | |
People | | • Increase in female participation by three percentage points.
• Operations Services (OS) increased to 5,000 employees.
• New Engagement and Perception Survey (EPS) system embedment.
• ELT members’ development and succession plans.
| | • By 30 June 2021 gender diversity had increased 2.7 percentage points to 29.2%, up from 26.5% at 30 June 2020, for a cumulative increase of 11.6 percentage points from 17.6% at 30 June 2016.
• By 30 June 2021 there were 3,864 OS employees.
• The new EPS was successfully implemented during FY2021 with high levels of participation and a strong improvement focus.
• The ELT transitions were completed in FY2021 (i.e. promotions, recruitment and departures), and updated individual development plans were established for all ELT members.
| | Between threshold and target. |
| | | |
Portfolio | | • Portfolio strategy delivery.
• Exploration and development performance.
• Business development process improvement.
| | • Strong progress on delivery of key strategy elements as have been publicly announced, including preparing for the investment in Jansen Stage 1, pursuing a merger of our Petroleum business with Woodside, unifying our corporate structure and the Cerrejon divestment. The process for BHP Mitsui Coal and New South Wales Energy Coal is progressing, in line with thetwo-year
timeframe set last year.• The metals exploration strategy was refreshed, as presented to the Board in June 2021, and is now in execution. Greenfield exploration activity has increased, with wider geographic coverage and greater focus on using technology to increase identification of ore under cover.
• Business Development and Exploration teams are working effectively together, with theco-location
of senior personnel, which will improve the interactions of the teams, as well as access to new opportunities. In addition, the Business Development team has significantly increased capability during FY2021. | | Target. |
Overall, it was considered the performance of the CEO against the individual measures KPI for FY2021 warranted an outcome at the target of 25 per cent.
LTIP performance outcomes
LTIP vesting based on performance to June 2021
The five-year performance period for the 2016 LTIP award ended on 30 June 2021. The CEO’s 2016 LTIP award comprised 192,360 awards (granted as President Operations, Minerals Australia prior to his appointment as CEO). Vesting is subject to achievement of the relative TSR performance conditions and any discretion applied by the Remuneration Committee (see ‘Overarching discretion and vesting underpin’ in this section 2.2.3).
Testing the performance condition
For the award to vest in full, TSR must exceed the Peer Group TSR (for 67 per cent of the award) and the Index TSR (for 33 per cent of the award) by an average of 5.5 per cent per year for five years, being 30.7 per cent in total compounded over the performance period from 1 July 2016 to 30 June 2021. TSR includes returns to BHP shareholders in the form of share price movements along with dividends paid and reinvested in BHP (including cash andin-specie
dividends).BHP’s TSR performance was positive 266.5 per cent over the five-year period from 1 July 2016 to 30 June 2021. This is above the weighted median Peer Group TSR of positive 213.9 per cent and above the Index TSR of positive 99.8 per cent over the same period. This level of performance results in 100 per cent vesting for the 2016 LTIP award. The value of the CEO’s vested 2016 LTIP award has been reported in ‘Single total figure of remuneration’ in this section 2.2.3.
The graph below shows BHP’s performance relative to comparator groups.
The Committee is conscious the granting of the 2016 LTIP awards and the early part of the five-year performance period coincided with a period of share price reductions, driven in part by the Samarco dam failure having occurred on 5 November 2015.
The number of LTIP awards to be granted in December 2016 was to be determined using the share price and US$/A$ exchange rate over the 12 months up to and including 30 June 2016. Using a12-month
average share price of A$20.3326 and a12-month
average US$/A$ exchange rate of 0.728415 (each up to and including 30 June 2016), the number of LTIP awards derived for Mike Henry was 259,982. However, to ensure Mike (and other Executive KMP) did not receive a larger number of awards as a result of the lower BHP share price since the Samarco dam failure in Brazil on 5 November 2015, as the Committee was conscious of shareholder expectations in this respect, the Committee instead granted 192,360 LTIP awards to Mike in December 2016, a reduction of 26 per cent. This was the same number that was granted to Mike in the prior year in December 2015, which in itself had been reduced from the formulaically derived amount to ensure the Samarco dam failure did not inflate the 2015 LTIP award grant size. The Committee has reviewed this approach and concluded it was appropriate.Having considered the LTIP grant size, the Committee undertook a further exercise to satisfy itself that the TSR performance, which formulaically would result in 100 per cent vesting, had not been inappropriately enhanced by the starting position of the performance period being lower as a consequence of a fall in share price following the Samarco dam failure. This analysis included estimating and removing the impact of the dam failure from the start of the performance period (i.e. removing the impact this would have otherwise had on the TSR outcome due to the lower starting position), reducing the TSR outcome for estimated payments in relation to the Samarco dam failure that may take place beyond the end of the performance period and examining the construct of the comparator group against which TSR performance is measured.
While this analysis uses inputs and assumptions that are theoretical, the Committee concluded the analysis was sufficiently robust to provide confidence that the underlying TSR performance was sufficient to support the formulaic vesting of the 2016 LTIP award at 100 per cent.
The value of the vested 2016 LTIP award is higher than the value of the award at the time it was granted. With the share price having risen appreciably during the five-year period and strong dividends, 36 per cent of the value realised is the value at grant time and 64 per cent of the value realised is due to share price appreciation and dividends. This value increment due to share price appreciation and dividends is consistent with the experience of shareholders over the period.
The following chart shows the cumulative outcomes of the decisions above, with the original notional grant size as if it had vested in full, the grant size reduction due to the Samarco dam failure, and the final vested value of US$7.939 million, split between the original grant value and share price appreciation and dividends.
LTIP allocated during FY2021
Following shareholder approval at the 2020 AGMs, LTIP awards (in the form of performance rights) were granted to Mike Henry on 20 October 2020.
The face value and fair value of the awards granted on 20 October 2020 are shown in the table below. The face value of Mike’s award was 200 per cent of his base salary of US$1.700 million at the time of grant.
The fair value of the awards is ordinarily calculated by multiplying the face value of the award by the fair value factor of 41 per cent (for the current plan design, as determined by the independent adviser to the Committee).The number of LTIP awards for Mike as detailed below was determined based on the US$ face value of the LTIP awards and calculated using the average share price and US$/A$ exchange rate over the 12 months up to and including 30 June 2020. | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | 140,239 | | 3,400 | | 200 | | 1,394 | | 82 | | 100 |
(1) | The allocation is 100 per cent of the maximum award that was permitted under the remuneration policy approved by shareholders at the 2019 AGMs.
|
In addition to those LTIP terms set in the remuneration policy for the CEO approved by shareholders in 2019, the Remuneration Committee has determined:
| | |
| | • 1 July 2020 to 30 June 2025
|
| |
| | • An averaging period of six months will be used in the TSR calculations.
• BHP’s TSR relative to the weighted median TSR of sector peer companies selected by the Committee (Peer Group TSR) and the MSCI World Index (Index TSR) will determine the vesting of 67% and 33% of the award, respectively.relevant comparator group(s) over a five-year performance period.
• Each company in25% of the peer groupaward will vest where BHP’s TSR is weighted by market capitalisation. The maximum weighting for any one companyequal to the median TSR of the relevant comparator group(s), as measured over the performance period. Where TSR is 25% andbelow the minimum is set at 0.4% to reduce sensitivity to any single peer company.median, awards will not vest.
• For the whole of either portion of the award to vest, BHP’s TSR must be at or exceed the weighted 80th percentile of the Peer Group TSR or the Index TSR (as applicable). Threshold vesting (25% of each portion of the award) occurs where BHP’s TSR equals the weighted 50th percentile (i.e. the median) of the Peer Group TSR or the Index TSR (as applicable). Vesting occurs on a sliding scale between the weighted 50th
and 80th
percentiles.median TSR of the relevant comparator group(s) up to a nominated level of TSR outperformance over the relevant comparator group(s), as determined by the Committee, above which 100% of the award will vest.Where the TSR performance condition is not met, there is no retesting and awards will lapse. The Committee also retains discretion to lapse any portion or all of the award where it considers the vesting outcome is not appropriate given Group or individual performance. This is an important mitigation against the risk of unintended outcomes. |
| | |
| | CDP awards are provided as cash and two awards of deferred shares, each of equivalent value to the cash award, vesting in two and five years respectively. Awards of deferred shares comprise rights to receive ordinary BHP shares in the future at the end of the deferral periods. Before the awards vest (or are exercised), these rights are not ordinary shares and do not carry entitlements to ordinary dividends or other shareholder rights; however, a DEP is provided on vested awards. The Committee has a discretion to settle CDP awards in cash. Vesting of five-year deferred shares under the CDP is underpinned by a holistic review of performance at the end of the five-year vesting period, including a review of HSEC performance, profitability, cash flow, balance sheet health, returns to shareholders, corporate governance and conduct over the five-year period. | | LTIP awards consist of rights to receive ordinary BHP shares in the future if the performance and service conditions are met. Before vesting (or exercise), these rights are not ordinary shares and do not carry entitlements to ordinary dividends or other shareholder rights; however, a DEP is provided on vested awards. The Committee has a discretion to settle LTIP awards in cash. Vesting of five-year performance rights under the LTIP is underpinned by a holistic review of performance at the end of the five-year performance period, including a review of HSEC performance, profitability, cash flow, balance sheet health, returns to shareholders, corporate governance and conduct over the five-year period. |
| | |
| | On cessation of employment, a ‘good leaver’ 1 may receive apro-rated cash award based on performance for that year. For a ‘good leaver’, their unvested CDP deferred awards generally remain on foot (wholly or in part) unless the Committee determine otherwise. If the executive is not a ‘good leaver’, all unvested CDP deferred awards will lapse. | | On cessation of employment, for a ‘good leaver’ 1 their unvested LTIP awards generally remain on foot on termination and arepro-rated for the portion of the vesting period served. These awards are eligible for vesting in the ordinary course, subject to any applicable performance conditions. If the executive is not a ‘good leaver’, all unvested LTIP awards will lapse. |
| |
Sector peer group companies(1)(2)(3)
| | CDP awards (including cash and deferred share awards) and LTIP awards are subject to the Group’s malus and clawback policy (see below). |
• Resources (85%): Anglo American, Fortescue Metals, Freeport-McMoRan, Glencore, Rio Tinto, Southern Copper, Teck Resources, Vale.
| 1 | • Oil ‘Good leaver’ treatment may apply where the reason for the cessation of employment with BHP is due to forced early retirement, retrenchment or redundancy, termination by mutual agreement or retirement with the agreement of the Group, or such other circumstances that do not constitute resignation or termination for cause.
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As has been set out in prior Remuneration Reports, for many years we have had malus and clawback provisions in place. During FY2022, we enhanced our malus and clawback policy covering awards made from 2021 under the CDP and LTIP. This enhanced policy further clarified the circumstances in which the Committee is able to reduce or clawback awards, which include:
an error in the Group’s Financial Statements that requires a material downward restatement
performance of a participant, or of the business or of the Group does not justify vesting or where the participant’s conduct or performance has been in breach of their employment contract, any laws, rules, codes of conduct or policies applicable to them or the standards reasonably expected of a person in their position
misstatement or misrepresentation of the performance of the company
where any team, business area, member of the Group or profit centre in which the participant works or worked has been found guilty in connection with any regulatory investigation or has been in breach of any laws, rules, codes of conduct or policies applicable to it or the standards reasonably expected of it
an event that has had, or may have a material adverse effect on the value or reputation of any member of the Group
where the Committee determines there has been material damage to the Group’s social licence to operate
a catastrophic health, safety, environment or community event or events occurring in any part of the Group
an act, omission or event occurs which constitutes a material failure of risk management or of other operational systems and controls
a participant is found to have contributed to circumstances that give rise to a material loss for any Group Company
These malus and clawback provisions apply whether or not awards are made in the form of cash or equity, whether or not the equity has vested, and whether or not employment is ongoing.
The terms of employment for the CEO and Executive KMP are formalised in their employment contracts. The current contracts of the CEO and Executive KMP are not fixed term. BHP may choose to terminate a contract on up to 12 months’ notice. BHP can require an executive to work through the notice period or may terminate the individual’s contract immediately by paying base salary plus pension contributions in lieu of the notice period. The CEO and Executive KMP must provide up to 12 months’ notice for voluntary resignation.
Approach to recruitment and promotion
For external candidates that are appointed Executive KMP, the Committee may determine that it is appropriate to provide additional cash and/or equity components to replace any remuneration forfeited or not received from a former employer. It is anticipated any foregone equity awards would be replaced by equity. The value of the replacement remuneration would not be any greater than the fair value of the awards foregone or not received (as determined by the Committee’s independent adviser). The Committee would determine appropriate service conditions and performance conditions within BHP’s remuneration framework, taking into account the conditions attached to the foregone awards. The Committee is mindful of limiting such payments and not providing any more compensation than is necessary. For any internal Executive KMP appointment, any entitlements provided under former arrangements will be honoured and remain on foot according to their existing terms.
2.3 Potential remuneration outcomes
The Committee recognises market forces influence remuneration practices and it strongly believes the fundamental driver of remuneration outcomes should be performance. It also believes that overall remuneration should be fair to the individual, and remuneration levels should accurately reflect the CEO’s and other Executive KMP’s responsibilities and contributions, while aligning with the expectations of our shareholders and considering the positioning and relativities of pay and employment conditions across the wider BHP workforce.
The amount of remuneration actually received each year depends on the achievement of business and individual performance that generate sustained shareholder value. Before deciding on the final incentive outcomes for the CEO and other Executive KMP, the Committee first considers the achievement ofpre-determined
performance conditions. The Committee then applies its overarching discretion to determine what it considers to be a fair and commensurate remuneration level in order to decide if the outcome should be reduced. In this way, the Committee believes it can set a remuneration level for the CEO and other Executive KMP that is sufficient to incentivise and is also fair and commensurate with shareholder expectations and prevailing market conditions. The diagram below provides the scenarios for the potential total remuneration of the CEO and other Executive KMP at different levels of performance.
: consists of fixed remuneration, which comprises base salary, pension contributions (10 per cent of base salary) and other benefits (notional 10 per cent of base salary), details of which are set out in 5.1 KMP remuneration table. : consists of fixed remuneration, target CDP (a cash award of 80 per cent of base salary plus two awards of deferred shares each of equivalent value to the cash award, vesting in two and five years, respectively) and target LTIP. The LTIP target value in the chart above is based on the fair value of the award, which is 41 per cent of the face value of 200 per cent of base salary for the CEO and 175 per cent for other Executive KMP. The potential impact of future share price movements is not included in the value of deferred CDP awards or LTIP awards.
: consists of fixed remuneration, maximum CDP (a cash award of 120 per cent of base salary plus two awards of deferred shares each of equivalent value to the cash award, vesting in two and five years respectively), and maximum LTIP (in the chart above based on the face value of 200 per cent of base salary for the CEO and 175 per cent for other Executive KMP). The potential impact of future share price movements is not included in the value of deferred CDP awards or LTIP awards. The maximum opportunity represented above is the most that could potentially be paid for each remuneration component. It does not reflect any intention by the Group to award that amount. In determining the maximum remuneration opportunity, the Committee reviews relevant benchmarking data and industry practices and believes the maximum remuneration opportunity is appropriate.
3 Remuneration for the CEO and other Executive KMP
3.1 FY2022 remuneration received by the CEO
The table below is a voluntarynon-statutory
disclosure of the remuneration received by the CEO during FY2022 and FY2021. This table is unaudited and differs from the audited remuneration calculated in accordance with the Australian Accounting Standards (refer to 5.1 KMP remuneration table and in Financial Statements note 25 Employee share ownership plans). The difference between the disclosure in the table below and remuneration calculated in accordance with Australian Accounting Standards relates to the CDP and LTIP. The remuneration calculated in accordance with Australian Accounting Standards require the fair value of the CDP and LTIP to be calculated at the time of grant and to be amortised over the relevant vesting periods regardless of the performance outcome. This may not reflect what the executive receives. In the table below, the CDP and LTIP values relate to the performance outcomes and actual amount received each year under the CDP (i.e. against the CDP scorecard) and the LTIP (i.e. the LTIP vesting outcome).
This table is designed to provide greater transparency for shareholders on the remuneration for the CEO during FY2022 and FY2021 as it has a stronger link to performance, with the CDP and LTIP included below representing those amounts that have been received as a consequence of satisfying performance conditions in the relevant financial year.
Details of the components of remuneration are contained in 2.2 Remuneration framework operation and the values in the table are explained further in the notes below.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | | | 1,700 | | | | 120 | | | | 170 | | | | 4,692 | | | | 7,939 | | | | 14,621 | |
| 1 | Benefits arenon-pensionable and gas (15%): Apache, BP, Canadian Natural Res., Chevron, ConocoPhillips, Devon Energy, EOG Resources, ExxonMobil, Occidental Petroleum, Royal Dutch Shell, Woodside Petroleum.include net movements in leave balances, private family health insurance, spouse business-related travel, car parking, fringe benefits tax and personal tax return preparation in required countries. |
| 2 | Mike Henry’s FY2022 and FY2021 pension contributions were provided based on 10 per cent of base salary. |
(1)3 | Sector peer group companiesThe values shown are selected by the Committee onfull CDP value (cash and deferred equity) earned as a consequence of performance during FY2022 and FY2021. The FY2022 CDP award will be providedone-third in cash in September 2022 andtwo-thirds in deferred equity, withone-third due to vest in FY2025 andone-third due to vest in FY2027 (on the basisterms of the commodities they produceCDP). The FY2021 CDP award was providedone-third in cash in September 2021 and their market capitalisations, such thattwo-thirds in deferred equity, withone-third due to vest in FY2024 andone-third due to vest in FY2026 (on the sector peer group as a whole, to the extent practical, reflects the weightingterms of the value of commodities produced by BHP. The targeted outcome is that, to the extent practical, the vesting outcome is driven by BHP’s performance excluding movements in commodity prices over the five-year performance period. |
(2)4 | From DecemberMike Henry’s LTIP award values for FY2022 and FY2021 (refer below) are based on the full awards he received in 2017 and 2016 BG Grouprespectively when he was President Operations, Minerals Australia (prior to becoming and Peabody Energy were removed fromwith no proration applied for time as CEO), and 100 per cent of the comparator group. BG Groupawards vesting. For FY2022 the LTIP award value is calculated on the average share price for the month of July 2022 (which will be updated for the actual share price on the vesting date in the 2023 Remuneration Report); whereas the LTIP award value for FY2021 was acquired by Royal Dutch Shell and Peabody Energy had become a significantly less comparable peer.calculated on the actual share price on the vesting date.
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(3) | From November 2018, CONSOL Energy was removed from the comparator group, as due to its internal restructuring it had become a less comparable peer.
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Overarching discretionA revised remuneration framework took effect from 1 July 2019 and vesting underpin
The rules of the CDP, STIP and LTIP and the terms and conditions of the awards give the Committee an overarching discretion to reduce the number of awards that will vest, notwithstanding the fact that the performance condition for partial or full vesting, as tested following the end of the performance period, or the relevant service conditions, have been met.
This holistic, qualitative judgement, which is applied as an underpin test before final vesting is confirmed, is an important risk management tool to ensure vesting is not simply driven by a formula or the passage of time that may give unexpected or unintended remuneration outcomes.
The Committee considers its discretion carefully each year ahead of the scheduled vesting of equity awards in August. It considers performance holistically over the five-year period, including a five-year ‘look back’ on HSEC performance, profitability, cash flow, balance sheet health, returns to shareholders, corporate governance and conduct. For the five years from FY2017 to FY2021, the Committee noted BHP’s continued improvement in HSEC outcomes, strong operational performance with improving production and cost performance, and significant returns to shareholders, together with no governance or conduct issues of note.
Accordingly, in respect of the STIPtwo-year
deferred shares (granted in November 2019 in respect of performance in FY2019), the Committee chose not to exercise its discretion and allowed the STIP awards to vest in full. In addition, in respect ofsignificantly reduced the LTIP
five-year performance shares (granted in December 2016),grant size for the
formulaic outcome of the 2016 LTIP was a 100 per cent vesting. Having undertaken the ‘look back’ review described above and the assessment of the estimated impact on TSR performance of the Samarco dam failure, the Committee concluded the vesting outcome was appropriate given Group and individual performance, and chose not to exercise its discretion and allowed 100CEO from 400 per cent of
the LTIP awardsbase salary (on a face value basis) to
vest. There is no upwards discretion available200 per cent and a rebalancing to
a CDP award with a long-term focus. As a result, the
Remuneration Committee in respect of the LTIP, as the overarching discretion may only reduce the number of awards that may vest.
CEO remuneration and returns to shareholders
The table below shows the single total figure of remuneration for Mike Henry
Andrew Mackenziereported above reflects the transition to this structure and
Marius Kloppers overincludes the
last 10 years alongfull amounts of the CDP award earned during FY2022 and FY2021 (i.e. irrespective that some elements of the CDP award are deferred) together with the
proportionfull amounts of
maximum opportunity earnedthepre-existing
LTIP awards vesting at the end of FY2022 and FY2021 which were granted in 2017 and 2016, respectively (i.e. when the LTIP award size was double the current grant size).Had the current remuneration framework been in place when Mike’s 2017 and 2016 LTIP awards were granted and a reduced size awarded, the reported LTIP values would have been US$4.356 million for each typeFY2022 and US$3.970 million for FY2021 (instead of incentive.
| | | | | | | | | | | | | | | | |
| | | | | Single total figure of
remuneration, US$(‘000) | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | FY2020 | (1) | | | 6,069 | | | | 64 | | | | 48 | |
| | | FY2020 | (1) | | | 2,424 | | | | 64 | | | | 48 | |
| | | FY2019 | | | | 3,531 | | | | 32 | | | | 0 | |
| | | FY2018 | | | | 4,657 | | | | 60 | | | | 0 | |
| | | FY2017 | | | | 4,554 | | | | 57 | | | | 0 | |
| | | FY2016 | | | | 2,241 | | | | 0 | | | | 0 | |
| | | FY2015 | | | | 4,582 | | | | 57 | | | | 0 | |
| | | FY2014 | | | | 7,988 | | | | 77 | | | | 58 | |
| | | FY2013 | (2) | | | 9,740 | | | | 47 | | | | 65 | |
| | | FY2013 | (2) | | | 5,624 | | | | 47 | | | | 65 | |
| | | FY2012 | | | | 16,092 | | | | 0 | | | | 100 | |
(1) | As Mike Henry assumed the role of CEO and Executive Director in January 2020, the FY2020 single total figure of remuneration shown includes remuneration relevant to that role for the period 1 January 2020 to 30 June 2020. The FY2020 single total figure of remuneration for Andrew Mackenzie includes remuneration relevant to his role as CEO and Executive Director for the period 1 July 2019 to 31 December 2019. The value of Mike’s vested 2015 LTIP award is included in full, while Andrew’s vested 2015 LTIP award (with a value of US$5.317US$8.712 million and US$7.939 million and which vested after Andrew stepped down from his role as CEO and Executive Director) was reported in section 3.3.24 of the 2020 Annual Report.
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(2) | As Andrew Mackenzie assumed the role of CEO and Executive Director in May 2013, the FY2013 single total figure of remuneration shown includes remuneration relevant to that role for the period 10 May 2013 to 30 June 2013. The FY2013 single total figure of remuneration for Marius Kloppers includes remuneration relevant to his role as CEO and Executive Director for the period 1 July 2012 to 10 May 2013. The value of Andrew’s vested 2008 LTIP award of US$8.480 million (inclusive of vestedsign-on
awards provided when Andrew joined BHP) is included in full, while Marius’ vested 2008 LTIP award (with a value of US$12.051 million and which vested after Marius stepped down from his role as CEO and Executive Director) was reported in section 4.4.28 of the 2014 Annual Report. |
The graph below shows BHP’s TSR against the performance of relevant indices over the same10-year
period. The indices shown in the
graph were chosen as being broad market indices, which include companiestable above). The reported total remuneration would have therefore been US$10.311 million for FY2022 and US$10.652 million for FY2021 (instead of
a comparable sizeUS$14.667 million and
complexity to BHP.US$14.621 million in the table above).
Changes in Directors’ remuneration from FY2019 to FY2021
The table below sets out the percentage change in remuneration from FY2019 to FY2021 for the CEOs (for the time they were CEO) andNon-executive
Directors, compared to the average change in each remuneration element for employees in Australia (being approximately 24,000 employees) over the same period. This has been chosen by the Committee as the most appropriate comparison, as Australia has the largest employee base, and the Committee considers remuneration levels in Australia when setting salaries and fees for Executive andNon-executive
Directors and the CEO is located in Australia. The CEOs’ andNon-executive
Directors’ remuneration described in the table align to what is disclosed in ‘Single total figureTable of remuneration’ (Executive Directors andNon-executive
Directors) in this section2.2.3.Contents | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | Mike Henry | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 67 | | | | 20 | |
| | Andrew Mackenzie | | | 0 | | | | 10 | | | | 100 | | | | – | | | | – | | | | – | |
| | Terry Bowen | | | 2 | | | | 33 | | | | | | | | 17 | | | | (90 | ) | | | | |
| | Malcolm Broomhead | | | (5 | ) | | | (53 | ) | | | | | | | (3 | ) | | | (84 | ) | | | | |
| | Xiaoqun Clever (2) | | | 0 | | | | 0 | | | | | | | | 0 | | | | 0 | | | | | |
| | Ian Cockerill (2) | | | 0 | | | | 0 | | | | | | | | 0 | | | | (100 | ) | | | | |
| | Anita Frew | | | 0 | | | | (2 | ) | | | | | | | 0 | | | | (96 | ) | | | | |
| | Gary Goldberg (2) | | | 0 | | | | 0 | | | | | | | | 14 | | | | (87 | ) | | | | |
| | Carolyn Hewson (3) | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | |
| | Susan Kilsby (2) | | | 0 | | | | 0 | | | | | | | | 7 | | | | (99 | ) | | | | |
| | Ken MacKenzie | | | 0 | | | | 25 | | | | | | | | 0 | | | | (90 | ) | | | | |
| | Lindsay Maxsted (3) | | | (2 | ) | | | (44 | ) | | | | | | | 0 | | | | 0 | | | | | |
| | John Mogford | | | 6 | | | | 13 | | | | | | | | 8 | | | | (97 | ) | | | | |
| | Christine O’Reilly (2) | | | 0 | | | | 0 | | | | | | | | 0 | | | | 0 | | | | | |
| | Shriti Vadera (3) | | | 0 | | | | 0 | | | | | | | | 0 | | | | 0 | | | | | |
| | Dion Weisler (2) | | | 0 | | | | 0 | | | | | | | | 0 | | | | 0 | | | | | |
| | | | | 2 | | | | (7 | ) | | | 43 | | | | 3 | | | | (36 | ) | | | 3 | |
(1) | The per cent changes for Mike Henry from FY2019 to FY2020 are zero due to his appointment as CEO on 1 January 2020. The per cent changes for Mike Henry from FY2020 to FY2021 are based on annualised FY2020 figures. The per cent changes for Andrew Mackenzie from FY2019 to FY2020 are based on annualised FY2020 figures.
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(2) | The per cent changes in remuneration from FY2019 to FY2020 are zero as there were no changes made to the remuneration ofNon-executive
Directors who joined the Board during FY2019 (Ian Cockerill and Susan Kilsby both joined on 1 April 2019). The per cent changes in remuneration from FY2020 to FY2021 are zero as there were no changes made to the remuneration ofNon-executive
Directors who joined the Board in FY2021 (Xiaoqun Clever and Christine O’Reilly joined on 1 October 2020 and 12 October 2020 respectively). The per cent changes for Gary Goldberg and Dion Weisler from FY2020 to FY2021 are based on annualised FY2020 figures as they joined the Board on 1 February 2020 and 1 June 2020 respectively. |
(3) | The per cent changes in remuneration from FY2019 to FY2020 for Carolyn Hewson are zero as there were no changes made to her remuneration up to the date of her retirement from the Board on 7 November 2019. The per cent changes for Lindsay Maxsted and Shriti Vadera from FY2020 to FY2021 are zero as there were no changes made to their remuneration up to the date of their retirement from the Board on 4 September 2020 and 15 October 2020 respectively.
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(4) | The majority of the amounts disclosed for benefits forNon-executive
Directors are usually travel allowances (amounts of between US$ nil and US$90,000 for FY2020), however, theCOVID-19
pandemic restrictedNon-executive
Director travel during FY2021. |
As BHP is a global companyThe FY2022 CEO pay ratio, calculated using the reported total fixed and our UK employees represent less than 1 per cent ofvariable remuneration above for the CEO, and compared to the median remuneration for all of our employees worldwide these disclosures are voluntary, and we have chosen to amend the comparison to all employees, an approach that is still compliant with UK requirements.
The table below shows the CEO pay ratios, calculated using the reported single total figure of remuneration, and compared to employees at the 25th
percentile, Median and 75th
percentile using Option A methodology as set out under UK requirements.
Option A uses the full-time equivalent base salary and benefits paid during the year as it is the most accurate reflection of employee pay as a direct comparison to the single total figure of remuneration for the CEO. The FY2021 CEO remuneration used in the calculation is the reported single total figure of remuneration data for Mike Henry.was 123:1 (FY2021 – 130:1). The remuneration calculation for all employees is based on actual earnings for the 12 months to 31 March
2021,2022, including annual incentive payments for employees calculated using the Group performance outcome, and vested equity received if applicable. Pension contributions are calculated as the total cost of contributions made by the Group over the
12-month
period. Employees on international assignments have been excluded from the analysis as their remuneration structures are generally not consistent with the
single total figure of remuneration
forreceived by the
CEO. The FY2020 CEO
remuneration usedas noted in the
calculation is a combination of reported single total figure of remuneration data for Mike Henry and Andrew Mackenzie, recognising the transition in CEO leadership during FY2020.table above.The FY2021FY2022 ratio of 129:123:1 at the median compared to the FY2020FY2021 ratio of 81:130:1 reflects the proportion of the CEO’s pay being more heavily weighted to variable pay, including share-based long-term incentives, than for other employees. Specifically, theThe change from FY2020FY2021 to FY2021FY2022 is driven by a higher FY2021 CDP outcome of 115 per cent against a target of 100 per cent compared to thelower FY2022 CDP outcome of 96 per cent (FY2021: 115 per cent) for the CEO, a higher value of the CEO’s vested LTIP award in FY2020, together withFY2022 compared to FY2021 and an increase in the 100 per cent LTIP vestingmedian remuneration for FY2021 at a BHP Group Limited share priceall of A$47.70 per share, whereas there was 48 per cent LTIP vesting for FY2020 at a BHP Group Limited share price of A$39.06 per share.our employees worldwide.
The Group believes the median pay ratio reflects the diversity of our global business footprint and employee population. BHP’s remuneration policies and practices are based on a high degree of alignment and consistency, with total remuneration at all levels providing a competitive package that enables the attraction and retention of talent while also providing
at-risk
remuneration based on performance.
Remuneration for the CEO in3.2 FY2022 CDP performance outcomes
The remuneration forBoard and the CEO in FY2022 will be in accordance withCommittee assessed the remuneration policy approved by shareholders at the AGMs in 2019.
Base salary is reviewed annually and increases are applicable from 1 September. The CEO commenced in the role on 1 January 2020 and did not receive a base salary increase in September 2021 and it will remain unchanged at US$1.700 million per annum for FY2022. The CEO’s base salary will be kept under review in future years to ensure it remains competitive, especiallyExecutive KMP’s CDP outcomes in light of recent movementthe Group’s performance in exchange ratesFY2022 and took into account performance against the US dollar.
measures in each Executive KMP’s CDP scorecard. For the CEO, the Board and the Committee determined a CDP outcome for FY2022 CDP performance measures
For FY2022,at 96 per cent against the Remunerationtarget of 100 per cent (which represents an outcome of 64 per cent against maximum). The Board and Committee has setbelieve this outcome is appropriately aligned with the following CDP scorecard performance measures:
| | | | | | |
| | | | | |
| | | 25 | % | | The following HSEC performance measures are designed to incentivise achievementshareholder experience and the interests of the Group’s public five-year HSEC targets.
Significant events (10%): No significant (actual level 4) health, safety (including fatalities), environment or community events during the year, implementation of sexual assault and sexual harassment controls, and design of cultural heritage controls.
Climate change (10%): Reported GHG emissions in FY2022 are below the FY2017 level. A majority of planned decarbonisation projects are presented for tollgates and all asset adaptation plans are updated. Work undertaken as planned under partnerships with strategic customers in the steel sector established in FY2021, one more partnership formalised, and a review of Scope 3 goals and estimation methodologies completed.
Management of priority tailings storage facilities (5%): All priority tailings storage facilities are assessed based on key risk indicator data, and are either within appetite or continued operation outside appetite is approved with remediation progressing to plan.
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| | | 50 | % | | ROCE is underlying profit after taxation (excluding after-taxation finance costs and exceptional items) divided by average capital employed. When we are assessing management’s performance, we make adjustments to the ROCE result to allow for changes in commodity prices, foreign exchange movements and other material items to ensure the assessment appropriately measures outcomes that are within the control and influence of the Group and its executives.
For reasons of commercial sensitivity, the target for ROCE will not be disclosed in advance; however, we plan to disclose targets and outcomes retrospectively in our next Remuneration Report, following the end of each performance year. In the rare instances where this may not be prudent on grounds of commercial sensitivity, we will explain why and give an indication of when they will be disclosed.
|
| | | 25 | % | | The CEO’s individual measures for FY2022 comprise contribution to BHP’s overall performance and the management team and the delivery of projects and initiatives within the scope of the CEO role as set out by the Board. These include projects and initiatives in respect of social value (long term growth in value and returns for all stakeholders), people (right people, right skills, coming together in the right way to support exceptional performance), performance (material improvement in the system that supports exceptional performance) and portfolio (material progress on our strategic objectives to create a winning portfolio and set BHP up for the next 20 years).
These performance measures are aligned with medium and long-term strategy aspirations that are intended to drive long-term value for shareholders and other stakeholders.
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The maximum face value of the CEO’s LTIP award under the remuneration policy approved by shareholders at the 2019 AGMsCDP scorecard outcome for FY2022 is US$3.400 million, being 200 per cent of the CEO’s base salary. The number of LTIP awards in FY2022 has been determined using the share price and US$/A$ exchange rate over the 12 months up to and including 30 June 2021. Based on this, a FY2022 grant of 107,183 LTIP awards is proposed and approval for this LTIP grant will be sought from shareholders at the 2021 AGMs. If approved, the award will be granted following the AGMs (i.e. in or around November/December 2021 subject to securities dealing considerations). The FY2022 LTIP award will use the same performance and service conditions and comparator groups as the FY2021 LTIP award.
Remuneration for other Executive KMP (excluding the CEO)The information in this section contains details of the remuneration policy that guided the Remuneration Committee’s decisions and resultedsummarised in the remuneration outcomes for other Executive KMP (excluding the CEO). The remuneration policy and structures for other Executive KMP are essentially the same as those already described for the CEO in previous sections of the Remuneration Report,following tables, including the treatment of remuneration on loss of office as detailed in ‘Service contracts and policy on loss of office’ in section 2.2.2.
Components of remuneration
The components of remuneration for other Executive KMP are the same as for the CEO, with any differences described below.
The CDP performance measures for other Executive KMP for FY2021 are similar to those of the CEO, which are outlined in ‘FY2021 CDP performance outcomes’ in this section 2.2.3; however, the weightinga narrative description of each performance measure will vary to reflect the focus required from each Executive KMP role.
Individual performance measures are determined at the start of the financial year. These include the other Executive KMP’s contribution to the delivery of projects and initiatives within the scope of their role and the overall performanceCEO’s level of the Group. Individual performance of other Executive KMP was reviewed against these measuresachievement, as determined by the Committee and on average, was considered slightly above target.
The diagram below represents the FY2021 CDP weightings and outcomes against the original scorecard.
LTIP awards granted to other Executive KMP for FY2022 will be calculated in accordance with the remuneration policy approved by shareholders in 2019. Awardsthe Board. The level of performance for other Executive KMP will have a maximum face value of 175 per cent of base salary, which is a fair value of 72 per cent of base salary under the current plan design (with a fair value of 41 per cent, taking into account the performance condition: 175 per cent x 41 per cent = 72 per cent).
Other Executive KMP who were promoted from executive roles within BHP may hold MAP awards that were granted to them in respect of their service innon-KMP
roles.Other Executive KMP are eligible to participate in Shareplus. For administrative simplicity, Executive KMP, including the CEO, do not currently participate in Shareplus. No Executive KMP, including the CEO, had any holdings under the Shareplus program during FY2021.
A significant portion of other Executive KMP remuneration isat-risk,
in order to provide strong alignment between remuneration outcomes and the interests of BHP shareholders.The diagram below sets out the relative mix of each remuneration component for the other Executive KMP for FY2021. Each componentmeasure is determined as a percentage of base salary (at the minimum, target and maximum levels of performance-based remuneration).
(1) | Base salary earned by each Executive KMP is set out in ‘Executive KMP remuneration table’ in this section 2.2.3.
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(2) | Retirement benefits are 10 per cent of base salary for other Executive KMP, with the exception of Geraldine Slattery.From FY2021, contribution rates for Geraldine reduced to 20 per cent of base salary in accordance with the remuneration policy approved by shareholders at the 2019 AGMs (progressive reduction to 10 per cent of base salary as follows: 15 per cent of base salary from 1 July 2021; and 10 per cent of base salary from 1 July 2022 onwards). For any new Executive KMP appointments, the pension contribution rate will be 10 per cent of base salary immediately. |
(3) | Other benefits are based on a notional 10 per cent of base salary.
|
(4) | As for the CEO, the minimum CDP award is zero, with a cash award of 80 per cent of base salary plus two awards of deferred shares each of equivalent value to the cash award, vesting in two and five years respectively, for target performance on all measures, and a maximum cash award of 120 per cent base salary plus two awards of deferred shares each of equivalent value to the cash award, vesting in two and five years respectively.
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(5) | Other Executive KMP have a maximum LTIP award with a face value of 175 per cent of base salary.
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The terms of employment for other Executive KMP are formalised in employment contracts, which have no fixed term. They typically outline the components of remuneration paid to the individual, but do not prescribe how remuneration levels are to be modified from year to year. Other Executive KMP’s employment contracts may be terminated by BHP on up to 12 months’ notice or can be terminated immediately by BHP making a payment of up to 12 months’ base salary plus pension contributions for the relevant period. Other Executive KMP must give up to 12 months’ notice for voluntary resignation.
Arrangements for KMP leaving and joining the Group
The arrangements for Executive KMP leaving the Group are within the approval provided by shareholders at the 2020 AGMs in regard to Australian termination benefits legislation, including the provision of performance-based remuneration in accordance with the rules of the relevant incentive plans.
Peter Beaven stepped down from his role as Chief Financial Officer on 30 November 2020 and exited BHP on 28 February 2021. Daniel Malchuk stepped down from his role as President Minerals Americas on 31 October 2020 and exited BHP on 31 December 2020. Peter and Daniel received base salary, pension contributions, prorated CDP, statutory leave entitlements and applicable benefits up to the dates of their exit from BHP.
Peter and Daniel received a part payment in lieu of notice upon exit and have been paid or will receive in the future the value of pension funds that they have accumulated during their service with the Group. When determining the Executive KMP CDP awards for FY2021, the Remuneration Committee resolved that Peter and Daniel would each receive a prorated FY2021 CDP award in the form of cash based on their performance (covering the cash andtwo-year
deferred share components, but not the five-year deferred share component). No deferral period will apply in respect of these CDP awards.All unvested FY2019 STIP and FY2020 CDPtwo-year
deferred share awards allocated to Peter and Daniel remained on foot on termination. FY2019 STIP deferred share awards vested in August 2021 and FY2020 CDPtwo-year
deferred share awards will not vest until August 2022. Peter’s and Daniel’s unvested LTIP awards and CDP five-year deferred shares were prorated to reflect the percentage of the performance period to 28 February 2021 for Peter and 31 December 2020 for Daniel. The vesting of the retained prorated LTIP awards will be determined by the Committee at the relevant time in future years and will only vest to the extent the performance conditions are met at the end of each five-year performance period. The vesting of LTIP awards and CDP five-year deferred share awards are subject to the Committee’s ability to reduce vesting through its discretion under the plan rules.David Lamont joined BHP as Chief Financial Officer on 1 December 2020. David left his former employer, CSL Limited, a major Australian company listed on the Australian Stock Exchange, on 30 October 2020. As a consequence of his resignation certain CSL incentive awards, which were expected to have been paid or vested in 2021 and beyond, were foregone.
Replacement BHP awards have been provided in accordance with BHP’s remuneration policy (approved by shareholders in 2019 with almost 94 per cent support) under which a new senior executive appointed from outside BHP can be provided cash and/or BHP equity awards to replace any remuneration forfeited or not received from the former employer. In accordance with that policy, remuneration that David forfeited or did not receive as a consequence of leaving CSL to join BHP has been partly replaced as set out in the table below.
The value of the BHP awards is less than the fair value of the awards foregone (as confirmed by the Committee’s independent adviser), and the duration of the BHP awards is longer, on average, than those they replace. The Committee has determined appropriate service and performance conditions within BHP’s framework, considering the vesting status of the conditions attached to the foregone awards. As always, the Committee has been mindful of limiting such payments and not providing any more compensation than is necessary and, under BHP’s incentive plans, retains the right to adjust vesting outcomes where an inappropriate benefit would be received.
The BHP awards provided are set out in the table below.
| | | | | | | | | | |
| | | | | | | | | | |
| | US$300,000 | | September 2021(1)
| | September 2022(1)
| | Nil | | Replaces a cash bonus payment foregone that would have been payable in September 2021 |
| | 77,000 | | August 2022(2)
| | August 2023(2)
| | Service and performance conditions, being subject to a holistic assessment of underlying financial performance of BHP and personal performance of David during the vesting period | | Partly replaces equity awards foregone that would have been paid and vested to David in 2021 and beyond |
(1) | Should David voluntarily resign or retire during the holding lock period, or be terminated for cause, the cash payment would become repayable on apro-rata
basis. |
(2) | Upon performance shares vesting in August 2022, a holding lock will apply to the vested shares until August 2023, at which time they will be released to David. Should David voluntarily resign or retire during the holding lock period, or be terminated for cause, the shares subject to the holding lock will be forfeited.
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Remuneration forNon-executive
DirectorsThe remuneration outcomes described below have been provided in accordance with the remuneration policy approved by shareholders at the 2019 AGMs. The maximum aggregate fees payable toNon-executive
Directors (including the Chair) were approved by shareholders at the 2008 AGMs at US$3.800 million per annum. This sum includes base fees, Committee fees and pension contributions. Travel allowances andnon-monetary
benefits are not included in this limit.Single total figure of remuneration
This section shows a single total figure of remuneration as prescribed under UK requirements. It is a measure of actual remuneration. Fees include the annual base fee, plus additional fees as applicable for the Senior Independent Director, Committee Chair and Committee memberships.Non-executive
Directors do not have any performance-basedat-risk
remuneration or receive any equity awards as part of their remuneration, therefore the totals shown below are total remuneration and total fixed fees. This table also meets the requirements of the Australian Corporations Act 2001 and relevant accounting standards. | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 187 | | | | 40 | | | | 10 | | | | 237 | |
| | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 201 | | | | 19 | | | | 11 | | | | 231 | |
| | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 220 | | | | 90 | | | | – | | | | 310 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 220 | | | | 47 | | | | – | | | | 267 | |
| | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 90 | | | | 15 | | | | – | | | | 105 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 205 | | | | 83 | | | | – | | | | 288 | |
| | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 866 | | | | 40 | | | | 14 | | | | 920 | |
| | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 205 | | | | 18 | | | | 11 | | | | 234 | |
| | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 199 | | | | 69 | | | | – | | | | 268 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 253 | | | | 48 | | | | – | | | | 301 | |
| | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 15 | | | | – | | | | 1 | | | | 16 | |
(1) | The majority of the amounts disclosed for benefits forNon-executive
Directors are usually travel allowances (amounts of between US$ nil and US$90,000 for FY2020) however, theCOVID-19
pandemic restrictedNon-executive
Director travel during FY2021. For FY2021, amounts of between US$ nil and US$3,500 are included in respect of tax return preparation; and amounts of between US$ nil and US$2,500 are included in respect of the reimbursement of the tax cost associated with the provision of taxable benefits. |
(2) | BHP Group Limited made minimum superannuation contributions of up to 9.5 per cent of fees for FY2021 in accordance with Australian superannuation legislation. No other pension contributions were paid.
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(3) | The FY2020 remuneration for Gary Goldberg and Dion Weisler relates to part of the year only, as they joined the Board on 1 February 2020 and 1 June 2020 respectively. The FY2021 remuneration for Xiaoqun Clever and Christine O’Reilly relates to part of the year only, as they joined the Board on 1 October 2020 and 12 October 2020 respectively.
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(4) | The FY2020 remuneration for Carolyn Hewson relates to part of the year only, as she retired from the Board on 7 November 2019. The FY2021 remuneration for Lindsay Maxsted and Shriti Vadera relates to part of the year only, as they retired from the Board on 4 September 2020 and 15 October 2020 respectively.
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Non-executive
Directors’ remuneration in FY2022In FY2022, the remuneration for theNon-executive
Directors will be paid in accordance with the remuneration policy approved by shareholders at the 2019 AGMs (which is unchanged from the remuneration policy forNon-executive
Directors approved by shareholders at the 2017 AGMs). Fee levels for theNon-executive
Directors and the Chair are reviewed annually. The review includes benchmarking against peer companies, with the assistance of external advisers.From 1 July 2017, the Chair’s annual fee was reduced by approximately 8 per cent from US$0.960 million to US$0.880 million and will remain at that level for FY2022. This fee reduction was in addition to the reduction of approximately 13 per cent from US$1.100 million to US$0.960 million effective 1 July 2015. Base fee levels forNon-executive
Directors will remain at the reduced levels that took effect from 1 July 2015, at which time they were reduced by approximately 6 per cent from US$0.170 million to US$0.160 million per annum.The below table sets out the annualised fee levels for FY2022.
| | | | |
Levels of fees and travel allowances forNon-executive
Directors (in US$) | | | |
| | | 160,000 | |
| | | | |
Plus additional fees for:
| | | | |
Senior Independent Director of BHP Group Plc
| | | 48,000 | |
| | | | |
| | | | |
| | | 60,000 | |
| | | 45,000 | |
| | | 45,000 | |
Nomination and Governance
| | | No additional fee | |
| | | | |
| | | | |
| | | 32,500 | |
| | | 27,500 | |
| | | 27,500 | |
Nomination and Governance
| | | 18,000 | |
| | | | |
| | | | |
Greater than 3 but less than 10 hours
| | | 7,000 | |
| | | 15,000 | |
| | | | |
| | | 880,000 | |
| | | | |
(1) | In relation to travel for Board business, the time thresholds relate to the flight time to travel to the meeting location (i.e. one way flight time). Only one travel allowance is paid per round trip.
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Board oversight and the Remuneration Committee
The Board is responsible for ensuring the Group’s remuneration arrangements are equitable and aligned with the long-term interests of BHP and its shareholders. In performing this function, it is critical the Board is independent of management when making decisions affecting remuneration of the CEO, other Executive KMP and the Group’s employees.
The Board has therefore established a Remuneration Committee to assist it in making such decisions. The Committee is comprised solely ofNon-executive
Directors, all of whom are independent. To ensure it is fully informed, the Committee regularly invites members of management to attend meetings to provide reports and updates; however, members of management are not present when decisions are considered or taken concerning their own remuneration. The Committee can draw on services from a range of
external sources, including remuneration advisers.threshold (the minimum necessary to qualify for any reward outcome), target (where the performance requirements are met), and maximum (where the performance requirements are significantly exceeded).The activities of the
Remuneration Committee are governed by
its Terms of Reference
(updated version approved by the Board in April 2021), which
areis available at bhp.com. The current members of the
Remuneration Committee are: Christine O’Reilly
(Remuneration(Chair), Catherine Tanna (member from 4 April 2022) and Dion Weisler. The following present and formerNon-executive
Directors served as members of the Committee
Chair)during the year: Gary Goldberg (member to 17 June 2022), Anita Frew
Gary Goldberg,(member to 11 November 2021) and Susan Kilsby
and Dion Weisler.(member to 11 November 2021). The role and focus of the Committee and details of meeting attendances can be found in
section 2.1. Other Directors2.2 Directors’ Report.Key decisions and employees who regularly attended meetings were: Ken MacKenzie (Chair), Mike Henry (CEO), Athalie Williams (Chief People Officer), Andrew Fitzgerald (Vice President Reward), Caroline Cox (Group Company Secretary to 31 October 2020), Stefanie Wilkinson (Group Company Secretary from 1 March 2021), Geof Stapledon (Vice President Governance to 31 March 2021), and Prakash Kakkad (Head of Group Governance from 1 June 2021). These individuals were not present when decisions regarding their own remuneration were considered or taken.
When determining executive director remuneration practices, the Remuneration Committee considers any decisions in the contextactivities of the principles of the 2018 UK Corporate Governance Code, including:Committee during FY2022 included:
| | |
Principleconsidering and approving remuneration for members of the ELT | | How the Remuneration Committee has applied the principle
|
| | BHP engages proactively with shareholders on remuneration matters. Feedback from shareholders is used by the Remuneration Committee in its decision-making in respect of the remuneration policy and its application. The Group also conducts regular employee engagement surveys which give employees an opportunity to provide feedback on a wide range of employee matters. Many employees are also ordinary shareholders through Shareplus and therefore have the opportunity to share their views as shareholders. |
| | The purpose, structure and strategic alignment of each element of remuneration is clearly set out in section 2.2.2. |
| | A significant portion of variable remuneration isat-risk
in order to provide strong alignment between remuneration outcomes and the interests of BHP shareholders. The delivery oftwo-thirds
of CDP awards in deferred shares and the LTIP five-year performance period help to align the long-term interests of the CEO and shareholders. |
| | The remuneration opportunities under different performance scenarios (minimum, target and maximum) are set out in section 2.2.2. |
| | The CEO is incentivised to achieve stretching performance through the targets set under the CDP and LTIP. In addition, the Remuneration Committee has discretion to adjust formulaic outcomes downwards to ensure that poor performance is not rewarded. |
| | The FY2021 CDP performance measures for the CEO include a number of measures linked to culture including the delivery of social value plans for assets, improving gender diversity and embedding a new Engagement and Perception Survey system. We continue to focus on fostering a culture of respect and ensuring the workplace is safe at all times. |
176
setting targets for and reviewing outcomes against performance measures and conditions of relevant incentive plans, including the Committee considering its discretion over FY2022 plan outcomes
reviewing the fee for the BHP Chair, which remains unchanged
considering remuneration and remuneration reporting implications of unification and the merger of the Petroleum business and Woodside
reviewing and adopting changes and improvements flowing from regulatory requirements and guidance, which in turn helps us improve our processes and approaches
engaging with shareholders and other key stakeholders
undertaking reviews of remuneration by gender and the annual Shareplus enrolment
Engagement of independent remuneration advisers
The Committee seeks and considers advice from independent remuneration advisers where appropriate. Remuneration consultants are engaged by and report directly to the Committee. Potential conflicts of interest are taken into account when remuneration consultants are selected and their terms of engagement regulate their level of access to, and require their independence from, BHP’s management.
PricewaterhouseCoopers wasPwC has been appointed by the Committee in March 2016 to act as an independent remuneration adviser.
The PricewaterhouseCoopers team that advises the Remuneration Committee does not provide any other services to the Group. Other PricewaterhouseCoopers teams provide services to the Group in the areas of forensicadviser and general technology, internal audit and international assignment solutions. Processes and arrangements are in place to protect independence (for example, ring-fencing of teams) and to manage any conflicts of interest that may arise.
PricewaterhouseCoopers is currently the only remuneration adviser appointed by the Committee. In that capacity, they may provide remuneration recommendations in relation to KMP;KMP, however, they did not do soprovide any remuneration recommendations in FY2021.
Total fees paid to the PricewaterhouseCoopers team advising the Committee on remuneration-related matters for FY2021 were £177,300. These fees are based on an agreed fee for regular items with additional work charged at agreed rates. Total fees paid to PricewaterhouseCoopers for other services rendered to the Group for FY2021 were approximately US$31 million.FY2022.
Statement of voting at the 2020 AGMsKMP for FY2022
BHP’sThis Remuneration Report describes the remuneration
resolutionspolicies, practices, outcomes and governance for the KMP of BHP. At BHP, KMP consists of our Board (including the CEO), as well as certain members of our ELT who have
attracted a high levelauthority and responsibility for planning, directing and controlling the activities of
support by shareholders. Voting in regard to those resolutions put to shareholders at the
2020 AGMs is shown below.Group directly or indirectly. After due consideration, the Committee determined the KMP for FY2022 comprised allNon-executive
Directors and the following Executive KMP: the CEO, the Chief Financial Officer, the President Minerals Australia, the President Minerals Americas and the Senior Executive Officer (i.e. President Petroleum until 31 May 2022).The following individuals have held their positions and were KMP for the whole of FY2022, unless stated otherwise:
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Remuneration Report (excluding remuneration policy (2) ) | | | UK | | | | 95.8 | | | | 4.2 | | | | 4,630,094 | |
Remuneration Report (whole Report) | | | Australia | | | | 95.7 | | | | 4.3 | | | | 4,961,722 | |
Approval of grants to Executive Director | | | Australia | | | | 98.5 | | | | 1.5 | | | | 4,624,916 | |
Approval of leaving entitlements | | | Australia | | | | 99.3 | | | | 0.7 | | | | 5,029,752 | |
Mike Henry, CEO and Executive Director
Edgar Basto, President Minerals Australia
David Lamont, Chief Financial Officer
Geraldine Slattery, President Petroleum from 1 July 2021 to 31 May 2022 and Senior Executive Officer from 1 June to 30 June 2022
Ragnar Udd, President Minerals Americas
Non-executive
Directors – for detailsofNon-executive
Directors, including dates of appointment or cessation (where relevant), refer to 2.2 Directors’ Report.
BHP has an overarching remuneration framework that guides the Committee’s decisions and is designed to support our strategy and reinforce our culture and values.
2.1 How the remuneration framework is set
The Committee sets the remuneration framework for the Executive KMP, including the CEO. The Committee is briefed on and considers prevailing market conditions, the competitive environment and the positioning and relativities of pay and employment conditions across the wider BHP workforce. The Committee takes into account the annual base salary increases for our employee population when determining any change in the Executive KMP’s base salary. The salary increases in locations where our Executive KMP are based are particularly relevant when reviewing their remuneration to ensure that their remuneration also reflects the local economic conditions.
The principles that underpin the remuneration framework for Executives are the same as those that apply to other employees, however Executive KMP arrangements have a greater emphasis on and a higher proportion of remuneration that is at risk as performance-related variable pay. The performance measures used to determine variable pay outcomes for the Executive KMP and all other employees are linked to the delivery of our strategy and behaviours that are aligned tovalues As part of the Board’s commitment to good governance, the Committee considers shareholder views and those of the wider community when setting the remuneration framework for the Executive KMP. We are committed to engaging and communicating with shareholders regularly and, as our shareholders are spread across the globe, we are proactive with our engagement on remuneration and governance matters with institutional shareholders and investor representative organisations. Feedback from shareholders and investors is used as input into decision-making by the Board and the Committee in relation to our remuneration framework and its application. The Committee considers that this approach provides a robust mechanism to ensure Directors are aware of matters raised, have a deep understanding of current shareholder views and can formulate frameworks and make decisions as appropriate. We encourage shareholders to make their views known to us by directly contacting our Investor Relations team (contact details available at bhp.com).
2.2 Remuneration framework operation
Our approved remuneration policy was adopted by shareholders in 2019 for a three-year period in accordance with UK requirements and following the unification of our corporate structure in early 2022 BHP is no longer required to have our policy approved by shareholders every three years. However, the following table shows the current components of our remuneration framework, which is consistent with the prior approved remuneration policy.
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Purpose and link to strategy | | Market competitive fixed remuneration is paid in order to attract, motivate and retain high-quality and experienced executives, and provide appropriate remuneration for these important roles in the Group. | | The CDP encourages and focuses executives’ efforts for the relevant financial year on the delivery of the Group’s strategic priorities, balancing financial and non-financial performance, to deliver short, medium and long-term success aligned to our purpose and, and to motivate executives to strive to achieve stretch performance objectives. | | The purpose of the LTIP is to focus executive’s efforts on the achievement of sustainable long-term value creation and success of the Group (including appropriate management of business risks). |
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Remuneration components and link to performance | | Fixed remuneration comprises base salary, pension contributions and benefits. Competitive fixed remuneration is aligned to global complexity, size, reach and industry, and reflects executives’ responsibilities, location, skills, performance, qualifications and experience. | | Annual variable pay opportunity linked to execution of business strategy. A balanced scorecard of short, medium and long-term elements including HSEC (25% weighting), financial (50% weighting) and individual performance measures (25% weighting) are chosen on the basis that they are expected to have a significant short, medium and long-term impact on the success of the Group, with appropriate targets for each measure which will appropriately motivate Executive KMP to achieve outperformance that contributes to the long-term sustainability of the Group and shareholder wealth creation. | | Annual long-term variable pay opportunity based on grants of five-year performance rights designed to align executives’ reward with sustained shareholder wealth creation in excess of relevant comparator group(s), through the relative TSR performance condition. Relative TSR has been chosen as an appropriate measure as it enables an objective external assessment over a sustained period on a basis that is familiar to shareholders. |
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Assessment of performance | | Achievement against each scorecard measure is assessed by the Committee and the Board, with guidance provided by other relevant Board Committees in respect of HSEC, financial and other measures, and a CDP award determined. If performance is below the threshold level for any measure, no CDP award will be provided in respect of that portion of the CDP award opportunity. In the event the Committee does not consider the outcomes that would otherwise apply to be a true reflection of the performance of the Group or should it consider that individual performance or other circumstances makes this an inappropriate outcome, it retains the discretion to not provide all or a part of any CDP award. This is an important mitigation against the risk of unintended award outcomes. | | Vesting of the LTIP award is dependent on BHP’s TSR relative to the TSR of relevant comparator group(s) over a five-year performance period. 25% of the award will vest where BHP’s TSR is equal to the median TSR of the relevant comparator group(s), as measured over the performance period. Where TSR is below the median, awards will not vest. Vesting occurs on a sliding scale between the median TSR of the relevant comparator group(s) up to a nominated level of TSR outperformance over the relevant comparator group(s), as determined by the Committee, above which 100% of the award will vest. Where the TSR performance condition is not met, there is no retesting and awards will lapse. The Committee also retains discretion to lapse any portion or all of the award where it considers the vesting outcome is not appropriate given Group or individual performance. This is an important mitigation against the risk of unintended outcomes. |
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| | CDP awards are provided as cash and two awards of deferred shares, each of equivalent value to the cash award, vesting in two and five years respectively. Awards of deferred shares comprise rights to receive ordinary BHP shares in the future at the end of the deferral periods. Before the awards vest (or are exercised), these rights are not ordinary shares and do not carry entitlements to ordinary dividends or other shareholder rights; however, a DEP is provided on vested awards. The Committee has a discretion to settle CDP awards in cash. Vesting of five-year deferred shares under the CDP is underpinned by a holistic review of performance at the end of the five-year vesting period, including a review of HSEC performance, profitability, cash flow, balance sheet health, returns to shareholders, corporate governance and conduct over the five-year period. | | LTIP awards consist of rights to receive ordinary BHP shares in the future if the performance and service conditions are met. Before vesting (or exercise), these rights are not ordinary shares and do not carry entitlements to ordinary dividends or other shareholder rights; however, a DEP is provided on vested awards. The Committee has a discretion to settle LTIP awards in cash. Vesting of five-year performance rights under the LTIP is underpinned by a holistic review of performance at the end of the five-year performance period, including a review of HSEC performance, profitability, cash flow, balance sheet health, returns to shareholders, corporate governance and conduct over the five-year period. |
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| | On cessation of employment, a ‘good leaver’ 1 may receive apro-rated cash award based on performance for that year. For a ‘good leaver’, their unvested CDP deferred awards generally remain on foot (wholly or in part) unless the Committee determine otherwise. If the executive is not a ‘good leaver’, all unvested CDP deferred awards will lapse. | | On cessation of employment, for a ‘good leaver’ 1 their unvested LTIP awards generally remain on foot on termination and arepro-rated for the portion of the vesting period served. These awards are eligible for vesting in the ordinary course, subject to any applicable performance conditions. If the executive is not a ‘good leaver’, all unvested LTIP awards will lapse. |
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| | CDP awards (including cash and deferred share awards) and LTIP awards are subject to the Group’s malus and clawback policy (see below). |
(1)1 | The sum‘Good leaver’ treatment may apply where the reason for the cessation of votes marked ‘Vote withheld’ atemployment with BHP is due to forced early retirement, retrenchment or redundancy, termination by mutual agreement or retirement with the agreement of the Group, Plc’s 2020 AGM or such other circumstances that do not constitute resignation or termination for cause.
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As has been set out in prior Remuneration Reports, for many years we have had malus and clawback provisions in place. During FY2022, we enhanced our malus and clawback policy covering awards made from 2021 under the CDP and LTIP. This enhanced policy further clarified the circumstances in which the Committee is able to reduce or clawback awards, which include:
an error in the Group’s Financial Statements that requires a material downward restatement
performance of a participant, or of the business or of the Group does not justify vesting or where the participant’s conduct or performance has been in breach of their employment contract, any laws, rules, codes of conduct or policies applicable to them or the standards reasonably expected of a person in their position
misstatement or misrepresentation of the performance of the company
where any team, business area, member of the Group or profit centre in which the participant works or worked has been found guilty in connection with any regulatory investigation or has been in breach of any laws, rules, codes of conduct or policies applicable to it or the standards reasonably expected of it
an event that has had, or may have a material adverse effect on the value or reputation of any member of the Group
where the Committee determines there has been material damage to the Group’s social licence to operate
a catastrophic health, safety, environment or community event or events occurring in any part of the Group
an act, omission or event occurs which constitutes a material failure of risk management or of other operational systems and controls
a participant is found to have contributed to circumstances that give rise to a material loss for any Group Company
These malus and clawback provisions apply whether or not awards are made in the form of cash or equity, whether or not the equity has vested, and whether or not employment is ongoing.
The terms of employment for the CEO and Executive KMP are formalised in their employment contracts. The current contracts of the CEO and Executive KMP are not fixed term. BHP may choose to terminate a contract on up to 12 months’ notice. BHP can require an executive to work through the notice period or may terminate the individual’s contract immediately by paying base salary plus pension contributions in lieu of the notice period. The CEO and Executive KMP must provide up to 12 months’ notice for voluntary resignation.
Approach to recruitment and promotion
For external candidates that are appointed Executive KMP, the Committee may determine that it is appropriate to provide additional cash and/or equity components to replace any remuneration forfeited or not received from a former employer. It is anticipated any foregone equity awards would be replaced by equity. The value of the replacement remuneration would not be any greater than the fair value of the awards foregone or not received (as determined by the Committee’s independent adviser). The Committee would determine appropriate service conditions and performance conditions within BHP’s remuneration framework, taking into account the conditions attached to the foregone awards. The Committee is mindful of limiting such payments and not providing any more compensation than is necessary. For any internal Executive KMP appointment, any entitlements provided under former arrangements will be honoured and remain on foot according to their existing terms.
2.3 Potential remuneration outcomes
The Committee recognises market forces influence remuneration practices and it strongly believes the fundamental driver of remuneration outcomes should be performance. It also believes that overall remuneration should be fair to the individual, and remuneration levels should accurately reflect the CEO’s and other Executive KMP’s responsibilities and contributions, while aligning with the expectations of our shareholders and considering the positioning and relativities of pay and employment conditions across the wider BHP workforce.
The amount of remuneration actually received each year depends on the achievement of business and individual performance that generate sustained shareholder value. Before deciding on the final incentive outcomes for the CEO and other Executive KMP, the Committee first considers the achievement ofpre-determined
performance conditions. The Committee then applies its overarching discretion to determine what it considers to be a fair and commensurate remuneration level in order to decide if the outcome should be reduced. In this way, the Committee believes it can set a remuneration level for the CEO and other Executive KMP that is sufficient to incentivise and is also fair and commensurate with shareholder expectations and prevailing market conditions. The diagram below provides the scenarios for the potential total remuneration of the CEO and other Executive KMP at different levels of performance.
: consists of fixed remuneration, which comprises base salary, pension contributions (10 per cent of base salary) and other benefits (notional 10 per cent of base salary), details of which are set out in 5.1 KMP remuneration table. : consists of fixed remuneration, target CDP (a cash award of 80 per cent of base salary plus two awards of deferred shares each of equivalent value to the cash award, vesting in two and five years, respectively) and target LTIP. The LTIP target value in the chart above is based on the fair value of the award, which is 41 per cent of the face value of 200 per cent of base salary for the CEO and 175 per cent for other Executive KMP. The potential impact of future share price movements is not included in the value of deferred CDP awards or LTIP awards.
: consists of fixed remuneration, maximum CDP (a cash award of 120 per cent of base salary plus two awards of deferred shares each of equivalent value to the cash award, vesting in two and five years respectively), and maximum LTIP (in the chart above based on the face value of 200 per cent of base salary for the CEO and 175 per cent for other Executive KMP). The potential impact of future share price movements is not included in the value of deferred CDP awards or LTIP awards. The maximum opportunity represented above is the most that could potentially be paid for each remuneration component. It does not reflect any intention by the Group to award that amount. In determining the maximum remuneration opportunity, the Committee reviews relevant benchmarking data and industry practices and believes the maximum remuneration opportunity is appropriate.
3 Remuneration for the CEO and other Executive KMP
3.1 FY2022 remuneration received by the CEO
The table below is a voluntarynon-statutory
disclosure of the remuneration received by the CEO during FY2022 and FY2021. This table is unaudited and differs from the audited remuneration calculated in accordance with the Australian Accounting Standards (refer to 5.1 KMP remuneration table and in Financial Statements note 25 Employee share ownership plans). The difference between the disclosure in the table below and remuneration calculated in accordance with Australian Accounting Standards relates to the CDP and LTIP. The remuneration calculated in accordance with Australian Accounting Standards require the fair value of the CDP and LTIP to be calculated at the time of grant and to be amortised over the relevant vesting periods regardless of the performance outcome. This may not reflect what the executive receives. In the table below, the CDP and LTIP values relate to the performance outcomes and actual amount received each year under the CDP (i.e. against the CDP scorecard) and the LTIP (i.e. the LTIP vesting outcome).
This table is designed to provide greater transparency for shareholders on the remuneration for the CEO during FY2022 and FY2021 as it has a stronger link to performance, with the CDP and LTIP included below representing those amounts that have been received as a consequence of satisfying performance conditions in the relevant financial year.
Details of the components of remuneration are contained in 2.2 Remuneration framework operation and the values in the table are explained further in the notes below.
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| | | FY2021 | | | | 1,700 | | | | 120 | | | | 170 | | | | 4,692 | | | | 7,939 | | | | 14,621 | |
| 1 | Benefits arenon-pensionable and votes marked ‘Abstain’ at BHP Group Limited’s 2020 AGM.include net movements in leave balances, private family health insurance, spouse business-related travel, car parking, fringe benefits tax and personal tax return preparation in required countries. |
| 2 | Mike Henry’s FY2022 and FY2021 pension contributions were provided based on 10 per cent of base salary. |
(2)3 | The values shown are the full CDP value (cash and deferred equity) earned as a consequence of performance during FY2022 and FY2021. The FY2022 CDP award will be providedone-third in cash in September 2022 andtwo-thirds in deferred equity, withone-third due to vest in FY2025 andone-third due to vest in FY2027 (on the terms of the CDP). The FY2021 CDP award was providedone-third in cash in September 2021 andtwo-thirds in deferred equity, withone-third due to vest in FY2024 andone-third due to vest in FY2026 (on the terms of the CDP). |
| 4 | The UK requirementMike Henry’s LTIP award values for approvalFY2022 and FY2021 (refer below) are based on the full awards he received in 2017 and 2016 respectively when he was President Operations, Minerals Australia (prior to becoming and with no proration applied for time as CEO), and 100 per cent of the remuneration policyawards vesting. For FY2022 the LTIP award value is calculated on the average share price for the month of July 2022 (which will be updated for the actual share price on the vesting date in the 2023 Remuneration Report); whereas the LTIP award value for FY2021 was metcalculated on the actual share price on the vesting date.
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A revised remuneration framework took effect from 1 July 2019 and significantly reduced the LTIP grant size for the CEO from 400 per cent of base salary (on a face value basis) to 200 per cent and a rebalancing to a CDP award with a long-term focus. As a result, the remuneration for Mike Henry reported above reflects the transition to this structure and includes the full amounts of the CDP award earned during FY2022 and FY2021 (i.e. irrespective that some elements of the CDP award are deferred) together with the full amounts of thepre-existing
LTIP awards vesting at the end of FY2022 and FY2021 which were granted in 2017 and 2016, respectively (i.e. when the LTIP award size was double the current grant size). Had the current remuneration framework been in place when Mike’s 2017 and 2016 LTIP awards were granted and a reduced size awarded, the reported LTIP values would have been US$4.356 million for FY2022 and US$3.970 million for FY2021 (instead of US$8.712 million and US$7.939 million in the table above). The reported total remuneration would have therefore been US$10.311 million for FY2022 and US$10.652 million for FY2021 (instead of US$14.667 million and US$14.621 million in the table above).
The FY2022 CEO pay ratio, calculated using the reported total fixed and variable remuneration above for the CEO, and compared to the median remuneration for all of our employees worldwide was 123:1 (FY2021 – 130:1). The remuneration calculation for all employees is based on actual earnings for the 12 months to 31 March 2022, including annual incentive payments for employees calculated using the Group performance outcome, and vested equity received if applicable. Pension contributions are calculated as the total cost of contributions made by the Group over the12-month
period. Employees on international assignments have been excluded from the analysis as their remuneration structures are generally not consistent with the remuneration received by the CEO as noted in the table above. The FY2022 ratio of 123:1 at the median compared to the FY2021 ratio of 130:1 reflects the proportion of the CEO’s pay being more heavily weighted to variable pay, including share-based long-term incentives, than for other employees. The change from FY2021 to FY2022 is driven by a lower FY2022 CDP outcome of 96 per cent (FY2021: 115 per cent) for the CEO, a higher value of the CEO’s vested LTIP award in FY2022 compared to FY2021 and an increase in the median remuneration for all of our employees worldwide.
The Group believes the median pay ratio reflects the diversity of our global business footprint and employee population. BHP’s remuneration policies and practices are based on a high degree of alignment and consistency, with total remuneration at all levels providing a competitive package that enables the attraction and retention of talent while also providingat-risk
remuneration based on performance. 3.2 FY2022 CDP performance outcomes
The Board and the Committee assessed the Executive KMP’s CDP outcomes in light of the Group’s performance in FY2022 and took into account performance against the measures in each Executive KMP’s CDP scorecard. For the CEO, the Board and the Committee determined a CDP outcome for FY2022 at 96 per cent against the target of 100 per cent (which represents an outcome of 64 per cent against maximum). The Board and Committee believe this outcome is appropriately aligned with the shareholder experience and the interests of the Group’s other stakeholders.
The CEO’s CDP scorecard outcome for FY2022 is summarised in the following tables, including a narrative description of each performance measure and the CEO’s level of achievement, as determined by the Committee and approved by the Board. The level of performance for each measure is determined based on a range of threshold (the minimum necessary to qualify for any reward outcome), target (where the performance requirements are met), and maximum (where the performance requirements are significantly exceeded).
Summary of outcomes for the CEO
The HSEC targets for the CEO are aligned to the Group’s 2030 public sustainability goals. As it has done for several years, when assessing HSEC performance against the scorecard targets, the Committee seeks guidance from the Sustainability Committee. The Committee has taken a holistic view of Group performance in critical areas, including considering any additional matters outside the scorecard targets that the Sustainability Committee has provided and considers relevant.
The performance commentary below is provided against the HSEC scorecard targets, which were set on the basis of operated assets only.
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| | | | Performance against scorecard targets | | |
| Significant events | | No significant (actual level 4) health, safety (including fatalities), environment or community events during the year. | | • There were no fatalities or other significant HSEC events during FY2022 at operated assets. • In addition, for a maximum outcome to be awarded, strong progress was required on the 2019 AGMs, wheredevelopment and implementation of controls in relation to the following outcomesFatality Elimination Program, sexual harassment and cultural heritage, and this was achieved in relation to the Fatality Elimination Program and cultural heritage for FY2022. While we continued to make progress on the implementation of our actions to eliminate sexual harassment during FY2022, we have more to do in FY2023. | | Between target and maximum. |
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| Climate change | | Reported GHG emissions in FY2022 are below the FY2017 level. A majority of planned decarbonisation projects are presented for tollgates and all asset adaptation plans are updated. Work undertaken as planned under partnerships with strategic customers in the steel sector established in FY2021, one more partnership formalised, and a review of Scope 3 goals and estimation methodologies completed. | | • For FY2022, we improved on our operational GHG emissions target of 14.6Mt, with an outcome of 12.5Mt1 , which was greater than 10% below the target (i.e. required for maximum). • Each region presented 90% of GHG reduction projects schedules and adaptation plans, updated for material changes, which were recorded:incorporated in the planning process. The completion of early stage development studies that contributed to the Group’s medium term target and financial and economic evaluation of physical climate change risks and adaptation measures (i.e. both required for maximum) was largely completed, with work continuing into FY2023. • During the year, we commenced Phase 1 work for each of the three strategic Memorandum of Understandings (MOUs) signed with steel customers in FY2021 (China Baowu (China), JFE Steel Corporation (Japan) and HBIS Limited (China)), including the commencement and delivery of work plans for each partnership. An additional steelmaking partnership MOU was signed with POSCO (South Korea) in October 2021, a 93.5 per cent vote ‘for’new customer partnership was signed focussed on plant trials with Zenith Steel (China), and a 6.5 per cent vote ‘against’review of BHP Scope 3 goals and methodology was completed. An industrial scale sinter plant emission reduction trial (i.e. required for maximum) was commenced with 23,166,578 votes withheld. This resolution was notZenith Steel in May 2022 relating to the optimisation stage of steel decarbonisation. | | Between target and maximum. |
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| Management of priority tailings storage facilities (TSFs) | | All priority TSFs are assessed based on key risk indicator data, and are either within appetite or continued operation outside appetite is approved with remediation progressing to plan. | | • All priority TSFs are within appetite based on key risk indicator data or continued operation outside appetite is approved with remediation progressing to plan. • We have continued improving our key risk indicator performance with 85% of all key risk indicators for priority TSFs rated either on target or less risk being taken than target, against a target of 85% and 90% required for maximum. | | Target. |
The outcome against the HSEC measure for FY2022 was 31 per cent out of the target of 25 per cent.
| 1 | As reported to the Sustainability Committee and Remuneration Committee meetings in 2020.early August 2022 and considered for the purposes of determining FY2022 CDP outcomes. The GHG emissions for FY2022 are subject to third-party verification. |
Financial
Other statutory disclosuresThis section provides detailsROCE is underlying profit after taxation (excluding after-taxation finance costs and exceptional items) divided by average capital employed. ROCE is the key financial measure against which CDP outcomes for our senior executives are measured and is, in our view, a relevant measure to assess the financial performance of any additional statutory disclosures required by Australian or UK regulations that have not beenthe Group for this purpose. While ROCE excludes exceptional items, the Committee reviews each exceptional item to assess if it should be included in the previous sectionsresult when determining the ROCE CDP outcome.
When we are assessing management’s performance, we make adjustments to the ROCE result to allow for changes in commodity prices, foreign exchange movements and other material items (from the levels assumed in setting the targets) to ensure the assessment appropriately measures outcomes that are within the control and influence of the Remuneration Report.Group and its executives. Of these, changes in commodity prices have historically been the most material due to volatility in prices and the impact on Group revenue and ROCE. As it has done for several years, the Committee seeks guidance each year from the Risk and Audit Committee when assessing financial performance against scorecard targets.
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| ROCE | | For FY2022, the target for ROCE was 38.1%, with a threshold of 33.5% and a maximum of 42.0%. Achievement of the ROCE target will result in a target CDP outcome. The ROCE target considers the upside opportunities and downside risks inherent in BHP’s businesses, and is an outcome that the Committee believes would be a level of performance that shareholders would view positively. The maximum and threshold are an appropriate range of ROCE outcomes, given the upside opportunities and downside risks, that represent an upper limit of stretch outperformance that would represent the maximum CDP award, and a lower limit of underperformance below which no CDP award should be made. The performance range around target is subject to a greater level of downside risk than there is upside opportunity, mainly due to physical and regulatory asset constraints. Accordingly, the range between threshold and target is somewhat greater than that between target and maximum. For maximum, the Committee takes care not to create leveraged incentives that encourage executives to push for short-term performance that goes beyond our risk appetite and current operational capacity. The Committee retains, and has a track record of applying, downward discretion (but not upwards discretion) to ensure the CDP outcome is appropriately aligned with the overall performance of the Group for the year, and is fair and equitable to management and shareholders. | | ROCE of 48.7% was reported by BHP for FY2022. Adjusted for the factors outlined below, ROCE is 36.3%, which is below target. The following adjustments were made to ensure the outcomes appropriately reflect the performance of management for the year: • The full elimination of the impacts of positive movements in commodities prices and exchange rates decreased ROCE by 6.9 percentage points. • Adjustments for other material items made to ensure the outcomes reflect the performance of management for the year decreased ROCE by 5.5 percentage points. This was mainly due to the elimination of the positive effect on reported ROCE outcomes of lower depreciation and lower asset values in the closing balance sheet due to the merger of the Petroleum business with Woodside and the sale of our interest in BMC. This downwards adjustment was necessary to ensure the basis of the ROCE outcome for CDP purposes was the same as the basis upon which Petroleum and our interest in BMC were included in the ROCE target for FY2022. • Having reviewed the FY2022 exceptional items (as described in Financial Statements note 3 Exceptional items), the Committee determined these should not be considered for the purposes of determining the FY2022 ROCE CDP outcome and that no further action was required in respect of exceptional items. The key drivers of the FY2022 ROCE outcome of 36.3% being below the target for FY2022 of 38.1% set at the commencement of the year were: • In Minerals Australia, production volumes were lower than expected mainly driven by labour and supply constraints across most assets associated withCOVID-19, delays in the ramp up of South Flank at Western Australian Iron Ore, labour availability issues and interrupted autonomous haulage rollout at BMA, and the longer than planned duration of the smelter maintenance campaign at Olympic Dam. In addition, input prices were higher across all assets. | | Below target. |
| | | | • In Minerals Americas, in addition to unplanned maintenance and higher input prices at all assets, production volumes were impacted by lower than expected recoveries at Pampa Norte due to plant design issues related to the Spence Growth Option and higher clay content, and lower than expected copper concentrator feed grade at Escondida. • In Petroleum, despite achieving planned production, sales volumes were lower than expected due to unfavourable timing, partly offset by better than expected cost performance. | | |
The outcome against the ROCE measure for FY2022 was 40 per cent out of the target of 50 per cent.
Individual measures for the CEO
Individual measures for the CEO are determined at the commencement of the financial year. The application of personal measures remains an important element of effective performance management. These measures seek to provide a balance between the financial andnon-financial
performance requirements that maintain our position as a leader in our industry. The CEO’s individual measures for FY2022 included contribution to BHP’s overall performance and the management team, and the delivery of projects and initiatives within the scope of the CEO role as specified by the Board, as set out in the table below. | | | | | | |
| | Individual scorecard targets | | Performance against scorecard targets | | |
| Social value | | Deliver a successful Say on Climate outcome at the 2021 AGMs. | | • The Climate Transition Action Plan/Say on Climate was successfully approved at the 2021 AGMs with 85% of votes in favour. | | Target. |
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| | Deliver an external update on BHP’s embedment and measurement of Social Value. | | • A Social Value Framework (SVF) was developed and approved by the Board in October 2021 and subsequently deployed across BHP. In June 2022, the SVF was presented to our workforce as well as externally via an investor roundtable, and both internal and external engagements were received positively. | | |
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| People | | Increase in female participation by three percentage points. | | • Female participation increased in FY2022 by 2.5 percentage points to 32.3% at 30 June 2022, compared to 29.8% at 30 June 2021. | | Below target. |
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| | Engagement and Perception Survey (EPS) improvement survey on survey over the year and substantively improve lower performing teams. | | • While most of our people continue to feel safe, engaged and enabled, our EPS results declined marginally in FY2022. The EPS results of lower performing teams were, on average, similar in FY2022 compared to the prior year, even though a number of lower performing teams did show improvement. | | |
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| Performance | | >90% of BHP Operating System (BOS) deployments on track, Operational Excellence Indicator (OEI) > 40 at 75% of sites at end of deployment, and > 75% improving OEI improvingfor other sites. | | • 94% of BOS deployments are on track according to plan. 88% of BOS sites at the end of deployment achieved an OEI score above the target of 40 (with an average OEI score of 43). 91% of sites already in deployment recorded animprovement over FY2022. | | Slightly above target. |
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| | Enable the data strategy and associated value creation through transforming data accuracy, consistency and access. | | • The data strategy has been reinforced to enable value creation through transformation of data accuracy, consistency and cloud-native access. We have also established a data analytics operating model which retains capabilities in the assets and functions whilst enabling standards and tool replication across the Group to remove duplication, and migrated 1SAP and an additional 78 applications to the cloud to unlock enhanced performance and enhance cybersecurity. | | |
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| Portfolio | | Progress the strategic review activities with respect to Petroleum, our interest in BMC and New South Wales Energy Coal as approved by the Board. | | • We made strong progress on strategic review activities as approved by the Board, including the merger of our Petroleum business with Woodside (completed in June 2022), and the divestments of our interests in Cerrejón (completed in January 2022) and BMC (completed in May 2022). In June 2022, we announced that we will retain New South Wales Energy Coal and will seek approval to continue mining through to cessation of operations in FY2030. | | Slightly above target. |
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| | Additional nickel and copper search spaces captured. | | • While we secured additional investments in nickel and copper projects, the public offer made for Noront Resources (nickel) was unsuccessful. | | |
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| | Continued maturation of the innovation and venture business units. | | • Our pursuit of innovation has progressed, with 60 innovation concepts generated for evaluation in FY2022. Strong progress also continues across ventures, with 9 investments executed during FY2022, while ventures also supported market intelligence in our strategic evaluations of new products and processes. | | |
Overall, it was considered the performance of the CEO against the individual measures for FY2022 had met expectations and warranted an outcome aligned to the target of 25 per cent.
The CDP performance measures for other Executive KMP for FY2022 are similar to those of the CEO outlined above. However, for the other Executive KMP, the weighting of each performance measure will vary to reflect the focus required from each Executive KMP role. As with the CEO, individual performance measures are determined at the start of the financial year. These include the other Executive KMP’s contribution to the delivery of projects and initiatives within the scope of their role and the overall performance of the Group. Individual performance of other Executive KMP was reviewed against these measures by the Committee and, on average, were considered to have met expectations and warranted an outcome aligned with target.
The diagram below represents the FY2022 CDP weightings and outcomes against the original scorecard for other Executive KMP.
3.3 FY2022 LTIP performance outcomes
The five-year performance period for the 2017 LTIP award for relevant Executive KMP ended on 30 June 2022. Vesting is subject to achievement of the relative TSR performance conditions and any discretion applied by the Committee (refer to 3.4 Overarching discretion and vesting underpin).
For the 2017 LTIP award to vest in full, BHP’s TSR over the performance period from 1 July 2017 to 30 June 2022 must be at or exceed the 80th percentile of the Sector Group TSR and the World TSR. TSR includes returns to BHP shareholders in the form of share price movements along with dividends paid and reinvested in BHP (including cash andin-specie
dividends). BHP’s TSR performance was positive 181.7 per cent over the five-year period from 1 July 2017 to 30 June 2022. This is above the 80th percentile of the Sector Group TSR of positive 168.7 per cent and above the 80th percentile of the World TSR of positive 128.8 per cent over the same period. This level of performance results in 100 per cent vesting for the 2017 LTIP award. The value of the CEO’s vested 2017 LTIP award has been reported in 3.1 FY2022 remuneration received by the CEO.
The graph below shows BHP’s performance relative to comparator groups.
The value of the vested 2017 LTIP award is higher than the value of the award at the time it was granted. With the share price having risen appreciably during the five-year period and strong dividends, 44 per cent of the value realised is due to the value at the time the awards were granted and 56 per cent is due to share price appreciation and dividends. This value increment due to share price appreciation and dividends is consistent with the experience of shareholders over the period.
3.4 Overarching discretion and vesting underpin
The rules of the CDP and LTIP and the terms and conditions of the awards provide the Committee with an overarching discretion to reduce the number of awards that will vest, notwithstanding that the performance condition or the relevant service conditions have been met.
This overarching discretion is a holistic, qualitative judgement and is applied as an underpin test before final vesting is confirmed. It is an important risk management tool to ensure vesting is not simply driven by a formula or the passage of time that may give unexpected or unintended remuneration outcomes.
The Committee considers its discretion carefully each year ahead of the scheduled vesting of CDP and LTIP equity awards in August. It considers performance holistically over the five-year period, including a five-year ‘look back’ on HSEC performance, profitability, cash flow, balance sheet health, returns to shareholders, corporate governance and conduct. For the five years from FY2018 to FY2022, the Committee noted BHP’s continued improvement in HSEC outcomes, strong operational performance with improving production and cost performance, and significant returns to shareholders, together with no governance or conduct issues of note.
Firstly, in respect of the vesting of CDPtwo-year
deferred shares (granted in November 2020 in respect of performance in FY2020), the Committee chose not to exercise its discretion and allowed the CDP awards to vest in full. Secondly, in respect of the vesting of the 2017 LTIP five-year performance shares, the formulaic outcome of the 2017 LTIP was 100 per cent vesting. Having undertaken the ‘look back’ review described above, the Committee concluded the vesting outcome was appropriate given Group and individual performance, and chose not to exercise its discretion and allowed 100 per cent of the LTIP awards to vest. There is no upwards discretion available to the Committee in respect of the LTIP and the overarching discretion may only reduce the number of awards that may vest.
3.5 Sign-on
performance sharesDavid Lamont joined BHP as Chief Financial Officer on 1 December 2020. David left his former employer, CSL Limited (CSL), a major Australian company listed on the Australian Stock Exchange, on 30 October 2020. As a consequence of his resignation, certain CSL incentive awards, which were expected to have been paid or vested in 2021 and beyond, were foregone. Replacement BHP awards were provided in accordance with BHP’s remuneration framework. In accordance with that policy, remuneration that David forfeited or did not receive as a consequence of leaving CSL to join BHP was partly replaced with 86,279 performance shares (i.e. 77,000 awards granted plus 9,279 additional uplift awards allocated as part of the merger of the Petroleum business with Woodside) and the Committee determined appropriate service and performance conditions.
The performance conditions were a holistic assessment of underlying financial performance of BHP and personal performance of David during the vesting period. At the time of grant, the target was 80 per cent vesting of awards, with a maximum of 100 per cent and a minimum of zero.
The service condition was satisfied and the Committee assessed the performance condition over the relevant performance period (1 December 2020 to 30 June 2022). The Committee considered BHP’s TSR, the CDP finance measure outcomes and David’s personal performance (with guidance on this assessment from the CEO).
In particular, the Committee considered the following information over the relevant period:
BHP’s relative TSR performance was slightly above the weighted median of BHP’s sector peers
BHP’s financial performance, as measured by the CDP finance measure outcomes, was slightly below target
the CEO’s view that David had performed in line with expectations in his role
The Committee exercised its discretion and determined to vest 80 per cent or 69,023 of the performance shares. The awards which will not vest will instead lapse. A holding lock will apply to the vested shares until August 2023, at which time they will be released to David. Should David voluntarily resign or retire during the holding lock period, or be terminated for cause, the shares subject to the holding lock will be forfeited.
3.6 LTIP allocated during FY2022
Following shareholder approval at the 2021 AGMs, 107,183 LTIP awards (in the form of performance rights) were granted to the CEO on 23 November 2021. The face value of the CEO’s award was 200 per cent of his base salary of US$1.700 million at the time of grant. The fair value of the awards is ordinarily calculated by multiplying the face value of the award by the fair value factor of 41 per cent (for the current plan design, as determined by the independent adviser to the Committee).The 107,183 LTIP awards for the CEO was determined based on the US$ face value of the LTIP awards of US$3.400 million and calculated using the average share price and US$/A$ exchange rate over the 12 months up to and including 30 June 2021. LTIP awards granted to other Executive KMP during FY2022 were calculated on the same basis as described above for the CEO, except that awards for other Executive KMP had a face value of 175 per cent of base salary. In addition to the LTIP terms set out in 2.2 Remuneration framework operation, the Committee has determined the following terms for the 2021 LTIP:
| | |
| | • 1 July 2021 to 30 June 2026 |
| |
| | • An averaging period of six months will be used in the TSR calculations. • BHP’s TSR relative to the weighted median TSR of sector peer companies selected by the Committee (Sector Group TSR) and the MSCI World Index (World TSR) will determine the vesting of 67% and 33% of the award, respectively. • Each company in the sector peer group is weighted by market capitalisation. The maximum weighting for any one company is 25% and the minimum is set at 0.4% to reduce sensitivity to any single sector peer company. • For the whole of either portion of the award to vest, BHP’s TSR must be at or exceed the weighted 80th percentile of the Sector Group TSR or the World TSR (as applicable). Threshold vesting (25% of each portion of the award) occurs where BHP’s TSR equals the weighted 50th percentile (i.e. the median) of the Sector Group TSR or the World TSR (as applicable). Vesting occurs on a sliding scale between the weighted 50th and 80th percentiles. |
| |
Sector peer group companies(1) | | • Resources (85%): Anglo American, Fortescue Metals, Freeport-McMoRan, Glencore, Rio Tinto, Southern Copper, Teck Resources, Vale. • Oil and gas (15%): Apache, BP, Canadian Natural Res., Chevron, ConocoPhillips, Devon Energy, EOG Resources, ExxonMobil, Occidental Petroleum, Shell, Woodside. |
| 1 | From November 2018, CONSOL Energy was removed from the sector comparator group, as due to its internal restructuring it had become a less comparable peer. |
3.7 FY2023 remuneration for the CEO and other Executive KMP
The remuneration for the CEO and other Executive KMP in FY2023 will be in accordance with 2.2 Remuneration framework operation.
Base salaries are reviewed annually and increases are applicable from 1 September. The CEO commenced in the role on 1 January 2020 and did not receive a base salary increase in FY2021 or FY2022. The Board and the Committee have assessed the CEO and other Executive KMP’s performance and determined that, as of 1 September 2022:
The CEO’s and other Executive KMP’s base salaries will increase by 3 per cent following a review by the Committee of the external market demand for senior executive talent and updated benchmarking. The Committee considers the increases modest in this context, as well as being below the median salary increase applied for other BHP employees of approximately 4 per cent.
In addition, having reviewed Ragnar Udd’s performance and development in role since appointment in November 2020, including the dynamic context and growing importance of the Americas region to the Group, the Committee provided an additional increase of 6 per cent increase in base salary (i.e. 9 per cent in total).
The CEO’s and other Executive KMP’s base salaries will be kept under review in future years to ensure they remain competitive.
FY2023 CDP performance measures
For FY2023, the Board and the Committee have set the following CDP scorecard performance measures for the CEO. The weighting of each performance measure and specific individual performance measures will vary for other Executive KMP to reflect the focus required from each of them in their role:
| | | | | | |
| | | | | |
Safety and Sustainability | | | 25 | % | | The following Safety and Sustainability (previously HSEC) performance measures are designed to incentivise achievement of the Group’s public goals. Significant events (10%): No significant (actual level 4) health, safety (including fatalities), environment or community events during the year. Achievement of sexual harassment and Fatality Implementation Program FY2023 deliverables. Climate change (10%): FY2023 GHG emissions targets met, aligned with progress towards the 2030 medium term target. A majority of planned decarbonisation projects are presented for tollgates or milestones as scheduled. Progress Memorandum of Understanding commitments with steel customers. Indigenous partnerships (5%): Achieve uplift in Indigenous, Traditional Owner and First Nations vendor procurement. Planned progress on Indigenous employment/participation targets. Release revised Global Indigenous Peoples Strategy. |
| | | 50 | % | | ROCE is underlying profit after taxation (excluding after-taxation finance costs and exceptional items) divided by average capital employed. When assessing management’s performance, adjustments are made to the ROCE result to allow for changes in commodity prices, foreign exchange movements and other material items to ensure the assessment appropriately measures outcomes that are within the control and influence of the Group and its executives. For reasons of commercial sensitivity, the target for ROCE is not disclosed in advance. |
| | | 25 | % | | The CEO’s individual measures for FY2023 comprise the contribution to BHP’s overall performance and the management team and the delivery of projects and initiatives within the scope of the CEO role as set out by the Board. These include projects and initiatives in respect of social value, people, performance and portfolio. These performance measures are aligned with medium and long-term strategy aspirations that are intended to drive long-term value for shareholders and other stakeholders, and the Board considers a 25% weighting in the CDP to be appropriate for these important elements. Individual performance measures for other Executive KMP similarly contribute to the delivery of projects and initiatives within the scope of their role and BHP’s overall performance. |
The maximum face value of the CEO’s FY2023 LTIP award under the remuneration framework is US$3.500 million, being 200 per cent of the CEO’s base salary at the time of grant. The number of LTIP awards in FY2023 has been determined using the share price and US$/A$ exchange rate over the 12 months up to and including 30 June 2022 (adjusted to eliminate the value of thein-specie
dividend distributed in connection with the merger of BHP’s Petroleum business with Woodside from the daily BHP Group Limited share prices between 1 July 2021 to 31 May 2022). Based on this, a FY2023 grant of 118,853 LTIP awards is proposed and approval for this LTIP grant will be sought from shareholders at the 2022 AGM. If approved, the award will be granted following the AGM (i.e. in or around November 2022, subject to securities dealing considerations). The FY2023 LTIP award will use the same performance and service conditions as the FY2022 LTIP award, except that the MSCI World Metals and Mining Index will replace the sector group companies comparator group, due to the merger of the Petroleum business with Woodside. Accordingly, the FY2023 LTIP award will use the following comparator groups: the new MSCI World Metals and Mining Index and the existing MSCI World Index, which will determine the vesting of 67 per cent and 33 per cent of the award, respectively. LTIP awards granted to other Executive KMP during FY2023 will be calculated on the same basis as described above for the CEO, except that awards for other Executive KMP will have a maximum face value of 175 per cent of base salary.
4 Remuneration forNon-executive
Directors Our remuneration framework forNon-executive
Directors aligns with the Australian Securities Exchange Corporate Governance Council’s Principles and Recommendations (4th
Edition). 4.1 Remuneration framework
The following table shows the components forNon-executive
Directors’ remuneration.Non-executive
Directors are not eligible to participate in any CDP or LTIP awards. | | | | |
| | | | |
Purpose and link to strategy | | Competitive fees are paid in order to attract and retain high-quality individuals, and to provide appropriate remuneration for the role undertaken. Fees are set at a competitive level based on benchmarks and advice provided by external advisers. | | Competitive benefits are paid in order to attract and retain high-quality individuals and adequately remunerate them for the role undertaken, including the considerable travel burden. |
| | |
| | The Chair is paid a single fee for all responsibilities.Non-executive Directors are paid a base fee and relevant committee membership fees. Committee Chairs and the Senior Independent Director are paid an additional fee to reflect their extra responsibilities. All fee levels are reviewed annually and any changes are ordinarily effective from 1 July. Fee levels reflect the size and complexity of the Group and the geographies in which the Group operates. The economic environment and the financial performance of the Group are taken into account. Consideration is also given to salary reviews across the rest of the Group. Where the payment of pension contributions is required by law, these contributions are deducted from the Director’s overall fee entitlements. | | Travel allowances are paid on aper-trip basis reflecting the considerable travel burden imposed on members of the Board as a consequence of the global nature of the organisation and apply when a Director needs to travel internationally to attend a Board meeting or site visits at our multiple geographic locations. As a consequence of our prior dual listed company structure,Non-executive Directors are required to prepare personal tax returns in Australia and the UK, regardless of whether they reside in one or neither of those countries. They are accordingly reimbursed for the costs of personal tax return preparation in whichever of the UK and/or Australia is not their place of residence (including payment of the tax cost associated with the provision of the benefit). |
The Board has adopted a letter of appointment that contains the terms on whichNon-executive
Directors will be appointed, including the basis upon which they will be indemnified by the Group. The Board has adopted a policy under which allNon-executive
Directors must seekre-election
at the AGM each year. As a result of requiringre-election
each year,Non-executive
Directors do not have a fixed term in their letter of appointment. The maximum aggregate fees payable toNon-executive
Directors (including the Chair) were approved by shareholders at the 2008 AGMs at US$3.800 million per annum. This sum includes base fees, Committee fees and pension contributions. Travel allowances andnon-monetary
benefits are not included in this limit. Payments on early termination or loss of office
There are no provisions in any of theNon-executive
Directors’ appointment arrangements for compensation payable on early termination of their directorship. ANon-executive
Director may resign on reasonable notice. No payments are made toNon-executive
Directors on loss of office. 4.2 Non-executive
Directors’ remuneration in FY2023In FY2023, the remuneration for theNon-executive
Directors will be paid in accordance with the remuneration framework set out above. Fee levels for theNon-executive
Directors and the Chair are reviewed annually. The review includes benchmarking against peer companies, with the assistance of external advisers. From 1 July 2017, the Chair’s annual fee was reduced by approximately 8 per cent from US$0.960 million to US$0.880 million and will remain at that level for FY2023. This fee reduction was in addition to the reduction of approximately 13 per cent from US$1.100 million to US$0.960 million effective 1 July 2015. Base fee levels forNon-executive
Directors will remain at the reduced levels that took effect from 1 July 2015, at which time they were reduced by approximately 6 per cent from US$0.170 million to US$0.160 million per annum. The below table sets out the annualised total remuneration and total fixed fees for FY2023, which remain unchanged from FY2022.
| | | | |
Levels of fees and travel allowances forNon-executive Directors (in US$) | | | |
| | | 160,000 | |
| | | | |
Plus additional fees for: | | | | |
Senior Independent Director | | | 48,000 | |
| | | | |
| | | | |
| | | 60,000 | |
| | | 45,000 | |
| | | 45,000 | |
Nomination and Governance | | | No additional fee | |
| | | | |
| | | | |
| | | 32,500 | |
| | | 27,500 | |
| | | 27,500 | |
Nomination and Governance | | | 18,000 | |
| | | | |
| | | | |
Greater than 3 but less than 10 hours | | | 7,000 | |
| | | 15,000 | |
| | | | |
| | | 880,000 | |
| | | | |
| 1 | In relation to travel for Board business, the time thresholds relate to the flight time to travel to the meeting location (i.e. one way flight time). Only one travel allowance is paid per round trip. |
5 Statutory KMP remuneration and other disclosures
5.1 KMP remuneration table
The table below has been prepared in accordance with relevant accounting standards and remunerationstandards. Remuneration data for Executive KMP are for the periods of FY2020FY2021 and FY2021FY2022 that they were KMP. More information on the policyframework and operation of each element of remuneration is provided earlier in previous sections of this Report.
The figures included in the shaded columns of the statutory table below for share-based payments were not actually provided to the Executive KMP including the CEO during FY2021FY2022 or FY2020.FY2021. These amounts are calculated in accordance with accounting standards and are the amortised IFRS fair values at grant date of equity and equity-related instruments that have been granted to the executives. For information on awards that were allocated and vested during FY2021FY2022 and FY2020,FY2021, refer to ‘Equity awards’ in this section 2.2.3.5.2 Equity awards.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Value of CDP/STIP awards (2)(6) | | | | | | |
| | | | | | | | | | | Value of CDP/STIP awards 2, 6 | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 1,400 | | | 1,075 | | | 129 | | | | – | | | 223 | | | 907 | | | 2,299 | | | 6,033 | | | FY2021 | | 1,700 | | | 1,564 | | | 120 | | | | – | | | 170 | | | 1,487 | | | 2,315 | | | 7,356 | |
| | FY2020 | | | 850 | | | 653 | | | 124 | | | | – | | | 213 | | | 1,202 | | | 2,038 | | | 5,080 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | FY2020 | | | 1,000 | | | 848 | | | 41 | | | | – | | | 250 | | | 810 | | | 2,090 | | | 5,039 | | | FY2021 | | 950 | | | 866 | | | 60 | | | | – | | | 95 | | | 432 | | | 839 | | | 3,242 | |
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| | FY2020 | | | 1,000 | | | 816 | | | 38 | | | | – | | | 250 | | | 797 | | | 2,090 | | | 4,991 | | | FY2021 | | 554 | | | 510 | | | 42 | | | | – | | | 55 | | | 167 | | | 935 | | | 2,263 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | FY2020 | | | 750 | | | 618 | | | | – | | | | – | | | 188 | | | 378 | | | 903 | | | 2,837 | | | FY2021 | | 800 | | | 800 | | | 25 | | | | – | | | 160 | | | 777 | | | 930 | | | 3,492 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | 567 | | | 521 | | | 49 | | | 420 | | | 57 | | | 190 | | | 483 | | | 2,287 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | 219 | | | | – | | | | – | | | 4 | | | 12 | | | | – | | | | – | | | 235 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | 195 | | | | – | | | | – | | | 3 | | | 10 | | | | – | | | | – | | | 208 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | 220 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | 220 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | 144 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | 144 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | 220 | | | | – | | | | – | | | 2 | | | | – | | | | – | | | | – | | | 222 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | 246 | | | | – | | | | – | | | 2 | | | | – | | | | – | | | | – | | | 248 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | 220 | | | | – | | | | – | | | 1 | | | | – | | | | – | | | | – | | | 221 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | 864 | | | | – | | | | – | | | 4 | | | 16 | | | | – | | | | – | | | 884 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | 215 | | | | – | | | | – | | | 2 | | | | – | | | | – | | | | – | | | 217 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | 162 | | | | – | | | | – | | | | – | | | 9 | | | | – | | | | – | | | 171 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | FY2021 | | 178 | | | | – | | | | – | | | 1 | | | 9 | | | | – | | | | – | | | 188 | |
(1)1 | Base salaries and fees shown in this table reflect the amounts paid over the 12-month period from 1 July 20202021 to 30 June 20212022 for each Executive KMP.KMP andNon-Executive Director. There were no changes to Executive KMP base salaries during FY2022. The followingNon-Executive Directors have received special exertion fees for additional or extra services they performed in FY2022 in connection with major transactions undertaken by the year except for Edgar Basto who was appointed as President Minerals Australia on 1 July 2020 onGroup: in connection with the unification of BHP’s dual listed structure – Gary Goldberg received an annual base salaryadditional fee of US$ 0.950 million, Ragnar Udd who was appointed20,000 as President Minerals Americas on 1 November 2020 onChair of the Transaction Committee and Ian Cockerill and Terry Bowen received US$12,500 each as members of the Transaction Committee; and in connection with the merger of the Petroleum business with Woodside – Christine O’Reilly received an annual base salaryadditional fee of US$ 0.850 million, David Lamont who was appointed20,000 as Chief Financial Officer on 1 December 2020 on an annual base salaryChair of US$0.950 million,the Transaction Committee and Geraldine Slattery whose salary changed toTerry Bowen and John Mogford received US$ 0.850 million on 1 January 2021. Geraldine’s base salary was set by12,500 each as members of the Remuneration Committee in March 2019 upon her appointment as President Petroleum at US$0.750 million per annum, which was 25 per cent below that of Geraldine’s predecessor. In December 2020, the Committee assessed Geraldine’s performance as President Petroleum and it was confirmed that Geraldine was performing and developing strongly in role. The Committee also considered market factors, job relativities and contribution in the role in reaching its decision that Geraldine’s base salary would be increased to US$0.850 million per annum on 1 January 2021. The base salaries for Executive KMP will be kept under review in future years to ensure they remain competitive, especially in light of recent movement in exchange rates against the US dollar.Transaction Committee. |
(2)2 | Annual cash incentive in this table is the cash portion of CDP awards earned in respect of performance during each financial year for each executive. CDP is provided one-third in cash and two-thirds in deferred equity (which are included in the Share-based payments columns of the table). The cash portion of CDP awards is paid to Executive KMP in September of the year following the relevant financial year. The minimum possible value awarded to each individual is nil and the maximum is 360 per cent of base salary (120 per cent in cash and 240 per cent in deferred equity). For FY2021,FY2022, Executive KMP earned the following CDP awards as a percentage of the maximum (the remaining portion has been forfeited): Mike Henry 7764 per cent, Edgar Basto 7657 per cent, Peter Beaven 80David Lamont 64 per cent, (for the time served as Chief Financial Officer), David Lamont 77 per cent (for the time served as Chief Financial Officer), Daniel Malchuk 77 per cent (for the time served as President Minerals Americas), Geraldine Slattery 8369 per cent, and Ragnar Udd 7764 per cent (for the time served as President Minerals Americas). Andrew’s FY2020 CDPcent. Peter Beaven’s and Peter’s and Daniel’sDaniel Malchuk’s FY2021 CDP was paid in cash and prorated to reflect the period served until they ceased to be KMP on 31 December 2019, 30 November 2020 and 31 October 2020 respectively, as noted for Andrew in ‘Single total figure of remuneration’ in this section 2.2.3, with 50 per cent of the total CDP award included in the Annual cash incentive column, and 50 per cent in the Value of CDP/STIP awards column.respectively. |
(3)3 | Non-monetary benefits are non-pensionable and include items such as net leave accruals, private family health insurance, spouse business-related travel, car parking, fringe benefits tax and other insurances, fees forpersonal tax return preparation (ifin required in multiple jurisdictions), car parking and travel costs.countries. |
(4)4 | Other benefits are non-pensionable and for FY2022 include asign-on cash award on commencement of employment for David Lamont representing compensation for remuneration that David forfeited or did not receive as a consequence of leaving CSL to join BHP in 2020; an encashment of annual leave entitlements under the US Annual Leave policy for Geraldine Slattery, together with a retention award for Geraldine to ensure her services were retained by BHP after the August 2021 announcement of the merger of the Petroleum business with Woodside; and in FY2021, a one-off relocation allowance (with no trailing entitlements) provided to Ragnar Udd in FY2021 relating to his international relocation from Australia to Chile. The majority of the amounts disclosed for benefits forNon-executive Directors are usually travel allowances (amounts of between US$ nil and US$70,000 for FY2022) however, theCOVID-19 pandemic restrictedNon-executive Director travel during FY2021 and FY2022. For FY2022, amounts of between US$ nil and US$4,000 are included in respect of tax return preparation; and amounts of between US$ nil and US$1,500 are included in respect of the reimbursement of the tax cost associated with the provision of taxable benefits. |
(5)5 | In FY2021, retirementRetirement benefits were 20 per cent of base salary for each Executive KMP except for Mike Henry, who was appointed CEO on 1 January 2020, Edgar Basto, who was appointed as President Minerals Australia on 1 July 2020, David Lamont, who was appointed as Chief Financial Officer on 1 December 2020,in FY2021 and Ragnar Udd, who was appointed as President Minerals Americas on 1 November 2020, each with a pension contribution rate ofFY2022 were 10 per cent of base salary as per the remuneration policy approved atframework, with the 2019 AGMs.exception of the retirement benefits reported for Geraldine Slattery of 15 per cent of base salary for FY2022 and the retirement benefits reported for Peter Beaven, Daniel Malchuk and Geraldine Slattery of 20 per cent of base salary for FY2021 in accordance with prior remuneration framework.Non-Executive Director fees are inclusive of minimum superannuation contributions of up to 10 per cent of remuneration for FY2022 in accordance with Australian superannuation legislation. No other pension contributions were paid. |
(6)6 | The IFRS fair value of CDP STIP and LTIP awards is estimated at grant date. Refer to Financial Statements note 25 ‘EmployeeEmployee share ownership plans’ in section 3 for more information on IFRS.plans. |
(7)7 | The remuneration reported for Andrew Mackenzie, Peter Beaven and Daniel Malchuk reflects service as Executive KMP up to 31 December 2019, 30 November 2020 and 31 October 2020, respectively. |
| 8 | The FY2021 remuneration for Xiaoqun Clever and Christine O’Reilly relates to part of the year only, as they joined the Board on 1 October 2020 and 12 October 2020 respectively. The FY2022 remuneration for Michelle Hinchliffe and Catherine Tanna relates to part of the year only, as they joined the Board on 1 March 2022 and 4 April 2022 respectively. |
| 9 | The FY2022 remuneration for Anita Frew and Susan Kilsby relates to part of the year only, as they retired from the Board on 11 November 2021. The FY2021 remuneration for Lindsay Maxsted and Shriti Vadera relates to part of the year only, as they retired from the Board on 4 September 2020 and 15 October 2020 respectively. |
The interests held by Executive KMP under the Group’s employee equity plans are set out in the table below. Each equity award is a right to acquire one ordinary share in BHP Group Limited or in BHP Group Plc upon satisfaction of the vesting conditions. BHP Group Limited share awards are shown in Australian dollars. BHP Group Plc awards are shown in Pounds Sterling. Our mandatory minimum performance requirements for securities dealing governs and restricts dealing arrangements and the provision of shares on vesting or exercise of awards. No interests under the Group’s employee equity plans are held by related parties of Executive KMP.
Dividend Equivalent Payments
Approval from BHP’s shareholders for the issue of equity awards to the CEO under the CDP and LTIP was obtained under ASX Listing Rule 10.14 at the 2021 AGM.DEP applies to awards provided to Executive KMP under the CDP STIP and LTIP as detailed in ‘Components of remuneration’ in section 2.2.2.2.2 Remuneration framework operation. No DEP is payable on MAP awards previously provided to Executive KMP.
Equity awards provided for Executive KMP service
Awards under the CDP, STIP, and LTIP
Executive KMP received or will receive awards under the CDP, STIP and LTIP. The terms and conditions of CDP STIP and LTIP awards, including the performance conditions, are described in ‘Components of remuneration’ in section 2.2.2. The LTIP rules are available at bhp.com.
Equity awards provided prior to Executive KMP service
Awards under the MAP
2.2 Remuneration framework operation.BHP senior management who are not KMP receive awards under the MAP. While no MAP awards were granted to Executive KMP after becoming KMP, Edgar Basto, Geraldine Slattery and Ragnar Udd still hold MAP awards that were allocated to them prior to commencing their Executive KMP service.
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| | | | | | – | | | 44,348 | | | | – | | | | – | | | 44,348 | | | Aug 25 | | A$35.90 | | | | – | | | | – | | | | – | | | | | | – | | | 49,304 | | | | – | | | | – | | | | – | | | 49,304 | | | Aug 26 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | | – | | | 44,348 | | | | – | | | | – | | | 44,348 | | | Aug 22 | | A$35.90 | | | | – | | | | – | | | | – | | | | | | – | | | 49,304 | | | | – | | | | – | | | | – | | | 49,304 | | | Aug 23 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | 17,420 | | | | – | | | | – | | | | – | | | 17,420 | | | Aug 21 | | A$37.24 | | | | – | | | | – | | | | – | | |
| | | | | 44,348 | | | | – | | | | – | | | | – | | | | – | | | 44,348 | | | Aug 25 | | A$35.90 | | | – | | | | – | | | | – | |
| | | | | 44,348 | | | | – | | | | – | | | | – | | | | – | | | 44,348 | | | Aug 22 | | A$35.90 | | | – | | | | – | | | | – | |
| | | | | 30,692 | | | | – | | | 30,692 | | | | – | | | | – | | | 19 Aug 20 | | A$33.50 | | | A$39.06 | | | A$1,199 | | | A$152 | | | | | 17,420 | | | | – | | | | – | | | 17,420 | | | | – | | | | – | | | 18 Aug 21 | | A$37.24 | | A$47.70 | | | A$831 | | | A$66 | |
| | | | | | – | | | 140,239 | | | | – | | | | – | | | 140,239 | | | Aug 25 | | A$35.90 | | | | – | | | | – | | | | – | | | | | | – | | | 107,183 | | | | – | | | | – | | | | – | | | 107,183 | | | Aug 26 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | 153,631 | | | | – | | | | – | | | | – | | | 153,631 | | | Aug 24 | | A$37.24 | | | | – | | | | – | | | | – | | | | | 140,239 | | | | – | | | | – | | | | – | | | | – | | | 140,239 | | | Aug 25 | | A$35.90 | | | – | | | | – | | | | – | |
| | | | | 172,413 | | | | – | | | | – | | | | – | | | 172,413 | | | Aug 23 | | A$33.50 | | | | – | | | | – | | | | – | | | | | 153,631 | | | | – | | | | – | | | | – | | | | – | | | 153,631 | | | Aug 24 | | A$37.24 | | | – | | | | – | | | | – | |
| | | | | 218,020 | | | | – | | | | – | | | | – | | | 218,020 | | | Aug 22 | | A$27.97 | | | | – | | | | – | | | | – | | | | | 172,413 | | | | – | | | | – | | | | – | | | | – | | | 172,413 | | | Aug 23 | | A$33.50 | | | – | | | | – | | | | – | |
| | | | | 192,360 | | | | – | | | | – | | | | – | | | 192,360 | | | Aug 21 | | A$25.98 | | | | – | | | | – | | | | – | | | | | 218,020 | | | | – | | | | – | | | | – | | | | – | | | 218,020 | | | Aug 22 | | A$27.97 | | | – | | | | – | | | | – | |
| | | | | 192,360 | | | | – | | | 92,333 | | | 100,027 | | | | – | | | 19 Aug 20 | | A$17.93 | | | A$39.06 | | | A$3,607 | | | A$748 | | | | | 192,360 | | | | – | | | | – | | | 192,360 | | | | – | | | | – | | | 18 Aug 21 | | A$25.98 | | A$47.70 | | | A$9,176 | | | A$1,634 | |
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| | | | | | – | | | 68,572 | | | | – | | | | – | | | 68,572 | | | Aug 25 | | A$35.90 | | | | – | | | | – | | | | – | | |
| | | | | 28,245 | | | | – | | | | – | | | | – | | | 28,245 | | | Aug 24 | | A$35.05 | | | | – | | | | – | | | | – | | |
| | | | | 28,245 | | | | – | | | | – | | | | – | | | 28,245 | | | Aug 23 | | A$35.05 | | | | – | | | | – | | | | – | | |
| | | | | 28,245 | | | | – | | | | – | | | | – | | | 28,245 | | | Aug 22 | | A$36.53 | | | | – | | | | – | | | | – | | |
| | | | | 27,651 | | | | – | | | | – | | | | – | | | 27,651 | | | Aug 21 | | A$33.83 | | | | – | | | | – | | | | – | | |
| | | | | 33,828 | | | | – | | | 33,828 | | | | – | | | | – | | | 19 Aug 20 | | A$25.98 | | | A$39.06 | | | A$1,321 | | | | – | | |
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| | | | | | – | | | 34,977 | | | | – | | | | – | | | 34,977 | | | Aug 25 | | A$35.90 | | | | – | | | | – | | | | – | | | | | | – | | | 27,312 | | | 3,292 | | | | – | | | | – | | | 30,604 | | | Aug 26 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | | – | | | 34,977 | | | | – | | | | – | | | 34,977 | | | Aug 22 | | A$35.90 | | | | – | | | | – | | | | – | | | | | | – | | | 27,312 | | | 3,292 | | | | – | | | | – | | | 30,604 | | | Aug 23 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | 19,003 | | | | – | | | | – | | | | – | | | 19,003 | | | Aug 21 | | A$37.24 | | | | – | | | | – | | | | – | | |
| | | | | 30,964 | | | | – | | | 30,964 | | | | – | | | | – | | | 19 Aug 20 | | A$33.50 | | | A$39.06 | | | A$1,209 | | | A$154 | | |
| | | | | | – | | | 72,182 | | | | – | | | | – | | | 72,182 | | | Aug 25 | | A$35.90 | | | | – | | | | – | | | | – | | |
| | | | | 139,664 | | | | – | | | | – | | | | – | | | 139,664 | | | Aug 24 | | A$37.24 | | | | – | | | | – | | | | – | | |
| | | | | 156,739 | | | | – | | | | – | | | | – | | | 156,739 | | | Aug 23 | | A$33.50 | | | | – | | | | – | | | | – | | |
| | | | | 198,200 | | | | – | | | | – | | | | – | | | 198,200 | | | Aug 22 | | A$27.97 | | | | – | | | | – | | | | – | | |
| | | | | 174,873 | | | | – | | | | – | | | | | 174,873 | | | Aug 21 | | A$25.98 | | | | – | | | | – | | | | – | | |
| | | | | 174,873 | | | | – | | | 83,940 | | | 90,933 | | | | – | | | 19 Aug 20 | | A$17.93 | | | A$39.06 | | | A$3,279 | | | A$680 | | |
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| | | | | | – | | | �� | 77,000 | | | | – | | | | – | | | 77,000 | | | Aug 22 | | A$38.56 | | | | – | | | | – | | | | – | | |
| | | | | | – | | | 68,572 | | | | – | | | | – | | | 68,572 | | | Aug 25 | | A$38.56 | | | | – | | | | – | | | | – | | |
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| | | | | | – | | | 33,657 | | | | – | | | | – | | | 33,657 | | | Aug 25 | | A$35.90 | | | | – | | | | – | | | | – | | |
| | | | | | – | | | 33,657 | | | | – | | | | – | | | 33,657 | | | Aug 22 | | A$35.90 | | | | – | | | | – | | | | – | | |
| | | | | 16,786 | | | | – | | | | – | | | | – | | | 16,786 | | | Aug 21 | | A$37.24 | | | | – | | | | – | | | | – | | |
| | | | | 33,686 | | | | – | | | 33,686 | | | | – | | | | – | | | 19 Aug 20 | | A$33.50 | | | A$39.06 | | | A$1,316 | | | A$167 | | |
| | | | | | – | | | 72,182 | | | | – | | | | – | | | 72,182 | | | Aug 25 | | A$35.90 | | | | – | | | | – | | | | – | | |
| | | | | 139,664 | | | | – | | | | – | | | | – | | | 139,664 | | | Aug 24 | | A$37.24 | | | | – | | | | – | | | | – | | |
| | | | | 156,739 | | | | – | | | | – | | | | – | | | 156,739 | | | Aug 23 | | A$33.50 | | | | – | | | | – | | | | – | | |
| | | | | 198,200 | | | | – | | | | – | | | | – | | | 198,200 | | | Aug 22 | | A$27.97 | | | | – | | | | – | | | | – | | |
| | | | | 174,873 | | | | – | | | | – | | | | – | | | 174,873 | | | Aug 21 | | A$25.98 | | | | – | | | | – | | | | – | | |
| | | | | 174,873 | | | | – | | | 83,940 | | | 90,933 | | | | – | | | 19 Aug 20 | | A$17.93 | | | A$39.06 | | | A$3,279 | | | A$680 | | |
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| | | | | | – | | | 25,490 | | | | – | | | | – | | | 25,490 | | | Aug 25 | | A$35.90 | | | | – | | | | – | | | | – | | |
| | | | | | – | | | 25,490 | | | | – | | | | – | | | 25,490 | | | Aug 22 | | A$35.90 | | | | – | | | | – | | | | – | | |
| | | | | 6,628 | | | | – | | | | – | | | | – | | | 6,628 | | | Aug 21 | | A$37.24 | | | | – | | | | – | | | | – | | |
| | | | | | – | | | 54,136 | | | | – | | | | – | | | 54,136 | | | Aug 25 | | A$35.90 | | | | – | | | | – | | | | – | | | | | | – | | | 52,409 | | | 6,316 | | | | – | | | | – | | | 58,725 | | | Aug 26 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | 104,748 | | | | – | | | | – | | | | – | | | 104,748 | | | Aug 24 | | A$37.24 | | | | – | | | | – | | | | – | | | | | 68,572 | | | | – | | | 8,263 | | | | – | | | | – | | | 76,835 | | | Aug 25 | | A$35.90 | | | – | | | | – | | | | – | |
| | | | | 28,527 | | | | – | | | | – | | | | – | | | 28,527 | | | Aug 23 | | A$34.83 | | | | – | | | | – | | | | – | | | | | 28,245 | | | | – | | | 3,404 | | | | – | | | | – | | | 31,649 | | | Aug 24 | | A$35.05 | | | – | | | | – | | | | – | |
| | | | | 28,527 | | | | – | | | | – | | | | – | | | 28,527 | | | Aug 22 | | A$34.83 | | | | – | | | | – | | | | – | | | | | 28,245 | | | | – | | | 3,404 | | | | – | | | | – | | | 31,649 | | | Aug 23 | | A$35.05 | | | – | | | | – | | | | – | |
| | | | | 28,527 | | | | – | | | | – | | | | – | | | 28,527 | | | Aug 21 | | A$33.83 | | | | – | | | | – | | | | – | | | | | 28,245 | | | | – | | | 3,404 | | | | – | | | | – | | | 31,649 | | | Aug 22 | | A$36.53 | | | – | | | | – | | | | – | |
| | | | | 34,349 | | | | – | | | 34,349 | | | | – | | | | – | | | 19 Aug 20 | | A$25.98 | | | A$39.06 | | | A$1,342 | | | | – | | | | | 27,651 | | | | – | | | | – | | | 27,651 | | | | – | | | | – | | | 18 Aug 21 | | A$33.83 | | A$47.70 | | | A$1,319 | | | | – | |
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| | | | | 77,000 | | | | – | | | 9,279 | | | | – | | | | – | | | 86,279 | | | Aug 22 | | A$38.56 | | | – | | | | – | | | | – | |
| | | | | | – | | | 16,072 | | | 1,937 | | | | – | | | | – | | | 18,009 | | | Aug 26 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | | – | | | 16,072 | | | 1,937 | | | | – | | | | – | | | 18,009 | | | Aug 23 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | | – | | | 52,409 | | | 6,316 | | | | – | | | | – | | | 58,725 | | | Aug 26 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | 68,572 | | | | – | | | 8,263 | | | | – | | | | – | | | 76,835 | | | Aug 25 | | A$38.56 | | | – | | | | – | | | | – | |
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| | | | | | – | | | 25,219 | | | 3,039 | | | | – | | | | – | | | 28,258 | | | Aug 26 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | | – | | | 25,219 | | | 3,039 | | | | – | | | | – | | | 28,258 | | | Aug 23 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | 25,490 | | | | – | | | 3,072 | | | | – | | | | – | | | 28,562 | | | Aug 25 | | A$35.90 | | | – | | | | – | | | | – | |
| | | | | 25,490 | | | | – | | | 3,072 | | | | – | | | | – | | | 28,562 | | | Aug 22 | | A$35.90 | | | – | | | | – | | | | – | |
| | | | | 6,628 | | | | – | | | | – | | | 6,628 | | | | – | | | | – | | | 18 Aug 21 | | A$37.24 | | | A$47.70 | | | | A$316 | | | A$25 | |
| | | | | | – | | | 46,892 | | | 5,651 | | | | – | | | | – | | | 52,543 | | | Aug 26 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | 54,136 | | | | – | | | 6,524 | | | | – | | | | – | | | 60,660 | | | Aug 25 | | A$35.90 | | | – | | | | – | | | | – | |
| | | | | 104,748 | | | | – | | | 12,623 | | | | – | | | | – | | | 117,371 | | | Aug 24 | | A$37.24 | | | – | | | | – | | | | – | |
| | | | | 28,527 | | | | – | | | 3,438 | | | | – | | | | – | | | 31,965 | | | Aug 23 | | A$34.83 | | | – | | | | – | | | | – | |
| | | | | 28,527 | | | | – | | | 3,438 | | | | – | | | | – | | | 31,965 | | | Aug 22 | | A$34.83 | | | – | | | | – | | | | – | |
| | | | | 28,527 | | | | – | | | | | 28,527 | | | | – | | | | – | | | 18 Aug 21 | | A$33.83 | | | A$47.70 | | | | A$1,361 | | | | – | |
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| | | | | | – | | | 16,434 | | | 1,981 | | | | – | | | | – | | | 18,415 | | | Aug 26 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | | – | | | 16,434 | | | 1,981 | | | | – | | | | – | | | 18,415 | | | Aug 23 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | | – | | | 46,892 | | | 5,651 | | | | – | | | | – | | | 52,543 | | | Aug 26 | | A$38.05 | | | – | | | | – | | | | – | |
| | | | | | – | | | 61,354 | | | | – | | | | – | | | 61,354 | | | Aug 25 | | A$33.81 | | | | – | | | | – | | | | – | | | | | 61,354 | | | | – | | | 7,394 | | | | – | | | | – | | | 68,748 | | | Aug 25 | | A$33.81 | | | – | | | | – | | | | – | |
| | | | | 21,231 | | | | – | | | | – | | | | – | | | 21,231 | | | Aug 24 | | A$38.36 | | | | – | | | | – | | | | – | | | | | 21,231 | | | | – | | | 2,559 | | | | – | | | | – | | | 23,790 | | | Aug 24 | | A$38.36 | | | – | | | | – | | | | – | |
| | | | | 21,231 | | | | – | | | | – | | | | – | | | 21,231 | | | Aug 23 | | A$38.36 | | | | – | | | | – | | | | – | | | | | 21,231 | | | | – | | | 2,559 | | | | – | | | | – | | | 23,790 | | | Aug 23 | | A$38.36 | | | – | | | | – | | | | – | |
| | | | | 21,231 | | | | – | | | | – | | | | – | | | 21,231 | | | Aug 22 | | A$36.53 | | | | – | | | | – | | | | – | | | | | 21,231 | | | | – | | | 2,559 | | | | – | | | | – | | | 23,790 | | | Aug 22 | | A$36.53 | | | – | | | | – | | | | – | |
| | | | | 25,565 | | | | – | | | | – | | | | – | | | 25,565 | | | Aug 21 | | A$33.83 | | | | – | | | | – | | | | – | | | | | 25,565 | | | | – | | | | | 25,565 | | | | – | | | | – | | | 18 Aug 21 | | A$33.83 | | | A$47.70 | | | | A$1,219 | | | | – | |
(1)1 | Uplift awards granted as a consequence of the merger of the Petroleum business with Woodside. For the CEO shareholder approval for these awards will be sought at the 2022 AGM and following approval these would be granted in or around November 2022. Uplift awards for other Executive KMP were granted on 17 June 2022. |
| 2 | Where the vesting date is not yet known, the estimated vesting month is shown. Where awards lapse, the lapse date is shown. If the vesting conditions are met, awards will vest on or as soon as practicable after the first non-prohibited period date occurring after 30 June of the preceding year of vest. The year of vesting is the second (STIP and CDP two-year awards), third (MAP), fourth (MAP) or fifth (MAP, CDP five-year awards and LTIP) financial year after grant. All awards are conditional awards and have no exercise period, exercise price or expiry date; instead ordinary fully paid shares are automatically delivered upon the vesting conditions being met. Where vesting conditions are not met, the conditional awards will immediately lapse. |
(2)3 | The market price shown is the closing price of BHP shares on the relevant date of grant. No price is payable by the individual to receive a grant of awards. The IFRS fair value of the CDP and LTIP awards granted in FY2021FY2022 at the grant date of 20 October 202023 November 2021 are as follows: CDP – A$35.9038.05 and LTIP – A$20.98. The IFRS fair value of the LTIP awards granted in FY2021 at the grant date of 2 November 2020 and 1 December 2020 are A$18.61 and A$20.85 respectively. The IFRS fair value of David Lamont’s performance shares at the grant date of 1 December 2020 is A$38.56.18.92. |
(3)4 | The market price shown is the closing price of BHP shares on the relevant date of vest. |
(4)5 | The gain on awards is calculated using the market price on date of vesting or exercise (as applicable) less any exercise price payable. The amounts that vested and were lapsed for the awards during FY2021FY2022 are as follows: STIPCDP – 100 per cent vested; LTIP – 48100 per cent vested and 52 per cent lapsed;vested; MAP – 100 per cent vested. |
(5) | The opening balances of awards for Edgar Basto, David Lamont and Ragnar Udd reflect their holdings on the date that each became KMP, being 1 July 2020, 1 December 2020 and 1 November 2020 respectively.
|
(6) | Awards shown as held by Peter Beaven and Daniel Malchuk at 30 June 2021 are their balances at the date they ceased being KMP (30 November 2020 and 31 October 2020, respectively). The subsequent treatment of their awards is set out in ‘Arrangements for KMP leaving and joining the Group’ in this section 2.2.3.
|
5.3 Estimated value range of equity awards
The current face value (and estimate of the maximum possible total value) of equity awards allocated during FY2021FY2022 and yet to vest are the awards as set out in the previous table multiplied by the current share price of BHP Group Limited or BHP Group Plc as applicable.Limited. The minimum possible total value of the awards is nil.
The actual value that may be received by participants in the future cannot be determined as it is dependent on and therefore fluctuates with the share prices of BHP Group Limited and BHP Group Plc at the date that any particular award vests or is exercised. The table below provides five-year share price history for BHP Group Limited and BHP Group Plc, history of dividends paid and the Group’s earnings.
Five-year share price, dividend and earnings history
The table below provides the five-year share price history for BHP Group Limited, history of dividends paid and the Group’s earnings.
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| BHP Group Limited | | Share price at beginning of year | | | | | | | A$41.68 | | | | A$33.60 | | | | A$23.23 | | | | A$19.09 | |
| | Share price at end of year | | | | | | | A$35.82 | | | | A$41.16 | | | | A$33.91 | | | | A$23.28 | |
| | Dividends paid | | | | | | | A$2.13 | | | | A$3.08 | (1) | | | A$1.24 | | | | A$0.72 | |
| | Share price at beginning of year | | | | | | | £20.33 | | | | £16.53 | | | | £12.15 | | | | £9.40 | |
| | Share price at end of year | | | | | | | £16.54 | | | | £20.15 | | | | £17.06 | | | | £11.76 | |
| | Dividends paid | | | | | | | £1.13 | | | | £1.70 | (1) | | | £0.72 | | | | £0.44 | |
| BHP | | Attributable profit
(US$ million, as reported) | | | | | | | 7,956 | | | | 8,306 | | | | 3,705 | | | | 5,890 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Share price at beginning of year | | | | | | | A$35.82 | | | | A$41.68 | | | | A$33.60 | | | | A$23.23 | |
Share price at end of year | | | | | | | A$48.57 | | | | A$35.82 | | | | A$41.16 | | | | A$33.91 | |
| | | | 1 | | | A$2.07 | | | | A$2.13 | | | | A$3.08 | 2 | | | A$1.24 | |
Attributable profit (US$ million, as reported) | | | | | | | 11,304 | | | | 7,956 | | | | 8,306 | | | | 3,705 | |
(1)1 . | The FY2022 dividends paid includes A$5.38 in respect of thein-specie dividend associated with the merger of the Petroleum business with Woodside. |
| 2 | The FY2019 dividends paid includes A$1.41 or £0.80 in respect of the special dividend associated with the divestment of Onshore US. |
The highest
and lowest closing share
pricesprice during
FY2021FY2022 were A$
51.65for BHP Group Limited shares54.06 and
£23.76 for BHP Group Plc shares. The lowest share prices during FY2021 were A$
33.78and £14.9035.56 respectively.
5.4 Ordinary share holdings and transactions
The number of ordinary shares in BHP Group Limited or in BHP Group Plc held directly, indirectly or beneficially, by each individual (including shares held in the name of all close members of the Director’s or Executive KMP’s family and entities over which either the Director or Executive KMP or the family member has, directly or indirectly, control, joint control or significant influence) are shown below. No shares are held nominally by any KMP or their related parties. There have been no changes in the interests of any Directors in the period to 1 September 2021 (being not less than one month prior to the date of the notice of the 2021 AGMs), except as noted below. These are ordinary shares held without performance conditions or restrictions and are included in MSR calculations for each individual.
The interests of Directors and Executive KMP in the ordinary shares of each of BHP Group Limited and BHP Group Plc as at 30 June 2021 did not exceed on an individual basis or in the aggregate 1 per cent of BHP Group Limited’s or BHP Group Plc’s issued ordinary shares.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | Received as remuneration (1) | | | | | | | | | | | | | | | Received as remuneration (1) | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 120,069 | | | | – | | | | 146,072 | | | | 67,162 | | | | 198,979 | | | | 196,262 | | | | – | | | | – | | | | – | | | | 196,262 | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 117,279 | | | | 42 | | | | 33,828 | | | | 16,260 | | | | 134,889 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | 261,287 | | | | – | | | | 136,244 | | | | 65,424 | | | | 332,107 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | 6,345 | | | | – | | | | – | | | | – | | | | 6,345 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | 194,608 | | | | – | | | | 139,312 | | | | 56,934 | | | | 276,986 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | 71,520 | | | | – | | | | 34,349 | | | | 8,544 | | | | 97,325 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | 105,418 | | | | | | | | | | | | | | | | 105,418 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 11,000 | | | | – | | | | – | | | | – | | | | 11,000 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | 19,000 | | | | – | | | | – | | | | – | | | | 19,000 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | 5,000 | | | | 2,000 | | | | – | | | | – | | | | 7,000 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | 8,759 | | | | – | | | | – | | | | – | | | | 8,759 | | | | 3,500 | | | | – | | | | – | | | | – | | | | 3,500 | |
| | | – | | | | – | | | | – | | | | – | | | | – | | | | 15,000 | | | | – | | | | – | | | | – | | | | 15,000 | |
| | | 10,000 | | | | – | | | | – | | | | – | | | | 10,000 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | – | | | | – | | | | – | | | | – | | | | – | | | | 6,900 | | | | – | | | | – | | | | – | | | | 6,900 | |
| | | 52,351 | | | | – | | | | – | | | | – | | | | 52,351 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | 18,000 | | | | – | | | | – | | | | – | | | | 18,000 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | – | | | | – | | | | – | | | | – | | | | – | | | | 12,000 | | | | 1,938 | | | | – | | | | – | | | | 13,938 | |
| | | 7,000 | | | | – | | | | – | | | | – | | | | 7,000 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | – | | | | – | | | | – | | | | – | | | | – | | | | 25,000 | | | | – | | | | – | | | | – | | | | 25,000 | |
| | | 1,544 | | | | – | | | | – | | | | – | | | | 1,544 | | | | – | | | | – | | | | – | | | | – | | | | – | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| |
| | | 395,241 | | | | – | | | | 245,423 | | | | 119,072 | | | | 521,592 | |
| | | 134,889 | | | | – | | | | 27,651 | | | | 32,502 | | | | 130,038 | |
| | | 6,345 | | | | – | | | | – | | | | – | | | | 6,345 | |
| | | 100,917 | | | | – | | | | 35,681 | | | | 9,366 | | | | 127,232 | |
| | | 105,816 | | | | – | | | | 25,565 | | | | 12,426 | | | | 118,955 | |
| | | 11,000 | | | | – | | | | – | | | | – | | | | 11,000 | |
| | | 19,000 | | | | – | | | | – | | | | – | | | | 19,000 | |
| | | 7,000 | | | | 1,000 | | | | – | | | | – | | | | 8,000 | |
| | | 13,188 | | | | 1,111 | | | | – | | | | – | | | | 14,299 | |
| | | 15,000 | | | | – | | | | – | | | | – | | | | 15,000 | |
| | | 10,000 | | | | 2,000 | | | | – | | | | – | | | | 12,000 | |
| | | – | | | | 8,508 | | | | – | | | | – | | | | 8,508 | |
| | | 6,900 | | | | – | | | | – | | | | – | | | | 6,900 | |
| | | 52,351 | | | | – | | | | – | | | | – | | | | 52,351 | |
| | | 13,938 | | | | – | | | | – | | | | – | | | | 13,938 | |
| | | 7,420 | | | | 2,000 | | | | – | | | | – | | | | 9,420 | |
| | | 10,400 | | | | – | | | | – | | | | – | | | | 10,400 | |
| | | 1,544 | | | | 6,000 | | | | – | | | | – | | | | 7,544 | |
(1)1 | Includes shares in BHP Group Plc held directly, indirectly or beneficially, by each individual (including shares held in the name of all close members of the Director’s or Executive KMP’s family and entities over which either the Director or Executive KMP or the family member has, directly or indirectly, control, joint control or significant influence) prior to unification. |
| 2 | Includes DEP in the form of shares on equity awards vesting, where applicable, as disclosed in ‘Equity awards’ in this section 2.2.3.5.2 Equity awards. |
(2)3 | The opening balances for Edgar Basto, David LamontIan Cockerill, Christine O’Reilly, Geraldine Slattery and Ragnar Udd reflect their shareholdings on the date that each became KMP being 1 July 2020, 1 December 2020have been adjusted to include an additional 929 shares, 420 shares, 3,592 shares and 1 November 2020398 shares, respectively. |
(3) | Shares shown as held by Peter Beaven and Daniel Malchuk at 30 June 2021 are their balances at the date they ceased being KMP being 30 November 2020 and 31 October 2020 respectively.
|
(4)4 | The following BHP Group Limited shares were held in the form of American Depositary Shares: 1,892 for Geraldine Slattery (868 BHP Group Limited) and 6,000 for Gary Goldberg (5,000 BHP Group Limited).Goldberg. |
(5)5 | The opening balances for Xiaoqun CleverMichelle Hinchliffe and Christine O’ReillyCatherine Tanna reflect their shareholdings on the date that each became Non-executive Directors being 1 October 2020March 2022 and 12 October 20204 April 2022, respectively. |
(6)6 | Shares shown as held by Lindsay MaxstedAnita Frew and Shriti VaderaSusan Kilsby at 30 June 20212022 are their balances at the date of their retirement from the Board on 4 September 2020 and 15 October 2020 respectively.11 November 2021. |
5.5 Prohibition on hedging of BHP Group shares and equity instruments
The CEO and other Executive KMP may not use unvested BHP equity awards as collateral or protect the value of any unvested BHP equity awards or the value of shares and securities held as part of meeting the MSR.
Any securities that have vested and are no longer subject to restrictions, or not held as part of meeting the MSR, may be subject to hedging arrangements or used as collateral, provided that prior consent is obtained.
5.6 Share ownership guidelines and the MSR
The share ownership guidelines and the MSR help to ensure the interests of Directors, executives and shareholders remain aligned.
The CEO and other Executive KMP are expected to grow their holdings to the MSR from the scheduled vesting of their employee awards over time. The MSR is tested at the time that shares are to be sold. Shares may be sold to satisfy tax obligations arising from the granting, holding, vesting, exercise or sale of the employee awards or the underlying shares whether the MSR is satisfied at that time or not.
The MSR for the CEO was five times annual
pre-tax
base salary. At the end of
FY2021,FY2022, the CEO met the MSR.
The MSR for other Executive KMP was three times annual
pre-tax
base salary. At the end of
FY2021,FY2022, the other Executive KMP met the MSR, except for David Lamont, as he was appointed as Executive KMP on 1 December 2020.
No other Executive KMP sold or purchased shares during FY2021,FY2022, other than sales to satisfy taxation obligations, andapart from Edgar Basto, who sold shares in order to fund the purchase of a net immaterial purchase for Edgar Basto.residential dwelling.
Effective 1 July 2020, a
two-year
post-retirement shareholding requirement for the CEO applies from the date of retirement, which will be the lower of the CEO’s MSR or the CEO’s actual shareholding at the date of retirement.
Subject to securities dealing constraints,
Non-executive
Directors have agreed to apply at least 25 per cent of their remuneration (base fees plus Committee fees) to the purchase of BHP shares until they achieve an MSR equivalent in value to one year of remuneration (base fees plus Committee fees). Thereafter, they must maintain at least that level of shareholding throughout their tenure. At the end of
FY2021,FY2022, each
Non-executive
Director met the
MSR with the exception of Susan Kilsby, Dion Weisler and Christine O’Reilly as they only recently joined the Board on 1 April 2019, 1 June 2020 and 12 October 2020, respectively. As at the date of this Report, Susan, Dion and Christine each met the MSR.
Payments to past Directors and for loss of office
UK regulations require the inclusion in the Remuneration Report of certain payments to past Directors and payments made for loss of office.
The following payments were made to Andrew Mackenzie for FY2021 that relate to the period when he was no longer an Executive Director and CEO and which have not been reported elsewhere in this section 2.2.3:
100 per cent of the 254,815 retained LTIP awards granted in 2016, reduced from 339,753 awards originally granted and prorated for time served at the time of departure, vested on 18 August 2021. The value of these awards for Andrew was US$10.517 million, including a related DEP of US$1.710 million which was paid in shares.
During FY2021, Andrew was provided tax return preparation services of US$0.073 million in respect of his tax obligations in multiple jurisdictions for BHP employment income in accordance with contractual and termination arrangements.
The Remuneration Committee has adopted a de minimis threshold of US$7,500 for disclosure of payments to past Directors under UK requirements.
There were no payments made for loss of office in FY2021.
Relative importance of spend on pay
The table below sets out the total spend for Continuing operations on employee remuneration during FY2021 (and the prior year) compared with other significant expenditure items, and includes items as prescribed in the UK requirements. BHP has included tax payments and purchases of property, plant and equipment being the most significant other outgoings in monetary terms.
| | | | | | | | |
| | | | | | |
Aggregate employee benefits expense | | | | | | | 4,120 | |
Dividends paid to BHP shareholders (1) | | | | | | | 6,876 | |
Income tax paid and royalty-related taxation paid (net of refunds) | | | | | | | 5,944 | |
Purchases of property, plant and equipment | | | | | | | 6,900 | |
(1) | There were no share buybacks in FY2021 or FY2020.
|
5.7 Transactions with KMP
During the financial year, there were no transactions between the Group and its subsidiaries and KMP (including their related parties) (2020:(2021: US$ nil; 2019:2020: US$ nil). There were no amounts payable by or loans with KMP (including their related parties) at 30 June 2021 (2020:2022 (2021: US$ nil).
A number of KMP hold or have held positions in other companies (i.e. personally related entities) where it is considered they control or significantly influence the financial or operating policies of those entities. There have been no transactions with those entities and no amounts were owed by the Group to personally related entities or any other related parties (2020:(2021: US$ nil; 2019:2020: US$ nil).
This Remuneration Report was approved by the Board on 2 September 202116 August 2022 and signed on its behalf by:
|
|
|
| Chair, Remuneration Committee |
2 September 2021 |
The information presented by the Directors in this Directors’ Report relates to BHP Group Limited, BHP Group Plc and their respective subsidiaries. Section 1 ‘Strategic Report’ (which includes the Chair’s review in section 1.2 and the Chief Executive Officer’s review in section 1.3, and incorporates the operating and financial review), section 2.1 ‘Corporate Governance Statement’, section 2.2 ‘Remuneration Report’, section 3.5 ‘Lead Auditor’s Independence Declaration’ and section 4 ‘Additional information’ are each incorporated by reference into, and form part of, this Directors’ Report. In addition, for the purposes of UK law, the Strategic Report in section 1 and the Remuneration Report in section 2.2 form separate reports and have been separately approved by the Board for that purpose.
For the purpose of the Financial Conduct Authority’s (FCA) Listing Rule 9.8.4C R, the applicable information required to be disclosed in accordance with FCA Listing Rule 9.8.4 R is set out in the sections below.
| | |
Applicable information required by FCA Listing Rule 9.8.4 R
| | Section in this Annual Report
|
(1) Interest capitalised by the Group
| | Section 3, note 22 ‘Net finance costs’ |
Paragraphs (2), (4), (5), (6), (7), (8), (9), (10), (11), (12), (13) and (14) of Listing Rule 9.8.4 R are not applicable.
The Directors confirm, on the advice of the Risk and Audit Committee (RAC), that they consider the Annual Report (including the Financial Statements), taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess BHP’s position, performance, business model and strategy.
2.3.1 Review of operations, principal activities and state of affairs
A review of the operations of BHP during FY2021, the results of those operations during FY2021 and the expected results of those operations in future financial years are set out in section 1, in particular in 1.2 to 1.15, 1.17 and 1.18 and in other material in this Annual Report. Information on the development of BHP and likely developments in future years also appears in those sections.
Our principal activities during FY2021 are disclosed in section 1. We are among the world’s top producers of major commodities, including iron ore, metallurgical coal and copper. We also have substantial interests in oil, gas and energy coal. No significant changes in the nature of BHP’s principal activities occurred during FY2021 other than as disclosed in section 1.
There were no significant changes in BHP’s state of affairs that occurred during FY2021 and no significant post balance date events other than as disclosed in section 1 and note 35 ‘Subsequent events’ in section 3.
No other matter or circumstance has arisen since the end of FY2021 that has significantly affected or is expected to significantly affect the operations, the results of operations or state of affairs of BHP in future years.
2.3.2 Share capital andbuy-back
programsAt the Annual General Meetings held in 2019 and 2020, shareholders authorised BHP Group Plc to makeon-market
purchases of up to 211,207,180 of its ordinary shares, representing 10 per cent of BHP Group Plc’s issued share capital at that time. During FY2021, we did not make anyon-market
oroff-market
purchases of BHP Group Limited or BHP Group Plc shares under any sharebuy-back
program. As at the date of this Directors’ Report, there were no currenton-market
buy-backs.
Shareholders will be asked at the 2021 Annual General Meetings to renew this authority. As at the date of this Directors’ Report, there is no intention to exercise this authority.Some of our executives receive rights over BHP shares as part of their remuneration arrangements. Entitlements may be satisfied by the transfer of existing shares, which are acquiredon-market
by the Employee Share Ownership Plan (ESOP) Trusts or, in respect of some entitlements, by the issue of shares.The number of shares referred to in column A below were purchased to satisfy awards made under the various BHP Group Limited and BHP Group Plc employee share schemes during FY2021.
| | | | | | | | | | | | | | | | | | | | |
| |
Total number of
shares
purchased and
transferred to
employees to
satisfy employee
awards | | |
Average price paid per share (1)
| | |
Total
number of shares
purchased as
| | |
Maximum number of shares that
may yet be purchased under the
| |
| | | | | | | | | | | | | | | | |
1 Jul 2020 to 31 Jul 2020 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | (3) |
1 Aug 2020 to 31 Aug 2020 | | | 6,158,718 | | | | 28.32 | | | | – | | | | – | | | | 211,207,180 | (3) |
1 Sep 2020 to 30 Sep 2020 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | (3) |
1 Oct 2020 to 31 Oct 2020 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | (3) |
1 Nov 2020 to 30 Nov 2020 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | (3) |
1 Dec 2020 to 31 Dec 2020 | | | – | | | | – | | | | | | | | – | | | | 211,207,180 | (3) |
1 Jan 2021 to 31 Jan 2021 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | (3) |
1 Feb 2021 to 28 Feb 2021 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | (3) |
1 Mar 2021 to 31 Mar 2021 | | | 882,454 | | | | 36.57 | | | | – | | | | – | | | | 211,207,180 | (3) |
1 Apr 2021 to 30 Apr 2021 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | (3) |
1 May 2021 to 31 May 2021 | | | – | | | | – | | | | – | | | | – | | | | 211,207,180 | (3) |
1 Jun 2021 to 30 Jun 2021 | | | 731,235 | | | | 38.00 | | | | – | | | | – | | | | 211,207,180 | (3) |
| | | | | | | | | | | | | | | | | | | | |
| | | 7,772,407 | | | | 30.16 | | | | – | | | | – | | | | 211,207,180 | (3) |
| | | | | | | | | | | | | | | | | | | | |
(1) | The shares were purchased in the currency of the stock exchange on which the purchase took place and the sale price has been converted into US dollars at the exchange rate on the day of purchase.
|
(2) | BHP Group Limited is able tobuy-back
and cancel BHP Group Limited shares within the ‘10/12 limit’ without shareholder approval in accordance with section 257B of the Australian Corporations Act 2001. Any futureon-market
sharebuy-back
program would be conducted in accordance with the Australian Corporations Act 2001 and with the ASX Listing Rules. |
(3) | At the Annual General Meetings held during 2019 and 2020, shareholders authorised BHP Group Plc to makeon-market
purchases of up to 211,207,180 of its ordinary shares, representing 10 per cent of BHP Group Plc’s issued capital at the time. |
Information about the Group’s financial position and financial results is included in the Financial Statements in this Annual Report. The Consolidated Income Statement shows profit attributable to BHP members of US$11.3 billion in FY2021, compared with a profit of US$8.0 billion in FY2020.
BHP’s business activities, together with the factors likely to affect its future development, performance and position, are discussed in section 1. In addition, sections 1.3 to 1.9 and 2.1.13, and note 23 ‘Financial risk management’ in section 3 outline BHP’s capital management objectives, its approach to financial risk management and exposure to financial risks, liquidity and borrowing facilities.
The Directors, having made appropriate enquiries, have a reasonable expectation that BHP has adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt the going concern basis of accounting in preparing the annual Financial Statements.
The Directors who served at any time during FY2021 or up until the date of this Directors’ Report were Ken MacKenzie, Mike Henry, Terry Bowen, Malcolm Broomhead, Xiaoqun Clever, Ian Cockerill, Anita Frew, Gary Goldberg, Susan Kilsby, Lindsay Maxsted, John Mogford, Christine O’Reilly, Shriti Vadera and Dion Weisler. For information on the current Directors of BHP Group Limited and BHP Group Plc, refer to section 2.1.2. These details include the period for which each Director held office up to the date of this Directors’ Report, their qualifications, experience and particular responsibilities, the directorships held in other listed companies since 1 July 2018 and the period for which each directorship has been held.
Shriti Vadera served as aNon-executive
Director of BHP Group Limited and BHP Group Plc from January 2011 until her retirement on 15 October 2020. Lindsay Maxsted served as aNon-executive
Director of BHP Group Limited and BHP Group Plc from March 2011 until his retirement on 4 September 2020.Xiaoqun Clever and Christine O’Reilly were appointed asNon-executive
Directors of BHP Group Limited and BHP Group Plc with effect from 1 October 2020 and 12 October 2020 respectively and were elected at the 2020 Annual General Meetings.The number of meetings of the Board and its Committees held during the year and each Director’s attendance at those meetings are set out in section 2.1.4.
2.3.5 Remuneration and share interests
The policy for determining the nature and amount of emoluments of the Executive Key Management Personnel (KMP) (including the Executive Director) and theNon-executive
Directors, and information about the relationship between that policy and BHP’s performance are set out in sections 2.2.2 and 2.2.3.The remuneration tables contained in section 2.2.3 set out the remuneration of members of the Executive KMP (including the Executive Director) and theNon-executive
Directors.‘Ordinary share holdings and transactions’ in section 2.2.3 sets out the relevant interests in shares in BHP Group Limited and BHP Group Plc of the Directors who held office during FY2021, at the beginning and end of FY2021. No rights or options over shares in BHP Group Limited and BHP Group Plc are held by any of theNon-executive
Directors. Interests held by the Executive Director under employee equity plans as at 30 June 2021 are set out in the tables showing interests in incentive plans contained in ‘Equity awards’ in section 2.2.3. Except for Mike Henry, as at the date of this Directors’ Report, the information pertaining to shares in BHP Group Limited and BHP Group Plc held directly, indirectly or beneficially by Directors is the same as set out in the table in ‘Ordinary share holdings and transactions’ in section 2.2.3. Where applicable, the information includes shares held in the name of a spouse, superannuation fund, nominee and/or other controlled entities.Non-executive
Directors have agreed to apply at least 25 per cent of their remuneration (base fees plus committee fees) to the purchase of shares in BHP Group Limited and BHP Group Plc until they achieve a shareholding equivalent in value to one year’s remuneration (base fees plus committee fees). Thereafter,Non-executive
Directors must maintain at least that level of shareholding throughout their tenure. All dealings by Directors are subject to mandatory minimum performance requirements for securities dealing and are reported to the Board and to the stock exchanges. Information on our policy governing the use of hedging arrangements over shares in BHP by Directors and other members of the KMP is set out in ‘Prohibition on hedging of BHP Group shares and equity instruments’ in section 2.2.3.As at the date of this Directors’ Report, Mike Henry held:
(either directly, indirectly or beneficially) 196,262 shares in BHP Group Plc and 325,330 shares in BHP Group Limited
rights and options over nil shares in BHP Group Plc and 772,999 shares in BHP Group Limited
We have not made available to any Directors any interest in a registered scheme.
‘Ordinary share holdings and transactions’ in section 2.2.3 sets out the relevant interests in shares in BHP Group Limited and BHP Group Plc held directly, indirectly or beneficially at the beginning and end of FY2021 by those senior executives who were Executive KMP (other than the Executive Director) during FY2021. Where applicable, the information includes shares held in the name of a spouse, superannuation fund, nominee and/or other controlled entities. Interests held by members of the Executive KMP under employee equity plans as at 30 June 2021 are set out in the tables contained in ‘Equity awards’ in section 2.2.3.
The table below sets out the relevant interests in shares in BHP Group Limited and BHP Group Plc held directly, indirectly or beneficially, as at the date of this Directors’ Report by those senior executives who were Executive KMP (other than the Executive Director) on that date. Where applicable, the information also includes shares held in the name of a spouse, superannuation fund, nominee and/or other controlled entities.
| | | | | | |
| | | | As at date of
Directors’ Report
| |
| | | |
| 130,038
|
|
| | | |
| 6,345
|
|
| | | |
| 123,640
|
|
| | | |
| 118,557
– |
|
Stefanie Wilkinson is the Group Company Secretary. For details of her qualifications and experience, refer to section 2.1.2. The following people also acted during FY2021 as Company Secretaries of BHP Group Limited and BHP Group Plc: Caroline Cox BA (Hons), MA, LLB, BCL until 1 March 2021, Rachel Agnew, BComm (Economics), LLB (Hons), GAICD, until 1 September 2020 and Geof Stapledon, BEc, LLB (Hons), DPhil, FCIS.
Geof Stapledon resigned as Company Secretary of BHP Group Limited and BHP Group Plc with effect from 7 July 2021. Prakash Kakkad, LLB, LPC was appointed as a Company Secretary of BHP Group Limited and BHP Group Plc and John-Paul Santamaria, BEng (Civil) (Hons), LLB was appointed as a Company Secretary of BHP Group Limited, in each case with effect from 7 July 2021.
Each individual has experience in a company secretariat role or other relevant fields arising from time spent in roles within BHP, other large listed companies or other relevant entities.
2.3.7 Indemnities and insurance
Rule 146 of the BHP Group Limited Constitution and Article 146 of the BHP Group Plc Articles of Association require each company to indemnify, to the extent permitted by law, each Officer of BHP Group Limited and BHP Group Plc, respectively, against liability incurred in, or arising out of, the conduct of the business of BHP or the discharge of the duties of the Officer. The Directors named in section 2.1.2, the Company Secretaries and other Officers of BHP Group Limited and BHP Group Plc have the benefit of this requirement, as do individuals who formerly held one of those positions.
In accordance with this requirement, BHP Group Limited and BHP Group Plc have entered into Deeds of Indemnity, Access and Insurance (Deeds of Indemnity) with each of their respective Directors. The Deeds of Indemnity are qualifying third party indemnity provisions for the purposes of the UK Companies Act 2006 and each of these qualifying third party indemnities was in force as at the date of this Directors’ Report.
We have a policy that BHP will, as a general rule, support and hold harmless an employee, including an employee appointed as a Director of a subsidiary who, while acting in good faith, incurs personal liability to others as a result of working for BHP.
In addition, as part of the arrangements to effect the demerger of South32, we agreed to indemnify certain former Officers of BHP who transitioned to South32 from certain claims and liabilities incurred in their capacity as Directors or Officers of South32.
From time to time, we engage our External Auditor, Ernst & Young (EY), to conductnon-statutory
audit work and provide other services in accordance with our policy on the provision of other services by the External Auditor. The terms of engagement in the United Kingdom include that we must compensate and reimburse EY LLP for, and protect EY LLP against, any loss, damage, expense, or liability incurred by EY LLP in respect of third party claims arising from a breach by BHP of any obligation under the engagement terms. In Australia, the terms of engagement for certain services include that we must compensate and reimburse EY for, and protect EY against, any loss, damage, expense, or liability incurred by EY in respect of third party claims arising from a breach by BHP of any obligation under the engagement terms.We have insured against amounts that we may be liable to pay to Directors, Company Secretaries or certain employees (including former Officers) pursuant to Rule 146 of the Constitution of BHP Group Limited and Article 146 of the Articles of Association of BHP Group Plc or that we otherwise agree to pay by way of indemnity. The insurance policy also insures Directors, Company Secretaries and some employees (including former Officers) against certain liabilities (including legal costs) they may incur in carrying out their duties. For this Directors’ and Officers’ insurance, we paid premiums of US$24,114,600 excluding taxes during FY2021.
During FY2021, BHP paid legal defence costs for certain current and former employees of BHP or BHP Brasil in relation to the criminal charges filed by the Federal Prosecutors’ Office in Brazil. In addition, BHP paid legal defence costs for Roger Gilbertson, a former BHP Bolivia country manager, in connection with the Bolivian authorities’ decision to criminally prosecute two former presidents of Bolivia and a number of former international oil company executives in relation to exploration and production contracts entered into between 1994 and 1997.
Other than as set out above, no indemnity in favour of a current or former officer of BHP Group Limited or BHP Group Plc, or in favour of the External Auditor, was called on during FY2021.
Our people are fundamental to our success. We are committed to shaping a culture where our employees are provided with opportunities to develop, are valued and encouraged to contribute towards making work safer, simpler and more productive. We strongly believe that having employees who are engaged and connected to BHP reinforces our shared purpose aligned toand will result in a more productive workplace.For more information on employee engagement and employee policies, including communications and regarding disabilities, refer to section 1.14, 1.12 and in ‘Workforce engagement’ in section 2.1.6.
2.3.9 Corporate governance
The FCA’s Disclosure Guidance and Transparency Rules (DTR 7.2) require that certain information be included in a corporate governance statement. BHP has an existing practice of issuing a corporate governance statement as part of our Annual Report that is incorporated into the Directors’ Report by reference. The information required by the Disclosure Guidance and Transparency Rules and the FCA’s Listing Rules (LR 9.8.6) is located in section 2, with the exception of the information referred to in LR 9.8.6 (1), (3) and (4) and DTR 7.2.6, which is located in sections 2.3.2, 2.3.3, ‘Directors’ in section 2.3.5 and 2.3.18.
A final dividend of 200 US cents per share will be paid on 21 September 2021, resulting in total dividends determined in respect of FY2021 of 301 US cents per share. For information on the dividends paid, refer to notes 16 ‘Share capital’ and 18 ‘Dividends’ in section 3. For information on the Group’s dividend policy, refer to section 4.10.7.
No current officer of BHP has held the role of director or partner of the Group’s current external auditor. During FY2021, Lindsay Maxsted was the only officer of BHP who, prior to his appointment as an officer of BHP, previously held the role of director or partner of the Group’s former external auditor, at a time when the Group’s former external auditor conducted an audit of BHP. KPMG resigned as BHP’s external auditor on 7 November 2019 following the conclusion of the 2019 AGMs, in order to comply with UK and EU requirements on auditor tenure. Lindsay Maxsted was not part of the KPMG audit practice after 1980 and, while at KPMG, was not in any way involved in, or able to influence, any audit activity associated with BHP. Lindsay Maxsted retired as aNon-executive
Director of BHP Group Limited and BHP Group Plc on 4 September 2020.Each person who held the office of Director at the date the Board approved this Directors’ Report made the following statements:
so far as the Director is aware, there is no relevant audit information of which BHP’s External Auditor is unaware
the Director has taken all steps that he or she ought to have taken as a Director to make him or herself aware of any relevant audit information and to establish that BHP’s External Auditor is aware of that information
This confirmation is given pursuant to section 418 of the UK Companies Act 2006 and should be interpreted in accordance with, and subject to, those provisions.
Consistent with the then applicable UK and EU requirements in regard to audit firm tender and rotation, BHP conducted an audit tender during FY2017.
After a comprehensive tender process, at a meeting held on 16 August 2017, the Board selected EY as its independent registered public accounting firm from the financial year beginning 1 July 2019, and our shareholders approved EY’s appointment at the Annual General Meetings in 2019.
Information on thenon-audit
services undertaken by BHP’s External Auditor, including the amounts paid fornon-audit
services, refer to note 36 ‘Auditor’s remuneration’ in section 3. Allnon-audit
services were approved in accordance with the process set out in the Policy on Provision of Audit and Other Services by the External Auditor. Nonon-audit
services were carried out that were specifically excluded by the Policy on Provision of Audit and Other Services by the External Auditor. Based on advice provided by the RAC, the Directors have formed the view that the provision ofnon-audit
services is compatible with the general standard of independence for auditors, and that the nature ofnon-audit
services means that auditor independence was not compromised. For a statement of the reasons for this view and for more information about our policy in relation to the provision ofnon-audit
services by the auditor, refer to section 2.1.10.2.3.13 Political donations
We maintain a position of impartiality with respect to party politics and do not make political contributions or expenditure/donations for political purposes to any political party, politician, elected official or candidate for public office. We do, however, contribute to the public debate of policy issues that may affect BHP in the countries in which we operate.
No political contributions/donations for political purposes were made by BHP to any political party, politician, elected official or candidate for public office during FY2021.(1)
(1) | Note that Australian Electoral Commission (AEC) disclosure requirements are broad, such that amounts that are not political donations can be reportable for AEC purposes. For example, where a political party or organisation owns shares in BHP, the AEC filing requires the political party or organisation to disclose the dividend payments received in respect of their shareholding.
|
2.3.14 Exploration, research and development
Companies within the Group carry out exploration and research and development necessary to support their activities. Details are provided in sections 1.10 to 1.17 and 4.6.
2.3.15 ASIC Instrument 2016/191
BHP Group Limited is an entity to which Australian Securities and Investments Commission (ASIC) Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 dated 24 March 2016 applies. Amounts in this Directors’ Report and the Financial Statements, except estimates of future expenditure or where otherwise indicated, have been rounded to the nearest million dollars in accordance with ASIC Instrument 2016/191.
2.3.16 Proceedings on behalf of BHP Group Limited
No proceedings have been brought on behalf of BHP Group Limited, nor has any application been made, under section 237 of the Australian Corporations Act 2001.
2.3.17 Performance in relation to environmental regulation
BHP seeks to be compliant with all applicable environmental laws and regulations relevant to its operations. We monitor compliance on a regular basis, including through external and internal means, to minimise the risk ofnon-compliance.
For more information on BHP’s performance in relation to health, safety and the environment, refer to section 1.13.For the purposes of section 299 (1)(f) of the Australian Corporations Act 2001, in FY2021 BHP was levied four fines in relation to environmental laws and regulations at our operated assets, the total amount payable being US$35,526. Three fines were received in Australia: the first fine was received at the Caval Ridge Mine for mine affected water release (US$10,187), the second fine was received at the Poitrel Mine for unverified environmental monitoring data (US$10,329) and the third fine was received at Ripstone Dam for water monitoring telemetry system failure (US$10,417). One fine was received in South America, at the Spence Mine for incorrect waste storage (US$4,593).
Greenhouse gas emissions and energy consumption
Regulations made under the UK Companies Act 2006 require BHP, to the extent practicable, to obtain relevant information on the Group’s annual quantity of greenhouse gas emissions, which is reported in tonnes of carbon dioxide equivalent, and the Group’s energy consumption. In accordance with those UK requirements, information on BHP’s total FY2021 greenhouse gas emissions and intensity and energy consumption has been included in sections 1.13.7 and 4.8.
For more information on environmental performance, including environmental regulation, refer to section 1.13
2.3.18 Share capital, restrictions on transfer of shares and other additional information
Information relating to BHP Group Plc’s share capital structure, restrictions on the holding or transfer of its securities or on the exercise of voting rights attaching to such securities, certain agreements triggered on a change of control and the existence of branches of BHP outside of the United Kingdom, is set out in the following sections:
section 1.10.1 (Locations)
section 2.3.2 (Share capital andbuy-back
programs)section 4.10.3 (Organisational structure)
section 4.10.4 (Material contracts)
section 4.10.5 (Constitution)
section 4.10.6 (Share ownership)
section 4.10.9 (Government regulations)
note 16 ‘Share capital’ and note 25 ‘Employee share ownership plans’ in section 3
As at the date of this Directors’ Report, there were 13,607,440 unvested equity awards outstanding in relation to BHP Group Limited ordinary shares held by 18,942 holders and 324,504 unvested equity awards outstanding in relation to BHP Group Plc ordinary shares held by 1,015 holders. The expiry dates of these unvested equity awards range between February 2022 and August 2025 and there is no exercise price. 4,155 options over unissued shares or unissued interests in BHP have been granted during or since the end of FY2021 and 4,096,660 shares or interests were issued as a result of the exercise of an option over unissued shares or interests during or since the end of FY2021. For more information, refer to note 25 ‘Employee share ownership plans’ in section 3. For information on movements in share capital during and since the end of FY2021, refer to note 16 ‘Share capital’ in section 3.
The Directors’ Report is approved in accordance with a resolution of the Board. | | |
| | |
Chair | | Chief Executive Officer |
Dated: 2 September 2021 | | |
Refer to the pages beginning on page
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4.11 Financial information summary
We prepare our Consolidated Financial Statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board. We publish our Consolidated Financial Statements in US dollars. All Consolidated Income Statement, Consolidated Balance Sheet and Consolidated Cash Flow Statement information below has been derived from audited Financial Statements. For more information refer to section 3.the Financial Statements.
InformationSome information in this section has been presented on a Continuing operations basis to exclude the contribution from Onshore US assets, unless otherwise noted.Discontinued operations. Details of the contribution of the Onshore US assetsDiscontinued operations to the Group’s results are disclosed in Financial Statements note 2927 ‘Discontinued operations’ in section 3..
| | | | | | | | | | | | | | | | | | | | |
| | | | | 2020 | | | 2019 | | | 2018 | | | 2017 | |
Consolidated Income Statement (section 3.1.1) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 42,931 | | | | 44,288 | | | | 43,129 | | | | 35,740 | |
| | | | | | | 14,421 | | | | 16,113 | | | | 15,996 | | | | 12,554 | |
Profit after taxation from Continuing operations | | | | | | | 8,736 | | | | 9,520 | | | | 7,744 | | | | 6,694 | |
Loss after taxation from Discontinued operations | | | | | | | – | | | | (335 | ) | | | (2,921 | ) | | | (472 | ) |
Profit after taxation from Continuing and Discontinued operations attributable to BHP shareholders (Attributable profit) (1) | | | | | | | 7,956 | | | | 8,306 | | | | 3,705 | | | | 5,890 | |
Dividends per ordinary share – paid during the period (US cents) | | | | | | | 143.0 | | | | 220.0 | | | | 98.0 | | | | 54.0 | |
Dividends per ordinary share – determined in respect of the period (US cents) | | | | | | | 120.0 | | | | 235.0 | | | | 118.0 | | | | 83.0 | |
Basic earnings per ordinary share (US cents) (1)(2) | | | | | | | 157.3 | | | | 160.3 | | | | 69.6 | | | | 110.7 | |
Diluted earnings per ordinary share (US cents) (1)(2) | | | | | | | 157.0 | | | | 159.9 | | | | 69.4 | | | | 110.4 | |
Basic earnings from Continuing operations per ordinary share (US cents) (2) | | | | | | | 157.3 | | | | 166.9 | | | | 125.0 | | | | 119.8 | |
Diluted earnings from Continuing operations per ordinary share (US cents) (2) | | | | | | | 157.0 | | | | 166.5 | | | | 124.6 | | | | 119.5 | |
Number of ordinary shares (million) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 5,058 | | | | 5,058 | | | | 5,324 | | | | 5,324 | |
| | | | | | | 5,057 | | | | 5,180 | | | | 5,323 | | | | 5,323 | |
| | | | | | | 5,069 | | | | 5,193 | | | | 5,337 | | | | 5,336 | |
Consolidated Balance Sheet (section 3.1.3) (3) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 105,733 | | | | 101,811 | | | | 112,943 | | | | 117,956 | |
| | | | | | | 52,175 | | | | 51,753 | | | | 60,599 | | | | 62,655 | |
Share capital (including share premium) | | | | | | | 2,686 | | | | 2,686 | | | | 2,761 | | | | 2,761 | |
Total equity attributable to BHP shareholders (4) | | | | | | | 47,865 | | | | 47,169 | | | | 55,521 | | | | 57,187 | |
Consolidated Cash Flow Statement (section 3.1.4) | | | | | | | | | | | | | | | | | | | | |
Net operating cash flows (5) | | | | | | | 15,706 | | | | 17,871 | | | | 18,461 | | | | 16,804 | |
Capital and exploration expenditure (6) | | | | | | | 7,640 | | | | 7,566 | | | | 6,753 | | | | 5,220 | |
Other financial information (section 4.2) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 12,044 | | | | 9,446 | | | | 11,605 | | | | 17,201 | |
Underlying attributable profit (7) | | | | | | | 9,060 | | | | 9,124 | | | | 8,933 | | | | 6,732 | |
| | | | | | | 22,071 | | | | 23,158 | | | | 23,183 | | | | 19,350 | |
| | | | | | | 15,874 | | | | 17,065 | | | | 16,562 | | | | 13,190 | |
Underlying basic earnings per share (US cents) (7) | | | | | | | 179.2 | | | | 176.1 | | | | 167.8 | | | | 126.5 | |
Underlying Return on Capital Employed (per cent) (4)(7) | | | | | | | 16.9 | | | | 16.0 | | | | 14.2 | | | | 9.8 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | 2021 | | | 2020 | | | 2019 | | | 2018 | |
Consolidated Income Statement (Financial Statements 1.1) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 56,921 | | | | 38,924 | | | | 38,446 | | | | 37,817 | |
| | | | | | | 25,515 | | | | 13,683 | | | | 13,629 | | | | 14,437 | |
Profit after taxation from Continuing operations 1 | | | | | | | 13,676 | | | | 8,628 | | | | 8,528 | | | | 8,559 | |
Profit/(loss) after taxation from Discontinued operations 1 | | | | | | | (225 | ) | | | 108 | | | | 657 | | | | (3,736 | ) |
Profit after taxation from Continuing and Discontinued operations attributable to BHP shareholders (Attributable profit) | | | | | | | 11,304 | | | | 7,956 | | | | 8,306 | | | | 3,705 | |
Profit after taxation from Continuing operations attributable to BHP shareholders 1 | | | | | | | 11,529 | | | | 7,848 | | | | 7,656 | | | | 7,467 | |
Dividends per ordinary share – paid during the period (US cents) | | | | | | | 156.0 | | | | 143.0 | | | | 220.0 | | | | 98.0 | |
Dividends per ordinary share – determined in respect of the period (US cents) | | | | | | | 301.0 | | | | 120.0 | | | | 235.0 | | | | 118.0 | |
In specie dividend on merger of Petroleum with Woodside (US cents) | | | | | | | – | | | | – | | | | – | | | | – | |
Basic earnings per ordinary share (US cents) 2 | | | | | | | 223.5 | | | | 157.3 | | | | 160.3 | | | | 69.6 | |
Diluted earnings per ordinary share (US cents) 2 | | | | | | | 223.0 | | | | 157.0 | | | | 159.9 | | | | 69.4 | |
Basic earnings from Continuing operations per ordinary share (US cents) 1,2 | | | | | | | 228.0 | | | | 155.2 | | | | 147.8 | | | | 140.3 | |
Diluted earnings from Continuing operations per ordinary share (US cents) 1,2 | | | | | | | 227.5 | | | | 154.8 | | | | 147.4 | | | | 139.9 | |
Number of ordinary shares (million) 2 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 5,058 | | | | 5,058 | | | | 5,058 | | | | 5,324 | |
| | | | | | | 5,057 | | | | 5,057 | | | | 5,180 | | | | 5,323 | |
| | | | | | | 5,068 | | | | 5,069 | | | | 5,193 | | | | 5,337 | |
Consolidated Balance Sheet (Financial Statements 1.3) 3 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 108,927 | | | | 105,733 | | | | 101,811 | | | | 112,943 | |
| | | | | | | 55,605 | | | | 52,175 | | | | 51,753 | | | | 60,599 | |
Share capital (including share premium) | | | | | | | 2,686 | | | | 2,686 | | | | 2,686 | | | | 2,761 | |
Total equity attributable to BHP shareholders | | | | | | | 51,264 | | | | 47,865 | | | | 47,169 | | | | 55,521 | |
Consolidated Cash Flow Statement (Financial Statements 1.4) | | | | | | | | | | | | | | | | | | | | |
Net operating cash flows 4 | | | | | | | 27,234 | | | | 15,706 | | | | 17,871 | | | | 18,461 | |
Capital and exploration expenditure 5 | | | | | | | 7,120 | | | | 7,640 | | | | 7,566 | | | | 6,753 | |
Other financial information (OFR 11) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 4,121 | | | | 12,044 | | | | 9,446 | | | | 11,605 | |
Underlying attributable profit 6 | | | | | | | 17,077 | | | | 9,060 | | | | 9,124 | | | | 8,933 | |
Underlying attributable profit - Continuing operations 1,6 | | | | | | | 16,985 | | | | 8,948 | | | | 8,431 | | | | 10,393 | |
| | | | | | | 35,073 | | | | 19,870 | | | | 19,093 | | | | 19,829 | |
| | | | | | | 29,853 | | | | 15,130 | | | | 14,581 | | | | 15,003 | |
Underlying basic earnings per share (US cents) 6 | | | | | | | 337.7 | | | | 179.2 | | | | 176.1 | | | | 167.8 | |
Underlying basic earnings per share - Continuing operations (US cents) 1,6 | | | | | | | 335.9 | | | | 176.9 | | | | 162.8 | | | | 195.2 | |
Underlying return on capital employed (per cent) 6 | | | | | | | 32.5 | | | | 16.9 | | | | 16.0 | | | | 14.2 | |
(1
)
| Comparative periods have been adjusted for the effects of applying IFRS 5Includes Loss after taxation from‘Non-current
Assets Held for Sale and Discontinued operations attributableOperations’ and discloses them on the same basis as the current period figures. For more information refer to BHP shareholders. Financial Statements note 27 ‘Discontinued operations’. |
(2)2 | For more information on earnings per share refer to Financial Statements note 7 ‘Earnings per share’ in section 3.. |
(3)3 | The Consolidated Balance Sheet for comparative periods includes the associated assets and liabilities held for sale in relation to Petroleum (merger with Woodside in FY2022), BMC and Cerrejón for FY2021(both disposed in FY2022) and Onshore US for FY2018(disposed in FY2019) as IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ does not require the Consolidated Balance Sheet to be restated for comparative periods. |
(4) | All comparative periods have been restated to reflect changes to the Group’s accounting policy following a decision by the IFRS Interpretations Committee on IAS 12 ‘Income Taxes’, resulting in the retrospective recognition of US$950 million of goodwill at Olympic Dam (included in the Copper segment) and an offsetting US$1,021 million increase in deferred tax liabilities. Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’ in section 3 for further information.
|
(5)4 | Net operating cash flows are after dividends received, net interest paid, proceeds and settlements of cash management related instruments, net taxation paid and includes Net operating cash flows from Discontinued operations. |
(6)5 | Capital and exploration expenditure is presented on a cash basis and represents purchases of property, plant and equipment plus exploration expenditure from the Consolidated Cash Flow Statement in section 3 and includes purchases of property, plant and equipment plus exploration expenditure from Discontinued operations. For more information refer to Financial Statements note 2927 ‘Discontinued operations’ in section 3. Purchase of property, plant and equipment includes capitalised deferred stripping of US$810 million for FY2021 (FY2020: US$698 million) and excludes capitalised interest.. Exploration expenditure is capitalised in accordance with our accounting policies, as set out in Financial Statements note 11 ‘Property, plant and equipment’ in section 3.. |
(7)6 | We use Alternative Performance Measures (APMs)non-IFRS financial information to reflect the underlying performance of the Group. Underlying attributable profit, Underlying basic earnings per share and Underlying return on capital employed includes Continuing and Discontinued operations. Refer to section 4.2OFR 11 for a reconciliation of APMsnon-IFRS financial information to their respective IFRS measure. Refer to section 4.2.1OFR 11.1 for the definition and method of calculation of APMs.non-IFRS financial information. Refer to Financial Statements note 20 ‘Net debt’ in section 3 for the composition of Net debt. |
4.2 Alternative Performance Measures
We use various Alternative Performance Measures (APMs) to reflect our underlying financial performance.
These APMs are not defined or specified under the requirements of IFRS, but are derived from the Group’s Consolidated Financial Statements prepared in accordance with IFRS. The APMs are consistent with how management review the financial performance of the Group with the Board and the investment community.
Sections 4.2.1 and 4.2.2 outline why we believe the APMs are useful and the calculation methodology. We believe these APMs provide useful information, but they should not be considered as an indication of or as a substitute for statutory measures as an indicator of actual operating performance (such as profit or net operating cash flow) or any other measure of financial performance or position presented in accordance with IFRS, or as a measure of a company’s profitability, liquidity or financial position.
The following tables provide reconciliations between the APMs and their nearest respective IFRS measure.
The measures and reconciliations below included in this section for the year ended 30 June 2021 and comparative periods are unaudited and have been derived from the Group’s Consolidated Financial Statements.
To improve the comparability of underlying financial performance between reporting periods, some of our APMs adjust the relevant IFRS measures for exceptional items. For more information on exceptional items, refer to note 3 ‘Exceptional items’ in section 3.1.
Exceptional items are those gains or losses where their nature, including the expected frequency of the events giving rise to them, and impact is considered material to the Group’s Consolidated Financial Statements. The exceptional items included within the Group’s profit from Continuing and Discontinued operations for the financial years are detailed below.
| | | | | | | | | | | | |
| |
| | | 2020
US$M | | | 2019
US$M | |
| | | | | | | | | | | | |
| | | | | | | – | | | | – | |
| | | | | | | 489 | | | | 50 | |
Expenses excluding net finance costs, depreciation, amortisation and impairments | | | | | | | (1,025 | ) | | | (57 | ) |
Depreciation and amortisation | | | | | | | – | | | | – | |
| | | | | | | (409 | ) | | | – | |
Loss from equity accounted investments, related impairments and expenses | | | | | | | (508 | ) | | | (945 | ) |
| | | | | | | | | | | | |
Profit/(loss) from operations | | | | | | | (1,453 | ) | | | (952 | ) |
| | | | | | | | | | | | |
| | | | | | | (93 | ) | | | (108 | ) |
| | | | | | | – | | | | – | |
| | | | | | | | | | | | |
| | | | | | | (93 | ) | | | (108 | ) |
| | | | | | | | | | | | |
Profit/(loss) before taxation | | | | | | | (1,546 | ) | | | (1,060 | ) |
| | | | | | | | | | | | |
Income tax (expense)/benefit | | | | | | | 241 | | | | 242 | |
Royalty-related taxation (net of income tax benefit) | | | | | | | – | | | | – | |
| | | | | | | | | | | | |
Total taxation (expense)/benefit | | | | | | | 241 | | | | 242 | |
| | | | | | | | | | | | |
Profit/(loss) after taxation from Continuing operations | | | | | | | (1,305 | ) | | | (818 | ) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Profit/(loss) after taxation from Discontinued operations | | | | | | | – | | | | – | |
| | | | | | | | | | | | |
Profit/(loss) after taxation from Continuing and Discontinued operations | | | | | | | (1,305 | ) | | | (818 | ) |
| | | | | | | | | | | | |
Total exceptional items attributable to non-controlling interests | | | | | | | (201 | ) | | | – | |
Total exceptional items attributable to BHP shareholders | | | | | | | (1,104 | ) | | | (818 | ) |
| | | | | | | | | | | | |
Exceptional items attributable to BHP shareholders per share (US cents) | | | | | | | (21.9 | ) | | | (15.8 | ) |
| | | | | | | | | | | | |
Weighted basic average number of shares (Million) | | | | | | | 5,057 | | | | 5,180 | |
| | | | | | | | | | | | |
APMs derived from Consolidated Income Statement
Underlying attributable profit
| | | | | | | | | | | | |
| |
| | | 2020
US$M | | | 2019
US$M | |
Profit after taxation from Continuing and Discontinued operations attributable to BHP shareholders | | | | | | | 7,956 | | | | 8,306 | |
Total exceptional items attributable to BHP shareholders (1) | | | | | | | 1,104 | | | | 818 | |
| | | | | | | | | | | | |
Underlying attributable profit | | | | | | | 9,060 | | | | 9,124 | |
| | | | | | | | | | | | |
(1) | For more information, refer to note 3 ‘Exceptional items’ in section 3.1.
|
Underlying attributable profit – Continuing operations
| | | | | | | | | | | | |
| |
| | | 2020
US$M | | | 2019
US$M | |
Profit after taxation from Continuing and Discontinued operations attributable to BHP shareholders | | | | | | | 7,956 | | | | 8,306 | |
Loss attributable to members of BHP for Discontinued operations | | | | | | | – | | | | 342 | |
Total exceptional items attributable to BHP shareholders (1) | | | | | | | 1,104 | | | | 818 | |
| | | | | | | | | | | | |
Underlying attributable profit – Continuing operations | | | | | | | 9,060 | | | | 9,466 | |
| | | | | | | | | | | | |
(1) | For more information, refer to note 3 ‘Exceptional items’ in section 3.1.
|
Underlying basic earnings per share
| | | | | | | | | | | | |
| |
| | | 2020
US cents | | | 2019
US cents | |
Basic earnings per ordinary share | | | | | | | 157.3 | | | | 160.3 | |
Exceptional items attributable to BHP shareholders per share (1) | | | | | | | 21.9 | | | | 15.8 | |
| | | | | | | | | | | | |
Underlying basic earnings per ordinary share | | | | | | | 179.2 | | | | 176.1 | |
| | | | | | | | | | | | |
(1) | For more information, refer to note 3 ‘Exceptional items’ in section 3.1.
|
| | | | | | | | | | | | |
| |
| | | 2020
US$M | | | 2019
US$M | |
| | | | | | | 14,421 | | | | 16,113 | |
Exceptional items included in profit from operations (1) | | | | | | | 1,453 | | | | 952 | |
| | | | | | | | | | | | |
| | | | | | | 15,874 | | | | 17,065 | |
| | | | | | | | | | | | |
Depreciation and amortisation expense | | | | | | | 6,112 | | | | 5,829 | |
| | | | | | | 494 | | | | 264 | |
Exceptional item included in Depreciation, amortisation and impairments (1) | | | | | | | (409 | ) | | | – | |
| | | | | | | | | | | | |
| | | | | | | 22,071 | | | | 23,158 | |
| | | | | | | | | | | | |
(1) | For more information, refer to note 3 ‘Exceptional items’ in section 3.1.
|
Underlying EBITDA – Segment
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Group and unallocated items/ eliminations (2) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Exceptional items included in profit from operations (1) | | | | | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortisation expense | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Exceptional item included in Depreciation, amortisation and impairments (1) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Petroleum | | | Copper | | | Iron Ore | | | Coal | | | Group and
unallocated
items/
eliminations(2) | | | Total Group | |
| | | 744 | | | | 1,362 | | | | 12,310 | | | | 793 | | | | (788 | ) | | | 14,421 | |
Exceptional items included in profit from operations (1) | | | 6 | | | | 1,228 | | | | 614 | | | | 18 | | | | (413 | ) | | | 1,453 | |
Depreciation and amortisation expense | | | 1,445 | | | | 1,740 | | | | 1,608 | | | | 807 | | | | 512 | | | | 6,112 | |
| | | 12 | | | | 426 | | | | 22 | | | | 14 | | | | 20 | | | | 494 | |
Exceptional item included in Depreciation, amortisation and impairments (1) | | | – | | | | (409 | ) | | | – | | | | – | | | | – | | | | (409 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2,207 | | | | 4,347 | | | | 14,554 | | | | 1,632 | | | | (669 | ) | | | 22,071 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | Petroleum | | | Copper | | | Iron Ore | | | Coal | | | Group and
unallocated
items/
eliminations(2) | | | Total Group | |
| | | 2,480 | | | | 2,587 | | | | 8,426 | | | | 3,400 | | | | (780 | ) | | | 16,113 | |
Exceptional items included in profit from operations (1) | | | – | | | | – | | | | 971 | | | | – | | | | (19 | ) | | | 952 | |
Depreciation and amortisation expense | | | 1,560 | | | | 1,835 | | | | 1,653 | | | | 632 | | | | 149 | | | | 5,829 | |
| | | 21 | | | | 128 | | | | 79 | | | | 35 | | | | 1 | | | | 264 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 4,061 | | | | 4,550 | | | | 11,129 | | | | 4,067 | | | | (649 | ) | | | 23,158 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
(1) | For more information, refer to note 3 ‘Exceptional items’ in section 3.1.
|
(2) | Group and unallocated items includes functions, other unallocated operations, including Potash, Nickel West, legacy assets, and consolidation adjustments.
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Exceptional items included in profit from operations (1) | | | Depreciation
and
amortisation | | | | | | Exceptional item included in Depreciation, amortisation and impairments (1) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Corporate, legacy assets and eliminations | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | Profit from
operations | | | Exceptional
items
included in
profit from
operations(1) | | | Depreciation
and
amortisation | | | Net
impairments | | | Exceptional item
included in
Depreciation,
amortisation and
impairments(1) | | | Underlying
EBITDA | |
| | | (130 | ) | | | – | | | | 3 | | | | – | | | | – | | | | (127 | ) |
| | | (113 | ) | | | 5 | | | | 68 | | | | 3 | | | | – | | | | (37 | ) |
Corporate, legacy assets and eliminations | | | (545 | ) | | | (418 | ) | | | 441 | | | | 17 | | | | – | | | | (505 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | (788 | ) | | | (413 | ) | | | 512 | | | | 20 | | | | – | | | | (669 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | Profit from
operations | | | Exceptional
items
included in
profit from
operations(1) | | | Depreciation
and
amortisation | | | Net
impairments | | | Exceptional item
included in
Depreciation,
amortisation and
impairments(1) | | | Underlying
EBITDA | |
| | | (131 | ) | | | – | | | | 4 | | | | – | | | | – | | | | (127 | ) |
| | | 91 | | | | – | | | | 11 | | | | – | | | | – | | | | 102 | |
Corporate, legacy assets and eliminations | | | (740 | ) | | | (19 | ) | | | 134 | | | | 1 | | | | – | | | | (624 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | (780 | ) | | | (19 | ) | | | 149 | | | | 1 | | | | – | | | | (649 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
(1) | For more information, refer to note 3 ‘Exceptional items’ in section 3.1.
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Group and
unallocated
items/
| | | | |
Revenue – Group production | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue – Third-party products | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Underlying EBITDA – Group production (1) | | | | | | | | | | | | | | | | | | | | | | | | |
Underlying EBITDA – Third-party products (1) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Segment contribution to the Group’s Underlying EBITDA (2) | | | | | | | | | | | | | | | | | | | | | | | | |
Underlying EBITDA margin (3) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | Petroleum | | | Copper | | | Iron Ore | | | Coal | | | Group and
unallocated
items/
eliminations(4) | | | Total Group | |
Revenue – Group production | | | 4,031 | | | | 9,577 | | | | 20,782 | | | | 6,242 | | | | 1,128 | | | | 41,760 | |
Revenue – Third-party products | | | 39 | | | | 1,089 | | | | 15 | | | | – | | | | 28 | | | | 1,171 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 4,070 | | | | 10,666 | | | | 20,797 | | | | 6,242 | | | | 1,156 | | | | 42,931 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Underlying EBITDA – Group production (1) | | | 2,209 | | | | 4,306 | | | | 14,561 | | | | 1,632 | | | | (669 | ) | | | 22,039 | |
Underlying EBITDA – Third-party products (1) | | | (2 | ) | | | 41 | | | | (7 | ) | | | – | | | | – | | | | 32 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2,207 | | | | 4,347 | | | | 14,554 | | | | 1,632 | | | | (669 | ) | | | 22,071 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Segment contribution to the Group’s Underlying EBITDA (2) | | | 10% | | | | 19% | | | | 64% | | | | 7% | | | | | | | | 100% | |
Underlying EBITDA margin (3) | | | 55% | | | | 45% | | | | 70% | | | | 26% | | | | | | | | 53% | |
| | | | | | |
| | Petroleum | | | Copper | | | Iron Ore | | | Coal | | | Group and
unallocated
items/
eliminations(4) | | | Total Group | |
Revenue – Group production | | | 5,920 | | | | 9,729 | | | | 17,223 | | | | 9,102 | | | | 1,116 | | | | 43,090 | |
Revenue – Third-party products | | | 10 | | | | 1,109 | | | | 32 | | | | 19 | | | | 28 | | | | 1,198 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 5,930 | | | | 10,838 | | | | 17,255 | | | | 9,121 | | | | 1,144 | | | | 44,288 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Underlying EBITDA – Group production (1) | | | 4,061 | | | | 4,434 | | | | 11,115 | | | | 4,068 | | | | (649 | ) | | | 23,029 | |
Underlying EBITDA – Third-party products (1) | | | – | | | | 116 | | | | 14 | | | | (1 | ) | | | – | | | | 129 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 4,061 | | | | 4,550 | | | | 11,129 | | | | 4,067 | | | | (649 | ) | | | 23,158 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Segment contribution to the Group’s Underlying EBITDA (2) | | | 17% | | | | 19% | | | | 47% | | | | 17% | | | | | | | | 100% | |
Underlying EBITDA margin (3) | | | 69% | | | | 46% | | | | 65% | | | | 45% | | | | | | | | 53% | |
(1) | We differentiate sales of our production from sales of third-party products to better measure the operational profitability of our operations as a percentage of revenue. These tables show the breakdown between our production and third-party products, which is necessary for the calculation of the Underlying EBITDA margin and margin on third-party products.
|
We engage in third-party trading for the following reasons:
Production variability and occasional shortfalls from our assets means that we sometimes source third-party materials to ensure a steady supplyTable of product to our customers.To optimise our supply chain outcomes, we may buy physical product from third parties.
To support the development of liquid markets, we will sometimes source third-party physical products and manage risk through both the physical and financial markets.
(2) | Percentage contribution to Group Underlying EBITDA, excluding Group and unallocated items.
|
(3) | Underlying EBITDA margin excludes third-party products.
|
(4) | Group and unallocated items includes functions, other unallocated operations, including Potash, Nickel West, legacy assets, and consolidation adjustments. Revenue not attributable to reportable segments comprises the sale of freight and fuel to third parties. Exploration and technology activities are recognised within relevant segments.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | 2020 | | | 2019 | |
| |
| | |
| | | | | | Profit before
taxation
US$M | | | Income tax
expense
US$M | | | % | | | Profit before
taxation
US$M | | | Income tax
expense
US$M | | | % | |
Statutory effective tax rate | | | | | | | | | | | | | | | 13,510 | | | | (4,774 | ) | | | 35.3 | | | | 15,049 | | | | (5,529 | ) | | | 36.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | – | | | | 20 | | | | | | | | – | | | | (25 | ) | | | | |
| | | | | | | | | | | | | | | 1,546 | | | | (241 | ) | | | | | | | 1,060 | | | | (242 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted effective tax rate | | | | | | | | | | | | | | | 15,056 | | | | (4,995 | ) | | | 33.2 | | | | 16,109 | | | | (5,796 | ) | | | 36.0 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | For more information, refer to note 3 ‘Exceptional items’ in section 3.1.
|
APMs derived from Consolidated Cash Flow Statement
Capital and exploration expenditure
| | | | | | | | | | | | |
| |
| | | 2020
US$M | | | 2019
US$M | |
Capital expenditure (purchases of property, plant and equipment) | | | | | | | 6,900 | | | | 6,250 | |
Add: Exploration expenditure | | | | | | | 740 | | | | 873 | |
| | | | | | | | | | | | |
Capital and exploration expenditure (cash basis) – Continuing operations | | | | | | | 7,640 | | | | 7,123 | |
| | | | | | | | | | | | |
Capital and exploration expenditure – Discontinued operations | | | | | | | – | | | | 443 | |
| | | | | | | | | | | | |
Capital and exploration expenditure (cash basis) – Total operations | | | | | | | 7,640 | | | | 7,566 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| |
| | | 2020
US$M | | | 2019
US$M | |
| | | | | | | 15,706 | | | | 17,871 | |
| | | | | | | (7,616 | ) | | | 2,607 | |
| | | | | | | | | | | | |
| | | | | | | 8,090 | | | | 20,478 | |
| | | | | | | | | | | | |
Free cash flow – Continuing operations
| | | | | | | | | | | | |
| |
| | | 2020
US$M | | | 2019
US$M | |
Net operating cash flows from Continuing operations | | | | | | | 15,706 | | | | 17,397 | |
Net investing cash flows from Continuing operations | | | | | | | (7,616 | ) | | | (7,377 | ) |
| | | | | | | | | | | | |
Free cash flow – Continuing operations | | | | | | | 8,090 | | | | 10,020 | |
| | | | | | | | | | | | |
APMs derived from Consolidated Balance Sheet
Net debt and gearing ratio
| | | | | | | | | | | | |
| |
| | | 2020
US$M
Restated | | | 2019
US$M
Restated | |
Interest bearing liabilities – Current | | | | | | | 5,012 | | | | 1,661 | |
Interest bearing liabilities – Non current | | | | | | | 22,036 | | | | 23,167 | |
| | | | | | | | | | | | |
Total interest bearing liabilities | | | | | | | 27,048 | | | | 24,828 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | 23,605 | | | | 24,113 | |
| | | | | | | 3,443 | | | | 715 | |
| | | | | | | | | | | | |
Less: Lease liability associated with index-linked freight contracts | | | | | | | 1,160 | | | | – | |
| | | | | | | | | | | | |
Less: Cash and cash equivalents | | | | | | | 13,426 | | | | 15,613 | |
| | | | | | | | | | | | |
Less: Net debt management related instruments (1) | | | | | | | 433 | | | | (204 | ) |
Less: Net cash management related instruments (2) | | | | | | | (15 | ) | | | (27 | ) |
| | | | | | | | | | | | |
Less: Total derivatives included in net debt | | | | | | | 418 | | | | (231 | ) |
| | | | | | | | | | | | |
| | | | | | | 12,044 | | | | 9,446 | |
| | | | | | | | | | | | |
| | | | | | | 52,175 | | | | 51,753 | |
| | | | | | | | | | | | |
| | | | | | | 18.8% | | | | 15.4% | |
| | | | | | | | | | | | |
(1) | Represents the net cross currency and interest rate swaps included within current andnon-current
other financial assets and liabilities. |
(2) | Represents the net forward exchange contracts related to cash management included within current andnon-current
other financial assets and liabilities. |
(3) | 30 June 2020 and 30 June 2019 net assets have been restated to reflect changes to the Group’s accounting policy following a decision by the IFRS Interpretations Committee on IAS 12 ‘Income Taxes’ resulting in retrospective decrease of US$71 million. Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’ in section 3.1.
|
| | | | | | | | |
| |
| | | 2020
US$M | |
Net debt at the beginning of the period | | | | | | | (9,446 | ) |
| | | | | | | | |
| | | | | | | 15,706 | |
| | | | | | | (7,616 | ) |
| | | | | | | (9,752 | ) |
| | | | | | | | |
Net increase / (decrease) in cash and cash equivalents from Continuing and Discontinued operations | | | | | | | (1,662 | ) |
| | | | | | | | |
Carrying value of interest bearing liability repayments | | | | | | | 1,533 | |
| | | | | | | | |
Carrying value of debt related instruments (proceeds)/settlements | | | | | | | 157 | |
| | | | | | | | |
Carrying value of cash management related instruments settlements/(proceeds) | | | | | | | (451 | ) |
| | | | | | | | |
Fair value adjustment on debt (including debt related instruments) | | | | | | | 88 | |
Foreign exchange impacts on cash (including cash management related instruments) | | | | | | | (26 | ) |
IFRS 16 leases taken on at 1 July 2019 | | | | | | | (1,778 | ) |
| | | | | | | (363 | ) |
| | | | | | | (96 | ) |
| | | | | | | | |
| | | | | | | (2,175 | ) |
| | | | | | | | |
Net debt at the end of the period | | | | | | | (12,044 | ) |
| | | | | | | | |
The following table reconciles Net operating assets for the Group to Net assets on the Consolidated Balance Sheet:
| | | | | | | | |
| |
| | | 2020
US$M
Restated | |
| | | | | | | 52,175 | |
| | | | | | | | |
Cash and cash equivalents | | | | | | | (13,426 | ) |
Trade and other receivables (2) | | | | | | | (194 | ) |
Other financial assets (3) | | | | | | | (2,425 | ) |
| | | | | | | (366 | ) |
| | | | | | | (3,688 | ) |
| | | | | | | – | |
| | | | | | | | |
Add: Non-operating liabilities | | | | | | | | |
Trade and other payables (4) | | | | | | | 310 | |
Interest bearing liabilities | | | | | | | 27,048 | |
Other financial liabilities (5) | | | | | | | 1,618 | |
| | | | | | | 913 | |
| | | | | | | 109 | |
Deferred tax liabilities (1) | | | | | | | 3,779 | |
Liabilities directly associated with the assets held for sale | | | | | | | – | |
| | | | | | | | |
| | | | | | | 65,853 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | 8,247 | |
| | | | | | | 25,357 | |
| | | | | | | 18,400 | |
| | | | | | | 9,509 | |
Group and unallocated items (6) | | | | | | | 4,340 | |
| | | | | | | | |
| | | | | | | 65,853 | |
| | | | | | | | |
(1) | 30 June 2020 balances have been restated to reflect changes to the Group’s accounting policy following a decision by the IFRS Interpretations Committee on IAS 12 ‘Income Taxes’, resulting in the retrospective recognition of US$950 million of goodwill at Olympic Dam (included in the Copper segment) and an offsetting US$1,021 million increase in deferred tax liabilities. Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’ in section 3.1 for further information.
|
(2) | Represents loans to associates, external finance receivable and accrued interest receivable included within other receivables.
|
(3) | Represents cross currency and interest rate swaps, forward exchange contracts related to cash management and investment in shares and other investments.
|
(4) | Represents accrued interest payable included within other payables.
|
(5) | Represents cross currency and interest rate swaps and forward exchange contracts related to cash management.
|
(6) | Group and unallocated items include functions, other unallocated operations including Potash, Nickel West, legacy assets, and consolidation adjustments.
|
Principal factors that affect Revenue, Profit from operations and Underlying EBITDA
The following table describes the impact of the principal factors that affected Revenue, Profit from operations and Underlying EBITDA for FY2021 and relates them back to our Consolidated Income Statement. For information on the method of calculation of the principal factors that affect Revenue, Profit from operations and Underlying EBITDA, refer to section 4.2.2.
| | | | | | | | | | | | | | | | | | | | |
| | |
| | |
| | |
| | |
amortisation and
impairments and
Exceptional
Items
| | |
| |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Expenses excluding net finance costs | | | | | | | | | | | | | | | | | | | | |
Loss from equity accounted investments, related impairments and expenses | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total other income, expenses excluding net finance costs and loss from equity accounted investments, related impairments and expenses | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Depreciation, amortisation and impairments (1) | | | | | | | | | | | | | | | | | | | | |
Exceptional item included in Depreciation, amortisation and impairments | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | 17,186 | | | | (221 | ) | | | | | | | – | | | | | |
| | | | | | | (870 | ) | | | | | | | – | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | 17,186 | | | | (1,091 | ) | | | | | | | – | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | (371 | ) | | | 59 | | | | | | | | – | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | – | | | | (34 | ) | | | | | | | – | | | | | |
Exploration and business development | | | – | | | | 109 | | | | | | | | – | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Change in controllable cash costs (2) | | | – | | | | 75 | | | | | | | | – | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | 104 | | | | (1,692 | ) | | | | | | | – | | | | | |
| | | – | | | | (286 | ) | | | | | | | – | | | | | |
| | | – | | | | 223 | | | | | | | | – | | | | | |
| | | – | | | | 282 | | | | | | | | – | | | | | |
| | | (142 | ) | | | 20 | | | | | | | | – | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | (38 | ) | | | (1,453 | ) | | | | | | | – | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | – | | | | 17 | | | | | | | | – | | | | | |
Ceased and sold operations | | | (22 | ) | | | 264 | | | | | | | | – | | | | | |
| | | 1,131 | | | | (449 | ) | | | | | | | – | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Depreciation, amortisation and impairments | | | – | | | | (891 | ) | | | | | | | 891 | | | | | |
| | | – | | | | (2,932 | ) | | | | | | | 2,932 | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Expenses excluding net finance costs | | | | | | | | | | | | | | | | | | | | |
Loss from equity accounted investments, related impairments and expenses | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Total other income, expenses excluding net finance costs and loss from equity accounted investments, related impairments and expenses | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Depreciation, amortisation and impairments (1) | | | | | | | | | | | | | | | | | | | | |
Exceptional item included in Depreciation, amortisation and impairments | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
(1) | Depreciation and impairments that we classify as exceptional items are excluded from depreciation, amortisation and impairments. Depreciation, amortisation and impairments includesnon-exceptional
impairments of US$264 million (FY2020: US$85 million). |
(2) | Collectively, we refer to the change in operating cash costs and change in exploration and business development as Change in controllable cash costs. Operating cash costs by definition do not includenon-cash
costs. The change in operating cash costs also excludes the impact of exchange rates and inflation, changes in fuel and energy costs, changes in exploration and business development costs andone-off
items. These items are excluded so as to provide a consistent measurement of changes in costs across all segments, based on the factors that are within the control and responsibility of the segment. Change in controllable cash costs and change in operating cash costs are not measures that are recognised by IFRS. They may differ from similarly titled measures reported by other companies. |
Underlying Return on Capital Employed (ROCE)
| | | | | | | | | | | | |
| |
| | | 2020
US$M
Restated | | | 2019
US$M
Restated | |
Profit after taxation from Continuing and Discontinued operations | | | | | | | 8,736 | | | | 9,185 | |
| | | | | | | 1,305 | | | | 818 | |
| | | | | | | | | | | | |
| | | | | | | 10,041 | | | | 10,003 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | 911 | | | | 1,072 | |
Exceptional items included within net finance costs (1) | | | | | | | (93 | ) | | | (108 | ) |
Income tax benefit on net finance costs | | | | | | | (267 | ) | | | (319 | ) |
| | | | | | | | | | | | |
Profit after taxation excluding net finance costs and exceptional items | | | | | | | 10,592 | | | | 10,648 | |
| | | | | | | | | | | | |
Net assets at the beginning of the period (2) | | | | | | | 51,753 | | | | 60,599 | |
Net debt at the beginning of the period | | | | | | | 9,446 | | | | 11,605 | |
| | | | | | | | | | | | |
Capital employed at the beginning of the period | | | | | | | 61,199 | | | | 72,204 | |
| | | | | | | | | | | | |
Net assets at the end of the period (2) | | | | | | | 52,175 | | | | 51,753 | |
Net debt at the end of the period | | | | | | | 12,044 | | | | 9,446 | |
| | | | | | | | | | | | |
Capital employed at the end of the period | | | | | | | 64,219 | | | | 61,199 | |
| | | | | | | | | | | | |
| | | | | | | 62,709 | | | | 66,702 | |
| | | | | | | | | | | | |
Underlying Return on Capital Employed | | | | | | | 16.9% | | | | 16.0% | |
| | | | | | | | | | | | |
(1) | For more information, refer to note 3 ‘Exceptional items’ in section 3.1.
|
(2) | The Underlying ROCE calculation uses restated net assets for the comparative periods.
|
4.2.1 Definition and calculation of Alternative Performance Measures
| | | | |
Alternative Performance Measures
(APMs)
| | Reasons why we believe the APMs are
useful
| | |
Underlying attributable profit
| | Allows the comparability of underlying financial performance by excluding the impacts of exceptional items and is also the basis on which our dividend payout ratio policy is applied.
| | Profit after taxation attributable to BHP shareholders excluding any exceptional items attributable to BHP shareholders.
|
Underlying basic earnings per share
| | On a per share basis, allows the comparability of underlying financial performance by excluding the impacts of exceptional items.
| | Underlying attributable profit divided by the weighted basic average number of shares.
|
| | Used to help assess current operational profitability excluding the impacts of sunk costs (i.e. depreciation from initial investment). Each is a measure that management uses internally to assess the performance of the Group’s segments and make decisions on the allocation of resources.
| | 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).
|
| | | | Underlying EBITDA excluding third-party product EBITDA, divided by revenue excluding third-party product revenue.
|
| | Used to help assess current operational profitability excluding net finance costs and taxation expense (each of which are managed at the Group level) as well as discontinued operations and any exceptional items.
| | Earnings before net finance costs, taxation expense, discontinued operations and any exceptional items. Underlying EBIT includes BHP’s share of profit/(loss) from investments accounted for using the equity method including net finance costs and taxation expense/(benefit).
|
| | | | Earnings before net finance costs, taxation expense and discontinued operations. Profit from operations includes Revenue, Other income, Expenses excluding net finance costs and BHP’s share of profit/(loss) from investments accounted for using the equity method including net finance costs and taxation expense/(benefit).
|
Capital and exploration expenditure
| | Used as part of our Capital Allocation Framework to assess efficient deployment of capital. Represents the total outflows of our operational investing expenditure.
| | Purchases of property, plant and equipment and exploration expenditure.
|
| | It is a key measure used as part of our Capital Allocation Framework. Reflects our operational cash performance inclusive of investment expenditure, which helps to highlight how much cash was generated in the period to be available for the servicing of debt and distribution to shareholders.
| | Net operating cash flows less net investing cash flows.
|
| | Net debt shows the position of gross debt less index-linked freight contracts offset by cash immediately available to pay debt if required and any associated derivative financial instruments. Liability associated with index-linked freight contracts, which are required to be remeasured to the prevailing freight index at each reporting date, are excluded from the net debt calculation due to the short-term volatility of the index they relate to not aligning with how the Group uses net debt for decision making in relation to the Capital Allocation Framework. Net debt includes the fair value of derivative financial instruments used to hedge cash and borrowings to reflect the Group’s risk management strategy of reducing the volatility of net debt caused by fluctuations in foreign exchange and interest rates. Net debt, along with the gearing ratio, is used to monitor the Group’s capital management by relating net debt relative to equity from shareholders.
| | Interest bearing liabilities less liability associated with index-linked freight contracts less cash and cash equivalents less net cross currency and interest rate swaps less net cash management related instruments for the Group at the reporting date.
|
| | Ratio of Net debt to Net debt plus Net assets.
|
| | | | |
| | Enables a clearer view of the assets deployed to generate earnings by highlighting the net operating assets of the business separate from the financing and tax balances. This measure helps provide an indicator of the underlying performance of our assets and enhances comparability between them.
| | Operating assets net of operating liabilities, including the carrying value of equity accounted investments and predominantly excludes cash balances, loans to associates, interest bearing liabilities, derivatives hedging our net debt, assets held for sale, liabilities directly associated with assets held for sale and tax balances.
|
Underlying return on capital employed (ROCE)
| | Indicator of the Group’s capital efficiency and is provided on an underlying basis to allow comparability of underlying financial performance by excluding the impacts of exceptional items.
| | Profit after taxation excluding exceptional items and net finance costs (after taxation) divided by average capital employed.
Profit after taxation excluding exceptional items and net finance costs (after taxation) is profit after taxation from Continuing and Discontinued operations excluding exceptional items, net finance costs and the estimated taxation impact of net finance costs. These are annualised for a half year end reporting period.
The estimated tax impact is calculated using a prima facie taxation rate on net finance costs (excluding any foreign exchange impact).
Average capital employed is calculated as the average of net assets less net debt for the last two reporting periods.
|
Adjusted effective tax rate
| | Provides an underlying tax basis to allow comparability of underlying financial performance by excluding the impacts of exceptional items.
| | Total taxation expense/(benefit) excluding exceptional items and exchange rate movements included in taxation expense/(benefit) divided by Profit before taxation and exceptional items.
|
| | Used to assess the controllable financial performance of the Group’s assets for each unit of production. Unit costs are adjusted for site specificnon-controllable
factors to enhance comparability between the Group’s assets. | | Ratio of net costs of the assets to the equity share of sales tonnage. Net costs is defined as revenue less Underlying EBITDA and excludes freight and other costs, depending on the nature of each asset.
Freight is excluded as the Group believes it provides a similar basis of comparison to our peer group.
Petroleum unit costs exclude:
• exploration, development and evaluation expense as these costs do not represent our cost performance in relation to current production and the Group believes it provides a similar basis of comparison to our peer group
• other costs that do not represent underlying cost performance of the business
Escondida unit costs exclude:
• by-product
credits being the favourable impact ofby-products
(such as gold or silver) to determine the directly attributable costs of copper productionWAIO, Queensland Coal and NSWEC unit costs exclude:
• royalties as these are costs that are not deemed to be under the Group’s control, and the Group believes exclusion provides a similar basis of comparison to our peer group
|
4.2.2 Definition and calculation of principal factors
The method of calculation of the principal factors that affect the period on period movements of Revenue, Profit from operations and Underlying EBITDA are as follows:
| | |
| | |
| | Change in average realised price for each operation from the prior period to the current period, multiplied by current period sales volumes. |
| | Change in price-linked costs (mainly royalties) for each operation from the prior period to the current period, multiplied by current period sales volumes. |
| | Change in sales volumes for each operation multiplied by the prior year average realised price less variable unit cost. |
| | Total of operating cash costs and exploration and business development costs. |
| | Change in total costs, other than price-linked costs, exchange rates, inflation on costs, fuel and energy costs,non-cash
costs andone-off
items as defined below for each operation from the prior period to the current period. |
Exploration and business development
| | Exploration and business development expense in the current period minus exploration and business development expense in the prior period. |
| | Change in exchange rate multiplied by current period local currency revenue and expenses. |
| | Change in inflation rate applied to expenses, other than depreciation and amortisation, price-linked costs, exploration and business development expenses, expenses in ceased and sold operations and expenses in new and acquired operations. |
| | Fuel and energy expense in the current period minus fuel and energy expense in the prior period. |
| | Change in net impact of capitalisation and depletion of deferred stripping from the prior period to the current period. |
| | Change in costs exceeding apre-determined
threshold associated with an unexpected event that had not occurred in the last two years and is not reasonably likely to occur within the next two years. |
| | Profit/(loss) on the sale of assets or operations in the current period minus profit/(loss) on sale of assets or operations in the prior period. |
Ceased and sold operations
| | Underlying EBITDA for operations that ceased or were sold in the current period minus Underlying EBITDA for operations that ceased or were sold in the prior period. |
Share of profit/(loss) from equity accounted investments
| | Share of profit/(loss) from equity accounted investments for the current period minus share of profit/(loss) from equity accounted investments in the prior period. |
| | Variances not explained by the above factors. |
4.32 Information on mining operations
The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.1 and the production table (refer to section 4.5.1) and reserves table (refer to section 4.6.2).and resources tables in Additional information 4 and 5.
| | | | | | | | | | | | | | | | |
| | | | OwnershipType and
amount of
ownership
| | | | Title, leases or
options and
acreage
involved | | History and
stage of
property | | Mine type &
mineralisation
style | | | | Facilities, use &Processing
conditionplants and
other available
facilities
|
| | | | | | | | |
| | | | | | | | | | | | | | | | |
| 560 km northwest of Adelaide, South Australia | | Copper cathode trucked to ports Uranium oxide transported by road to ports Gold bullion transported by road and plane | | BHP 100% | | BHP | | Mining lease granted by South Australian Government expires in 20362036. Approximately 17,788 hectares Right of extension for 50 years (subject to remaining mine life) | | Acquired in 2005 as part of Western Mining Corporation (WMC) acquisition Copper production began in 1988 Nominal milling capacity raised to 9 Mtpa in 1999 Optimisation project completed in 2002 New copper solvent extraction plant commissioned in 2004 Major smelter maintenance campaigncampaigns completed in 20182017 and 2022 | | Large poly-metallic deposit of iron oxide-copper-uranium-gold mineralisation | | Electricity transmitted via (i) BHP’s 275 kV power line from Port Augusta and (ii) ElectraNet’s system upstream of Port Augusta Energy purchased via Retail Agreement | | Underground automated train and trucking network feeding crushing, storage and ore hoisting facilities Nominal milling capacity: 10.3 Mtpa Flash furnace produces copper anodes, which are then refined to produce copper cathodes Electrowon copper cathode and uranium oxide concentrate produced by leaching and solvent extracting flotation tailings Gold cyanide leach circuit and gold room producing gold bullion |
| |
| Key permit conditions | | The Roxby Downs (Indenture Ratification) Act 1982 (Indenture Act) applies to Olympic Dam’s operations. It contains conditions from the South Australian Government, including relating to the protection and management of the environment; water; closure and rehabilitation considerations; local procurement and community plans/initiatives/project commitments; and payment of royalties. Olympic Dam also holds other relevant approvals and tenements granted by the South Australian Government, including under the SA Mining Act. |
Iron ore mining operations
The following table contains additional details of our iron ore mining operations. This table should be read in conjunction with OFR 5.1 and the production table (refer to section 4.5.1) and reserves table (refer to section 4.6.2).and resources tables in Additional information 4 and 5.
| | | | | | | | | | | | | | | | |
| | | | OwnershipType and
amount of
ownership
| | | | Title, leases or
options and
acreage
involved | | History and
stage of
property | | Mine type &
mineralisation
style | | | | Facilities, use &Processing
conditionplants and
other available
facilities
|
|
|
|
Pilbara region, Western Australia MtNewman West (Mt Whaleback,
Orebodies 24, 25, 29, 30, 31, 32 and 3535) Newman East (Orebodies 24, 25) | | Ore transported by Mt Newman JV-owned rail to Port Hedland (427 km) | | ITOCHU Minerals and Energy of Australia 5% | | BHP | | Mineral lease granted and held under the Iron Ore (Mount Newman) Agreement Act 1964 expires in 2030 with right to successive renewals of 21 years eacheach. ML244SA - approximately 78,934 hectares | | halebackWhaleback in 1969
Production from Orebodies 24, 25, 29, 30, 31, 32 and 35 complements production from Mt Whaleback Production from Orebodies 31 and 32 started in 2015 and 2017 respectively Mining at Orebody 18 ceased in 2020 after depletion | | Bedded ore types classified as per host Archaean or Proterozoic iron formation, which are Brockman and Marra Mamba; also present is iron-rich detrital material | | Power for all mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas fired gas-fired Yarnima power station Power consumed in port operations is supplied via a contract with Alinta | | Newman Hub: primary crusher, ore handling plant, heavy media beneficiation plant, stockyard blending facility, single cell rotary car dumper, train load out (nominal capacity 75 Mtpa) Orebody 25 Ore processing plant (nominal capacity 12 Mtpa) ceased operation mid FY2022 |
| |
| | State Agreement contains conditions set by the Western Australian Government, including requirements for future development proposals; environmental compliance and reporting obligations; closure and rehabilitation considerations; local procurement and community plans/initiatives/investment requirements; payment of rent, taxes and government royalties. Tenements granted by the Western Australian Government under the Mining Act. Key permit conditions include resource reporting, environmental compliance and reporting, rehabilitation considerations and offset payments and payment of lease rentals, and royalties. Registered Indigenous Land Use Agreements with conditions, including appropriate native title compensation and opportunity sharing; enshrine heritage protections and land access rights; and guarantee certain heritage, environment and consultation processes. |
| | | | | | | | | | | | | | | | |
| | | | Type and
amount of
ownership | | | | Title, leases or
options and
acreage involved | | History and stage
of property | | Mine type &
mineralisation
style | | | | Processing plants
and other
available
facilities |
| | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | |
| Pilbara region, Western Australia | | Ore transported by Mt Newman JV-owned rail to Port Hedland (316 km) Yandi JV’s railway spur links Yandi hub to Mt Newman JV main line | | ITOCHU Minerals and Energy of Australia 8% Mitsui Iron Ore Corporation 7%
| | BHP | | Mining lease granted pursuant to the Iron Ore (Marillana Creek) Agreement Act 1991 expires in 2033 with 1 renewal right to a further 21 years to 2054 M270SA - approximately 30,344 hectares | | Production began at the Yandi mine in 1992
Capacity of Yandi hub expanded between 1994 and 2013
Yandi has commenced production ramp down activity in FY2022 | | Channel Iron Deposits are Cainozoic fluvial sediments | | Power for all mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas fired gas-fired Yarnima power station Power consumed in port operations is supplied via a contract with Alinta | | 4 primary crushers, 3 ore handling plants, stockyard blending facility and 2 train load outs (nominal capacity 80 Mtpa) Decommissioning has commenced on 2 ore handling plants, as part of planned ramp down activities |
| |
| Key permit conditions | | State Agreement contains conditions set by the Western Australian Government, including requirements for future development proposals; environmental compliance and reporting obligations; closure and rehabilitation considerations; local procurement and community plans/initiatives/investment requirements; payment of rent, taxes and government royalties. Tenements granted by the Western Australian Government under the Mining Act. Key permit conditions include resource reporting, environmental compliance and reporting, rehabilitation considerations and offset payments and payment of lease rentals, and royalties. Registered Indigenous Land Use Agreements with conditions, including appropriate native title compensation and opportunity sharing; enshrine heritage protections and land access rights; and guarantee certain heritage, environment and consultation processes. |
| | | | | | | | | | | | | | | | |
| | | | OwnershipType and
amount of
ownership
| | | | Title, leases or
options and
acreage involved | | History and stage
of property | | Mine type &
mineralisation
style | | | | Facilities, use &Processing plants
conditionand other
available
facilities
|
| | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | |
Pilbara region, Western Australia Bill’s Hill, Eastern Syncline and Mt Helen (jointly called Western Ridge deposits) | | OreJimblebar ore is transported via overland conveyor (12.4 km) and by Mt Newman JV-owned rail to Port Hedland (428 km) The Western Ridge deposits are located close to Newman Operations and all production will be trucked and/or transported via overland conveyor | | ITOCHU Iron OreMinerals and Energy of Australia 8% Mitsui & Co. Iron Ore Exploration & Mining 7% *Jimblebar is an ‘incorporated’ venture, with the above companies holding A Class Shares with rights to certain parts of Mining Leasemining lease 266SA held by BHP Iron Ore Jimblebar(Jimblebar) Pty Ltd (BHPIOJ) BHPBHPIOJ holds 100% of the B Class Shares, which has rights to all other BHPIOJJimblebar assets
| | BHP | | Mining lease granted pursuant to the Iron Ore (McCamey’s Monster) Agreement Authorisation Act 1972 expires in 2030 with rights to successive renewals of 21 years each M266SA – approximately 51,756 hectares | | Production began in March 1989 From 2004, production was transferred to Wheelarra JV as part of the Wheelarra sublease agreement This sublease agreement expired in March 2018 Ore was first produced from the newly commissioned Jimblebar hub in late 2013 Jimblebar sells ore to the Newman JV proximate to the Jimblebar hub Production at Western Ridge commenced in FY2022 | | Bedded ore types classified as per host Archaean or Proterozoic banded iron formation, which are Brockman and Marra Mamba; also present is iron-rich detrital material | | Power for all mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas fired gas-fired Yarnima power station Power consumed in port operations is supplied via a contract with Alinta | | 3 primary crushers, ore handling plant, train loadout, stockyard blending facility and supporting mining hub infrastructure (nominal capacity 71 Mtpa) Production from the Western Ridge deposits will be processed through existing processing facility for Newman Operations |
| |
| Key permit conditions | | State Agreement contains conditions set by the Western Australian Government, including requirements for future development proposals; environmental compliance and reporting obligations; closure and rehabilitation considerations; local procurement and community plans/initiatives/investment requirements; payment of rent, taxes and government royalties. Tenements granted by the Western Australian Government under the Mining Act. Key permit conditions include resource reporting, environmental compliance and reporting, rehabilitation considerations and offset payments and payment of lease rentals, and royalties. Registered Indigenous Land Use Agreement with conditions, including appropriate native title compensation and opportunity sharing; enshrine heritage protections and land access rights; and guarantee certain heritage, environment and consultation processes. |
| | | | | | | | | | | | | | | | |
| | | | OwnershipType and
amount of
ownership
| | | | Title, leases or
options and
acreage involved | | History and stage
of property | | Mine type &
mineralisation
style | | | | Facilities, use &Processing plants
conditionand other
available
facilities
|
| | | | | | | | | | | | | | |
| | | | | | | |
Mt Goldsworthy joint venture | | | | | | | | | | | | | | |
Pilbara region, Western Australia Mining Area C (includes South Flank) | | Yarrie and Nimingarra iron ore transported by Mt Goldsworthy JV-owned rail to Port Hedland (218 km) Mining Area C iron ore transported by Mt Newman JV-owned rail to Port Hedland (360 km) South Flank iron ore transported by overland conveyors (8–16 km) to the Mining Area C processing hub Mt Goldsworthy JV railway spur links Mining Area C and South Flank to Yandi railway spur | | Mitsui Iron Ore Corporation 7% ITOCHU Minerals and Energy of Australia 8% | | BHP | | 1 mineral lease and 1 mining lease both granted pursuant to the Iron Ore (Goldsworthy – Nimingarra) Agreement Act 1972, expire 2035, with rights to successive renewals of 21 years each. ML251SA and M263SA – approximately 15,623 hectares A number of smaller mining leases granted under the Mining Act 1978 expire in 2026 with rights to successive renewals of 21 yearsyears. 5 leases – approximately 2,999 hectares 3 mineral leases granted under the Iron Ore (Mount Goldsworthy) Agreement Act 1964, which expire 2028, with rights to successive renewals of 21 years eacheach. ML235SA, ML249SA and ML281SA – approximately 91,124 hectares | | Operations commenced at Mt Goldsworthy in 1966 and at Shay Gap in 1973 Original Goldsworthy mine closed in 1982 Associated Shay Gap mine closed in 1993 Mining at Nimingarra mine ceased in 2007, then continued from adjacent Yarrie area Production commenced at Mining Area C mine in 2003 Yarrie mine operations were suspended in February 2014 First ore at South Flank commenced in May 2021 | | Mining Area C, South Flank, Yarrie and Nimingarra are open-cut Bedded ore types classified as per host Archaean or Proterozoic iron formation, which are Brockman, Marra Mamba and Nimingarra; also present is iron-rich detrital material | | Power for Yarrie and Shay Gap is supplied by their own small diesel generating stations
Power for all remaining mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas fired gas-fired Yarnima power station Power consumed in port operations is supplied via a contract with Alinta | | Mining Area C: 2 primary crushers, 2 ore handling plants, stockyard blending facility and train load out (nominal capacity 60 Mtpa) South Flank: 2 primary crushers, 1 ore handling plant, stockyard and blending facility and train load out (nominal capacity 80 Mtpa) |
| |
| Key permit conditions | | State Agreements contain conditions set by the Western Australian Government, including requirements for future development proposals; environmental compliance and reporting obligations; closure and rehabilitation considerations; local procurement and community plans/initiatives/investment requirements; payment of rent, taxes and government royalties. Tenements granted by the Western Australian Government under the Mining Act. Key permit conditions include resource reporting, environmental compliance and reporting, rehabilitation considerations and offset payments and payment of lease rentals, and royalties. Registered Indigenous Land Use Agreements with conditions, including appropriate native title compensation and opportunity sharing; enshrine heritage protections and land access rights; and guarantee certain heritage, environment and consultation processes. |
| | | | | | | | | | | | | | | | |
| | | | Type and
amount of
ownership | | | | Title, leases or
options and
acreage involved | | History and stage
of property | | Mine type &
mineralisation
style | | | | Processing plants
and other
available
facilities |
| | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | |
| Pilbara region, Western Australia | | POSMAC JV sells ore to Mt Goldsworthy JV at Mining Area C Ore is transported via Mt Goldsworthy JV-owned rail and Mt Newman JV-owned rail to Port Hedland | | ITOCHU Minerals and Energy of Australia 8% Mitsui Iron Ore Corporation 7% | | BHP | | Sublease over part of Mt Goldsworthy Mining Area C mineral lease that expires on the earlier of termination of the mineral lease or the end of the POSMAC JV | | Production commenced in October 2003 POSMAC JV sells all ore to Mt Goldsworthy JV at Mining Area C | | Bedded ore types classified as per host Archaean or Proterozoic iron formation, which is Marra Mamba | | Power for all mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas fired gas-fired Yarnima power station Power consumed in port operations is supplied via a contract with Alinta | | POSMAC sells all ore to Mt Goldsworthy JV, which is then processed at Mining Area C |
| |
| | Key permit conditions of POSMAC joint venture are captured within the Mount Goldsworthy joint venture key permit conditions outlined above. |
The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.1 and the production table (refer to section 4.5.1) and reserves table (refer to section 4.6.2).and resources tables in Additional information 4 and 5.
| | | | | | | | | | | | | | | | |
| | | | OwnershipType and amount
of ownership
| | | | Title, leases or
options and
acreage involved | | History and stage
of property | | Mine type &
mineralisation
style | | | | Facilities, use &Processing plants
conditionand other
available facilities
|
Queensland CoalBHP Mitsubishi Alliance
|
|
Central Queensland Coal Associates joint venture |
Bowen Basin, Queensland, Australia Blackwater and Norwich Park mines | | Coal transported by rail to Hay Point, Gladstone, Dalrymple Bay and Abbot Point ports Distances between the mines and port are between 160 km and 315 km | | Mitsubishi Development 50% | | BMA | | Mining leases, including undeveloped tenements, have expiry dates ranging up to 2043, renewable for further periods as Queensland Government legislation allowsallows. Approximately 125,100 hectares Mining is permitted to continue under the legislation during the renewal application period All required renewal applications were lodged and pending a decision from the Minister | | Goonyella mine commenced in 1971, merged with adjoining Riverside mine in 1989 Operates as Goonyella Riverside Broadmeadow (longwall operations) in 2005 Production at Saraji South (formerly Norwich ParkPark) ceased in May 20122012; limited product is due to be sourced from Saraji South for processing at Saraji scheduled from the December 2022 quarter and will be included under the Saraji mine | | All open-cut except Broadmeadow (longwall underground) Bituminous coal is mined from the Permian Moranbah and Rangal Coal measures Products range from premium quality, low volatile, high vitrinite, hard coking coal to medium volatile hard coking coal, to weak coking coal, some pulverised coal injection (PCI) coal and medium ash thermal coal as a secondary product | | Queensland electricity grid connection is under medium-termlong-term contracts and energy purchased via Retail Agreements | | On-site beneficiation processing facilities Combined nominal capacity: in excess of 67 Mtpa |
| | | | | | | |
BHP Mitsui CoalKey permit conditions | | | | | | | | | | | | | | |
Bowen Basin,Key permit conditions are contained in the various legislation set by the Queensland Australia
South Walker CreekGovernment and Poitrel mines
| | Coal transported by railinclude conditions relating to Hay Pointcarrying out works in accordance with the environmental authority and Dalrymple Bay ports
Distances between the minesapproved development plans, payment of rents, reporting and port are between 135 km and 165 km
| | | | BMC | | payment of royalties. Mining leases including undeveloped tenements, have expiry dates ranging up to 2041, renewable for further periods as Queensland Government legislation allows Mining is permitted to continuegranted under the legislation during the renewal application period
All renewal applications were lodged and pending a decision from the Minister
| | South Walker Creek commenced in 1996
Poitrel commenced in 2006
BMC purchased remaining 50% shareCentral Queensland Coal Associates Agreement Act 1968 place an extraction cap of Red Mountain processing facility in 2018 to secure 100% ownership
| | Bituminous coal is mined from the Permian Rangal Coal measures
Produces a range of coking coal and pulverised coal injection (PCI) coal
| | Queensland electricity grid connection is under medium-term contracts and energy purchased via Retail Agreements | | South Walker Creek coal beneficiatedon-site
Nominal capacity: in excess of 6 Mtpa
Poitrel mine utilises Red Mountain for processing and rail loading facilities
Nominal capacity: in excess of 6 Mtpa
|
| | | | | | | | | | | | | | | | |
| | | | OwnershipType and amount
of ownership
| | | | Title, leases or
options and
acreage involved | | History and stage
of property | | Mine type &
mineralisation
style | | | | Facilities, use &Processing plants
conditionand other
available facilities
|
New South Wales Energy Coal |
|
|
Approximately 126 km northwest of Newcastle, New South Wales, Australia | | Export coal transported by third-party rail to Newcastle port | | BHP 100% | | BHP | | Current Development Consent expires in 2026 Mt Arthur Coal Mine (MAC) commenced the first formal stepcontinues to obtainwork on obtaining new State and Commonwealth approvals to continue open-cut mining at MAC beyond 30 June 2026 MAC holds 10 mining leases, 2 sub leases and 3 exploration licences MAC’s primary exploration licence (EL5965)mining lease (ML 1487) was renewed in full in December 2020granted for a further 21-year term until July 2026MAC’s primary Mining Lease (ML 1487) will expire in June 2022. A renewal application was submitted in April 2021 seeking a further 21 yearsTotal mining leases approximately 8,750 hectares
| | Production commenced in 2002 GovernmentApproval to expand mining granted in 2010 with an additional area also granted by an approval permits extraction of up to 36 Mtpa of run of mine coal from underground andopen-cutmodification in 2014
operations, withopen-cut
extraction limited to 32 Mtpa Domestic sales ceased during FY2020 Conveyor with conveyor to Bayswater and Liddell Power Stations has been decommissioned
On 16 June 2022, BHP announced the decision to cease mining at the asset by the end of FY2030 | | Produces a medium rank bituminous thermal coal | | NSW electricity grid connection under a deemed long-term contract and energy purchased via a Retail Agreement | | Beneficiation facilities: coal handling, preparation, washing plants
Nominal capacity: in excess of 23 Mtpa |
| |
| | The project approval contains key conditions: (i) it requires MAC to be operated generally in accordance with the environmental assessment; and (ii) permits extraction of up to 36 Mtpa of run of mine coal from underground andopen-cut operations, withopen-cut extraction limited to 32 Mtpa. |
The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.1 and the production table (refer to section 4.5.1) and reserves table (refer to section 4.6.2).and resources tables in Additional information 4 and 5.
| | | | | | | | | | | | | | | | |
| | | | OwnershipType and amount
of ownership
| | | | Title, leases or
options and
acreage involved | | History and stage
of property | | Mine type &
mineralisation
style | | | | Facilities, use &Processing plants
conditionand other
available facilities
|
|
|
Mt Keith mine and concentrator |
| | | | | | | | |
485450 km north of Kalgoorlie, Western Australia
Mt Keith Satellite Mine (Yakabindie) | | Nickel concentrate transported by road to Leinster for drying and on-on-shipping
shipping | | BHP 100% | | BHP | | Mining leases granted by Western Australian Government Key leases expire between 2029 and 2036 First renewal of 21 years is as a right. Further renewals at government discretion Mt Keith mining leases approximately 9,240 hectares Mt Keith satellite mining leases approximately 3,835 hectares | | Commissioned in 1995 by WMC Acquired in 2005 as part of WMC acquisition Mt Keith Satellite mineMine contains 2 open-pit mines: Six Mile Well in full production and Goliath currently being pre-stripped | | Disseminated textured magmatic nickel-sulphide mineralisation associated with a metamorphosed ultramafic intrusion | | On-site third-party gas-fired turbines with backup from diesel engine generation Contracts expire in December 2038 Natural gas sourced and transported under separate long-term contracts | | Concentration plant with a nominal capacity: capacity of 11 Mtpa of ore |
| |
| | Use of the land for the purposes set out by the Western Australian Government under granted mining tenements and broadly comprise of submission of detailed mining proposals; payment of royalties, annual rent to the State Government; rates to relevant local governments; compliance with environmental regulations and mine closure requirements and other reporting obligations. Existing mining operations are also subject to an Indigenous Land Use Agreement (ILUA), which includes commitments for payments made to trust accounts; Indigenous employment and business opportunities; heritage and cultural protections. |
| | | | | | | | | | | | | | | | |
| | | | Type and amount
of ownership | | | | Title, leases or
options and
acreage involved | | History and stage
of property | | Mine type &
mineralisation
style | | | | Processing plants
and other
available facilities |
| | | | | | | | | | |
| | | | | |
Leinster mine complex and concentrator | | | | | | | | | | |
375 km north of Kalgoorlie, Western Australia Venus sub-level caving operation B11 block caving operation Rocky’s Reward open-pit mine | | Nickel concentrate shipped by road and rail to Kalgoorlie Nickel Smelter | | BHP 100% | | BHP | | Mining leases granted by Western Australian Government Key leases expire between 2025 and 2040 Renewals of principal mineral lease in accordance with State Agreement ratified by the Nickel (Agnew) Agreement Act 1974 Leinster mining leases approximately 6,325 hectares Camelot mining leases approximately 2,353 hectares | | Production commenced in 1979 Acquired in 2005 as part of WMC acquisition Leinster underground ceased operations in 2013 and recommenced operations in 2016 with Venus sub-level cave now in operation and B11 block cave developing its undercut and first draw points Rocky’s Rewardopen-pit mine ceased mining in 2021 | | Steeply dipping disseminated and massive textured nickel-sulphide mineralisation associated with metamorphosed ultramafic lava flows and intrusions | | On-site third-party gas-fired turbines with back up from diesel engine generation Contracts expire in December 2038 Natural gas sourced and transported under separate long-term contracts | | Concentration plant with a nominal capacity: 3 Mtpa of ore |
| |
| Key permit conditions | | Use of the land for the purposes set out by the Western Australian Government in the Nickel (Agnew) Agreement Act 1974 and other Nickel West granted tenements broadly comprise of submission of detailed mining proposals; payment of royalties, annual rent to Western Australian Government; rates to relevant local governments; compliance with environmental regulations and mine closure requirements and other reporting obligations. Existing mining operations are also subject to an Indigenous Land Use Agreement (ILUA), which includes commitments for payments made to trust accounts; Indigenous employment and business opportunities; heritage and cultural protections. |
| | | | | | | | | | | | | | | | |
| | | | OwnershipType and amount
of ownership
| | | | Title, leases or
options and
acreage involved | | History and stage
of property | | Mine type &
mineralisation
style | | | | Facilities, use &Processing plants
conditionand other
available facilities
|
| | | | | | | | | | | | | | | | |
| | | | | | | | |
| | | | | | | | | | | | | | | | |
481450 km north of Kalgoorlie, Western Australia | | Nickel ore transported by road to Leinster or Mt Keith for further processing | | BHP 100% | | BHP | | Mining leases granted by Western Australian Government Key leases expire between 2025 and 2028 First renewal of 21 years is as of right. Further renewals at government discretion Mining leases approximately 2,675 hectares | | Production commenced in 2008 Acquired in 2005 as part of WMC acquisition | | Steeply dipping massive textured nickel-sulphide mineralisation associated with metamorphosed ultramafic lava flows | | Supplied from Mt Keith | | Mine site |
| |
| Key permit conditions | | Use of the land for the purposes set out by the Western Australian Government under granted mining tenements and broadly comprise of submission of detailed mining proposals; payment of royalties, annual rent to the State Government; rates to relevant local government; compliance with environmental regulations and mine closure requirements and other reporting obligations. Existing mining operations are also subject to an Indigenous Land Use Agreement (ILUA), which includes commitments for payments made to trust accounts; Indigenous employment and business opportunities; heritage and cultural protections. |
Nickel smelters, refineries and processing plants
| | | | | | | | | | | | | | | | |
Smelter,
processing
| | | | | | | | | | | | | | | | Nominal
production
capacity |
| | | | | | | | | | | | | | | | |
| | | | | | | | |
| | | | | | | | | | | | | | | | |
Nickelnickel concentrator | | 56 km south of Kalgoorlie, Western Australia | | BHP 100% | | BHP | | Mineral leases granted by Western Australian Government Key leases expire in 2028 Mining leases approximately 242 hectares | | Use of the land for the purposes set out by the Western Australian Government under granted mining tenements and broadly comprise of submission of detailed mining proposals; payment of royalties, annual rent to the State Government; rates to relevant local government; compliance with environmental regulations and mine closure requirements and other reporting obligations | | Concentrate containing approximately 13% nickel | | On-site third-party gas-fired turbines supplemented by access to grid power Contracts expire in December 2038 Natural gas sourced and transported under separate long-term contracts | | OreNickel sourced through ore tolling and concentrate purchase arrangements with third parties in Kambalda regionand outer regions
|
| | | | | | | | | | | | | | | | |
Nickelnickel smelter | | Kalgoorlie, Western Australia | | BHP 100% | | BHP | | Freehold title over the property | | | | Matte containing approximately 65% nickel | | On-site third-party gas-fired turbines supplemented by access to grid power Contracts expire in December 2038 Natural gas sourced and transported under separate long-term contracts | | 110 ktpa nickel metal in matte |
| | | | | | | | | | | | | | | | |
Nickelnickel refinery | | 30 km south of Perth, Western Australia | | BHP 100% | | BHP | | Freehold title over the property | | | | London Metal Exchange (LME) grade nickel briquettes, nickel powder Also intermediate products, including copper sulphide, cobalt-nickel-sulphide, ammonium-sulphate Nickel sulphate containing approximately 22% nickel | | Power is sourced from the local grid, which is supplied under a retail contract, supplemented by a Power Purchase Agreement with Merredin Solar Farm for 50% of its output | | 82.5 ktpa mattenickel metal in powder, briquettes, and nickel sulphate (with approval to increase up to 90kpta)90 ktpa) 99 kt–100 kt nickel sulphate (approximately 22 kt–24 kt nickel) |
The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.2 and the production table (refer to section 4.5.1) and reserves table (refer to section 4.6.2).and resources tables in Additional information 4 and 5.
| | | | | | | | | | | | | | | | |
| | | | OwnershipType and amount
of ownership
| | | | Title, leases
or options
and acreage
involved | | History and
stage of
property | | Mine type &
mineralisation
style | | | | Facilities, use &Processing plants
conditionand other available
facilities
|
| | | | | | | | | | | | | | |
170 km southeast of Antofagasta, Chile | | Private road available for public use Copper cathode transported by privately owned rail to ports at Antofagasta and Mejillones Copper concentrate transported by Escondida-owned pipelines to its Coloso port facilities | | JECO Corporation consortium comprising Mitsubishi, JX Nippon Mining and Metals 10% | | BHP | | Mining concession from Chilean Government valid indefinitely (subject to payment of annual fees) Mining concessions (exploitation): approximately 380,000 hectares | | Original construction completed and production commenced in 1990 Start of operations of the third concentrator plant in 2015 Inauguration of Escondida Water Supply desalination plant (CY2018) and its extension (CY2019) | | 2 open-cut pits: Escondida and Escondida Norte Escondida and Escondida Norte mineral deposits are adjacent but distinct supergene enriched porphyry copper deposits | | Escondida-owned transmission lines connect to Chile’s northern power grid Electricity sourced from external vendors and Tamakaya SpA (100% owned by BHP), which generates power from the Kelar gas-fired power plant Renewable power agreements signed in FY2020 with supply to commencecommenced in FY2022 | | Crushing facilities feed concentrator and leaching processes 3 concentrator plants produce copper concentrate from sulphide ore by flotation extraction process (by-products: gold and silver) 2 solvent extraction and electrowinning plants produce copper cathode Nominal capacity: 153.7 Mtpa422 ktpd (nominal milling capacity) and 350 ktpa copper cathode (nominal capacity of tank house) |
| | | | | | | | | | | | | | | | 2 x 168 km concentrate pipelines, 167 km water pipeline Port facilities at Coloso, Antofagasta Desalinated water plant (total water capacity of 3,800 litres per second) |
| |
| Key permit conditions | | Mining companies in Chile must comply with an Environmental Impact Assessment (EIA) approved by the Environmental Assessment Service (SEA) in order to operate. Changes in the scope of the operation can trigger a Environmental Impact Declaration (DIA) or a full EIA. Mining companies must also pay a yearly mining concession. |
| | | | | | | | | | | | | | | | |
| | | | Type and amount
of ownership | | | | Title, leases
or options
and acreage
involved | | History and
stage of
property | | Mine type &
mineralisation
style | | | | Processing plants
and other available
facilities |
| | | | | | | | | | | | | | |
162 km northeast of Antofagasta, Chile | | Copper cathode transported by rail to ports at Mejillones and Antofagasta Copper concentrate transported by rail or trucks to port in Mejillones Molybdenum concentrate is transported by trucks | | BHP 100% | | BHP | | Mining concession from Chilean Government valid indefinitely (subject to payment of annual fees) Mining concessions (exploitation): approximately 44,000 hectares | | First copper produced in 2006 Spence Growth Option (SGO) project (i.e. new 95 ktpd copper concentrator and molybdenum plants) produced first copper in December 2020 and first molybdenum in April 2022 | | Enriched and oxidised porphyry copper deposit containing in situ copper oxide mineralisation that overlies a near-horizontal sequence of supergene sulphides, transitional sulphides, and finally primary (hypogene) sulphide mineralisation | | Spence-owned transmission lines connect to Chile’s northern power grid Electricity purchased from external vendors Renewable power agreements signed in FY2020 with supply to commencecommenced in FY2022 | | Crushing facilities feed concentrator and leaching processes 1 copper concentrator plant with 95 ktpd capacity (by-products: gold and silver), molybdenum plant and a 1,000 lps desalinated water plant under a Build, Own, Operate, Transfer (BOOT) agreement Dynamic leach pads, solvent extraction and electrowinning plant Nominal capacity of tank house: 200 ktpa copper cathode |
| |
| Key permit conditions | | Mining companies in Chile must comply with an EIA approved by the SEA in order to operate Changes in the scope of the operation can trigger a DIA or a full EIA Mining companies must also pay a yearly mining concession |
| | | | | | | | | | | | | | | | |
| | | | OwnershipType and
amount of
ownership
| | | | Title, leases or options
optionsand acreage involved | | History and stage of
property | | Mine type &
mineralisation
style | | | | Facilities, use &Processing
conditionplants and
other available
facilities
|
Pampa Norte Cerro Colorado | | | | | | | | | | | | | | |
120 km east of Iquique, Chile | | Copper cathode trucked to port at Iquique | | BHP 100% | | BHP | | Mining concession from Chilean Government valid indefinitely (subject to payment of annual fees) Current environmental licence expires at the end of CY2023 Mining concessions (exploitation): approximately 34,000 hectares | | Commercial production commenced in 1994 Expansions in 1996 and 1998 | | Enriched and oxidised porphyry copper deposit containing in situ copper oxide mineralisation that overlies a near-horizontal sequence of supergene sulphides, transitional sulphides and finally primary (hypogene) sulphide mineralisation | | Electricity purchased from external vendors | | Crushing facilities, dynamic leach pads, solvent extraction plant, electrowinning plant Nominal capacity of tank house: 130 ktpa copper cathode |
| |
| Key permit conditions | | Mining companies in Chile must comply with an EIA approved by the SEA in order to operate. Changes in the scope of the operation can trigger a DIA or a full EIA. Mining companies must also pay a yearly mining concession. |
| | | | | | | | | | | | | | | | |
| | | | Type and
amount of
ownership | | | | Title, leases
or options
and acreage
involved | | History and
stage of property | | Mine type &
mineralisation
style | | | | Processing plants
and other
available
facilities |
| | | | | | | | | | | | | | | | |
270 km northeast of Lima, Peru | | Copper and zinc concentrates transported by Antamina-owned pipeline to its Punta Lobitos port Molybdenum and lead/bismuth concentrates transported by truck | | | | Compañía Minera Antamina S.A. | | Mining rights from Peruvian Government held indefinitely, subject to payment of annual fees and supply of information on investment and production Total acreage: approximately 6,600 hectares | | Commercial production commenced in 2001 | | Zoned porphyry and skarn deposit with central copper dominated ores and an outer band of copper-zinc dominated ores | | Long-term contracts with individual power producers | | Primary crusher, concentrator, copper and zinc flotation circuits, bismuth/moly cleaning circuit Nominal milling capacity 53 Mtpa145 ktpd 304 km concentrate pipeline Port facilities at Huarmey |
| |
| Key permit conditions | | In April 2022, Antamina submitted to Peruvian authorities an Environmental Impact Study Modification (MEIA), which would enable Antamina to extend its life from 2028 to 2036, maintaining annual production volumes within its current operational footprint. |
| | | | | | | | | | | | | | | | |
| | | | Type and
amount of
ownership | | | | Title, leases
or options
and acreage
involved | | History and
stage of property | | Mine type &
mineralisation
style | | | | Processing plants
and other available
facilities |
| | | | | | | | | | | | | | | | |
| | Public road | | | | Resolution Copper Mining LLC | | Private land, patented and unpatented mining claims Total acreage: approximately 46,000 acres | | The Resolution deposit is within the footprint and adjacent the historical Magma Copper Mine The ResolutionNon-Operated Joint Venture (NOJV) was formed in 2004 with Rio Tinto as operator | | Porphyry copper and molybdenum deposit | | 115kV power lines to East and West Plant sites with supply contract with Salt River Project | | Water treatment and reverse osmosis plant, two active underground shafts with associated support infrastructure including hoisting, ventilation and cooling, and a rail corridor connecting the site to the national rail network |
| |
| Key permit conditions | | The Resolution Copper Project is subject to a federal permitting process pursuant to the National Environmental Policy Act (NEPA) and other U.S. legislation, including requirements for consultation, coordination and collaboration with Native American Tribes. The NEPA process is led by the U.S. Forest Service. The Resolution Copper Project is also required to obtain several state and local permits, including air quality and groundwater protection permits. |
Iron ore mining operations
The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.2 and the production table (refer to section 4.5.1) and reserves table (refer to section 4.6.2).and resources tables in Additional information 4 and 5.
| | | | | | | | | | | | | | | | |
| | | | OwnershipType and
amount of
ownership
| | | | Title, leases or
options and
acreage involved | | History and stage
of property | | | | | | Facilities, use &Processing plants
conditionand other
available
facilities
|
| | | | | | | | | | | | | | | | |
| Southeast Brazil | | Conveyor belts used to transport iron ore to beneficiation plant 3Three slurry pipelines owned by Samarco used to transport concentrate to its pellet plants on coast
Iron ore pellets exported via port facilities | | BHP Brasil 50% of Samarco Mineração S.A. | | Samarco | | Mining concessions granted by Brazilian Government subject to compliance with the mine plan Samarco commencedrecommenced iron ore pellet production in December 2020, having met licensing requirements to restart operations at its Germano complex in Minas Gerais and its Ubu complex in Espírito Santo Mining rights for approximately 1,605 hectares | | Production began at Germano mine in 1977 and at Alegria complex in 1992 Second pellet plant built in 1997 Third pellet plant, second concentrator and second pipeline built in 2008 Fourth pellet plant, third concentrator and third pipeline built in 2014 | | Itabirites (metamorphic quartz-hematite rock) and friable hematite ores | | Samarco holds interests in 2 hydroelectric power plants, which supply part of its electricity Power supply contract with Cemig Geração e Transmissão expires in 20222026 | | Samarco’s gradual restart of operations includes 1 concentrator and a new system of tailings disposal combining a confined pit and filtration plant for dry stacking of sandy tailings Beneficiation plants, pipelines, pellet plants and port facilities |
| |
| Key permit conditions | | Samarco has an operating licence (LOC – Corrective Operating License) obtained for the return of operations. For the continuity of operations, it has a long-term licensing plan that includes expansion of the mining area and new structures for the disposal of waste and tailings. |
CoalOther mining operations
The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.2 and the production table (refer to section 4.5.1) and reserves table (refer to section 4.6.2).and resources tables in Additional information 4 and 5.
| | | | | | | | | | | | | | | | |
| | | | OwnershipType and
amount of
ownership
| | | | Title, leases or
options and
acreage
involved | | History and
stage of
property | | Mine type &
mineralisation
style | | | | Facilities, use &Processing
conditionplants and
other available
facilities
|
Cerrejón
Jansen Stage 1 (under construction) | | | | | | | | | | | | | | | | |
La Guajira province, ColombiaApproximately 150 km east of Saskatoon, Canada | | Coal exportedMuriate of Potash (MOP) to be transported by company-owned rail to its Port Bolivar facilities (150 km)the port at Westshore Terminal in Delta, British Columbia, Canada
| | | | Cerrejón | | Mining leases expire progressively from 2028 to early 2034 | | Original mine began producing in 1976
BHP interest acquired in 2000
In June 2021, BHP entered into a sale and purchase agreement with Glencore to divest its 33.3 % interest in Cerrejón. See section 1.10.3 for more information
| | Produces a medium rank bituminous thermal coal
| | Local Colombian power system
Electricity purchased from external vendors
| | Beneficiation facilities: crushing plants, rail loading facilities with capacity in excess of 40 Mtpa and a 3.2 Mtpa washing plant |
4.3.1 Information on oil and gas operations
The following table contains additional details of our petroleum operations. This table should be read in conjunction with the production table (refer to section 4.5.2) and reserves table (refer to section 4.6.1).
| | | | | | | | | | | | |
| | | | | | | | | | Nominal production
capacity
| | Facilities, use &
condition
|
| | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | |
| | | | | |
Neptune (Green Canyon 613)
| | | | | | | | | | |
| | Oil and gas | | | | EnVen Energy | | Lease from US Government as long as oil and gas produced in paying quantities | | 50 Mbbl/d oil
50 MMcf/d gas | | Stand-alone tension leg platform (TLP)
On 20 May 2021, BHP finalised a purchase and sale agreement with EnVen Energy Ventures, LLC to divest our interest in and operation of Neptune
|
| | | | | |
Shenzi (Green Canyon 653)
| | | | | | | | | | |
| | Oil and gas | | 100% | | BHP | | Lease from US Government as long as oil and gas produced in paying quantities | | 100 Mbbl/d oil
50 MMcf/d gas | | Stand-alone TLPThe total area of the Jansen lease is approximately 1,156 square km
Genghis Khan field (part of same geological structure) tied back to Marco Polo TLPAll surface lands have been acquired
| | On 6 November 2020, BHP finalised a membership interest purchase and sale agreement with Hess Corporation to acquire an additional 28% working interest in Shenzi
|
| | | | | |
Atlantis (Green Canyon 743)
Stage 1 is currently under construction | | | | | | | | | | |
The Lower Patience Lake (LPL)Gulfsub-member
is the potash horizon targeted for Jansen. TheLPL sub-member is composed of Mexico (2,155 m)
sylvite (KCl), halite (NaCl) with variable amounts of disseminated insolubles and clay seams | | Oil and gasPermanent power supply to be constructed | | BHP 44%Mill, buildings, and other facilities and infrastructure are planned to be constructed
| | BP | | Lease from US Government as long as oilConstruction of production and gas produced in paying quantities | | 200 Mbbl/d oil
180 MMcf/d gas | | Moored semi-submersible platform |
|
Mad Dog (Green Canyon 782)
service shafts was completed during FY2022 |
| |
Oil and gasKey permit conditions | | BHP 23.9%An Environmental Assessment is required to be submitted to the regulatory authority in order to determine the potential environmental and social impacts of a project during construction, operation and closure.
| | BP | | LeaseDepending on the activity, permits from US Government as long as oilmunicipal, provincial and gas produced in paying quantities | | 100 Mbbl/d oil
60 MMcf/d gas | | Moored integrated truss spar, facilities for simultaneous production and drilling operations |
| | | | | | | | | | | | |
| | | | | | | | | | Nominal production
capacity
| | Facilities, use &
condition
|
| | | | | | | | | | | | |
|
|
Offshore and onshore Victoria | | Oil and gas | | Gippsland Basin joint venture (GBJV):
Esso Australia (Exxon Mobil subsidiary) 50%
Kipper Unit joint venture (KUJV):
| | Esso Australia | | 20 production licences and 2 retention leases issued by Australian Government
Production licences and leases expire between 2032 and end of life of field. Retention leases expire between 2023 and end of life field
1 production licence held with Mitsui E&P Australia
| | | | 11 offshore fields producing through offshore infrastructure, including 12 steel jacket platforms, 2 concrete gravity platforms and a subsea pipeline network
Onshore infrastructure:
– Longford facility (gas conditioning/processing and liquids processing facilities)
– interconnecting pipelines
– Long Island Point (LPG processing and liquids storage/offtake)
– heliport and onshore supply base
|
|
|
Offshore and onshore Western Australia | | Domestic gas, LPG, condensate,
| | 16.67% of original LNG JV
15.78% of Extended Interest Joint Venture
Other participants: subsidiaries of Woodside, Chevron, BP, Shell, Mitsubishi/Mitsui and China National Offshore Oil Corporation
| | Woodside Petroleum Ltd | | 14 production licences issued by Australian Government
Licences expire between 2022 and 5 years after production ceases
| | North Rankin Complex: 3,010 MMcf/d gas
1,746 MMcf/d gas
100 Mbbl/d condensate
| | Production from offshore fields is processed over the North Rankin Complex, Goodwyn Alpha and Angel platforms, then transported onshore to the Karratha Gas Plant by 2 subsea trunklines
The Karratha Gas Plant comprises 5 LNG processing trains, two domestic gas trains, LPG fractionation and condensate stabilisation units and associated storage and loading facilities
|
|
|
| | Oil | | BP, Chevron, Japan Australia LNG (MIMI) 16.67% each
| | Woodside Petroleum Ltd | | 3 production licences issued by Australian Government
Licences expire between 2033 and 2039
| | Production capacity: 60 Mbbl/d
Storage: 1 MMbbl | | 12 subsea well completions (5 producers), 1 floating production storage and offloading (FPSO) unit |
|
|
| | Oil | | Santos 31.501%
Inpex Alpha Ltd 28.5%
| | BHP | | Production licence issued by Australian Government expires 5 years after production ceases | | Production capacity: 96 Mbbl/d oil
| | 26 subsea well completions (21 producers, 4 water injectors, 1 gas injector), 1 FPSO unit |
| | | | | | | | | | Nominal production
capacity
| | Facilities, use &
condition
|
| | | | | | | | | | | | |
Offshore and onshore Western
| | Gas and condensate | | | | BHP | | Production licence issued by Australian Government expires 5 years after production ceases | | | | Single flow line transports gas to onshore gas processing facility
Gas plant located approximately 17 km southwest of Onslow
|
Other production operations
|
|
|
|
|
| | Oil and gas | | National Gas Company 30% Chaoyang 25%
| | BHP | | Production sharing contract with the Trinidad and Tobago Government entitles us to operate Greater Angostura until 2031 | | | | Integrated oil and gas development: central processing platform connected to 4 wellhead platforms and a gas export platform
31 wells completed for production and injection including: 17 oil producers, 7 gas producers (3 subsea) and 7 gas injectors
|
|
| | Oil and gas | | Heritage Petroleum 20.13%
National Gas Company 11.41%
| | BHP | | Production sharing contract with the Trinidad and Tobago Government entitles us to operate Ruby until 2038 | | | | Single well head protector platform (WPP) consisting of 5 oil/gas producers tied back to the existing CPP/GEP facilities in the Greater Angostura Block |
|
|
ROD Integrated Development
|
900 km southeast of Algiers, Algeria
| | Oil | | BHP 45% interest in 401a/402a production sharing contract ENI 55%
BHP effective 28.85% interest in ROD unitised integrated development
| | Joint Sonatrach/ENI entity | | Production sharing contract with Sonatrach (title holder) | | Approximately 80 Mbbl/d oil | | Development and production of 6 oil fields
2 largest fields (ROD and SF SFNE) extend into neighbouring blocks 403a, 403d
Production through dedicated processing train on block 403federal agencies may also be required.
|
4.43 Financial Informationinformation by commodity
Management believes the following financial information presented by commodity provides a meaningful indication of the underlying financial performance of the assets, including equity accounted investments, of each reportable segment. Information relating to assets that are accounted for as equity accounted investments is shown to reflect BHP’s share, unless otherwise noted, to provide insight into the drivers of these assets.
For the purposes of this financial information, segments are reported on a statutory basis in accordance with IFRS 8/AASB 8 ‘Operating Segments’. The tables for each commodity include an ‘adjustment for equity accounted investments’ to reconcile the equity accounted results to the statutory segment results.
For a reconciliation of
alternative performance measuresnon-IFRS
financial information to
their respective IFRS
measuremeasures and an explanation as to the use of Underlying EBITDA in assessing our performance refer to
section 4.2.OFR 11. For the definition and method of calculation of
alternative performance measures,non-IFRS
financial information refer to
section 4.2.1.OFR 11.1. For more information as to the statutory determination of our reportable segments refer to
Financial Statements note 1 ‘Segment reporting’
in section 3.1.Detailed below is financial information for our Petroleum assets for FY2021 and FY2020.
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Australia Production Unit (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total Petroleum from Group production | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Adjustment for equity accounted investments (3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total Petroleum statutory result | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Revenue (4) | | | Underlying
EBITDA | | | D&A | | | Underlying
EBIT | | | Net
operating
assets | | | Capital
expenditure | | | Exploration
gross(5) | | | Exploration
to profit(6) | |
Australia Production Unit (1) | | | 361 | | | | 253 | | | | 197 | | | | 56 | | | | 289 | | | | 6 | | | | | | | | | |
| | | 1,102 | | | | 761 | | | | 449 | | | | 312 | | | | 1,796 | | | | 87 | | | | | | | | | |
| | | 1,076 | | | | 731 | | | | 260 | | | | 471 | | | | 1,261 | | | | 130 | | | | | | | | | |
| | | 561 | | | | 431 | | | | 175 | | | | 256 | | | | 1,061 | | | | 197 | | | | | | | | | |
| | | 277 | | | | 174 | | | | 139 | | | | 35 | | | | 550 | | | | 45 | | | | | | | | | |
| | | 216 | | | | 164 | | | | 64 | | | | 100 | | | | 1,551 | | | | 375 | | | | | | | | | |
| | | 191 | | | | 92 | | | | 46 | | | | 46 | | | | 323 | | | | 46 | | | | | | | | | |
| | | 159 | | | | 111 | | | | 12 | | | | 99 | | | | 60 | | | | 16 | | | | | | | | | |
| | | – | | | | (394 | ) | | | 41 | | | | (435 | ) | | | 1,227 | | | | (1 | ) | | | | | | | | |
| | | 104 | | | | (111 | ) | | | 77 | | | | (188 | ) | | | 129 | | | | 8 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Petroleum from Group production | | | 4,047 | | | | 2,212 | | | | 1,460 | | | | 752 | | | | 8,247 | | | | 909 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 39 | | | | (2 | ) | | | – | | | | (2 | ) | | | – | | | | – | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 4,086 | | | | 2,210 | | | | 1,460 | | | | 750 | | | | 8,247 | | | | 909 | | | | 564 | | | | 394 | |
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Adjustment for equity accounted investments (3) | | | (16 | ) | | | (3 | ) | | | (3 | ) | | | – | | | | – | | | | – | | | | – | | | | – | |
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Total Petroleum statutory result | | | 4,070 | | | | 2,207 | | | | 1,457 | | | | 750 | | | | 8,247 | | | | 909 | | | | 564 | | | | 394 | |
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(1) | Australia Production Unit includes Macedon, Pyrenees and Minerva (divested in December 2019).
|
(2) | Predominantly divisional activities, business development and Neptune (sale finalised in May 2021). Also includes the Caesar oil pipeline and the Cleopatra gas pipeline, which are equity accounted investments. The financial information for the Caesar oil pipeline and the Cleopatra gas pipeline presented above, with the exception of net operating assets, reflects BHP’s share.
|
(3) | Total Petroleum statutory result revenue excludes US$12 million (FY2020: US$16 million) revenue related to the Caesar oil pipeline and the Cleopatra gas pipeline. Total Petroleum statutory result Underlying EBITDA includes US$3 million (FY2020: US$3 million) D&A related to the Caesar oil pipeline and the Cleopatra gas pipeline.
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(4) | Total Petroleum statutory result revenue includes: crude oil US$2,013 million (FY2020: US$2,033 million), natural gas US$977 million (FY2020: US$980 million), LNG US$682 million (FY2020: US$774 million), NGL US$212 million (FY2020: US$198 million) and other US$62 million (FY2020: US$85 million) which includes third-party products.
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(5) | Includes US$26 million of capitalised exploration (FY2020: US$170 million).
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(6) | Includes US$86 million of exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) (FY2020: US$ nil).
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Detailed below is financial information for our Copper assets for FY2021FY2022 and FY2020.FY2021.
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Total Copper from Group production | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Adjustment for equity accounted investments (5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total Copper statutory result | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | Revenue | | | Underlying
EBITDA | | | D&A | | | Underlying
EBIT | | | Net
operating
assets | | | Capital
expenditure | | | Exploration
gross | | | Exploration
to profit | |
| | | 6,719 | | | | 3,535 | | | | 1,143 | | | | 2,392 | | | | 12,013 | | | | 919 | | | | | | | | | |
| | | 1,395 | | | | 599 | | | | 316 | | | | 283 | | | | 3,187 | | | | 955 | | | | | | | | | |
| | | 832 | | | | 468 | | | | 114 | | | | 354 | | | | 1,453 | | | | 205 | | | | | | | | | |
| | | 1,463 | | | | 212 | | | | 291 | | | | (79 | ) | | | 8,601 | | | | 538 | | | | | | | | | |
| | | – | | | | (202 | ) | | | 58 | | | | (260 | ) | | | 103 | | | | 22 | | | | | | | | | |
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Total Copper from Group production | | | 10,409 | | | | 4,612 | | | | 1,922 | | | | 2,690 | | | | 25,357 | | | | 2,639 | | | | | | | | | |
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| | | 1,089 | | | | 41 | | | | – | | | | 41 | | | | – | | | | – | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 11,498 | | | | 4,653 | | | | 1,922 | | | | 2,731 | | | | 25,357 | | | | 2,639 | | | | 62 | | | | 57 | |
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Adjustment for equity accounted investments (5) | | | (832 | ) | | | (306 | ) | | | (165 | ) | | | (141 | ) | | | – | | | | (205 | ) | | | (8 | ) | | | (3 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Copper statutory result | | | 10,666 | | | | 4,347 | | | | 1,757 | | | | 2,590 | | | | 25,357 | | | | 2,434 | | | | 54 | | | | 54 | |
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Total Copper from Group production | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Adjustment for equity accounted investments 5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total Copper statutory result | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | Revenue | | | Underlying
EBITDA | | | D&A | | | Underlying
EBIT | | | Net
operating
assets | | | Capital
expenditure | | | Exploration
gross | | | Exploration
to profit | |
| | | 9,470 | | | | 6,483 | | | | 969 | | | | 5,514 | | | | 11,926 | | | | 666 | | | | | | | | | |
| | | 1,801 | | | | 954 | | | | 390 | | | | 564 | | | | 4,510 | | | | 678 | | | | | | | | | |
| | | 1,627 | | | | 1,158 | | | | 142 | | | | 1,016 | | | | 1,362 | | | | 237 | | | | | | | | | |
| | | 2,211 | | | | 598 | | | | 313 | | | | 285 | | | | 9,045 | | | | 830 | | | | | | | | | |
| | | – | | | | (230 | ) | | | 10 | | | | (240 | ) | | | 85 | | | | 7 | | | | | | | | | |
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Total Copper from Group production | | | 15,109 | | | | 8,963 | | | | 1,824 | | | | 7,139 | | | | 26,928 | | | | 2,418 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2,244 | | | | 64 | | | | – | | | | 64 | | | | – | | | | – | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 17,353 | | | | 9,027 | | | | 1,824 | | | | 7,203 | | | | 26,928 | | | | 2,418 | | | | 62 | | | | 58 | |
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Adjustment for equity accounted investments 5 | | | (1,627 | ) | | | (538 | ) | | | (144 | ) | | | (394 | ) | | | – | | | | (238 | ) | | | (9 | ) | | | (5 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Copper statutory result | | | 15,726 | | | | 8,489 | | | | 1,680 | | | | 6,809 | | | | 26,928 | | | | 2,180 | | | | 53 | | | | 53 | |
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(1)1 | Escondida is consolidated under IFRS 10 and reported on a 100 per cent basis. |
(2)2 | Includes Spence and Cerro Colorado. |
(3)3 | Antamina, SolGold and Resolution are equity accounted investments and their financial information presented above with the exception of net operating assets reflects BHP Group’s share. |
(4)4 | Predominantly comprises divisional activities, greenfield exploration and business development. Includes Resolution and SolGold. |
(5)5 | Total Copper statutory result revenue excludes US$1,6271,777 million (FY2020:(FY2021: US$8321,627 million) revenue related to Antamina. Total Copper statutory result Underlying EBITDA includes US$144148 million (FY2020:(FY2021: US$165144 million) D&A and US$394425 million (FY2020:(FY2021: US$141394 million) net finance costs and taxation expense related to Antamina, Resolution and SolGold that are also included in Underlying EBIT. Total Copper Capital expenditure excludes US$237323 million (FY2020:(FY2021: US$205237 million) related to Antamina and US$ nil (FY2021: US$1 million (FY2020: US$ nil)million) related to SolGold. Exploration gross excludes US$911 million (FY2020:(FY2021: US$89 million) related to SolGold of which US$57 million (FY2020:(FY2021: US$35 million) was expensed. |
(6) | Net operating assets has been restated to reflect changes to the Group’s accounting policy following a decision by the IFRS Interpretations Committee on IAS 12 ‘Income Taxes’, resulting in the retrospective recognition of US$950 million of Goodwill at Olympic Dam. Note, an offsetting increase in Deferred tax liabilities of US$1,021 million which is not included in Net Operating Assets above. Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’ in section 3.1 for further information.
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Detailed below is financial information for our Iron Ore assets for FY2021FY2022 and FY2020.FY2021.
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Western Australia Iron Ore | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total Iron Ore from Group production | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Adjustment for equity accounted investments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total Iron Ore statutory result | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | | |
| | Revenue | | | Underlying
EBITDA | | D&A | | | Underlying
EBIT | | Net
operating
assets | | Capital
expenditure | | | Exploration
gross(4) | | | Exploration
to profit | | |
| | | Revenue | | | Underlying
EBITDA | | D&A | | | Underlying
EBIT | | Net
operating
assets | | Capital
expenditure | | | Exploration
gross1 | | | Exploration
to profit | |
Western Australia Iron Ore | | | 20,663 | | | | 14,508 | | | 1,606 | | | | 12,902 | | | 20,177 | | | 2,326 | | | | | | | | 34,337 | | | | 26,270 | | | 1,959 | | | | 24,311 | | | 21,289 | | | 2,186 | | | | | |
| | | – | | | | – | | | | – | | | | – | | | (2,045 | ) | | | – | | | | | | |
| | | 119 | | | | 53 | | | 24 | | | | 29 | | | 268 | | | 2 | | | | | | |
| | | | – | | | | – | | | | – | | | | – | | | (2,794 | ) | | | – | | | | | |
| | | | 120 | | | | 7 | | | 25 | | | | (18 | ) | | 168 | | | 2 | | | | | |
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Total Iron Ore from Group production | | | 20,782 | | | | 14,561 | | | 1,630 | | | | 12,931 | | | 18,400 | | | 2,328 | | | | | | | | 34,457 | | | | 26,277 | | | 1,984 | | | | 24,293 | | | 18,663 | | | 2,188 | | | | | |
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| | | 15 | | | | (7 | ) | | | – | | | | (7 | ) | | | – | | | | – | | | | | | |
| | | | 18 | | | | 1 | | | | – | | | | 1 | | | | – | | | | – | | | | | |
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| | | 20,797 | | | | 14,554 | | | 1,630 | | | | 12,924 | | | 18,400 | | | 2,328 | | | | 87 | | | | 47 | | | | 34,475 | | | | 26,278 | | | 1,984 | | | | 24,294 | | | 18,663 | | | 2,188 | | | | 100 | | | | 55 | |
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Adjustment for equity accounted investments | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | |
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Total Iron Ore statutory result | | | 20,797 | | | | 14,554 | | | 1,630 | | | | 12,924 | | | 18,400 | | | 2,328 | | | | 87 | | | | 47 | | | | 34,475 | | | | 26,278 | | | 1,984 | | | | 24,294 | | | 18,663 | | | 2,188 | | | | 100 | | | | 55 | |
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(1)1 | Includes US$41 million of capitalised exploration (FY2021: US$45 million). |
| 2 | Samarco is an equity accounted investment and its financial information presented above, with the exception of net operating assets, reflects BHP Billiton Brasil Ltda’s share. All financial impacts following the Samarco dam failure have been reported as exceptional items in both reporting periods. |
(2)3 | Predominantly comprises divisional activities, towage services, business development and ceased operations. |
(3)4 | Includes inter-segment and external sales of contracted gas purchases. |
(4) | Includes US$45 million of capitalised exploration (FY2020: US$40 million).
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Detailed below is financial information for our Coal assets for FY2021FY2022 and FY2020.FY2021.
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New South Wales Energy Coal (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total Coal from Group production | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Adjustment for equity accounted investments (3)(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total Coal statutory result | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| | Revenue | | | Underlying
EBITDA | | | D&A | | | Underlying
EBIT | | | Net
operating
assets | | | Capital
expenditure | | | Exploration
gross | | | Exploration to
profit | |
| | | 5,357 | | | | 1,935 | | | | 684 | | | | 1,251 | | | | 8,168 | | | | 523 | | | | | | | | | |
New South Wales Energy Coal (1) | | | 972 | | | | (19 | ) | | | 152 | | | | (171 | ) | | | 841 | | | | 73 | | | | | | | | | |
| | | 364 | | | | 69 | | | | 112 | | | | (43 | ) | | | 776 | | | | 24 | | | | | | | | | |
| | | – | | | | (155 | ) | | | 11 | | | | (166 | ) | | | (276 | ) | | | 8 | | | | | | | | | |
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Total Coal from Group production | | | 6,693 | | | | 1,830 | | | | 959 | | | | 871 | | | | 9,509 | | | | 628 | | | | | | | | | |
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| | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | | | | |
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| | | 6,693 | | | | 1,830 | | | | 959 | | | | 871 | | | | 9,509 | | | | 628 | | | | 22 | | | | 9 | |
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Adjustment for equity accounted investments (3)(4) | | | (451 | ) | | | (198 | ) | | | (138 | ) | | | (60 | ) | | | – | | | | (25 | ) | | | – | | | | – | |
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Total Coal statutory result | | | 6,242 | | | | 1,632 | | | | 821 | | | | 811 | | | | 9,509 | | | | 603 | | | | 22 | | | | 9 | |
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New South Wales Energy Coal 1 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total Coal from Group production | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Adjustment for equity accounted investments 5,6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Total Coal statutory result | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| | Revenue | | | Underlying
EBITDA | | | D&A | | | Underlying
EBIT | | | Net
operating
assets | | | Capital
expenditure | | | Exploration
gross | | | Exploration
to profit | |
| | | 3,537 | | | | 567 | | | | 597 | | | | (30 | ) | | | 7,240 | | | | 440 | | | | | | | | | |
New South Wales Energy Coal 1 | | | 927 | | | | (87 | ) | | | 144 | | | | (231 | ) | | | (289 | ) | | | 50 | | | | | | | | | |
| | | 281 | | | | 74 | | | | 86 | | | | (12 | ) | | | – | | | | 21 | | | | | | | | | |
| | | 778 | | | | (96 | ) | | | 152 | | | | (248 | ) | | | 561 | | | | 90 | | | | | | | | | |
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Total Coal from Group production | | | 5,523 | | | | 458 | | | | 979 | | | | (521 | ) | | | 7,512 | | | | 601 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | | | | |
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| | | 5,523 | | | | 458 | | | | 979 | | | | (521 | ) | | | 7,512 | | | | 601 | | | | 20 | | | | 7 | |
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Adjustment for equity accounted investments 5,6 | | | (369 | ) | | | (170 | ) | | | (114 | ) | | | (56 | ) | | | – | | | | (22 | ) | | | – | | | | – | |
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Total Coal statutory result | | | 5,154 | | | | 288 | | | | 865 | | | | (577 | ) | | | 7,512 | | | | 579 | | | | 20 | | | | 7 | |
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(1)1 | Newcastle Coal Infrastructure Group and Cerrejón areis an equity accounted investmentsinvestment and theirits financial information presented above with the exception of net operating assets reflects BHP Group’s share. |
(2)2 | On 11 January 2022, BHP completed the sale of its 33.33 per cent interest in Cerrejón to Glencore. The transaction was first announced on 28 June 2021 for a total cash consideration of US$294 million with an effective economic date of 31 December 2020. During the year ended 30 June 2022, the Group received dividends of US$238 million from Cerrejón, reducing completion proceeds, net of expected transaction costs at completion date. For more information refer to Financial Statements note 29 ‘Investments accounted for using the equity method’. |
| 3 | On 3 May 2022, BHP completed the sale of its 80 per cent interest in BHP Mitsui Coal (BMC) to Stanmore SMC Holdings Pty Ltd, a wholly owned entity of Stanmore Resources Limited (Stanmore Resources) resulting in a net after tax gain on disposal of US$840 million that has been recognised as an exceptional item. For more information refer to Financial Statements note 3 ‘Exceptional items’. The Group’s share of BMC revenue, Underlying EBITDA, D&A, Underlying EBIT, Net operating assets and Capital expenditure have been presented within ‘Other’. |
| 4 | Predominantly comprises BMC, divisional activities and ceased operations. |
(3)5 | Total Coal statutory result revenue excludes US$ nil (FY2021: US$281 million (FY2020: US$364 million) revenue related to Cerrejón. Total Coal statutory result Underlying EBITDA includes US$ nil (FY2021: US$86 million (FY2020: US$112 million) D&A and US$ nil (FY2021: US$2 million (FY2020: US$25 million) net finance costs and taxation expensebenefit related to Cerrejón, that are also included in Underlying EBIT. Total Coal statutory result Capital expenditure excludes US$ nil (FY2021: US$21 million (FY2020: US$24 million) related to Cerrejón. |
(4)6 | Total Coal statutory result revenue excludes US$8887 million (FY2020:(FY2021: US$8788 million) revenue related to Newcastle Coal Infrastructure Group. Total Coal statutory result excludes US$8262 million (FY2020:(FY2021: US$6182 million) Underlying EBITDA, US$2827 million (FY2020:(FY2021: US$2628 million) D&A and US$5435 million (FY2020:(FY2021: US$3554 million) Underlying EBIT related to Newcastle Coal Infrastructure Group until future profits exceed accumulated losses. Total Coal Capital expenditure excludes US$1 million (FY2020: nil (FY2021: US$1 million) related to Newcastle Coal Infrastructure Group. |
(5) | On 28 June 2021, BHP announced that it had signed a Sale and Purchase Agreement with Glencore to divest its 33.3 per cent interest in Cerrejón. While BHP continued to report its share of profit and loss within the Coal segment and asset tables, the Group’s investment of US$284 million in Cerrejón has subsequently been classified as ‘Assets held for sale’ and therefore excluded from net operating assets.
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Detailed below is financial information for our Other assets for FY2021FY2022 and FY2020.FY2021.
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| | | Revenue | | | Underlying
EBITDA | | D&A | | | Underlying
EBIT | | Net
operating
assets | | | Capital
expenditure | | | Exploration
gross | | | Exploration
to profit | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (167 | ) | | 2 | | | | (169 | ) | | 3,073 | | | | 268 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,545 | | | | 259 | | | 110 | | | | 149 | | | 300 | | | | 286 | | | | 17 | | | | 17 | |
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| | | |
| | Revenue | | | Underlying
EBITDA | | D&A | | | Underlying
EBIT | | Net
operating
assets | | | Capital
expenditure | | | Exploration
gross | | | Exploration
to profit | | |
| | | – | | | | (127 | ) | | 3 | | | | (130 | ) | | 4,068 | | | | 201 | | | | – | | | | – | | |
| | | 1,189 | | | | (37 | ) | | 71 | | | | (108 | ) | | 60 | | | | 254 | | | | 13 | | | | 13 | | |
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4.5.1 Production – Minerals
The table below details our mineral and derivative product production for all operations (except Petroleum) for the three years ended 30 June 2022, 2021 2020 and 2019.2020. Unless otherwise stated, the production numbers represent our share of production and include BHP’s share of production from which profit is derived from our equity accounted investments. Production information for equity accounted investments is included to provide insight into the operational performance of these entities. For discussion of minerals pricing during the past three years refer to section 1.17.OFR 10.
| | | | BHP interest
% | | | | | |
| | | BHP share of production 1 Year ended 30 June | |
| | | | | | 2020 | | | 2019 | | | | | | 2021 | | | 2020 | |
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Payable metal in concentrate (‘000 tonnes) | | | | | | | | | | | | | | | | |
| | | 57.5 | | | | | | | | 925.9 | | | | 882.1 | | |
| | | 100 | | | | | | | | 0 | | | | 0 | | |
| | | 33.75 | | | | | | | | 124.5 | | | | 147.2 | | |
| | | | 57.5 | | | | | | | | 871.7 | | | | 925.9 | |
| | | | 100 | | | | | | | | 27.4 | | | | 0 | |
| | | | 33.75 | | | | | | | | 144.0 | | | | 124.5 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 1,050.4 | | | | 1,029.3 | | | | | | | | | | 1,043.1 | | | | 1,050.4 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | 57.5 | | | | | | | | 259.4 | | | | 253.2 | | |
| | | 100 | | | | | | | | 242.7 | | | | 246.5 | | |
| | | | 57.5 | | | | | | | | 196.5 | | | | 259.4 | |
| | | | 100 | | | | | | | | 190.8 | | | | 242.7 | |
| | | 100 | | | | | | | | 171.6 | | | | 160.3 | | | | 100 | | | | | | | | 205.3 | | | | 171.6 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 673.7 | | | | 660.0 | | | | | | | | | | 592.6 | | | | 673.7 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total copper concentrate and cathode | | | | | | | | | 1,724.1 | | | | 1,689.3 | | | | | | | | | | 1,635.7 | | | | 1,724.1 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Payable metal in concentrate (‘000 tonnes) | | | | | | | | | | | | | | | | |
| | | 33.75 | | | | | | | | 1.7 | | | | 2.4 | | |
| | | | 33.75 | | | | | | | | 2.5 | | | | 1.7 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 1.7 | | | | 2.4 | | | | | | | | | | 2.5 | | | | 1.7 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Payable metal in concentrate (‘000 tonnes) | | | | | | | | | | | | | | | | |
| | | 33.75 | | | | | | | | 88.5 | | | | 98.1 | | |
| | | | 33.75 | | | | | | | | 145.1 | | | | 88.5 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 88.5 | | | | 98.1 | | | | | | | | | | 145.1 | | | | 88.5 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Payable metal in concentrate (‘000 ounces) | | | | | | | | | | | | | | | | |
| | | 57.5 | | | | | | | | 177.4 | | | | 286.0 | | |
| | | | 57.5 | | | | | | | | 167.0 | | | | 177.4 | |
| | | | 100 | | | | | | | | 4.7 | | | |
Olympic Dam, Australia (refined gold) | | | 100 | | | | | | | | 146.0 | | | | 107.0 | | | | 100 | | | | | | | | 146.0 | | | | 146.0 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 323.4 | | | | 393.0 | | | | | | | | | | 317.7 | | | | 323.4 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Payable metal in concentrate (‘000 ounces) | | | | | | | | | | | | | | | | |
| | | 57.5 | | | | | | | | 6,413 | | | | 8,830 | | |
| | | 33.75 | | | | | | | | 4,116 | | | | 4,758 | | |
| | | | 57.5 | | | | | | | | 5,759 | | | | 6,413 | |
| | | | 33.75 | | | | | | | | 5,965 | | | | 4,116 | |
| | | | 100 | | | | | | | | 214 | | | |
Olympic Dam, Australia (refined silver) | | | 100 | | | | | | | | 984 | | | | 923 | | | | 100 | | | | | | | | 810 | | | | 984 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 11,513 | | | | 14,511 | | | | | | | | | | 12,748 | | | | 11,513 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Payable metal in concentrate (tonnes) | | | | | | | | | | | | | | | | |
| | | 100 | | | | | | | | 3,678 | | | | 3,565 | | | | 100 | | | | | | | | 3,267 | | | | 3,678 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 3,678 | | | | 3,565 | | | | | | | | | | 3,267 | | | | 3,678 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Payable metal in concentrate (tonnes) | | | | | | | | | | | | | | | | |
| | | 33.75 | | | | | | | | 1,666 | | | | 1,141 | | |
| | | | 33.75 | | | | | | | | 863 | | | | 1,666 | |
| | | | 100 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 1,666 | | | | 1,141 | | | | | | | | | | 863 | | | | 1,666 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | BHP interest
% | | | | | |
| | | BHP Group share of production 1 Year ended 30 June | |
| | | | | | 2020 | | | 2019 | | | | | | 2021 | | | 2020 | |
| | | | | | | | | | | | | | | | |
Western Australia Iron Ore | | | | | | | | | | | | | | | | |
Production (‘000 tonnes) (6) | | | | | | | | | |
Production (‘000 tonnes) 6 | | | | | | | | | |
| | | 85 | | | | | | | | 65,641 | | | | 66,622 | | | | 85 | | | | | | | | 63,221 | | | | 65,641 | |
Area C Joint Venture, Australia | | | 85 | | | | | | | | 51,499 | | | | 47,440 | | | | 85 | | | | | | | | 52,386 | | | | 51,499 | |
Yandi Joint Venture, Australia | | | 85 | | | | | | | | 69,262 | | | | 65,197 | | | | 85 | | | | | | | | 68,596 | | | | 69,262 | |
| | | 85 | | | | | | | | 61,754 | | | | 58,546 | | |
| | | | 85 | | | | | | | | 67,393 | | | | 61,754 | |
| | | 85 | | | | | | | | 3 | | | | 159 | | | | 85 | | | | | | | | 0 | | | | 3 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total Western Australia Iron Ore | | | | | | | | | 248,159 | | | | 237,964 | | | | | | | | | | 251,596 | | | | 248,159 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 50 | | | | | | | | – | | | | – | | |
| | | | 50 | | | | | | | | 1,938 | | | | – | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 248,159 | | | | 237,964 | | | | | | | | | | 253,534 | | | | 248,159 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Production (‘000 tonnes) (8) | | | | | | | | | |
Production (‘000 tonnes) 8 | | | | | | | | | |
| | | 50 | | | | | | | | 5,545 | | | | 6,603 | | | | 50 | | | | | | | | 6,224 | | | | 5,545 | |
Goonyella Riverside, Australia | | | 50 | | | | | | | | 8,765 | | | | 8,563 | | | | 50 | | | | | | | | 9,448 | | | | 8,765 | |
| | | 50 | | | | | | | | 5,783 | | | | 5,933 | | | | 50 | | | | | | | | 5,892 | | | | 5,783 | |
| | | 50 | | | | | | | | 4,963 | | | | 4,892 | | | | 50 | | | | | | | | 4,489 | | | | 4,963 | |
| | | 50 | | | | | | | | 2,170 | | | | 2,178 | | | | 50 | | | | | | | | 1,928 | | | | 2,170 | |
| | | 50 | | | | | | | | 4,349 | | | | 3,967 | | | | 50 | | | | | | | | 3,903 | | | | 4,349 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Total BHP Mitsubishi Alliance | | | | | | | | | 31,575 | | | | 32,136 | | | | | | | | | | 31,884 | | | | 31,575 | |
| | | | | | | | | | | | | | | | | | | | | | | |
South Walker Creek, Australia (9) | | | 80 | | | | | | | | 5,415 | | | | 6,194 | | |
| | | 80 | | | | | | | | 4,128 | | | | 4,071 | | |
South Walker Creek, Australia 9 | | | | 80 | | | | | | | | 4,887 | | | | 5,415 | |
| | | | 80 | | | | | | | | 3,854 | | | | 4,128 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 9,543 | | | | 10,265 | | |
| | | | | | | | | | 8,741 | | | | 9,543 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 41,118 | | | | 42,401 | | |
| | | | | | | | | | 40,625 | | | | 41,118 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
New South Wales Energy Coal, Australia | | | 100 | | | | | | | | 16,052 | | | | 18,257 | | | | 100 | | | | | | | | 14,326 | | | | 16,052 | |
| | | 33.3 | | | | | | | | 7,115 | | | | 9,230 | | |
| | | | 33.3 | | | | | | | | 4,964 | | | | 7,115 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 23,167 | | | | 27,487 | | | | | | | | | | 19,290 | | | | 23,167 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | | | | | | | | |
Saleable production (‘000 tonnes) | | | | | | | | | | | | | | | | |
Nickel West, Australia (10) | | | 100 | | | | | | | | 80.1 | | | | 87.4 | | |
| | | | 100 | | | | | | | | 89.0 | | | | 80.1 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | 80.1 | | | | 87.4 | | | | | | | | | | 89.0 | | | | 80.1 | |
| | | | | | | | | | | | | | | | | | | | | | | |
(1)1 | BHP share of production includes the Group’s share of production for which profit is derived from our equity accounted investments, unless otherwise stated. |
(2)2 | Metal production is reported on the basis of payable metal. |
(3)3 | Shown on 100 per cent basis. BHP interest in saleable production is 57.5 per cent. |
(4)4 | For statutory financial reporting purposes, this is an equity accounted investment. We have included production numbers from our equity accounted investments as the level of production and operating performance from these operations impacts Underlying EBITDA of the Group. Our use of Underlying EBITDA is explained in section 1.8.3.OFR 4.3. BHP completed the sale of its 33.3 per cent interest in Cerrejón on 11 January 2022. Production for Cerrejón reported until 31 December 2021. |
(5)5 | Includes Cerro Colorado and Spence. |
(6)6 | Iron ore production is reported on a wet tonnes basis. |
(7)7 | Shown on 100 per cent basis. BHP interest in saleable production is 85 per cent. |
(8)8 | Metallurgical coal production is reported on the basis of saleable product. Production figures include some thermal coal. |
(9)9 | Shown on 100 per cent basis. BHP interest in saleable production is 80 per cent. |
(10)10 | Nickel contained in matte and refined nickel metal, including briquette, and power, mattepowder, nickel sulphate and by-product streams. |
4.5.2 Production – Petroleum
The table below details Petroleum’s historical net crude oil and condensate, natural gas and natural gas liquids production, primarily by geographic segment, for each of the three years ended 30 June 2021, 2020 and 2019. We have shown volumes of marketable production after deduction of applicable royalties, fuel and flare. We have included in the table average production costs per unit of production and average sales prices for oil and condensate and natural gas for each of those periods.
| | | | | | | | | | | | |
| | | BHP share of production
Year ended 30 June | |
| | | | | | 2020 | | | 2019 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | 14,044 | | | | 14,365 | |
United States – Conventional | | | | | | | 23,345 | | | | 28,047 | |
United States – Onshore US (1) | | | | | | | – | | | | 6,411 | |
| | | | | | | 3,823 | | | | 4,885 | |
| | | | | | | | | | | | | |
Total crude oil and condensate | | | | | | | 41,212 | | | | 53,708 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | 292.6 | | | | 310.1 | |
United States – Conventional | | | | | | | 8.1 | | | | 10.4 | |
United States – Onshore US (1) | | | | | | | – | | | | 96.3 | |
| | | | | | | 58.9 | | | | 76.2 | |
| | | | | | | | | | | | | |
| | | | | | | 359.6 | | | | 493.0 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | 6,462 | | | | 6,265 | |
United States – Conventional | | | | | | | 1,189 | | | | 1,581 | |
United States – Onshore US (1) | | | | | | | – | | | | 3,505 | |
| | | | | | | – | | | | 42 | |
| | | | | | | | | | | | | |
| | | | | | | 7,651 | | | | 11,392 | |
| | | | | | | | | | | | | |
Total production of petroleum products (million barrels of oil equivalent) | | | | | | | | | | | | |
| | | | | | | 69.3 | | | | 72.3 | |
United States – Conventional | | | | | | | 25.9 | | | | 31.4 | |
United States – Onshore US (1) | | | | | | | – | | | | 26.0 | |
| | | | | | | 13.6 | | | | 17.6 | |
| | | | | | | | | | | | | |
Total production of petroleum products | | | | | | | 108.8 | | | | 147.3 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | 52.38 | | | | 69.50 | |
United States – Conventional | | | | | | | 46.69 | | | | 64.65 | |
United States – Onshore US (1) | | | | | | | – | | | | 68.02 | |
| | | | | | | 56.05 | | | | 68.86 | |
| | | | | | | | | | | | | |
Total crude oil and condensate | | | | | | | 49.53 | | | | 66.73 | |
| | | | | | | | | | | | | |
(US$ per thousand cubic feet) | | | | | | | | | | | | |
| | | | | | | 5.60 | | | | 7.00 | |
United States – Conventional | | | | | | | 2.20 | | | | 3.22 | |
United States – Onshore US (1) | | | | | | | – | | | | 2.90 | |
| | | | | | | 2.60 | | | | 2.87 | |
| | | | | | | | | | | | | |
| | | | | | | 5.02 | | | | 5.50 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | 27.51 | | | | 36.54 | |
United States – Conventional | | | | | | | 13.44 | | | | 25.73 | |
United States – Onshore US (1) | | | | | | | – | | | | 27.74 | |
| | | | | | | – | | | | 28.66 | |
| | | | | | | | | | | | | |
| | | | | | | 25.36 | | | | 32.17 | |
| | | | | | | | | | | | | |
Total average production cost (US$ per barrel of oil equivalent) (5) | | | | | | | | | | | | |
| | | | | | | 7.12 | | | | 8.98 | |
United States – Conventional | | | | | | | 4.57 | | | | 5.29 | |
United States – Onshore US (1) | | | | | | | – | | | | 4.93 | |
| | | | | | | 4.94 | | | | 6.41 | |
| | | | | | | | | | | | | |
Total average production cost | | | | | | | 6.24 | | | | 7.18 | |
| | | | | | | | | | | | | |
(1)11 | BHP completed the sale of its 80 per cent interest in BHP Mitsui Coal (BMC) on 3 May 2022. Production for Onshore US assets is shown through the closing date of the divestment in FY2019. Production for Eagle Ford, Permian and Haynesville assets is shown through 31 October 2018 and production for Fayetteville is shown through 28 September 2018. |
(2) | Other comprises Algeria, Trinidad and Tobago, and the United Kingdom (divestedreported until 30 November 2018).
|
(3) | LPG and ethane are reported as natural gas liquids (NGL).
|
(4) | Total barrels of oil equivalent (boe) conversion is based on the following: 6,000 standard cubic feet (scf) of natural gas equals one boe.
|
(5) | Average production costs include direct and indirect costs relating to the production of hydrocarbons and the foreign exchange effect of translating local currency denominated costs into US dollars, but excludes ad valorem and severance taxes, and the cost to transport our produced hydrocarbons to the point of sale.April 2022.
|
Reserves are the estimated quantities of material that can be demonstrated to be able to be economically5 Mineral resources and legally extracted from BHP’s properties. In order to estimate reserves, assumptions are required about a range of technical and economic factors, including quantities, qualities, production techniques, recovery efficiency, production and transport costs, commodity supply and demand, commodity prices and exchange rates.
Estimating the quantity and/or quality of reserves requires the size, shape and depth of ore bodies or oil and gas reservoirs to be determined by analysing geological data, such as drilling samples and geophysical survey interpretations. Economic assumptions used to estimate reserves change from period to period as additional technical and operational data is generated.
4.6.1 Petroleummineral reserves
Estimates of oilOur mineral resources and gasmineral reserves involve some degree of uncertainty, are inherently imprecise, require the application of judgement and are subject to future revision. Accordingly, financial and accounting measures (such as the standardised measure of discounted cash flows, depreciation, depletion and amortisation charges, the assessment of impairments and the assessment of valuation allowances against deferred tax assets) that are based on reserve estimates are also subject to change.
How we estimate andpresented in this annual report reserves
Petroleum’s reserves are estimated as of 30 June each year. Reported reserves include both Conventional Petroleum reserves and Onshore US reserves for FY2018 and are included in the opening balances in the accompanying tables. Footnotes have been includedprepared in accordance with the tables to identify the contribution of the Discontinued operations (Onshore US) for this period. The sale of Petroleum’s interests in Onshore US reserves was completed in FY2019. Remaining reserves at the end of FY2019, FY2020 and FY2021 reflect the Continuing operations only.
Our proved reserves are estimated and reported on a net interest basis according to the US Securities and Exchange Commission (SEC) regulations
Subpart 1300 of RegulationS-K
(S-K
1300).Mineral resource is a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and
quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralisation, taking into account relevant factors such ascut-off
grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralisation drilled or sampled. Our mineral resources have been
determinedclassified as measured, indicated or inferred depending on the level of geological certainty and confidence in
accordance with SEC Rulethe estimates, as defined in Item 1300 of4-10(a)S-K
of RegulationS-X.
1300. Proved oilMineral reserve is an estimate of tonnage and gas reserves
Proved oilgrade or quality of indicated and
gas reserves are those quantitiesmeasured mineral resources that, in the opinion of
crude oil, natural gas and natural gas liquids (NGL) that, by analysis of geoscience and engineering data,the qualified person, can be
estimated with reasonable certainty to bethe basis of an economically
producible from a given date forward from known reservoirs and under existing economic conditions, operating methods, operating contracts and government regulations. Unless evidence indicates that renewal of existing operating contracts is reasonably certain, estimates of economically producible reserves reflect only the period before the contracts expire. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain thatviable project. More specifically, it
will commence within a reasonable time. As specified in SEC Rule4-10(a)
of RegulationS-X,
oil and gas prices are taken as the unweighted average of the corresponding first day of the month prices for the 12 months prior to the ending date of the period covered.Proved reserves were estimated by reference to available well and reservoir information, including but not limited to well logs, well test data, core data, production and pressure data, geologic data, seismic data and in some cases, to similar data from analogous, producing reservoirs. A wide range of engineering and geoscience methods, including performance analysis, numerical simulation, well analogues and geologic studies were used to estimate high confidence proved developed and undeveloped reserves in accordance with SEC regulations.
Proved reserve estimates were attributed to future development projects only where there is a significant commitment to project funding and execution and for which applicable government and regulatory approvals have been secured or are reasonably certain to be secured. Furthermore, estimates of proved reserves include only volumes for which access to market is assured with reasonable certainty. All proved reserve estimates are subject to revision (either upward or downward) based on new information, such as from development drilling and production activities or from changes in economic factors, including product prices, contract terms or development plans.
Developed oil and gas reserves
Proved developed oil and gas reserves are reserves that can be expected to be recovered through:
existing wells with existing equipment and operating methods
installed extraction equipment and infrastructure operational at the time of the reserve estimate if the extraction is by means not involving a well
Performance-derived reserve assessments for producing wells were primarily based on the following manner:
for our conventional operations, reserves were estimated using rate and pressure decline methods, including material balance, supplemented by reservoir simulation models where appropriate
for our Discontinued operations (Onshore US) reported for FY2018, reserves were estimated using rate-transient analysis and decline curve analysis methods
for wells that lacked sufficient production history, reserves were estimated using performance-based type curves and offset location analogues with similar geologic and reservoir characteristics
Proved undeveloped reserves
Proved undeveloped oil and gas reserves are reserves that are expected to be recovered from new wells on undrilled acreage where commitment has been made to commence development within five years from first reporting or from existing wells where a relatively major expenditure is required for recompletion.
A combination of geologic and engineering data and where appropriate, statistical analysis was used to support the assignment of proved undeveloped reserves when assessing planned drilling locations. Performance data along with log and core data was used to delineate consistent, continuous reservoir characteristics in core areas of the development. Proved undeveloped locations were included in core areas between known data and adjacent to productive wells using performance-based type curves and offset location analogues with similar geologic and reservoir characteristics. Locations where a high degree of certainty could not be demonstrated using the above technologies and techniques were not categorised as proved.
Methodology used to estimate reserves
Reserves have been estimated with deterministic methodology, with the exception of the North West Shelf gas operation in Australia, where probabilistic methodology has been used to estimate and aggregate reserves for the reservoirs dedicated to the gas project only. The probabilistic-based portion of these reserves totals 6 million barrels of oil equivalent (MMboe) in FY2021, 12 MMboe in FY2020 and 16 MMboe in FY2019. These amounts represent approximately 1 per cent of our total reported proved reserves in FY2021, and approximately 2 per cent in each of FY2020 and FY2019. Total boe conversion is based on the following: 6,000 standard cubic feet (scf) of natural gas equals 1 boe. Aggregation of proved reserves beyond the field/project level has been performed by arithmetic summation. Due to portfolio effects, aggregates of proved reserves may be conservative. The custody transfer point(s) or point(s) of sale applicable for each field or project are the reference point for reserves. The reserves replacement ratio is the change in reserves during the year excluding production, divided by the production during the year and stated as a percentage.
The Petroleum Reserves Group (PRG) is a dedicated group that provides oversight of the reserves’ assessment and reporting processes. It is independent of the various operation teams directly responsible for development and production activities. The PRG is staffed by individuals averaging more than 30 years’ experience in the oil and gas industry. The manager of the PRG, Abhijit Gadgil, is a full-time employee of BHP and is responsible for overseeing the preparation of the reserve estimates and compiling the information for inclusion in this Annual Report. He has an advanced degree in engineering and more than 40 years of diversified industry experience in reservoir engineering, reserves assessment, field development and technical management. He is a40-year
member of the Society of Petroleum Engineers (SPE). He has also served on the Society of Petroleum Engineers Oil and Gas Reserves Committee. Mr Gadgil has the qualifications and experience required to act as a qualified petroleum reserves evaluator under the Australian Securities Exchange (ASX) Listing Rules. The estimates of petroleum reserves are based on and fairly represent information and supporting documentation prepared under the supervision of Mr Gadgil. He has reviewed and agrees with the information included in section 4.6.1 and has given his prior written consent for its publication. Noeconomically mineable part of
a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the
individual compensation for members of the PRGmaterial is
dependent on reported reserves.Reserve assessments for all Petroleum operations were conducted by technical staff within the operating organisation. These individuals meet the professional qualifications outlined by the SPE, are trained in the fundamentals of SEC reserves reporting and the reserves processes and are endorsed by the PRG. Each reserve assessment is reviewed annually by the PRG to ensure technical quality, adherence to internally published Petroleum guidelines and compliance with SEC reporting requirements. Once endorsed by the PRG, all reserves receive final endorsement by senior management and the Risk and Audit Committee prior to public reporting. Our Internal Audit and Advisory function provides secondary assurance of the oil and gas reserve reporting processes through the testing of the effectiveness of key controls that have been implemented as required by the US Sarbanes-Oxley Act of 2002. For more information on our risk management governance, refer to section 2.1.10.mined or extracted.
Production for FY2021 totalled 103 MMboe in sales with an additional 5 MMboe innon-sales
production, which was used primarily for fuel consumed in operations. Total production of 108 Mmboe was approximately 6 MMboe lower than in FY2020. The decrease was primarily due to natural declines in mature fields.Net additions to reserves totalled 25 MMboe, driven primarily by the acquisition of additional working interest in the Shenzi field and partially offset by a negative performance revision in the Atlantis field in the US Gulf of Mexico. The net additions replaced 23 per cent of production. As of 30 June 2021, proved reserves totalled 665 MMboe.
Reserves have been calculated using the economic interest method and represent net revenue interest volumes after deduction of applicable royalties owned by others. Reserves of 61 MMboe were in production and risk-sharing arrangements where BHP has a revenue interest in production without transfer of ownership of the products. At 30 June 2021, approximately 9 per cent of the proved reserves were attributable to these arrangements.
Extensions and discoveries
In the Atlantis field in the US Gulf of Mexico, Phase 3 development drilling in the South West region of the field added approximately 1 MMboe by extending the previously recognised proved reservoir limit.
In Australia, revisions increased proved reserves by 4 MMboe, primarily due to strong performance in the Macedon field. Small increases in the Bass Strait and Pyrenees fields were offset by negative performance revisions in the North West Shelf fields.
In the US Gulf of Mexico, revisions decreased reserves by 11 MMboe overall, primarily driven by reductions related to lower than expected well performance in the Atlantis and Mad Dog fields of 19 MMboe and 4 MMboe respectively. Approval of the Shenzi Subsea Multi Phase Pump Project added 6 MMboe, while strong performance in the Eastern area of the Shenzi field increased reserves by a further 5 MMboe.
In Trinidad and Tobago, continued strong performance in the Angostura field added 6 MMboe to proved reserves. This addition was partially offset by a price-related reduction of approximately 1 MMboe.
Improved recovery revisions
There were no improved recovery revisions during the year.
In November 2020, BHP acquired Hess Corporation’s 28 per cent interest in the Shenzi field located in the Gulf of Mexico. The acquisition resulted in the addition of approximately 27 MMboe to proved reserves. BHP also divested its 35 per cent interest in the Neptune field in May 2021 which reduced reserves by approximately 1 MMboe. Overall, net additions from Purchases and Sales were 26 MMboe.
Production for FY2020 totalled 109 MMboe in sales with an additional 5 MMboe innon-sales
production, which was used primarily for fuel consumed in operations. Total production was approximately 13 MMboe lower than conventional production in FY2019. The decrease was due to a number of factors, including natural declines in mature fields, weather events that necessitated precautionary shut ins and lower demand as a consequence of theCOVID-19
pandemic, (refer to section 4.5.2 for more information). Discoveries, extensions and revisions to reserves added a total of 21 MMboe, which replaced 19 per cent of production. As of 30 June 2020, proved reserves totalled 748 MMboe.Reserves have been calculated using the economic interest method and represent net interest volumes after deduction of applicable royalty. Reserves of 69 MMboe are in two production and risk-sharing arrangements where BHP has a revenue interest in production without transfer of ownership of the products. At 30 June 2020, approximately 9 per cent of the proved reserves were attributable to such arrangements.
Extensions and discoveries
Board approval of the North West Shelf Greater Western Flank Phase 3 project in Australia added 12 MMboe for development of the Goodwyn South and Lambert Deep fields. Board approval of the Ruby development project in Trinidad and Tobago during the September 2019 quarter also added 19 MMboe to proved reserves. The Ruby project is comprised of the Ruby oil field and the Delaware gas field.
In Australia, reserves decreased by 35 MMboe overall due to downward revisions. This reduction was primarily in the Bass Strait due to poor reservoir performance in the Turrum field and lower overall condensate and natural gas liquids (NGL) recovery from the Bass Strait gas fields totalling 40 MMboe. Included in this reduction was a decrease of 4 MMboe due to lower product prices. Improved reservoir performance in the Pyrenees operated field added 5 MMboe partially offsetting the Bass Strait reduction. In the North West Shelf fields, reserves increased 4 MMboe for better performance and other revisions, however, this increase was offset by product price-related reductions of 4 MMboe. In the US Gulf of Mexico, strong reservoir performance and technical studies in the Atlantis, Shenzi and Mad Dog fields added a total of 25 MMboe to proved reserves.
In the Angostura field in Trinidad and Tobago and the ROD integrated development in Algeria, increases of 1 MMboe were offset by product price-related reductions of approximately 1 MMboe.
During FY2020, net revisions reduced reserves by a total of 10 MMboe overall.
Improved recovery revisions
There were no improved recovery revisions during the year.
There were no purchases or sales during the year.
Production for FY2019 totalled 147 MMboe in sales, which was comprised of 121 MMboe for our conventional fields and 26 MMboe that was produced from our US Onshore fields prior to the closure of the divestment agreements. In comparison, our conventional fields produced approximately 1 MMboe more than in FY2018. This increase was due to a number of factors, includingstart-up
of the Greater Western Flank Phase B project in the North West Shelf in Australia and higher uptime in several fields, which more than offset natural production declines in more mature fields (refer to section 4.5.2 for more information). There was also an additional 5 MMboe innon-sales
production, primarily for fuel consumed in our Petroleum operations. The combined sales andnon-sales
production totalled 152 MMboe for FY2019. For our conventional fields, additions and revisions to reserves added 57 MMboe, which replaced 45 per cent of the production in FY2019. As of 30 June 2019, our proved reserves totalled 841 MMboe.Reserves have been calculated using the economic interest method and represent net interest volumes after deduction of applicable royalty. Reserves of 64 MMboe are in two production and risk-sharing arrangements where BHP has a revenue interest in production without transfer of ownership of the products. At 30 June 2019, approximately 8 per cent of the proved reserves were attributable to such arrangements.
Extensions and discoveries
Extensions added a total of approximately 2 MMboe to proved reserves, of which 1 MMboe was added for the Atlantis field in the US Gulf of Mexico with the balance being added in the Snapper field in the Bass Strait in Australia.
Improved recovery revisions
There were no improved recovery revisions during the year.
Revisions for FY2019 added a total of 56 MMboe. The largest addition was in the Atlantis field where 28 MMboe was added for performance and approval of Phase 3 infill drilling. Other revisions, primarily in the Mad Dog field, brought the total revisions for our US Gulf of Mexico assets to 29 MMboe. Additions through revisions in Australia totalled 22 MMboe, with the North West Shelf project adding 11 MMboe. The Goodwyn field was the largest component of this change adding 10 MMboe for strong performance. In the Bass Strait, 11 MMboe was added with the largest changes occurring in the Snapper and Turrum fields, which added 5 MMboe and 2 MMboe, respectively. In Other(1)
geographic areas, 4 MMboe was added for better performance in the Offshore Angostura project in Trinidad and Tobago, while 1 MMboe was added for improved performance in the ROD integrated development in Algeria.The sale of Petroleum’s interests in the US Onshore Permian, Eagle Ford, Haynesville and Fayetteville fields accounted for reported sales of approximately 464 MMboe. There were no purchases during FY2019.
These results are summarised in the following tables, which detail estimated oil, condensate, NGL and natural gas reserves at 30 June 2021, 30 June 2020 and 30 June 2019, with a reconciliation of the changes in each year.
(1) | ‘Other’ comprises Algeria, Trinidad and Tobago and the United Kingdom (sold in FY2019).
|
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Proved developed and undeveloped oil and condensate reserves (a) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | |
Revisions of previous estimates | | | 7.8 | | | | 25.9 | | | | 1.0 | | | | 34.7 | |
Extensions and discoveries | | | 0.0 | | | | 0.8 | | | | – | | | | 0.9 | |
Purchase/sales of reserves | | | – | | | | (79.7 | ) | | | – | | | | (79.7 | ) |
| | | (14.4 | ) | | | (34.5 | ) | | | (4.9 | ) | | | (53.7 | ) |
| | | | | | | | | | | | | | | | |
| | | (6.5 | ) | | | (87.5 | ) | | | (3.9 | ) | | | (97.9 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | |
Revisions of previous estimates | | | 0.9 | | | | 21.3 | | | | (0.7 | ) | | | 21.5 | |
Extensions and discoveries | | | 1.8 | | | | – | | | | 5.0 | | | | 6.7 | |
Purchase/sales of reserves | | | – | | | | – | | | | – | | | | – | |
| | | (14.0 | ) | | | (23.3 | ) | | | (3.8 | ) | | | (41.2 | ) |
| | | | | | | | | | | | | | | | |
| | | (11.3 | ) | | | (2.0 | ) | | | 0.4 | | | | (13.0 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | |
Revisions of previous estimates | | | 2.7 | | | | (8.0 | ) | | | (0.0 | ) | | | (5.3 | ) |
Extensions and discoveries | | | – | | | | 1.1 | | | | – | | | | 1.1 | |
Purchase/sales of reserves | | | – | | | | 23.9 | | | | – | | | | 23.9 | |
| | | (11.9 | ) | | | (23.2 | ) | | | (3.6 | ) | | | (38.7 | ) |
| | | | | | | | | | | | | | | | |
| | | (9.2 | ) | | | (6.2 | ) | | | (3.7 | ) | | | (19.1 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Proved developed oil and condensate reserves | | | | | | | | | | | | | | | | |
| | | 60.5 | | | | 181.2 | | | | 19.2 | | | | 260.8 | |
| | | 59.0 | | | | 128.9 | | | | 16.3 | | | | 204.2 | |
| | | 46.7 | | | | 131.0 | | | | 11.9 | | | | 189.6 | |
Developed reserves as of 30 June 2021 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Proved undeveloped oil and condensate reserves | | | | | | | | | | | | | | | | |
| | | 10.0 | | | | 180.7 | | | | 2.8 | | | | 193.4 | |
| | | 5.0 | | | | 145.4 | | | | 1.7 | | | | 152.1 | |
| | | 6.0 | | | | 141.3 | | | | 6.5 | | | | 153.8 | |
Undeveloped reserves as of 30 June 2021 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
(a) | Small differences are due to rounding to first decimal place.
|
(b) | ‘Other’ comprises Algeria, Trinidad and Tobago and the United Kingdom (sold in FY2019).
|
(c) | For FY2018 amounts include 86.1 million barrels attributable to Discontinued operations of Onshore US.
|
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Proved developed and undeveloped NGL reserves (a) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | |
Revisions of previous estimates | | | 4.9 | | | | 0.8 | | | | 0.0 | | | | 5.7 | |
Extensions and discoveries | | | 0.2 | | | | 0.1 | | | | – | | | | 0.2 | |
Purchase/sales of reserves | | | – | | | | (58.7 | ) | | | – | | | | (58.7 | ) |
| | | (6.3 | ) | | | (5.1 | ) | | | (0.0 | ) | | | (11.4 | ) |
| | | | | | | | | | | | | | | | |
| | | (1.2 | ) | | | (62.9 | ) | | | – | | | | (64.1 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | |
Revisions of previous estimates | | | (17.8 | ) | | | 1.2 | | | | – | | | | (16.6 | ) |
Extensions and discoveries | | | 0.3 | | | | – | | | | – | | | | 0.3 | |
Purchase/sales of reserves | | | – | | | | – | | | | – | | | | – | |
| | | (6.5 | ) | | | (1.2 | ) | | | – | | | | (7.6 | ) |
| | | | | | | | | | | | | | | | |
| | | (23.9 | ) | | | – | | | | – | | | | (23.9 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | |
Revisions of previous estimates | | | (1.6 | ) | | | (1.1 | ) | | | – | | | | (2.7 | ) |
Extensions and discoveries | | | – | | | | 0.0 | | | | – | | | | 0.0 | |
Purchase/sales of reserves | | | – | | | | 0.6 | | | | – | | | | 0.6 | |
| | | (6.0 | ) | | | (1.3 | ) | | | – | | | | (7.3 | ) |
| | | | | | | | | | | | | | | | |
| | | (7.6 | ) | | | (1.7 | ) | | | – | | | | (9.3 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Proved developed NGL reserves | | | | | | | | | | | | | | | | |
| | | 49.8 | | | | 37.0 | | | | – | | | | 86.8 | |
| | | 46.5 | | | | 4.3 | | | | – | | | | 50.8 | |
| | | 23.8 | | | | 5.0 | | | | – | | | | 28.8 | |
Developed reserves as of 30 June 2021 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Proved undeveloped NGL reserves | | | | | | | | | | | | | | | | |
| | | 6.6 | | | | 35.0 | | | | – | | | | 41.6 | |
| | | 8.7 | | | | 4.8 | | | | – | | | | 13.5 | |
| | | 7.6 | | | | 4.0 | | | | – | | | | 11.6 | |
Undeveloped reserves as of 30 June 2021 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
(a) | Small differences are due to rounding to first decimal place.
|
(b) | ‘Other’ comprises Algeria, Trinidad and Tobago and the United Kingdom (sold in FY2019).
|
(c) | For FY2018 amounts include 62.2 million barrels attributable to Discontinued operations of Onshore US.
|
(d) | For FY2018 amounts include 2.5 million barrels consumed as fuel for Discontinued operations of Onshore US.
|
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Proved developed and undeveloped natural gas reserves (a) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | |
Revisions of previous estimates | | | 53.7 | | | | 14.0 | | | | 24.7 | | | | 92.4 | |
Extensions and discoveries | | | 2.5 | | | | 0.4 | | | | – | | | | 3.0 | |
Purchase/sales of reserves | | | – | | | | (1,952.8 | ) | | | – | | | | (1,952.8 | ) |
| | | (336.8 | ) | | | (109.4 | ) | | | (77.8 | ) | | | (524.1 | ) |
| | | | | | | | | | | | | | | | |
| | | (280.6 | ) | | | (2,047.8 | ) | | | (53.1 | ) | | | (2,381.5 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | |
Revisions of previous estimates | | | (111.7 | ) | | | 14.2 | | | | 5.6 | | | | (92.0 | ) |
Extensions and discoveries | | | 62.4 | | | | – | | | | 84.0 | | | | 146.5 | |
Purchase/sales of reserves | | | – | | | | – | | | | – | | | | – | |
| | | (317.3 | ) | | | (10.7 | ) | | | (60.7 | ) | | | (388.7 | ) |
| | | | | | | | | | | | | | | | |
| | | (366.6 | ) | | | 3.5 | | | | 28.9 | | | | (334.2 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | |
Revisions of previous estimates | | | 15.4 | | | | (8.6 | ) | | | 27.2 | | | | 34.0 | |
Extensions and discoveries | | | – | | | | 0.4 | | | | – | | | | 0.4 | |
Purchase/sales of reserves | | | – | | | | 7.5 | | | | – | | | | 7.5 | |
| | | (304.4 | ) | | | (9.9 | ) | | | (54.9 | ) | | | (369.2 | ) |
| | | | | | | | | | | | | | | | |
| | | (289.0 | ) | | | (10.6 | ) | | | (27.7 | ) | | | (327.3 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Proved developed natural gas reserves | | | | | | | | | | | | | | | | |
| | | 1,975.9 | | | | 1,479.4 | | | | 328.6 | | | | 3,783.8 | |
| | | 1,856.4 | | | | 65.5 | | | | 275.5 | | | | 2,197.3 | |
| | | 1,453.1 | | | | 73.4 | | | | 220.4 | | | | 1,746 .9 | |
Developed reserves as of 30 June 2021 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Proved undeveloped natural gas reserves | | | | | | | | | | | | | | | | |
| | | 436.6 | | | | 680.7 | | | | – | | | | 1,117.3 | |
| | | 275.5 | | | | 46.8 | | | | – | | | | 322.3 | |
| | | 312.2 | | | | 42.4 | | | | 84.0 | | | | 438.6 | |
Undeveloped reserves as of 30 June 2021 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
(a) | Small differences are due to rounding to first decimal place.
|
(b) | Production includes volumes consumed by operations.
|
(c) | Production for Australia includes gas sold as LNG.
|
(d) | ‘Other’ comprises Algeria, Trinidad and Tobago and the United Kingdom (sold in FY2019).
|
(e) | For FY2018, FY2019, FY2020 and FY2021 amounts include 295, 268, 246 and 204 billion cubic feet respectively, which are anticipated to be consumed as fuel in operations in Australia.
|
(f) | For FY2018, FY2019, FY2020 and FY2021 amounts include 160, 64, 65 and 67 billion cubic feet respectively, which are anticipated to be consumed as fuel in operations in the United States.
|
(g) | For FY2018, FY2019, FY2020 and FY2021 amounts include 16, 14, 17 and 13 billion cubic feet respectively, which are anticipated to be consumed as fuel in operations in Other areas.
|
(h) | For FY2018, FY2019, FY2020 and FY2021 amounts include 472, 346, 327 and 284 billion cubic feet respectively, which are anticipated to be consumed as fuel in operations.
|
(i) | For FY2018 amounts include 2,049 billion cubic feet attributable to Discontinued operations of Onshore US.
|
| | | | | | | | | | | | | | | | |
Millions of barrels of oil equivalent (a) | | | | | | | | | | | | |
Proved developed and undeveloped oil, condensate, natural gas and NGL reserves (b) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | |
Revisions of previous estimates | | | 21.6 | | | | 29.1 | | | | 5.1 | | | | 55.8 | |
Extensions and discoveries | | | 0.6 | | | | 0.9 | | | | – | | | | 1.6 | |
Purchase/sales of reserves | | | – | | | | (463.9 | ) | | | – | | | | (463.9 | ) |
| | | (76.8 | ) | | | (57.8 | ) | | | (17.9 | ) | | | (152.4 | ) |
| | | | | | | | | | | | | | | | |
| | | (54.5 | ) | | | (491.7 | ) | | | (12.8 | ) | | | (558.9 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | |
Revisions of previous estimates | | | (35.4 | ) | | | 24.8 | | | | 0.2 | | | | (10.4 | ) |
Extensions and discoveries | | | 12.5 | | | | – | | | | 19.0 | | | | 31.5 | |
Purchase/sales of reserves | | | – | | | | – | | | | – | | | | – | |
| | | (73.4 | ) | | | (26.3 | ) | | | (13.9 | ) | | | (113.6 | ) |
| | | | | | | | | | | | | | | | |
| | | (96.3 | ) | | | (1.5 | ) | | | 5.2 | | | | (92.6 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | – | | | | – | | | | – | | | | – | |
Revisions of previous estimates | | | 3.7 | | | | (10.5 | ) | | | 4.5 | | | | (2.3 | ) |
Extensions and discoveries | | | | | | | 1.2 | | | | | | | | 1.2 | |
Purchase/sales of reserves | | | – | | | | 25.7 | | | | – | | | | 25.7 | |
| | | (68.7 | ) | | | (26.1 | ) | | | (12.8 | ) | | | (107.6 | ) |
| | | | | | | | | | | | | | | | |
| | | (64.9 | ) | | | (9.7 | ) | | | (8.3 | ) | | | (83.0 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Proved developed oil, condensate, natural gas and NGL reserves | | | | | | | | | | | | | | | | |
| | | 439.6 | | | | 464.7 | | | | 73.9 | | | | 978.2 | |
| | | 414.9 | | | | 144.1 | | | | 62.2 | | | | 621.2 | |
| | | 312.6 | | | | 148.3 | | | | 48.6 | | | | 509.5 | |
Developed reserves as of 30 June 2021 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Proved undeveloped oil, condensate, natural gas and NGL reserves | | | | | | | | | | | | | | | | |
| | | 89.4 | | | | 329.2 | | | | 2.8 | | | | 421.3 | |
| | | 59.6 | | | | 158.1 | | | | 1.7 | | | | 219.4 | |
| | | 65.6 | | | | 152.4 | | | | 20.5 | | | | 238.5 | |
Undeveloped reserves as of 30 June 2021 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
(a) | Barrel oil equivalent conversion based on 6,000 scf of natural gas equals 1 boe.
|
(b) | Small differences are due to rounding to first decimal place.
|
(c) | Production includes volumes consumed by operations.
|
(d) | ‘Other’ comprises Algeria, Trinidad and Tobago and the United Kingdom (sold in FY2019).
|
(e) | For FY2018, FY2019, FY2020 and FY2021 amounts include 49, 45, 41 and 34 million barrels equivalent respectively, which are anticipated to be consumed as fuel in operations in Australia.
|
(f) | For FY2018, FY2019, FY2020 and FY2021 amounts include 29, 11, 11 and 11 million barrels equivalent respectively, which are anticipated to be consumed as fuel in operations in the United States.
|
(g) | For FY2018, FY2019, FY2020 and FY2021 amounts include 3, 2, 3 and 2 million barrels equivalent respectively, which are anticipated to be consumed as fuel in operations in Other areas.
|
(h) | For FY2018, FY2019, FY2020 and FY2021 amounts include 81, 58, 55 and 47 million barrels equivalent respectively, which are anticipated to be consumed as fuel in operations.
|
(i) | For FY2018 amounts include 490 million barrels equivalent attributable to Discontinued operations of Onshore US.
|
FY2021 proved undeveloped reserves
At 30 June 2021, Petroleum had 200 MMboe of proved undeveloped reserves, which corresponds to 30 per cent of the reported proved reserves of 665 MMboe. This represents a decrease of 38 MMboe from the 238 MMboe at 30 June 2020.
During FY2021, a total of 44 MMboe proved undeveloped reserves were converted to proved developed reserves through development activities. This was driven by the following four projects: the Barracouta West development in the Bass Strait in Australia (14 MMboe), a gas delivery pressure and compressorre-staging
study in the Macedon field in Offshore Western Australia (14 MMboe) and the Atlantis Phase 3 development in the US Gulf of Mexico (14 MMboe).Start-up
of the Ruby development project in Offshore Trinidad and Tobago also converted 3 MMboe to proved developed with first oil production. Increases to proved undeveloped reserves included approval of the Shenzi Subsurface Multi-Phase Pump project which added 6 MMboe. The effect of commodity prices relative to FY2020 resulted in the addition of 5 MMboe to proved undeveloped reserves while the acquisition of additional interest in the Shenzi field in the US Gulf of Mexico increased proved undeveloped reserves by 3 MMboe. Technical studies, revisions to expected performance and other changes reduced proved undeveloped reserves by 2 Mmboe.Over the past three years, the conversion of proved undeveloped reserves to developed status has totalled 93 MMboe, averaging 31 MMboe per year. At 30 June 2021, a total of 114 MMboe proved undevelopedOur mineral reserves have been reported for five or more years. Approximately 101 MMboeclassified as proven and probable depending on the mineral resource classification and level of this amount is associated with the Mad Dog Phase 2 development which is anticipated to produce first oil in CY2022. The remaining 13 MMboe is in our currently producing fields and will be developed and brought on stream in a phased manner to best optimise the use of production facilities and to meet sales commitments.
During FY2021, Petroleum spent US$1.1 billion on development activities worldwide. Of this amount:
US$0.9 billion was spent progressing the conversion of proved undeveloped reserves for projects where developed status was achieved in FY2021 or will be achieved when development is completedconfidence in the
futureassumptions, as defined in Item 1300 ofS-K
1300.
US$0.2 billion represented other development expenditures, including compliance and infrastructure improvement
FY2020 proved undeveloped reserves
At 30 June 2020, Petroleum had 238 MMboe of proved undeveloped reserves, which corresponds to 32 per cent of the reported proved reserves of 748 MMboe. This represents an increase of 19 MMboe from the 219 MMboe at 30 June 2019.
The most significant drivers of this increase were the additions of 19 MMboe for the Ruby development project in Offshore Trinidad and Tobago and 12 MMboe for the Greater Western Flank Phase 3 development project in Australia as extensions and discoveries.
Reclassifications from proved undeveloped to proved developed occurred in Australia in the Macedon field (7 MMboe), the Cobia field in Bass Strait (2 MMboe) and in the Offshore US Gulf of Mexico in the Mad Dog Spar A field (3 MMboe). In the Shenzi field, the need to perform a producer redrill resulted in the reclassification of 4 MMboe proved developed into proved undeveloped.
In Australia, in the Bass Strait, 18 MMboe was moved into proved undeveloped for the Turrum field as a result of the reservoir performance reassessment, while in the Kipper field, a reduction of the gas delivery pressure requirements enabled more gas to be delivered prior to the installation of compression. This resulted in the movement of 16 MMboe from proved undeveloped to proved developed reserves. Bass Strait proved undeveloped fuel was also increased by 3 MMboe as a result of a fuel utilisation study. Performance revisions in the Mad Dog Spar A and the Shenzi fields in the US Gulf of Mexico reduced proved undeveloped by 6 MMboe.
Lower commodity prices resulted in a 4 MMboe reduction to proved undeveloped reserves.
Over the past three years, the conversion of proved undeveloped reserves to developed status has totalled 98 MMboe, averaging 33 MMboe per year. At 30 June 2020, a total of 30 MMboe proved undeveloped reserves have been reported for five or more years. These reserves are in our currently producing fields and will be developed and brought on stream in a phased manner to best optimise the use of production facilities and to meet sales commitments. During FY2020, Petroleum spent US$1.0 billion on development activities worldwide. Of this amount:
US$0.8 billion was spent progressing the conversion of proved undeveloped reserves for conventional projects where developed status was achieved in FY2020 or will be achieved when development is completed in the future
US$0.2 billion represented other development expenditures, including compliance and infrastructure improvements
FY2019 proved undeveloped reserves
At 30 June 2019, Petroleum had 219 MMboe of proved undeveloped reserves, which corresponds to 26 per cent of the reported proved reserves of 841 MMboe. This represents a reduction in proved undeveloped reserves of 202 MMboe from the 421 MMboe at 30 June 2018. The largest element of this reduction was 185 MMboe, which occurred with the divestment of unconventional Onshore US assets. A reclassification from proved undeveloped to proved developed status of approximately 40 MMboe that occurred in the North West Shelf, Australia, with the completion of development and the start of production from the Greater Western Flank Phase B project, also contributed to the reduction. An additional 1 MMboe was also reclassified from proved undeveloped to proved developed status with the completion of an infill well in the ROD integrated development in Algeria. Partially offsetting these reductions were revisions for technical studies of 10 MMboe for the Kipper field in the Bass Strait, Australia. Additions following the approval of the Atlantis Phase 3 project in the Offshore US Gulf of Mexico added 8 MMboe for development plan changes, 7 MMboe for performance and 1 MMboe as an extension. A performance reduction of 2 MMboe in the Mad Dog field partially offset the Atlantis performance addition.
The changes in proved undeveloped reserves in FY2021, FY2020 and FY2019 are summarised by change category in the table below. Additional information detailing the effect of price, performance, changes in capital development plans and technical studies are also provided for revisions.
| | | | | | | | | | | | |
Proved Undeveloped Reserves (PUD) Reconciliation (MMboe) (a) | | | |
| | | | | | | | | | |
| | | | | | | | | | | | |
Revisions of Previous Estimates | | | | | | | | | | | | |
Reclassifications to developed | | | (44 | ) | | | (8 | ) | | | (42 | ) |
Performance, Technical Studies and Other | | | (2 | ) | | | (1 | ) | | | 16 | |
| | | – | | | | (0 | ) | | | 8 | |
| | | 5 | | | | (4 | ) | | | – | |
Extensions and Discoveries | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
(a) | Small differences are due to rounding.
|
Ore Reserves are estimates of the amount of ore that can be economically and legally extracted and processed from our mining properties. In order toTo estimate mineral reserves, assumptions are required about a range of technical and economic factors, including quantities, qualities, production techniques, recovery efficiency, production and transport costs, commodity supply and demand, commodity prices and exchange rates. Estimating the quantity and/or quality of Ore Reservesmineral reserves requires the size, shape and depth of ore bodies to be determined by analysing geological data such as drilling samples and geophysical survey interpretations. Economic assumptions used to estimate reserves may change from period to period as additional technical, financial and operational data is generated. All of the Ore Reserves presented are reported in 100 per cent terms and represent estimates at 30 June 2021 (unless otherwise stated). All tonnes and grade information has been rounded, hence small differences may be present in the totals. Tonnes are reported as dry metric tonnes (unless otherwise stated).becomes available.
Our mineral resources and mineral reserves are constrained to tenure that we have rights to. Our mineral leases are of sufficient duration (or convey a legal right to renew for sufficient duration) to enable all Ore Reservesreserves on the leased properties to be mined in accordance with current production schedules. Our Ore Reserves may include areas where some additional approvals remain outstanding, but where, based on the technical investigations we carry out as part of our mine planning process, and our knowledge and experience of the approvals process, we expect that suchhowever it is anticipated these approvals will be obtained as part of the normal course of business and withinwith the timeframe required by the current life of mine schedule.schedules.
Presentation of mineral resources and mineral reserves
Mineral resources and mineral reserves are presented at the proportion attributable to our economic interest and represent estimates as at 30 June 2022. Mineral resources are presented exclusive of mineral reserves. The specific point of reference and commodity prices defining the mineral resources and mineral reserves estimates are provided in the footnotes associated with each of the mineral resources and mineral reserves tables below. Quantities of mineral reserves and mineral resources are reported Ore Reserves containedin million metric tonnes (Mt). Tonnes are reported as dry metric tonnes (unless otherwise stated). All tonnes and quality information have been rounded, small differences may be present in the totals. Refer to the Glossary for definitions of technical terms relating to mineral resources, mineral reserves, geology, mining or related matters and abbreviations.
Our mineral resources and mineral reserves presented in this
document do not exceedannual report differ from the
quantities that we estimateMineral Resources and
could be extracted economically if future prices for each commodity were equal to the average historical prices for the three years to 31 December 2020, using current operating costs. In some cases where commodities are produced asby-products
(orco-products)
with other metals, we use the three-year average historical prices for the combination of commodities produced at the relevant mine in order to verify that each Ore Reserve is economic. The three-year historical average prices used for each traded commodity to test for impairment of the Ore Reserves contained in this Annual Report are as follows: | | |
| | |
| | 2.83/lb |
| | 1,477/ozt |
| | 10.66/lb |
| | 6.17/lb |
| | 17.47/ozt |
| | 1.17/lb |
| | 26.73/lb |
| | 82.47/dmt |
| | 95.97/dmt |
Metallurgical Hard Coking Coal
| | 169.56/t |
Metallurgical Weak Coking Coal
| | 95.58/t |
Thermal Coal Newcastle(2)
| | 81.88/t |
| | 61.65/t |
(1) | Some commodities are traded on a contractual basis for which we are unable to disclose prices due to commercial sensitivity.
|
(2) | The Uranium price reported is sourced from TradeTech – Uranium Spot Price Indicator. Thermal coal prices reported are sourced from the McCloskey Report FOB by region, Newcastle and Colombia 6,000 kcal/t Net As Received. These are comparable to realised prices used to test for impairment.
|
The reported Ore Reserves may differ in some respects from the Ore Reserves we report in our home jurisdictionsjurisdiction of Australia. The jurisdiction of Australia andrequires reporting in accordance with the UK. Those jurisdictions require the use ofAustralian Stock Exchange (ASX) listing rules and the Australasian Code for reporting of Exploration Results, Mineral Resources and Ore Reserves, December 2012 (the JORC Code), which provides guidance.
A key difference in the estimation of our resources and reserves pursuant to the ASX listing rules andS-K
1300 are the economic inputs, commodity prices and cost assumptions. Estimates we report in accordance with the ASX listing rules are based on
internally generated, projected long-term commodity prices and current operating costs or costs used in studies for development projects. S-K
1300 requires mineral resources and mineral reserves estimates to be based on reasonable and justifiable commodity prices selected by a qualified person. Further, the prices must provide a reasonable basis for establishing the prospects of economic extraction for mineral resources, and be the expected prices for mineral reserves. SinceS-K
1300 requires the disclosure of the prices used in the estimation of mineral resources and mineral reserves, due to commercial sensitivity regarding the disclosure of our internally generated projected long-term commodity prices, estimates included in this report in accordance withS-K
1300 are based on historical average commodity prices. Our mineral resources are based on the third quartile average monthly prices over the timeframe of 1 July 2018 to 30 June 2021, unless otherwise stated. Our mineral reserves are based on the second quartile average monthly prices over the timeframe of 1 July 2018 to 30 June 2021, unless otherwise stated. Exceptions are described in the footnotes associated with each of the mineral resources or mineral reserves tables below.Except as otherwise stated, the estimates included in this report in accordance withS-K
1300 are based on average costs over the timeframe of 1 July 2018 to 30 June 2021 for production-stage properties or, for development-stage properties, costs are determined from first principles. Fornon-operated
properties that we have an economic interest in, the commodity prices and costs used are as the operator has advised. The qualified persons consider that the use of historic prices and costs are appropriate to demonstrate economic viability of the mineral resources and mineral reserves. The prices are factual and the time interval is of sufficient duration to consider a range of price fluctuations. The commodity prices used to estimate the mineral resources and mineral reserves are included as footnotes to the mineral resources and mineral reserves tables below.
Internal controls and assurance programs
We have internal controls over our mineral resources and mineral reserves estimation efforts that are designed to produce reasonable
investmentand reliable estimates aligned with industry practice and our regulatory reporting requirements. The governance for our estimation efforts is located at both the asset and the BHP Group level within our Resource Centre of Excellence, an internal assurance team independent of our qualified persons and BHP employees who are responsible for the estimations. The assets provide first-line assurance on estimates through peer review and validation processes. The Resource Centre of Excellence is responsible for assurance over the processes implemented by the assets as they relate to mineral resources and mineral reserves estimation and the compiling of the mineral resources and mineral reserves estimates to be reported in accordance withS-K
1300. Our internal controls utilise management systems, including, but not limited to, formal quality assurance and quality control processes, standardised procedures, workflow processes, data security covering record keeping, chain of custody and data storage, supervision and management approval, reconciliations, internal and external reviews and audits.
Our internal requirements and standards provide the basis for the governance over the estimation and reporting of mineral resources and mineral reserves and provide technical guidance to all reporting assets. These internal requirements and standards are periodically reviewed and updated for alignment with industry practice and reporting regulations.
Our internal controls for exploration data, as they relate to mineral resources and mineral reserves estimations, are managed by our operating assets with assurance provided by the Resource Centre of Excellence. These include, but are not limited to:
documented procedures and standards defining minimum requirements on critical aspects to support exploration and resource development programs
peer review of data collection including staged sign off by reviewers
quality control checks on drill hole positions, collar and down hole surveys
geological logs verified by either peer review or cross validation from other data sources, such as, sample analysis, downhole geophysical logging, core photography or scanning technologies
sample security protocols at all stages of handling, from sample collection, transportation, preparation and analysis, including the storage of core or pulps post analysis
industry standard practices for sample analysis quality control. Insertion of standards, duplicates, and blanks into sample batches at a frequency to enable the assessment of analytical data quality
commercial or internal laboratories site inspected periodically and their internal quality control data is reviewed. From time to time a selection of samples are analysed at alternate laboratories to monitor laboratory performance
quality control data reviewed at regular intervals to verify deviations to enable timely remediation
quality assurance and quality control data validation and verification processes in place to support database integrity. This is based on automatic routines inbuilt into the geological databases. Inconsistencies are reviewed, verified and where required rectified by the responsible geologist
geological databases periodically audited from source data
geological data is stored on company servers and are routinely backed up
geological models, including interpretation and mineralisation domains, internally peer reviewed prior to estimation
Our internal controls for mineral resources and mineral reserves estimation include, but are not limited to:
source data review from database extracts, using exploratory data statistical analysis prior to use in the estimation of mineral resources. Identification of data to exclude, outliers and visual checks against estimation domains
peer reviews of the estimation inputs based on statistical studies and estimation parameters as applied in industry standard estimation software
visual and statistical validation of the estimates against source data and where available reconciliation to previous models, operational models and production data
peer review of the classification applied, considering quantitative measures and qualitative considerations
peer review of assumptions applied that convert resources to reserves
independent audits or reviews for new or materially changed mineral resources and mineral reserves
Operating assets manage internal risk registers relating to uncertainties in the mineral resources and mineral reserves estimates to direct future work programs or estimation updates. These may include but are not limited to:
areas of uncertainty in the estimates impacting local interpretations
bulk density assumptions, based on sample test work or operational results
metallurgical recovery assumptions, based on test work or plant performance
changes in commodity prices, costs and exchange rate assumptions
geotechnical and hydrogeological considerations impacting on underground or open-cut mining assumptions
ore loss and dilution, mining selectivity and production rate assumptions
cut-off
value changes to meet product specificationschanges in environmental, permitting and social license to operate assumptions
Further to assurance activities by the assets specifically relating to the estimation of mineral resources and mineral reserves, the Resource Centre of Excellence with subject matter experts have developed standards and guidelines across BHP for reviewing and documenting the information supporting our mineral resources and mineral reserves estimates, describing the methods used and verifying the reliability of such estimates. These activities are supported by the following controls:
The reporting of mineral resources and mineral reserves estimates are required to follow BHP’s standard procedures for public reporting in accordance with current regulatory requirements.
Annual risk reviews are conducted with qualified persons and BHP employees on all mineral resources and mineral reserves to be reported including year on year change impact assessment, reconciliation performance metrics for the operating mines and control assessment for the estimation inputs. The information and supporting documentation is prepared by the applicable qualified persons relating to the estimates and is evaluated for compliance with BHP’s internal controls. Based on these reviews, recommendations of endorsement are provided to our senior management for the use and reporting of the mineral resources and mineral reserves estimates.
Periodic internal technical ‘deep dive’ assessments of mineral resources and mineral reserves estimates are conducted on a frequency that is informed by asset materiality and outcomes of the annual risk reviews.
Management and closure reviews of actions assigned to qualified persons and BHP employees resulting from the annual risk reviews and technical ‘deep dive’ assessments are conducted.
Assurance is undertaken over the reporting documentation provided by qualified persons for public release and management and verification of inputs into BHP mineral resources and mineral reserves reporting database.
The Resource Centre of Excellence also provides an annual update on assurance activities and changes relating to our mineral resources and mineral reserves estimation efforts to the Risk and Audit Committee (RAC) in connection with the RAC’s responsibility over the effectiveness of systems of internal control and risk management of BHP.
Inherent risks in the estimation of mineral resources and mineral reserves
The estimation of our mineral resources and mineral reserves are largely based on historical average prices of the commodities we produce or intend to produce, primarily iron ore, copper, coal, potash and nickel. Estimated annual cash flows from our future operations, estimated production schedules, estimated capital expenditure and operating costs, estimated site closure costs, estimated royalty and tax costs, valuation assumptions and interpretations of geologic data obtained from drill holes and other exploration techniques, all of which may not necessarily be indicative of future results. The assumptions and interpretations used to estimate our mineral resources and mineral reserves may change from period to period, and, because additional geological data generated during the course of our operations may not be consistent with the data on which we based our mineral resources and mineral reserves, such estimates may change from period to period or may need to be revised. No assurance can be given that our mineral resources or mineral reserves presented in this report will be recovered at the grade, quality or quantities presented or at all.
There are numerous uncertainties inherent in the estimation of mineral resources and mineral reserves. Areas of uncertainty that may materially impact our mineral resources or mineral reserves estimates may include, but are not limited to: (i) changes to long-term commodity prices, external market factors, foreign exchange rates and other economic assumptions; (ii) changes in geological interpretations of mineral deposits and geological modelling, including estimation input parameters and techniques; (iii) changes to metallurgical or process recovery assumptions which adversely affect the volume, grade or qualities of our commodities produced (for example, processing that results in higher deleterious elements that result in penalties) or other changes to mining method assumptions; (iv) changes to input assumptions used to derive the potentially mineable shapes applicable to the assumed underground or open-pit mining methods used to constrain the estimates; (v) changes to life of mine or production rate assumptions; (vi) changes to dilution and mining recovery assumptions; (vii) changes tocut-off
grades applied to the estimates; (viii) changes to geotechnical (including seismicity), structures, rock mass strength, stress regime, hydrogeological, hydrothermal or geothermal factors; (ix) changes to infrastructure supporting the operations of or access to the applicable mine site; (x) changes to mineral, surface, water or other natural resources rights; (xi) changes to royalty, taxes, environmental, permitting and social license assumptions in
calculating Ore Reservesthe jurisdictions in which we operate; and (xii) changes in capital or operating costs. Additionally, the term “mineral resources” does not indicate recoverable proven and probable mineral reserves pursuant toS-K
1300. Estimates of mineral resources are subject to further exploration and evaluation of development and operating costs, grades, recoveries and other material factors, and, therefore, are subject to considerable uncertainty. Mineral resources do not meet the threshold for mineral reserve modifying factors, such as engineering, legal or economic feasibility, that would allow for the conversion to mineral reserves. Accordingly, no assurance can be given that our mineral resources not included in mineral reserves will become recoverable proven and probable mineral reserves. Refer to “Forward-looking statements” and the Risk Factors in OFR 9.1 for other factors that may affect our mineral resources and mineral reserves estimates.
Ore Reserves in accordance with Industry Guide 7
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
Commodity deposit (1)(2)(3)(4) | | | | | | | | | | | | | | | | | | | | | | | | |
| | Mt | | | %TCu | | | %SCu | | | ppmMo | | | | | | Mt | | | %TCu | | | %SCu | | | ppmMo | | | | | | Mt | | | %TCu | | | %SCu | | | ppmMo | | | | | | Mt | | | %TCu | | | %SCu | | | ppmMo | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Oxide | | | | 76 | | | | 0.62 | | | | – | | | | – | | | | | | | | 123 | | | | 0.53 | | | | – | | | | – | | | | | | | | 199 | | | | 0.56 | | | | – | | | | – | | | | | | | | 58 | | | | 57.5 | | | | 206 | | | | 0.58 | | | | – | | | | – | | | | | | | | 58 | |
| | | Sulphide | | | | 3,450 | | | | 0.68 | | | | – | | | | – | | | | | | | | 1,700 | | | | 0.57 | | | | – | | | | – | | | | | | | | 5,150 | | | | 0.64 | | | | – | | | | – | | | | | | | | | | | | | | | | 5,210 | | | | 0.66 | | | | – | | | | – | | | | | | | | | |
| |
| Sulphide
Leach |
| | | 1,330 | | | | 0.42 | | | | – | | | | – | | | | | | | | 286 | | | | 0.39 | | | | – | | | | – | | | | | | | | 1,620 | | | | 0.41 | | | | – | | | | – | | | | | | | | | | | | | | | | 1,660 | | | | 0.42 | | | | – | | | | – | | | | | | | | | |
| | | Oxide | | | | 6.6 | | | | 0.46 | | | | 0.32 | | | | – | | | | | | | | 0.4 | | | | 0.42 | | | | 0.28 | | | | – | | | | | | | | 7.0 | | | | 0.46 | | | | 0.32 | | | | – | | | | | | | | 2.3 | | | | 100 | | | | 35 | | | | 0.58 | | | | 0.42 | | | | – | | | | | | | | 3.4 | |
| |
| Supergene
Sulphide |
| | | 6.1 | | | | 0.54 | | | | 0.12 | | | | – | | | | | | | | 0.7 | | | | 0.48 | | | | 0.10 | | | | – | | | | | | | | 6.8 | | | | 0.53 | | | | 0.12 | | | | – | | | | | | | | | | | | | | | | 18 | | | | 0.58 | | | | 0.17 | | | | – | | | | | | | | | |
| |
| Transitional
Sulphide |
| | | 10 | | | | 0.50 | | | | – | | | | – | | | | | | | | 0.6 | | | | 0.46 | | | | – | | | | – | | | | | | | | 11 | | | | 0.50 | | | | – | | | | – | | | | | | | | | | | | | | | | 14 | | | | 0.51 | | | | 0.10 | | | | – | | | | | | | | | |
| | | Oxide | | | | 26 | | | | 0.67 | | | | 0.41 | | | | – | | | | | | | | 0.3 | | | | 0.57 | | | | 0.39 | | | | – | | | | | | | | 26 | | | | 0.67 | | | | 0.41 | | | | – | | | | | | | | 38 | | | | 100 | | | | 31 | | | | 0.61 | | | | 0.42 | | | | – | | | | | | | | 36 | |
| |
| Oxide - low
solubility |
| | | – | | | | – | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | – | | | | | | | | – | | | | – | | | | – | | | | – | | | | | | | | | | | | | | | | 10 | | | | 0.67 | | | | 0.30 | | | | – | | | | | | | | | |
| |
| Supergene
Sulphide |
| | | 104 | | | | 0.59 | | | | 0.10 | | | | – | | | | | | | | 7.8 | | | | 0.41 | | | | 0.09 | | | | – | | | | | | | | 112 | | | | 0.58 | | | | 0.10 | | | | – | | | | | | | | | | | | | | | | 107 | | | | 0.61 | | | | 0.10 | | | | – | | | | | | | | | |
| |
| Transitional
Sulphide |
| | | 20 | | | | 0.64 | | | | – | | | | 100 | | | | | | | | 0.5 | | | | 0.49 | | | | – | | | | 60 | | | | | | | | 20 | | | | 0.64 | | | | – | | | | 100 | | | | | | | | | | | | | | | | 23 | | | | 0.66 | | | | 0.05 | | | | 95 | | | | | | | | | |
| |
| Hypogene
Sulphide |
| | | 636 | | | | 0.46 | | | | – | | | | 180 | | | | | | | | 725 | | | | 0.45 | | | | – | | | | 130 | | | | | | | | 1,360 | | | | 0.45 | | | | – | | | | 150 | | | | | | | | | | | | | | | | 1,310 | | | | 0.46 | | | | 0.02 | | | | 150 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Mt | | | %Cu | | | kg/t
U3 O8 | | | g/tAu | | | g/tAg | | | Mt | | | %Cu | | | kg/t
U3 O8 | | | g/tAu | | | g/tAg | | | Mt | | | %Cu | | | kg/t
U3 O8 | | | g/tAu | | | g/tAg | | | | | | | | | Mt | | | %Cu | | | kg/t
U3 O8 | | | g/tAu | | | g/tAg | | | | |
Copper uranium gold operation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| UG
Sulphide |
| | | 239 | | | | 2.09 | | | | 0.61 | | | | 0.73 | | | | 5 | | | | 174 | | | | 1.97 | | | | 0.60 | | | | 0.66 | | | | 4 | | | | 413 | | | | 2.04 | | | | 0.61 | | | | 0.70 | | | | 5 | | | | 40 | | | | 100 | | | | 448 | | | | 1.88 | | | | 0.57 | | | | 0.69 | | | | 4 | | | | 43 | |
| | | Low-grade | | | | – | | | | – | | | | – | | | | – | | | | – | | | | 31 | | | | 0.83 | | | | 0.27 | | | | 0.34 | | | | 2 | | | | 31 | | | | 0.83 | | | | 0.27 | | | | 0.34 | | | | 2 | | | | | | | | | | | | 25 | | | | 0.86 | | | | 0.29 | | | | 0.34 | | | | 2 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Mt | | | | %Cu | | | | %Zn | | | | g/tAg | | | | ppmMo | | | | Mt | | | | %Cu | | | | %Zn | | | | g/tAg | | | | ppmMo | | | | Mt | | | | %Cu | | | | %Zn | | | | g/tAg | | | | ppmMo | | | | | | | | | | | | Mt | | | | %Cu | | | | %Zn | | | | g/tAg | | | | ppmMo | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| Sulphide
Cu only |
| | | 128 | | | | 0.93 | | | | 0.14 | | | | 7 | | | | 360 | | | | 94 | | | | 0.99 | | | | 0.16 | | | | 8 | | | | 340 | | | | 222 | | | | 0.95 | | | | 0.15 | | | | 7 | | | | 350 | | | | 6.7 | | | | 33.75 | | | | 245 | | | | 0.94 | | | | 0.13 | | | | 7 | | | | 340 | | | | 7.7 | |
| |
| Sulphide
Cu-Zn |
| | | 59 | | | | 0.85 | | | | 2.02 | | | | 12 | | | | 70 | | | | 76 | | | | 0.84 | | | | 2.13 | | | | 13 | | | | 70 | | | | 135 | | | | 0.84 | | | | 2.08 | | | | 13 | | | | 70 | | | | | | | | | | | | 163 | | | | 0.85 | | | | 2.14 | | | | 13 | | | | 80 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Measured + Indicated Resources | | | | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | OC | | | | 4.0 | | | | 0.48 | | | | – | | | | – | | | | – | | | | 5.0 | | | | 0.47 | | | | – | | | | – | | | | – | | | | 9.0 | | | | 0.48 | | | | – | | | | – | | | | – | | | | 2.0 | | | | 0.75 | | | | – | | | | – | | | | – | |
| | | OC | | | | 4.0 | | | | 0.53 | | | | – | | | | – | | | | – | | | | 9.0 | | | | 0.44 | | | | – | | | | – | | | | – | | | | 13 | | | | 0.47 | | | | – | | | | – | | | | – | | | | 11 | | | | 0.49 | | | | – | | | | – | | | | – | |
| | | OC | | | | 596 | | | | 0.49 | | | | – | | | | – | | | | – | | | | 1,020 | | | | 0.49 | | | | – | | | | – | | | | – | | | | 1,620 | | | | 0.49 | | | | – | | | | – | | | | – | | | | 5,370 | | | | 0.53 | | | | – | | | | – | | | | – | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | OC | | | | 282 | | | | 0.45 | | | | – | | | | – | | | | – | | | | 570 | | | | 0.47 | | | | – | | | | – | | | | – | | | | 852 | | | | 0.46 | | | | – | | | | – | | | | – | | | | 636 | | | | 0.44 | | | | – | | | | – | | | | – | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | UG | | | | 485 | | | | 1.32 | | | | 0.38 | | | | 0.56 | | | | 2 | | | | 437 | | | | 1.26 | | | | 0.37 | | | | 0.50 | | | | 2 | | | | 922 | | | | 1.29 | | | | 0.38 | | | | 0.53 | | | | 2 | | | | 170 | | | | 1.41 | | | | 0.39 | | | | 0.62 | | | | 3 | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| OC &
UG |
| | | 41 | | | | 0.70 | | | | 0.51 | | | | 11 | | | | 150 | | | | 159 | | | | 0.85 | | | | 0.63 | | | | 11 | | | | 180 | | | | 200 | | | | 0.82 | | | | 0.61 | | | | 11 | | | | 180 | | | | 425 | | | | 0.99 | | | | 0.57 | | | | 11 | | | | 170 | |
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(1)1 | Mineral resources are being first time reported in accordance withCut-offS-K
criteria:1300 and are presented for the portion attributable to BHP’s economic interest. All tonnes and quality information have been rounded, small differences may be present in the totals. |
| | | | |
| 2 | Ore typeMineral resources are presented exclusive of mineral reserves.
|
| 3 | Escondida, in which BHP has a 57.5% interest, is considered a material property for purposes of Item 1304 ofS-K 1300. |
| 4 | Ore ReservesEscondida point of reference for the mineral resources was mine gate.
|
Escondida | | Oxide | 5 | ³Escondida mineral resources estimates were based on a copper price of US$3.04/lb. 0.20%SCu |
| | Sulphide | 6 | ³Escondida mineral resourcescut-off criteria used was Oxide ≥ 0.20% soluble Cu; Mixed ≥ 0.30% TCu Cu; Sulphide ≥ 0.25% Cu for mineralisation assigned to be processed via leaching or ≥ 0.30% Cu for mineralisation assigned to be processed via the concentrator. |
| 7 | Escondida metallurgical recoveries for Oxide 62%; Mixed 42%; Sulphide 42% for material processed by leaching or 83% for material processed via the concentrator. |
| 8 | Pampa Norte, in which BHP has a 100% interest, includes Cerro Colorado and Spence deposits. The mineral resources estimates were based on a copper price of US$3.04/lb. The reference point for the mineral resources was mine gate. |
| 9 | Olympic Dam mineral resources estimates, in which BHP has a 100% interest, were based on a copper price of US$3.04/lb, uranium oxide price of US$30.06/lb, gold price of US$1,817/troy oz and silver price of US$24.40/troy oz. The reference point for the mineral resources was mine gate,ex-processing. |
| 10 | Antamina mineral resources estimates, in which BHP has a 33.75% interest, were based on a copper price of US$3.30/lb, zinc price of US$1.20/lb, silver price of US$25.10/troy oz and molybdenum price of US$11.10/lb. The reference point for the mineral resources was in situ. |
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| | | | | �� | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | OC | | | | 75 | | | | 0.57 | | | | – | | | | – | | | | – | | | | 31 | | | | 0.51 | | | | – | | | | – | | | | – | | | | 106 | | | | 0.55 | | | | – | | | | – | | | | – | |
| | | OC | | | | 1,560 | | | | 0.70 | | | | – | | | | – | | | | – | | | | 939 | | | | 0.56 | | | | – | | | | – | | | | – | | | | 2,500 | | | | 0.65 | | | | – | | | | – | | | | – | |
| | | OC | | | | 755 | | | | 0.46 | | | | – | | | | – | | | | – | | | | 197 | | | | 0.40 | | | | – | | | | – | | | | – | | | | 952 | | | | 0.45 | | | | – | | | | – | | | | – | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | | OC | | | | 725 | | | | 0.51 | | | | – | | | | – | | | | – | | | | 419 | | | | 0.50 | | | | – | | | | – | | | | – | | | | 1,150 | | | | 0.50 | | | | – | | | | – | | | | – | |
| | | | | | | | | | | | | | | | |
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| | | UG | | | | 285 | | | | 1.96 | | | | 0.59 | | | | 0.72 | | | | 5 | | | | 263 | | | | 1.71 | | | | 0.53 | | | | 0.63 | | | | 4 | | | | 548 | | | | 1.84 | | | | 0.56 | | | | 0.68 | | | | 5 | |
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| | | OC | | | | 57 | | | | 0.92 | | | | 0.65 | | | | 9 | | | | 280 | | | | 48 | | | | 0.98 | | | | 0.99 | | | | 11 | | | | 230 | | | | 105 | | | | 0.94 | | | | 0.80 | | | | 10 | | | | 260 | |
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| 1 | Mineral reserves are being first time reported in accordance withS-K 1300 and are presented for the portion attributable to BHP’s economic interest. All tonnes and quality information have been rounded, small differences may be present in the totals. |
| 2 | Escondida, in which BHP has a 57.5% interest, is considered a material property for purposes of Item 1304 ofS-K 1300. |
| 3 | Escondida point of reference for the mineral reserves was mine gate. |
| 4 | Escondida mineral reserves estimates were based on a copper price of US$2.79/lb. |
| 5 | Escondida mineral reservescut-off criteria used was Oxide ≥ 0.20% soluble Cu. For Sulphide ≥ 0.30% Cu and where greater than the variable cut-off (V_COG) of the concentrator. Sulphide ore is processed in the concentrator plants as a result of an optimised mine plan with consideration of technical and economicaleconomic parameters in order to maximise net present value. |
| | Sulphide Leach | | ³
≥ 0.25%TCu Cu and 70% or less of copper contained in chalcopyrite and lower than V_COG and with >30% of copper carried by more leachable copper minerals .the variablecut-off grade. Sulphide Leachleach ore is processed by dumpin the leaching plant as an alternative to the concentrator process. |
| | Oxide, Supergene Sulphide & Transitional Sulphide | | ³
0.30%TCu |
Spence | | Oxide | | ³
0.30%TCu |
| | Supergene Sulphide, Transitional Sulphide & Hypogene Sulphide | | ³
0.20%TCu |
| | UG Sulphide | | Variable between 1.10%Cu and 1.70%Cu |
| | Low-grade | | ³
0.60%Cu |
| | Sulphide Cu only | | Net value per concentrator hour incorporating all material revenue and cost factors and includes metallurgical recovery (see footnote 4 for averages). Mineralisation at the US$6,000/hr limit is equivalent to 0.15%Cu, 2.0g/tAg, 156ppmMo with 6,815t/hr mill throughput. |
| | SulphideCu-Zn
| | Net value per concentrator hour incorporating all material revenue and cost factors and includes metallurgical recovery (see footnote 4 for averages). Mineralisation at the US$6,000/hr limit is equivalent to 0.06%Cu, 0.73%Zn, 4.2g/tAg with 6,384t/hr mill throughput. |
Antamina – All metals used in net value calculations are assumed to be recovered into concentrate and sold.
(2)6 | Approximate drill hole spacings used to classifyEscondida metallurgical recoveries for Oxide 62%; Sulphide Leach 42%; Sulphide 42% for material processed by leaching or 83% for material processed via the reserves were:concentrator.
|
| | | | |
| 7 | | | |
| | Sulphide Leach: 60m × 60m
| | Sulphide Leach: 115m × 115m
|
Pampa Norte, in which BHP has a 100% interest, includes Cerro Colorado and Spence deposits. The mineral reserves estimates were based on a copper price of US$2.79/lb. The point of reference for the mineral reserves was mine gate. | | 40m to 50m | | 100m |
| | Supergene Sulphide, Transitional Sulphide & Hypogene Sulphide: maximum 70m × 70m
| | 100m × 100m for all ore types |
Olympic Dam | | 20m to 35m | | 35m to 70m |
Antamina | | 25m to 45m | | 40m to 80m |
(3)8 | Olympic Dam mineral reserves estimates, in which BHP has a 100% interest, were based on a copper price of US$2.79/lb, uranium oxide price of US$28.68/lb, gold price of US$1,535.75/troy oz and silver price of US$17.16/troy oz. The point of reference for the mineral reserves was mine gate,Oreex-processing.
|
| 9 | Antamina mineral reserves estimates, in which BHP has a 33.75% interest, were based on a copper price of US$3.30/lb, zinc price of US$1.10/lb, silver price of US$20.70/troy oz and molybdenum price of US$9.30/lb. The point of reference for the mineral reserves was delivery to processing plant. |
5.2 Escondida individual property disclosure
5.2.1 Property description
Escondida copper mine (Escondida) is a production stage property operated by Minera Escondida Limitada (MEL) consisting of Escondida and Escondida Norte deposits located in northern Chile, 170 km south-east of Antofagasta at an elevation of approximately 3,100 m above sea level.
The location of the operations centred upon the two pits are listed and shown below.
Escondida: Latitude 24°16’ S, Longitude 69° 04’ W
Escondida Norte: Latitude 24°13’ S, Longitude 69° 03’ W
All required infrastructure supporting the current mine plan including roads, rail and port, power and water supply is in place. Access to the property is via a company maintained public road from Antofagasta. The city of Antofagasta is serviced by the regional airport.
The site infrastructure, centred on the two pits, includes three concentrator plants, one heap and one dump leaching process facilities, associated cathode production plant, tailings deposit, along with support and service facilities.
Two MEL owned and operated seawater desalination plants are located at Punta Coloso on the Antofagasta coastline and supply water for processing plants, mine operations and supporting infrastructure via three pipelines to the mine site. Water is recycled from the tailings dam forre-use
in the concentrator plants. The nearby Coloso port facility receives copper concentrate via a pipeline from the mine site and processes this to a dry concentrate ready for stockpiling and loading via a dedicated concentrate shiploading facility. Both concentrate pipeline and port facilities are owned and operated by MEL.
Additional third-party owned port infrastructure is located at Antofagasta, including rail, train unloading and ship loading facilities.
Escondida utilises an existing privately owned railway system to transport copper cathode product from site and consumables to site through the ports of Antofagasta and Mejillones. Escondida owns a minor rail spur connecting the mine site into the publicly owned railway.
The source of water for the mine, processing plants and supporting infrastructure is provided from two seawater desalination plants located at Punta Coloso, and pumping facilities to site via three pipelines. Water is recycled from the tailings dam forre-use
in the concentrator plants. Electrical power supplied to site infrastructure was purchased from suppliers Power Angamos and Tamakaya. From FY2023, MEL are expected to be supplied via a third-party renewable power purchase agreement, contributing towards reducing the site’s emissions. The contract has two providers Enel Generation (60%) and Colbun (40%).
The power is supplied at 220kV and then distributed throughout the operations to the required locations via a series of substations. The power transmission system that supplies the mine site is owned and managed by MEL.
The workforce is a combination of employees and contractors supporting the operations. Operational personnel reside on site in MEL accommodation and are sourced from Antofagasta or from other parts of Chile.
MEL holds a total of 764 mining concessions covering an area of 406,018 ha. There are 18 principal mining concessions that provide MEL with the right to explore and mine indefinitely, subject to payment of annual license fees. All leases were obtained through the legally established process in which judicial requests are presented to the Chilean state.
| | | | | | | | | | | | |
| | Registered tenement holder | | | | | | | Annual rent and rate (UTM) 1 | |
| | | | | | | 7,059 | | | | 705.9 | |
| | | | | | | 5,235 | | | | 523.5 | |
| | | | | | | 1,732 | | | | 173.2 | |
| | | | | | | 557 | | | | 55.7 | |
| | | | | | | 2,385 | | | | 238.5 | |
| | | | | | | 9,159 | | | �� | 915.9 | |
| | | | | | | 3,060 | | | | 306.0 | |
| | | | | | | 500 | | | | 50.0 | |
| | | | | | | 400 | | | | 40.0 | |
| | | | | | | 200 | | | | 20.0 | |
| | | | | | | 1,785 | | | | 178.5 | |
| | | | | | | 1 | | | | 0.1 | |
| | | | | | | 230 | | | | 23.0 | |
| | | | | | | 15,000 | | | | 1,500.0 | |
| | | | | | | 22 | | | | 2.2 | |
| | | | | | | 9 | | | | 0.9 | |
| | | | | | | 3,200 | | | | 320.0 | |
| | | | | | | 8,400 | | | | 840.0 | |
| | | | | | | | | | | | |
| 1 | Unidad Tributaria Mensual (UTM) is a Chilean state tax unit valued in Chilean pesos (CLP) per hectare. The 2022 rate is 0.1 UTM. Annual payments are made at the end of the Chilean tax year (end of March) for concessions. |
In addition to mining concessions, Chilean law also regulates, independently of mining concessions, the rights to the use of the land surface. MEL owns 155,000 ha of surface rights and these are also renewable on an annual basis. These rights are also obtained through legal process presented to the Chilean state and potentially to other third party owners, including the Chilean “Consejo de Defensa del Estado” as required, MEL’s main surface rights cover operational activities such as pits, dumps, leach pads, plant and other infrastructure.
| | | | | | | | | | | | |
| | Surface rights identifier 1 | | | | | | |
| | | | | | | | | | |
Pits, waste dumps, leach pads, plants | | 619 V | | 964 | | 1984 | | Hipotecas y Gravámenes | | Bienes Raíces Antofagasta | | 22,084 |
Energy transmission lines, aqueducts, mineral pipelines, roads | | 1121 V | | 1117 | | 2018 | | Hipotecas y Gravámenes | | Bienes Raíces Antofagasta | | 26,988 |
| 1 | As defined by Chilean legal requirements |
MEL also holds maritime concessions for the Coloso port facilities. These concessions are requested through submission of the proposed project to the Chilean Ministry of Defence and are awarded by legal decree.
5.2.4 Registrant interest
BHP does not hold any royalty in the Escondida property in addition to its economic interest of 57.5%.
5.2.5 Present condition of property
Escondida is a production-stage property actively operating two open cut mines, Escondida and Escondida Norte.
Continuous resource definition activities are ongoing to upgrade mineral resources understanding to support the mine plans and to develop mineral reserves. These activities include drilling andin-pit
mapping. Geological understanding of the two deposits is supported by a total of approximately 2,700 km of drilling undertaken in a total of approximately 8,600 drill holes.
Surface mining is by drilling and blasting along with shovel/excavator loading and truck haulage from each of the two open pits. Extracted sulphide ore undergoes crushing prior to processing in one of three concentrators with concentrate piped to the Coloso port for drying. Lower grade sulphide ore is directly dumped onto leach pads and is processed by biological leaching. Oxide and transitional ores are processed using heap leaching. Leached products are converted to copper cathode then railed to Antofagasta port.
Construction commenced on the Escondida property in 1988 with first production in 1990. A number of expansion phases followed from 1993 onwards which included the development of additional infrastructure to increase production. Key milestones subsequent to first production in 1990 relating to the development of the operations were:
1998 Acid heap leaching of oxides commenced
2002 Second concentrator (Phase 4) inaugurated
2005 Mining commenced at Escondida Norte
2006 Dumpbio-leaching
of sulphides commenced 2007 First desalination plant commenced pumping
2016 Third concentrator inaugurated
2017 Second desalination plant commenced pumping
2020 Operation converted to 100% use of desalination water
The operations undertake planned maintenance programs and implement scheduled replacement of mine fleet and infrastructure components that is intended to maintain the continued reliable operating of equipment, facilities and infrastructure to meet operational requirements.
The total book value for the Escondida property and its associated plant and equipment was US$10.6 billion as of 30 June 2022.
5.2.8 History of previous operations
Utah International Inc. (Utah) and Getty Oil Co. (Getty) commenced geochemical exploration in the region in 1978 which led to the discovery of Escondida deposit in 1981. In 1984 through corporate acquisitions, BHP acquired the Escondida property. Ownership changed in 1985 to a joint venture between BHP (57.5%), Rio Tinto Zinc (30%), JECO Corporation (10%) and World Bank (2.5%). The joint venture undertook all the subsequent exploration and development work to bring Escondida into operation in 1990. Current ownership, since 2010 is BHP (57.5%), Rio Tinto (30%), JECO Corporation (10%) and JECO 2 Limited (2.5%). Minera Escondida Limitada operates Escondida.
5.2.9 Significant encumbrances
Minera Escondida holds the licenses to operate pursuant to the current mine plan. BHP is not aware of any material encumbrances that would impact the current mineral resources or mineral reserves.
5.2.10 Geology and mineralisation
The Escondida and Escondida Norte copper deposits lie in the Escondida-Sierra de Varas shear lens of the Domeyko Fault System. The deposits are supergene-enriched copper porphyries with primary sulphide mineralisation associated with multiple phase intrusions of monzonite to granodiorite composition into host volcanics.
Primary mineralisation has undergone secondary supergene leaching and enrichment with associated local formation of copper oxide mineralisation, predominately brochantite. Supergene enrichment generated laterally-continuous andsub-horizontal
high-grade sulphide mineralisation zones across the deposit, predominately chalcocite and covellite. The primary hypogene mineralisation, present in the deepest parts of the deposits is chalcopyrite with bornite.
5.2.11 Mineral resources and mineral reserves
Tables of mineral resources and mineral reserves for Escondida reported by ore type are included in section 5.1 above.
5.2.12 Changes to mineral resources and mineral reserves
Mineral resources are being reported for the first time in a filing with the SEC in accordance withS-K
1300 for the fiscal year ending 30 June 2022. There are no comparable estimates for the preceding year ending 30 June 2021. Similarly, mineral reserves are being reported for the first time in accordance withS-K
1300 for the fiscal year ending 30 June 2022. In the preceding year ending 30 June 2021, BHP had reported mineral reserves for Escondida in accordance with the US SEC Industry Guide 7 at a 100% ownership basis. Total reserves as at 30 June 2022 were 3,560Mt, compared to the previous year as at 30 June 2021 which were 4,010Mt (on an equity basis), a decrease of 11% (-450Mt). The changes were mainly due to the application of economic assumptions relating to commodity prices and costs in response to the disclosure requirements ofS-K
1300 relative to the assumptions we applied for the previous year in accordance with the US SEC Industry Guide 7 with some depletion. 5.2.13 Material assumptions and criteria
Material assumptions in the estimation of mineral resources are:
Resources estimated using ordinary kriging.
The sample data preparation including data capping.
The pit optimisation used to determine the resources that have reasonable prospects of economic extraction based on a copper price of US$3.04/lb.
Material assumptions in the estimation of mineral reserves are:
The classified resource model.
Variablecut-off
grade strategy that maximises throughput for the concentrator, smelter and refinery. Commodity prices, operating and capital costs.
Details of the material assumptions are described in the Technical Report Summary filed as an exhibit to this report, sections 11 Mineral Resource Estimates and 12 Mineral Reserve Estimates.
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| | | | | | | | | | | Measured + Indicated Resources | | | | |
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| | | OC | | | | 250 | | | | 61.0 | | | | 0.11 | | | | 3.5 | | | | 2.3 | | | | 6.2 | | | | 770 | | | | 59.7 | | | | 0.13 | | | | 4.8 | | | | 2.8 | | | | 6.3 | | | | 1,020 | | | | 60.0 | | | | 0.12 | | | | 4.5 | | | | 2.7 | | | | 6.3 | | | | 2,240 | | | | 59.7 | | | | 0.12 | | | | 4.8 | | | | 2.6 | | | | 6.4 | |
| | | OC | | | | 100 | | | | 56.7 | | | | 0.13 | | | | 7.9 | | | | 3.6 | | | | 6.8 | | | | 490 | | | | 58.8 | | | | 0.08 | | | | 6.0 | | | | 3.0 | | | | 6.0 | | | | 590 | | | | 58.4 | | | | 0.09 | | | | 6.4 | | | | 3.1 | | | | 6.2 | | | | 3,900 | | | | 59.9 | | | | 0.10 | | | | 5.2 | | | | 2.3 | | | | 6.2 | |
| | | OC | | | | 360 | | | | 58.3 | | | | 0.11 | | | | 4.7 | | | | 2.4 | | | | 8.9 | | | | 1,300 | | | | 59.4 | | | | 0.14 | | | | 4.5 | | | | 2.3 | | | | 7.6 | | | | 1,660 | | | | 59.2 | | | | 0.13 | | | | 4.5 | | | | 2.3 | | | | 7.8 | | | | 1,930 | | | | 57.9 | | | | 0.13 | | | | 5.5 | | | | 2.6 | | | | 8.3 | |
| | | OC | | | | 210 | | | | 60.1 | | | | 0.10 | | | | 5.1 | | | | 2.9 | | | | 5.2 | | | | 560 | | | | 59.5 | | | | 0.14 | | | | 5.3 | | | | 3.1 | | | | 5.7 | | | | 760 | | | | 59.7 | | | | 0.13 | | | | 5.2 | | | | 3.0 | | | | 5.6 | | | | 280 | | | | 58.6 | | | | 0.10 | | | | 5.7 | | | | 3.4 | | | | 6.2 | |
| | | OC | | | | 170 | | | | 60.5 | | | | 0.13 | | | | 4.8 | | | | 2.5 | | | | 5.6 | | | | 200 | | | | 59.3 | | | | 0.13 | | | | 6.1 | | | | 2.5 | | | | 6.0 | | | | 370 | | | | 59.9 | | | | 0.13 | | | | 5.5 | | | | 2.5 | | | | 5.8 | | | | 2,050 | | | | 59.0 | | | | 0.13 | | | | 4.9 | | | | 2.8 | | | | 7.1 | |
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| 1 | Mineral resources are being first time reported in accordance withS-K 1300 and are presented for the portion attributable to BHP’s economic interest in the respective joint venture. All tonnes and quality information have been rounded, small differences may be present in the totals. |
| 2 | Mineral resources are presented exclusive of mineral reserves. |
| 3 | WAIO is considered a material property for purposes of Item 1304 ofS-K 1300. BHP interest is 85% for all joint ventures except BHP(Non-JV) where it is 100%. |
| 4 | Mineral resources qualities are presented as in situ mass percentage on a dry weight basis and tonnage as wet tonnes. Moisture content is based on deposit types, Brockman (BKM) – 3%; Marra Mamba (MM) – 4%; Channel Iron Deposit (CID) – 8% and Detrital Iron Deposits (DID) – 4%. |
| 5 | WAIO point reference for the mineral resources was in situ. |
| 6 | Mineral resources estimates were based on an iron ore price of US$86/dmt for Platts 62% Fe Fines Index free on board (FOB) Port Hedland basis. Based on the median three-year monthly average price over a timeframe of 1 July 2018 to 30 June 2021. |
| 7 | Mineral resource estimatescut-off criteria was based on deposit types identified in the joint venture. These are BKM and MM 54% Fe; CID 52% Fe and DID 58% Fe and less than 6% Al2 O3 . |
| 8 | WAIO is predominantly a producer of direct shipping ore and the metallurgical recovery was assumed as 100% for the purpose of reporting all mineral resources. |
| 9 | Goldsworthy joint venture includes 2 Mt measured + indicated and 3 Mt of inferred mineral resources from the POSMAC joint venture that BHP has a 65% economic interest. |
| 10 | BHP(Non-JV) mineral resources are those that are wholly attributable to BHP without associated mineral reserves. |
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| | | OC | | | | 240 | | | | 63.7 | | | | 0.10 | | | | 2.9 | | | | 1.8 | | | | 3.3 | | | | 510 | | | | 61.9 | | | | 0.11 | | | | 3.4 | | | | 2.1 | | | | 5.3 | | | | 750 | | | | 62.5 | | | | 0.11 | | | | 3.3 | | | | 2.0 | | | | 4.6 | |
| | | OC | | | | 910 | | | | 62.0 | | | | 0.09 | | | | 3.2 | | | | 1.8 | | | | 5.8 | | | | 1,030 | | | | 61.0 | | | | 0.08 | | | | 3.9 | | | | 1.9 | | | | 6.4 | | | | 1,940 | | | | 61.5 | | | | 0.08 | | | | 3.6 | | | | 1.8 | | | | 6.1 | |
| | | OC | | | | 480 | | | | 61.8 | | | | 0.12 | | | | 3.4 | | | | 2.5 | | | | 5.1 | | | | 410 | | | | 61.4 | | | | 0.11 | | | | 4.1 | | | | 2.7 | | | | 4.7 | | | | 900 | | | | 61.6 | | | | 0.12 | | | | 3.7 | | | | 2.6 | | | | 4.9 | |
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| 1 | Mineral reserves are being first time reported in accordance withS-K 1300 regulations and are presented for the portion attributable to BHP’s economic interest in the respective joint ventures. All tonnes and quality information have been rounded, small differences may be present in the totals. |
| 2 | WAIO is considered a material property for purposes of Item 1304 ofS-K 1300. BHP interest is 85% for all joint ventures. |
| 3 | Mineral reserves qualities are presented as in situ mass percentage on a dry weight basis and tonnage as wet tonnes. Moisture content is based on deposit types, Brockman (BKM) – 3%; Marra Mamba (MM) – 4%; Channel Iron Deposit (CID) – 8% and Detrital Iron Deposits (DID) – 4%. |
| 4 | WAIO point of reference for the mineral reserves was as delivered to the ore handling/process plant. |
(4)5 | Metallurgical recoveriesMineral reserves estimates were based on an iron ore price of US$86/dmt for the operations were:Platts 62% Fe Fines Index and US$103/dmt for lump, both FOB Port Hedland basis.
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| 6 | WAIO joint ventures include Brockman (BKM) and Marra Mamba (MM) deposit types. All mineral reserves estimates applied aMetallurgical recoverycut-off
criteria of 58% Fe. |
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| | Cu 94%, U3
O8
68%, Au 70%, Ag 63% |
| | Sulphide Cu only: Cu 93%, Zn 0%, Ag 84%, Mo 62%
SulphideCu-Zn:
Cu 81%, Zn 85%, Ag 74%, Mo 0% |
(5)7 | Metallurgical recoveries based on testwork:WAIO is predominantly a producer of direct shipping ore and the metallurgical recovery was assumed as 99% for Mt Newman and 100% for Goldsworthy and Jimblebar joint ventures for the purposes of reporting mineral reserves.
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| 8 | Metallurgical recoveryGoldsworthy joint venture includes 11Mt of mineral reserves from the POSMAC joint venture that BHP has a 65% economic interest.
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| | Transitional Sulphide: 65% |
| | Transitional Sulphide & Hypogene Sulphide: Cu 86%, Mo variable depending on mineralogy |
5.4 WAIO individual property disclosure
5.4.1 Property description
WAIO is a production-stage property with mines located in the Pilbara iron ore province in the north-west of Western Australia (WA), Australia and is centred on the regional town of Newman located approximately 1,000 km north of WA’s capital city Perth. The property is accessible from Perth by road via the Great Northern Highway and by air via regular commercial flights to Newman.
Mines, processing facilities, railways and port facilities comprising WAIO are spread over a geographical area of 350 kmN-S
and 250 kmE-W
between Port Hedland and Newman towns in the Pilbara region. The geographic coordinates of the central points of the five mines are provided below and their locations shown below.
Newman: Latitude: 23°21’40” S, Longitude: 119°40’15” E
Jimblebar: Latitude: 23°22’40” S, Longitude: 120°07’45” E
Mining Area C: Latitude: 22°55’30” S, Longitude: 118°58’55” E
South Flank: Latitude: 22°59’35” S, Longitude: 118°59’45” E
Yandi: Latitude: 22°43’15” S, Longitude: 119°05’15” E
Most of the infrastructure required for WAIO to support the current mining operations including roads, airport, rail and port, power and water supply is in place. These have been developed by BHP gradually over the last six decades in pace with staged expansion of production capacity.
WAIO’s mines (Newman, Jimblebar, Mining Area C, South Flank and Yandi) and processing hubs (Newman, Jimblebar, Mining Area C and Yandi) are connected to its two ports (Nelson Point and Finucane Island) located at Port Hedland by a network of more than 1,000 km of rail infrastructure.
The mines have a network of BHP owned roads to service the mining operations and connect to the Great Northern Highway.
Water is sourced from ground water supplies for all WAIO mines, process plants and mine camps. These water supplies are drawn from BHP managed bore fields around mine sites established by WAIO under license for its operations and mine camps. Port Hedland operations are supplied water under contract from the municipal provider, sourced from nearby coastal aquifers.
WAIO has a naturalgas-fired
power plant (Yarnima Power Station, in Newman town), with an installed generator capacity for 190 megawatt. The plant supplies the entire power requirement for all its mining, processing facilities and mine camps. Power consumed for WAIO’s port operations at Port Hedland is purchased via a power purchase agreement with Alinta Energy, a large energy supplier in Australia. BHP has set up its own accommodation villages / camps at the mines to accommodate its(FIFO) personnel. In addition to the commercial airport at Newman, BHP has set up private airports at mine sites and operates regular charter flights from Perth directly to transport FIFO workforce. WAIO relies mainly on FIFO workforce sourced primarily from within Western Australia (Perth and other regional towns) and to a lesser extent from other states in Australia.
BHP and its joint venture partners hold mineral rights in 54 mineral titles covering a total area of approximately 4,523 km2
. Of this, approximately 2,678 km2
is contributed by eight mineral titles held pursuant to five State Agreement Acts of the state of Western Australia and the remaining area (1,845 km2
) by 46 mineral titles held pursuant to the Mining Act, 1978 (Western Australia). The five State Agreement Acts (incorporating agreements between BHP along with its joint venture partners and the state of Western Australia) are ratified by the parliament of Western Australia and provide WAIO long-term tenure security for mineral development. These acts and details of mining titles held pursuant to each State Agreement are provided in the list and table below.
(6)1. | Escondida – Oxide and Sulphide Leach ore types contribute 13 years and 27 years respectively toIron Ore (Mount Newman) Agreement Act 1964 (WA) - ML244SA held by the reported reserve life.Mount Newman Joint Venture.
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(7)2. | Cerro Colorado – The decrease inIron Ore Reserves was mainly due to depletion(Mount Goldsworthy) Agreement Act 1964 (WA) - ML235SA and a reduction inML249SA held by the nominated production rate with reserve life constrainedMount Goldsworthy (Northern Areas) Joint Venture and ML281SA held by mining permit expiry in 2023.the Mount Goldsworthy (Area C) Joint Venture.
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(8)3. | Spence – The decrease in Oxide and Transitional Sulphide ore types was mainly due to depletion. The increase in Supergene Sulphide and Hypogene Sulphide ore types was mainly due to an update inIron Ore (Goldsworthy-Nimingarra) Agreement Act 1972 (WA) - M263SA & ML251SA held by the reserves estimate supported by additional drilling and updated mine design, resulting with an increase in reserve life.Mount Goldsworthy (Northern Areas) Joint Venture.
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(9)4. | Olympic Dam – The decrease in UG Sulphide ore type and reduction in reserve life was due to updated mine stope designs and depletion partially offsetIron Ore (McCamey’s Monster) Agreement Authorisation Act 1972 (WA) - M266SA held by an updated reserves estimate supported by additional drilling.BHP Iron Ore (Jimblebar) Pty Ltd.
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(10) 5. | Antamina – The decrease inIron Ore Reserves and reduction in reserve life was mainly due to depletion.(Marillana Creek) Agreement Act 1991 (WA) - M270SA held by the Yandi Joint Venture.
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Ore Reserves in accordance with Industry Guide 7
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| | | | Mt | | | %Fe | | | %P | | | %SiO 2 | | | %Al 2 O3 | | | %LOI | | | Mt | | | %Fe | | | %P | | | %SiO 2 | | | %Al 2 O3 | | | %LOI | | | Mt | | | %Fe | | | %P | | | %SiO 2 | | | %Al 2 O3 | | | %LOI | | | Mt | | | %Fe | | | %P | | | %SiO 2 | | | %Al 2 O3 | | | %LOI | |
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WAIO (2)(3)(4)(5)(6)(7)(8)(9) | | BKM | | | 980 | | | | 62.8 | | | | 0.13 | | | | 3.1 | | | | 2.1 | | | | 4.4 | | | | 1,500 | | | | 62.1 | | | | 0.13 | | | | 3.5 | | | | 2.2 | | | | 4.8 | | | | 2,480 | | | | 62.4 | | | | 0.13 | | | | 3.4 | | | | 2.2 | | | | 4.7 | | | | 15 | | | | 88 | | | | 2,480 | | | | 62.5 | | | | 0.13 | | | | 3.3 | | | | 2.2 | | | | 4.6 | | | | 15 | |
| | | | | 10 | | | | 59.6 | | | | 0.14 | | | | 7.3 | | | | 3.4 | | | | 2.0 | | | | 10 | | | | 59.1 | | | | 0.13 | | | | 7.9 | | | | 3.5 | | | | 2.1 | | | | 30 | | | | 59.4 | | | | 0.13 | | | | 7.5 | | | | 3.4 | | | | 2.0 | | | | | | | | | | | | 30 | | | | 59.7 | | | | 0.13 | | | | 7.1 | | | | 3.3 | | | | 2.0 | | | | | |
| | | | | 50 | | | | 56.9 | | | | 0.05 | | | | 5.8 | | | | 1.7 | | | | 10.6 | | | | 10 | | | | 57.9 | | | | 0.04 | | | | 4.9 | | | | 1.5 | | | | 10.4 | | | | 60 | | | | 57.2 | | | | 0.05 | | | | 5.6 | | | | 1.7 | | | | 10.5 | | | | | | | | | | | | 150 | | | | 57.2 | | | | 0.05 | | | | 5.5 | | | | 1.5 | | | | 10.6 | | | | | |
| | | | | 810 | | | | 62.3 | | | | 0.06 | | | | 2.8 | | | | 1.5 | | | | 6.0 | | | | 1,070 | | | | 61.1 | | | | 0.06 | | | | 3.6 | | | | 1.8 | | | | 6.7 | | | | 1,880 | | | | 61.6 | | | | 0.06 | | | | 3.2 | | | | 1.7 | | | | 6.4 | | | | | | | | | | | | 1,800 | | | | 61.7 | | | | 0.06 | | | | 3.1 | | | | 1.7 | | | | 6.3 | | | | | |
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| | Registered tenement holders 1 / interest | | | | | |
| | |
| |
| | BHP (85/100), Itochu (8/100), Mitsui (7/100) | | 5/08/1965 | | 4/08/2028 | | | 4,142 | | | $ | 4,818 | |
| | BHP (85/100), Itochu (10/100), Mitsui (5/100) | | 7/04/1967 | | 6/04/2030 | | | 78,934 | | | $ | 116,342 | |
| | BHP (85/100), Itochu (8/100), Mitsui (7/100) | | 22/09/1972 | | 21/09/2035 | | | 1,300 | | | $ | 7,433 | |
| | BHP (85/100), Itochu (8/100), Mitsui (7/100) | | 8/05/1974 | | 4/08/2028 | | | 30,647 | | | $ | 36,618 | |
| | | | 11/10/1988 | | 10/10/2030 | | | 51,756 | | | $ | 123,468 | |
| | BHP (85/100), Itochu (8/100), Mitsui (7/100) | | 22/01/1989 | | 21/09/2035 | | | 14,323 | | | $ | 325,346 | |
| | BHP (85/100), Itochu (8/100), Mitsui (7/100) | | 4/09/1991 | | 3/09/2033 | | | 30,344 | | | $ | 1,571,645 | |
| | BHP (85/100), Itochu (8/100), Mitsui (7/100) | | 26/04/2002 | | 4/08/2028 | | | 56,335 | | | $ | 157,882 | |
(1)1 | Samarco – Operations have recommencedFull Legal entity names for the tenement holders are: (i) BHP: BHP Minerals Pty Ltd, (ii) Mitsui-Itochu: Mitsui-Itochu Iron Pty Ltd, (iii) Itochu: Itochu Minerals & Energy of Australia Pty Ltd and a reserves estimate is in progress.(iv) Mitsui: Mitsui Iron Ore Corporation Pty Ltd.
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(2)2 | Approximate drill hole spacings usedAll State Agreement Act leases, except M270SA, have right to classifysuccessive renewals of 21 years each. M270SA has right to only two renewals, each for 21 years ultimately expiring in 2054. The lease will then revert to Mining Act. BHP will need to engage with the reserves were:State Government before the expiry to renegotiate the terms of the State Agreement.
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(3) | WAIO recovery wasM266SA is held by BHP Iron Ore (Jimblebar) Pty Ltd, a subsidiary of BHP Minerals Pty Ltd (BHP). In 2013, BHP entered into an incorporated Joint Venture (Jimblebar IJV) with Itochu and Mitsui in respect of the Jimblebar mining hub, owned by BHP Iron Ore (Jimblebar) Pty Ltd (BHPIOJ). The Jimblebar IJV is structured so that BHP, Itochu and Mitsui hold A Class Shares in BHPIOJ, which confer an 85:8:7 economic interest, respectively in the “Jimblebar Assets”, being certain assets of BHPIOJ including the Jimblebar mine. BHPIOJ also owns other assets, called “Excluded Assets”, in which BHP alone holds a 100%, except for BKM Bene where Whaleback beneficiation plant recovery was 88% (tonnage basis). economic interest through B Class Shares in BHPIOJ.
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(4)4 | The Ore Reserves qualities listed referStatutory Rents and Rates are payable annually to in situ mass percentage on a dry weight basis. Wet tonnes are reported for WAIO deposits based on the following moisture contents: BKM – Brockman 3%, BKM Bene – Brockman Beneficiation 3%, CID – Channel Iron Deposits 8%, MM – Marra Mamba 4%. IronState Government and the Local Government/Shire respectively.
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As at 30 June 2022, all of WAIO’s mineral reserves and 86% of mineral resources (exclusive of mineral reserves) were located on the eight mineral titles held pursuant to the five State Agreement Acts. The remaining 14% of mineral resources are located across the 46 mineral titles held pursuant to the Mining Act. All mineral development and extraction activities are currently being undertaken only within tenements held pursuant to the State Agreement Acts. Activities within the Mining Act tenements are currently limited to exploration work aimed at defining mineral resources.
5.4.4 Registrant interest
In addition to being the majority owner of the property, BHP holds one royalty stream which entitles BHP to earn royalty income in relation to ore produced only from Mining Area C and South Flank. This royalty stream contributed 0.1% of free on board (FOB) revenue in FY2022.
5.4.5 Present condition of property
WAIO is a production-stage property with a large base of mineral reserves and mineral resources.
Exploration activities have been ongoing on the property since the 1960s. Drilling is the primary method for exploration and sampling. From the 1950s to December 2021, WAIO had completed over 145,000 exploration drill holes for a total of 11,400 km, including 8,312 km reverse circulation and 773 km diamond core drilling, across its tenements for the purpose of resource identification and definition. For the past 15 years, annually 400 to 500 km of drilling was carried out.
The exploration activities have occurred in areas adjacent to operating mines (brownfield areas) to replenish mineral resources depleted by mine production. In addition, activities have also been completed in strategic greenfield areas to provide optionality for future development.
All mines are open cut, with ore extracted using excavator and truck. After extraction, the ore is crushed before train loading and transporting to the port for direct shipping.
Production on the WAIO property started in late 1960s from one mine. Currently there are five operating mines, Newman, Yandi, Mining Area C Jimblebar and South Flank, started in 1969, 1992, 2003, 2013 and 2021 respectively. Equipment fleet for the mining operations are replaced and upgraded routinely as required to ensure these are meeting the production targets.
Yandi mine has started itsproduction ramp down, closure and decommissioning of associated infrastructure commenced in July 2021. The operations undertake planned maintenance programs and implement scheduled replacement of equipment and infrastructure that is required to maintain the continued reliable operation of the mines and supporting services such as power, port facilities, water supplies and rail.
Modernisation of rail operations and automation of haul trucks are currently in progress.
The total book value of the WAIO property and its associated plant and equipment was US$17.5 billion on equity ownership basis, as of 30 June 2022.
5.4.8 History of previous operations
Since the 1960s, BHP has been continuously exploring, developing and extracting iron ore at gradually increasing rates of production to keep pace with globalsea-borne
market demands. In 1966, BHP’s joint venture partner Goldsworthy Mining Limited (GML) was the first company to develop an iron ore mine in the Pilbara. The mine, Mount Goldsworthy ceased operations in 1982 with production entirely for export purposes. BHP was initially a joint venture partner in GML, but acquired the full ownership of GML in 1990.
In 1969, BHP developed the Mount Whaleback deposit at Newman entirely for export purposes as a part of the Mount Newman Mining Joint Venture (NJV). The majority ownership of NJV was acquired by BHP in 1986.
In 1991, BHP developed the Yandi deposit and in 1992 acquired the Jimblebar deposits. In the 1990s, subleases tied to ore purchase agreements by a Chinese consortium over part of the Jimblebar deposits and by South Korea’s POSCO for C Deposit at Mining Area C.
Since the 1990s to present day, BHP has been expanding production from its five mining hubs, Newman, Jimblebar, Mining Area C, South Flank and Yandi. South Flank commenced production in May 2021 to replace Yandi production. Yandi is decreasing production towards closure and decommissioning of infrastructure.
5.4.9 Significant encumbrances
BHP is not aware of any significant encumbrances to the property, including current and future permitting requirements and associated timelines or permit conditions.
5.4.10 Geology and mineralisation
The WAIO iron ore deposits are hosted in the late Archaean to earlyProterozoic-age
banded iron formations of the Hamersley Group in the Pilbara region of Western Australia. The two main hosts for bedrock mineralisation in the Hamersley Group are the Brockman and Marra Mamba iron formations. Brockman Iron Formation tend to have higher phosphorous and alumina concentration (both deleterious elements) with a lowerloss-on
ignition than the Marra Mamba Iron Formation. These compositional differences are one of reasons for dividing the ore by stratigraphy. The bedded iron deposits are further subdivided in terms of their genesis and mineralogy into hypogene martite-microplaty hematite and supergene martite-geothite ores. Widespread detrital sequences occur adjacent to the bedded iron deposits in the form of colluvial-alluvial fans. The detrital deposits economic value depends on the size and concentration and are mostly exploited when associated with bedrock deposits.
In addition, mineralisation is found in fluviatile channel iron deposits of the late Eocene to early Miocene age. The iron content in the channel iron deposits tends to be lower than the bedrock mineralisation, however, they tend to be lower in phosphorous and alumina.
The primary iron bearing minerals are hematite and goethite which vary in concentration within the deposits.
Mineralisation extends more or less continuously over strike lengths of5-10km
for the majority of deposits, but may extend for up to50-60km.
The width of mineralisation at surface typically ranges from about 200m up to 1500m. Mineralisation extends to depths of between 100 and 400m and deposits typically have some form of surface expression.
5.4.11 Mineral resources and mineral reserves
Tables of mineral resources and mineral reserves for WAIO reported by joint venture are included in section 5.3 above.
5.4.12 Changes to mineral resources and mineral reserves
Mineral resources are being reported for the first time in a filing with the SEC in accordance withS-K
1300 for the fiscal year ending 30 June 2022. There are no comparable estimates for the preceding year ending 30 June 2021. Similarly, mineral reserves are being reported for the first time in accordance withS-K
1300 for the fiscal year ending 30 June 2022. In the preceding year ending 30 June 2021, BHP reported mineral reserves for WAIO in accordance with the US SEC Industry Guide 7 and at a 100% ownership basis. Total reserves as at 30 June 2022 were 3,590 Mt, compared to the previous year as at 30 June 2021 which were 3,780 Mt (on equity basis), a decrease of 5% (190 Mt). The changes were mainly due to the application of economic assumptions relating to commodity prices and costs in response to the disclosure requirements ofS-K
1300 relative to the assumptions we applied for the previous year in accordance with the SEC Industry Guide 7, as well as, the removal of mineral reserves late in the life of asset plan requiring updating to current economic assumptions and depletion. 5.4.13 Material assumptions and criteria
Mineral resources estimated for WAIO’s active mines and undeveloped deposits consider the following assumptions:
Resources estimated using ordinary kriging and inverse distance weighted methods.
Resources are reported exclusive of mineral reserves and are presented as in situ estimates.
Resources are reported on a wet tonnage basis for all deposit types associated with the joint ventures.
Standard open cut practices are assumed for all ore extraction.
Resources are excluded from reporting as appropriate for heritage, environmental, hydrological, tenure, and infrastructure purposes to minimise any potential impacts.
Mineral reserves are estimated for WAIO’s active mining areas and considers the following assumptions:
The latest and approved resource models and mineral resource estimates have been used for mine planning and conversion to mineral reserves by application of all relevant modifying factors.
The resource models are converted to mining models (WAIO equivalent of a “reserve” model) by regularising the resource model blocks toSMU-sized
blocks. The average of the previous three years (FY2019 to FY2021) actual yearly operating and capital costs are used to estimate thecut-off
grades and mineral reserves. The median of the three-year trailing calendar monthly average iron ore prices from July 2018 to June 2021 are used to estimate thecut-off
grades and mineral reserves. Mineral reserves are estimated using conventionalopen-cut
mining method involving drill and blast with load and haul activities. Pit optimisations are completed to determine economic pit limits using industry standard Lerch-Grossman algorithm.
Mine designs including pit, waste dumps and haul roads are generated in industry standard CAD software. The designs incorporate the minimum mining width based on the equipment and slope design parameters from geotechnical models.
WAIO’s(ROM) ore is direct shipping ore without the need of concentration or beneficiation. The processing method involves simple crushing and screening of the ore to produce lump and fines products. Details of the material assumptions are described in the Technical Report Summary filed as an exhibit to this report, sections 11 Mineral Resource Estimates, 12 Mineral Reserve Estimates, 13 Mining Methods, 14 Processing and Recovery Methods and 18 Capital and Operating Costs.
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| | | OC & UG | | | | 1,038 | | | | 9.9 | | | | 19.8 | | | | 0.57 | | | | 599 | | | | 10.3 | | | | 20.9 | | | | 0.60 | | | | 1,637 | | | | 10.1 | | | | 20.2 | | | | 0.58 | | | | 746 | | | | 11.0 | | | | 22.2 | | | | 0.58 | |
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| 1 | Coal resources is marketed for WAIOused as Lump (direct blast furnace feed) and Fines (sinter plant feed).an equivalent term to mineral resources. |
(5)2 | Coal resources are being first time reported in accordance withCut-offS-K
grades used1300 and are presented for the portion attributable to estimate Ore Reserves range from 50–62%Fe for all material types. Ore delivered to process facility.BHP’s economic interest in the respective joint venture. All tonnes and quality information have been rounded, small differences may be present in the totals. |
(6)3 | Ore ReservesCoal resources are reported on a Pilbara basis by ore type to align with our productionpresented exclusive of the blended lump products which comprises BKM, BKM Bene and MM ore types and blended fines products including CID. This also reflects our single logistics chain and associated management system.coal reserves.
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(7)4 | BMA mineral resources, in which BHP has a 50% interest, is reported as Pilbara Ore Reserve tonnes weighted average across all joint ventures which can vary from year to year. BHP ownership varies between 85%includes Goonyella Complex, Daunia, Caval Ridge, Peak Downs, Saraji, Saraji South and 100%.Blackwater deposits. |
(8)5 | Ore ReservesThe point of reference for the coal resources tonnage estimates is in situ. Coal qualities are all locatedpresented as a potential product on State Agreement mining leases that guarantee the rightanair-dried basis. |
| 6 | Coal resources estimates comprise 94% metallurgical and 6% thermal coal product categories. Coal resources were assessed for reasonable prospects of economic extraction assuming a hard coking coal (Met) price of US$197/t and a thermal coal price of US$96/t for optimisation studies. |
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| | | | | | | | | | | | | | | Proven Marketable Reserves | | | Probable Marketable Reserves | | | Total Marketable Reserves | |
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| | | OC & UG | | | | 1,012 | | | | 283 | | | | 1,295 | | | | 659 | | | | 10.0 | | | | 21.1 | | | | 0.56 | | | | 169 | | | | 10.4 | | | | 22.3 | | | | 0.62 | | | | 828 | | | | 10.0 | | | | 21.4 | | | | 0.57 | |
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| 1 | Coal reserves is used as an equivalent term to mine. Across WAIO, State Government approvals (including environmental and heritage clearances) are required before commencing mining operations in a particular area. Included in the Ore Reserves are select areas where one or more approvals remain outstanding, but where, based on the technical investigations carried out as part of the mine planning process and company knowledge and experience of the approvals process, it is expected that such approvals will be obtained as part of the normal course of business and within the time frame required by the current mine schedule.mineral reserves. |
(9)2 | The decreaseCoal reserves are being first time reported in CID ore type was dueaccordance withS-K 1300 and are presented for the portion attributable to depletionBHP’s economic interest in the respective joint venture. All tonnes and mine plan changes. |
Coal Reserves in accordance with Industry Guide 7
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Commodity deposit (1)(2)(3)(4)(5) | | | | | | | | Mt | | | Mt | | | Mt | | | Mt | | | %Ash | | | %VM | | | %S | | | Mt | | | %Ash | | | %VM | | | %S | | | Mt | | | %Ash | | | %VM | | | %S | | | Mt | | | %Ash | | | %VM | | | %S | |
Metallurgical coal operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | | OC | | | | Met | | | | 494 | | | | 19 | | | | 513 | | | | 391 | | | | 9.1 | | | | 25.2 | | | | 0.53 | | | | 14 | | | | 10.9 | | | | 28.4 | | | | 0.56 | | | | 405 | | | | 9.2 | | | | 25.3 | | | | 0.53 | | | | 31 | | | | 50 | | | | 419 | | | | 9.1 | | | | 25.3 | | | | 0.53 | | | | 35 | |
| | | UG | | | | Met | | | | 53 | | | | 106 | | | | 159 | | | | 41 | | | | 8.1 | | | | 23.9 | | | | 0.54 | | | | 67 | | | | 10.0 | | | | 23.3 | | | | 0.55 | | | | 108 | | | | 9.3 | | | | 23.5 | | | | 0.55 | | | | | | | | | | | | 112 | | | | 9.2 | | | | 23.5 | | | | 0.55 | | | | | |
| | | OC | | | | Met/Th | | | | 769 | | | | 296 | | | | 1,065 | | | | 455 | | | | 10.6 | | | | 21.8 | | | | 0.58 | | | | 168 | | | | 10.6 | | | | 22.1 | | | | 0.69 | | | | 623 | | | | 10.6 | | | | 21.8 | | | | 0.61 | | | | 38 | | | | 50 | | | | 444 | | | | 10.6 | | | | 22.3 | | | | 0.62 | | | | 27 | |
| | | OC | | | | Met | | | | 222 | | | | 111 | | | | 333 | | | | 128 | | | | 11.0 | | | | 22.3 | | | | 0.57 | | | | 68 | | | | 11.0 | | | | 22.4 | | | | 0.57 | | | | 196 | | | | 11.0 | | | | 22.3 | | | | 0.57 | | | | 27 | | | | 50 | | | | 196 | | | | 11.0 | | | | 22.2 | | | | 0.57 | | | | 27 | |
| | | OC | | | | Met/Th | | | | 457 | | | | 54 | | | | 511 | | | | 294 | | | | 10.5 | | | | 17.9 | | | | 0.63 | | | | 24 | | | | 10.6 | | | | 19.2 | | | | 0.88 | | | | 318 | | | | 10.5 | | | | 18.0 | | | | 0.65 | | | | 31 | | | | 50 | | | | 339 | | | | 10.5 | | | | 18.0 | | | | 0.65 | | | | 33 | |
| | | OC | | | | Met | | | | 159 | | | | 70 | | | | 229 | | | | 116 | | | | 10.3 | | | | 16.8 | | | | 0.70 | | | | 49 | | | | 10.2 | | | | 16.6 | | | | 0.70 | | | | 165 | | | | 10.3 | | | | 16.7 | | | | 0.70 | | | | 65 | | | | 50 | | | | 165 | | | | 10.3 | | | | 16.7 | | | | 0.70 | | | | 65 | |
| | | OC | | | | Met/Th | | | | 161 | | | | 225 | | | | 386 | | | | 140 | | | | 8.8 | | | | 26.5 | | | | 0.43 | | | | 191 | | | | 9.1 | | | | 26.2 | | | | 0.42 | | | | 331 | | | | 9.0 | | | | 26.3 | | | | 0.42 | | | | 25 | | | | 50 | | | | 352 | | | | 9.0 | | | | 26.3 | | | | 0.42 | | | | 27 | |
| | | OC | | | | Met/PCI | | | | 60 | | | | 25 | | | | 85 | | | | 53 | | | | 8.1 | | | | 20.4 | | | | 0.34 | | | | 20 | | | | 8.3 | | | | 20.0 | | | | 0.35 | | | | 73 | | | | 8.2 | | | | 20.2 | | | | 0.34 | | | | 16 | | | | 50 | | | | 80 | | | | 8.2 | | | | 20.3 | | | | 0.34 | | | | 17 | |
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| | | OC | | | | Met/PCI | | | | 87 | | | | 36 | | | | 123 | | | | 69 | | | | 9.2 | | | | 13.6 | | | | 0.29 | | | | 29 | | | | 9.2 | | | | 13.2 | | | | 0.29 | | | | 98 | | | | 9.2 | | | | 13.5 | | | | 0.29 | | | | 15 | | | | 80 | | | | 102 | | | | 9.2 | | | | 13.5 | | | | 0.29 | | | | 16 | |
| | | OC | | | | Met | | | | 24 | | | | 24 | | | | 48 | | | | 20 | | | | 7.9 | | | | 23.0 | | | | 0.31 | | | | 19 | | | | 8.4 | | | | 23.3 | | | | 0.31 | | | | 39 | | | | 8.1 | | | | 23.1 | | | | 0.31 | | | | 8.5 | | | | 80 | | | | 44 | | | | 8.1 | | | | 23.1 | | | | 0.31 | | | | 9.6 | |
(1) | Cut-off
criteria applied were: Goonyella Riverside, Peak Downs, Norwich Park, Saraji³
0.5m seam thickness; Caval Ridge³
0.4m seam thickness; Blackwater, Daunia, South Walker Creek, Poitrel³
0.3m seam thickness; Broadmeadow³
2.5m seam thickness.quality information have been rounded, small differences may be present in the totals. |
(2)3 | Only geophysically logged, fully analysed cored holes with greater than 95% recovery (or <± 10% expected error at 95% confidence forBMA mineral reserves, in which BHP has a 50% interest, includes Goonyella Riverside Broadmeadow) were used to classify Coal Reserves. Drill hole spacings vary between seamsComplex, Daunia, Caval Ridge, Peak Downs, Saraji, Saraji South and geological domains and were determined in conjunction with geostatistical analysis where applicable. The range of maximum drill hole spacings used to classify the Coal Reserves were:Blackwater deposits.
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Goonyella Riverside, Broadmeadow
| | 900m to 1,300m plus 3D seismic coverage for UG | | 1,750m to 2,400m |
| | 250m to 1,500m | | 500m to 2,500m |
| | 500m to 1,050m | | 500m to 2,100m |
| | 450m to 1,800m | | 800m to 2,600m |
| | 500m to 1,400m | | 1,000m to 2,800m |
| | 450m to 1,000m | | 900m to 1,850m |
| | 450m to 850m | | 900m to 1,400m |
| | 400m to 800m | | 650m to 1,500m |
| | 300m to 550m | | 600m to 1,050m |
(3) | Product recoveries for the operations were:
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Goonyella Riverside, Broadmeadow
| | 74% |
| | 59% |
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| | 63% |
| | 71% |
| | 86% |
| | 85% |
| | 78% |
| | 79% |
(4)4 | Total Coal Reservescoal reserves were at thea 4% moisture content when mined (4% CQCA JV and BHP Mitsui Coal).mined. Total Marketable Reservesmarketable reserves were at a product specification moisture content (9.5-10% Goonyella Riverside Broadmeadow;Complex; 9.5% Peak Downs; 10%10.5% Caval Ridge; 10.1% Saraji; 10-11% Norwich Park;Saraji South;7.5-11.5% Blackwater; 10-10.5% Daunia; 9% South Walker Creek;10-12%
Poitrel)Daunia) and at an air-dried quality basis for sale after the beneficiation of the Total Coal Reserves.total coal reserves. |
(5)5 | Coal deliveredThe point of reference for the coal reserves was delivery to the coal handling plant.process plants.
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(6)6 | Goonyella RiversideCoal reserves estimates comprise 95% hard coking coal, 2% soft coking coal, 1% pulverised coal injection (PCI) and Broadmeadow deposits use2% thermal coal product categories. Coal reserves prices used for each of the same infrastructurecoal categories were hard coking coal US$155/t, soft coking coal US$98/t, PCI US$99/t and reserve life appliesthermal coal US$75/t.
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| | | | | | | | | | | | Measured + Indicated Resources | | | | |
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| | | OC | | | | 6.2 | | | | 19.0 | | | | 29.6 | | | | 0.66 | | | | 6,170 | | | | 0.6 | | | | 19.7 | | | | 29.3 | | | | 0.54 | | | | 6,060 | | | | 6.8 | | | | 19.2 | | | | 29.5 | | | | 0.63 | | | | 6,130 | | | | 8.6 | | | | 23.1 | | | | 28.8 | | | | 0.49 | | | | 5,720 | |
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| 1 | Coal resources is used as an equivalent term to both. The decrease in reserve life was mainly due to depletion and an increase in nominated production rate.mineral resources. |
(7)2 | Coal resources are being first time reported in accordance withPercentageS-K
1300 and are presented for the portion attributable to BHP’s economic interest. All tonnes and quality information have been rounded, small differences may be present in the totals. |
| 3 | Coal resources are presented exclusive of secondary thermal products for Coal Reserves with coal type Met/Th are: Peak Downs 1.7%; Saraji 1.0%; Blackwater 14%. Contributions may vary year on year based on market demand.reserves. |
(8)4 | Peak Downs – The increaseNSWEC, in which BHP has a 100% interest, includes Mt Arthur Coal Reserves and reserve life was mainly due to conversion of tenure from an exploration lease to a mining lease.deposit.
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(9)5 | Coal qualities are reported on anSaraji – air-dried
in situ basis. Tonnages are reported as in situ. |
| 6 | The decreasepoint of reference for the coal resources was in Coal Reserves and reserve life was mainly due to depletion.situ. |
(10)7 | Norwich Park – RemainsCoal resources estimates were based on care and maintenance.thermal coal price of US$96/t.
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| | | | | | | | | | | | | | | Proven Marketable Reserves | | | Probable Marketable Reserves | | | Total Marketable Reserves | |
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| | | OC | | | | 95 | | | | 49 | | | | 144 | | | | 69 | | | | 15.8 | | | | 30.5 | | | | 0.53 | | | | 5,880 | | | | 36 | | | | 15.8 | | | | 30.4 | | | | 0.53 | | | | 5,880 | | | | 104 | | | | 15.8 | | | | 30.4 | | | | 0.53 | | | | 5,880 | |
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| 1 | Coal reserves is used as an equivalent term to mineral reserves. |
(11)2 | Blackwater – The decreaseCoal reserves are being first time reported in Coal Reserves was mainly dueaccordance withS-K 1300 and are presented for the portion attributable to depletionBHP’s economic interest. All tonnes and exclusion of reserves to allow forin-pit
tailings storage.quality information have been rounded, small differences may be present in the totals. |
(12)3 | Daunia – The decreaseNSWEC, in which BHP has a 100% interest, includes Mt Arthur Coal Reserves and reserve life was mainly due to depletion and changes in the mine plan.deposit.
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(13)4 | Coal qualities are presented as a potential product on anSouth Walker Creek – The decreaseair-dried
basis. Tonnages for the coal reserves are reported on an in reserve lifesitu moisture basis. Moisture when mined was due to depletion. 8.7% and for marketable reserves was 9.5%. |
(14)5 | Poitrel – The decrease in Coal Reserves and reserve life was due to depletion.
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Coal Reserves in accordance with Industry Guide 7
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Commodity deposit (1)(2)(3)(4) | | | | | | | | | | | | | | | | | Proven Marketable
Reserves | | | Probable Marketable
Reserves | | | | | | | | | | | | | | | | |
| | Mt | | | Mt | | | Mt | | | Mt | | | %Ash | | | %VM | | | %S | | | KCal/
kg CV | | | Mt | | | %Ash | | | %VM | | | %S | | | KCal/
kg CV | | | Mt | | | %Ash | | | %VM | | | %S | | | KCal/
kg CV | | | Mt | | | %Ash | | | %VM | | | %S | | | KCal/
kg CV | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | | OC | | | | Th | | | | 97 | | | | 40 | | | | 137 | | | | 63 | | | | 15.8 | | | | 30.9 | | | | 0.53 | | | | 5,870 | | | | 26 | | | | 15.8 | | | | 30.9 | | | | 0.53 | | | | 5,870 | | | | 89 | | | | 15.8 | | | | 30.9 | | | | 0.53 | | | | 5,870 | | | | 7.5 | | | | 100 | | | | 436 | | | | 15.3 | | | | 28.4 | | | | 0.49 | | | | 6,050 | | | | 20 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | OC | | | | Th | | | | 255 | | | | 89 | | | | 344 | | | | 248 | | | | 9.6 | | | | 32.3 | | | | 0.60 | | | | 6,200 | | | | 87 | | | | 10.6 | | | | 32.8 | | | | 0.63 | | | | 6,240 | | | | 335 | | | | 9.9 | | | | 32.4 | | | | 0.61 | | | | 6,210 | | | | 13 | | | | 33.33 | | | | 319 | | | | 11.8 | | | | 32.6 | | | | 0.61 | | | | 6,032 | | | | 14 | |
| | |
| | |
| | ³
0.3m seam thickness,£
32%ash,³
40% coal plant yield |
| | ³
0.35m seam thickness |
(2) | Approximate drill hole spacings used to classify the reserves were:
|
| | | | |
| | | | |
| | 200m to 800m (geophysically logged, >95% core recovery) | | 400m to 1,550m (geophysically logged, >95% core recovery) |
| | >6 drill holes per 100ha | | 2 to 6 drill holes per 100ha |
(3) | Product recoveriespoint of reference for the operations were:
|
(4) | Total Coal Reserves were at the moisture content when mined (8.5% Mt Arthur Coal; 12.4% Cerrejón). Total Marketable Reserves were at a product specific moisture content (9.5% Mt Arthur Coal; 12.9% Cerrejón) and at an ‘coal reserves was as received ’ quality basis for Mt Arthur Coal and at a total moisture quality basis for Cerrejón. |
(5) | Mt Arthur Coal – Coal delivered to handling plant.
|
(6) | Mt Arthur Coal – The decrease in Marketable Coal Reserves and reserve life was mainly due to changes in geotechnical parameters, costs and lower commodity prices impacting mine design.
|
(7) | Cerrejón – Divestment of Cerrejón is in progress.
|
(8) | Cerrejón – The increase in Marketable Coal Reserves was due to changes in mine design and an increase in nominated annual production rate. Coal is beneficiated by exception.
|
(9) | Cerrejón – In response to ongoing local community legal challenges, some permits remain suspended. BHP continues to monitor the situation for potential impact on mining.
|
Ore Reserves in accordance with Industry Guide 7
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| | | | |
Commodity deposit (1)(2)(3)(4) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Mt | | | %Ni | | | Mt | | | %Ni | | | Mt | | | %Ni | | | Mt | | | %Ni | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | OC | | | | 1.2 | | | | 0.61 | | | | 0.76 | | | | 0.62 | | | | 2.0 | | | | 0.61 | | | | 9.0 | | | | 100 | | | | 3.9 | | | | 0.74 | | | | 8.0 | |
| | | UG | | | | – | | | | – | | | | 5.0 | | | | 1.6 | | | | 5.0 | | | | 1.6 | | | | | | | | | | | | 5.1 | | | | 1.6 | | | | | |
| | | OC | | | | 65 | | | | 0.57 | | | | 19 | | | | 0.55 | | | | 84 | | | | 0.57 | | | | 15 | | | | 100 | | | | 84 | | | | 0.57 | | | | 15 | |
| | | SP | | | | 2.6 | | | | 0.52 | | | | 0.99 | | | | 0.45 | | | | 3.6 | | | | 0.49 | | | | | | | | | | | | 7.1 | | | | 0.58 | | | | | |
| | | OC | | | | 54 | | | | 0.59 | | | | 45 | | | | 0.60 | | | | 99 | | | | 0.59 | | | | 9.2 | | | | 100 | | | | 96 | | | | 0.61 | | | | 8.9 | |
| | | | |
| | | | |
| | OC | | ³
0.40%Ni |
| | UG | | ³
0.90%Ni |
| | | | ³
0.35%Ni and³
0.18% recoverable Ni |
| | SP | | – |
| | OC | | ³
0.35%Ni and³
0.18% recoverable Ni |
(2) | Approximate drill hole spacings used to classify the reserve were:
|
| | | | |
| | | | |
| | 25m × 25m | | 25m × 50m |
| | 40m × 40m | | 80m × 80m |
| | 40m × 60m | | 80m × 60m |
(3) | Ore delivered to thecoal handling process plant.
|
(4)6 | Metallurgical recoveryCoal reserves estimates were based on thermal coal price of US$85/t.
|
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| | | | | | | | | | | | Measured + Indicated Resources | | | | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7.7 | | | | | |
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| 1 | Mineral resources are being first time reported in accordance withS-K 1300 and are presented for the operations were:portion attributable to BHP’s economic interest. All tonnes and quality information have been rounded, small differences may be present in the totals. |
| 2 | Mineral resources are presented exclusive of mineral reserves. |
| | | | |
| | | 3 | Jansen, in which BHP has a 100% interest, is considered a material property for the purposes of item 1304 ofMetallurgical recoveryS-K
1300. |
| | OC | | 80% |
| | UG | | 88% |
| | | | 63% |
| | | | 63% |
(5)4 | Leinster – The decreasepoint of reference for the mineral resources was in OC ore type was due to depletion. The increase in the reserve life was due to a decrease in nominated annual production rate. OC and UG ore types contribute 6 years and 9 years respectively to the reported reserve life.situ.
|
(6)5 | Mt Keith –Mineral resources estimate was based on a potash price of US$338/t. The decreaseprimary basis was Nutrien’s quarterly published offshore and onshore realised price from 2008 to 2020.
|
| 6�� | Mineral resources are stated for the Lower Patient Lake (LPL) potash unit and using a seam thickness of 3.96 m from the top of 406 clay seam. |
| 7 | Mineral resources are based on the expected metallurgical recovery of 92%. |
| 8 | Potash or sylvite (KCl) content of the deposit is reported in SPpotassium oxide form (K2 O). The conversion from KCl to K2 O uses a mineralogical conversion factor of 1.583, for example, 25.6% K2 O grade is equivalent to 40.5% KCl. |
| 9 | % MgO is used as a measure of carnallite (KCl.MgCl2 .6H2 O) content where per cent carnallite equivalent = % MgO x 6.8918. |
| 10 | Mineral resources tonnages are reported on an in situ moisture content basis and was estimated to be 0.3%. |
| 1 | Mineral reserves are being first time reported in accordance withS-K 1300 and are presented for the portion attributable to BHP’s economic interest. All tonnes and quality information have been rounded, small differences may be present in the totals. |
| 2 | Jansen, in which BHP has a 100% interest, is considered a material property for the purposes of item 1304 ofS-K 1300. |
| 3 | The point of reference for the mineral reserves was ore typeas delivered to the mill for processing. |
| 4 | Mineral reserves estimates were based on a potash price of US$338/t. The primary basis was dueNutrien’s quarterly published offshore and onshore realised price from 2008 to depletion.2020. |
| 5 | Mineral reserves estimatescut-off is a function of mining parameters and seam thickness. The calculatedcut-off grade from economic modelling where the mine plan would be break-even is 11.6% K2 O. |
| 6 | Mineral reserves are based on the expected metallurgical recovery of 92%. |
| 7 | Potash or sylvite (KCl) content of the deposit is reported in potassium oxide form (K2 O). The conversion from KCl to K2 O uses a mineralogical conversion factor of 1.583, for example, 25.6% K2 O grade is equivalent to 40.5% KCl. |
| 8 | % MgO is used as a measure of carnallite (KCl.MgCl2 .6H2 O) content where per cent carnallite equivalent = % MgO x 6.8918. |
| 9 | Mineral reserves tonnages are reported on anin-situ moisture content basis and was estimated to be 0.3%. |
5.8 Jansen individual property disclosure
5.8.1 Property description
The Jansen potash project is located in the rural municipalities of Leroy and Prairie Rose in the province of Saskatchewan, Canada, approximately 150 kilometres east of the city of Saskatoon.
The geographic coordinate location for the service shaft is Latitude 51°53’56.62“N and Longitude 104°42’53.44“W.
The site is accessed by road from provincial Highway 16 approximately 12 kilometres to the south and Highway 5 approximately 32 kilometres to the north. Access to the mine site from these highways uses upgraded secondary and/or primary roads from the village of Jansen to the south and the town of LeRoy to the north. The nearest commercial airport is in the city of Saskatoon.
Communications, power, water, and natural gas are provided by provincial crown corporations. The pipeline connection to the Saskatoon South East Water Supply system for Jansen’s primary water use is complete. The natural gas supply pipeline has been installed. Currently temporary construction power is provided by SaskPower with a 138 kV overhead line, the permanent 230kV supply is to be completed when mine construction is complete.
The Jansen site has two mine shafts, the service shaft and the production shaft. The service shaft permanent headframe, hoist houses, and collar house are constructed. The production shaft sinking headframe and ground mounted drum winders are installed and in use.
A third party rail provider is planned to transport the potash produced from the Jansen site to the port terminal, located in Delta, British Columbia, Canada, which is owned and operated by a third party provider. The port facility will unload the railcars, store the product, and load shipping vessels.
The processing facilities to be constructed at Jansen include:
Raw ore handling, storage and crushing;
Process mill building wet area comprising attrition scrubbing,de-sliming,
flotation andde-brining;
Process mill building dry area comprising drying, screening, compaction and glazing;
Tailings processing, crystallizer and reagents;
Product handling, storage and loadout.
Employees of Jansen mine are anticipated to reside in several existing communities located in the area.
The total area of the Jansen project lease is approximately 115,638 ha. Most mineral rights parcels are owned by the Saskatchewan Crown, the remaining mineral parcels are owned by individuals or corporations. To gain access to the potash within mineral parcels owned by individuals or corporations (‘freehold mineral lease’), BHP must either purchase the mineral parcels or negotiate mineral lease agreement(s) with the registered owner(s) of the mineral parcel(s). The freehold mineral leases secured by BHP have a term of 21 years and are renewable at the option of BHP for successive terms of 21 years. An annual rental payment of CA$4.94/hectare is also paid to keep these leases in good standing.
All surface lands that form part of the Jansen mine operations footprint have been acquired by BHP Canada.
On 23 November 2012, the Government of Saskatchewan and BHP Canada entered into Potash Lease Special Agreement KLSA 011. This agreement gives BHP the exclusive right to search for, dig, work, mine, extract, recover, process, and carry away subsurface minerals under or within all of the Saskatchewan Crown mineral parcels of KLSA 011. The lease pertains to two categories of lands, ‘KLSA 011 Core Lands’ comprising primarily the mineral reserves and ‘KLSA 011 Expansion Lands’, area outside mineral reserves that includes the primarily inferred resources.
During the first three years of KLSA 011, BHP was required to complete CA$12M of work on the lease area. This work commitment has been met.
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Jansen project total lease area | | | 115,638 | | | | 100 | | | | | | | | | |
| | | 63,939.43 | | | | 55 | | | | 22/11/2033 | | | | 1,056,623.66 | |
| | | 41,724.73 | | | | 36 | | | | 22/11/2033 | | | | | |
BHP acquired freehold mineral rights | | | 8,997.56 | | | | 8 | | | | Not applicable | | | | | |
Total of Core, Expansion, and acquired freehold mineral rights | | | | | | | | | | | | | | | | |
| 1 | Annual lease payment in CA$ |
4.7 Major projects5.8.4 Registrant interest
Capital and exploration expenditureBHP does not hold any royalty in Jansen in addition to its economic interest of
US$7.1 billion in FY2021 was in line with guidance. This included maintenance(
1)
expenditure of US$2.3 billion and exploration expenditure of US$514 million.100%.Capital5.8.5 Present condition of property
Jansen is currently in construction phase. A substantial portion of the site grading, drainage and
exploration expenditureroad network is in place. The site is connected to natural gas supply, construction electrical power, communication fibre andnon-potable
water. A 2,600 person construction camp has been constructed and in use. The service shaft and the production shaft have been excavated and hydrostatically lined. The service shaft permanent headframe, hoist houses, and collar house are constructed. The production shaft sinking headframe and ground mounted drum winders are installed and in use. Jansen is a development stage property that is in the process of approximatelyconstruction with board approval to proceed with Stage 1 announced in August 2021. Some permanent infrastructure is in place including site facilities, service and production shafts, along with temporary construction infrastructure. BHP has a construction program to complete all the necessary requirements such as installation of processing, underground development, mining equipment, rail and port facilities to enable the mine to commence operations.
The total book value for the Jansen property and its associated plant and equipment was US$6.73.7 billion as of 30 June 2022.
5.8.8 History of previous operations
There is no history of previous operations on the Jansen project area.
5.8.9 Significant encumbrances
There have been no material encumbrances to the property identified as of the date of this report. Federal, provincial, municipal permits and approval for
mineralsconstruction and
US$2.3 billionoperation have been received. All material permits that have been applied for
petroleumto-date
have been received. 5.8.10 Geology and mineralisation
The Jansen potash deposit is located within the Williston Basin, a large, intracratonic, and horizontally bedded sedimentary basin that has not been subject to structural deformation, either faulting or folding.
The potash beds are hosted within the Prairie Evaporite Formation, in regionally extensive, horizontal layers created by the repeated, cyclical evaporation of a shallow, inland sea during the Devonian period. The potash deposit extends from east to west in the province and are relatively uniform, except where there are anomalies due to local alterations or disruption of the potash beds.
In the Jansen area, the potash is at a depth of 800 to 1,050 metres. Two potash members are present the Patience Lake and Belle Plaine Members. The Patience Lake Member is further subdivided into Upper Patience Lake and Lower Patience Lakesub-members.
The Lower Patience Lakesub-member
is the potash horizon targeted for Jansen. The Lower Patience Lakesub-member
is composed of sylvite (KCl), halite (NaCl) with variable amounts of disseminated insolubles and clay seams. Carnallite (KCl.MgCl2
.6H2
O), a mineral which can impact processing and ground stability, occasionally occurs in place of sylvite within the potash layer. Large carnallite zones can typically be mapped using 3D seismic survey information. The Dawson Bay Formation includes the Second Red Beds Member and the Dawson Bay Carbonate members which overlay the Prairie Evaporite Formation. The Dawson Bay Formation in the Jansen area is expected in FY2022. In total, this is US$0.5 billion higher than previous guidance predominantly due to unfavourable impacts of a stronger Australian dollar. Guidance is subject to exchange rate movements.have low permeability or relatively low inflow deliverability potential.
This guidance includesApproximately 400 metres below the Prairie Evaporite Formation are the Cambrian-Ordovician Winnipeg and Deadwood formations. Sediments of these formations were deposited in near shore, shallow water marine environments on top of the Precambrian rocks. The coarse to fine sands of the formations, host a US$800 million exploration program in FY2022, with approximately US$260 millionvast deep saline aquifer that is used for our minerals exploration program and approximately US$540 million for our petroleum exploration and appraisal program.brine disposal.
5.8.11 Mineral resources and mineral reserves
Tables of mineral resources and mineral reserves for Jansen reported by ore type are included in section 5.7 above.
5.8.12 Changes to mineral resources and mineral reserves
Mineral resources and mineral reserves are being reported for the
BHP Board approved two major projects:first time in a filing with the SEC in accordance withS-K
1300 for the fiscal year ending 30 June 2022. There are no comparable estimates for the preceding year ending 30 June 2021. 5.8.13 Material assumptions and criteria
The key assumptions in the estimation of mineral resources are summarised as:
an investmentCut-off
parameter of
US$5.7 billion (C$7.5 billion) for3.96 m from the
Jansen Stage 1 Potash Project intop of the
province406 clay seam contact with the top of
Saskatchewan, CanadaLower Patience Lakesub-member,
aligned with the mining equipment requirements.Geological anomalies identification including collapses representing potential water ingress hazards, carnallite anomalies impacting extraction and processing and no potash zones creating additional dilution.
an investmentExclusion zones sterilising sections of US$544 millionthe reserves due to lease boundaries and around drill holes.
Brine and solid salt waste estimate for disposal modelling into the Shenzi North developmentaquifer and tailings management area.
The key assumptions in the US Gulfestimation of Mexico, followingmineral reserves are summarised as:
The mining method will be continuous mining using long room and pillar method.
Extraction ratios to reduce stress and provide room stability.
Thickness of the successful acquisitionroof salt beam (horizon) as potential planes of weakness, impacting amount of ground support or dilution estimates.
Mine design layout maximising the Mineral Resource extraction based on estimated thicknesses, avoiding anomalies (collapse, massive carnallite and no potash zones) and salt beam modelling.
Commodity price and operating costs.
Details of the material assumptions are described in the Technical Report Summary filed as an additional 28 per centexhibit to this report, sections 11 Mineral Resource Estimates, 12 Mineral Reserve Estimates and 13 Mining Methods.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Measured + Indicated
Resources | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | OC & UG | | | | 54 | | | | 0.59 | | | | 166 | | | | 0.73 | | | | 220 | | | | 0.69 | | | | 20 | | | | 0.75 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| 1 | Mineral resources are being first time reported in accordance withS-K 1300 and are presented for the portion attributable to BHP’s economic interest. All tonnes and quality information have been rounded, small differences may be present in the totals. |
| 2 | Mineral resources are presented exclusive of mineral reserves. |
| 3 | Nickel West mineral resources, in which BHP has a 100% interest, includes Leinster, Mt Keith, Yakabindie, Venus and Honeymoon Well deposits. |
| 4 | The point of reference for the mineral resources was delivery to Leinster gatehouse. |
| 5 | Mineral resources estimates were based on a nickel price of US$7.24/lb. |
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| | | OC & UG | | | | 110 | | | | 0.58 | | | | 47 | | | | 0.72 | | | | 157 | | | | 0.62 | |
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| 1 | Mineral reserves are being first time reported in accordance withS-K 1300 and are presented for the portion attributable to BHP’s economic interest. All tonnes and quality information have been rounded, small differences may be present in the totals. |
| 2 | Nickel West mineral reserves, in which BHP has a 100% interest, includes Leinster, Mt Keith and Yakabindie deposits. |
| 3 | The point of reference for the mineral reserves was delivery to Leinster gatehouse. |
| 4 | Mineral reserves estimates were based on nickel price of US$6.13/lb. |
The Jansen Stage 1 project was tracking to plan at the end of FY2022. We are working interestto bring forward Jansen Stage 1 first production to 2026 and assessing options to accelerate Jansen Stage 2. Approximately US$740 million in Shenzi in November 2020. The capital expenditure approved represents a 100 per cent share interest. BHP is operator and holds a 72 per cent shareplanned for work at Jansen Stage 1 in Shenzi North. Repsol holds the remaining 28 per cent working interest andFY2023, which is expected to make a Final Investment Decision later this calendar year
Atcontinue to focus on civil and mechanical construction on the end of the 2021 financial year, BHP had two major projects under development, which were Mad Dog Phase 2 in petroleumsurface and Jansen mine shafts in potash. Both of these projects are tracking to plan.underground, as well as equipment procurement and port construction.
| | | | | | | | | | | | | | | | |
| | | | Project scope / scope/capacity (2)1
| |
| | |
| | | Capital
expenditure
(US$M)(1)Progress/comments
| |
| | | | | | | | | | | | | | |
Projects achieved first productioncompleted during the 2021 financial yearFY2022 | | | | | | | | | | | | |
| | | | New subsea production system that will tie back to the existing Atlantis facility, with capacity to produce up to 38,000 gross barrels of oil equivalent per day. First production achieved in July 2020, ahead of schedule and on budget. | | | | | | | CY2020 | | | | 696 | |
| | | | New 95 ktpd concentrator is expected to incrementally increase Spence’s payable copper in concentrate production by approximately 185 ktpa in the first 10 years of operation and extend the mining operations by more than 50 years. First production achieved in December 2020, on schedule and on budget. | | | | | | | FY2021 | | | | 2,460 | |
| | | | Sustaining iron ore mine to replace production from the 80Mtpa (100 per cent basis) Yandi Mine. First production achieved in May 2021, on schedule and on budget. | | | | | | | CY2021 | | | | 3,061 | |
| | | | Five production wells tied back into existing operated processing facilities, with capacity to produce up to 16,000 gross barrels of oil per day and 80 million gross standard cubic feet of natural gas per day. First production achieved in May 2021,
ahead of schedule and on budget.
| | | | | | | CY2021 | | | | 283 | |
(1) | Maintenance capital includesnon-discretionary
spend for the following purposes: deferred development and production stripping; risk reduction, compliance and asset integrity. |
| | | | | | | | | | | | | | | | |
| | | | Project scope / capacity(2)
| |
| | | | |
| | | | | | | | | | | | | |
Projects in execution at 30 June 2021
| |
| | Mad Dog Phase 2 (US Gulf of Mexico) 23.9%(non-operator)
| | New floating production facility with the capacity to produce up to 140,000 gross barrels of crude oil per day. On schedule and on budget. The overall project is 93% complete. | | | | | | | CY2022 | | | | 2,154 | |
Other projects in progress at 30 June 2021
| | | | | | | | | | | | |
| | Jansen Potash Project | | Investment to finish the excavation and lining of the production and service shafts, and to continue the installation of essential surface infrastructure and utilities. | utilities | | | 2,972 | | | | CY2027 | | | Completed in June 2022 |
Projects in execution at 30 June 2022 | | | | | | | | | | |
| | | | Design, engineering and construction of an underground potash mine and surface infrastructure, with capacity to produce 4.35 Mtpa | | | 5,723 | | | | CY2027 | | | Approved in August 2021. The project is 8% complete |
(2)1 | Unless noted otherwise, references to capacity are on a 100 per cent basis, references to capital expenditure from subsidiaries are reported on a 100 per cent basis and references to capital expenditure from joint operations reflectreflects BHP’s share. |
Capital and exploration expenditure (continuing operations) of US$6.1 billion in the 2022 financial year was lower than guidance of US$6.5 billion primarily due to favourable exchange rate movements. This included maintenance expenditure of US$2.8 billion and exploration of US$256 million.
(3) | Capital expenditure of approximately US$100 million (related to the above scope) is expected for FY2022.Capital and exploration expenditure of approximately US$7.6 billion and US$9.0 billion are expected for the 2023 and 2024 financial years, including a US$0.4 billion exploration program planned in the 2023 financial year. In the medium term, capital and exploration expenditure of approximately US$10 billion per annum on average is expected. Guidance is subject to exchange rate movements. |
4.8 Sustainability7 People – performance data – 2022
DefinitionTable 1 – Workforce data and calculation of sustainability performance metricsdiversity by region FY2022
We use sustainability performance metrics (SPMs) to assess progress against our sustainability commitments and targets. These metrics are commonly used by many of our stakeholders and most are industry standard.
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| | | | | | | | | | | | | | | Employees by gender number and % | |
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| | | 1,544 | | | | 3.9 | | | | 2,188 | | | | 5.4 | | | | 619 | | | | 40.1 | | | | 925 | | | | 59.9 | |
| | | 29,368 | | | | 74.9 | | | | 20,052 | | | | 49.8 | | | | 20,341 | | | | 69.3 | | | | 9,027 | | | | 30.7 | |
| | | 61 | | | | 0.2 | | | | 10 | | | | <1.0 | | | | 29 | | | | 47.5 | | | | 32 | | | | 52.5 | |
| | | 467 | | | | 1.2 | | | | 928 | | | | 2.3 | | | | 259 | | | | 55.5 | | | | 208 | | | | 44.5 | |
| | | 7,770 | | | | 19.8 | | | | 17,083 | | | | 42.4 | | | | 5,288 | | | | 68.1 | | | | 2,482 | | | | 31.9 | |
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Management also uses the SPMs to evaluate our sustainability performance against the positive and negative impacts of our operational activities.
We align our SPMs with credible international standards, such as the Global Reporting Initiative (GRI) sustainability reporting standards, to ensure our performance is relevant and assessed against a range of reporting.
The SPMs listed in the tables below relate to each SPM for the year ended 30 June 2021. We have obtained external limited assurance over our disclosures in this section as well as in section 1.12 People and culture and 1.13 Sustainability.
A definition and explanation that outlines why we believe the SPMs are useful to the Board, management, investors and other stakeholders, and the methodology behind our most material SPMs is provided in our methodology tables disclosed in our online ESG Standards and Databook and below.
People-related metricsTable 2 – Employees by category and diversity for FY2022
Our global workforce is the foundation of our business
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| | | 36,965 | | | | 94.3 | | | | 25,622 | | | | 11,343 | | | | 1,513 | | | | 27,489 | | | | 56 | | | | 459 | | | | 7,448 | |
| | | 1,233 | | | | 3.1 | | | | 581 | | | | 652 | | | | 3 | | | | 1,224 | | | | 4 | | | | 2 | | | | | |
| | | 943 | | | | 2.4 | | | | 311 | | | | 632 | | | | 28 | | | | 587 | | | | 1 | | | | 5 | | | | 322 | |
| | | 28 | | | | 0.1 | | | | 6 | | | | 22 | | | | | | | | 27 | | | | | | | | 1 | | | | | |
| | | 41 | | | | 0.1 | | | | 16 | | | | 25 | | | | | | | | 41 | | | | | | | | | | | | | |
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Table 3 – Employees by category and we believe supporting the wellbeing of our people and promoting an inclusive and diverse culture are vitaldiversity for maintaining a competitive advantage. The SPMs for gender, employment type and turnover are key indicators, which allow the Board, management, investors and other stakeholders to measure and track our near and long-term progress.FY2022
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| | | 259 | | | | 168 | | | | 91 | | | | 64.9 | | | | 35.1 | | | | 0.0 | | | | 12.4 | | | | 53.6 | | | | 34.0 | |
| | | 1,228 | | | | 781 | | | | 447 | | | | 63.6 | | | | 36.4 | | | | 0.2 | | | | 28.3 | | | | 48.5 | | | | 23.0 | |
Supervising and professional | | | 16,208 | | | | 10,131 | | | | 6,077 | | | | 62.5 | | | | 37.5 | | | | 10.1 | | | | 40.4 | | | | 31.2 | | | | 18.3 | |
Operators and general support | | | 21,515 | | | | 15,456 | | | | 6,059 | | | | 71.8 | | | | 28.2 | | | | 18 | | | | 29.7 | | | | 26.3 | | | | 26.0 | |
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| 1 | 1.12 People and culture and section 4.8.1 People – performance data FY2021
–Workforce by gender, region, category and employment type |
| |
| | Proportional data for average number of employees is basedBased on the average of the number of employees at the last day of each calendar month for a10-month
period from July to April, which is then used as the average for the FY2021.The number and average number (and percentages) of employees by region shows the weighted average number of employees based on BHP ownership.
Contractor data is collected from internal surveys and the organisation’s systems and averages for a10-month
period from July 2020 to April 2021, which is then used as the average for the FY2021.The gender numbers in section 1.12 People and cultureare a ‘point in time’ snapshot of employees as at 30 June 2021 usedincluding employees on extended absence, which was 948 in internal management reporting for the purposes of monitoring progress against our aspirational goal of a gender-balanced workforce by FY2025.FY2022. There is no significant seasonal variation in employment numbers. These methodologies have been prepared in accordance with GRI standard102-8
and GRI standard405-1.
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| | |
| | 1.12 People and culture and section 4.8.1 People – performance data FY2021
– Employee new hires and turnover |
| |
| | Data for employee new hires, including by gender, age group and region, is based on the number of employee new hires for a10-month
period from July 2020 through to April 2021 divided by the average number of employees at the last day of each calendar month for the same period, which is then used to calculate a weighted average for FY2021 based on our operated assets. Employee new hires refers to all employment types.Data for employee turnover, including by gender, age group and region, is based on the number of employee new terminations for a10-month
period from July 2020 through to April 2021 divided by the average number of employees at the last day of each calendar month for the same period, which is then used to calculate a weighted average for FY2021 based on our operated assets. Employee new terminations refers to all employment types.These methodologies have been prepared in accordance with GRI standard401-1.
|
Health and safety-related metrics
Our highest priority is the safety of our people and the communities where we operate. This is why we focus on identifying safety risks and implementing controls designed to minimise the likelihood and potential impact of those risks. The health and safety SPMs allow the Board, management, investors and other stakeholders to measure and track health and safety performance at our operated assets, including trends related to personal injuries, occupational illness and exposures. We focus on strengtheningin-field
verification of material and fatal risks, enhancing our internal investigation process, widely sharing and applying lessons, and enabling additional quality field time to engage our workforce. | | |
| | 1.13.3 Our sustainability performance:Non-financial
KPIs; section 1.13.4 Safety and section 4.8.2 Health and Safety – performance data FY2021–TRIF |
| |
| | TRIF (total recordable injury frequency) is an indicator highlighting broad personal injury trends and refers to the number of recordable injuries per hours worked during the financial year. TRIF equals the sum of (fatalities + lost-time cases + restricted work cases + medical treatment cases) x 1,000,000 (or 200,000) ÷ actual hours worked. In accordance with SASB Metals and Mining Standard, we also report TRIF per 200,000 hours worked. BHP adopts the US Government Occupational Safety and Health Administration (OSHA) guidelines for the recording and reporting of occupational injury and illnesses. TRIF statistics excludenon-operated
assets.improvement of TRIF is one of our five-year sustainability targets and is one of the indicators used to assess our safety performance.FY2016 to FY2018 data includes Continuing operations and Discontinued operations (Onshore US assets). FY2019 data includes Discontinued operations (Onshore US assets) to 28 February 2019 and Continuing operations.
This methodology has been prepared in accordance with GRI standard403-9
and OSHA guidelines. |
| | 1.13.4 Safety and section 4.8.2 Health and Safety – performance data FY2021
–High-potential injury events |
| |
| | High-potential injury (HPI) events refers to the number of recordable injuries and first aid cases where there was the potential for a fatality during the financial year. HPIs event trends remain a primary focus to assess progress against our most important safety objective: to eliminate fatalities, and provides insight into our performance on preventing future fatalities.
The basis of calculation for HPIs was revised in FY2020 from event count to injury count as part of a safety reporting methodology improvement.
FY2016 to FY2018 data includes Continuing operations and Discontinued operations (Onshore US assets). FY2019 data includes Discontinued operations (Onshore US assets) to 28 February 2019 and Continuing operations.
This methodology has been prepared in accordance with GRI standard403-9.
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| | |
| 2 | 1.13.5 Health and section 4.8.2 Health and Safety – performance data FY2021
–Occupational illness incidence |
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| | An occupational illness is an illness that occurs as a consequence of work-related activities or exposure and includes acute or chronic illnesses or diseases, which may be caused by inhalation, absorption, ingestion or direct contact. Illness is determined by reference to the US OSHA Recordkeeping Handbook.
Occupational illness incidence is a lag indicator highlighting broad occupational illness trends and refers to the number of employees that suffer from an occupational illness per million hours worked during the financial year.
Incidence of occupational illness is used to identify situations where exposure controls were effective (no illness occurrence) and where exposure controls were potentially ineffective (illness occurs). It also informs priorities for exposure reduction projects.
The data for FY2016 to FY2018 includes Continuing operations and Discontinued operations. FY2019 data includes Discontinued operations (Onshore US assets) to 31 October 2018 and Continuing operations.
The data excludes potential work-relatedCOVID-19
cases.This methodology has been prepared in accordance with GRI standard403-10
and the OSHA Recordkeeping Handbook. |
| | |
| | 1.13.3 Our sustainability performance:Non-financial
KPIs and section 4.8.2 Health and Safety – performance data FY2021–Occupational exposures |
| |
| | Occupational exposures refers to the number of employees who have potential exposure to an agent in the workplace that exceeds either regulatory or the sometimes stricter BHP internal occupational exposure limits (OELs). These employees are required to wear personal protective equipment (PPE). Reported occupational exposure data discounts the effect of the PPE worn.
BHP has adopted a five-year sustainability target to reduce by at least 50 per cent (compared to the adjusted FY2017 exposure data) the number of employees exposed to diesel exhaust particulate matter, coal mine dust and silica.
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| | An OEL is the level of exposure to an agent to which it is believed nearly all people may be repeatedly exposed throughout a working life without adverse effect.
The exposure profile is derived through a combination of quantitative exposure measurements and qualitative assessments undertaken by specialist occupational hygienists consistent with best practice as defined by the American Industrial Hygiene Association. The 95 per cent upper confidence limit of the mean exposure is compared to our OELs.
Where employees are exposed in excess of an OEL:
• exposure controls in accordance with the hierarchy of control must be implemented
• PPE is provided and must be worn
• health surveillance must be undertaken
Quantitative occupational exposure measurements are undertaken to provide assurance that implemented controls remain effective.
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Community-related metrics
We seek to create and contribute to social value in the communities where we operate through the positive social and economic benefits generated by our core business, our constructive engagement and advocacy on important issues and our contribution as community partners. Our community SPMs allow the Board, management, investors and other stakeholders to track our performance in contributing to social value in the communities where we operate and monitor our relationships and engagement with this important stakeholder group.
| | |
| | 1.13.3 Our sustainability performance:Non-financial
KPIs and section 1.13.11 Social investment–Social investment spend |
| |
| | Our voluntary social investment is calculated as 1 per cent of the average of the previous three years’pre-tax
profit. Social investment is our voluntary contribution towards projects or donations with the primary purpose of contributing to the resilience of the communities where we operate and the environment, aligned with our broader business priorities. By building common ground through collective impact and partnerships, our social investments will purposefully create social value to strengthen the communities where we operate, to improve the resilience of the natural environment and address the strategic priorities of the business. Donations from BHP to the BHP Foundation are included in the calculation of our 1 per cent target as are the costs of administering our social investment programs. The Sustainability Committee reviews our social investment spend on a quarterly basis.Our social investment spend is one of the metrics used to monitor our performance against our commitment to making a contribution to social value and meeting our five-year sustainability target.
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| | |
| | 1.13.3 Our sustainability performance:Non-financial
KPIs and section 1.13.8 Community–Significant community events |
| |
| | A significant event resulting fromBHP-operated
activities is one with an actual severity rating of four or above, based on our internal severity rating scale (tiered from one to five by increasing severity) as defined in our mandatory minimum requirements for risk management. A significant community event is an event that could have a serious or severe impact on the community (including impacts to livelihoods, infrastructure, health, safety, security or cultural heritage) or a substantiated human rights violation.This metric assists the Board and management in monitoring BHP’s social performance and is one indicator of the health of our relationship with the communities where we operate.
This methodology has been prepared in accordance with GRI standard413-2
and GRI standard MM6. |
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| | 1.13.8 Community and section 4.8.3 Society – performance data FY2021
– Community complaints |
| |
| | Community complaints refers to a verbal or written notification made directly to a BHP representative by a member of a community relating to an alleged adverse impact on that community arising from BHP’s activities and/or employee or contractor behaviour. Trends in community complaints are analysed by management every six months. This data is used as one of the inputs for management to determine whether we are operating within our risk appetite.
This metric assists the Board and management to monitor BHP’s social performance and is one indicator of the health of our relationship with the communities where we operate.
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| |
| | This methodology has been prepared in accordance with GRI standard MM7. |
Environment-related metrics
We acknowledge the nature of our operations can have significant environmental impacts. Our environmental SPMs allow the Board and management to manage and monitor the inherent risks relating to and any adverse impacts our operations may have on air quality, water resources, biodiversity and habitats. They also allow the Board, management, investors and other stakeholders to measure and track our performance towards our environmental commitments. These measures are used to inform strategic focus areas, support planning and investments in infrastructure and identify improvement opportunities that potentially reduce environmental impacts. BHP respects legally designated protected areas and commits to avoiding areas or activities where we consider the environmental risk is outside BHP’s risk appetite. Additionally, our operations and growth strategy depend on obtaining and maintaining access to environmental resources, such as land and water. Significant environmental events and incidents ofnon-compliance,
such as tailings storage facilities failures, can lead to costly environmental liabilities, which hinder our growth and expansion strategies. | | |
| | 1.13.14 Land and biodiversity and section 4.8.4 Environment – performance data
– Land owned, leased or managed, Land disturbed, Land rehabilitated and Land set aside for conservation. |
| |
| | Land may refer to sea, lake or river beds if appropriate and includes land for infrastructure to support extractive operations.
Land disturbed includes the total land area at the time of reporting that is physically impacted by the activities of the business that substantially disrupts thepre-existing
habitats and land cover. |
| | Land managed for conservation is the total area at the time of reporting managed for the purposes of biodiversity conservation only. It includes land that the business has formally assigned and manages as a compensatory action as well as other land that the business has protected from disturbance activities and manages for conservation.
Land data is calculated as the total land area owned, leased or managed by BHP as at 30 June of the reporting year, expressed as hectares. Data does not include land managed for rehabilitation or conservation as part of voluntary social investment.
This methodology has been prepared in accordance with GRI standard MM1 and these metrics assist the Board and management in understanding the magnitude of land that is under direct control of the company and its operational footprint.
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| | |
| | 1.13.3 Our sustainability performance:Non-financial
KPIs; section 1.13.13 Water and section 4.8.6 Water – performance data –Water withdrawals, Water discharges, Water diversions, Water consumption, Water Recycling/Reuse, Water storage and Water stress |
| |
| | The volume of water, in megalitres (ML), received and intended for use by the operated asset from the water environment and/or a third-party supplier. We disclose water withdrawal in ML by operated asset and source (sea, ground and surface waters and third party) as defined in section 4.11.4). Volumes by quality type (as defined in section 4.11.4) are also disclosed. Withdrawal volumes disclosed per annum include rainfall and runoff volumes captured and used during the reporting year. Rainfall and runoff volumes that have been captured and stored are excluded in withdrawals and will be reported in the future year of use. Withdrawal volumes also include water entrained (as defined in section 4.11.4) in ore.
Water withdrawal metrics assist the Board and management in understanding the significance of our water resource use, collectively for the Group and by individual operated assets, and to assess trends over time. It also helps inform investment in infrastructure to reduce water withdrawals and improve efficiency of water use.
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| |
| | The volume of water, in ML, removed from the operated asset and returned to the environment and/or distributed to a third party. This may include discharge to sea, surface waters, groundwater seepage or aquifer reinjection. We disclose water discharges in ML by operated asset and destination. Volumes by quality type (as defined in section 4.11.4) are also disclosed.
Water discharge metrics assist the Board and management in understanding the amount of water that operated assets must handle and release in line with water quality requirements. It also helps inform investment in infrastructure to improve water quality, reduce water withdrawals and improve efficiency of water use.
The volume of water, in ML, that is actively managed by an operated asset but not used for any operational purposes. Diversions are reported as both withdrawals and discharges and may include:
• flood waters that are discharged to an external surface water body
• dewatering volumes produced by aquifer interception that are reinjected to groundwater or discharged to surface water
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| | • ground or surface water that is removed by or supplied to a third party, such as a community
• water removed as part of accessing crude oil that is returned to the sea without use
• water used for ecosystem irrigation
Withdrawal and discharge of diverted water may occur in different annual reporting periods, so in any given annual period there may be a differential between withdrawals and discharges for diverted water.
Water diversion metrics assist the Board and management in understanding the volumes of water handled by the operated asset. This information assists in forecasting water management costs and identifying opportunities to reduce them.
The volume of water, in ML, used by the operated asset and not returned to the environment or a third party. We disclose consumption by total consumption and use (evaporation, entrainment and other as defined in section 4.11.4).
Water consumption metrics assist the Board and management in the planning of water supplies and infrastructure for future production, expansions or new projects. The metrics are also used to identify the areas where we have opportunity to reduce water use.
The volume of water, in ML, that is reused or recycled at an operated asset. Reused water is water that has previously being used at the operated asset that is used again without further treatment. Recycled water is water that is reused but is treated before it is used again.
Water recycled/reused metrics assist the Board and management in assessing opportunities to reduce water withdrawals. These metrics assist with comparisons of water recycling/reuse performance and trends between our operated assets and with peers, which can be used to inform and prioritise reuse and recycling improvements and technological investments.
Water stress is defined as the ability, or lack thereof, to meet human and ecological demand for fresh water consistent with the definition provided by the CEO Water Mandate. It is a broad term that considers a number of physical aspects, including water availability, quality and accessibility. For example, water stress may be considered to be high if water resources are physically scarce; are not directly suitable for use due to quality constraints; or are not available for access due to regulatory restrictions or a lack of infrastructure.
Water stress contributes to the overall baseline risk profile of a site or location.
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| | These methodologies have been prepared in accordance with the ICMM A Practical Guide to Consistent Water Reporting for the Mining and Metals Industry (Version 1),GRI standard303-3,
GRI standard303-4
and GRI standard303-5.
These metrics assist the Board and management in understanding the volumes of water that BHP interacts with and the water volume and use efficiency trends over time. |
| | |
| | 4.8.4 Environment – performance data
–Mineral waste (including tailings) |
| |
| | Mineral waste refers to the large quantities of material arising as a result of extractive activities.Non-product
materials (overburden) have to be removed to give access to product-bearing material (ores), which are processed, physically or chemically, to release them from their matrix and convert them into output products and waste products (tailings, slags, sludges, slimes or other process residues). For minerals waste, the figures represent the total deposited in the reporting year, expressed as kilotonnes (kt).Mineral waste (hazardous)
Includes the following if classified as hazardous by local legislation:
• mineral waste from raw or intermediate materials that have been processed as part of the production sequence, such as beneficiation, refining and smelting
• tailings, slimes, sludge, residues, slag, fly ash, gypsum, coal rejects
Includesnon-hazardous
wasteco-disposed/mingled
with hazardous material. Excludes any hazardous mineral waste that is rehandled to prevent double counting.Tailings waste(non-hazardous)
Includes tailings, slimes and residue resulting from the processing of ore which is not classified as hazardous by local legislation.
This methodology has been prepared in accordance with GRI standard MM3. These metrics assist the Board and management in understanding the volumes and types of waste generated and trends over time.
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| | |
| | 1.13.3 Our sustainability performance:Non-financial
KPIs and section 1.13.12 Environment–Significant environmental events |
| |
| | A significant event resulting from BHP operated activities is one with an actual severity rating of four and above, based on our internal severity rating scale (tiered from one to five by increasing severity) as defined in our mandatory minimum requirements for risk management. The severity rating considers the nature, extent and duration of the impact and any corrective actions required to restore ecosystem function.
This metric assists the Board and management in monitoring BHP’s environment performance and is one indicator of the impacts on the environments where we operate.
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4.8.1 People – performance data FY2021(1)(2)
Workforce data and diversity by region for FY2021
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| | | Employees by gender number and % | | | Average number and % of contractors (2) | | | Average no. hours (EE) absenteeism rate (3) | |
| | | | | | | | | | | | |
| | | 1,907 | | | | 5.5 | | | | 735 | | | | 38.5 | | | | 1,172 | | | | 61.5 | | | | 2,474 | | | | 5.9 | | | | 27.4 | |
| | | 23,828 | | | | 69.1 | | | | 17,530 | | | | 73.6 | | | | 6,298 | | | | 26.4 | | | | 21,467 | | | | 51.2 | | | | 88.5 | |
| | | 54 | | | | 0.2 | | | | 25 | | | | 46.3 | | | | 29 | | | | 53.7 | | | | 8 | | | | <0.1 | | | | 3.0 | |
| | | 1,299 | | | | 3.8 | | | | 840 | | | | 64.7 | | | | 459 | | | | 35.3 | | | | 1,333 | | | | 3.2 | | | | 31.6 | |
| | | 7,390 | | | | 21.4 | | | | 5,674 | | | | 76.8 | | | | 1,716 | | | | 23.2 | | | | 16,630 | | | | 39.7 | | | | 59.3 | |
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Employees by category and diversity for FY2021
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| | | | | | | | | | | | | | | | | | | | | | | Average total
remuneration
US$ | |
| | | 0.7 | | | | 72.1 | | | | 27.9 | | | | 0.0 | | | | 12.0 | | | | 53.9 | | | | 34.1 | | | | 1.08 | | | | 1.13 | |
| | | 3.3 | | | | 70.1 | | | | 29.9 | | | | 0.4 | | | | 28.2 | | | | 45.5 | | | | 25.9 | | | | 1.05 | | | | 1.08 | |
Supervisory and professional | | | 40.0 | | | | 67.3 | | | | 32.7 | | | | 10.2 | | | | 40.9 | | | | 30.9 | | | | 18.0 | | | | 1.14 | | | | 1.17 | |
Operators and general support | | | 56.0 | | | | 76.4 | | | | 23.6 | | | | 17.3 | | | | 30.3 | | | | 27.1 | | | | 25.3 | | | | 1.28 | | | | 1.33 | |
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| | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | 94.7 | | | | 73.5 | | | | 26.5 | | | | 5.1 | | | | 71.4 | | | | 0.1 | | | | 3.6 | | | | 19.8 | |
| | | 2.8 | | | | 53.8 | | | | 46.2 | | | | 0.2 | | | | 98.5 | | | | 0.5 | | | | 0.8 | | | | 0 | |
| | | 2.4 | | | | 57.7 | | | | 42.3 | | | | 4.7 | | | | 71.6 | | | | <0.1 | | | | 0.2 | | | | 23.5 | |
| | | 0.1 | | | | 31.3 | | | | 68.7 | | | | 3.1 | | | | 96.9 | | | | 0 | | | | 0 | | | | 0 | |
| | | <0.1 | | | | 50 | | | | 50 | | | | 0 | | | | 100 | | | | 0 | | | | 0 | | | | 0 | |
Turnover and new hires for FY2021
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| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 3,225 | | | | 2,588 | | | | 1,860 | | | | 2,029 | | | | 1,217 | | | | 707 | | | | 194 | | | | 4,979 | | | | 5 | | | | 76 | | | | 559 | |
| | | | | | | 24.64 | % | | | 11.64 | % | | | 35.41 | % | | | 15.46 | % | | | 10.82 | % | | | 8.24 | % | | | 10.17 | % | | | 18.07 | % | | | 9.26 | % | | | 5.85 | % | | | 7.56 | % |
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| | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 2,988 | | | | 1,276 | | | | 768 | | | | 1,355 | | | | 1,054 | | | | 1,087 | | | | 254 | | | | 3,118 | | | | 6 | | | | 118 | | | | 768 | |
| | | | | | | 10.79 | % | | | 12.15 | % | | | 14.62 | % | | | 10.32 | % | | | 9.37 | % | | | 12.67 | % | | | 13.32 | % | | | 11.32 | % | | | 11.11 | % | | | 9.08 | % | | | 10.39 | % |
Employee remuneration for FY2021
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Ratio highest to median (4) | | | Ratio standard entry level wage to local minimum wage (5) | |
| |
| | |
| | | | | | | | | | | | | |
| | | 1.65 | | | | 1.75 | | | | 0:1 | | | | 88:1 | | | | 4:1 | | | | 4:1 | |
| | | 1.12 | | | | 1.14 | | | | 0:1 | | | | 53:1 | | | | 3:1 | | | | 2:1 | |
| | | 1.40 | | | | 1.49 | | | | 0:1 | | | | 4:1 | | | | | | | | | |
| | | 1.17 | | | | 1.19 | | | | | | | | 13:1 | | | | | | | | | |
| | | 0.86 | | | | 0.96 | | | | | | | | 77:1 | | | | 4:1 | | | | 4:1 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Employee parental leave for FY2021(7)
| | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | |
| | | 830 | | | | 384 | | | | 352 | | | | 92 | |
| | | 717 | | | | 489 | | | | 473 | | | | 97 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Employee parental leave for FY2020(7)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | 731 | | | | 361 | | | | 334 | | | | 309 | | | | 93 | | | | 93 | |
| | | 570 | | | | 411 | | | | 405 | | | | 378 | | | | 99 | | | | 93 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Employee regular performance discussion records for FY2021(8)
| | | | | | | | | | | | |
| | | | | | | | | |
| | | 91.3 | | | | 92.6 | | | | 92.1 | |
| | | 92.5 | | | | 91.6 | | | | 92.2 | |
| | | 96.2 | | | | 92.9 | | | | 94.4 | |
| | | 84.3 | | | | 91.5 | | | | 86.9 | |
| | | 95.6 | | | | 93.9 | | | | 95.0 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | |
| | | 90.8 | | | | 90.6 | | | | 90.7 | |
| | | 93.1 | | | | 93.5 | | | | 93.3 | |
Supervisory and professional | | | 94.3 | | | | 94.5 | | | | 94.4 | |
Operators and general support | | | 90.2 | | | | 88.6 | | | | 89.7 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Active employee workforce globally on collective bargaining agreements(9)
| | | | | | | | |
| | | | | Non-collective
agreements % | |
| | | 0 | | | | 100 | |
| | | 49 | | | | 51 | |
| | | 0 | | | | 100 | |
| | | 0 | | | | 100 | |
| | | 80 | | | | 20 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Employee training for FY2021(6)
| | | | | | | | | | | | |
| | | | |
| | | | | | | | | |
| | | 8 | | | | 9 | | | | 8 | |
| | | 14 | | | | 12 | | | | 14 | |
Supervisory and professional | | | 23 | | | | 19 | | | | 21 | |
Operators and general support | | | 32 | | | | 114 | | | | 51 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
(1) | Proportional data in the People section are based on the average of the number of employees at the last day of each calendar month for a10-month
period which calculates the average for the year with the exception of the average number (and %) of employees in the data tables by region which shows the weighted average number of employees based on BHP ownership. There is no significant seasonal variation in employment numbers. |
(2) | Contractor data is collected from internal surveys and the organisation systems and averages for a 10-month period. |
(3) | Absenteeism comprises sick leave, hospitalisation leave, injury on duty, short-term disability, unauthorised absence, industrial action, union absence, leave without pay, unpaid absence and workers’ compensation.
|
(4)3 | The salary increase ratio representsEmployees who left BHP via the percentage increasemerger of our Petroleum business with WoodsideEnergy Group Ltd (Woodside), which completed on 1 June 2022 (approximately 1,000 employees), or the sale of our 80 per cent interest in annual total compensation for the highest-paid individualBHP Mitsui Coal Pty Ltd (BMC) to the median percentage increase in annual total compensation for all employees (excluding the highest-paid individual) in the same location for each significant region. Salary increases do not include promotional increases. ContractorsStanmore Resources, which completed on 3 May 2022 (approximately 500 employees) are excluded from the remuneration data.
|
(5) | Individuals classified as entry level are those in operations and general support roles and have been with the company for less than one year. Minimum wage is determined for all locations with the exception of Singapore and Switzerland as they do not have a minimum wage mandated by their respective governments and therefore have been excluded from the calculation. Contractors are excluded from the remuneration data.
|
(6) | The number of training hours has been annualised using data from a10-month
period, July to April, to determine a total for the year. Percentages are calculated using the average of the number of employees at the last day of each calendar month for the same10-month
period. This data includes the training provided to apprentices and trainees as part of the FutureFit Academy in Australia during FY2021, which totals more than 500,000 hours (on average over 1,100 hours per employee). |
(7) | The calculation includes primary parental leave only and does not include secondary parental leave. Secondary parental leave is atwo-week
parental leave benefit for thenon-primary
caregiver. All BHP employees are eligible for parental leave. Retention rate for employees that returned from parental leave in FY2020 calculated as at least 12 months from date of return. |
(8) | Data reflects the number of employees as at 30 June 2021 that have at least one performance review record in our core HR system for performance review records. Performance review records for some employees at operations in Chile and Australia are not recorded in the core HR system and not captured in this data.
|
(9) | Data at 30 April 2021, no major fluctuation in workforce throughout the year.excluded.
|
4.8.2 Health and Safety – performance data FY2021
Regional summary for FY2021(1)
Per 1,000,000 hours worked
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Employee occupational illness incidence (2) | | | Contractor occupational illness incidence (2) | | | Employee high potential injury frequency (3) | | | Contractor high potential injury frequency (3) | |
| | | 0 | | | | 0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | |
| | | 0 | | | | 0 | | | | 4.5 | | | | 5.4 | | | | 5.1 | | | | 2.5 | | | | 0.1 | | | | 0.3 | |
| | | 0 | | | | 0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | |
| | | 0 | | | | 0 | | | | 0.0 | | | | 1.8 | | | | 1.4 | | | | 0.4 | | | | 0.0 | | | | 0.4 | |
| | | 0 | | | | 0 | | | | 0.9 | | | | 2.0 | | | | 3.6 | | | | 1.0 | | | | 0.2 | | | | 0.2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 0 | | | | 0 | | | | 3.3 | | | | 4.0 | | | | 4.4 | | | | 1.9 | | | | 0.1 | | | | 0.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Injury rates for FY2021(1)
SASB basis – per 200,000 hours worked
| | | | | | | | | | |
| | | | | | | | | |
Total recordable injury frequency | | Per 200,000 hours worked | | | 0.67 | | | | 0.80 | |
High potential injury events frequency (3) | | Per 200,000 hours worked | | | 0.02 | | | | 0.05 | |
High consequence injury events frequency | | Per 200,000 hours worked | | | 0.07 | | | | 0.04 | |
Number of recordable work-related injuries | | | | | 235 | | | | 385 | |
Number of high consequence work-related injuries | | | 25 | | | | 19 | |
| | | | | 70,648,290 | | | | 96,323,097 | |
(1) | Due to the lag nature of incident reporting and subsequent verification, final results may vary post reporting.
|
(2) | Occupational illnesses excludesCOVID-19
related data. |
(3) | High potential injuries (HPI) are recordable injuries and first aid cases where there was the potential for a fatality.
|
Average hours of health, safety and emergency response training
The number of training hours has been annualised using data from a10-month
period, July to April, to determine a total for the year. Percentages are calculated using the average of the number of employees at the last day of each calendar month for the same10-month
period. The training relates to the health, safety, or emergency preparedness of employees with respect to occupational risks or hazards to which employees are reasonably likely to be exposed as assessed by BHP. This includes training related to general health and safety behavioral expectations covered in, Inductions and general leadership courses.Significant fines fornon-compliance
with health, safety and environmental laws and/or regulations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Total monetary value of fines (US$) | |
| | Environmental (1) | | | Health | | | Safety | | | Other (2) | | | Environmental (1) | | | Health | | | Safety | | | Other (2) | |
| | | 3 | | | | 0 | | | | 0 | | | | 0 | | | US$ | 30,933 | | | US$ | 0 | | | US$ | 0 | | | US$ | 0 | |
| | | 0 | | | | 0 | | | | 0 | | | | 0 | | | US$ | 0 | | | US$ | 0 | | | US$ | 0 | | | US$ | 0 | |
| | | 0 | | | | 0 | | | | 0 | | | | 0 | | | US$ | 0 | | | US$ | 0 | | | US$ | 0 | | | US$ | 0 | |
| | | 1 | | | | 6 | | | | 0 | | | | 1 | | | US$ | 4,593 | | | US$ | 48,494 | | | US$ | 0 | | | US$ | 342 | |
(1) | Does not include the dam failure at Samarco, ournon-operated
minerals joint venture. |
(2) | Includes a fine at Escondida relating to a building permit under general construction and town planning laws (US$340).
|
4.8.3 Society – performance data FY2021
Indigenous peoples territories(1)
| | | | | | | | |
| |
| | |
| |
| | | 24 | | | | 13 | |
| | | 6 | | | | 1 | |
| | | 2 | | | | 2 | |
| | | 0 | | | | 0 | |
| | | 0 | | | | 0 | |
| | | 5 | | | | 0 | |
(1) | The term Operations includes proven and probable reserves.
|
4.8.4 Environment – performance data
Not required for US reporting.
4.8.5 Climate change – performance data
Not required for US reporting.
4.8.6 Water – performance data
Not required for US reporting.
The Group is involved from time to time in legal proceedings and governmental investigations of a character normally incidental to our business, including claims and pending actions against it seeking damages, or clarification or prosecution of legal rights and regulatory inquiries regarding business practices. Insurance or other indemnification protection may offset the financial impact on the Group of a successful claim.
This section summarises the significant legal proceedings and investigations and associated matters in which the Group is currently involved or has finalised since our last Annual Report. The timing of many of the legal proceedings and investigations continue to be delayed or uncertain as a result of court closures or delays in response to the
COVID-19
pandemic.
Legal proceedings relating to the failure of the Fundão tailings dam at the Samarco iron ore operations in Minas Gerais and Espírito Santo (Samarco dam failure)
The Group is engaged in numerous legal proceedings relating to the Samarco dam failure. While there has been progress in priority areas, such as individual compensation and indemnification for the damage caused by the dam failure, it is not possible at this time to provide a range of possible outcomes for all proceedings or a reliable estimate of potential future exposures. There are numerous additional lawsuits against Samarco relating to the dam failure to which the Group is not party. Currently, there are approximately 5054 ongoing public civil claims and 2036 that are suspended. The most significant of these proceedings are summarised below.
R$20 billion public civil claim commenced by the Federal Government of Brazil, states of Espírito Santo and Minas Gerais and other authorities (R$20 billion Public Civil Claim)claim)
On 30 November 2015, the Federal Government of Brazil, states of Espírito Santo and Minas Gerais and other public authorities collectively filed a public civil claim before the 12
th
Federal Court of Belo Horizonte against Samarco and its shareholders, BHP Billiton Brasil Ltda. (BHP Brasil) and Vale
S.A. (Vale), seeking the establishment of a fund of up to R$20 billion (approximately US$4 billion) in aggregate for
clean-up
costs and damages.
On 2 March 2016, Samarco, BHP Brasil together withand Vale, and Samarco, entered into a Framework Agreement with the states of Espírito Santo and Minas Gerais and other public authorities to establish a foundation (Fundação Renova) to develop and execute environmental and socioeconomic programs (Programs) to remediate and provide compensation for damage caused by the Samarco dam failure.
The term of the Framework Agreement is 15 years, renewable for periods of one year successively until all obligations under the Framework Agreement have been performed. Under the Framework Agreement, Samarco is responsible, as a primary obligor, for funding Fundação Renova’s annual calendar year budget for the duration of the Framework Agreement. The amount of funding for each calendar year will be dependent on the remediation and compensation projects to be undertaken in a particular year. To the extent that Samarco does not meet its funding obligations under the Framework Agreement, each of ValeBHP Brasil and BHP BrasilVale has funding obligations under the Framework Agreement, as secondary obligors, in proportion to its 50 per cent shareholding in Samarco.
R$155 billion public civil claim commenced by the Federal Public Prosecutors’ Office (R$155 billion Federal Public Prosecutors’ Office claim)
On 3 May 2016, the Brazilian Federal Public Prosecutors’ Office filed a public civil claim before the
12th 12th
Federal Court of Belo Horizonte against
Samarco, BHP Brasil
Vale and
SamarcoVale – as well as 18 other public entities (which has since been reduced to five defendants
(
1
)
by the 12
th
Federal Court) – seeking R$155 billion (approximately US$30 billion) for reparation, compensation and collective moral damages in relation to the Samarco dam failure.
This public civil claim and the R$20 billion Public Civil
Claimclaim are broad claims that encompass the majority of the public civil claims filed against
Samarco, BHP Brasil
Samarco and Vale. For this reason, the 12
th
Federal Court has suspended other public civil claims while negotiations continue in relation to the settlement of the R$155 billion Federal Public Prosecutors’ Office claim.
Despite suspension of thisThis public civil claim beingwas suspended for a period of two years from the date of ratification of the Governance Agreement (described below) on 8 August 2018 the claim has not been resumed.2018.
On 19 March 2021, the parties to the case agreed to extend the suspension of this case until 27 April 2021. Although the stay period has formally elapsed, neither party has made any filings to date, and the parties are engaged in negotiations to seek a definitive settlement (summarised below).
(1)1 | Currently, solely BHP Brasil, Vale and Samarco, the Federal Government and the state of Minas Gerais are defendants. |
On 25 June 2018,
Samarco, BHP Brasil, Vale,
Samarco, the other parties to the Framework Agreement, the Public Prosecutors’ Office
(
1
)2
and the Public Defense Office
(
2
)3
entered into a Governance Agreement, which settled the R$20 billion Public Civil
Claimclaim and established a process to renegotiate the Programs over two years to progress settlement of the R$155 billion Federal Public Prosecutors’ Office claim.
Under the Governance Agreement, renegotiation of the Programs will be based on certain agreed principles, including full reparation consistent with Brazilian law, the requirement for a technical basis for any proposed changes, consideration of findings from experts appointed by Samarco, BHP Brasil Samarco and Vale, consideration of findings from experts appointed by prosecutors and consideration of feedback from impacted communities.
Since early CY2021, the parties have been engaging in negotiations to seek a definitive and substantive settlement of claims relating to the dam failure. The mediationnegotiations are overseen by the President of the National Council of Justice, as the Chief Justice of the Supreme Court in Brazil, and are expected to continue until at least the expected end of the term of the current President on 31 August 2022. Outcomes of the negotiations are highly uncertain, and it is ongoing as at the date of this Report. It istherefore not possible to provide a range of outcomes or a reliable estimate of potential settlement outcomes and there is a risk that a negotiated outcome may be materially higher than amounts currently reflected in the Samarco dam failure provision. Until revisions to the Programs are agreed, Fundação Renova will continue to implement the Programs in accordance with the terms of the Framework Agreement and the Governance Agreement.
Since 7 January 2020, the 12
th
Federal Court of Belo Horizonte has issued several decisions creating 13 enforcement proceedings (Enforcement Proceedings) linked to the R$20 billion Public Civil
Claimclaim and R$155 billion Federal Public Prosecutors’ Office claim described above.
Issues covered by these Enforcement Proceedings include environmental recovery, human health risk and ecological risk, resettlement of affected communities, infrastructure and development, registration of certain impacted individuals under the Programs and indemnities for people impacted by the dam failure, resumption of economic activities, water supply for human consumption and hiring of technical advisers to impacted people, and restructuring Fundação Renova’s management system, among other key delivery areas.
In the context of these Enforcement Proceedings,
Samarco, BHP Brasil
Samarco and Vale are seeking determinations, including,
among other things, the repealing of fishing bans ordered by the courts or administration entities,
set-off
of compensation paid against future damages that may need to be paid, and
determination regarding the hiring and supervision of technical assistants to impacted people.
In August 2020, a Simplified Indemnification System (the Novel System) was created by the 12th
Federal Court of Belo Horizonte with specific rules designed for those who could not easily demonstrate their status as an impacted person based on ‘rough justice’ principles. Led by Fundação Renova, the Novel System has, as at the date of this Report, settled with more than 68,000 claimants who were able to prove their damages, with approximately 66,500 claims already having been paid. On 26 June 2022, the President of the Federal Court of Appeals issued a preliminary ruling applying to impacted persons from Naque (a city in Minas Gerais) regarding the Novel System, determining that its terms do not provide a full release from damages. The amounts paid under the Novel System should therefore be considered as a ‘minimum indemnification’ granting a partial release from damages. For the same reasons, it was also determined that impacted persons should have the option to seek legal representation when settling claims under the Novel System, and that the Novel System settlement agreement does not prevent impacted persons from pursuing lawsuits in foreign jurisdictions. On 1 July 2022, the Federal Prosecutors filed a motion requesting the extension of the decision to all affected areas, as well as any settlements which have already been paid. On 6 July 2022, BHP Brasil filed its appeal and, as at the date of this Report, no decision has been made.
On 30 June 2022, the 12th
Federal Court of Belo Horizonte extended the deadline for claim applications under the Novel System from 30 June 2022 to 31 August 2022. | 2 | The Public Prosecutors’ Office includes the Federal, State of Minas Gerais and State of Espírito Santo public prosecutors’ offices. |
| 3 | The Public Defense Office includes the Federal, State of Minas Gerais and State of Espírito Santo public defense offices. |
Samarco’s judicial reorganisation
On 9 April 2021, Samarco filed for judicial reorganisation (JR) with the Second Business State Court for the Belo Horizonte District of Minas Gerais (JR Court). The JR proceeding seeks to enable Samarco to negotiate and implement an orderly restructuring of its financial indebtedness in order to establish a sustainable financial position for Samarco, among other things, to continue to rebuild its operations and meet its Fundação Renova obligations. Samarco filed for JR following multiple enforcement actions filed by some of Samarco’s creditors that threatened its operations. The JR Court granted Samarco’s JR petitionmotion on 12 April 2021 and granted a stay of the enforcement actions.
On 10 June 2021, Samarco submitted its first proposed Plan of Reorganisation (Plan) to the JR Court. Certain of Samarco’s creditors have submitted formal objections to the Plan. It is expected that
On 18 August 2021, the State Prosecutor’s Office filed an application to hold BHP Brasil and Vale responsible for Samarco’s debt. On 18 October 2021, certain creditors of Samarco filed a general meeting of creditors will be convened for creditors to vote on whether to approve, reject or modifysimilar application with the Plan.same purpose. Neither application has been decided yet.
AccordingPursuant to the list of creditors filed withproduced by Judicial Administrators appointed by the JR Court, by the Judicial Administrators (who are in charge of a first review of the list of creditors filed by Samarco), Fundação Renova’s funding obligations undertaken by Samarco areSamarco’s obligation to fund Renova is not subject to the JR, although some financialJR. Certain creditors of Samarco have objected to this position. It is expected thatchallenged the Judicial Administrators’ list of creditors. Among other things, such creditors will challenge the list of creditors filed by the Judicial Administrators, in orderare seeking to among other things, prevent Samarco from funding Fundação Renova. It is also expected that such creditors will litigatedisallow shareholders’ claims against Samarco and its shareholders over the courseimpair Samarco’s obligation to fund Renova. No final decision has been rendered on these issues yet.
Certain creditors of Samarco have also requested that the JR proceeding, particularly with respectCourt appoint an examiner and a judicial manager for Samarco. The JR Court has not ruled on that request yet.
On 18 April 2022, certain creditors of Samarco voted to reject the treatmentPlan in a General Meeting of Samarco’s Fundação Renova obligations. Such lenders have objected to the financing thatCreditors (GMC). Samarco, BHP Brasil and Vale have offeredchallenged the votes of such creditors and the JR Court has not ruled on such challenge yet.
On 18 May 2022, certain creditors of Samarco submitted an alternative plan of reorganisation (Lenders Plan), which, among other things, caps Samarco’s Renova funding obligations and contemplates a change in Samarco’s control. On the same date, the local labour unions also filed an alternative plan with the support of Samarco’s shareholders. Samarco, BHP Brasil and Vale filed objections to
Samarco on a super-priority basis, known asdebtor-in-possessionthe Lenders Plan, which are pending. No plan of reorganisation has been approved or confirmed.
funding. No BHP entity is a debtor in Samarco’s judicial reorganisationJR case. BHP Brasil is participating in Samarco’s JR proceeding in its capacities as a shareholder and creditor.creditor of Samarco.
(1) | The Public Prosecutors’ Office includes the Federal, State of Minas Gerais and State of Espírito Santo public prosecutors’ offices.
|
(2) | The Public Defense Office includes the Federal, State of Minas Gerais and State of Espírito Santo public defense offices.
|
United States Chapter 15 Casecase
On 19 April 2021, Samarco filed a petition with the U.S.US Bankruptcy Court for the Southern District of New York seeking recognition of the JR proceeding under Chapter 15 of the U.S.US Bankruptcy Code. On 13 May 2021, the U.S. bankruptcy courtUS Bankruptcy Court granted recognition of the JR proceeding as a ‘foreign main proceeding’ and accordingly stayed enforcement actions against Samarco in U.S.US territory. No BHP entity is a debtor in Samarco’s Chapter 15 case. BHP Brasil is participating in Samarco’s Chapter 15 proceeding in its capacities as a shareholder and creditor of Samarco.
Civil public actions commenced by the State Prosecutors’ Office in the state of Minas Gerais (Mariana CPA cases)
The State Prosecutors of Mariana have commenced several civil public actions (CPA) against Samarco, BHP Brasil Samarco and Vale.
On 10 December 2015, the State Prosecutors’ Office in the state of Minas Gerais filed a CPA against Samarco, BHP Brasil and Vale before the State Court in Mariana claiming indemnification (amount not specified) for moral and material damages to an unspecified group of individuals affected by the Samarco dam failure, including the payment of costs for housing and social and economic assistance (CPA Mariana I).
On 2 October 2018, the parties reached a settlement dismissing the claim, which was ratified by the Court. Under this settlement, Fundação Renova has reached more than 85100 individual agreements with impacted families in Mariana for the payment of damages.
In connection with CPA Mariana I, the State Prosecutors (Minas Gerais) started four enforcement proceedings against Samarco, BHP Brasil and ValeVale. There are seven enforcement proceedings under way seeking (i) to set a deadline for completion of resettlement of the residents of Mariana’s districts and for fines to be imposed for delays to resettlement and forresettlement; (ii) to set the final term that will allow new households to join the resettlement; (iii) payment of compensation to affected individuals for delivery of houses below standard.standard; (iv) to guarantee access to water sources for the families of the collective resettlements; (v) payment of fines for alleged delays in presenting proposals and making payments to affected individuals; and (vi) payment of compensation to impacted individuals who allege that they have not yet received compensation and a penalty for the alleged delays in making such payments.
In addition to CPA Mariana I, the State Prosecutors (Minas Gerais) commenced eightnine other CPAs in Mariana against Samarco, BHP Brasil, Vale and, in some cases, Fundação Renova. The claims presented in those CPAs are related to damages that, according to the State Prosecutors, are not covered by CPA Mariana I.
The remaining CPAs have either been settled by the parties, including BHP Brasil, or the claims to which the CPAs relate have been dismissed (though the decisions are not yet final). Fundação Renova is responsible for any pending obligations set forth in the settlement agreements relating to the CPAs.
Fundação Renova dissolution lawsuit
On 24 February 2021, the Minas Gerais State Prosecutor filed a CPA against Samarco, BHP Brasil, Vale and Fundação Renova seeking the dissolution of Fundação Renova. The plaintiffs are seeking R$10 billion (approximately US$2 billion) for moral damages and an injunction for the immediate intervention of Fundação Renova was also made, alleging the need to preserve information and documents produced by Fundação Renova to evaluate criminal and civil responsibilities. On 25 May 2021, the Superior Court of Justice granted urgent relief to suspend the lawsuit. As at the date of this Report, the Court’s decision regarding the merits remains pending.
Civil public action commenced by the State Prosecutors’ Office in the state of Espírito Santo and Minas Gerais (CPA Advertising)
On 11 May 2021, Federal and State Prosecutors (Minas Gerais and Espírito Santo) filed a CPA against Fundação Renova, Samarco, BHP Brasil, Vale and Vale,Fundação Renova, challenging Fundação Renova’s advertising expenditures. The plaintiffs requested injunctive relief for Fundação Renova to cease advertisements and stop incurring new expenses on advertising. The plaintiffs requested payment of approximately R$56 million (approximately US$11 million) to be paid as compensation to the communities and approximately R$28 million (approximately US$65 million) to be spent on execution of Fundação Renova’s socio-economic and socio-environmental programs. A ruling is still pending.
Civil public action commenced by Associations concerning the use of tanfloc for water treatment (R$120 billion Associations claim)
On 28 October 2021, Vila Lenira Residents Association, State of Espírito Santo Rural Producers and Artisans Association, Colatina Velha Neighborhood Residents Association, and United for the Progress of Palmeiras Neighborhood Association filed a lawsuit against Samarco, BHP Brasil and Vale and others, including the State of Minas Gerais, the State of Espirito Santo and the Federal Government. The plaintiffs allege that the defendants carried out a clandestine study on the citizens of the locations affected by the Fundão’s Dam Failure, using tanfloc – a tannin-based flocculant/coagulant – that is currently used for wastewater treatment applications. The plaintiffs claim that this product allegedly put the population at risk due to its alleged experimental qualities.
The plaintiffs are seeking multiple kinds of relief – material damage, moral damages, loss of profits – and that the defendants should pay for water supply in all locations where there is no water source other than the Doce River.
On 25 July 2022, Samarco, BHP Brasil and Vale presented their defences individually, as well as the State of Minas Gerais, the State of Espírito Santo and the Federal Government. The Court’s decision is still pending.
Public civil claims currently suspended
Approximately 20 of the proceedings to which BHP Brasil is a party are currently suspended due to their connection with R$20 billion Public Civil Claimclaim and R$155 billion Federal Public Prosecutors’ Office claim. There has not yet been a ruling in these cases.
The suspended proceedings include proceedings commenced by the State Prosecutors (Minas Gerais and Espírito Santo), Public Defenders (Minas Gerais and Espírito Santo), and the states of Minas Gerais and Espírito Santo against Samarco, BHP Brasil, Vale and Fundação Renova. The claims relate to environmental remediation measures, compensation for the impacts of the dam failure, including moral damages, reconstruction of properties and populations, including historical, religious, cultural, social, environmental and intangible heritages affected by the dam failure, and suspension of public water supply, among others.
Other civil proceedings in Brazil
As noted above, BHP Brasil has been named as a defendant in numerous lawsuits relating to the Samarco dam failure. In addition, government inquiries and investigations relating to the Samarco dam failure have been commenced by numerous agencies of the Brazilian Government and are ongoing, including criminal investigations by the federal and state police, and by federal prosecutors.
BHP Brasil’s potential liabilities, if any, resulting from other pending and future claims, lawsuits and enforcement actions relating to the Samarco dam failure, together with the potential cost of implementing remedies sought in the various proceedings, cannot be reliably estimated at this time and therefore a provision has not been recognised and nor has any contingent liability been quantified for these matters. Ultimately, these could have a material adverse impact on BHP’s business, competitive position, cash flows, prospects, liquidity and shareholder returns. For more information on the Samarco dam failure refer to section 1.15.OFR 8.
As at June
2021,2022, Samarco had been named as a defendant in more than
80,00057,000 small claims for moral damages in which people argue their public water service was interrupted for between five and 10 days. BHP Brasil is a
co-defendant
in more than 24,000 of these cases.
More than 270,000 people have received moral damages related to the temporary suspension of public water supply through settlements reached with Fundação Renova.The Brazilian Code of Civil Procedure provides that repetitive claims can be settled through a system known as Incident ofthe Resolution of Repetitive Demands Procedure (IRDR). Under the IRDR, a court will hear a ‘pilot case’ representative of asuch recurring claimlegal matters and the judgment in that decision will set a precedent for the resolution of similar cases in that jurisdiction. An IRDR has been established in Minas Gerais and the court in the pilot case has ruled that the mandatory parameter for resolution of claims will be the payment of R$20002,000 (approximately US$400) per individual claim for moral damages due to the suspension and quality of public water supply. That decision is pending an appealAppeals before higher courts.courts are pending judgment. Meanwhile, Samarco has reached settlement in more than 5,3009,900 individual cases.
On 20 October 2016, the Federal Prosecutors’ Office in Brazil filed criminal charges against Samarco, BHP Brasil, Vale and certain of their employees and former employees of BHP Brasil (Affected Individuals) in the Federal Court of Ponte Nova, Minas Gerais. On 3 March 2017, BHP Brasil and the Affected Individualscharged employees and former employees of BHP Brasil (Affected Individuals) filed their preliminary defences. The Federal Court granted Habeas Corpus petitions in favour of all eight of the Affected Individuals terminating the charges against those individuals. The Federal Prosecutors’ Office appealed seven of the decisions with hearings of the appeals still pending. BHP Brasil rejects outright the charges against BHP Brasil and the Affected Individuals and will defend the charges and fully support each of the Affected Individuals in their defences of the charges.
United States class action complaint – bondholders
On 14 November 2016, a putative class action complaint (Bondholder Complaint) was filed in the U.S. District Court for the Southern District of New York on behalf of purchasers of Samarco’s10-year
bond notes due 2022–2024 between 31 October 2012 and 30 November 2015. The Bondholder Complaint was initially filed against Samarco and the former Chief Executive Officer of Samarco. The Bondholder Complaint asserted claims under the U.S. federal securities laws and indicated that the plaintiff would seek certification to proceed as a class action.The Bondholder Complaint was subsequently amended to include BHP Group Limited, BHP Group Plc, BHP Brasil, Vale and officers of Samarco, including four of Vale and BHP Brasil’s nominees to the Samarco Board. On 5 April 2017, the plaintiff discontinued its claims against the individual defendants. The amount of damages sought by the putative class was unspecified.
On 7 March 2018, the District Court granted a joint motion from the remaining corporate defendants to dismiss the Bondholder Complaint. A second amended Bondholder Complaint was also dismissed by the Court on 18 June 2019. On 9 July 2019, the plaintiff filed a motion for reconsideration of that decision or for leave to file a third amended complaint. On 30 October 2019, the District Court denied the plaintiff’s motion for reconsideration and for leave to amend its complaint. On 4 March 2021, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal with prejudice and the plaintiff did not seek any further review of that decision.
Australian class action complaintclaim
BHP Group Limited is named as a defendant in a shareholder class action in the Federal Court of Australia on behalf of persons who acquired shares in BHP Group Limited on the Australian Securities Exchange or shares in BHP Group Plc (now known as BHP Group (UK) Ltd) on the London Stock Exchange and Johannesburg Stock Exchange in periods prior to the Samarco dam failure. The amount of damages sought in the class action is unspecified.
On 12 May 2020, BHP Group Limited filed an application seeking declaratory relief which, if successful, would narrow the group of claimants in the class action. BHP Group Limited was unsuccessful at first instance and on appeal to the Full Court of the Federal Court of Australia. BHP Group Limited has now sought leave to appeal the decision of the Full Court to theThe High Court of Australia.Australia heard an appeal from the Full Court’s decision on 9 August 2022 and a decision is pending.
United Kingdom group action complaintclaim
BHP Group Plc(UK) Ltd (formerly BHP Group Plc) and BHP Group Limited are named as defendants in group action claims for damages that have been filed in the courts of England. These claims have been filed on behalf of certain individuals, governments, businesses and communities in Brazil allegedly impacted by the Samarco dam failure.
On 7 August 2019, the BHP parties filed a preliminary application to strike out or stay this action on jurisdictional and other procedural grounds. That application was successful before the High Court and the action was dismissed. However, on 8 July 2022, the Court of Appeal reversed the dismissal decision and allowed the action to proceed in England. The claimants sought and were denied permissionBHP parties will now seek leave to appeal the dismissal decision.
On 29 April 2021, the claimants applied to reopen the action. The Court of Appeal heard this application on 22 June 2021 and gave judgment on 27 July 2021, allowingto the claimants to reopen the action and granting them permission to appeal the dismissal decision. The appeal is scheduled to be heard on 4-8 April 2022.Supreme Court.
4.109 Shareholder information
4.10.19.1 History and development
BHP Group Limited (formerly BHP Billiton Limited, then BHP Limited and, before that, The Broken Hill Proprietary Company Limited) was incorporated in 1885 and is registered in Australia with ABN 49 004 028 077. BHP Group Plc (formerly BHP Billiton Plc, and before that Billiton Plc) was incorporated in 1996 and is registered in England and Wales with registration number 3196209. Successive predecessor entities to BHP Group Plc have operated since 1860.
We have operated under a Dual Listed Company (DLC) structure sincefrom 29 June 2001.2001 until 31 January 2022. Under the DLC structure, the two parent companies, BHP Group Limited and BHP Group Plc, operateoperated as a single economic entity, run by a unified Board and senior executive management team. For more information on the DLC structure, refer to section 4.10.3.
On 31 January 2022, we unified our corporate structure under BHP Group Limited, which is now the sole parent company.
As at the date of this Annual Report, BHP Group Limited has a primary listing on the Australian Securities Exchange (ASX) (ticker BHP) in Australia, and BHP Group Plc has a premiumstandard listing on the UK FCA’s Official List and its ordinary shares are admitted to trading on the London Stock Exchange (LSE) (ticker BHP). BHP Group Plc also has, a secondary listing on the Johannesburg Stock Exchange (JSE) (ticker BHP) in South Africa.
In addition, BHP Group LimitedBHG) and BHP Group Plc areis listed on the New York Stock Exchange (NYSE) in the United States.
Trading on the NYSE is viain the form of American Depositary Receipts (ADRs) evidencing American Depositary Shares (ADSs), with each ADS representing two ordinary shares of BHP Group Limited or BHP Group Plc.Limited. Citibank N.A. (Citibank) is the Depositary for boththe ADS programs.program. BHP Group Limited’s ADSs have been listed for trading on the NYSE (ticker BHP) since 28 May 1987 and BHP Group Plc’s since 25 June 2003 (ticker BBL).
4.10.39.3 Organisational structure
From June 2001 to January 2022, BHP consists of BHPoperated under a Dual Listed Company structure, with two separate parent companies (BHP Group Limited and BHP Group Plc,Plc) and their respective subsidiaries operating as a single unified economic entity,entity.
On 31 January 2022, BHP unified its Dual Listed Company structure, following the completion of the DLC merger in June 2001 (the DLC merger). Forwhich BHP Group Plc became a full listsubsidiary of BHP Group Limited andLimited. BHP Group PlcLimited is now the ultimate BHP parent company of all subsidiaries referwithin the BHP Group.
Refer to Financial Statements note 28 ‘Subsidiaries’ for a list of our significant subsidiaries and to Exhibit 8.1 -– List of Subsidiaries.
On 17 August 2021, BHP announced its intention to unify its current DLC structure. For further detailsSubsidiaries for a list of the unification proposal, see section 1.5.
BHP shareholders approved the DLC merger in 2001, which was designed to place ordinary shareholders of both companies in a position where they have economic and voting interests in a single group.
The principles of the BHP DLC structure are reflected in the DLC Structure Sharing Agreement and include the following:our subsidiaries.
The two companies must operate as if they are a single unified economic entity, through Boards of Directors that comprise the same individuals and a unified senior executive management team.
The Directors of both companies will, in addition to their duties to the company concerned, have regard to the interests of the ordinary shareholders in the two companies as if the two companies were a single unified economic entity and, for that purpose, the Directors of each company take into account in the exercise of their powers the interests of the shareholders of the other.
Certain DLC equalisation principles must be observed. These are designed to ensure that for so long as the Equalisation Ratio between a BHP Group Limited ordinary share and a BHP Group Plc ordinary share is 1:1, the economic and voting interests resulting from holding one BHP Group Limited ordinary share and one BHP Group Plc ordinary share are, so far as practicable, equivalent. For more information, refer tosub-section
‘Equalisation of economic and voting rights’ below.Australian Foreign Investment Review Board conditions
The Treasurer of Australia approved the DLC merger subject to certain conditions, the effect of which was to require that, among other things, BHP Group Limited continues to:
be an Australian company, which is headquartered in Australia
ultimately manage and control the companies that conducted the businesses that were conducted by its subsidiaries at the time of the DLC merger for as long as those businesses form part of BHP
The conditions also require the global headquarters of BHP to be in Australia.
The conditions have effect indefinitely, subject to amendment of the Australian Foreign Acquisitions and Takeovers Act 1975 (FATA) or any revocation or amendment by the Treasurer of Australia. If BHP Group Limited no longer wishes to comply with these conditions, it must obtain the prior approval of the Treasurer. Failure to comply with the conditions results in substantial penalties under the FATA.
Equalisation of economic and voting rights
The economic and voting interests attached to each BHP Group Limited ordinary share relative to each BHP Group Plc ordinary share are determined by a ratio known as the Equalisation Ratio.
The Equalisation Ratio is currently 1:1, meaning one BHP Group Limited ordinary share currently has the same economic and voting interests as one BHP Group Plc ordinary share.
The Equalisation Ratio governs the proportions in which dividends and capital distributions are paid on the ordinary shares in each company relative to the other. Given the current Equalisation Ratio of 1:1, the amount of any cash dividend paid by BHP Group Limited on each BHP Group Limited ordinary share must be matched by an equivalent cash dividend by BHP Group Plc on each BHP Group Plc ordinary share, and vice versa. If one company is prohibited by applicable law or is otherwise unable to pay a matching dividend, the DLC Structure Sharing Agreement requires that BHP Group Limited and BHP Group Plc will, as far as practicable, enter into such transactions with each other as their Boards agree to be necessary or desirable to enable both companies to pay matching dividends at the same time. These transactions may include BHP Group Limited or BHP Group Plc making a payment to the other company or paying a dividend on the DLC Dividend Share held by the other company (or a subsidiary of it). The DLC Dividend Share may be used to ensure that the need to trigger the matching dividend mechanism does not arise. BHP Group Limited issued a DLC Dividend Share on 23 February 2016. No DLC Dividend Share has been issued by BHP Group Plc.
For more information on the DLC Dividend Share, refer to ‘DLC Dividend Share’sub-section
below and section 4.10.5.a distribution or action affecting the amount or nature of issued share capital is proposed by one of BHP Group Limited and BHP Group Plc and that distribution or action would result in the ratio of economic returns on, or voting rights in relation to Joint Electorate Actions (see below) of, a BHP Group Limited ordinary share to a BHP Group Plc ordinary share not being the same, or would benefit the holders of ordinary shares in one company relative to the holders of ordinary shares in the other company
no ‘matching action’ is taken by the other company. A matching action is a distribution or action affecting the amount or nature of issued share capital in relation to the holders of ordinary shares in the other company, which ensures that the economic and voting rights of a BHP Group Limited ordinary share and BHP Group Plc ordinary share are maintained in proportion to the Equalisation Ratio
For example, an adjustment would be required if there were to be a capital issue or distribution by one company to its ordinary shareholders that does not give equivalent value (before tax) on a per share basis to the ordinary shareholders of the other company and no matching action was undertaken. Since the establishment of the DLC structure in 2001, no adjustment to the Equalisation Ratio has ever been made.
Each of BHP Group Limited and BHP Group Plc is authorised to issue a DLC Dividend Share to the other company or a wholly owned subsidiary of it. In effect, only that other company or a wholly owned subsidiary of it may be the holder of the share. The share is redeemable.
The holder of the share is entitled to be paid such dividends as the Board may decide to pay on that DLC Dividend Share provided that:
the amount of the dividend does not exceed the cap mentioned below
the Board of the issuing company in good faith considers paying the dividend to be in furtherance of any of the DLC principles, including the principle of BHP Group Limited and BHP Group Plc operating as a single unified economic entity
The amounts that may be paid as dividends on a DLC Dividend Share are capped. Broadly speaking, the cap is the total amount of the preceding ordinary cash dividend (whether interim or final) paid on BHP Group Limited ordinary shares or BHP Group Plc ordinary shares, whichever is greater. The cap will not apply to any dividend paid on a DLC Dividend Share if the proceeds of that dividend are to be used to pay a special cash dividend on ordinary shares.
A DLC Dividend Share otherwise has limited rights and does not carry a right to vote. DLC Dividend Shares cannot be used to transfer funds outside of BHP as the terms of issue contain structural safeguards to ensure that a DLC Dividend Share may only be used to pay dividends within the Group. For more information on the rights attaching to and terms of DLC Dividend Shares, refer to section 4.10.5, the Constitution of BHP Group Limited and the Articles of Association of BHP Group Plc.
Under the terms of the DLC agreements, BHP Group Limited and BHP Group Plc have implemented special voting arrangements so that the ordinary shareholders of both companies vote together as a single decision-making body on matters that affect the ordinary shareholders of each company in similar ways. These are referred to as Joint Electorate Actions. For so long as the Equalisation Ratio remains 1:1, each BHP Group Limited ordinary share will effectively have the same voting rights as each BHP Group Plc ordinary share on Joint Electorate Actions.
A Joint Electorate Action requires approval by ordinary resolution (or special resolution if required by statute, regulation, applicable listing rules or other applicable requirements) of BHP Group Limited and BHP Group Plc. In the case of BHP Group Limited, both the BHP Group Limited ordinary shareholders and the holder of the BHP Group Limited Special Voting Share vote as a single class and, in the case of BHP Group Plc, the BHP Group Plc ordinary shareholders and the holder of the BHP Group Plc Special Voting Share vote as a single class.
Matters on which ordinary shareholders of BHP Group Limited may have divergent interests from the ordinary shareholders of BHP Group Plc are referred to as Class Rights Actions. The company wishing to carry out the Class Rights Action requires the prior approval of the ordinary shareholders in the other company voting separately and, where appropriate, the approval of its own ordinary shareholders voting separately. Depending on the type of Class Rights Action undertaken, the approval required is either an ordinary or special resolution of the relevant company.
The Joint Electorate Action and Class Rights Action voting arrangements are secured through the constitutional documents of the two companies, the DLC Structure Sharing Agreement, the BHP Special Voting Shares Deed and rights attaching to a specially created Special Voting Share issued by each company and held in each case by a special voting company. The shares in the special voting companies are held legally and beneficially by Law Debenture Trust Corporation Plc.
BHP Group Limited and BHP Group Plc have each executed a Deed Poll Guarantee in favour of the creditors of the other company. Under the Deed Poll Guarantees, each company has guaranteed certain contractual obligations of the other company. This means that creditors entitled to the benefit of the BHP Group Limited Deed Poll Guarantee and the BHP Group Plc Deed Poll Guarantee will, to the extent possible, be placed in the same position as if the relevant debts were owed by both BHP Group Limited and BHP Group Plc on a combined basis.
Restrictions on takeovers of one company only
The BHP Group Limited Constitution and the BHP Group Plc Articles of Association have been drafted to ensure that, except with the consent of the Board, a person cannot gain control of one company without having made an equivalent offer to the ordinary shareholders of both companies on equivalent terms. Sanctions for breach of these provisions would include withholding of dividends, voting restrictions and the compulsory divestment of shares to the extent a shareholder and its associates exceed the relevant threshold.
4.10.4 Material contracts
BHP Group Limited (then known as BHP Limited) and BHP Group Plc (then known as Billiton Plc) merged by way of a DLC structure on 29 June 2001. To effect the DLC structure, BHP Limited and Billiton Plc (as they were then known) entered into the following contractual agreements:
BHP Billiton DLC Structure Sharing Agreement
BHP Billiton Special Voting Shares Deed
BHP Billiton Limited Deed Poll Guarantee
BHP Billiton Plc Deed Poll Guarantee
For information on the effect of each of these agreements, refer to section 4.10.3.
On 2 March 2016, BHP Brasil together with Vale and Samarco, entered into a Framework Agreement with the Federal Government of Brazil, states of Espírito Santo and Minas Gerais and certain other authorities to establish a foundation (Fundação Renova) that will develop and execute environmental and socio-economic programs to remediate and provide compensation for damage caused by the Samarco dam failure. For a description of the terms of the Framework Agreement, refer to section 4.9.
This section sets out a summary of the Constitution of BHP Group LimitedLimited’s Constitution, as well as other related arrangements under applicable laws and the Articles of Association of BHP Group Plc. Where the term ‘BHP’ is used in this section, it can mean either BHP Group Limited or BHP Group Plc.regulations.
Provisions of the Constitution of BHP Group Limited and the Articles of Association of BHP Group Plc can be amended only where such amendment is approved by special resolution. A ‘special resolution’ is a resolution either:
that is passed by approval as a Class Rights Action, where the amendment results in a change to an ‘Entrenched Provision’, or
otherwise, as a Joint Electorate Action
In 2015, shareholders approved a number of amendments to our constitutional documents to amend the terms75 per cent (i.e. at least three quarters) of the Equalisation Shares (which were renamed as DLC Dividend Shares) andvotes cast by BHP shareholders entitled to facilitatevote being in favour of the more streamlined conduct of simultaneous general meetings.resolution.
For a description of Joint Electorate Actions and Class Rights Actions, refer to ‘DLC structure’ in section 4.10.3.
The Board may exercise all powers of BHP, other than those that are reserved for BHP shareholders to exercise in a general meeting.
Power to issue securities
Under the Constitution, and Articles of Association, the Board of Directors has the power to issue any BHP shares or other securities (including redeemable shares) with preferred, deferred or other special rights, obligations or restrictions. The Board may issue shares on any terms it considers appropriate, provided that:
the issue does not affect any special rights of shareholders
if required, the issue is approved by shareholders
if the issue is of a class other than ordinary shares, the rights attaching to the class are expressed at the date of issue
Restrictions on voting by Directors
A Director may not vote in respect of any contract or arrangement or any other proposal in which they have a material personal interest except in certain prescribed circumstances, including (subject to applicable laws) where the material personal interest:
arises because the Director is a shareholder of BHP and is held in common with the other shareholders of BHP
arises in relation to the Director’s remuneration as a Director of BHP
relates to a contract BHP is proposing to enter into that is subject to approval by the shareholders and will not impose any obligation on BHP if it is not approved by the shareholders
arises merely because the Director is a guarantor or has given an indemnity or security for all or part of a loan, or proposed loan, to BHP
arises merely because the Director has a right of subrogation in relation to a guarantee or indemnity referred to above
relates to a contract that insures, or would insure, the Director against liabilities the Director incurs as an officer of BHP, but only if the contract does not make BHP or a related body corporate the insurer
relates to any payment by BHP or a related body corporate in respect of an indemnity permitted by law, or any contract relating to such an indemnity, or
is in a contract, or proposed contract with, or for the benefit of, or on behalf of, a related body corporate and arises merely because the Director is a director of a related body corporate
If a Director has a material personal interest and is not entitled to vote on a proposal, they will not be counted in the quorum for any vote on a resolution concerning the material personal interest.
In addition, under the UK Companies Act 2006, a Director has a duty to avoid conflicts of interest between their interests and the interests of the company. The duty is not breached if, among other things, the conflict of interest is authorised bynon-interested
Directors. The Articles of Association of BHP Group Plc enable the Board to authorise a matter that might otherwise involve a Director breaching their duty to avoid conflicts of interest. An interested Director may not vote or be counted towards a quorum for a resolution authorising a conflict of interest. Where the Board authorises a conflict of interest, the Board may prohibit the relevant Director from voting on any matter relating to the conflict. The Board has adopted procedures to manage these voting restrictions.Any Director may lend money to BHP at interest with or without security or may, for a commission or profit, guarantee the repayment of any money borrowed by BHP and underwrite or guarantee the subscription of shares or securities of BHP or of any corporation in which BHP may be interested without being disqualified as a Director and without being liable to account to BHP for any commission or profit.
Appointment and retirement of Directors
The Constitution and Articles of Association provideprovides that a person may be appointed as a Director of BHP by the existing Directors of BHP or may be elected by the shareholders in a general meeting.
Any person appointed as a Director of BHP by the existing Directors will hold office only until the next general meeting that includes an election of Directors.
A person may be nominated by shareholders as a Director of BHP if:
a shareholder provides a valid written notice of the nominationnomination; and
the person nominated by the shareholder satisfies candidature for the office and consents in writing to his or her nomination as a Director,
in each case,and the nomination is provided at least 40 business days before the earlier of the date of the general meeting of BHP Group Plc and the corresponding general meeting of BHP Group Limited.meeting. The person nominated as a Director may be elected to the Board by ordinary resolution passed in a general meeting.
Under the Articles of Association, if a person is validly nominated for election as a Director at a general meeting of BHP Group Limited, the Directors of BHP Group Plc must nominate that person as a Director at the corresponding general meeting of BHP Group Plc. An equivalent requirement is included in the Constitution, which requires any person validly nominated for election as a Director of BHP Group Plc to be nominated as a Director of BHP Group Limited.
The Board has a policy
consistent with the UK Corporate Governance Code under which all
Non-executive Directors must, if they wish to remain on the Board, seek
re-election
by shareholders annually. This policy took effect from the 2011 Annual General Meetings (AGMs) and replaced the previous system that required
Non-executive Directors to submit themselves to shareholders for
re-election
at least every three years.
A Director may be removed by BHP in accordance with applicable law and must vacate his or her office as a Director in certain circumstances set out in the Constitution and Articles of Association.Constitution. There is no requirement for a Director to retire on reaching a certain age.
Rights attaching to shares
Under English law, dividends on shares may only be paid out of profits available for distribution. Under Australian law, dividends on shares may be paid only if the company’s assets exceed its liabilities immediately before the dividend is determined and the excess is sufficient for payment of the dividend, the payment of the dividend is fair and reasonable to the company’s shareholders as a whole and the payment of the dividend does not materially prejudice the company’s ability to pay its creditors.
The Constitution and Articles of Association provideprovides that payment of any dividend may be made in any manner, by any means and in any currency determined by the Board.
All unclaimed dividends may be invested or otherwise used by the Board for the benefit of whichever of BHP Group Limited or BHP Group Plc determined that dividend, until claimed or in the case of BHP Group Limited, otherwise disposed of according to law. BHP Group Limited is governed by the Victorian unclaimed monies legislation, which requires BHP Group Limited to pay to the State Revenue Office any unclaimed dividend payments of A$20 or more that have remained unclaimed for over 12 months.
In the case of BHP Group Plc, any dividend unclaimed after a period of 12 years from the date the dividend was determined or became due for payment will be forfeited and returned to BHP Group Plc.
Generally, matters considered by shareholders at an AGM of BHP Group Limited or BHP Group Plc constitute Joint Electorate Actions or Class Rights Actions and must be decided on a poll and in the manner described under the headings ‘Joint Electorate Actions’ and ‘Class Rights Actions’ in ‘DLC structure’ in section 4.10.3.
This means that, in practice, most items of business at AGMs are decided by way of a poll even though the Constitution and Articles of Association generally permit voting to be conducted by a show of hands in the first instance.
In addition, at any general meeting, a resolution, other than a procedural resolution, put to the vote of the meeting on which the holder of the relevant BHP Special Voting Share is entitled to vote must be decided on a poll.
For the purposes of determining which shareholders are entitled to attend or vote at a meeting of BHP Group Plc or BHP Group Limited, and how many votes such shareholder may cast, the Notice of Meeting will specify when a shareholder must be entered on the Register of Shareholders in order to have the right to attend or vote at the meeting. The specified time must be not more than 48 hours before the time of the meeting.
Shareholders who wish to appoint a proxy to attend, vote or speak at a meeting of BHP Group Plc or BHP Group Limited (as appropriate) on their behalf must deposit the relevant form appointing a proxy so that it is received by that company not less than 48 hours before the time of the meeting.
Rights to share in BHP Group Limited’s profits
The rights attached to the ordinary shares of BHP Group Limited, as regards the participation in the profits available for distribution that the Board determines to distribute, are as follows:
The holders of any preference shares will be entitled, in priority to any payment of dividend to the holders of any other class of shares, to a preferred right to participate as regards dividends up to but not beyond a specified amount in distribution.
Subject to the special rights attaching to any preference shares, but in priority to any payment of dividends on all other classes of shares, the holder of the DLC Dividend Share (if any) will be entitled to be paid suchnon-cumulative
dividends as the Board may, subject to the cap referred to in ‘DLC structure’ in section 4.10.3 and the DLC Dividend Share being held by BHP Group Plc or a wholly owned member of its group, decide to pay on that DLC Dividend Share.Any surplus remaining after payment of the distributions above will be payable to the holders of BHP Group Limited ordinary shares and the BHP Group Limited Special Voting Share in equal amounts per share.
Rights to share in BHP Group Plc’s profits
The rights attached to the ordinary shares of BHP Group Plc, in relation to the participation in the profits available for distribution that the Board determines to distribute, are as follows:
The holders of the cumulative preference shares will be entitled, in priority to any payment of dividend to the holders of any other class of shares, to be paid a fixed cumulative preferential dividend (Preferential Dividend) at a rate of 5.5 per cent per annum, to be paid annually in arrears on 31 July in each year or, if any such date will be a Saturday, Sunday or public holiday in England, on the first business day following such date in each year. Payments of Preferential Dividends will be made to holders on the register at any date selected by the Directors up to 42 days prior to the relevant fixed dividend date.
Subject to the rights attaching to the cumulative preference shares, but in priority to any payment of dividends on all other classes of shares, the holder of the BHP Group Plc Special Voting Share will be entitled to be paid a fixed dividend of US$0.01 per annum, payable annually in arrears on 31 July.
Subject to the rights attaching to the cumulative preference shares and the BHP Group Plc Special Voting Share, but in priority to any payment of dividends on all other classes of shares, the holder of the DLC Dividend Share will be entitled to be paid suchnon-cumulative
dividends as the Board may, subject to the cap referred to in ‘DLC structure’ in section 4.10.3 and the DLC Dividend Share being held by BHP Group Limited or a wholly owned member of its group, decide to pay on that DLC Dividend Share.Any surplus remaining after payment of the distributions above will be payable to the holders of the BHP Group Plc ordinary shares in equal amounts per BHP Group Plc ordinary share.
As set out in ‘DLC structure’ in section 4.10.3, each of BHP Group Limited and BHP Group Plc is authorised to issue a DLC Dividend Share to the other company or a wholly owned subsidiary of it.
The dividend rights attaching to a DLC Dividend Share are described above and in ‘DLC structure’ in section 4.10.3. The DLC Dividend Share issued by BHP Group Limited (BHP Group Limited DLC Dividend Share) and the DLC Dividend Share that may be issued by BHP Group Plc (BHP Group Plc DLC Dividend Share) have no voting rights and, as set out in ‘Rights on return of assets on liquidation’ below, very limited rights to a return of capital on awinding-up.
A DLC Dividend Share may be redeemed at any time, and must be redeemed if a person other than:in the case of the BHP Group Limited DLC Dividend Share, BHP Group Plc or a wholly owned member of its group
in the case of the BHP Group Plc DLC Dividend Share, BHP Group Limited or a wholly owned member of its group
becomes the beneficial owner of the DLC Dividend Share.
Rights on return of assets on liquidation
Under the DLC structure, there are special provisions designed to ensure that, as far as practicable, the holders of ordinary shares in BHP Group Limited and holders of ordinary shares in BHP Group Plc are treated equitably having regard to the Equalisation Ratio. These special provisions would apply in the event of an insolvency of either or both companies.
On a return of assets on liquidation of BHP Group Limited, the assets of BHP Group Limited remaining available for distribution among shareholders after the payment of all prior ranking amounts owed to all creditors and holders of preference shares, and to all prior ranking statutory entitlements, are to be applied subject to the special provisions referred to above in paying to the holders of the BHP Group Limited Special Voting Share and the DLC Dividend Share of an amount of up to A$2.00 on each such share, on an equal priority with any amount paid to the holders of BHP Group Limited ordinary shares, and any surplus remaining is to be applied in making payments solely to the holders of BHP Group Limited ordinary shares in accordance with their entitlements.
On a return of assets on liquidation of BHP Group Plc, subject to the payment of all amounts payable under the special provisions referred to earlier, prior ranking amounts owed to the creditors of BHP Group Plc and to all prior ranking statutory entitlements, the assets of BHP Group Plc to be distributed on awinding-up
are to be distributed to the holders of shares in the following order of priority:To the holders of the cumulative preference shares, the repayment of a sum equal to the nominal capital paid up or credited as paid up on the cumulative preference shares held by them and any accrued Preferential Dividend, whether or not such dividend has been earned or declared, calculated up to the date of commencement of thewinding-up.
To the holders of the BHP Group Plc ordinary shares and to the holders of the BHP Group Plc Special Voting Share and the DLC Dividend Share, the payment out of surplus, if any, remaining after the distribution above of an equal amount for each BHP Group Plc ordinary share, the BHP Group Plc Special Voting Share and the DLC Dividend Share subject to a maximum in the case of the BHP Group Plc Special Voting Share and the DLC Dividend Share of the nominal capital paid up on such shares.
Redemption of preference shares
If BHP Group Limited at any time proposes to create and issue any preference shares, the terms of the preference shares may give either or both of BHP Group Limited and the holder the right to redeem the preference shares.
The preference shares terms may also give the holder the right to convert the preference shares into ordinary shares.
Under the Constitution, the preference shares must give the holders:
the right (on redemption and on a
winding-up)
to payment in cash in priority to any other class of shares of (i) the amount paid or agreed to be considered as paid on each of the preference shares; and (ii) the amount, if any, equal to the aggregate of any dividends accrued but unpaid and of any arrears of
dividendsdividends; andthe right, in priority to any payment of dividend on any other class of shares, to the preferential dividenddividend.
There is no equivalent provision in the Articles of Association of BHP Group Plc, although as noted above in ‘Power to issue securities’, BHP can issue preference shares that are subject to a right of redemption on terms the Board considers appropriate.
Subject to the terms on which any shares may have been issued, the Board may make calls on the shareholders in respect of all monies unpaid on their shares. BHP has a lien on every partly paid share for all amounts payable in respect of that share. Each shareholder is liable to pay the amount of each call in the manner, at the time and at the place specified by the Board (subject to receiving at least 14 days’ notice specifying the time and place for payment). A call is considered to have been made at the time when the resolution of the Board authorising the call was passed.
Subject to relevant law, the Directors may exercise all powers of BHP to borrow money, and to mortgage or charge its undertaking, property, assets (both present and future) and all uncalled capital or any part or parts thereof and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of BHP or of any third party.
Variation of class rights
Rights attached to any class of shares issued by either BHP Group Limited or BHP Group Plc can only be varied (whether as a Joint Electorate Action or a Class Rights Action) where such variation is approved by:
the company that issued the relevant shares, as a special resolutionresolution; and
the holders of the issued shares of the affected class, either by a special resolution passed at a separate meeting of the holders of the issued shares of the class affected, or with the written consent of members with at least 75 per cent of the votes of that classclass.
The AGMs provideAnnual General Meeting (AGM) provides a forum to facilitate the sharing of shareholder views and areis an important eventsevent in the BHP calendar. These meetings provideThe meeting provides an update for shareholders on our performance and offeroffers an opportunity for shareholders to ask questions and vote. To vote at an AGM, a shareholder must be a registered holder of BHP Group Limited shares (in the case of the AGM of BHP Group Limited) or a registered holder of BHP Group Plc shares (in the case of the AGM of BHP Group Plc) at a designated time before the relevant AGM.
Key members of management, including the CEOChief Executive Officer (CEO) and CFO,Chief Financial Officer, are present and available to answer questions. The External Auditor will also be available to answer questions.
Proceedings at shareholder meetings are webcast live from our website. Copies of the speeches delivered by the Chair and CEO to the AGMsAGM are released to the relevant stock exchanges and posted on our website. The outcome of voting on the items of business are released to the relevant stock exchanges and posted on our website as soon as they are available following completion of the BHP Group Limited AGM and finalisation of the polls.
More information on our AGMs is available at bhp.com/meetings.
Conditions governing general meetings
The Board may, and must on requisition in accordance with applicable laws, call a general meeting of the shareholders at the time and place or places and in the manner determined by the Board. No shareholder may convene a general meeting of BHP except where entitled under law to do so. Any Director may convene a general meeting whenever the Director thinks fit. General meetings can also be adjourned or cancelled, postponed or adjourned,postponed where permitted by law or the Constitution or Articles of Association.Constitution. Notice of a general meeting must be given to each shareholder entitled to vote at the meeting and such notice of meeting must be given in the form and manner in which the Board thinks fit subject to any applicable law. Five shareholders of the relevant company present in person or by proxy constitute a quorum for a meeting. A shareholder who is entitled to attend and cast a vote at a general meeting of BHP may appoint a person as a proxy to attend and vote for the shareholder in accordance with applicable law. All provisions relating to general meetings apply with any necessary modifications to any special meeting of any class of shareholders that may be held.
Limitations of rights to own securities
There are no limitations under the Constitution or the Articles of Association restricting the right to own BHP shares or other securities other than restrictions that reflect the takeovers codes under relevant Australian and English law.securities. In addition, the Australian Foreign Acquisitions and Takeovers Act 1975 imposes a number of conditions that restrict foreign ownership of Australian-based companies.
For information on share control limits imposed by the Constitution and the Articles of Association, as well as relevant laws refer to sections 4.10.9 and ‘DLC structure’ in section 4.10.3.Additional information 9.8.
Documents filed by BHP Group Limited on the Australian Securities Exchange (ASX) are available at asx.com.au and documents filed on the London Stock Exchange (LSE) by BHP Group Plc are available at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. Documents filed on the ASX or on the LSE are not incorporated by reference into this Annual Report. The documents referred to in this Annual Report as being available on our website, bhp.com, are not incorporated by reference and do not form part of this Annual Report.
BHP Group Limited and BHP Group Plc both filefiles Annual Reports and other reports and information with the US Securities and Exchange Commission (SEC). These filings are available on the SEC website at sec.gov.
4.10.69.5 Share ownership
The details of the share capital for both BHP Group Limited and BHP Group Plc are presented in Financial Statements note 16 ‘Share capital’ in section 3 and remain current as at 204 August 2021.2022.
The table in ‘Ordinary share holdings and transactions’ in section 2.2.3Remuneration Report 5.4 and the information set out ‘Keyin ‘Executive Key Management Personnel’ in section 2.3.5Directors’ Report 4 present information pertaining to the shares in BHP Group Limited and BHP Group Plc held by Directors and members of the Key Management Personnel (KMP).Personnel.
Neither BHP Group Limited nor BHP Group Plc is not directly or indirectly controlled by another corporation or by any government. Other than as described in ‘DLC Structure’ in section 4.10.3, noNo shareholder possesses voting rights that differ from those attaching to all of BHP Group Limited and BHP Group Plc’sLimited’s voting securities.
Substantial shareholders in BHP Group Limited
The following table shows holdings of 5 per cent or more of voting rights in BHP Group Limited’s shares as notified to BHP Group Limited under the Australian Corporations Act 2001, Section 671B as at 30 June
2021.2022.(1)1
| | | Identity of
person or group | | | | | | % of total voting rights (2) | |
| | | | | | | |
| | Identity of
person or group | | | | | | | | | | | | | | Identity of person or group | | | | | | | |
| |
| | 21 November 2019 | | 18 November 2019 | | | 176,981,268 | | | 6.00 | | 6.00 | | 5.46 | | Citigroup Global Markets Australia Pty Limited | | 26 April 2022 | | 21 April 2022 | | | 318,921,856.17 | | | | 6.2999 | % |
| | Vanguard Group | | 18 June 2020 | | 19 March 2020 | | | 177,088,930 | | | 6.00 | | 6.01 | | – | | BlackRock Group | | 3 February 2022 | | 31 January 2022 | | | 351,161,439 | | | | 6.93 | % |
| | | First Sentier Investors Holdings Pty Limited | | 25 January 2022 | | 21 January 2022 | | | 148,776,229 | | | | 5.04 | % |
(1)1 | No changes inBetween 1 July 2022 and 4 August 2022, BHP received a substantial shareholder notice from State Street Corporation on 22 July 2022, which included the holdingsfollowing information: date of 5 per cent or morechange 20 July 2022, the number of thesecurities owned 261,205,833 and percentage of voting rights in BHP Group Limited’s shares have been notified to BHP Group Limited between 1 July 2021 and 20 August 2021.5.16 per cent.
|
(2)2 | The percentages quoted are based on the total voting rights conferred by ordinary sharesprovided in BHP Group Limited as at 20 August 2021 of 2,950,251,394.the last substantial shareholders notice. |
Substantial shareholders in BHP Group Plc
The following table shows holdings of 3 per cent or more of voting rights conferred by BHP Group Plc’s ordinary shares as notified to BHP Group Plc under the UK Disclosure and Transparency Rule 5 as at 30 June 2021.(1)
| | | | | | | | | | | | | | | | |
| | Identity of
person or group | | | | | | | % of total voting rights (2) |
| | | | | | | | | | | | | |
| | Aberdeen Asset Managers Limited | | 8 October 2015 | | 7 October 2015 | | | 103,108,283 | | | 4.88 | | 4.88 | | 4.88 |
| | BlackRock, Inc. | | 3 December 2009 | | 1 December 2009 | | | 213,014,043 | | | <10.00 | | <10.00 | | <10.00 |
| | Elliott International, L.P. (4) | | 4 January 2020 | | 1 January 2020 | | | 106,940,721 | | | 5.06 | | 5.06 | | 5.45 |
| | Norges Bank (5) | | 21 July 2020 | | 20 July 2020 | | | 105,910,183 | | | 5.01 | | 5.01 | | 3.07 |
(1) | No changes in the holdings of 3 per cent or more of voting rights in BHP Group Plc’s shares have been notified to BHP Group Plc between 1 July 2021 and 20 August 2021.
|
(2) | The percentages quoted are based on the total voting rights conferred by ordinary shares in BHP Group Plc as at 20 August 2021 of 2,112,071,796.
|
(3) | TheTR-1
notification of major holdings form dated 1 December 2009 showed, as at that date, an interest in 213,014,043 shares which amounted to 9.65 per cent of the BHP Group Plc issued share capital. Changes in the share capital of BHP Group Plc since the TR1 was received on 3 December 2009, including certain sharebuy-backs
conducted by BHP Group Plc, indicated a formulaic holding above 10 per cent; however, given no revised TR1 has been received by BHP Group Plc, the BlackRock holding is considered to be below 10 per cent. |
(4) | Holding is made up of 4.66 per cent ordinary shares and 0.41 per cent by financial instruments.
|
(5) | Holding is made up of 5.01 per cent ordinary shares and 0.001 per cent by financial instruments.
|
Twenty largest shareholders as at
204 August
20212022 (as named on the Register of Shareholders)
(1)1
| | | | Number of fully
paid shares | | | | | |
| | | | |
| 1. | | HSBC Custody Nominees (Australia) Limited | | 645,004,218 | | | 21.86 | | | HSBC Custody Nominees (Australia) Limited 2 | | | 1,308,389,176 | | | | 25.85 | |
| 2. | | J P Morgan Nominees Australia Pty Limited | | 469,192,067 | | | 15.90 | | | J P Morgan Nominees Australia Pty Limited | | | 808,044,953 | | | | 15.96 | |
| 3. | | Citicorp Nominees Pty Limited <Citibank NY ADR DEP A/C> | | 227,232,926 | | | 7.70 | | | Computershare Clearing Pty Ltd <CCNL DI A/C> 3 | | | 377,361,065 | | | | 7.45 | |
| 4. | | Citicorp Nominees Pty Ltd | | 133,872,944 | | | 4.54 | | | Citicorp Nominees Pty Ltd | | | 345,389,241 | | | | 6.82 | |
| 5. | | National Nominees Limited | | 95,294,905 | | | 3.23 | | | Citicorp Nominees Pty Limited <Citibank NY ADR Dep A/C> | | | 287,052,215 | | | | 5.67 | |
| 6. | | BNP Paribas Nominees Pty Ltd <Agency Lending DRP A/C> | | 53,391,864 | | | 1.81 | | | South Africa Control A/C\C 4 | | | 215,543,062 | | | | 4.26 | |
| 7. | | BNP Paribas Noms Pty Ltd <DRP> | | 49,862,404 | | | 1.69 | | | BNP Paribas Noms Pty Ltd <Drp> | | | 140,537,183 | | | | 2.78 | |
| 8. | | Citicorp Nominees Pty Limited <Colonial First State INV A/C> | | 29,303,581 | | | 0.99 | | | National Nominees Limited | | | 133,886,307 | | | | 2.64 | |
| 9. | | BNP Paribas Nominees PTY Ltd Six Sis Ltd <DRP A/C> | | 26,792,321 | | | 0.91 | | | BNP Paribas Nominees Pty Ltd <Agency Lending Drp A/C> | | | 61,711,472 | | | | 1.22 | |
| 10. | | HSBC Custody Nominees (Australia) Limited <Nt-Comnwlth Super Corp A/C> | | 21,100,336 | | | 0.72 | | | Citicorp Nominees Pty Limited <Colonial First State Inv A/C> | | | 41,973,139 | | | | 0.83 | |
| 11. | | Computershare Nominees CI Ltd <ASX Shareplus Control A/C> | | 16,974,417 | | | 0.58 | | | HSBC Custody Nominees (Australia) Limited <Nt-Comnwlth Super Corp A/C> | | | 32,952,696 | | | | 0.65 | |
| 12. | | Australian Foundation Investment Company Limited | | 13,413,159 | | | 0.45 | | | BNP Paribas Nominees Pty Ltd ACF Clearstream | | | 21,016,512 | | | | 0.42 | |
| 13. | | HSBC Custody Nominees (Australia) Limited <Euroclear Bank SA NV A/C> | | 12,599,528 | | | 0.43 | | | Computershare Nominees CI Ltd <ASX Shareplus Control A/C> | | | 19,149,708 | | | | 0.38 | |
| 14. | | Netwealth Investments Limited <Wrap Services A/C> | | 9,723,904 | | | 0.33 | | | Australian Foundation Investment Company Limited | | | 13,413,159 | | | | 0.26 | |
| 15. | | BNP Paribas Nominees Pty Ltd ACF Clearstream | | 8,859,295 | | | 0.30 | | | Netwealth Investments Limited <Wrap Services A/C> | | | 12,887,342 | | | | 0.25 | |
| 16. | | Argo Investments Limited | | 7,618,304 | | | 0.26 | | | BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd <DRP A/C> | | | 10,288,935 | | | | 0.20 | |
| 17. | | CS Third Nominees Pty Limited <HSBC Cust Nom AU Ltd 13 A/C> | | 6,991,188 | | | 0.24 | | | | | | 8,968,304 | | | | 0.18 | |
| 18. | | BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd <DRP A/C> | | 6,466,956 | | | 0.22 | | | HSBC Custody Nominees (Australia) Limited 2 | | | 7,379,822 | | | | 0.15 | |
| 19. | | Solium Nominees (Australia) Pty Ltd <VSA A/C> | | 6,344,025 | | | 0.22 | | | HSBC Custody Nominees (Australia) Limited <Euroclear Bank SA NV A/C> | | | 6,927,263 | | | | 0.14 | |
| 20. | | Milton Corporation Limited | | 4,854,921 | | | 0.16 | | | Solium Nominees (Australia) Pty Ltd <VSA A/C> | | | 5,574,376 | | | | 0.11 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | Number of fully
paid shares | | | | |
| 1. | | PLC Nominees (Proprietary) Limited (2) | | 271,064,311 | | | 12.83 | | |
| 2. | | National City Nominees Limited | | 121,100,203 | | | 5.73 | | |
| 3. | | State Street Nominees Limited | | 108,021,608 | | | 5.11 | | |
| 4. | | Vidacos Nominees Limited <13559> | | 103,135,721 | | | 4.88 | | |
| 5. | | Chase Nominees Limited <Usresld> | | 91,777,141 | | | 4.35 | | |
| 6. | | The Bank Of New York (Nominees) | | 67,444,587 | | | 3.19 | | |
| 7. | | State Street Nominees Limited | | 50,880,990 | | | 2.41 | | |
| 8. | | Government Employees Pension Fund-Public Investment Corporation | | 40,389,304 | | | 1.91 | | |
| 9. | | Nortrust Nominees Limited | | 39,359,904 | | | 1.86 | | |
| 10. | | State Street Nominees Limited | | 35,523,641 | | | 1.68 | | |
| 11. | | Chase Nominees Limited <Bbhlend> | | 29,919,629 | | | 1.42 | | |
| 12. | | Hanover Nominees Limited <Sogcs> | | 29,263,154 | | | 1.39 | | |
| 13. | | Hanover Nominees Limited <Ubs03> | | 28,040,186 | | | 1.33 | | |
| 14. | | Chase Nominees Limited | | 27,621,622 | | | 1.31 | | |
| 15. | | Lynchwood Nominees Limited | | 26,221,509 | | | 1.24 | | |
| 16. | | State Street Nominees Limited | | 24,820,368 | | | 1.18 | | |
| 17. | | Industrial Development Corporation of South Africa | | 23,537,693 | | | 1.11 | | |
| 18. | | State Street Nominees Limited | | 21,080,452 | | | 1.00 | | |
| 19. | | Hanover Nominees Limited <Jpm17> | | 18,945,039 | | | 0.90 | | |
| 20. | | Vidacos Nominees Limited <Clrlux> | | 18,009,571 | | | 0.85 | | |
| | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | |
(1)1 | Many of the 20 largest shareholders shown for BHP Group Limited and BHP Group Plc hold shares as a nominee or custodian. In accordance with the reporting requirements, the tables reflect the legal ownership of shares and not the details of the underlying beneficial holders. |
(2)2 | The largest holderHSBC Custody Nominees (Australia) Limited is listed twice in the above table as they are registered separately under the same name on the share register.
|
| 3 | Computershare Clearing Pty Ltd <CCNL DI A/C> represents the Depositary Interest Register (UK). |
| 4 | South Africa Control A/C\C represents the South African register of BHP Group Plc is the Strate nominee in which the majority of shares in South Africa (including some of the shareholders included in this list) are held in dematerialised form.branch register. |
US share ownership as at 204 August 20212022
| | | | | | | | | | | |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Registered holders of voting securities | | | 1,533 | | | | 0.28 | | | | 3,711,268 | | | 0.13 | | | | 76 | | | | 0.57 | | | | 92,970 | | | 0.01 | | | | 1,613 | | | | 0.26 | | | | 3,665,430 | | | 0.07 | |
| | | 1,533 | | | | 0.28 | | | | 228,895,234 | (1) | | 7.76 | | | | 189 | | | | 1.41 | | | | 121,100,202 | (2) | | 5.73 | | | | 1,760 | | | | 0.29 | | | | 285,080,406 | 1 | | 5.63 | |
(1)1 | These shares translate to 114,447,617 ADRs. |
(2) | These shares translate to 60,550,101142,540,203 ADRs.
|
Geographical distribution of shareholders and shareholdings as at 204 August 20212022
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 526,748 | | | | 96.96 | | | | 2,895,280,282 | | | 98.14 | | | | 1,495 | | | | 11.12 | | | | 1,986,279 | | | | 0.09 | | | | 595,906 | | | | 97.41 | | | | 5,006,223,404 | | | 98.89 | |
| | | 8,859 | | | | 1.63 | | | | 20,016,647 | | | 0.68 | | | | 25 | | | | 0.19 | | | | 34,208 | | | | 0.01 | | | | 7,448 | | | | 1.22 | | | | 17,288,389 | | | 0.34 | |
| | | 2,486 | | | | 0.46 | | | | 6,504,235 | | | 0.22 | | | | 9,172 | | | | 68.22 | | | | 1,836,043,487 | | | | 86.93 | | | | 2,463 | | | | 0.40 | | | | 6,396,636 | | | 0.13 | |
| | | 1,533 | | | | 0.28 | | | | 3,711,268 | | | 0.13 | | | | 76 | | | | 0.57 | | | | 92,970 | | | | 0.01 | | | | 1,613 | | | | 0.26 | | | | 3,665,430 | | | 0.07 | |
| | | 96 | | | | 0.02 | | | | 217,529 | | | 0.01 | | | | 1,935 | | | | 14.39 | | | | 271,244,446 | | | | 12.84 | | | | 93 | | | | 0.02 | | | | 194,146 | | | 0.00 | |
| | | 3,559 | | | | 0.65 | | | | 24,521,433 | | | 0.82 | | | | 741 | | | | 5.51 | | | | 2,670,406 | | | | 0.13 | | | | 4,206 | | | | 0.69 | | | | 28,555,185 | | | 0.57 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 543,281 | | | | 100.00 | | | | 2,950,251,394 | | | 100.00 | | | | 13,444 | | | | 100.00 | | | | 2,112,071,796 | | | | 100.00 | | | | 611,729 | | | | 100 | | | | 5,062,323,190 | | | 100 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Distribution of shareholdings by size as at 204 August 20212022
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 254,525 | | | | 46.85 | | | | 53,184,352 | | | 1.80 | | | | 7,169 | | | | 53.32 | | | | 1,423,059 | | | | 0.07 | | |
| | | | 294,628 | | | | 48.163 | | | | 59,084,642 | | | | 1.17 | |
| | | 100,846 | | | | 18.56 | | | | 77,206,333 | | | 2.62 | | | | 2,229 | | | | 16.58 | | | | 1,641,003 | | | | 0.09 | | | | 109,464 | | | | 17.894 | | | | 83,778,512 | | | | 1.65 | |
| | | 148,183 | | | | 27.28 | | | | 331,352,333 | | | 11.23 | | | | 2,300 | | | | 17.11 | | | | 4,722,591 | | | | 0.24 | | | | 164,130 | | | | 26.831 | | | | 367,994,711 | | | | 7.27 | |
| | | 23,571 | | | | 4.34 | | | | 166,292,785 | | | 5.64 | | | | 355 | | | | 2.64 | | | | 2,528,873 | | | | 0.12 | | | | 26,073 | | | | 4.262 | | | | 183,985,534 | | | | 3.63 | |
| | | 12,189 | | | | 2.24 | | | | 182,978,713 | | | 6.20 | | | | 328 | | | | 2.44 | | | | 5,415,961 | | | | 0.25 | | | | 13,245 | | | | 2.165 | | | | 198,949,969 | | | | 3.93 | |
| | | 2,620 | | | | 0.48 | | | | 89,156,739 | | | 3.02 | | | | 196 | | | | 1.46 | | | | 7,137,840 | | | | 0.34 | | | | 2,766 | | | | 0.452 | | | | 94,261,200 | | | | 1.86 | |
| | | 880 | | | | 0.16 | | | | 60,146,735 | | | 2.04 | | | | 187 | | | | 1.39 | | | | 13,643,993 | | | | 0.71 | | | | 936 | | | | 0.153 | | | | 64,334,549 | | | | 1.27 | |
| | | 322 | | | | 0.06 | | | | 45,485,094 | | | 1.54 | | | | 242 | | | | 1.80 | | | | 39,735,115 | | | | 1.78 | | | | 347 | | | | 0.057 | | | | 49,498,045 | | | | 0.98 | |
| | | 72 | | | | 0.01 | | | | 24,988,342 | | | 0.85 | | | | 121 | | | | 0.90 | | | | 43,918,465 | | | | 2.39 | | | | 66 | | | | 0.011 | | | | 22,227,516 | | | | 0.44 | |
| | | 28 | | | | 0.01 | | | | 19,404,350 | | | 0.66 | | | | 110 | | | | 0.82 | | | | 78,002,808 | | | | 3.32 | | | | 25 | | | | 0.004 | | | | 17,084,058 | | | | 0.34 | |
| | | 45 | | | | 0.01 | | | | 1,900,055,618 | | | 64.40 | | | | 207 | | | | 1.54 | | | | 1,913,902,088 | | | | 90.62 | | | | 49 | | | | 0.008 | | | | 3,921,124,454 | | | | 77.46 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 543,281 | | | | 100.00 | | | | 2,950,251,394 | | | 100.00 | | | | 13,444 | | | | 100.00 | | | | 2,112,071,796 | | | | 100.00 | | | | 611,729 | | | | 100 | | | | 5,062,323,190 | | | | 100 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)1 | One ordinary share entitles the holder to one vote. |
(2)2 | The number of BHP Group Limited shareholders holding less than a marketable parcel (A$500) based on the market price of A$44.3438.17 as at 204 August 20212022 was 5,703.9,468. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 156,217 | | | | 28.75 | | | | 2,164,415,676 | | | | 73.36 | | | | 4,591 | | | | 34.15 | | | | 2,103,853,273 | | | | 99.61 | |
| | | 387,064 | | | | 71.25 | | | | 785,835,718 | | | | 26.64 | | | | 8,853 | | | | 66.85 | | | | 8,218,523 | | | | 0.39 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 543,281 | | | | 100.00 | | | | 2,950,251,394 | | | | 100.00 | | | | 13,444 | | | | 100.00 | | | | 2,112,071,796 | | | | 100.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The Group adopted a dividend policy in February 2016 that provides for a minimum 50 per cent payout of Underlying attributable profit (Continuing operations) at every reporting period. For information on Underlying attributable profit (Continuing operations) for FY2021,FY2022 refer to section 1.8.1.OFR 4.2 and OFR 11.
The Board will assess, at everyeach reporting period, the ability to pay amounts additional to the minimum payment, in accordance with the Capital Allocation Framework, as described in section 1.6.OFR 2.2.
In FY2021,FY2022, we determined our dividends and other distributions in US dollars as it is our main functional currency. BHP Group Limited paid its dividends in Australian dollars, UK pounds sterling, New Zealand dollars and US dollars. BHP Group Plc paid its dividends in UK pounds sterling (or US dollars, if elected) to shareholders registered on its principal register in the United Kingdom and in South African rand to shareholders registered on its branch register in South Africa.
Currency conversions are based on foreign currency exchange rates on a single day or an average for a period of days ending on or before the dividend record date. Different periods are used for each currency, based on the size of the dividend and each currency’s liquidity and market dynamics.
Setting currency conversion rates based on a single day or over a range of days helps to reduce the Group’s exposure to movements in exchange rates, while optimising currency market liquidity to accommodate potential larger dividend currency requirements.
BHP Group Limited shareholders may currently have their cash dividends paid directly into their bank account in Australian dollars, UK pounds sterling, New Zealand dollars, or US dollars, provided they have submitted direct credit details and if required, a valid currency election nominating a financial institution to the BHP Share Registrar in Australia no later than close of business on the dividend reinvestment plan election date. BHP Group Limited shareholders who do not provide their direct credit details will receive dividend payments by way of a cheque in Australian dollars.
BHP Group Plc shareholders on the UK register who wish to receive their dividends in US dollars must complete the appropriate election form and return it to the BHP Share Registrar in the United Kingdom no later than close of business on the dividend reinvestment plan election date. BHP Group Plc shareholders may have their cash dividends paid directly into a bank or building society by completing a dividend mandate form, which is available from the BHP Share Registrar in the United Kingdom or South Africa.
Dividend reinvestment plan
BHP offers a dividend reinvestment plan to registered shareholders, which provides the opportunity to use cash dividends to purchase BHP shares in the market. Following the unification of BHP’s DLC structure, BHP made amendments to its dividend reinvestment programme to provide former shareholders of BHP Group Plc (now known as BHP Group (UK) Ltd) with an ongoing opportunity to participate in the BHP Group Limited dividend reinvestment plan.
4.10.89.7 American Depositary Receipts fees and charges
We have
an American Depositary Receipts (ADR)
programsprogram for BHP Group Limited
and BHP Group Plc.Both of the ADR programs havewhich has a 2:1 ordinary shares to American Depositary Share (ADS) ratio.
Citibank serves as the depositary bank for both of our ADR programs.program. ADR holders agree to the terms in the deposit agreement filed with the SEC for depositing ADSsordinary shares or surrendering the ADSs for cancellation and for certain services as provided by Citibank. Holders are required to pay allcertain fees for general depositary services provided by Citibank, in each of our ADR programs, as set forthout in the tables below.
Standard depositary fees:fees
| | |
| | Fee payable by the ADR holders |
| Issuance of ADSs upon deposit of shares | | Up to US$5.00 per 100 ADSs (or fraction thereof) issued |
| |
| Delivery of Deposited Securities against surrender of ADSs | | Up to US$5.00 per 100 ADSs (or fraction thereof) surrendered |
| |
Distribution of Cash DistributionsDividends | | No feeUp to US$1.50 per 100 ADSs (or fraction thereof) held |
Corporate actions depositary fees:fees
| | |
| | Fee payable by the ADR holders |
| Cash Distributions other than Cash Dividends (i.e. sale of rights, other entitlements, return of capital) | | Up to US$2.00 per 100 ADSs (or fraction thereof) held |
| |
| Distribution of ADSs pursuant to exercise of rights to purchase additional ADSs. Excludes stock dividends and stock splits | | Up to US$5.00 per 100 ADSs (or fraction thereof) held |
| |
| Distribution of securities other than ADSs or rights to purchase additional ADSs (i.e., spin-off shares) | | Up to US$5.00 per 100 ADSs (or fraction thereof) held |
| |
| Distribution of ADSs pursuant to an ADR ratio change in which shares are distributed | | No fee |
Fees payable by the Depositary to the Issuer
Citibank has provided BHP net reimbursement of US$1,157,5001,067,481.21 in FY2021FY2022 for ADR program-related expenses for both of BHP’s ADR programs (FY2020program (FY2021: US$1,157,500). ADR program-related expenses include legal and accounting fees, listing fees, expenses related to investor relations in the United States, fees payable to service providers for the distribution of material to ADR holders, expenses of Citibank as administrator of the ADS Direct Plan and expenses to remain in compliance with applicable laws.
Citibank has further agreed to waive other ADR program-related expenses for FY2021,FY2022, amounting to US$24,189.85 (BHP Group Limited: US$17,663.41; BHP Group Plc: $6,526.44)18,195.03 which are associated with the administration of the ADR programs (FY2020 less thanprogram (FY2021: US$0.03 million)24,189.85).
The ADSs issued under our ADR programsprogram trade on the NYSE under the stock tickers BHP and BBL for the BHP Group Limited and BHP Group Plc programs, respectively.ticker BHP. As of 204 August 2021,2022, there were 114,447,617142,540,203 ADSs on issue and outstanding in the BHP Group Limited ADR programprogram.
Holders are also required to pay the following charges in connection with depositing of ordinary shares and 60,550,101surrendering ADSs on issuefor cancellation and outstandingfor the purpose of withdrawing deposited securities: taxes and other governmental charges, registration fees, transmission and delivery expenses, expenses and charges incurred by the depositary in the BHP Group Plc ADR program.conversion of foreign currency, fees and expenses of the depositary in connection with compliance with exchange control regulations and other regulatory requirements and fees and expenses incurred by the depositary or other nominee in connection with servicing or delivery of deposit securities.
4.10.99.8 Government regulations
Our assets are subject to a broad range of laws and regulations imposed by governments and regulatory bodies. These regulations touch all aspects of our assets, including how we extract, process and explore for minerals oil and natural gas and how we conduct our business, including regulations governing matters such as environmental protection, land rehabilitation, occupational health and safety, human rights, the rights and interests of Indigenous peoples, competition, foreign investment, export, marketing of minerals, oil and natural gas and taxes.
The ability to extract and process minerals
oil and natural gas is fundamental to BHP. In most jurisdictions, the rights to extract mineral
or petroleum deposits are owned by the government. We obtain the right to access the land and extract the product by entering into licences or leases with the government that owns the mineral
oil or natural gas deposit. We also rely on governments to grant the rights necessary to transport and treat the extracted material to prepare it for sale. The terms of the lease or licence, including the time period of the lease or licence, vary depending on the laws of the relevant government or terms negotiated with the relevant government. Generally, we own the product we extract and we are required to pay royalties or other taxes to the government.
The Queensland Government recently announced that a10-year
freeze on coal royalties would expire on 30 June 2022, with a new progressive royalty system to apply from 1 July 2022. The revised system replaced the fixed royalty amount of 15 per cent on any amounts above A$150 per tonne with a tiered approach, which increases the royalty amount payable as the price of coal passes certain monetary thresholds. The royalty rates for amounts up to and including A$150 will not change despite the expiry of the royalty freeze. For more information refer to OFR 5.1.The rights to explore for minerals oil and natural gas are granted to us by the government that owns the natural resources we wish to explore. Usually, the right to explore carries with it the obligation to spend a defined amount of money on the exploration, or to undertake particular exploration activities.
In certain jurisdictions where we have assets, such as Trinidad and Tobago, a production sharing contract (PSC) governs the relationship between the government and companies concerning how much of the oil and gas extracted from the country each party will receive. In PSCs, the government awards rights for the execution of exploration, development and production activities to the company. The company bears the financial risk of the initiative and explores, develops and ultimately produces the field as required. When successful, the company is permitted to use the money from a certain set percentage of produced oil and gas to recover its capital and operational expenditures, known as ‘cost oil’. The remaining production is known as ‘profit oil’ and is split between the government and the company at a rate determined by the government and set out in the PSC.
Environmental protection, mine closure and land rehabilitation, and occupational health and safety are principally regulated by governments and to a lesser degree, if applicable, by leases. These obligations often require us to make substantial expenditures to minimise or remediate the environmental impact of our assets and to ensure the safety of our employees and contractors and the communities where we operate. Regulations setting emissions standards for fuels used to power vehicles and equipment at our assets and the modes of transport used in our supply chains can also have a substantial impact, both directly and indirectly, on the markets for these products, with
flow-on
impacts on our costs. For more information on these types of obligations refer to
section 1.13.OFR 7.The
Parliament of Western Australia
Government is currently progressingrecently passed the Aboriginal Cultural Heritage
Bill 2020Act 2021(WA) (ACH
Bill)Act). The ACH Act, which received assent on 22 December 2021, will replace the Aboriginal Cultural Heritage Act1972(WA),
which, if passed into law, is expected toconcluding more than three years of consultation with Indigenous Australians, industry representatives, heritage professionals and the Western Australian community. The ACH Act will strengthen the
Western Australian government’s authority to regulate land use including mining activities, and the consultation process in relation to Aboriginal cultural heritage sites in Western Australia.
Before the ACH Act comes into operation, there will be a transitional period of at least 12 months during which subordinate legislation, statutory guidelines and operational policies will be developed to ensure the ACH Act will achieve its intended effects. There is potential for the ACH Act to impact BHP’s mining operations or future access to mining areas. For more information refer to
section 1.13.10.From time to time, certain trade sanctions are adopted by the United Nations (UN) Security Council and/or various governments, including in the United Kingdom, the United States, the European Union (EU), China and Australia against certain countries, entities or individuals, that may restrict our ability to sell extracted minerals, oil or natural gas to, and/or our ability to purchase goods or services from, these countries, entities or individuals.
Disclosure of Iran-related activities pursuant to section 13(r) of the US Securities Exchange Act of 1934
Section 13(r) of the US Securities Exchange Act of 1934, as amended (the Exchange Act) requires an issuer to disclose in its annual reports whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran. If applicable, disclosure is required even where the activities, transactions or dealings are conducted outside the United States by
non-U.S.non-US
persons in compliance with applicable law, and whether or not the activities are sanctionable under
U.S.US law. Provided in this section is certain information concerning activities of certain affiliates of BHP that took place in
FY2021.FY2022. BHP believes that these activities are not sanctionable either as being outside the scope of
U.S.US sanctions, or within the scope of a specific licence issued by the
U.S.US Department of the Treasury‘s Office of Foreign Assets Control (OFAC).
On 30 November 2018, BHP Billiton Petroleum Great Britain Ltd (BHP GB), a wholly owned subsidiary of BHP, and its
co-venturers
in the Bruce and Keith gas and oil fields offshore United Kingdom (BP Exploration Operating Company (BP), Marubeni Oil & Gas (UK) Limited (Marubeni) and Total E&P UK Limited (Total)) completed the sale of their interests in the Bruce and Keith gas and oil fields to Serica Energy (UK) Limited (Serica) (the Bruce and Keith Transaction). BHP divested its entire licence interests in Bruce and Keith but retained the obligation to fund decommissioning in accordance with its previous licence interest.
The transfer of licence interests and retention of decommissioning liabilities for the Bruce and Keith
co-venturers
in the respective gas and oil fields is described below:
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | |
| | |
| | | | | |
| | | Post-sale decom. interest % | |
| | | 37 | | | | 1 | | | | 37 | | | | 34.83 | | | | 0 | | | | 34.83 | |
| | | 43.25 | | | | 1 | | | | 43.25 | | | | 25 | | | | 0 | | | | 25 | |
| | | 16 | | | | 0 | | | | 16 | | | | 31.83 | | | | 0 | | | | 31.83 | |
| | | 3.65 | | | | 0 | | | | 0 | | | | 8.33 | | | | 0 | | | | 0 | |
| | | 0 | | | | 98 | | | | 3.75 | | | | 0 | | | | 100 | | | | 8.33 | |
While the sale closed on 30 November 2018, it was effective in economic terms as of 1 January 2018. In addition to initial cash consideration received from Serica at completion, BHP subsequently received, and will continue to receive:BHP:
subsequently received a share of
pre-tax
net cash flow attributable to its historic interest in the Bruce and Keith gas and oil fields of 60 per cent during December 2018, 50 per cent in CY2019 and 40 per cent in each of CY2020 and CY2021 under a Net Cash Flow Sharing Deed; and
will continue to receive a share of projected decommissioning costs up to a specified capcap.
The Bruce platform provides transportation and processing services to the nearby Rhum gas field pursuant to a contract between the Bruce owners and Rhum owners (the Bruce-Rhum Agreement). At the same time as the Bruce and Keith Transaction, Serica acquired from BP its 50 per cent interest and operatorship of the Rhum gas field. The Rhum gas field is now owned by a 50:50 unincorporated joint venture arrangement between Serica and Iranian Oil Company (UK) Limited (IOC). IOC is an indirect subsidiary of the National Iranian Oil Company, (NIOC), which is a corporation owned by the Government of Iran.
OFAC issued licence No.
(the OFAC Licence) authorising BP, Serica and all
U.S.US persons and
U.S.-owned US-owned
or controlled foreign entities identified in the licence application to provide goods, services and support for the operation, maintenance and production of the Rhum gas field, and goods, services and support to the Bruce platform for a period from 2 November 2018 through 31 October 2019. On 22 October 2019, OFAC renewed this licence through to 28 February 2021, and on 19 January 2021, OFAC renewed the license through to 31 January 2023. OFAC also provided an assurance that
non-U.S.non-US
persons would not be exposed to
U.S.US secondary sanctions for engaging in these activities and transactions involving Rhum or the Bruce platform, namely providing goods, services, and support to the Rhum field.
BHP continues to monitor developments concerning U.S.US sanctions with respect to Iran to maintain compliance with applicable sanctions laws and requirements. Although BHP has no ongoing direct dealings with any Iranian party, because BHP will receivereceived ongoing consideration from Serica related to the sale of its interest in the Bruce-Rhum Agreement, BHP has included this disclosure.
BHP recognised the following transactions in FY2021FY2022 related to the Bruce-Rhum Agreement. For the period 1 July 20202021 to 30 June 2021,2022, BHP received US$2.26.5 million from Serica under the Net Cash Flow Sharing Deed.
Uranium production in Australia
To mine, process, transport and sell uranium from within Australia, we are required to hold possession and export permissions, which are also subject to regulation by the Australian Government or bodies that report to the Australian Government.
To possess nuclear material, such as uranium, in Australia, a Permit to Possess Nuclear Materials (Possession Permit) must be held pursuant to the Australian NuclearNon-Proliferation
(Safeguards) Act 1987(Non-Proliferation
Act). A Possession Permit is issued by the Australian Minister for Foreign Affairs. Compliance with theNon-Proliferation
Act is monitored by the Australian Safeguards andNon-Proliferation
Office, an office established under theNon-Proliferation
Act, which administers Australia’s domestic nuclear safeguards requirements and reports to the Australian Government.To export uranium from Australia, a Permit to Export Natural Uranium (Export Permit) must be held pursuant to the Australian Customs (Prohibited Exports) Regulations 1958. The Export Permit is issued by the Minister with responsibility for Resources and Energy.
A special permit to transport nuclear material is required under theNon-Proliferation
Act by a party that transports nuclear material from one specified location to another specified location. Each of the service providers we engage to transport uranium is required to hold a permit to transport nuclear material issued by the Australian Safeguards andNon-Proliferation
Office.
There are no laws or regulations currently in force in the United Kingdom that restrict the export or import of capital or the payment of dividends tonon-resident
holders of BHP Group Plc’s shares, although the Group does operate in some other jurisdictions where the payment of dividends could be affected by exchange control approvals.From time to time, certain sanctions are adopted by the UN Security Council and/or various governments, including in the United Kingdom, the United States, the EU and Australia against certain countries, entities or individuals that may restrict the export or import of capital or the remittance of dividends to certainnon-resident
holders of BHP Group Plc’s shares.There are no restrictions under BHP Group Plc’s Articles of Association or (subject to the effect of any sanctions) under English law that limit the right ofnon-resident
or foreign owners to hold or vote BHP Group Plc’s shares.There are certain restrictions on shareholding levels under BHP Group Plc’s Articles of Association described below.
Under current Australian legislation, the payment of any dividends, interest or other payments by BHP Group Limited to
non-resident
holders of BHP Group Limited’s shares is not restricted by exchange controls or other limitations, except that, in certain circumstances, BHP Group Limited may be required to withhold Australian taxes.
From time to time, certain sanctions are adopted by the UN Security Council and/or various governments, including in the United Kingdom, the United States, the EU and Australia. Those sanctions prohibit or, in some cases, impose certain approval and reporting requirements on transactions involving sanctioned countries, entities and individuals and/or assets controlled or owned by them. Certain transfers into or out of Australia of amounts greater than A$10,000 in any currency may also be subject to reporting requirements.
The Australian Foreign Acquisitions and Takeovers Act 1975 (the FATA) restricts certain acquisitions of interests in securities in Australian companies, including BHP Group Limited. Generally, under the FATA, the prior approval of the Australian Treasurer must be obtained for proposals by a foreign person (either alone or together with its associates) to acquire 20 per cent or more of the voting power or issued securities in an Australian company. Lower approval thresholds apply in certain circumstances, including
for acquisitions
of interests in entities that operate a ‘national security business’, and acquisitions of interests by
a foreign government
investorinvestors of voting power or issued securities in an Australian company.
The FATA also empowers the Treasurer to make certain orders prohibiting acquisitions by foreign persons in Australian companies, including BHP Group Limited (and requiring divestiture if the acquisition has occurred) where the Treasurer considers the acquisition to be contrary to national security or the national interest. Such orders may also be made in respect of acquisitions by foreign persons where two or more foreign persons (and their associates) in aggregate already control 40 per cent or more of the issued securities or voting power in an Australian company, including BHP Group Limited.
The restrictions in the FATA on acquisitions of securities in BHP Group Limited described above apply equally to acquisitions of securities in BHP Group Plc because BHP Group Limited and BHP Group Plc are dual listed entities.
Except for the restrictions under the FATA, there are no limitations, either under Australian law or under the Constitution of BHP Group Limited, on the right of
non-residents
to hold or vote BHP Group Limited ordinary shares.
Shareholding limitsPost-unification requirements under the Constitution and Articles of AssociationFATA
There are certain other statutory restrictions and restrictions that are reflected in BHP Group Limited’s Constitution and BHP Group Plc’s ArticlesThe Treasurer gave approval under the FATA for the actions taken as part of Association that apply generally to acquisitionsimplementation of shares in BHP Group Limited and BHP Group Plc (i.e. the restrictions are not targeted at foreign persons only). These include restrictionsunification of BHP’s DLC structure on a person (and associates) breaching a voting power threshold of:the conditions set out below:
above 20 per cent in relation to BHP Group Limited remains an Australian resident company, incorporated under the Corporations Act, that is listed on a ‘stand-alone’ basis (i.e. calculated as if there were no Special Voting Sharethe ASX under the name ‘BHP Group Limited’ and only counting BHP Group Limited’s ordinary shares)trades under that name.
30 per centBHP Group Limited remains the ultimate holding company of, and continues to ultimately manage and control the companies conducting the businesses which are presently conducted by the subsidiaries of BHP Group Plc. This isLimited, including the thresholdMinerals and Services businesses, for a mandatory offer under Rule 9so long as those businesses form part of the UK takeover code and this threshold applies to all voting rights of BHP Group Plc (therefore including voting rights attached to the BHP Group Plc Special Voting Share)Group.
30 per cent in relation toThe headquarters of BHP Group Plc on a ‘stand-alone’ basis (i.e. calculated as if there were no Special Voting Share and only countingLimited (including the BHP Group Plc’s ordinary shares)Group’s corporate head offices) are to be in Australia.
above 20 per cent in relation to BHP Group Plc, calculated having regard to all the voting power on a joint electorate basis (i.e. calculated on the aggregateThe Chief Executive Officer of BHP Group Limited’s and BHP Group Plc’s ordinary shares)Limited has their principal office in Australia.
Under BHP Group Limited’s Constitution and BHP Group Plc’s Articles of Association, sanctions for breach of any of these thresholds, other than by means of certain ‘permitted acquisitions’, include withholding of dividends, voting restrictions and compulsory divestment of shares to the extent a shareholder and its associates exceed the relevant threshold.
289The centre of administrative and practical management of BHP Group Limited is in Australia and BHP Group Limited’s corporate head office activities, of the kind presently carried on in Australia, continue to be managed in Australia.
The headquarters of BHP Group Limited is publicly acknowledged as being in Australia in significant public announcements and in all public documents.
The Chief Executive Officer of BHP Group Limited has their principal place of residence in Australia.
The majority of all regularly scheduled Board meetings of BHP Group Limited in any calendar year occurs in Australia.
The taxation discussion below describes the material Australian, UK and US federal income tax consequences to a US holder owning BHP Group Limited ordinary shares or ADSs or BHP Group Plc ordinary shares or ADSs. The discussion below also outlines the potential South African tax issues for US holders of BHP Group Plc shares that are listed on the JSE.
The following discussion is not relevant to
non-US
holders of BHP Group Limited
ordinary shares or ADSs or BHP Group Plc ordinary shares or ADSs. By its nature, the commentary below is of a general nature and we recommend that holders of ordinary shares or ADSs consult their own tax advisers regarding the Australian, UK
South African and US federal, state and local tax and other tax consequences of owning and disposing of ordinary shares and ADSs in their particular circumstances.
For purposes of this commentary, a US holder is a beneficial owner of ordinary shares or ADSs who is, for US federal income tax purposes:
a citizen or resident alien of the US;
a corporation (or other entity treated as a corporation for US federal income tax purposes) that is created or organised under the laws of the US or any political subdivision thereof;
an estate, the income of which is subject to US federal income taxation regardless of its source; or
| | (a) | if a court within the US is able to exercise primary supervision over its administration and one or more US persons have the authority to control all of its substantial decisions; or |
| | (b) | that has made a valid election to be treated as a US person for tax purposes. |
This discussion of material tax consequences for US holders is based on the Australian, UK US and South AfricanUS laws currently in effect, the published practice of tax authorities in those jurisdictions and the double taxation treaties and conventions currently in existence. These laws are subject to change, possibly on a retroactive basis.
US holders in BHP Group Limited
Dividends (including other distributions treated as dividends for Australian tax purposes) paid by BHP Group Limited to a US holder that is not an Australian resident for Australian tax purposes will generally not be subject to Australian withholding tax if they are fully franked (broadly, where a dividend is franked, tax paid by BHP Group Limited is imputed to the shareholders).
Dividends paid to such US holders, which are not fully franked, will generally be subject to Australian withholding tax not exceeding 15 per cent only to the extent (if any) that the dividend is neither:
declared by BHP Group Limited to be conduit foreign income. (Broadly, this means that the relevant part of the dividend is declared to have been paid out of foreign source amounts received by BHP Group Limited that are not subject to tax in Australia, such as dividends remitted to Australia by foreign subsidiaries).
The Australian withholding tax outcome described above applies to US holders who are eligible for benefits under the Tax Convention between Australia and the US as to the Avoidance of Double Taxation (the Australian Tax Treaty). Otherwise, the rate of Australian withholding tax may be 30 per cent.
In contrast, dividends (including other distributions treated as dividends for Australian tax purposes) paid by BHP Group Limited to a US holder may instead be taxed by assessment in Australia if the US holder:
is an Australian resident for Australian tax purposes (although the tax will generally not exceed 15 per cent where the US holder is eligible for benefits under the Australian Tax Treaty as a treaty resident of the US and any franking credits may be creditable against their Australian income tax liability); or
carries on business in Australia through a permanent establishment as defined in the Australian Tax Treaty, or performs personal services from a fixed base in Australia, and the shareholding in respect of which the dividend is paid is effectively connected with that permanent establishment or fixed base, (however, in such a case any franking credits may be creditable against the Australian income tax liability).
The treatment of dividends outlined above may be modified where the shareholding in BHP
Group
Limited is held through a trust, limited partnership, limited liability company, pension fund, sovereign wealth fund or other investment vehicle. Affected US holders should seek their own advice in relation to such arrangements.
Sale of ordinary shares and ADSs
Gains made by US holders on the sale of ordinary shares or ADSs will generally not be taxed in Australia.
However, the precise Australian tax treatment of gains made by US holders on the sale of ordinary shares or ADSs generally depends on whether or not the gain is an Australian sourced gain of an income nature for Australian income tax purposes.
Where the gain is of an income nature, a US holder will generally only be liable to Australian income tax on an assessment basis (whether or not they are also an Australian resident for Australian tax purposes) if:
they are not eligible for benefits under the Australian Tax Treaty and the gain is sourced in Australia for Australian tax purposes; or
they are eligible for benefits under the Australian Tax Treaty but the gain constitutes any of the following (in which case the gain will be deemed to have an Australian source):
| | – | | business profits of an enterprise attributable to a permanent establishment situated in Australia through which the enterprise carries on business in Australia; or |
| | – | | income or gains from the alienation of property that form part of the business property of a permanent establishment of an enterprise that the US holder has in Australia, or pertain to a fixed base available to the US holder in Australia for the purpose of performing independent personal services; or |
| | – | | income derived from the disposition of shares in a company, the assets of which consist wholly or principally of real property (which includes rights to exploit or to explore for natural resources) situated in Australia, whether such assets are held directly or indirectly through one or more interposed entities. |
Where the gain is not taxed as Australian sourced income, the US holder will generally only be liable to Australian capital gains tax on an assessment basis if they acquired (or are deemed to have acquired) their shares or ADSs after 19 September 1985 and one or more of the following applies:
the US holder is an Australian resident for Australian tax purposes; or
the ordinary shares or ADSs have been used by the US holder in carrying on a business through a permanent establishment in Australia; or
the ordinary shares or ADSs constitute an ‘indirect Australian real property interest’ for Australian CGT purposes – this will generally be the case if the US holder (either alone or together with associates) directly or indirectly owns or owned 10 per cent or more of the issued share capital of BHP Group Limited at the time of the disposal or throughout a
12-month
period during the two years prior to the time of disposal and, at the time of the disposal, the sum of the market values of BHP Group Limited’s assets that are taxable Australian real property (held directly or through interposed entities) exceeds the sum of the market values of BHP Group Limited’s assets (held directly or through interposed entities) that are not taxable Australian real property at that time (which, for these purposes includes mining, quarrying or prospecting rights in respect of minerals, petroleum or quarry materials situated in Australia); or
the US holder is an individual who is not eligible for benefits under the Australian Tax Treaty as a treaty resident of the US and elected on becoming a
non-resident
of Australia to continue to have the ordinary shares or ADSs subject to Australian capital gains tax.
In certain circumstances, if the ordinary shares or ADSs constitute an ‘indirect Australian real property interest’ for Australian CGT purposes, the purchaser may be required to withhold under the
non-resident
CGT withholding regime an amount equal to 12.5 per cent of the purchase price in situations including where the acquisition is undertaken by way of an
off-market
transfer. Affected US holders should seek their own advice in relation to how this withholding regime may apply to them.
The comments above on the sale of ordinary shares and ADSs do not apply:
to temporary residents of Australia who should seek advice that is specific to their circumstances; or
if the Investment Management Regime (IMR) applies to the US holder, which exempts from Australian income tax and capital gains tax gains made on disposals by certain categories of
non-resident
funds – called IMR entities – of (relevantly) portfolio interests in Australian public companies (subject to a number of conditions). The IMR exemptions broadly apply to widely held IMR entities in relation to their direct investments and indirect investments made through an independent Australian fund manager. The exemptions apply to gains made by IMR entities that are treated as companies for Australian tax purposes as well as gains made by
non-resident
investors in IMR entities that are treated as trusts and partnerships for Australian tax purposes.
Stamp duty, gift, estate and inheritance tax
Australia does not impose any stamp duty, gift, estate or inheritance taxes in relation to transfers or gifts of shares or ADSs or upon the death of a shareholder.
This section describes the material US federal income tax consequences to a US holder of owning ordinary shares or ADSs. It applies only to ordinary shares or ADSs that are held as capital assets for tax purposes.
This discussion addresses only US federal income taxation and does not discuss all of the tax consequences that may be relevant to US holders in light of their individual circumstances, including foreign, state or local tax consequences, estate and gift tax consequences, and tax consequences arising under the Medicare contribution tax on net investment income. This section does not apply to a holder of ordinary shares or ADSs that is a member of a special class of holders subject to special rules, including a dealer in securities, a trader in securities that elects to use a
method of accounting for its securities holdings, a
tax-exempt
organisation, a life insurance company, a person liable for alternative minimum tax, a person who actually or constructively owns 10 per cent or more of the combined voting power of the voting stock or of the total value of the stock of BHP Group Limited, a person that holds ordinary shares or ADSs as part of a straddle or a hedging or conversion transaction, a person that purchases or sells ordinary shares or ADSs as part of a wash sale for tax purposes, or a person whose functional currency is not the US dollar.
If an entity or arrangement that is treated as a partnership for US federal income tax purposes holds the ordinary shares or ADSs, the US federal income tax treatment of a partner generally will depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the ordinary shares or ADSs should consult its tax adviser with regard to the US federal income tax treatment of an investment in the ordinary shares or ADSs.
This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, and the Australian Tax Treaty, all as currently in effect. These authorities are subject to change, possibly on a retroactive basis.
This section is in part based on the representations of the Depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.
In general, for US federal income tax purposes, a holder of ADSs will be treated as the owner of the ordinary shares represented by those ADSs. Exchanges of ordinary shares for ADSs, and ADSs for ordinary shares, generally will not be subject to US federal income tax.
Under US federal income tax laws and subject to the Passive Foreign Investment Company (PFIC) rules discussed below, a US holder must include in its gross income the amount of any dividend paid by BHP Group Limited out of its current or accumulated earnings and profits (as determined for US federal income tax purposes) plus any Australian tax withheld from the dividend payment even though the holder does not receive it. The dividend is taxable to the holder when the holder, in the case of ordinary shares, or the Depositary, in the case of ADSs, actually or constructively receives the dividend.
Dividends paid to a
non-corporate
US holder on shares or ADSs will be taxable at the preferential rates applicable to long-term capital gains provided the US holder holds the shares or ADSs for more than 60 days during the
121-day
period beginning 60 days before the
ex-dividend
date and does not enter into certain risk reduction transactions with respect to the shares or ADSs during the abovementioned holding period. However, a
non-corporate
US holder that elects to treat the dividend income as ‘investment income’ pursuant to Section 163(d)(4) of the US Internal Revenue Code will not be eligible for such preferential rates. In the case of a corporate US holder, dividends on shares and ADSs are taxed as ordinary income and will not be eligible for the dividends received deduction generally allowed to US corporations in respect of dividends received from other US corporations.
Distributions in excess of current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a
non-taxable
return of capital to the extent of the holder’s tax basis, determined in US dollars, in the ordinary shares or ADSs and thereafter as a capital gain. However, BHP Group Limited does not expect to calculate earnings and profits in accordance with US federal income tax principles. Accordingly, holders should expect to generally treat distributions made by BHP Group Limited as dividends.
The amount of any cash distribution paid in any foreign currency will be equal to the US dollar value of such currency, calculated by reference to the spot rate in effect on the date such distribution is received by the US holder or, in the case of ADSs, by the Depositary, regardless of whether and when the foreign currency is in fact converted into US dollars. If the foreign currency is converted into US dollars on the date received, the US holder generally should not recognise foreign currency gain or loss on such conversion. If the foreign currency is not converted into US dollars on the date received, the US holder will have a basis in the foreign currency equal to its US dollar value on the date received,of the distribution, and generally will recognise foreign currency gain or loss on a subsequent conversion or other disposal of such currency. Such foreign currency gain or loss generally will be treated as ordinary income or loss ineligible for the preferential tax rate applicable to dividend income and generally will be income or loss from US sources for foreign tax credit limitation purposes.
Subject to certain limitations, Australian tax withheld in accordance with the Australian Tax Treaty and paid over to Australia will be creditable against an individual’s US federal income tax liability. However, under recently finalized Treasury regulations, it is possible that such withholding tax will not be creditable unless the U.S. holder is eligible to claim the benefits of the Australian Tax Treaty and elects to apply the Australian Tax Treaty. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are taxed at the preferential rates applicable to long-term capital gains. To the extent a reduction or refund of the tax withheld is available to a US holder under Australian law or under the Australian Tax Treaty, the amount of tax withheld that could have been reduced or that is refundable will not be eligible for credit against the holder’s US federal income tax liability. A US holder that does not elect to claim a US foreign tax credit may instead claim a deduction for Australian income tax withheld, but only for a taxable year in which the US holder elects to do so with respect to all foreign income taxes paid or accrued in such taxable year.
Dividends will be income from sources outside the US, and generally will be ‘passive category’ income for the purpose of computing the foreign tax credit allowable to a US holder. In general, a taxpayer’s ability to use foreign tax credits may be limited and is dependent on the particular circumstances. US holders should consult their tax advisers with respect to these matters.
Sale of ordinary shares and ADSs
Subject to the PFIC rules discussed below, a US holder who sells or otherwise disposes of ordinary shares or ADSs will recognise a capital gain or loss for US federal income tax purposes equal to the difference between the US dollar value of the amount realised and the holder’s tax basis, determined in US dollars, in those ordinary shares or ADSs. The gain or loss will generally be income or loss from sources within the US for foreign tax credit limitation purposes. The capital gain of a
non-corporate
US holder is generally taxed at preferential rates where the holder has a holding period greater than 12 months in the shares or ADSs sold. There are limitations on the deductibility of capital losses.
The US dollar value of any foreign currency received upon a sale or other disposition of ordinary shares or ADSs will be calculated by reference to the spot rate in effect on the date of sale or other disposal (or, in the case of a cash basis or electing accrual basis taxpayer, on the settlement date). A US holder will have a tax basis in the foreign currency received equal to that US dollar amount, and generally will recognise foreign currency gain or loss on a subsequent conversion or other disposal of the foreign currency. This foreign currency gain or loss generally will be treated as US source ordinary income or loss for foreign tax credit limitation purposes.
Passive Foreign Investment Company rules
We do not believe that the BHP Group Limited ordinary shares or ADSs will be treated as stock of a PFIC for US federal income tax purposes, but this conclusion is a factual determination that is made annually at the end of the year and thus may be subject to change. If BHP Group Limited were treated as a PFIC, any gain realised on the sale or other disposition of ordinary shares or ADSs would in general not be treated as a capital gain. Instead, a US holder would be treated as if it had realised such gain and certain ‘excess distributions’ ratably over its holding period for the ordinary shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. In addition, dividends received with respect to ordinary shares or ADSs would not be eligible for the preferential tax rates applicable to dividend income if BHP Group Limited were a PFIC either in the taxable year of the distribution or the preceding taxable year, but instead would be taxable at rates applicable to ordinary income. Assuming the shares or ADSs are ‘marketable stock’, a US holder may mitigate the adverse tax consequences described above by electing to be taxed annually on a
basis with respect to such shares or ADSs.
US holders in BHP Group Plc
Under UK law, no UK tax is required to be withheld at source from dividends paid on ordinary shares or ADSs.
Sale of ordinary shares and ADSs
US holders will not be liable for UK tax on capital gains realised on disposal of ordinary shares or ADSs unless:
they are resident in the UK; or
they carry on a trade, profession or vocation in the UK through a branch or agency for the year in which the disposal occurs and the shares or ADSs have been used, held or acquired for the purposes of such trade (or profession or vocation), branch or agency. In the case of a trade, the term ‘branch’ includes a permanent establishment.
An individual who ceases to be a resident in the UK for tax purposes while owning shares or ADSs and then disposes of those shares or ADSs while not a UK resident may become subject to UK tax on capital gains if he/she:
had sole UK residence in the UK tax year preceding his/her departure from the UK;
had sole UK residence at any time during at least four of the seven UK tax years preceding his/her year of departure from the UK; and
subsequently becomes treated as having sole UK residence again before five complete UK tax years of
non-UK
residence have elapsed from the date he/she left the UK.
In this situation US holders will generally be entitled to claim US tax paid on such a disposition as a credit against any corresponding UK tax payable.
Under the current UK–US Estate and Gift Tax Treaty, ordinary shares or ADSs held by a US holder who is domiciled for the purposes of the UK–US Estate and Gift Tax Treaty in the US, and is not for the purposes of the UK–US Estate and Gift Tax Treaty a national of the UK, will generally not be subject to UK inheritance tax on the individual’s death or on a chargeable gift of the ordinary shares or ADSs during the individual’s lifetime, provided that any applicable US federal gift or estate tax liability is paid. The position as previously set out will not apply to ordinary shares or ADSs which: (a) are part of the business property of a permanent establishment of the individual in the UK; or (b) in the case of a shareholder who performs independent personal services, pertain to a fixed base situated in the UK. Where the ordinary shares or ADSs have been placed in trust by a settlor who, at the time of settlement, was a US resident shareholder, the ordinary shares or ADSs will generally not be subject to UK inheritance tax unless the settlor, at the time of settlement, was not domiciled in the US and was a UK national. In the exceptional case where the ordinary shares or ADSs are subject to both UK inheritance tax and US federal gift or estate tax, the UK–US Estate and Gift Tax Treaty generally provides for double taxation to be relieved by means of credit relief.
UK stamp duty and stamp duty reserve tax
Under applicable legislation, UK stamp duty or stamp duty reserve tax (SDRT) is, subject to certain exemptions, payable on any issue or transfer of shares to the Depositary or their nominee where those shares are for inclusion in the ADR program at a rate of 1.5 per cent of their price (if issued), the amount of any consideration provided (if transferred on sale) or their value (if transferred for no consideration).
However, from 1 October 2009, thisThis 1.5 per cent charge
haswill not generally
ceased to apply to issues of shares into European Union (EU) depositary receipt systems and into EU clearance systems. Further,be payable on the
First-tier Tribunal has held that the 1.5 per cent SDRT charge on aissue or transfer of shares to
an issuerthe Depository or their nominee where, for SDRT purposes, the shares are in anon-UK
incorporated company and, for stamp duty purposes, the instrument of
ADRs (as an integral part of a fresh capital raising) was incompatible with EU law. Her Majesty’s Revenuetransfer is executed and
Customs has confirmed that it willremains at all times outside the UK.Similarly, no longer seek to impose the 1.5 per cent SDRT chargeshould be payable on the issue of shares (or, where it is integral to the raising of new capital, the transfer of shares)an ordinary share to a depositary receipt issuerperson other than the Depository or a clearance service, wherever located, and it has also confirmed that it will continue this approach after the end of the “implementation period” on 31 December 2020 following the UK’s withdrawal from the EU. The law in this area may still be susceptible to change. We recommend advice should be sought in relation to paying the 1.5 per cent SDRTtheir nominee or stamp duty charge in any circumstances.
No SDRT would be payable on the transfer of an ADS. No UK stamp duty should be payable on the transfer of an ADS or an ordinary share provided that the instrument of transfer is executed and remains at all times outside the UK. Transfers of ordinary shares to persons other thanWhere it is payable, the Depositary or their nominee will give rise to stamp duty or SDRT at the time of transfer. The relevant rate is currently 0.5 per cent of the amount payable for the shares. The purchaser normally pays the stamp duty or SDRT.
Special rules apply to transactions involving intermediates and stock lending.
This section describes the material US federal income tax consequences to a US holder of owning ordinary shares or ADSs. It applies only to ordinary shares or ADSs that are held as capital assets for tax purposes. This section does not apply to a holder of ordinary shares or ADSs that is a member of a special class of holders subject to special rules, including a dealer in securities, a trader in securities who elects to use amethod of accounting for its securities holdings, atax-exempt
organisation, a life insurance company, a person liable for alternative minimum tax, a person who actually or constructively owns 10 per cent or more of the combined voting power of voting stock or of the total value of the stock of BHP Group Plc, a person that holds ordinary shares or ADSs as part of a straddle or a hedging or conversion transaction, a person that purchases or sells ordinary shares or ADSs as part of a wash sale for tax purposes, or a person whose functional currency is not the US dollar.If an entity or arrangement that is treated as a partnership for US federal income tax purposes holds the ordinary shares or ADSs, the US federal income tax treatment of a partner generally will depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the ordinary shares or ADSs should consult its tax adviser with regard to the US federal income tax treatment of an investment in the ordinary shares or ADSs.
This section is in part based on the representations of the Depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.
In general, for US federal income tax purposes, a holder of ADSs will be treated as the owner of the ordinary shares represented by those ADSs. Exchanges of ordinary shares for ADSs, and ADSs for ordinary shares, generally will not be subject to US federal income tax.
Dividends paid to anon-corporate
US holder on shares or ADSs will be taxable at the preferential rates applicable to long-term capital gains provided that the US holder holds the shares or ADSs for more than 60 days during the121-day
period beginning 60 days before theex-dividend
date and does not enter into certain risk reduction transactions with respect to the shares or ADSs during the abovementioned holding period. However, anon-corporate
US holder that elects to treat the dividend income as ‘investment income’ pursuant to Section 163(d)(4) of the US Internal Revenue Code will not be eligible for such preferential rates. In the case of a corporate US holder, dividends on shares and ADSs are taxed as ordinary income and will not be eligible for the dividends received deduction generally allowed to US corporations in respect of dividends received from other US corporations.Distributions in excess of current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as anon-taxable
return of capital to the extent of the holder’s tax basis, determined in US dollars, in the ordinary shares or ADSs and thereafter as a capital gain. However, BHP Group Plc does not expect to calculate earnings and profits in accordance with US federal income tax principles. Accordingly, holders should expect to generally treat distributions made by BHP Group Plc as dividends.The amount of any cash distribution paid in any foreign currency will be equal to the US dollar value of such currency, calculated by reference to the spot rate in effect on the date such distribution is received by the US holder or, in the case of ADSs, by the Depositary, regardless of whether and when the foreign currency is in fact converted into US dollars. If the foreign currency is converted into US dollars on the date received, the US holder generally should not recognise foreign currency gain or loss on such conversion. If the foreign currency is not converted into US dollars on the date received, the US holder will have a basis in the foreign currency equal to its US dollar value on the date received, and generally will recognise foreign currency gain or loss on a subsequent conversion or other disposal of such currency. Such foreign currency gain or loss generally will be treated as ordinary income or loss ineligible for the preferential tax rate applicable to dividend income and generally will be income or loss from US sources for foreign tax credit limitation purposes.
Dividends will be income from sources outside the US, and generally will be ‘passive category’ income for the purpose of computing the foreign tax credit allowable to a US holder. In general, a taxpayer’s ability to use foreign tax credits may be limited and is dependent on the particular circumstances. US holders should consult their tax advisers with respect to these matters.
Sale of ordinary shares and ADSs
Subject to the PFIC rules discussed below, a US holder who sells or otherwise disposes of ordinary shares or ADSs will recognise a capital gain or loss for US federal income tax purposes equal to the difference between the US dollar value of the amount realised and the holder’s tax basis, determined in US dollars, in those ordinary shares or ADSs. The gain or loss will generally be income or loss from sources within the US for foreign tax credit limitation purposes. The capital gain of anon-corporate
US holder is generally taxed at preferential rates where the holder has a holding period greater than 12 months in the shares or ADSs sold. There are limitations on the deductibility of capital losses.The US dollar value of any foreign currency received upon a sale or other disposition of ordinary shares or ADSs will be calculated by reference to the spot rate in effect on the date of sale or other disposal (or, in the case of a cash basis or electing accrual basis taxpayer, on the settlement date). A US holder will have a tax basis in the foreign currency received equal to that US dollar amount, and generally will recognise foreign currency gain or loss on a subsequent conversion or other disposal of the foreign currency. This foreign currency gain or loss generally will be treated as US source ordinary income or loss for foreign tax credit limitation purposes.
Passive Foreign Investment Company rules
We do not believe that the BHP Group Plc ordinary shares or ADSs will be treated as stock of a PFIC for US federal income tax purposes, but this conclusion is a factual determination that is made annually at the end of the year and thus may be subject to change. If BHP Group Plc were treated as a PFIC, any gain realised on the sale or other disposition of ordinary shares or ADSs would in general not be treated as a capital gain. Instead, a US holder would be treated as if it had realised such gain and certain ‘excess distributions’ ratably over its holding period for the ordinary shares or ADSs and would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. In addition, dividends received with respect to ordinary shares or ADSs would not be eligible for the preferential tax rates applicable to dividend income if BHP Group Plc were a PFIC either in the taxable year of the distribution or the preceding taxable year, but instead would be taxable at rates applicable to ordinary income. Assuming the shares or ADSs are ‘marketable stock’, a US holder may mitigate the adverse tax consequences described above by electing to be taxed annually on abasis with respect to such shares or ADSs.
(c) South African taxation10 Glossary
Dividends paid or payable on or after 22 February 2017 in respect of shares in foreign companies that are listed on a South African exchange will attract South African Dividends Tax at the rate of 20 per cent, unless an exemption or a reduced rate in terms of a Double Tax Agreement applies. In this regard, we note that where a foreign tax resident company, listed on the JSE declares a cash dividend to anon-South
African tax resident, Dividends Tax would not apply (refer section 64F(j) of the South African Income Tax Act).Accordingly, it is unlikely that a US tax resident (or any other foreign tax resident) that is a holder of BHP Group Plc shares listed on the JSE would be subject to South African Dividends Tax on any cash dividends received or accrued in respect of their JSE listed BHP Group Plc shares. However, to qualify for the exemption, the US tax resident holder (or other foreign resident holder) must within the appropriate time period provide the prescribed declaration form or written undertaking confirming the application of the exemption to the regulated intermediary responsible for making payment of the dividend (or any other appropriate party responsible for payment of the dividend). With effect from 1 October 2020, the declaration will no longer be valid after a period of 5 years, so a new declaration will be required.
If the US holder (or any othernon-resident)
is tax resident in South Africa they would likely be subject to Dividends Tax at a rate of 20%. Investors are cautioned to be certain of their tax residence to ensure correct tax treatment.Although the beneficial owner of the dividend is liable for the South African Dividends Tax on a cash dividend, the South African Dividends Tax would be withheld from the gross amount of the dividend paid to the shareholder.
No South African Dividends Tax is required to be withheld from cash dividends provided the dividends are paid to, inter alia, South African tax resident corporate shareholders (including South African companies, pension, provident, retirement annuity and benefit funds). However, these dividends will only be exempt from South African Dividends Tax if these types of shareholders provide the prescribed declaration forms or written undertakings to the regulated intermediaries (or the person who is obliged to withhold the Dividends Tax) making the cash dividend payments before they are paid. We reiterate that with effect from 1 October 2020, the declaration is no longer be valid after a period of 5 years.
South African tax resident shareholders who are natural persons (individuals) or trusts, other than closure rehabilitation trusts, do not qualify for an exemption from South African Dividends Tax.
Except for certain exclusions, generally speaking such dividends paid to South African tax resident natural persons or trusts are exempt from South African income tax and, as such, the South African Dividends Tax may be considered as a final andnon-creditable
levy.
Sale of ordinary shares and ADSs
A US holder who or which is tax resident in South Africa would be liable for either income tax on any profit on disposal of BHP Group Plc shares or ADSs, or capital gains tax on any gain on disposal of BHP Group Plc shares or ADSs, depending on whether the BHP Group Plc shares and ADSs are held on revenue or capital account.
Income tax is payable on any profit on disposal of BHP Group Plc shares or ADSs held by a US holder who or which is tax resident in the US, where the profit is of a revenue nature and sourced in South Africa, unless relief is afforded under the Double Tax Agreement concluded between South Africa and the US. We highlight that this Double Tax Agreement contains a limitation on benefits clause that should be carefully scrutinised to ensure application of the Double Tax Agreement. Where the Double Tax Agreement applies, the profit would only be taxed in South Africa if it is attributable to a permanent establishment of that US holder in South Africa.
Where the BHP Billiton Plc shares or ADSs are held on capital account, US holders will not be liable for South African tax on capital gains realised on the disposal of BHP Billiton Plc shares or ADSs unless:
such US holders are tax resident in South Africa; or
80 per cent or more of the market value of the BHP Group Plc shares or ADSs is attributable (at the time of disposal of those BHP Group Plc shares or ADSs) directly or indirectly to immovable property situated in South Africa and the US holder (alone or together with a connected person) in question directly or indirectly holds an interest of at least 20 per cent in BHP Group Plc; or
the US holder’s BHP Group Plc shares or ADSs form part of the business property of a permanent establishment which an enterprise of the US holder has in South Africa.
For a US holder who will recognise a capital gain or loss for South African capital gains tax purposes on a disposal of BHP Group Plc shares or ADSs, such gain or loss will be equal to the difference between the Rand value of the amount realised (i.e. proceeds) and the holder’s tax basis (i.e. base cost), determined in Rand, in those BHP Group Plc shares or ADSs. The holder’s tax basis will generally be equal to the cost that was incurred to acquire the BHP Group Plc shares or ADSs, if such shares or ADSs were acquired after 1 October 2001. South African capital gains tax is levied at an effective rate of 22.4 per cent for companies, up to 18 per cent for individuals (depending on the applicable tax bracket), and 36 per cent for trusts.
In addition to the above, in terms of the new section 9K inserted in the South African Income Tax Act, a natural person or a trust that is a South African tax resident who or which transfers listed shares from a South African exchange (eg. the JSE) to a foreign exchange is i) deemed to dispose of his/her listed shares at market value, and ii) deemed to have reacquired his/her listed shares on the same day for a tax basis (i.e. base cost), equal to market value. The section applies with effect from 1 March 2021 in respect of any security listed on an exchange outside of South Africa on or after that date.
South African Securities Transfer Tax is levied at 0.25 per cent in respect of the transfer of shares in a foreign company that are listed on the JSE. Accordingly, a transfer of those BHP Group Plc shares listed on the JSE will be subject to this tax. The tax is levied on the amount of consideration at which the BHP Group Plc share is transferred or, where no amount/value is declared or if the amount so declared is less than the lowest price of the BHP Group Plc share, the closing price of the BHP Group Plc share. The tax is ultimately borne by the person to whom that BHP Group Plc share is transferred.
4.10.11 Ancillary information for our shareholders
This Annual Report provides the detailed financial data and information on BHP’s performance required to comply with the reporting regimes in Australia, the United Kingdom and the United States.
Shareholders of BHP Group Limited and BHP Group Plc will receive a copy of the Annual Report if they have requested a copy. ADR holders may view all documents at bhp.com or opt to receive a hard copy by accessing https://app.irdirect.net/company/0/hotline/ or calling Citibank Shareholder Services during normal business hours using the details listed in the Corporate directory at the end of this Annual Report.
Change of shareholder details and enquiries
Shareholders wishing to contact BHP on any matter relating to their shares or ADR holdings are invited to telephone the appropriate office of the BHP Share Registrar or Transfer Office listed in the Corporate directory at the end of this Annual Report.
Any change in shareholding details should be notified by the shareholder to the relevant Registrar in a timely manner.
Shareholders can also access their current shareholding details and change many of those details at bhp.com. The website requires shareholders to quote their Shareholder Reference Number (SRN) or Holder Identification Number (HIN) in order to access this information.
Alternative access to the Annual Report
We offer an alternative for all shareholders who wish to be advised of the availability of the Annual Report through our website via an email notification. By providing an email address through our website, shareholders will be notified by email when the Annual Report has been released. Shareholders will also receive notification of other major BHP announcements by email. Shareholders requiring further information or wishing to make use of this service should visit bhp.com.
ADR holders wishing to receive a hard copy of the Annual Report 2021 can do so by accessing https://app.irdirect.net/company/0/hotline/ or calling Citibank Shareholder Services during normal business hours. ADR holders may also contact the adviser that administers their investments. Holders of BHP Group Plc shares dematerialised into Strate should liaise directly with their Central Securities Depository Participant (CSDP) or broker.
Key dates for shareholders
The following table sets out future dates in the next financial and calendar year of interest to our shareholders. If there are any changes to these dates or times, all relevant stock exchanges (see section 4.10.2) will be notified.
| | |
| | |
| | Final dividend payment date |
| |
| | BHP Group Plc Annual General Meeting in London
Time: 9.00am (local time)
Details of the business of the meeting are contained in the separate Notice of Meeting
|
| |
| | BHP Group Limited Annual General Meeting in Perth
Time: 1.00pm (local time)
Details of the business of the meeting are contained in the separate Notice of Meeting
|
| |
| | BHP Results for the half year ended 31 December 2021 |
4.11.1 Mining, oil andgas-related
10.1 Mining-related terms
The Australian Institute of Geoscientists.
Coal of high rank with the highest carbon content.
Association of Professional Engineers and Geoscientists of Saskatchewan.
Alberta Society of Professional Biologists
The Australasian Institute of Mining and Metallurgy.
The process of physically separating ore from waste material prior to subsequent processing of the improved ore.
Coal of intermediate rank with relatively high carbon content.
An area resulting from an underground mining method where the orebody is undermined to make it collapse under its own weight.
The development or exploration located inside the area of influence of existing mine operations which can share infrastructure/management.
A component of natural gas. Where sold separately, is largely butane gas that has been liquefied through pressurisation. One tonne of butane is approximately equivalent to 14,000 cubic feet of gas.
Equivalent to Ore Reserves,mineral reserves, but specifically concerning coal.
Equivalent to mineral resources, but specifically concerning coal.
Used in the manufacture of coke, which is used in the steelmaking process by virtue of its carbonisation properties. Coking coal may also be referred to as metallurgical coal.
A mixture of hydrocarbons that exist in gaseous form in natural underground reservoirs, but which condense to form a liquid at atmospheric conditions.
Electrolytically refined copper that has been deposited on the cathode of an electrolytic bath of acidified copper sulphate solution. The refined copper may also be produced through leaching and electrowinning.
A mixture of hydrocarbons that exist in liquid form in natural underground reservoirs and remain liquid at atmospheric pressure after being produced at the well head and passing through surface separating facilities.
A nominated Cut-off
grade
above which an Ore Reserve is
defined.the grade (i.e., the concentration of metal or mineral in rock) that determines the destination of the material during mining. For
example,purposes of establishing “prospects of economic extraction,” the
lowest cut-off
grade
of mineralisedis the grade that distinguishes material
deemed to have no economic value (it will not be mined in underground mining or if mined in surface mining, its destination will be the waste dump) from material deemed to have economic value (its ultimate destination during mining will be a processing facility). Other terms used in similar fashion ascut-off
grade include net smelter return, pay limit, and break-even stripping ratio.Development stage, as used in “Additional Information—Information on mining operations”, refers to a property that
qualifies as economic for estimating an Ore Reserve.has mineral reserves disclosed, pursuant toS-K
1300, but no material extraction.
Electrowinning/electrowon
An electrochemical process in which metal is recovered by dissolving a metal within an electrolyte and plating it onto an electrode.
Used as a fuel source in electrical power generation, cement manufacture and various industrial applications. Energy coal may also be referred to as steaming or thermal coal.
A component of natural gas. Where sold separately, is largely ethane gasExploration stage, as used in “Additional Information—Information on mining operations”, refers to a property that has been liquefied through pressurisation. One tonne of ethane is approximately equivalent to 28,000 cubic feet of gas.no mineral reserves disclosed.
An area consistingFirst principles refers to building up the costs for a piece of a single reservoir or multiple reservoirswork considering all grouped on or relatedthe parts and activities needed to the same individual geological structural feature and/or stratigraphic condition. There may be two or more reservoirs in a field that are separated vertically by intervening impervious strata, or laterally by local geologic barriers, or by both. Reservoirs that are associated by being in overlapping or adjacent fields may be treated as a single or common operational field.
The geological terms ‘structural feature’ and ‘stratigraphic condition’ are intended to identify localised geological features as opposed to the broader terms of basins, trends, provinces, plays,etc. (per SEC RegulationS-X,
Rule4-10).put it together.
A method of selectively recovering minerals from finely ground ore using a froth created in water by specific reagents. In the flotation process, certain mineral particles are induced to float by becoming attached to bubbles of froth and the unwanted mineral particles sink.
The finer particle fraction of coal ash.
FPSO (floating production, storage andoff-take)
A floating vessel used by the offshore oil and gas industry for the processing of hydrocarbons and for storage of oil. An FPSO vessel is designed to receive hydrocarbons produced from nearby platforms or subsea templates, process them and store oil until it can be offloaded onto a tanker.
Any physical or chemical measurement of the characteristics of the material of interest in samples or product.
The development or exploration located outside the area of influence of existing mine operations/infrastructure.
A process used for the recovery of metals such as copper, nickel, uranium and gold fromlow-grade
ores. The crushed material is laid on a slightly sloping, impermeable pad and leached by uniformly trickling (gravity fed) a chemical solution through the beds to ponds. The metals are recovered from the solution.Hypogene mineralisation is formed by fluids at high temperature and pressure derived from magmatic activity. Copper in Hypogene Sulphide is mainly provident from the copper bearing mineral chalcopyrite and higher metal recoveries are achieved via grinding/flotation concentration processes.
Indicated mineral resource
Indicated mineral resources is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling. The level of geological certainty associated with an indicated mineral resource is sufficient to allow a Qualified Person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Because an indicated mineral resource has a lower level of confidence than the level of confidence of a measured mineral resource, an indicated mineral resource may only be converted to a probable mineral reserve.
Inferred mineral resources
Inferred mineral resource is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. The level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an inferred mineral resource has the lowest level of geological confidence of all mineral resources, which prevents the application of the modifying factors in a manner useful for evaluation of economic viability, an inferred mineral resource may not be considered when assessing the economic viability of a mining project, and may not be converted to a mineral reserve.
Situated in the original place.
Joint Ore Reserves Committee (JORC) Code
A set of minimum standards, recommendations and guidelines for public reporting in Australasia of Exploration Results, Mineral Resources and Ore Reserves. The guidelines are defined by the Australasian Joint Ore Reserves Committee (JORC), which is sponsored by the Australian mining industry and its professional organisations.
The process by which a soluble metal can be economically recovered from minerals in ore by dissolution.
LNG (liquefied natural gas)248
A measure of the percentage of volatile matter (liquid or gas) contained within a mineral or rock. LOI is determined to calculate loss in mass when subjected to high temperatures.
LPG (liquefied petroleum gas)
Consists of propane and butane and a small amount (less than 2 per cent) of ethane that has been liquefied through pressurisation. One tonne of LPG is approximately equivalent to 12 barrels of oil.
Tonnes of coal available, at specified moisture content and
air-dried
qualities, for sale after the beneficiation of Coal Reserves.
Material of economic interest
Material of economic interest when used in the context of mineral resource determination, includes mineralization, including dumps and tailings, mineral brines, and other resources extracted on or within the earth’s crust. It does not include oil and gas resources resulting from oil and gas producing activities, gases (e.g. helium and carbon dioxide), geothermal fields, and water.
Member of the Australasian Institute of Mining and Metallurgy.
Measured mineral resource
Measured mineral resource is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a measured mineral resource is sufficient to allow a Qualified Person to apply modifying factors, as defined in this section, in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve.
A broader term than coking coal, which includes all coals used in steelmaking, such as coal used for the pulverised coal injection process.
The location at which the product is transferred from the mining operation on to the next stage, either for furtheroff-site
processing or distribution to customers as a saleable product. Mineral resource is a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such ascut-off
grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled. Mineral reserve is an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the Qualified Person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted.
Any single mineral or combination of minerals occurring in a mass, or deposit, of economic interest.
NGL (natural gas liquids)Mixed (ore type)
ConsistsRefer to Transitional Sulphide.
Modifying factors are the factors that a qualified person must apply to indicated and measured mineral resources and then evaluate in order to establish the economic viability of propane, butanemineral reserves. A Qualified Person must apply and ethane – individuallyevaluate modifying factors to convert measured and indicated mineral resources to proven and probable mineral reserves. These factors include, but are not restricted to: Mining; processing; metallurgical; infrastructure; economic; marketing; legal; environmental compliance; plans, negotiations, or asagreements with local individuals or groups; and governmental factors. The number, type and specific characteristics of the modifying factors applied will necessarily be a mixture.function of and depend upon the mineral, mine, property, or project.
Nominated production rate
The approved average production rate for the remainder of the
plan or five-year plan production rate if significantly different to
production rate.
Surface working in which the working area is kept open to the sky.
That part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserves determination. To establish this, studies appropriate to this type of mineral deposit involved have been carried out to estimate the quantity, grade and value of the ore mineral(s) present. In addition, technical studies have been completed to determine realistic assumptions for the extraction of minerals including estimates of mining, processing, economic, marketing, legal, environmental, social and governmental factors. The degree of these studies is sufficient to demonstrate the technical and economic feasibility of the project and depends on whether or not the project is an extension of an existing project or operation. The estimates of minerals to be produced include allowances for ore losses and the treatment of unmineralised materials which may occur as part of the mining and processing activities. Ore Reserves are sub-divided in order of increasing confidence into Probable Ore Reserves and Proven Ore Reserves.
Pulverised coal injection.
Probable Ore Reservesmineral reserve
Ore Reserves for which quantityProbable mineral reserve is the economically mineable part of an indicated and, grade and/or quality are estimated for information similar to that used for Proven Ore Reserves, that the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for Proven Ore Reserves, is high enough to assume continuity between points of observation.in some cases, a measured mineral resource.
A componentProduction stage, as used in “Additional Information—Information on mining operations”, refers to a property with material extraction of natural gas. Where sold separately, is largely propane gas that has been liquefied through pressurisation. One tonne of propane is approximately equivalent to 19,000 cubic feet of gas.
Proved oil and gas reserves
Those quantities of oil, gas and natural gas liquids, which by analysis of geoscience and engineering data can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation (from SEC Modernization of Oil and Gas Reporting, 2009, 17 CFR Parts 210, 211, 229 and 249).mineral reserves.
Proven Ore Reservesmineral reserve
Ore Reserves for which (a) quantityProven mineral reserve is estimatedthe economically mineable part of a measured mineral resource and can only result from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the resultsconversion of detailed samplings and (b) the sites for inspection, sampling and measurement are paced so closely and the geologic character is so well defined that size, shape, depth anda measured mineral content of reserves are well established.resource.
Reserve LifeQualified Person
Current stated Ore Reserves estimate dividedDefined by US SEC as an individual who is both (1) a mineral industry professional with at least five years of relevant experience in the current approved nominated production rate astype of mineralisation and type of deposit under consideration and in the specific type of activity that person is undertaking on behalf of the registrant; and (2) an eligible member or licensee in good standing of a recognised professional organisation at the end oftime the financial year.technical report is prepared.
Run of mine product mined in the course of regular mining activities. Tonnes include allowances for diluting materials and for losses that occur when the material is mined.
A
by-product
of smelting after the desired metal has been extracted from its ore.
A mixture of liquid and the finer particle sized fraction of minerals, typically related to tailings.
A thick, soft, wet mud or similar viscous mixture of liquid and solid components, especially the product of minerals processing or refining activities.
The process of extracting metal from its ore by heating and melting.
A method of separating one or more metals from a leach solution by treating with a solvent that will extract the required metal, leaving the others. The metal is recovered from the solvent by further treatment.
An accumulation of ore or mineral built up when demand slackens or when the treatment plant or beneficiation equipment is incomplete or temporarily unable to process the mine output; any heap of material formed to create a buffer for loading or other purposes or material dug and piled for future use.
Commence drilling ofAn area within an
oil or gas well.underground mine which uses thesub-level
cave method. This is where an ore body is extracted from the upper horizons first and mining progresses downwards level by level.Supergene is a term used to describe near-surface processes and their products, formed at low temperature and pressure by the activity of meteoric or surface water. Copper in Supergene Sulphide is mainly provident from the copper bearing minerals chalcocite and covellite and is amenable to both grinding/flotation concentration and leaching processes.
Those portions of washed or milled ore that are too poor to be treated further or remain after the required metals and minerals have been extracted.
TLP (tension leg platform)
A vertically moored floating facility for production of oil and gas.
Total Ore Reservesresources
The sum of Proveninferred, indicated and Probable Ore Reserves.measured mineral resources.
The sum of proved and probable mineral reserves.
Transitional Sulphide is a term used to describe the zone of mineralisation that is a gradation between Supergene Sulphide and Hypogene Sulphide resulting from the incomplete development of the former as it overprints the latter. This results in a more irregular distribution of the three main copper bearing minerals and is amenable to both grinding/flotation concentration and leaching processes.
Troy ounce is a unit of measure of precious metals.
Below the surface mining activities.
Production is usually quoted in terms of wet metric tonnes (wmt). To adjust from wmt to dry metric tonnes (dmt) a factor is applied based on moisture content.
4.11.210.2 Terms used in reserves and resources
| | |
| | silver |
| |
| | alumina |
| |
| | anthracite |
| |
| | inorganic material remaining after combustion |
| |
| | gold |
| |
| | copper |
| |
| | calorific value |
| |
| | iron |
| |
| | insolubles |
| |
| | potassium oxide |
| |
| | potassium chloride |
| |
| | carnallite |
| |
| | loss on ignition |
| |
| | Lower Patience Lake (stratigraphic unit) |
| |
| | metallurgical coal |
| |
| | magnesium oxide |
| |
| | molybdenum |
| |
| | nickel |
| |
| | phosphorous |
| |
| | phosphorous in concentrate |
| |
| | pulverised coal injection |
| |
| | sulphur |
| |
| | soluble copper |
| |
| | silica |
| |
| | total copper |
| |
| | thermal coal |
| |
| | uranium oxide |
| |
| | volatile matter |
| |
| | the percentage of material of interest that is extracted during mining and/or processing |
| |
| | zinc |
| | |
| | percentage or per cent |
| |
| | barrel (containing 42 US gallons) |
| |
| | barrels per day |
| |
| | billion cubic feet (measured at the pressure bases set by the regulator) |
| |
| | barrels of oil equivalent – 6,000 scf of natural gas equals 1 boe |
| |
| | carbon dioxide equivalent |
| |
| | dry metric tonne |
| |
| | gigajoule |
| |
| | gigalitre |
| |
| | grams per tonne |
| |
| | hectare |
| |
| | kilocalories per kilogram |
| |
| | kilograms per tonne |
| |
| | kilometre |
| |
| | thousand troy ounces |
| |
| | kilotonnes |
| |
| | kilotonnes per annum |
| |
| | kilotonnes per day |
| |
| | kilovolt |
| |
| | kilowatt |
| |
| | kilowatt hour |
| |
| | pound |
| |
| | metre |
| |
| | cubic metre |
| |
| | thousand barrels per day |
| |
| | thousand cubic feet (measured at the pressure bases set by the regulator) |
| |
| | megalitre |
| |
| | millimetre |
| |
| | million barrels per day (measured at the pressure bases set by the regulator) |
| |
| | million barrels of oil equivalent |
| |
| | million British thermal units – 1 scf of natural gas equals approximately 1,010 Btu |
| |
| | million cubic feet per day |
| |
| | thousand standard cubic feet |
| |
| | million tonnes |
| |
| | million tonnes per annum |
| |
| | megawatt |
| |
| | troy ounce |
| |
| | parts per million |
| |
| | petajoules |
| |
| | standard cubic feet |
| |
| | tonne |
| |
| | tonne of carbon dioxide equivalent |
| |
| | terajoule |
| |
| | terajoules per day |
| |
| | terawatt |
| |
| | terawatt hour |
| |
| | tonnes per annum |
| |
| | tonnes per day |
| |
| | tonnes per hour |
| |
| | wet metric tonnes |
AASB (Australian Accounting Standards Board)
Accounting standards as issued by the Australian Accounting Standards Board.
A quantitative measure of a level of activity that results in greenhouse gas emissions. Activity data is multiplied by an energy and/or emissions factor to derive the energy consumption and greenhouse gas emissions associated with a process or an operation. Examples of activity data include kilowatt-hours of electricity used, quantity of fuel used, output of a process, hours equipment is operated, distance travelled and floor area of a building.
ADR (American Depositary Receipt)
An instrument evidencing American Depositary Shares or ADSs, which trades on a stock exchange in the United States.
ADS (American Depositary Share)
A share issued under a deposit agreement that has been created to permit
US-resident
investors to hold shares in
non-US
companies and, if listed, trade them on the stock exchanges in the United States.
ADSs are evidenced by American Depositary Receipts, or ADRs, which are the instruments that, if listed, trade on a stock exchange in the United States.
ASIC (Australian Securities and Investments Commission)
The Australian Government agency that enforces laws relating to companies, securities, financial services and credit in order to protect consumers, investors and creditors.
Assets are a set of one or more geographically proximate operations (including
open-cut
mines
and underground
mines, and onshore and offshore oil and gas production and production facilities)mines). Assets include our operated and
non-operated
assets.assetsWe group our assets into geographic regions in order to provide effective governance and accelerate performance improvement. Minerals assets are grouped under Minerals Australia or Minerals Americas based on their geographic location. Oil, gas and petroleum assets are grouped together as Petroleum.
ASX (Australian Securities Exchange)
ASX is a multi-asset class vertically integrated exchange group that functions as a market operator, clearing house and payments system facilitator. It oversees compliance with its operating rules, promotes standards of corporate governance among Australia’s listed companies and helps educate retail investors.
Both companies in the DLC structure, being BHP Group Limited and BHP Group Plc and their respective subsidiaries.
BHP Group Limited and its subsidiaries.
BHP Group Limited and its subsidiaries.
A fully paid ordinary share in the capital of BHP Group Limited.
BHP Group Limited shareholders
The holders of BHP Group Limited shares.
BHP Group Limited Special Voting Share
A single voting share issued to facilitate joint voting by shareholders of BHP Group Limited on Joint Electorate Actions.Actions (prior to unification of the DLC structure).
BHP Group Plc (now known as BHP Group (UK) Ltd) and its subsidiaries.
A fully paid ordinary share in the capital of BHP Group Plc.Plc (now known as BHP Group (UK) Ltd).
BHP Group Plc shareholders
The holders of BHP Group Plc shares.shares (prior to unification of the DLC structure).
BHP Group Plc Special Voting Share
A single voting share issued to facilitate joint voting by shareholders of BHP Group Plc (now known as BHP Group (UK) Ltd) on Joint Electorate Actions.Actions (prior to unification of the DLC structure).
BHP Group (UK) Ltd (formerly known as BHP Group Plc) and its subsidiaries.
In the context of BHP’s financial results, BHP shareholders refers to the holders of shares in BHP Group Limited and BHP Group Plc.Limited.
The Board of Directors of BHP.
Canadian Greenhouse Gas Reporting Program
The Greenhouse Gas Reporting Program (GHGRP) collects information on greenhouse gas (GHG) emissions annually from facilities across Canada.
Carbon dioxide equivalent (CO
2
-e)
The universal unit of measurement to indicate the global warming potential (GWP) of each greenhouse gas, expressed in terms of the GWP of one unit of carbon dioxide. It is used to evaluate releasing (or avoiding releasing) different greenhouse gases against a common basis.
Carbon neutral includes all those greenhouse gas emissions as defined for BHP reporting purposes.
The central purpose of a carbon offset for an organisation is to substitute for internal GHG emission reductions. Offsets may be generated through projects in which GHG emissions are avoided, reduced, removed from the atmosphere or permanently stored (sequestration). Carbon offsets are generally created and independently verified in accordance with either a voluntary program or under a regulatory program. The purchaser of a carbon offset can ‘retire’ or ‘surrender’ it to claim the underlying reduction towards their own GHG emissions reduction targets or goals or to meet legal obligations.
Central Queensland Coal Associates.The CEO Water Mandate is a UN Global Compact initiative that mobilises business leaders on water, sanitation, and the Sustainable Development Goals. Endorsers of the CEO Water Mandate commit to continuous progress against six core elements of stewardship and in so doing understand and manage their own water risks. Companies that endorse the Mandate agree to continuous improvement in six core areas of their water stewardship practice: Direct Operations, Supply Chain & Watershed Management, Collective Action, Public Policy, Community Engagement and Transparency. BHP is an active signatory of the Mandate.
Our Commercial function seeks to maximise commercial
and social value across our
supply chain. It provides effective and efficient service levels to our assets and customers through world-class insights and market intelligence, deep subject-matter expertise, simple processes and centralised standard activities. The function is organised around the core activities in our inbound and outbound value chains, supported by
business partnering, credit and market risk management, and strategy and planning activities.
BHP Group Limited BHP Group Plc and their respectiveits subsidiaries.
Assets/operations/entities that are owned and/or operated by BHP, excluding major assets/operations/entities classified as Discontinued Operations.
Convention of Biological Diversity
The Convention on Biological Diversity (CBD) is the international legal instrument for ‘the conservation of biological diversity, the sustainable use of its components and the fair and equitable sharing of the benefits arising out of the utilization of genetic resources’ that has been ratified by 196 nations.
Central Queensland Coal Associates.
Major assets/Assets/operations/entities that have either been disposed of or are classified as held for sale in accordance with IFRS 5/AASB 5
Non-current
Assets Held for Sale and Discontinued Operations
.
The date, determined by a company’s board of directors, by when an investor must be recorded as an owner of shares in order to qualify for a forthcoming dividend.
DLC (Dual Listed Company)
BHP’s Dual Listed Company structure had two parent companies (BHP Group Limited and BHP Group Plc (now known as BHP Group (UK) Ltd)) operating as a single economic entity as a result of the DLC merger. The DLC structure was unified on 31 January 2022
A share to enable a dividend to be paid by BHP Group Plc to BHP Group Limited or by BHP Group Limited to BHP Group Plc (as applicable).
DLC (Dual Listed Company)
BHP’s Dual Listed Company structure has two parent companies (BHP Group Limited and BHP Group Plc) operating as a single economic entity as a result prior to unification of the DLC merger.structure
The Dual Listed Company merger between BHP Group Limited and BHP Group Plc (now known as BHP Group (UK) Ltd) on 29 June 2001.
BHP’s Economic Contribution Report for the year ended 30 June 2022.
ELT (Executive Leadership Team)
The Executive Leadership Team directly reports to the Chief Executive Officer and is responsible for themanagement of BHP and leading the delivery of our strategic objectives. A factor that converts activity data into greenhouse gas emissions data (e.g. kgCO
2
-e emitted per GJ of fuel consumed, kg CO
2
-e emitted per KWh of electricity used).
A consolidation approach whereby a company accounts for greenhouse gas emissions from operations according to its share of equity in the operation. The equity share reflects economic interest, which is the extent of rights a company has to the risks and rewards flowing from an operation. Also see the definition for ‘Operational control approach’.
ELT (Executive Leadership Team)
The Executive Leadership Team directly reports to the Chief Executive Officer and is responsible for themanagement of BHP and leading the delivery of our strategic objectives.Energy means all forms of energy products where ‘energy products’ means combustible fuels, heat, renewable energy, electricity, or any other form of energy from operations that are owned or controlled by BHP. The primary sources of energy consumption come from fuel consumed by haul trucks at our operated assets, as well as purchased electricity used at our operated assets.
The energy content of a fuel is an inherent chemical property that is a function of the number and types of chemical bonds in the fuel.
Entrained water includes water incorporated into product and/or waste streams, such as tailings, that cannot be easily recovered.
EPA (Environmental Protection Agency)Equity share approach
A consolidation approach whereby a company accounts for greenhouse gas emissions from operations according to its share of equity in the operation. The EPAequity share reflects economic interest, which is the extent of rights a government regulator workingcompany has to protect the environment through regulation of pollutionrisks and waste.
Evaporation volumerewards flowing from an operation. Also see the definition for ‘Operational control approach’.
Volumes of water that are consumed via evaporation of water from water storage facilities and for dust suppression activities. Evaporation volumes are calculated using both climate and physical information. Evaporation may be calculated by multiplying the evaporation rate (measured throughon-site
instruments or sourced from meteorological authorities) by the surface areas of the water body, or it may be estimated from the change in stored water volumes when the other inputs and outputs are directly measured.Executive KMP (Key Management Personnel)
Executive KMP includes the Executive Director (our CEO), the Chief Financial Officer, the President Operations (Minerals Australia), the President Operations (Minerals Americas), and the
President Operations (Petroleum)Senior Executive Officer (President Petroleum until 31 May). It does not include the
Non-Executive
Directors (our Board).
Financial control approach
A consolidation approach whereby a company reports greenhouse gas emissions based on the accounting treatment in the company’s consolidated financial statements, as follows:
100 per cent for operations accounted for as subsidiaries, regardless of the equity interest owned
for operations accounted for as a joint operation, the company’s interest in the operations
It does not report greenhouse gas emissions from operations that are accounted for using the equity method in the company’s financial statements.
Functions operate along global reporting lines to provide support to all areas of the organisation. Functions have specific accountabilities and deep expertise in areas such as finance, legal, governance, technology, human resources, corporate affairs, health, safety and community.
The ratio of net debt to net debt plus net assets.
For BHP reporting purposes, these are the aggregate anthropogenic carbon dioxide equivalent emissions of carbon dioxide (CO
2
), methane (CH
4
), nitrous oxide (N
2
O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF
6
). Nitrogen trifluoride (NF
3
) GHG emissions are currently not relevant for BHP reporting purposes.
The global goal for nature defines what is needed to halt and reverse today’s catastrophic loss of nature. It is supported by a number of organisations that ask governments to adopt the goal at the international level, which each country, the private sector, communities and others can contribute to achieving.
Goal (in respect of greenhouse gas emissions)
An ambition to seek an outcome for which there is no current pathway(s), but for which efforts will be pursued towards addressing that challenge, subject to certain assumptions or conditions.
GRI (Global Reporting Initiative)
GRI works with businesses and governments to understand and communicate their impact on critical sustainability issues.
Water beneath the earth’s surface, including beneath the seabed, which fills pores or cracks between porous media such as soil, rock, coal, and sand, often forming aquifers. Groundwater may be abstracted for use from bore fields or accessed via dewatering to access ore. For accounting purposes, water that is entrained in the ore can be considered as groundwater (e.g. dewatering, abstraction from bore field, ore entrainment).groundwater.
BHP Group Limited BHP Group Plc and their respectiveits subsidiaries.
GWP (global warming potential)
A factor describing the radiative forcing impact (degree of harm to the atmosphere) of one unit of a given greenhouse gas relative to one unit of CO
2
. BHP currently uses GWP from the Intergovernmental Panel on Climate Change (IPCC) Assessment Report
4 (AR4)5 (AR5) based on
a100-year
timeframe.
A natural gas pipeline located in Erath, Louisiana that serves as the official delivery location for futures contracts on the New York Mercantile Exchange.
HPI (high-potential injuries)
High-potential injuries (HPI) are recordable injuries and first aid cases where there was the potential for a fatality.
ICMM (International Council on Mining and Metals)
The International Council on Mining and Metals is an international organisation dedicated to a safe, fair and sustainable mining and metals industry.
IFRS (International Financial Reporting Standards)
Accounting standards as issued by the International Accounting Standards Board.
IPCC (Intergovernmental Panel on Climate Change)
The Intergovernmental Panel on Climate Change (IPCC) is the United Nations body for assessing the science related to climate change.
IUCN (International Union for Conservation of Nature)
The International Union for Conservation of Nature is an international organisation working in the field of nature conservation and sustainable use of natural resources.
KMP (Key Management Personnel)
Persons havingKey Management Personnel (KMP) includes the roles which have the authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly.
For BHP, KMP includes the Executive Director (our CEO), theNon-ExecutiveNon-executive
Directors,
(our Board), as well asthe CEO, the Chief Financial Officer, the President Minerals Australia, the President Minerals Americas and the
Senior Executive Officer (i.e. President
Petroleum.Petroleum until 31 May 2022).KPI (key performance indicator)
Used to measure the performance of the Group, individual businesses and executives in any one year.
Legacy assets refer to those
BHP-operated
assets, or part thereof, located in the Americas that are in the closure phase.
LME (London Metal Exchange)
A major futures exchange for the trading of industrial metals.
Scope 2 greenhouse gas emissions based on average energy generation emission factors for defined geographic locations, including local, subnational, or national boundaries (i.e. grid factors). In the case of a direct line transfer, the location-based emissions are equivalent to the market-based emissions.
Scope 2 greenhouse gas emissions based on the generators (and therefore the generation fuel mix from which the reporter contractually purchases electricity and/or is directly provided electricity via a direct line transfer).
Minerals AmericasNature positive
A grouphigh-level goal and concept describing a future state of assets located in Brazil, Canada, Chile, Colombia, Perunature (e.g. biodiversity, ecosystem services and natural capital) which is greater than the United States (see ‘Asset groups’) focusingcurrent state. This definition comes from the Taskforce on copper, zinc, iron ore, energy coal and potash.
Minerals AustraliaNature-related Financial Disclosures (TNFD) Framework – Beta release v0.1.
A group of assets located in Australia (see ‘Asset groups’). Minerals Australia includes operations in Western Australia, Queensland, New South Wales and South Australia, focusing on iron ore, copper, metallurgical, and energy coal and nickel.
Net zero (for a BHP greenhouse gas goal, target or pathway, or similar)
Net zero includes the use of carbon offsets as required.governed by BHP’s approach to carbon offsetting described at bhp.com/climate.
Net zero (for industry sectors, the global economy, transition or future, or similar)
Net zero refers to a state in which the greenhouse gases (as defined in this Glossary) going into the atmosphere are balanced by removal out of the atmosphere.
NGER (National Greenhouse and Energy Reporting Scheme)
The Australian National Greenhouse and Energy Reporting (NGER) scheme is a single national framework for reporting and disseminating company information about greenhouse gas emissions, energy production, energy consumption and other information specified under NGER legislation.
Concentrate, matte, residue, and mix sulphide.
Non-operated
asset/non-operated
joint venture (NOJV)
Non-operated
assets/non-operated
joint ventures include interests in assets that are owned as a joint venture but not operated by BHP. References in this Annual Report to a ‘joint venture’ are used for convenience to collectively describe assets that are not wholly owned by BHP. Such references are not intended to characterise the legal relationship between the owners of the asset.
An illness that occurs as a consequence of work-related activities or exposure. It includes acute or chronic illnesses or diseases, which may be caused by inhalation, absorption, ingestion or direct contact.
OELs (occupational exposure limits)
An occupational exposure limit is an upper limit on the acceptable concentration of a hazardous substance in workplace air for a particular material or class of materials. OELs may also be set for exposure to physical agents such as noise, vibration or radiation.
OMC (Operations Management Committee)OFR
Prior to FY2018,BHP’s Operating and Financial Review for the Operations Management Committee had responsibility for planning, directing and controlling the activities of BHP under the authorities that have been delegated to it by the Board. This included key strategic, investment and operational decisions, and recommendations to the Board.year ended 30 June 2022.
During FY2018 the OMC was dissolved and the Remuneration Committeere-examined
the classification of KMP for FY2018 to determine which persons have the authority and responsibility for planning, directing and controlling the activities of BHP. After due consideration, the Remuneration Committee determined the KMP for FY2018 comprised of allNon-executive
Directors (the Board), the Executive Director (the CEO), the Chief Financial Officer, the President Operations, Minerals Australia, the President Operations, Minerals Americas, and the President Operations, Petroleum. The Committee also determined that, effective 1 July 2017, the Chief External Affairs Officer and Chief People Officer roles are no longer considered KMP.BHP’s petroleumPetroleum asset (divested in the year ended 30 June 2019) in four US shale areas (Eagle Ford, Permian, Haynesville and Fayetteville), where we produced oil, condensate, gas and natural gas liquids.
OPEC (Organization of the Petroleum Exporting Countries)
OPEC is a permanent intergovernmental organisation of 13oil-exporting
developing nations that coordinates and unifies the petroleum policies of its Member Countries.Operated assets include assets that are wholly owned and operated by BHP and assets that are owned as a joint venture and operated by BHP. References in this Annual Report to a ‘joint venture’ are used for convenience to collectively describe assets that are not wholly owned by BHP. Such references are not intended to characterise the legal relationship between the owners of the asset.
Operational control approach
A consolidation approach whereby a company accounts for 100 per cent of the greenhouse gas emissions over which it has operational control (a company is considered to have operational control over an operation if it or one of its subsidiaries has the full authority to introduce and implement its operating policies at the operation). It does not account for greenhouse gas emissions from operations in which it owns an interest but does not have operational control. Also see the definition for ‘Equity share approach’.
Open-cut
mines, underground mines
offshore oil and gas production and processing facilities.
The Operating Model outlines how BHP is organised, works and measures performance and includes mandatory performance requirements and common systems, processes and planning. The Operating Model has been simplified and BHP is organised by assets, asset groups, Commercial, and functions.
OSHA (Occupational Safety and Health Administration)
The Occupational Safety and Health Administration is an agency of the United States Department of Labor that regulates workplace health and safety.
Other (with respect to water consumption volumes)
This includes water volumes used for purposes such as potable water consumption and amenity facilities at our operated assets.
The Paris Agreement is an agreement between countries party to the United Nations Framework Convention on Climate Change (UNFCC) to strengthen efforts to combat climate change and adapt to its effects, with enhanced support to assist developing countries to do so.
Aims of the Paris Agreement goals
The central objective of the Paris Agreement is its long-term temperature goal to hold global average temperature increase to well below 2°C above
pre-industrial
levels and pursue efforts to limit the temperature increase to 1.5°C above
pre-industrial
levels.
Aligned to the Paris Agreement goals.
A group of oil and gas assets (see ‘Asset groups’). formerly operated by BHP before its merger with Woodside in June 2022. Petroleum’s core production operations arewere located in the US Gulf of Mexico, Australia and Trinidad and Tobago. Petroleum producesproduced crude oil and condensate, gas and natural gas liquids.
PPE (personal protective equipment)
PPE means anything used or worn to minimise risk to worker’s health and safety, including air supplied respiratory equipment.
In the context of American Depositary Shares (ADS) and listed investments, the term ‘quoted’ means ‘traded’ on the relevant exchange.
The mix of energy generation resources and associated attributes such as greenhouse gas emissions in a defined geographic boundary left after contractual instruments have been claimed/retired/cancelled. The residual mix can provide an emission factor for companies without contractual instruments to use in a market-based method calculation. A residual mix is currently unavailable to account for voluntary purchases and this may result in double counting between electricity consumers.
SASB (Sustainability Accounting Standards Board)
The Sustainability Accounting Standards Board is a
non-profit
organisation that develops standards focused on the financial impacts of sustainability.
Scope 1 greenhouse gas emissions
Scope 1 greenhouse gas emissions are direct emissions from operations that are owned or controlled by the reporting company. For BHP, these are primarily emissions from fuel consumed by haul trucks at our operated assets, as well as fugitive methane emissions from coal and petroleum production at our operated assets.
Scope 2 greenhouse gas emissions
Scope 2 greenhouse gas emissions are indirect emissions from the generation of purchased or acquired electricity, steam, heat or cooling that is consumed by operations that are owned or controlled by the reporting company. BHP’s Scope 2 emissions have been calculated using the market-based method using supplier specific emissions factors unless otherwise specified.
Scope 3 greenhouse gas emissions
Scope 3 greenhouse gas emissions are all other indirect emissions (not included in Scope 2) that occur in the reporting company’s value chain. For BHP, these are primarily emissions resulting from our customers using and processing the commodities we sell, as well as upstream emissions associated with the extraction, production and transportation of the goods, services, fuels and energy we purchase for use at our operations; emissions resulting from the transportation and distribution of our products; and operational emissions (on an equity basis) from our
non-operated
joint ventures.
Water from oceans, seas and estuaries.
SEC (United States Securities and Exchange Commission)
The US regulatory commission that aims to protect investors, maintain fair, orderly and efficient markets and facilitate capital formation.
An employee who has responsibility for planning, directing or controlling the activities of the entity or a strategically significant part of it. In the Strategic Report,OFR, senior manager includes senior leaders and any persons who are directors of any subsidiary company even if they are not senior leaders.
All-employee
share purchase plan.
Social investment is our voluntary contribution towards projects or donations with the primary purpose of contributing to the resilience of the communities where we operate and the environment, aligned with our broader business priorities. BHP’s targeted level of contribution is 1 per cent of
pre-tax
profit calculated on the average of the previous three years’
pre-tax
profit as reported.
For FY2023-FY2030, our social investment will be assessed as a total over the seven-year goals period to FY2030, rather than calculated as an average of the previous three years’pre-tax
profit.During FY2015, BHP demerged a selection of our alumina, aluminium, coal, manganese, nickel, silver, lead and zinc assets into a new company – South32 Limited.
SPM (sustainability performance metric)
The sustainability performance metrics are the metrics used to measure and evaluate our sustainability performance.260
South Africa’s Central Securities Depositary for the electronic settlement of financial instruments.
All water naturally open to the atmosphere, except forincluding rivers, lakes and creeks and external water dams but excluding water from oceans, seas and estuaries (e.g. precipitation and runoff, including snow and hail), rivers and creeks and external water dams..
Target (in respect of greenhouse gas emissions)
An intended outcome in relation to which we have identified one or more pathways for delivery of that outcome, subject to certain assumptions or conditions.
Water supplied by an entity external to the operational facility. Third-party water may contains water from the other three sources, surface water, groundwater and seawater.
An asset that we believe is large, long life and low cost.
TRIF (total recordable injury frequency)
The sum of (fatalities + lost-time cases + restricted work cases + medical treatment cases) x 1,000,000 ÷ actual hours worked.
Stated in units of per million hours worked. BHP adopts the US Government Occupational Safety and Health Administration guidelines for the recording and reporting of occupational injury and illnesses. TRIF statistics exclude
non-operated
assets.
TSR (total shareholder return)
TSR measures the return delivered to shareholders over a certain period through the movements in share price and dividends paid (which are assumed to be reinvested). It is the measure used to compare BHP’s performance to that of other relevant companies under the Long-Term Incentive Plan.
UKLA (United Kingdom Listing Authority)
Term used when the UK Financial Conduct Authority (FCA) acts as the competent authority under Part VI of the UK Financial Services and Markets Act (FSMA).
Underlying attributable profit
Profit/(loss) after taxation attributable to BHP shareholders excluding any exceptional items attributable to BHP shareholders as described in Financial Statements note 3 ‘Exceptional items’ in section 3. Refer. For more information refer to section 4.2 for further information.OFR 11.
Underlying EBITDA, including depreciation, amortisation and impairments. Refer to section 4.2 for further information.
313Earnings before net finance costs, taxation expense, Discontinued operations and any exceptional items. Underlying EBIT includes BHP’s share of profit/(loss) from investments accounted for using the equity method including net finance costs and taxation expense/(benefit). For more information refer to OFR 11.
Earnings before net finance costs, depreciation, amortisation and impairments, taxation expense, Discontinued operations and exceptional items. ReferUnderlying 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). For more information refer to section 4.2 for further information.OFR 11.
The unification of BHP’s corporate structure under BHP Group Limited as effected on 31 January 2022.
One of the financial measures BHP uses to monitor the performance of individual assets. Unit costs are calculated as ratio of net costs of the assets to the equity share of sales tonnage. Net costs is defined as revenue less Underlying EBITDA excluding freight and other costs, depending on the nature of each asset.
Petroleum unit costs exclude exploration and development and evaluation expense and other costs that do not represent underlying cost performance of the business; Western Australia Iron Ore, Queensland Coal and New South Wales Energy Coal unit costs exclude
government royalties; Escondida unit costs exclude
by-product
credits.
United Nations Sustainable Development Goals (SDGs)
The Sustainable Development Goals (SDGs), also known as the Global Goals, were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity.
WAF (Water Accounting Framework)
The Water Accounting Framework is a common mining and metals industry approach to water accounting in Australia.
Water of high quality that would require minimal (if any) treatment to meet drinking water standards. This water is considered high-quality/high-grade in the
International Council on Mining and Metals (ICMM) ‘A Practical Guide to Consistent Water Reporting’
‘Good Practice Guide’ (2nd Edition) (2021).
Water of medium quality that would require moderate treatment to meet drinking water standards (it may have a high salinity threshold of no higher than 5,000 milligrams per litre total dissolved solids and other individual constituents). This water is considered high-quality/high-grade in the
International Council on Mining and Metals (ICMM) ‘A Practical Guide to Consistent Water Reporting’
‘Good Practice Guide’ (2nd Edition) (2021).
Water of low quality that would require significant treatment to meet drinking water standards. It may have individual constituents with high values of total dissolved solids, elevated levels of metals or extreme levels of pH. This type of water also includes seawater. This water is considered
in the
International Council on Mining and Metals (ICMM) ‘A Practical Guide to Consistent Water Reporting’
‘Good Practice Guide’ (2nd Edition) (2021).
WRSA (Water Resource Situational Analysis)
A situational analysisWater Resource Situational Analysis (WRSA) is an analysisa holistic assessment of the water situation where an asset operates. The process is designed to describe the water challenges that stakeholders share and the opportunities for collective action to address those challenges. The WRSA is prepared by a credible third-party and draws on publicly available information and direct stakeholder input. Within a defined area that includes the water resources and catchments that the operated assetBHP interacts, with, includingeach WRSA includes assessment of: (i)
the sustainability of the volume and quality of the water resources, taking into account interactions of all other parties and climate change forecasts; (ii) BHP’s direct, indirect and cumulative impacts on the sustainability of the volume and quality of the water resources and any related environmental, social or cultural values taking into accountand climate change forecasts in accordance with the Water Management Standard; (iii)
the state of water infrastructure, water access, sanitation and hygiene of local communities; (iv) communities
the environmental health of the water catchments that feed the water resources taking into account the extent of vegetation, runoff, and any conservation of the area; (v) area
external water governance arrangements and their effectiveness.effectiveness
Telephone Australia 1300 55 47 57
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Facsimile +61 3 9609 3015
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Telephone +1 713 961 8500
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Marina Bay Financial Centre, Tower 2
Share Registrars and Transfer Offices
BHP Group Limited Registrar
Computershare Investor Services
Yarra Falls, 452 Johnston Street
Postal address – GPO Box 2975
Telephone 1300 656 780 (within Australia)
+61 3 9415 4020 (outside Australia)
Facsimile +61 3 9473 2460
Email enquiries: investorcentre.com/bhp
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Postal address (for general enquiries)
The Pavilions, Bridgwater Road
Telephone +44 344 472 7001
Facsimile +44 370 703 6101
Email enquiries: investorcentre.co.uk/contactus
BHP Group Plc Branch Register and Transfer Secretary
Computershare Investor Services
Postal address – Private Bag X9000
Telephone +27 11 373 0033
Facsimile +27 11 688 5217
Email enquiries: web.queries@computershare.co.za
Holders of shares dematerialised into Strate should contact their CSDP or stockbroker.
Computershare Investor Services Limited
Level 2/159 Hurstmere Road
Postal address – Private Bag 92119
Computershare Trust Company, N.A.
Postal address – PO Box 43078
Telephone +1 888 404 6340
Facsimile +1 312 601 4331
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Telephone +1 781 575 4555 (outside of US) +1 877 248 4237(toll-free within US)Facsimile +1 201 324 3284
Email enquiries: citibank@shareholders-online.com
Exhibits marked
‘*’“*” have been filed as exhibits to this annual report on Form
20-F.
Remaining exhibits have been incorporated by reference as indicated.
| Exhibit 4 Material Contracts
4.2 | SVC Special Voting Shares Deed, dated 29 June 2001, among BHP Limited, BHP SVC Pty Limited, Billiton Plc, Billiton SVC Limited and The Law Debenture Trust Corporation p.l.c.(2)(P)
|
4.3 | SVC Special Voting Shares Amendment Deed, dated 13 August 2001, among BHP Limited, BHP SVC Pty Limited, Billiton Plc, Billiton SVC Limited and The Law Debenture Trust Corporation p.l.c.(2)(P)
|
4.4*4.1 | Deed Poll Guarantee, dated 29 June 2001, of BHP Limited(2)(P)
|
4.5 | Deed Poll Guarantee, dated 29 June 2001, of Billiton Plc(2)(P)
|
4.8 | BHP Billiton Ltd Long Term Incentive Plan Rules, datedapproved November 2010(2)(P)
|
4.104.3 | BHP Billiton Plc Long Term Incentive Plan Rules, dated November 2010(2)(P)
|
Exhibit 8 List of Subsidiaries
| | | *8.1 | | | | | | | Certifications (section 302) |
Exhibit 12 Certifications (section 302)
| | | *12.2 | | | | | | | Certifications (section 906) |
Exhibit 13 Certifications (section 906)
Exhibit 15 Consent of Independent Registered Public Accounting Firm
| | | *15.3 | | | | | | *15.4 | | | | | | Technical Report Summaries | 101.INS* | | | *96.1 | | | | | | *96.2 | | | | | | *96.3 | | | | | | | | | | | *101.INS | | Inline XBRL Instance Document—this instance document does not appear in the Interactive Data File because its XBRL tags embedded within the Inline XBRL document |
101.SCH**101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
101.CAL**101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF**101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB**101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE**101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | | | | Cover Page Interactive Data File | | | | *104 | | Cover page Interactive Data File (embedded within the Inline XBRL document) |
(1) | Previously filed as an exhibit to BHP’s annual report on Form 20-F for the year ended 30 June 2016 on 21 September 2016. |
(2) | Previously filed on paper form as an exhibit to BHP’s annual report on Form20-F
for the year ended 30 June 2001 on 19 November 2001. |
(3) | Previously filed as an exhibit to BHP’s annual report on Form20-F
for the year ended 30 June 2008 on 15 September 2008. |
(4) | Previously filed as an exhibit to BHP’s annual report on Form20-F
for the year ended 30 June 2020 on 22 September 2020. |
(P) | Previously filed on paper form.
|
The registrantsregistrant hereby certifycertifies that they meetit meets all of the requirements for filing on Form 20-F and that they haveit has duly caused and authorised the undersigned to sign this annual report on theirits behalf. Date: 216 September 20212022
About these Financial Statements BHP Group Limited, an incorporated Australian-listed company, and BHP Group Plc, an incorporated UK-listed company, formformed a Dual Listed Company (DLC) . These entities until 31 January 2022. Under the DLC structure BHP Group Limited, BHP Group Plc and their subsidiaries operateoperated together as a single for-profit economic entity (referred to as ‘BHP’ or ‘the Group’) with a common Board of Directors, unified management structure and joint objectives. In effect, the DLCOn 31 January 2022, BHP unified its corporate structure provides the same voting rights and dividend entitlements fromunder BHP Group Limited, and subsequently BHP Group Plc irrespective of whether investors hold shares inchanged its name to BHP Group Limited(UK) Ltd. Throughout the Consolidated Financial Statements (the Financial Statements), the collective contributions of the aforementioned entities are referred to as ‘BHP’ or BHP Group Plc.‘the Group’, regardless of the DLC or unified corporate structure.Group and related party information is presented in note 3331 ‘Related party transactions’ in section 3.1.to the Financial Statements. This details transactions between the Group’s subsidiaries, associates, joint arrangements and other related parties. The nature of the operations and principal activities of the Group are described in the segment information (refer to note 1 ‘Segment reporting’ in section 3.1)to the Financial Statements). Presentation of the Consolidated Financial Statements Directors of BHP Group Limited and BHP Group Plc Directors have included information in this report they deem to be material and relevant to the understanding of the Consolidated Financial Statements (the Financial Statements).Statements. Disclosure may be considered material and relevant if the dollar amount is significant due to its size or nature, or the information is important to understand the: Group’s current year results impact of significant changes in the Group’s business or aspects of the Group’s operations that are important to future performance On 22 November 2021, the Group and Woodside Energy Group Limited (‘Woodside’) signed a binding Share Sale Agreement (‘SSA’) for the merger of the Group’s oil and gas portfolio with Woodside. While the merger had an economic effective date of 1 July 2021, the Group continued to control the Petroleum assets and carry on business in the normal course for 11 months until 1 June 2022 (Completion Date). As such, the Group recognises its share of revenue, expenses, net finance costs and associated income tax expense related to the Discontinued operation until the Completion Date. Comparative periods have been adjusted for the effects of applying IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ to disclose the Group’s Petroleum business on the same basis as the current period. These Financial Statements were approved by the Board of Directors on 2 September 2021. The Directors have the authority to amend the Financial Statements after issuance.16 August 2022.
3.11 Consolidated Financial Statements
3.1.11.1 Consolidated Income Statement for the year ended 30 June 20212022 | | | | | | | | | | | | | | | | | | | | Notes | | | | | | 2020 | | | 2019 | | | | | | | | | | | US$M | | | US$M | | | | | | | | | | | | | | | | | | | | | | 2 | | | | | | | | 42,931 | | | | 44,288 | | | | | 5 | | | | | | | | 777 | | | | 393 | | Expenses excluding net finance costs | | | 5 | | | | | | | | (28,775 | ) | | | (28,022 | ) | Loss from equity accounted investments, related impairments and expense s | | | 31 | | | | | | | | (512 | ) | | | (546 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 14,421 | | | | 16,113 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,262 | ) | | | (1,510 | ) | | | | | | | | | | | | 351 | | | | 446 | | | | | | | | | | | | | | | | | | | | | | | 22 | | | | | | | | (911 | ) | | | (1,064 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,510 | | | | 15,049 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (4,708 | ) | | | (5,335 | ) | Royalty-related taxation (net of income tax benefit) | | | | | | | | | | | (66 | ) | | | (194 | ) | | | | | | | | | | | | | | | | | | | | | | 6 | | | | | | | | (4,774 | ) | | | (5,529 | ) | | | | | | | | | | | | | | | | | | | Profit after taxation from Continuing operations | | | | | | | | | | | 8,736 | | | | 9,520 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loss after taxation from Discontinued operations | | | 29 | | | | | | | | – | | | | (335 | ) | | | | | | | | | | | | | | | | | | | Profit after taxation from Continuing and Discontinued operations | | | | | | | | | | | 8,736 | | | | 9,185 | | | | | | | | | | | | | | | | | | | | Attributable to non-controlling interests | | | | | | | | | | | 780 | | | | 879 | | Attributable to BHP shareholders | | | | | | | | | | | 7,956 | | | | 8,306 | | | | | | | | | | | | | | | | | | | | Basic earnings per ordinary share (cents) | | | 7 | | | | | | | | 157.3 | | | | 160.3 | | Diluted earnings per ordinary share (cents) | | | 7 | | | | | | | | 157.0 | | | | 159.9 | | Basic earnings from Continuing operations per ordinary share (cents) | | | 7 | | | | | | | | 157.3 | | | | 166.9 | | Diluted earnings from Continuing operations per ordinary share (cents) | | | 7 | | | | | | | | 157.0 | | | | 166.5 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | Notes | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2 | | | | | | | | 56,921 | | | | 38,924 | | | | | 5 | | | | | | | | 380 | | | | 720 | | Expenses excluding net finance costs | | | 5 | | | | | ) | | | (30,871 | ) | | | (25,453 | ) | Loss from equity accounted investments, related impairments and expenses | | | 29 | | | | | ) | | | (915 | ) | | | (508 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 25,515 | | | | 13,683 | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | (1,290 | ) | | | (1,192 | ) | | | | | | | | | | | | 67 | | | | 334 | | | | | | | | | | | | | | | | | | | | | | | 22 | | | | | ) | | | (1,223 | ) | | | (858 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 24,292 | | | | 12,825 | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | (10,376 | ) | | | (4,216 | ) | Royalty-related taxation (net of income tax benefit) | | | | | | | | ) | | | (240 | ) | | | 19 | | | | | | | | | | | | | | | | | | | | | | | 6 | | | | | ) | | | (10,616 | ) | | | (4,197 | ) | | | | | | | | | | | | | | | | | | | Profit after taxation from Continuing operations | | | | | | | | | | | 13,676 | | | | 8,628 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profit/(loss) after taxation from Discontinued operations | | | 27 | | | | | | | | (225 | ) | | | 108 | | | | | | | | | | | | | | | | | | | | Profit after taxation from Continuing and Discontinued operations | | | | | | | | | | | 13,451 | | | | 8,736 | | | | | | | | | | | | | | | | | | | | Attributable to non-controlling interests | | | | | | | | | | | 2,147 | | | | 780 | | Attributable to BHP shareholders | | | | | | | | | | | 11,304 | | | | 7,956 | | | | | | | | | | | | | | | | | | | | Basic earnings per ordinary share (cents) | | | 7 | | | | | | | | 223.5 | | | | 157.3 | | Diluted earnings per ordinary share (cents) | | | 7 | | | | | | | | 223.0 | | | | 157.0 | | Basic earnings from Continuing operations per ordinary share (cents) | | | 7 | | | | | | | | 228.0 | | | | 155.2 | | Diluted earnings from Continuing operations per ordinary share (cents) | | | 7 | | | | | | | | 227.5 | | | | 154.8 | | | | | | | | | | | | | | | | | | | |
The accompanying notes form part of these Financial Statements.
3.1.21.2 Consolidated Statement of Comprehensive Income for the year ended 30 June 20212022 | | | | Notes | | | | | 2020 | | 2019 | | | | | | | | | 2021 | | 2020 | | | | | | | | | | US$M | | US$M | | | Notes
| | | | | | US$M | | US$M | | Profit after taxation from Continuing and Discontinued operations | | | | | | | | 8,736 | | | 9,185 | | | | | | | | | | 13,451 | | | 8,736 | | Other comprehensive income | | | | | | | | | | | | | | | Items that may be reclassified subsequently to the income statement: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gains/(losses) taken to equity | | | | | | | | (315 | ) | | (327 | ) | | (Gains)/losses transferred to the income statement | | | | | | | | 297 | | | 299 | | | (Losses)/gains taken to equity | | | | | | | ) | | | 863 | | | (315 | ) | Losses/(gains) transferred to the income statement | | | | | | | | | | (837 | ) | | 297 | | Exchange fluctuations on translation of foreign operations taken to equity | | | | | | | | 1 | | | 1 | | | | | | | ) | | | 5 | | | 1 | | Exchange fluctuations on translation of foreign operations transferred to income statement | | | | | | | | | – | | | (6 | ) | | | | | | | | | – | | | | – | | Tax recognised within other comprehensive income | | | 6 | | | | | | | 5 | | | 8 | | | | 6 | | | | | | | | (8 | ) | | 5 | | | | | | | | | | | | | | | | | | | | | | | | | | Total items that may be reclassified subsequently to the income statement | | | | | | | | (12 | ) | | (25 | ) | | | | | | ) | | | 23 | | | (12 | ) | | | | | | | | | | | | | | | | | | | | | | | | | Items that will not be reclassified to the income statement: | | | | | | | | | | | | | | | | | Re-measurement gains/(losses) on pension and medical schemes | | | | | | | | (81 | ) | | (20 | ) | | | | | | | | | 58 | | | (81 | ) | Equity investments held at fair value | | | | | | | | (2 | ) | | 1 | | | | | | | ) | | | (2 | ) | | (2 | ) | Tax recognised within other comprehensive income | | | 6 | | | | | | | 26 | | | 19 | | | | 6 | | | | | ) | | | (20 | ) | | 26 | | | | | | | | | | | | | | | | | | | | | | | | | | Total items that will not be reclassified to the income statement | | | | | | | | (57 | ) | | | – | | | | | | | | | | 36 | | | (57 | ) | | | | | | | | | | | | | | | | | | | | | | | | | Total other comprehensive income/(loss) | | | | | | | | (69 | ) | | (25 | ) | | Total other comprehensive (loss)/income | | | | | | | ) | | | 59 | | | (69 | ) | | | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive income | | | | | | | | 8,667 | | | 9,160 | | | | | | | | | | 13,510 | | | 8,667 | | | | | | | | | | | | | | | | | | | | | | | | | | Attributable to non-controlling interests | | | | | | | | 769 | | | 878 | | | | | | | | | | 2,158 | | | 769 | | Attributable to BHP shareholders | | | | | | | | 7,898 | | | 8,282 | | | | | | | | | | 11,352 | | | 7,898 | | | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes form part of these Financial Statements.
1.3 Consolidated Balance Sheet as at 30 June 2021 | | | | | | | | | | | | | | | | Notes | | | | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | 20 | | | | | | | | 13,426 | | Trade and other receivables | | | 8 | | | | | | | | 3,364 | | | | | 23 | | | | | | | | 84 | | | | | 10 | | | | | | | | 4,101 | | | | | 31 | | | | | | | | – | | | | | | | | | | | | | 366 | | | | | | | | | | | | | 130 | | | | | | | | | | | | | | | | | | | | | | | | | | | 21,471 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade and other receivables | | | 8 | | | | | | | | 267 | | | | | 23 | | | | | | | | 2,522 | | | | | 10 | | | | | | | | 1,221 | | Property, plant and equipment | | | 11 | | | | | | | | 72,362 | | | | | 12 | | | | | | | | 1,574 | | Investments accounted for using the equity method | | | 31 | | | | | | | | 2,585 | | | | | 14 | | | | | | | | 3,688 | | | | | | | | | | | | | 43 | | | | | | | | | | | | | | | | | | | | | | | | | | | 84,262 | | | | | | | | | | | | | | | | | | | | | | | | | | | 105,733 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9 | | | | | | | | 5,767 | | Interest bearing liabilities | | | 20 | | | | | | | | 5,012 | | Liabilities directly associated with the assets held for sale | | | 31 | | | | | | | | – | | Other financial liabilities | | | | | | | | | | | 225 | | | | | | | | | | | | | 913 | | | | | 4,15,19,26 | | | | | | | | 2,810 | | | | | | | | | | | | | 97 | | | | | | | | | | | | | | | | Total current liabilities | | | | | | | | | | | 14,824 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9 | | | | | | | | 1 | | Interest bearing liabilities | | | 20 | | | | | | | | 22,036 | | Other financial liabilities | | | 23 | | | | | | | | 1,414 | | | | | | | | | | | | | 109 | | | | | 14 | | | | | | | | 3,779 | | | | | 4,15,19,26 | | | | | | | | 11,185 | | | | | | | | | | | | | 210 | | | | | | | | | | | | | | | | Total non-current liabilities | | | | | | | | | | | 38,734 | | | | | | | | | | | | | | | | | | | | | | | | | | | 53,558 | | | | | | | | | | | | | | | | | | | | | | | | | | | 52,175 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share capital – BHP Group Limited | | | | | | | | | | | 1,111 | | Share capital – BHP Group Plc | | | | | | | | | | | 1,057 | | | | | | | | | | | | | (5 | ) | | | | 17 | | | | | | | | 2,306 | | | | | | | | | | | | | 43,396 | | | | | | | | | | | | | | | | Total equity attributable to BHP shareholders | | | | | | | | | | | 47,865 | | | | | 17 | | | | | | | | 4,310 | | | | | | | | | | | | | | | | | | | | | | | | | | | 52,175 | |
| | | | | | | | | | | | | | | | | | | | | | 2021 | | | | | Notes | | | | | | US$M | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | 20 | | | | | | | | 15,246 | | Trade and other receivables | | | 8 | | | | | | | | 6,059 | | | | | 23 | | | | | | | | 230 | | | | | 10 | | | | | | | | 4,426 | | | | | | | | | | | | | 324 | | | | | | | | | | | | | 279 | | | | | | | | | | | | | 129 | | | | | | | | | | | | | | | | | | | | | | | | | | | 26,693 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Trade and other receivables | | | 8 | | | | | | | | 337 | | | | | 23 | | | | | | | | 1,610 | | | | | 10 | | | | | | | | 1,358 | | Property, plant and equipment | | | 11 | | | | | | | | 73,813 | | | | | 12 | | | | | | | | 1,437 | | Investments accounted for using the equity method | | | 29 | | | | | | | | 1,742 | | | | | 14 | | | | | | | | 1,912 | | | | | | | | | | | | | 25 | | | | | | | | | | | | | | | | | | | | | | | | | | | 82,234 | | | | | | | | | | | | | | | | | | | | | | | | | | | 108,927 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9 | | | | | | | | 7,027 | | Interest bearing liabilities | | | 20 | | | | | | | | 2,628 | | Liabilities directly associated with the assets held for sale | | | | | | | | | | | 17 | | Other financial liabilities | | | 23 | | | | | | | | 130 | | | | | | | | | | | | | 2,800 | | | | | 4,15,19,26 | | | | | | | | 3,696 | | | | | | | | | | | | | 105 | | | | | | | | | | | | | | | | Total current liabilities | | | | | | | | | | | 16,403 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest bearing liabilities | | | 20 | | | | | | | | 18,355 | | Other financial liabilities | | | 23 | | | | | | | | 1,146 | | | | | | | | | | | | | 120 | | | | | 14 | | | | | | | | 3,314 | | | | | 4,15,19,26 | | | | | | | | 13,799 | | | | | | | | | | | | | 185 | | | | | | | | | | | | | | | | Total non-current liabilities | | | | | | | | | | | 36,919 | | | | | | | | | | | | | | | | | | | | | | | | | | | 53,322 | | | | | | | | | | | | | | | | | | | | | | | | | | | 55,605 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share capital – BHP Group Limited | | | | | | | | | | | 1,111 | | Share capital – BHP Group Plc | | | | | | | | | | | 1,057 | | | | | | | | | | ) | | | (33 | ) | | | | 17 | | | | | | | | 2,350 | | | | | | | | | | | | | 46,779 | | | | | | | | | | | | | | | | Total equity attributable to BHP shareholders | | | | | | | | | | | 51,264 | | Non-controlling interests | | | 17 | | | | | | | | 4,341 | | | | | | | | | | | | | | | | | | | | | | | | | | | 55,605 | | | | | | | | | | | | | | | |
The accompanying notes form part of these Financial Statements. The Financial Statements were approved by the Board of Directors on 2 September 202116 August 2022 and signed on its behalf by:
3.1.41.4 Consolidated Cash Flow Statement for the year ended 30 June 2021
| | | | | | | | | | | | | | | | | | | | Notes | | | | | | 2020 | | | 2019 | | | | | | | | | | | US$M | | | US$M | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation and amortisation expense | | | | | | | | | | | | | | | | | Impairments of property, plant and equipment, financial assets and intangibles | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Loss from equity accounted investments, related impairments and expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Changes in assets and liabilities: | | | | | | | | | | | | | | | | | Trade and other receivables | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Provisions and other assets and liabilitie s | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | Cash generated from operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | (Settlements)/proceeds of cash management related instruments | | | | | | | | | | | | | | | | | Net income tax and royalty-related taxation refunded | | | | | | | | | | | | | | | | | Net income tax and royalty-related taxation paid | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | Net operating cash flows from Continuing operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net operating cash flows from Discontinued operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Purchases of property, plant and equipment | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | ) | Exploration expenditure expensed and included in operating cash flows | | | | | | | | | | | | | | | | | Investment in subsidiaries, operations and joint operations, net of cash | | | | | | | | | | | | | | | | | Net investment and funding of equity accounted investments | | | | | | | | | | | | | | | | ) | Proceeds from sale of assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | Net investing cash flows from Continuing operations | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | Net investing cash flows from Discontinued operations | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | Proceeds from divestment of Onshore US, net of its cash | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Proceeds from interest bearing liabilities | | | | | | | | | | | | | | | | | Proceeds/(settlements) of debt related instruments | | | | | | | | | | | | | | | | ) | Repayment of interest bearing liabilities | | | | | | | | | | | | | | | | ) | Purchase of shares by Employee Share Ownership Plan (ESOP) Trusts | | | | | | | | | | | | | | | | ) | Share buy-back – BHP Group Limited | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | ) | Dividends paid to non-controlling interests | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | Net financing cash flows from Continuing operations | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | Net financing cash flows from Discontinued operations | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | Net increase/(decrease) in cash and cash equivalents from Continuing operations | | | | | | | | | | | | | | | | ) | Net increase/(decrease) in cash and cash equivalents from Discontinued operations | | | | | | | | | | | | | | | | | Proceeds from divestment of Onshore US, net of its cash | | | | | | | | | | | | | | | | | Cash and cash equivalents, net of overdrafts, at the beginning of the financial year | | | | | | | | | | | | | | | | | Foreign currency exchange rate changes on cash and cash equivalents | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | Cash and cash equivalents, net of overdrafts, at the end of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | | | | US$M | | | US$M | | | | | Notes | | | | | | Restated | | | Restated | | | | | | | | | | | | | | | | | | | Profit before taxation from Continuing operations | | | | | | | | | | | 24,292 | | | | 12,825 | | | | | | | | | | | | | | | | | | | Depreciation and amortisation expense | | | | | | | | | | | 5,084 | | | | 4,667 | | Impairments of property, plant and equipment, financial assets and intangibles | | | | | | | | | | | 2,507 | | | | 482 | | | | | | | | | | | | | 1,223 | | | | 858 | | Loss from equity accounted investments, related impairments and expenses | | | | | | | | | | | 915 | | | | 508 | | | | | | | | | | ) | | | 573 | | | | 896 | | Changes in assets and liabilities: | | | | | | | | | | | | | | | | | Trade and other receivables | | | | | | | | ) | | | (2,389 | ) | | | 128 | | | | | | | | | | ) | | | (405 | ) | | | (714 | ) | | | | | | | | | | | | 1,149 | | | | (589 | ) | Provisions and other assets and liabilities | | | | | | | | ) | | | 486 | | | | 1,350 | | | | | | | | | | | | | | | | | | | | Cash generated from operations | | | | | | | | | | | 33,435 | | | | 20,411 | | | | | | | | | | | | | 728 | | | | 117 | | | | | | | | | | | | | 97 | | | | 368 | | | | | | | | | | ) | | | (766 | ) | | | (1,213 | ) | Proceeds/(settlements) of cash management related instruments | | | | | | | | | | | (401 | ) | | | 85 | | Net income tax and royalty-related taxation refunded | | | | | | | | | | | 222 | | | | 47 | | Net income tax and royalty-related taxation paid | | | | | | | | ) | | | (7,432 | ) | | | (5,130 | ) | | | | | | | | | | | | | | | | | | | Net operating cash flows from Continuing operations | | | | | | | | | | | 25,883 | | | | 14,685 | | | | | | | | | | | | | | | | | | | | Net operating cash flows from Discontinued operations | | | 27 | | | | | | | | 1,351 | | | | 1,021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 27,234 | | | | 15,706 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Purchases of property, plant and equipment | | | | | | | | ) | | | (5,612 | ) | | | (5,991 | ) | | | | | | | | | ) | | | (192 | ) | | | (176 | ) | Exploration expenditure expensed and included in operating cash flows | | | | | | | | | | | 134 | | | | 123 | | Net investment and funding of equity accounted investments | | | | | | | | ) | | | (553 | ) | | | (596 | ) | Proceeds from sale of assets | | | | | | | | | | | 158 | | | | 187 | | | Proceeds/(settlements) from sale of subsidiaries, operations and joint operations net of their cash | | | | | | | | | | | (3 | ) | | | – | | | | | | | | | | ) | | | (257 | ) | | | (130 | ) | | | | | | | | | | | | | | | | | | | Net investing cash flows from Continuing operations | | | | | | | | ) | | | (6,325 | ) | | | (6,583 | ) | | | | | | | | | | | | | | | | | | | | Net investing cash flows from Discontinued operations | | | 27 | | | | | ) | | | (1,520 | ) | | | (1,033 | ) | | | | | | | | | | | | | | | | | | | | Net cash completion payment on merger of Petroleum with Woodside | | | 27 | | | | | ) | | | – | | | | – | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents disposed on merger of Petroleum with Woodside | | | 27 | | | | | | | | – | | | | – | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | (7,845 | ) | | | (7,616 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Proceeds from interest bearing liabilities | | | | | | | | | | | 568 | | | | 514 | | Proceeds/(settlements) of debt related instruments | | | | | | | | | | | 167 | | | | (157 | ) | Repayment of interest bearing liabilities | | | | | | | | ) | | | (8,357 | ) | | | (2,008 | ) | Purchase of shares by Employee Share Ownership Plan (ESOP) Trusts | | | | | | | | ) | | | (234 | ) | | | (143 | ) | | | | | | | | | ) | | | (7,901 | ) | | | (6,876 | ) | Dividends paid to non-controlling interests | | | | | | | | ) | | | (2,127 | ) | | | (1,043 | ) | | | | | | | | | | | | | | | | | | | Net financing cash flows from Continuing operations | | | | | | | | ) | | | (17,884 | ) | | | (9,713 | ) | | | | | | | | | | | | | | | | | | | | Net financing cash flows from Discontinued operations | | | 27 | | | | | ) | | | (38 | ) | | | (39 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | (17,922 | ) | | | (9,752 | ) | | | | | | | | | | | | | | | | | | | Net increase/(decrease) in cash and cash equivalents from Continuing operations | | | | | | | | | | | 1,674 | | | | (1,611 | ) | Net increase/(decrease) in cash and cash equivalents from Discontinued operations | | | | | | | | | | | (207 | ) | | | (51 | ) | | Net cash completion payment on merger of Petroleum with Woodside | | | | | | | | ) | | | – | | | | – | | | Cash and cash equivalents disposed on merger of Petroleum with Woodside | | | | | | | | | | | – | | | | – | | Cash and cash equivalents, net of overdrafts, at the beginning of the financial year | | | | | | | | | | | 13,426 | | | | 15,593 | | Foreign currency exchange rate changes on cash and cash equivalents | | | | | | | | ) | | | 353 | | | | (505 | ) | | | | | | | | | | | | | | | | | | | Cash and cash equivalents, net of overdrafts, at the end of the financial year | | | 20 | | | | | | | | 15,246 | | | | 13,426 | | | | | | | | | | | | | | | | | | | |
The accompanying notes form part of these Financial Statements.
3.1.51.5 Consolidated Statement of Changes in Equity for the year ended 30 June 20212022
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Attributable to BHP shareholders | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as at 1 July 2020 (restated) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transactions with owners: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Purchase of shares by ESOP Trusts | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Employee share awards exercised net of employee | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Vested employee share awards that have lapsed, been cancelled or forfeited | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accrued employee entitlement for unexercised awards net of tax | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as at 30 June 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as at 1 July 2019 (restated) | | | 1,111 | | | | 1,057 | | | | (32 | ) | | | – | | | | 2,285 | | | | 42,748 | | | | 47,169 | | | | 4,584 | | | | 51,753 | | Total comprehensive income | | | – | | | | – | | | | – | | | | – | | | | (12 | ) | | | 7,910 | | | | 7,898 | | | | 769 | | | | 8,667 | | Transactions with owners: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Purchase of shares by ESOP Trusts | | | – | | | | – | | | | (139 | ) | | | (4 | ) | | | – | | | | – | | | | (143 | ) | | | – | | | | (143 | ) | | Employee share awards exercised net of employee contributions net of tax | | | – | | | | – | | | | 166 | | | | 4 | | | | (132 | ) | | | (38 | ) | | | – | | | | – | | | | – | | | Vested employee share awards that have lapsed, been cancelled or forfeited | | | – | | | | – | | | | – | | | | – | | | | (10 | ) | | | 10 | | | | – | | | | – | | | | – | | | Accrued employee entitlement for unexercised awards net of tax | | | – | | | | – | | | | – | | | | – | | | | 175 | | | | – | | | | 175 | | | | – | | | | 175 | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | (7,234 | ) | | | (7,234 | ) | | | (1,043 | ) | | | (8,277 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as at 30 June 2020 (restated) | | | 1,111 | | | | 1,057 | | | | (5 | ) | | | – | | | | 2,306 | | | | 43,396 | | | | 47,865 | | | | 4,310 | | | | 52,175 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as at 1 July 2018 | | | 1,186 | | | | 1,057 | | | | (5 | ) | | | – | | | | 2,290 | | | | 51,057 | | | | 55,585 | | | | 5,078 | | | | 60,663 | | Impact of change in accounting policies (Note 39) | | | – | | | | – | | | | – | | | | – | | | | – | | | | (71 | ) | | | (71 | ) | | | – | | | | (71 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Restated balance as at 1 July 2018 | | | 1,186 | | | | 1,057 | | | | (5 | ) | | | – | | | | 2,290 | | | | 50,986 | | | | 55,514 | | | | 5,078 | | | | 60,592 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive income | | | – | | | | – | | | | – | | | | – | | | | (24 | ) | | | 8,306 | | | | 8,282 | | | | 878 | | | | 9,160 | | Transactions with owners: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Purchase of shares by ESOP Trusts | | | – | | | | – | | | | (182 | ) | | | (6 | ) | | | – | | | | – | | | | (188 | ) | | | – | | | | (188 | ) | | Employee share awards exercised net of employee contributions net of tax | | | – | | | | – | | | | 155 | | | | 6 | | | | (100 | ) | | | (61 | ) | | | – | | | | – | | | | – | | | Vested employee share awards that have lapsed, been cancelled or forfeited | | | – | | | | – | | | | – | | | | – | | | | (18 | ) | | | 18 | | | | – | | | | – | | | | – | | | Accrued employee entitlement for unexercised awards net of tax | | | – | | | | – | | | | – | | | | – | | | | 138 | | | | – | | | | 138 | | | | – | | | | 138 | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | (11,302 | ) | | | (11,302 | ) | | | (1,205 | ) | | | (12,507 | ) | | BHP Group Limited shares bought back and cancelled | | | (75 | ) | | | – | | | | – | | | | – | | | | – | | | | (5,199 | ) | | | (5,274 | ) | | | – | | | | (5,274 | ) | | Divestment of subsidiaries, operations and joint operations | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | (168 | ) | | | (168 | ) | Transfer to non-controlling interests | | | – | | | | – | | | | – | | | | – | | | | (1 | ) | | | – | | | | (1 | ) | | | 1 | | | | – | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as at 30 June 2019 (restated) | | | 1,111 | | | | 1,057 | | | | (32 | ) | | | – | | | | 2,285 | | | | 42,748 | | | | 47,169 | | | | 4,584 | | | | 51,753 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Attributable to BHP shareholders | | | | | | | | | | | | | | | | | | | |
| | |
| | | | | | | | | |
| | |
| | |
| | |
| | |
| | |
| | Balance as at 1 July 2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive income | | | | | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | Transactions with owners: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | BHP Group Limited shares issued | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | Purchase of shares by ESOP Trusts | | | | | | | | | | | | ) | | | | ) | | | | | | | | | | | | ) | | | | | | | | ) | Employee share awards exercised net of employee
contributions net of tax | | | | | | | | | | | | | | | | | | | | ) | | | | ) | | | | | | | | | | | | | Vested employee share awards that have lapsed, been cancelled or forfeited | | | | | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | Accrued employee entitlement for unexercised awards net of
tax | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Corporate structure unification | | | | | | | | ) | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | ) | | | | ) | | | | ) | In specie dividend on merger of Petroleum with Woodside | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Divestment of subsidiaries, operations and joint operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transfers within equity on divestment of subsidiaries,
operations and joint operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Equity contributed net of tax | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as at 30 June 2022 | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as at 1 July 2020 | | | 1,111 | | | | 1,057 | | | | (5 | ) | | | – | | | | 2,306 | | | | 43,396 | | | | 47,865 | | | | 4,310 | | | | 52,175 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive income | | | – | | | | – | | | | – | | | | – | | | | 22 | | | | 11,330 | | | | 11,352 | | | | 2,158 | | | | 13,510 | | Transactions with owners: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Purchase of shares by ESOP Trusts | | | – | | | | – | | | | (229 | ) | | | (5 | ) | | | – | | | | – | | | | (234 | ) | | | – | | | | (234 | ) | Employee share awards exercised net of employee
contributions net of tax | | | – | | | | – | | | | 202 | | | | 4 | | | | (149 | ) | | | (57 | ) | | | – | | | | – | | | | – | | Vested employee share awards that have lapsed, been cancelled
or forfeited | | | – | | | | – | | | | – | | | | – | | | | (4 | ) | | | 4 | | | | – | | | | – | | | | – | | Accrued employee entitlement for unexercised awards net of
tax | | | – | | | | – | | | | – | | | | – | | | | 175 | | | | – | | | | 175 | | | | – | | | | 175 | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | (7,894 | ) | | | (7,894 | ) | | | (2,127 | ) | | | (10,021 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as at 30 June 2021 | | | 1,111 | | | | 1,057 | | | | (32 | ) | | | (1 | ) | | | 2,350 | | | | 46,779 | | | | 51,264 | | | | 4,341 | | | | 55,605 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as at 1 July 2019 | | | 1,111 | | | | 1,057 | | | | (32 | ) | | | – | | | | 2,285 | | | | 42,748 | | | | 47,169 | | | | 4,584 | | | | 51,753 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive income | | | – | | | | – | | | | – | | | | – | | | | (12 | ) | | | 7,910 | | | | 7,898 | | | | 769 | | | | 8,667 | | Transactions with owners: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Purchase of shares by ESOP Trusts | | | – | | | | – | | | | (139 | ) | | | (4 | ) | | | – | | | | – | | | | (143 | ) | | | – | | | | (143 | ) | Employee share awards exercised net of employee
contributions net of tax | | | – | | | | – | | | | 166 | | | | 4 | | | | (132 | ) | | | (38 | ) | | | – | | | | – | | | | – | | Vested employee share awards that have lapsed, been cancelled
or forfeited | | | – | | | | – | | | | – | | | | – | | | | (10 | ) | | | 10 | | | | – | | | | – | | | | – | | Accrued employee entitlement for unexercised awards net of
tax | | | – | | | | – | | | | – | | | | – | | | | 175 | | | | – | | | | 175 | | | | – | | | | 175 | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | (7,234 | ) | | | (7,234 | ) | | | (1,043 | ) | | | (8,277 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Balance as at 30 June 2020 | | | 1,111 | | | | 1,057 | | | | (5 | ) | | | – | | | | 2,306 | | | | 43,396 | | | | 47,865 | | | | 4,310 | | | | 52,175 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The accompanying notes form part of these Financial Statements.
The Group’s Financial Statements as at and for the year ended 30 June 2021:2022: are a consolidated general purpose financial report have been prepared in accordance with the requirements of the:of: | | | | the Australian Corporations Act 2001 |
| | | UK Companies (Corporations Act 2006
|
have been prepared in accordance with accounting standards and interpretations collectively referred to as ‘IFRS’ in this report, which encompass the:
| | | International Financial Reporting Standards and interpretations as issued by the International Accounting Standards Board2001)
|
| | | | Australian Accounting Standards being Australian equivalents to International Financial Reporting Standards and interpretations as issued byother authoritative pronouncements of the Australian Accounting Standards Board (AASB) |
| | | International Accounting Standards in conformity with the requirements of the UK Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies inissued by the European Union (EU)
|
| | | International Accounting Standards adopted for use within the UKBoard (IASB) (collectively referred to as IFRS) |
are prepared on a going concern basis as the Directors: | | | | have made an assessment of the Group’s ability to continue as a going concern overfor the period to 30 September 2022 (the ‘going concern period’)12 months from the date of this report |
| | | | consider it appropriate to adopt the going concern basis of accounting in preparing the Group’s Financial Statements |
measure items on the basis of historical cost principles, except for the following items: | | | | derivative financial instruments and certain other financial assets and liabilities, which are carried at fair value |
| | | | non-current assets or disposal groups that are classified as or which are measured at the lower of carrying amount and fair value less costs to sell |
include significant accounting policies in the notes to the Financial Statements that summarise the recognition and measurement basis used and are relevant to an understanding of the Financial Statements apply a presentation currency of US dollars, consistent with the predominant functional currency of the Group’s operations. Amounts are rounded to the nearest million dollars, unless otherwise stated, in accordance with ASIC (Rounding in Financial/Directors’ Reports) Instrument 2016/191 present reclassified comparative information where required for consistency with the current year’s presentation adopt all new and amended standards and interpretations under IFRS, issued by the relevant bodies (listed above), that are mandatory for application in periods beginning on 1 July 2020. Those new and amended standards and interpretations did not require restatement of prior period financial information early adopt amendments to IFRS 9/AASB 9 ‘Financial Instruments’ (IFRS 9), IAS 39/AASB 139 ‘Financial Instruments: Recognition and Measurement’ (IAS 39); IFRS 7/AASB 7 ‘Financial Instruments: Disclosures’ (IFRS 7); IFRS 4/AASB 4 ‘Insurance Contracts’ (IFRS 4) and IFRS 16/AASB 16 ‘Leases’ (IFRS 16) in relation to Interest Rate Benchmark Reform
apply accounting policies consistently in all prior years presented including retrospective application of2021. None had a significant impact on the Group’s accounting policy change relating to Income Taxes.Financial Statements. Refer to note 3937 ‘New and amended accounting standards and interpretations and changes to accounting policies’ for the impact on the Financial Statementsdetails
have not early adopted any other standards and interpretations that have been issued or amended but are not yet effectiveeffective. Refer note 37 ‘New and amended accounting standards and interpretations and changes to accounting policies’ for details The accounting policies are consistently applied by all entities included in the Financial Statements. Following unification of the Group’s corporate structure under BHP Group Limited, which was completed in January 2022, the Group Financial Statements are no longer required to be prepared in accordance with: the UK Companies Act 2006 International Accounting Standards in conformity with the requirements of the UK Companies Act 2006 and International Financial Reporting Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union (EU) International Accounting Standards adopted for use within the UK In assessing the appropriateness of the going concern assumption over the going concern period, management have stress tested BHP’s most recent financial projections to incorporate a range of potential future outcomes by considering BHP’s principal risks. The Group’s financial forecasts, including downside commodity price and production scenarios, demonstrate that the Group believes that it has sufficient financial resources to meet its obligations as they fall due throughout the going concern period. As such, the Financial Statements continue to be prepared on the going concern basis. Principles of consolidation In preparing the Financial Statements, the effects of all intragroup balances and transactions have been eliminated. A list of significant entities in the Group, including subsidiaries, joint arrangements and associates at year-end is contained in note 3028 ‘Subsidiaries’, note 3129 ‘Investments accounted for using the equity method’ and note 3230 ‘Interests in joint operations’. The Financial Statements of the Group include the consolidation of BHP Group Limited BHP Group Plc(the Company or parent entity) and their respectiveits subsidiaries, being the entities controlled by the parent entitiesentity during the year.year and BHP Group Plc and its subsidiaries whilst the DLC was in effect. Control exists where the Group: has power over the investee is exposed to, or has rights to, variable returns from its involvement with the entity has the ability to affect those returns through its power to direct the activities of the entity
The ability to approve the operating and capital budget of a subsidiary and the ability to appoint key management personnel are decisions that demonstrate that the Group has the existing rights to direct the relevant activities of a subsidiary. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in profit or loss from the date the Company gains control until the date when the Company ceases to control the subsidiary. Where the Group’s interest is less than 100 per cent, the interest attributable to outside shareholders is reflected in non-controlling interests. Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company. interests. When the Group loses control of a subsidiary, the gain or loss on disposal is recognised in profit or loss. The Financial Statements of subsidiaries are prepared for the same reporting period as the Group. The acquisition method of accounting is used to account for the Group’s business combinations.
The Group undertakes a number of business activities through joint arrangements, which exist when two or more parties have joint control. Joint arrangements are classified as either joint operations or joint ventures, based on the contractual rights and obligations between the parties to the arrangement: A joint operation is an arrangement in which the Group shares joint control, primarily via contractual arrangements with other parties. In a joint operation, the Group has rights to the underlying assets and obligations for the liabilities relating to the arrangement. This includes situations where the parties benefit from the joint activity through a share of the output, rather than by receiving a share of the results of trading. In relation to the Group’s interest in a joint operation, the Group recognises: its assets and liabilities, including its share of any assets and liabilities held or incurred jointly; revenue from the sale of its share of the output and its share of any revenue generated from the sale of the output by the joint operation; and its expenses including its share of expenses incurred jointly. All such amounts are measuredallocated in accordance with the terms of the arrangement, which is usually in proportion to the Group’s interest in the joint operation. The Group accounts for the assets, liabilities, revenue and expenses relating to its interest in a joint operation in accordance with the IFRS Standards applicable to the particular assets, liabilities, revenue and expenses. A joint venture is a joint arrangement in which the parties that share joint control have rights to the net assets of the arrangement. A separate vehicle, not the parties, will have the rights to the assets and obligations for the liabilities relating to the arrangement. More than an insignificant share of output from a joint venture is sold to third parties, which indicates the joint venture is not dependent on the parties to the arrangement for funding, nor do the parties have an obligation for the liabilities of the arrangement. Joint ventures are accounted for using the equity accounting method.method as outlined below.The Group accounts for investments in associates using the equity accounting method.method as outlined below. An entity is considered an associate where the Group is deemed to have significant influence but not control or joint control. Significant influence is presumed to exist where the Group: has over 20 per cent but less than 50 per cent of the voting rights of an entity, unless it can be clearly demonstrated that this is not the case or holds less than 20 per cent of the voting rights of an entity; however, has the power to participate in the financial and operating policy decisions affecting the entity The Group uses the term ‘equity accounted investments’ to refer to joint ventures and associates collectively. Under the equity method, an investment in an associate or a joint venture is recognised initially at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate or joint venture. When the Group’s share of losses of an associate or a joint venture exceeds the Group’s interest in that associate or joint venture, the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Transactions related to the Group’s worldwide operations are conducted in a number of foreign currencies. The majority of the subsidiaries, joint arrangements and associates within each of the operations have assessed US dollars as the functional currency, however, some subsidiaries, joint arrangements and associates have functional currencies other than US dollars. Transactions and monetary items denominated in foreign currencies are translated into US dollars as follows: | | | | | | | | Date of underlying transaction | Monetary assets and liabilities | | |
Foreign exchange gains and losses resulting from translation are recognised in the income statement, except for qualifying cash flow hedges (which are deferred to equity) and foreign exchange gains or losses on foreign currency provisions for site closure and rehabilitation costs (which are capitalised in property, plant and equipment for operating sites). On consolidation, the assets, liabilities, income and expenses of foreign operations with non-US dollar denominated functional currency entitiescurrencies are translated into US dollars using the following applicable exchange rates: | | | | | | | | Date of underlying transaction | | | | Income and expensesEquity | | Date of underlying transactionHistorical rate | Assets and liabilitiesReserves | | | | | | | | |
Foreign exchange differences resulting from translation are initially recognised in the foreign currency translation reserve and subsequently transferred to the income statement on disposal of a foreign operation.
Significant accounting policies, judgements and estimates | The Group has identified a number ofGroup’s accounting policies under which significant judgements,require the use of judgement, estimates and assumptions are made.assumptions. All judgements, estimates and assumptions are based on the most current facts and circumstances and are reassessed on an ongoing basis. Actual results in future reporting periods may differ for these estimates under different assumptions and conditions. | SignificantFurther information regarding the Group’s significant judgements and key estimates and assumptions, made in applying these accounting policies are embedded within the following notes: |
| | | | | | | | | | Significant events – Samarco dam failure | | | Taxation | | | Inventories | | | Exploration and evaluation | | | Development expenditure | | | Overburden removal costs | | | Depreciation of property, plant and equipment | | | Impairments ofnon-current
assets | | | Closure and rehabilitation provisions | | | |
| The Samarco dam failure, impairment assessments and closure and rehabilitation provisions have been identified as areas involving significant judgement andbeing those where changes to key estimates and assumptions may materially affect financial results and the carrying amount of assets and liabilities to be reported in the next reporting period. period, are embedded within the following notes:
| | | | | | | | Significant events – Samarco dam failure | | | Taxation | | | Overburden removal costs | | | Depreciation of property, plant and equipment | | | Impairments of non-current assets | | | Closure and rehabilitation provisions | | | | | Additional information including sensitivity analysis, where appropriate, has been provided in the relevant notes to enhance an understanding of the impact of key estimates and assumptions on the Group’s financial position and performance. | | | Reserves are estimates of the amount of product that can be demonstrated to be able to be economically and legally extracted from the Group’s properties. In order to estimate reserves, assumptions are required about a range of technical and economic factors, including quantities, qualities, production techniques, recovery efficiency, production and transport costs, commodity supply and demand, commodity and carbon prices and exchange rates. | | Estimating the quantity and/or quality of reserves requires the size, shape and depth of ore bodies or oil and gas reservoirs to be determined by analysing geological data, such as drilling samples and geophysical survey interpretations. Economic assumptions used to estimate reserves change from period-to-period as additional technical and operational data is generated. This process may require complex and difficult geological judgements to interpret the data. | | Additional information on the Group’s mineral and oil and gas reserves can be viewed within section 4.6.
| | Section 4.6 is unaudited and does not form part of these Financial Statements.
| | Reserve impact on financial reporting | | Estimates of reserves may change from as the economic assumptions used to estimate reserves change and additional geological data is generated during the course of operations. Changes in reserves may affect the Group’s financial results and financial position in a number of ways, including: | | • asset carrying values may be affected due to changes in estimated future production levels | | • depreciation, depletion and amortisation charged into the income statement may change where such charges are determined on the units of production basis, or where the useful economic lives of assets change | | • overburden removal costs recorded on the balance sheet or charged to the income statement may change due to changes in stripping ratios or the units of production basis of depreciation | | • closure and rehabilitation provisions may change where changes in estimated reserves affect expectations about the timing or cost of these activities | | • the carrying amount of deferred tax assets may change due to changes in estimates of the likely recovery of the tax benefits |
Impact ofCOVID-19
pandemicThe Group continues to actively monitor the impact of theCOVID-19
pandemic, including the impact on economic activity and financial reporting. During the period the Group continued to experience lower volumes at certain of its operated assets and to incur incremental directly attributable costs including those associated with the increased provision of health and hygiene services, the impacts of maintaining social distancing requirements and demurrage and other standby charges related to delays caused byCOVID-19.
These incremental costs have been classified as an exceptional item, as outlined in note 3 ‘Exceptional items’.As the pandemic continues to evolve, with the extent and timing of impacts varying across the Group’s key operating locations, it remains difficult to predict the full extent and duration of resulting operational and economic impacts for the Group. This uncertainty impacts judgements made by the Group, including those relating to assessing collectability of receivables and determining the recoverable values of the Group’snon-current
assets as outlined in notes 8 ‘Trade and other receivables’ and 13 ‘Impairment of non-current assets’, respectively. Given the uncertainty associated with the pandemic, management assesses the appropriate financial treatment and disclosure of COVID-19 impacts each reporting period.The ongoing uncertainty has also been considered in the Group’s assessment of the appropriateness of adopting the going concern basis of preparation of the Consolidated Financial Statements. In assessing the appropriateness of the going concern assumption over the going concern period, management have stress tested BHP’s most recent financial projections to incorporate a range of potential future outcomes by considering BHP’s principal risks. The Group’s financial forecasts, including downside commodity price and production scenarios, demonstrate that the Group believes that it has sufficient financial resources to meet its obligations as they fall due throughout the going concern period. As such, the Consolidated Financial Statements continue to be prepared on the going concern basis.
The Group continues to develop its assessment of the potential impacts of climate change and the transition to a low carbon economy. The Group’s current climate change strategy focuses on reducing operational greenhouse gas (GHG) emissions, investing in low emissions technologies, supporting emissions reductions in our value chain and promoting product stewardship, managing climate-related risk and opportunity, and working with others to enhance the global policy and market response. Future changes to the Group’s climate change strategy or global decarbonisation signposts may impact the Group’s significant judgements and key estimates and result in material changes to financial results and the carrying values of certain assets and liabilities in future reporting periods. During FY2022, the Group completed the merger of the Group’s Petroleum business with Woodside and the divestments of the Group’s interests in BHP Mitsui Coal Pty Ltd (BMC) and the Cerrejón non-operated energy coal joint venture. In addition, the Group announced that it will retain New South Wales Energy Coal (NSWEC) in its portfolio, seek approvals to continue mining at NSWEC beyond its current mining consent that expires in 2026, and intends to proceed with a managed process to cease mining at the asset by the end of FY2030. While climate change and the transition to a low carbon economy remain key considerations in the Group’s significant judgements and estimates, the portfolio updates during FY2022 have reduced the Group’s exposure to fossil fuels. Following the updates, the potential risk to the carrying value of the Group’s assets and liabilities from long-term price estimates for oil, gas and energy coal is largely limited to the impact of those commodities on the Group’s supply chain. The Group’s current climate change strategy is reflected in the Group’s significant judgements and key estimates, and therefore the Financial Statements, as follows: The Group’s targets and goals As part of its response to the Paris Agreement goals, the Group has set a target to reduce its operational GHG emissions (Scope 1 and Scope 2 from our operated assets) by at least 30 per cent from FY2020 levels by FY2030 and a goal to achieve net zero operational GHG emissions by 2050. For the FY2030 target, the FY2020 baseline has been adjusted to reflect the divestment of the Group’s Petroleum and BMC operations and will be adjusted for any material future acquisitions and divestments based on GHGdivestments. Approved emissions at the time of the transaction, and carbon offsets will be used as required. Emissions reduction projects aimed at contributing to the achievement of the Group’s operational GHG emissions target and goal have been incorporated into the forecast cash flows of the Group’s assets. The use of carbon offsets will be governed by the Group’s approach to carbon offsetting, with the Group’s offset strategy is currently being managed at a consolidated Group level and therefore is not currently incorporated into the forecast cash flows of individual assets. Any change to the Group’s climate change strategy could impact these forecasts and the Group’s significant judgements and key estimates. The Group continues to invest, including in partnership with others, in emissions reduction projects and technology innovation and development in its value chain to support reductions to its total reported Scope 3 GHG emissions inventory.inventory, with a particular focus on steelmaking and maritime emissions. However, while we seek to influence, Scope 3 emissions occur outside of our direct control. Reduction pathways are dependent on the development, and upstream or downstream deployment of solutions and/or supportive policy. Where possible, the financial impact of the Group’s activities in support of Scope 3 reduction pathways is reflected in the financial statements, for example the Group’s chartering of LNG-fuelled vessels. It is thereforehowever currently not possible to reliably estimate or measure the full potential financial statement impacts of the Group’s pursuit of its Scope 3 goals and targets. Expenditure under theThe Climate Investment Program (CIP) which,, as announced by the Group in July 2019, aims to invest at least US$400 million over the CIP’s five-year life in emissions reduction projects across the Group’s operated assets and value chain,chain. Spend under the CIP, along with capital expenditure in support of operational decarbonisation at our operated assets, is recognised in the relevant year of expenditure.spend.
Global transition signposts and commodity impacts In addition to the Group’s targets and goals, significant judgements and key estimates are also impacted by the Group’s current assessment of the range of economic and climate related conditions that could exist in transitioning to a low carbon economy, considering the current trajectory of society and the global economy as a whole. Despite recent progress, all 1.5°C pathwaysSignposts do not yet indicate that the appropriate measures are in place to 2050 representdrive decarbonisation at the pace or scale required for the Group to assess achieving the aims of the Paris Agreement as the most likely future outcome. However, as governments, institutions, companies and society increasingly focus on addressing climate change, the potential for a major departure from today’s global trajectorynon-linear and/or more rapid transition and the subsequent impact on threats and opportunities increases. The BHP Climate Transition Action Plan 2021 references the Group’s divergent climate scenarios across a range of temperature outcomes. The Group does not believecurrently uses two of those scenarios, being the technological, regulatory, or economic foundations for a rapid transitionCentral Energy View and Lower Carbon View1 as inputs to net zero emissions are currently in place. Acknowledgingthe Group’s operational planning cases. The use of these signposts,two scenarios reflects the Group’s current best estimate of the potential impacts of climate change and the transition to a low carbon economy are reflected in the following two scenarios, which consider existing policies, trends and commitments and the Group’s viewestimates of the most likely range of futuresfuture states for the global economy and associated sub-systems: reflects, and is periodically updated to respond to, existing policy trends and commitments and currently tracks to approximately 3°C temperature increase above pre-industrial levels by 2100currently tracks to approximately 2.5°C temperature increase by 2100, and accelerates decarbonisation trends and policies, particularly in easier-to-abate sectors such as power generation and light duty vehiclessub-systems. These two scenarios are reviewed periodically to reflect new information. These scenarios are currently being used as inputs to the Group’soperational planning cases informinginform updates to the Group’s supply, demand and price forecasts,outlooks, capital allocation and portfolio decisions. As
Given the complexity of climate modelling, these scenarios are reviewed periodically to reflect new information, with developments in the periods between scenario updates being reflected in updated internal long-term price outlooks. Investment decisions and asset valuations also incorporate carbon price assumptions for major Group operational, competitor and customer countries. In determining the Group’s forecast, factors such as a country’s current and announced climate policies and targets and societal factors such as public acceptance and demographics are considered, with the Group forecasting the global range of regional carbon prices to reach between US$0-175/tCO2 -e in FY2030 and US$10-250/tCO2 -e in FY2050, and US$10-175/tCO2 -e in FY2030 and US$100-250/tCO2 -e in FY2050 in BHP’s current major operational and market countries. | 1 | Central Energy View reflects, and is periodically updated to respond to, existing policy trends and commitments. Lower Carbon View accelerates decarbonisation trends and policies, particularly in easier-to-abate sectors such as power generation and light duty vehicles. BHP’s Climate Change Report 2020 describes these scenarios in more detail. |
The operational planning cases, price outlooks and cost of carbon assumptions, impact certain significant judgements and key estimates, including the determination of the valuation of assets and potential impairment charges (notes 11 ‘Property, plant and equipment’ and 13 ‘Impairment of non-current assets’), the estimation of the remaining useful economic life of assets for depreciation purposes (note 11 ‘Property, plant and equipment’), and the timing of closure and rehabilitation activities (note 15 ‘Closure and rehabilitation provisions’). In addition to the operational planning cases, the Group utilises a range of scenarios, including its 1.5°C Paris-aligned scenario2 , when testing the resilience of its portfolio, forming strategy and making investment decisions. While a 1.5ºC Paris-aligned scenario does not currently represent one of the recoverabilityinputs to the Group’s operational planning cases, the Group has, during FY2022, systematically integrated the Group’s 1.5ºC Paris-aligned scenario into the Group’s strategy and capital allocation process to test the extent to which its capital allocation is aligned with a rapidly decarbonising global economy. Specifically, the Group applies the Group’s 1.5°C Paris-aligned scenario to assess whether future demand for the Group’s products under that scenario supports ongoing capital investment. The internal allocation of certain deferred tax assets (note 14 ‘Deferred tax balances’).capital under the Group’s Capital Allocation Framework and all major investment decisions now require an assessment of investment viability under the Group’s 1.5°C Paris-aligned scenario. The Group continues to monitor global decarbonisation signposts and update its operational planning cases, price outlooks, and cost of carbon assumptions and assessments relating to strategy and capital allocation accordingly. Where such signposts indicate the appropriate measures are in place for achievement of a 1.5ºC Paris-aligned scenario, this will be reflected in the Group’s operational planning cases. Sensitivity to demand for fossil fuelsthe Group’s commodities The Group acknowledges that there are a range of possible energy transition scenarios, including those that are aligned with the aims of the Paris Agreement, goals, that may indicate different outcomes for individual commodities. While not currently an input to the Group’s planning cases, theThe resilience of the Group’s portfolio to a 1.5°C Paris-aligned scenario (the Group’s 1.5°C Paris-aligned scenario) has beencontinues to be considered, including the impact of Paris-aligned commodity price outlooksestimates under that scenario on the Group’s latest asset plans. Although all potential financial reporting consequences under the Group’s 1.5°C Paris-aligned scenario are currently impracticable to fully assess, the long-term commodity price outlooks under this scenario are either largely consistent with or favourable to the price outlooks in the Group’s current planning cases, with the exception of energy coal, oil and natural gas. There are inherent limitations with scenario analysis and it is difficult to predict which, if any, of the scenarios might eventuate and none of the scenarios considered constitutes a definitive outcome for the Group. TheHowever, the long-term commodity price outlooksestimates under the Group’s 1.5°C Paris-aligned scenario excluding energyreflect the world needing around twice as much steel, copper and potash and four times as much nickel in the next 30 years as in the last 30. In addition, the Group’s portfolio is transitioning towards higher quality iron ore and metallurgical coal oilthat enable steelmakers to be more efficient and natural gas, reflect:operate with a lower emissions intensity. CopperAs such, although all potential financial reporting consequences under the Group’s 1.5°C Paris-aligned scenario are currently impracticable to fully assess, the long-term commodity price outlooks under this scenario for iron ore, copper, metallurgical coal, nickel and nickel benefiting frompotash are either largely consistent with or favourable to the dramatic pace of electrification over and aboveprice outlooks in the Group’s current operational planning casescases.
Iron ore growth underpinned by the benefit to steel demand from the construction of renewables, particularly wind power
Potash growth reflecting the potential for greater penetration of biofuels
Metallurgical coal supported by the limited alternatives in steelmaking over the scenario timeframe
Given the positive long-term price outlooks for these commodities, the Group currently considers that a material adverse change is not expected to the valuation, and remaining useful life, of assets and discounting of closure and rehabilitation provisions for assets relating to these commodities under its 1.5°C Paris-aligned scenario. ForWhile energy coal oil and natural gas, long-term commodity price outlooks under the Group’s 1.5°C Paris-aligned scenario are unfavourable when compared to the price outlooks in the Group’s current operational planning cases. However, recent portfolio announcements and impairments recognised in FY2021 limit the exposure of the carrying value of the Group’s assets to long-term commodity prices for energy coal, oil and natural gas, as: the Group has announced a merger proposal to combine the Group’s petroleum business with Woodside
the Group has announced the signing of a Sale and Purchase Agreement to divest the Group’s 33.3 per cent interest in Cerrejón
cases, following impairments recognised in FY2021, the carrying value of assets at the Group’s remaining energy coal operations at NSWEC assets is no longer materialmaterial. Further, as management would alter its operating and investment plansthe Group’s closure provision for NSWEC reflects the announcement in such a pricing environment for these assets to mitigate cash flow and valuation impacts, it is currently impracticable to fully assess the potential impacts on the significant judgements and key estimates used in the preparationFY2022 of the Group’s Financial Statements. However, givenplans to seek approvals to continue mining at NSWEC beyond its current mining consent that expires in 2026 and intention to proceed with a managed process to cease mining at NSWEC by the factors outlined above, NSWECend of FY2030. While the closure provisions areprovision remains subject to estimation and assumptions, the timing of closure is no longer considered the liabilities mostmaterially susceptible to the long-term impacts of the Group’s 1.5°C Paris-aligned scenario as reserves may become incapable of extraction in an economically viable fashion prior to the current best estimate of remaining useful life. In such a scenario, closure activity may be performed earlier than the Group’s current best estimate, impacting the closure provision.climate change. The Group is progressing work to assess the potential impact of physical risks of climate change in line with the Group���sGroup’s Risk Management Framework. In FY2022, the Group conducted a physical risk identification process that prioritised key potential climate hazards for more detailed analysis including, for example, risks associated with higher sea levels disrupting port operations and extreme rainfall impacting the stability of tailings storage facilities. Given the ongoing nature of the Group’s physical risk assessment process, inclusion of adaptation risk in the Group’s operating plans, and associated asset valuations, is currently limited. As the Group progresses its adaptation strategy, including risk evaluations planned for FY2023, the identification of additional risks or the detailed development of the Group’s response may result in material changes to financial results and the carrying values of assets and liabilities in future reporting periods. | This scenario aligns with the aims of the Paris Agreement and requires steep global annual emissions reduction, sustained for decades, to stay within a 1.5°C carbon budget. 1.5°C is above pre-industrial levels. BHP’s Climate Change Report 2020 describes this scenario, including its assumptions, outputs and limitations, in more detail. |
3.1.6
1.6 Notes to the Financial Statements The Group operated 4three reportable segments during FY2021,FY2022, which are aligned with the commodities that are extracted and marketed and reflect the structure used by the Group’s management to assess the performance of the Group. | | | | | | | | | | Exploration, development and production of oil and gas
| | | | | | Mining of copper, silver, zinc, molybdenum, uranium and gold | | | | | | | | | | | | Mining of metallurgical coal and energy coal |
Unless otherwise noted,On 22 November 2021, the segment reporting informationGroup signed a binding SSA for the year ended 30 June 2019 excludes Discontinued operations, beingmerger of the Petroleum Onshore US operations comprising the Eagle Ford, Haynesville, Permian and FayettevilleGroup’s oil and gas assets.portfolio with Woodside. Following that announcement, the Group’s Petroleum business no longer meets the reporting segment recognition criteria as outlined in IFRS 8/AASB 8 ‘Operating segments’ and therefore does not form part of the reportable segments. Comparative periods have been adjusted for the effects of applying IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ to disclose the Group’s Petroleum business on the same basis as the current period. Group and unallocated items includes functions, other unallocated operations including Potash, Nickel West and legacy assets, and consolidation adjustments. Revenue not attributable to reportable segments comprises the sale of freight and fuel to third-parties,third parties, as well as revenues from unallocated operations. Exploration and technology activities are recognised within relevant segments. Total assets and total liabilities for FY2020 and FY2019 have been restated to reflect changes to the Group’s accounting policy following a decision by the IFRS Interpretations Committee on IAS 12/AASB 112 ‘Income Taxes’ (IAS 12), resulting in the retrospective recognition of US$950 million of Goodwill at Olympic Dam (included in the Copper Segment) and an offsetting US$1,021 million increase in Deferred tax liabilities (included in Group and unallocated). Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’ for further information.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Group and
unallocated
items/
eliminations | | | | | | | | 3,895 | | | | 15,726 | | | | 34,475 | | | | 5,154 | | | | 1,567 | | | | 60,817 | | | | | 51 | | | | – | | | | – | | | | – | | | | (51 | ) | | | – | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation and amortisation | | | (1,739 | ) | | | (1,608 | ) | | | (1,971 | ) | | | (845 | ) | | | (661 | ) | | | (6,824 | ) | | | | (128 | ) | | | (72 | ) | | | (13 | ) | | | (20 | ) | | | (31 | ) | | | (264 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (47 | ) | | | (144 | ) | | | (1,319 | ) | | | (1,567 | ) | | | (1,308 | ) | | | (4,385 | ) | | | | | | | | | | | | | | | | | | | | | | | | (1,305 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Capital expenditure (cash basis) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Loss)/profit from equity accounted investments, related impairments and expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Investments accounted for using the equity method | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Group and
unallocated
items/
eliminations | | | | | | | | 16,849 | | | | 30,767 | | | | 15,549 | | | | 1,933 | | | | 65,098 | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation and amortisation | | | (1,765 | ) | | | (2,203 | ) | | | (762 | ) | | | (953 | ) | | | (5,683 | ) | | | | (470 | ) | | | (33 | ) | | | (9 | ) | | | (3 | ) | | | (515 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (81 | ) | | | (648 | ) | | | 849 | | | | (450 | ) | | | (330 | ) | | | | | | | | | | | | | | | | | | | | (969 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Capital expenditure (cash basis) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profit/(loss) from equity accounted investments, related impairments and
expenses | | | | | | | | ) | | | | | | | | ) | | | | ) | | | | | | | | | | | | | | | | | | | | | | | Investments accounted for using the equity method | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Petroleum | | | Copper | | | Iron Ore | | | Coal | | | Group and
unallocated
items/
eliminations | | | Group
total | | | | | 4,008 | | | | 10,666 | | | | 20,797 | | | | 6,241 | | | | 1,219 | | | | 42,931 | | | | | 62 | | | | – | | | | – | | | | 1 | | | | (63 | ) | | | – | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,070 | | | | 10,666 | | | | 20,797 | | | | 6,242 | | | | 1,156 | | | | 42,931 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,207 | | | | 4,347 | | | | 14,554 | | | | 1,632 | | | | (669 | ) | | | 22,071 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation and amortisation | | | (1,445 | ) | | | (1,740 | ) | | | (1,608 | ) | | | (807 | ) | | | (512 | ) | | | (6,112 | ) | | | | (12 | ) | | | (17 | ) | | | (22 | ) | | | (14 | ) | | | (20 | ) | | | (85 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 750 | | | | 2,590 | | | | 12,924 | | | | 811 | | | | (1,201 | ) | | | 15,874 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (6 | ) | | | (1,228 | ) | | | (614 | ) | | | (18 | ) | | | 413 | | | | (1,453 | ) | | | | | | | | | | | | | | | | | | | | | | | | (911 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,510 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Capital expenditure (cash basis) | | | 909 | | | | 2,434 | | | | 2,328 | | | | 603 | | | | 626 | | | | 6,900 | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Loss)/profit from equity accounted investments, related impairments and expenses | | | (4 | ) | | | 67 | | | | (508 | ) | | | (68 | ) | | | 1 | | | | (512 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Investments accounted for using the equity method | | | 245 | | | | 1,558 | | | | – | | | | 776 | | | | 6 | | | | 2,585 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,071 | | | | 28,892 | | | | 23,841 | | | | 12,110 | | | | 27,819 | | | | 105,733 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,824 | | | | 3,535 | | | | 5,441 | | | | 2,601 | | | | 37,157 | | | | 53,558 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Petroleum | | | Copper | | | Iron Ore | | | Coal | | | Group and
unallocated
items/
eliminations | | | Group
total | | | | | 5,853 | | | | 10,838 | | | | 17,251 | | | | 9,121 | | | | 1,225 | | | | 44,288 | | | | | 77 | | | | – | | | | 4 | | | | – | | | | (81 | ) | | | – | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,930 | | | | 10,838 | | | | 17,255 | | | | 9,121 | | | | 1,144 | | | | 44,288 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,061 | | | | 4,550 | | | | 11,129 | | | | 4,067 | | | | (649 | ) | | | 23,158 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Depreciation and amortisatio n | | | (1,560 | ) | | | (1,835 | ) | | | (1,653 | ) | | | (632 | ) | | | (149 | ) | | | (5,829 | ) | | | | (21 | ) | | | (128 | ) | | | (79 | ) | | | (35 | ) | | | (1 | ) | | | (264 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,480 | | | | 2,587 | | | | 9,397 | | | | 3,400 | | | | (799 | ) | | | 17,065 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | – | | | | (971 | ) | | | – | | | | 19 | | | | (952 | ) | | | | | | | | | | | | | | | | | | | | | | | | (1,064 | ) | | | | | | | | | | | | | | | | | | | | | | | | 15,049 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Capital expenditure (cash basis) | | | 645 | | | | 2,735 | | | | 1,611 | | | | 655 | | | | 604 | | | | 6,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | (Loss)/profit from equity accounted investments, related impairments and expenses | | | (2 | ) | | | 303 | | | | (945 | ) | | | 103 | | | | (5 | ) | | | (546 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Investments accounted for using the equity method | | | 239 | | | | 1,472 | | | | – | | | | 853 | | | | 5 | | | | 2,569 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 12,434 | | | | 28,378 | | | | 22,592 | | | | 12,124 | | | | 26,283 | | | | 101,811 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,102 | | | | 3,340 | | | | 5,106 | | | | 2,450 | | | | 35,060 | | | | 50,058 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Copper | | | Iron Ore | | | Coal | | | Group and
unallocated
items/
eliminations | | | Group
total | | | | | 15,726 | | | | 34,475 | | | | 5,154 | | | | 1,566 | | | | 56,921 | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,726 | | | | 34,475 | | | | 5,154 | | | | 1,566 | | | | 56,921 | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,489 | | | | 26,278 | | | | 288 | | | | 18 | | | | 35,073 | | | | | | | | | | | | | | | | | | | | | | | | Depreciation and amortisation | | | (1,608 | ) | | | (1,971 | ) | | | (845 | ) | | | (660 | ) | | | (5,084 | ) | | | | (72 | ) | | | (13 | ) | | | (20 | ) | | | (31 | ) | | | (136 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | 6,809 | | | | 24,294 | | | | (577 | ) | | | (673 | ) | | | 29,853 | | | | | | | | | | | | | | | | | | | | | | | | | | | (144 | ) | | | (1,319 | ) | | | (1,567 | ) | | | (1,308 | ) | | | (4,338 | ) | | | | | | | | | | | | | | | | | | | | (1,223 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 24,292 | | | | | | | | | | | | | | | | | | | | | | | | Capital expenditure (cash basis) | | | 2,180 | | | | 2,188 | | | | 579 | | | | 665 | | | | 5,612 | | | | | | | | | | | | | | | | | | | | | | | | Profit/(loss) from equity accounted investments, related impairments and expenses | | | 692 | | | | (1,126 | ) | | | (480 | ) | | | (1 | ) | | | (915 | ) | | | | | | | | | | | | | | | | | | | | | | | Investments accounted for using the equity method | | | 1,482 | | | | – | | | | – | | | | 260 | | | | 1,742 | | | | | | | | | | | | | | | | | | | | | | | | | | | 31,517 | | | | 26,171 | | | | 11,030 | | | | 40,209 | | | | 108,927 | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,589 | | | | 7,508 | | | | 3,518 | | | | 37,707 | | | | 53,322 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Copper | | | Iron Ore | | | Coal | | | Group and
unallocated
items/
eliminations | | | Group
total | | | | | 10,666 | | | | 20,797 | | | | 6,241 | | | | 1,220 | | | | 38,924 | | | | | – | | | | – | | | | 1 | | | | (1 | ) | | | – | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,666 | | | | 20,797 | | | | 6,242 | | | | 1,219 | | | | 38,924 | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,347 | | | | 14,554 | | | | 1,632 | | | | (663 | ) | | | 19,870 | | | | | | | | | | | | | | | | | | | | | | | | Depreciation and amortisation | | | (1,740 | ) | | | (1,608 | ) | | | (807 | ) | | | (512 | ) | | | (4,667 | ) | | | | (17 | ) | | | (22 | ) | | | (14 | ) | | | (20 | ) | | | (73 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | 2,590 | | | | 12,924 | | | | 811 | | | | (1,195 | ) | | | 15,130 | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,228 | ) | | | (614 | ) | | | (18 | ) | | | 413 | | | | (1,447 | ) | | | | | | | | | | | | | | | | | | | | (858 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 12,825 | | | | | | | | | | | | | | | | | | | | | | | | Capital expenditure (cash basis) | | | 2,434 | | | | 2,328 | | | | 603 | | | | 626 | | | | 5,991 | | | | | | | | | | | | | | | | | | | | | | | | Profit/(loss) from equity accounted investments, related impairments and expenses | | | 67 | | | | (508 | ) | | | (68 | ) | | | 1 | | | | (508 | ) | | | | | | | | | | | | | | | | | | | | | | | Investments accounted for using the equity method | | | 1,558 | | | | – | | | | 776 | | | | 251 | | | | 2,585 | | | | | | | | | | | | | | | | | | | | | | | | | | | 28,892 | | | | 23,841 | | | | 12,110 | | | | 40,890 | | | | 105,733 | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,535 | | | | 5,441 | | | | 2,601 | | | | 41,981 | | | | 53,558 | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Impairment losses exclude exceptional items of US$ nil (2021: US$2,371 million (2020:million; 2020: US$409 million; 2019: US$ NaN)million). |
(2) | Exceptional items reported in Group and unallocated include Samarco dam failure costs of US$ (13) million (2021: US$(14) million (2020:million; 2020: US$(32) million; 2019: US$(31) million) and Samarco related other income of US$ nil (2021: US$34 million (2020:million; 2020: US$489 million; 2019: US$50 million). Refer to note 3 ‘Exceptional items’ for further information. |
(3) | TotalGroup and unallocated comparative periods total assets and total liabilities include Petroleum assets and liabilities that were previously disclosed as part of FY2020 and FY2019 have been restated to reflect changes to the Group’s accounting policy. Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’ for further information.Petroleum segment. |
| | | | | | | | | | | | | | | | Revenue by location of customer | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | | | | | | | | 2,232 | | | | 2,568 | | | | | | | | | 1,156 | | | | 1,875 | | | | | | | | | 26,576 | | | | 24,274 | | | | | | | | | 3,904 | | | | 4,193 | | | | | | | | | 1,475 | | | | 2,479 | | | | | | | | | 2,666 | | | | 2,550 | | | | | | | | | 2,583 | | | | 2,940 | | | | | | | | | 1,827 | | | | 2,442 | | | | | | | | | 315 | | | | 662 | | | | | | | | | 197 | | | | 305 | | | | | | | | | | | | | | | | | | | | | | | | 42,931 | | | | 44,288 | | | | | | | | | | | | | | | | | | | | | | Non-current assets by location of assets (1) | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | | | | | | | Restated | | | Restated | | | | | | | | | 48,236 | | | | 45,963 | | | | | | | | | 9,682 | | | | 8,633 | | | | | | | | | 18,179 | | | | 18,404 | | | | | | | | | 1,955 | | | | 371 | | | | | | | | | 6,210 | | | | 5,067 | | | | | | | | | | | | | | | | | | | | | | | | 84,262 | | | | 78,438 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | Revenue by location of customer | | | | | | | | 2021 | | | 2020 | | | | | | | | US$M | | | US$M | | | | | | | | Restated | | | Restated | | | | | | | | | 1,871 | | | | 1,212 | | | | | | | | | 886 | | | | 963 | | | | | | | | | 39,653 | | | | 26,503 | | | | | | | | | 4,387 | | | | 3,314 | | | | | | | | | 2,189 | | | | 1,475 | | | | | | | | | 3,420 | | | | 2,666 | | | | | | | | | 2,934 | | | | 1,730 | | | | | | | | | 1,147 | | | | 719 | | | | | | | | | 426 | | | | 315 | | | | | | | | | 8 | | | | 27 | | | | | | | | | | | | | | | | | | | | | | | | 56,921 | | | | 38,924 | | | | | | | | | | | | | | | | | | | | | | Non-current assets by location of assets | | | | | | | | 2021 | | | 2020 | | | | | | | | US$M | | | US$M | | | | | | | | | 48,612 | | | | 48,236 | | | | | | | | | 9,701 | | | | 9,682 | | | | | | | | | 18,548 | | | | 18,179 | | | | | | | | | 1,851 | | | | 1,955 | | | | | | | | | 3,522 | | | | 6,210 | | | | | | | | | | | | | | | | | | | | | | | | 82,234 | | | | 84,262 | | | | | | | | | | | | | | | |
(1) | FY2020 and FY2019 have been restated to reflect changes to the Group’s accounting policy following a decision by the IFRS Interpretations Committee on IAS 12 ‘Income Taxes’, resulting in the retrospective recognition of US$950 million of Goodwill at Olympic Dam. Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’ for further information.1
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(2) | Unallocated assets comprise deferred tax assets and other financial assets. |
Underlying EBITDA is earnings before net finance costs, depreciation, amortisation and impairments, taxation expense, Discontinued operations and any exceptional items. Underlying EBITDA includes BHP’s share of profit/(loss) from investments accounted for using the equity method including net finance costs, depreciation, amortisation and impairments and taxation expense/(benefit). Exceptional items are excluded from Underlying EBITDA in order to enhance the comparability of such measures from and provide investors with further clarity in order to assess the performance of the Group’s operations. Management monitors exceptional items separately. Refer to note 3 ‘Exceptional items’ for additional detail. Segment assets and liabilities Total segment assets and liabilities of reportable segments represents operating assets and operating liabilities, including the carrying amount of equity accounted investments and predominantly excludes cash balances, loans to associates, interest bearing liabilities and deferred tax balances. The carrying value of investments accounted for using the equity method represents the balance of the Group’s investment in equity accounted investments, with no adjustment for any cash balances, interest bearing liabilities or deferred tax balances of the equity accounted investment.
Revenue by segment and asset | | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | Australia Production Unit | | | | | | | 361 | | | | 507 | | | | | | | | | 1,102 | | | | 1,237 | | | | | | | | | 1,076 | | | | 1,657 | | | | | | | | | 561 | | | | 979 | | | | | | | | | 277 | | | | 540 | | | | | | | | | 216 | | | | 319 | | | | | | | | | 191 | | | | 287 | | | | | | | | | 159 | | | | 258 | | | | | | | | | 39 | | | | 10 | | | | | | | | | 88 | | | | 136 | | | | | | | | | | | | | | | | | | | | | | | 4,070 | | | | 5,930 | | | | | | | | | | | | | | | | | | | | | | | 6,719 | | | | 6,876 | | | | | | | | | 1,395 | | | | 1,502 | | | | | | | | | 1,463 | | | | 1,351 | | | | | | | | | 1,089 | | | | 1,109 | | | | | | | | | | | | | | | | | | | | | | | 10,666 | | | | 10,838 | | | | | | | | | | | | | | | | Western Australia Iron Ore | | | | | | | 20,663 | | | | 17,066 | | | | | | | | | 15 | | | | 32 | | | | | | | | | 119 | | | | 157 | | | | | | | | | | | | | | | | | | | | | | | 20,797 | | | | 17,255 | | | | | | | | | | | | | | | | | | | | | | | 5,357 | | | | 7,679 | | New South Wales Energy Coal | | | | | | | 885 | | | | 1,421 | | | | | | | | | – | | | | 19 | | | | | | | | | – | | | | 2 | | | | | | | | | | | | | | | | | | | | | | | 6,242 | | | | 9,121 | | | | | | | | | | | | | | | | Group and unallocated items (4) | | | | | | | 1,219 | | | | 1,225 | | | | | | | | | (63 | ) | | | (81 | ) | | | | | | | | | | | | | | | | | | | | | | 42,931 | | | | 44,288 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | US$M | | | US$M | | | | | | | | Restated | | | Restated | | | | | | | | | 9,470 | | | | 6,719 | | | | | | | | | 1,801 | | | | 1,395 | | | | | | | | | 2,211 | | | | 1,463 | | | | | | | | | 2,244 | | | | 1,089 | | | | | | | | | | | | | | | | | | | | | | | 15,726 | | | | 10,666 | | | | | | | | | | | | | | | | Western Australia Iron Ore | | | | | | | 34,337 | | | | 20,663 | | | Third-party products | | | | | | | 18 | | | | 15 | | | | | | | | | 120 | | | | 119 | | | | | | | | | | | | | | | | | | | | | | | 34,475 | | | | 20,797 | | | | | | | | | | | | | | | | | BHP Mitsubishi Alliance | | | | | | | 3,537 | | | | 4,422 | | | New South Wales Energy Coal | | | | | | | 839 | | | | 885 | | | | | | | | | 778 | | | | 935 | | | | | | | | | | | | | | | | | | | | | | | 5,154 | | | | 6,242 | | | | | | | | | | | | | | | | Group and unallocated items 4 | | | | | | | 1,566 | | | | 1,220 | | | | | | | | | – | | | | (1 | ) | | | | | | | | | | | | | | | | | | | | | | 56,921 | | | | 38,924 | | | | | | | | | | | | | | | |
(1) | Total Petroleum revenue includes: crude oil US$2,013 million (2020: US$2,033 million; 2019: US$3,171 million), natural gas US$977 million (2020: US$980 million; 2019: US$1,259 million), LNG US$682 million (2020: US$774 million; 2019: US$1,179 million), NGL US$212 million (2020: US$198 million; 2019: US$263 million) and other US$62 million (2020: US$85 million; 2019: US$58 million).
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(2) | Total Copper revenue includes: copper US$15,992 million (2021: US$14,812 million (2020:million; 2020: US$10,044 million; 2019: US$10,215 million) and other US$857 million (2021: US$914 million (2020:million; 2020: US$622 million; 2019: US$623 million). Other consists of silver, zinc, molybdenum, uranium and gold. |
(3) | Includes revenue related to BHP Mitsui Coal (BMC) divested in May 2022.
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| Total Coal revenue includes: metallurgical coal US$11,990 million (2021: US$4,260 million (2020:million; 2020: US$5,311 million; 2019: US$7,568 million) and energy coal US$3,559 million (2021: US$894 million (2020:million; 2020: US$931 million; 2019: US$1,553 million).
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(4) | Group and unallocated items revenue includes: Nickel West US$1,926 million (2021: US$1,545 million (2020:million; 2020: US$1,189 million; 2019: US$1,193 million) and other revenue US$227 million (2020:(2021: US$3021 million; 2019:2020: US$3231 million). |
Revenue consists of revenue from contracts with customers of US$59,302 million (2020:(2021: US$43,08755,562 million; 2019:2020: US$44,36138,917 million) and other revenue predominantly relating to provisionally priced sales of US$1,515(406) million (2020:(2021: US$(156)1,359 million; 2019:2020: US$(73)7 million). Recognition and measurement The Group generates revenue from the production and sale of commodities. Revenue is recognised when or as control of the promised goods or services passes to the customer. In most instances, control passes when the goods are delivered to a destination specified by the customer, typically on board the customer’s appointed vessel. Revenue from the provision of services is recognised over time as the services are provided, but does not represent a significant proportion of total revenue and is aggregated with the respective asset and product revenue for disclosure purposes. The amount of revenue recognised reflects the consideration to which the Group expects to be entitled in exchange for thetransferring goods or services. Where the Group’s sales are provisionally priced, the final price depends on future index prices. The amount of revenue initially recognised is based on the relevant forward market price. Adjustments between the provisional and final price are accounted for under IFRS 9/AASB 9 ‘Financial Instruments’ (IFRS 9) and, separately recorded as other revenue.revenue and presented as part of the total revenue of each asset. The period between provisional pricing and final invoicing is typically between 60 and 120 days. Revenue from concentrate is net of treatment costs and refining charges. Revenue from the sale of significant by-products is included within revenue. Where a by-product is not significant, revenue is credited against costs. The Group applies the practical expedient to not adjust the expected consideration for the effects of the time value of money if the period between the delivery and when the customer pays for the promised good or service is one year or less.
For commodity sales contracts, each individual metric unit is a separate performance obligation. Where the Group has contracts with unfulfilled performance obligations at period-end, it is required to disclose the transaction price allocated to these performance obligations. The Group applies the practical expedient not to not disclose this information for contracts with anrelating to unfulfilled performance obligations, either due to the expected duration of the contract term being one year or less. The Groupless, or for longer term contracts, because the entity has a numberright to consideration (and can recognise revenue) for goods delivered.
Exceptional items are those gains or losses where their nature, including the expected frequency of the events giving rise to them, and impact is considered material to the Financial Statements. Such items included within the Group’s profit from Continuing operations for the year are detailed below. Exceptional items attributable toD iscontinued operations are detailed in note 27 ‘Discontinued operations’. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Exceptional items by category | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment of Energy coal assets | | | | | | | | | | | | | Impairment of Potash assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Attributable to non-controlling interest s | | | | | | | | | | | | | Attributable to BHP shareholders | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Exceptional items by category | | | | | | | | | | | | | | | | | | | | | ) | | | | ) | Impairment of US deferred tax assets | | | | | | | | ) | | | | ) | Corporate structure unification costs | | | | ) | | | | | | | | ) | BHP Mitsui Coal (BMC) gain on disposal | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | ) | | | | ) | | | | | | | | | | | | | | | Attributable to non-controlling interests | | | | | | | | | | | | | Attributable to BHP shareholders | | | | ) | | | | ) | | | | ) | | | | | | | | | | | | | | |
Samarco Mineração S.A. (Samarco) dam failure The FY2021FY2022 exceptional loss of US$1,1581,063 million (after tax) related to the Samarco dam failure in November 2015 comprises the following: | | | | | Year ended 30 June 20212022 | | | | | | | | | Expenses excluding net finance costs: | | | | | Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure | | | | | Loss from equity accounted investments, related impairments and expenses: | | | | | Samarco impairment expense | | | | | Samarco Germano dam decommissioning | | | | | Samarco dam failure provision | | | | ) )
| Fair value change on forward exchange derivatives
derivatives | | | | ) | | | | | | | | | | ) | | | | | | | | | | ) | | | | | |
| Refer to note 4 ‘Significant events – Samarco dam failure’ for further information. |
Impairment of US deferred tax assets The Group recognised an impairment charge of US$423 million (after tax) in relation to deferred tax assets where the recoverability has historically been reliant on Petroleum earnings in the same tax group. While these tax assets remained with the Group following the merger of the Group’s oil and gas portfolio with Woodside, the impairment charge reflects the extent of other currently forecast future earnings against which the assets can be recovered. Corporate structure unification costs The Group incurred transaction costs associated with the unification of the Group corporate structure under its existing Australian parent company, BHP Group Limited, which was completed on 31 January 2022. Refer note 16 ‘Share capital’ for further information. BHP Mitsui Coal (BMC) gain on disposal On 3 May 2022 the Group sold it s 80 per cent interest in BHP Mitsui Coal Pty Ltd (BMC) to Stanmore SMC Holdings Pty Ltd, a wholly owned subsidiary of Stanmore Resources Limited (Stanmore Resources). Stanmore Resources paid US$1.1billion cash consideration at completion plus a preliminary completion adjustment of US$218million for working capital . US$100million in cash remains payable in six monthson 3 November 2022 with potential for an additional amount of up to US$150million (US$122 million discounted) in a price-linked earnout payable in the 2024 calendar year.
Details of the gain on disposal is as follows: | | | | | | | | | | | | | | | Cash and cash equivalents | | | | | Trade and other receivables | | | | | | | | | | | | | | | Property, plant and equipment | | | | | | | | | | | | | | | | | | | | | (1)Trade and other payables | | | | | Interest bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Less non-controlling interest share of net assets disposed | | | | | | | | | | BHP share of net assets disposed | | | | | | | | | | | | | | | | Transaction and other directly applicable costs | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | |
The exceptional items relating to the year ended 30 June 2021 and the year ended 30 June 2020 are detailed below. | | | | | | | | | | | | | | | Gross | | | Tax | | | Net | | | | | US$M | | | US$M | | | US$M | | Exceptional items by category | | | | | | | | | | | | | | | | (1,087 | ) | | | (71 | ) | | | (1,158 | ) | | | | (499 | ) | | | 138 | | | | (361 | ) | Impairment of Energy coal assets | | | (1,523 | ) | | | (651 | ) | | | (2,174 | ) | Impairment of Potash assets | | | (1,314 | ) | | | (473 | ) | | | (1,787 | ) | | | | | | | | | | | | | | | | | | (4,423 | ) | | | (1,057 | ) | | | (5,480 | ) | | | | | | | | | | | | | | | Attributable to non-controlling interests | | | (34 | ) | | | 10 | | | | (24 | ) | Attributable to BHP shareholders | | | (4,389 | ) | | | (1,067 | ) | | | (5,456 | ) | | | | | | | | | | | | | | |
Samarco Mineração S.A. (Samarco) dam failure The FY2021 exceptional loss of US$1,158 million related to the Samarco dam failure in November 2015 comprises the following: | | | | | | | US$M | | | | | 34 | | Expenses excluding net finance costs: | | | | | Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure | | | (46 | ) | Loss from equity accounted investments, related impairments and expenses: | | | | | Samarco impairment expense | | | (111 | ) | Samarco Germano dam decommissioning | | | (15 | ) | Samarco dam failure provision | | | (1,000 | ) | Fair value change on forward exchange derivatives | | | 136 | | | | | (85 | ) | | | | (71 | ) | | | | | | | | | (1,158 | ) | | | | | | |
(1) | Refer to note 4 ‘Significant events – Samarco dam failure’ for further information. |
COVID-19
is considered a single protracted globally pervasive event with financial impacts being experienced over a number of reporting periods. The exceptional item reflects the directly attributable COVID-19 pandemic related additional costs for the Group for the year ended 30 June 2021,FY2021, including costs associated with the increased provision of health and hygiene services, the impacts of maintaining social distancing requirements and demurrage and other standby charges related to delays caused by COVID-19. At the time, COVID-19 was considered a single protracted globally pervasive event.COVID-19.However, as the pandemic has continued to evolve, certain impacts that were initially considered to be potentially short-term in nature are now expected to continue over a number of reporting periods. These activities are now considered to be part of business as usual operations and, as such, for FY2022, the incremental costs have not been classified as an exceptional item.
Impairment of Energy coal assets The Group recognised an impairment charge of US$1,704 million (after tax) in relation to New South Wales Energy Coal (NSWEC) reflecting the status of the divestment process and current market conditions for thermal coal, the strengthening Australian dollar and changes to the mine plan. In addition, the Group recognised an impairment charge of US$470 million (after tax) for Cerrejón, reflecting the expected net sales proceeds. Refer to note 13 ‘Impairment of non-current assets’ for further information on the pre-tax impairment.
Impairment of Potash assets The Group recognised an impairment charge of US$ 2,0651,787 million (after tax) in relation to Potash. The impairment charge reflectsreflected an analysis of recent market perspectives and the value that we would now expect expected a market participant to attribute to our investments to date. Refer to note 13 ‘Impairment of non-current assets’ for further information on the pre-tax impairment.The exceptional items relating to the year ended 30 June 2020 and the year ended 30 June 2019 are detailed below.
| | | Gross | | Tax | | Net | | | Year ended 30 June 2020
Restated | | | Gross | | Tax | | Net | | | | | US$M | | US$M | | US$M | | | US$M | | US$M | | US$M | | Exceptional items by category | | | | | | | | | | | | | | | | (176 | ) | | – | | (176 | ) | | | (176 | ) | | – | | (176 | ) | Cancellation of power contracts | | | (778 | ) | | 271 | | (507 | ) | | | (778 | ) | | 271 | | (507 | ) | | | | (183 | ) | | 53 | | (130 | ) | | | (177 | ) | | 51 | | (126 | ) | Cerro Colorado impairment | | | (409 | ) | | (83 | ) | | (492 | ) | | | (409 | ) | | (83 | ) | | (492 | ) | | | | | | | | | | | | | | | | | | | | | | | | (1,546 | ) | | 241 | | (1,305 | ) | | | (1,540 | ) | | 239 | | (1,301 | ) | | | | | | | | | | | | | | | | | | | | | Attributable to non-controlling interest s | | | (291 | ) | | 90 | | (201 | ) | | Attributable to non-controlling interests | | | | (291 | ) | | 90 | | (201 | ) | Attributable to BHP shareholders | | | (1,255 | ) | | 151 | | (1,104 | ) | | | (1,249 | ) | | 149 | | (1,100 | ) | | | | | | | | | | | | | | | | | | | | |
Samarco Mineração S.A. (Samarco) dam failure The FY2020 exceptional loss of US$176 million related to the Samarco dam failure in November 2015 comprises the following: | | | | | | | US$M | | | | | 489 | | Expenses excluding net finance costs: | | | | | Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure | | | (64 | ) | Loss from equity accounted investments, related impairments and expenses: | | | | | Samarco impairment expense | | | (95 | ) | Samarco Germano dam decommissioning | | | 46 | | Samarco dam failure provision | | | (459 | ) | | | | (93 | ) | | | | | | | | | | (176 | ) | | | | | | |
(1) | Refer to note 4 ‘Significant events – Samarco dam failure’ for further information. |
Cancellation of power contracts Reflects an onerous contract provision in relation to the cancellation of power contracts at the Group’s Escondida and Spence operations, as part of the shift towards 100 per cent renewable energy supply contracts. COVID-19
can be considered a single protracted globally pervasive event with financial impacts expected over a number of reporting periods. The exceptional item reflects the directly attributable COVID-19 pandemic related additional costs for the Group for FY2020, including costs associated with the increased provision of health and hygiene services, and the impacts of maintaining social distancing requirements.requirements and other standby charges related to delays caused by COVID-19. At the time, COVID-19 was considered a single protracted globally pervasive event.However, as the pandemic has continued to evolve, certain impacts that were initially considered to be potentially short-term in nature are now expected to continue over a number of reporting periods. These activities are now considered to be part of business as usual operations and, as such, for FY2022, the incremental costs have not been classified as an exceptional item. Cerro Colorado impairment The Group recognised an impairment charge of US$492 million (after tax) in relation to Cerro Colorado. This reflects the decision taken by the Group to reduce Cerro Colorado’s throughput for the remaining period of its current environmental licence, which expires at the end of CY2023. | | | | | | | | | | | | | | | Gross | | | Tax | | | Net | | | | | US$M | | | US$M | | | US$M | | Exceptional items by categor y | | | | | | | | | | | | | | | | (1,060 | ) | | | – | | | | (1,060 | ) | | | | – | | | | 242 | | | | 242 | | | | | | | | | | | | | | | | | | | (1,060 | ) | | | 242 | | | | (818 | ) | | | | | | | | | | | | | | | Attributable to non-controlling interests | | | – | | | | – | | | | – | | Attributable to BHP shareholders | | | (1,060 | ) | | | 242 | | | | (818 | ) | | | | | | | | | | | | | | |
Samarco Mineração S.A. (Samarco) dam failure
The FY2019 exceptional loss of US$1,060 million related to the Samarco dam failure in November 2015 comprises the following:
| | | | | | | US$M | | | | | 50 | | Expenses excluding net finance costs:
| | | | | Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure
| | | (57 | ) | Loss from equity accounted investments, related impairments and expenses:
| | | | | Samarco impairment expense
| | | (96 | ) | Samarco Germano dam decommissioning
| | | (263 | ) | Samarco dam failure provision
| | | (586 | ) | | | | (108 | ) | | | | | | | | | (1,060 | ) | | | | | |
(1) | Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.
|
Global taxation matters includes amounts released from provisions for tax matters and other claims resolved during the period.
4 Significant events – Samarco dam failure On 5 November 2015, the Samarco Mineração S.A. (Samarco) iron ore operation in Minas Gerais, Brazil, experienced a tailings dam failure that resulted in a release of mine tailings, flooding the communities of Bento Rodrigues, Gesteira and Paracatu and impacting other communities downstream (the Samarco dam failure). Refer to section 1.15on ‘Samarco’. in the Operating and Financial Review. Samarco is jointly owned by BHP Billiton Brasil Ltda (BHP Brasil) and Vale S.A. (Vale). BHP Brasil’s 50 per cent interest is accounted for as an equity accounted joint venture investment. BHP Brasil does not separately recognise its share of the underlying assets and liabilities of Samarco, but instead records the investment as one line on the balance sheet. Each period, BHP Brasil recognisesrecognised its 50 per cent share of Samarco’s profit or loss
and adjustsadjusted the carrying value of the investment in Samarco accordingly. Such adjustment continuescontinued until the investment carrying value is was reduced
to US$ NaN,nil, with any additional share of Samarco losses only recognised to the extent that BHP Brasil has an obligation to fund the losses. After
applying equity accounting, any remaining carrying value of the investment is tested for impairment. Any charges relating to the Samarco dam failure incurred directly by BHP Brasil or other BHP entities are recognised 100 per cent in the Group’s results. The financial impacts of the Samarco dam failure on the Group’s income statement, balance sheet and cash flow statement for the year ended 30 June 20212022 are shown in the tables below and have been treated as an exceptional item. | | | | | | | | | | | | | Financial impacts of Samarco dam failure | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | | | | | | | | | | | | | | | | | | | | | 489 | | | | 50 | | Expenses excluding net finance costs: | | | | | | | | | | | | | Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure (2) | | | | | | | (64 | ) | | | (57 | ) | Loss from equity accounted investments, related impairments and expenses: | | | | | | | | | | | | | Samarco impairment expense (3) | | | | | | | (95 | ) | | | (96 | ) | Samarco Germano dam decommissioning (4) | | | | | | | 46 | | | | (263 | ) | Samarco dam failure provision (5) | | | | | | | (459 | ) | | | (586 | ) | Fair value change on forward exchange derivatives (6) | | | | | | | – | | | | – | | | | | | | | | | | | | | | | | | | | | | | (83 | ) | | | (952 | ) | | | | | | | | (93 | ) | | | (108 | ) | | | | | | | | | | | | | | | | | | | | | | (176 | ) | | | (1,060 | ) | | | | | | | | – | | | | – | | | | | | | | | | | | | | | | | | | | | | | (176 | ) | | | (1,060 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (5 | ) | | | 4 | | | | | | | | | – | | | | – | | | | | | | | | – | | | | – | | | | | | | | | (137 | ) | | | (629 | ) | | | | | | | | | | | | | | | | | | | | | | (142 | ) | | | (625 | ) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Financial impacts of Samarco dam failure | | | | | 2021 | | | 2020 | | | | | | | | US$M | | | US$M | | | | | | | | | | | | | | | | | | | | | | 34 | | | | 489 | | Expenses excluding net finance costs: | | | | | | | | | | | | | Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure | | | | ) | | | (46 | ) | | | (64 | ) | Loss from equity accounted investments, related impairments and expenses: | | |
| | | | | | | | | | Samarco impairment expense | | | | | | | (111 | ) | | | (95 | ) | Samarco Germano dam decommissioning | | | | | | | (15 | ) | | | 46 | | Samarco dam failure provision | | | | ) | | | (1,000 | ) | | | (459 | ) | Fair value change on forward exchange derivatives | | | | ) | | | 136 | | | | – | | | | | | | | | | | | | | | | | | | | ) | | | (1,002 | ) | | | (83 | ) | | | | | ) | | | (85 | ) | | | (93 | ) | | | | | | | | | | | | | | | | | | | ) | | | (1,087 | ) | | | (176 | ) | | | | | ) | | | (71 | ) | | | – | | | | | | | | | | | | | | | | | | | | ) | | | (1,158 | ) | | | (176 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | (5 | ) | | | (5 | ) | | | | | ) | | | 136 | | | | – | | | | | | ) | | | (71 | ) | | | – | | | | | | ) | | | (741 | ) | | | (137 | ) | | | | | | | | | | | | | | | | | | | ) | | | (681 | ) | | | (142 | ) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | | | | | | | | | US$M | | | | | | US$M | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (176 | ) | | | | | | | (1,060 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Samarco impairment expense (3) | | | | | | | | | | | 95 | | | | | | | | 96 | | | | | | Samarco Germano dam decommissioning (4) | | | | | | | | | | | (46 | ) | | | | | | | 263 | | | | | | Samarco dam failure provision (5) | | | | | | | | | | | 459 | | | | | | | | 586 | | | | | | Fair value change on forward exchange derivatives (6) | | | | | | | | | | | – | | | | | | | | – | | | | | | | | | | | | | | | | | 93 | | | | | | | | 108 | | | | | | Changes in assets and liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5 | | | | | | | | (4 | ) | | | | | | | | | | | | | | | | | | | | 430 | | | | | | | | (11 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Net investment and funding of equity accounted investments (9) | | | | | | | | | | | | | | | (464 | ) | | | | | | | (424 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (464 | ) | | | | | | | (424 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Net decrease in cash and cash equivalents | | | | | | | | | | | | | | | (34 | ) | | | | | | | (435 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | | | | | 2020 | | | | | | | | | | | | | | US$M | | | | | | US$M | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | | | | (1,087 | ) | | | | | | | (176 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | Samarco impairment expense | | | | | | | | | | | 111 | | | | | | | | 95 | | | | | | Samarco Germano dam decommissioning | | | | ) | | | | | | | 15 | | | | | | | | (46 | ) | | | | | Samarco dam failure provision | | | | | | | | | | | 1,000 | | | | | | | | 459 | | | | | | Fair value change on forward exchange derivatives | | | | | | | | | | | (136 | ) | | | | | | | – | | | | | | of cash management related instruments | | | | | | | | | | | – | | | | | | | | – | | | | | | | | | | | | | | | | | 85 | | | | | | | | 93 | | | | | | Changes in assets and liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5 | | | | | | | | 5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (7 | ) | | | | | | | 430 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net investment and funding of equity accounted investments | | | | | | | | ) | | | | | | | (470 | ) | | | | | | | (464 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | | | | (470 | ) | | | | | | | (464 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Net decrease in cash and cash equivalents | | | | | | | | ) | | | | | | | (477 | ) | | | | | | | (34 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) 1 | Proceeds from insurance settlements. |
(2) 2 | Includes legal and advisor costs incurred. |
(3) | Impairment expense from working capital funding provided during the period. |
(4) | US$(56) million (2021: US$(6) million (2020:million; 2020: US$37 million; 2019: US$263 million) change in estimate and US$(12) million (2021: US$21 million (2020:million; 2020: US$(83) million; 2019: US$ NaN) exchange translation. |
(5) | US$842 million (2020: US$916 million; 2019: US$579 million) change in estimate and US$158 million (2020: US$(457) million; 2019: US$7 million) exchange translation.
|
(6)5 | US$747 million (2021: US$842 million; 2020: US$916 million) change in estimate and US$(84) million (2021: US$158 million; 2020: US$(457) million) exchange translation. |
| 6 | During the period the Group entered into forward exchange contracts to limit the Brazilian reais exposure on the dam failure provisions. While not applying hedge accounting, the fair value changes in the forward exchange instruments are recorded within Loss from equity accounted investments, related impairments and expenses in the Income Statement. |
(7) | Amortisation of discounting of provision. |
(8) | Includes tax on forward exchange derivatives and other taxes incurred during the period. |
(9) | Includes US$ nil (2021: US$(111) million (2020:million; 2020: US$(95) million; 2019: US$(96) million) funding provided during the period, US$ (256)million (2021: US$(351) million (2020:million; 2020: US$(365) million; 2019: US$(328) million) utilisation of the Samarco dam failure provision, and US$ nil (2021: US$(8) million (2020:million; 2020: US$(4) million; 2019: US$ NaN)million) utilisation of the Samarco Germano decommissioningdecommissio ning provision. |
Equity accounted investment in Samarco BHP Brasil’s investment in Samarco remains at US$ NaN. BHP Brasil provided US$111 million funding under a working capital facility during the period and recognised impairment losses of US$111 million. NaNnil. No dividends have been received by BHP Brasil from Samarco during the period and Samarco currently does 0tnot have profits available for distribution.
Provisions related to the Samarco dam failure | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | | | | | | | | | | | | US$M | | At the beginning of the financial year | | | | | | | | | | | | | | | 1,914 | | | | | | | | | | | | | | | | | 137 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (369 | ) | | | | | Adjustments charged to the income statement: | | | | | | | | | | | | | | | | | Change in estimate - Samarco dam failure provision | | | | | | | | | | | 916 | | | | | | Change in estimate - Samarco Germano dam decommissionin g | | | | | | | | | | | 37 | | | | | | Amortisation of discounting impacting net finance costs | | | | | | | | | | | 93 | | | | | | | | | | | | | | | | | (540 | ) | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | 2,051 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 896 | | | | | | | | | | | | | | | | | 1,155 | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | 2,051 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Samarco dam failure provision | | | | | | | | | | | | | | | 1,824 | | Samarco Germano dam decommissioning provision | | | | | | | | | | | | | | | 227 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | | | | | | | | | | | | | US$M | | At the beginning of the financial year | | | | | | | | | | | | | | | 2,051 | | | | | | | | | | | | | | | | | 741 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (359 | ) | | | | | Adjustments charged to the income statement: | | | | | | | | | | | | | | | | | Change in estimate - Samarco dam failure provision | | | | | | | | | | | 842 | | | | | | Change in estimate - Samarco Germano dam decommissioning | | | |
| | | | | | | (6 | ) | | | | | Amortisation of discounting impacting net finance costs | | | | | | | | | | | 85 | | | | | | | | | |
| | | | | | | 179 | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | 2,792 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,206 | | | | | | | | | | | | | | | | | 1,586 | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | 2,792 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Samarco dam failure provision | | | | | | | | | | | | | | | 2,560 | | Samarco Germano dam decommissioning provision | | | | | | | | | | | | | | | 232 | | | | | | | | | | | | | | | | | | | |
Samarco dam failure provisions and contingencies As at 30 June 2021,2022, BHP Brasil has identified provisions and contingent liabilities arising as a consequence of the Samarco dam failure as follows: Provision for Samarco dam failure On 2 March 2016, BHP Brasil, Samarco and Vale, entered into a Framework Agreement with the Federal Government of Brazil, the states of Espírito Santo and Minas Gerais and certain other public authorities to establish a foundation (Fundação Renova) that is developing and executing environmental and socio-economic programs (Programs) to remediate and provide compensation for damage caused by the Samarco dam failure.failure (the Framework Agreement). Key Programs include those for financial assistance and compensation of impacted persons, including fisherfolk impacted by the dam failure, and those for remediation of impacted areas and resettlement of impacted communities. A committee (Interfederative Committee) comprising representatives from the Brazilian Federal and State Governments, local municipalities, environmental agencies, impacted communities and Public Defence Office oversees the activities of the Fundação Renova in order to monitor, guide and assess the progress of actions agreed in the Framework Agreement. In addition, the 12th Federal Court is supervising the work of the Fundação Renova and the Court’s decisions, including decisions relating to the scope of individuals eligible for compensation and the amount of damages to which they are entitled, have been considered in the Samarco dam failure provision change in estimate. Any future decisions will be analysed for impacts on the provision at the time of any decision.decision and the provision may be impacted in future reporting periods as a result of appeals and motions for clarification on certain Court decisions that remain outstanding. The term of the Framework Agreement is 15 years, renewable for periods of one year successively until all obligations under the Framework Agreement have been performed. Under the Framework Agreement, Samarco has primary responsibility for funding Fundação Renova’s annual calendar year budget for the duration of the Framework Agreement. The funding amounts for each calendar year will be dependent on the remediation and compensation projects to be undertaken in a particular year. Annual contributions may be reviewed under the Framework Agreement. To the extent that Samarco does not meet its funding obligations, each of BHP Brasil and Vale have secondary funding obligations under the Framework Agreement in proportion to its their 50 per cent shareholding in Samarco. Samarco began to gradually recommence operations in December 2020, however, there remains significant uncertainty regarding Samarco’s long-term cash flow generation.generationand the outcome of the Judicial Reorganisation (outlined below) . In light of these uncertainties and based on currently available information, BHP Brasil’s provision for its obligations under the Framework Agreement Programs is US$ 2.63.2 billion before tax and after discounting at 30 June 20212022 (30 June 2020:2021: US$ 1.82.6 billion) . The dam failure provision at 30 June 2022 reflects only the Group’s estimate of the costs to be incurred in completing those Programs, as the Group is unable to provide a range of possible outcomes or a reliable estimate of other existing or potential future claims (refer to contingent liabilities below). Under a Governance Agreement ratified on 8 August 2018, BHP Brasil, Samarco and Vale were to establish a process to renegotiate the Programs over two years to progress settlement of the R$155 billion (approximately US$30 billion) Federal Public Prosecution Office claim (described below). Pre-requisites established in the Governance Agreement, for re-negotiation of the Framework Agreement , were not implemented during the two year period and on 30 September 2020, Brazilian Federal and State prosecutors and public defenders filed a request for the immediate resumption of the R$155 billion (approximately US$30 billion) claim, which has been was suspended from the date of ratification of the Governance Agreement. The claim remains suspended after the parties toFormal suspensionof the claim agreed to continue the suspension ceased on 19 March 2021. 10 December 2021, however no further rulings have been made .
BHP Brasil, Samarco, Vale and Federal and State prosecutors have been engaging in negotiations to seek a definitive and substantive settlement of the obligations under the Framework Agreement and the R$155 billion (approximately US$30 billion) Federal Public Prosecution Office claim. It is not possibleThe negotiations are overseen by the President of the National Council of Justice, as the Chief Justice of the Supreme Court in Brazil and are expected to provide a rangecontinue until at least the expected end of outcomes or a reliable estimatethe term of potential settlement outcomesthe current President on 31 August 2022. Outcomes of the negotiations are highly uncertain and, there is a risk that a negotiated outcome may be materially higher than amounts currently reflected in the Samarco dam failure provision. Untiluntil any revisions to the Programs are agreed, Fundação Renova will continue to implement the Programs in accordance with the terms of the Framework Agreement and the Governance Agreement. BHP Brasil, Samarco and Vale are required to maintain security of an amount equal to the Fundação Renova’s annual budget up to a limit of R$2.2 billion (approximately US$ 440420 million). The security currently comprises R$1.3 billion (approximately US$ 260250 million) in insurance bonds and a charge of R$800 million (approximately US$ 160150 million) over Samarco’s assets. A further R$100 million (approximately US$20 million) in liquid assets previously maintained as security was released for COVID-19 related response efforts in Brazil.
Table of ContentsSamarco Germano dam decommissioning Samarco is currently progressing plans for the accelerated decommissioning of its upstream tailings dams (the Germano dam complex). Given the significant uncertainties surrounding Samarco’s long-term cash flow generation, BHP Brasil’s provision for per cent share of the expected Germano decommissioning costs is i million (30 June 2020: US$227 2021:U million). The decommissioning is at an early stage and as a result,progressing, however further engineering work and required validation by Brazilian authorities could lead to changes to estimates in future reporting periods. | | | Key judgements and estimates | | The outcomes of litigation are inherently difficult to predict and significant judgement has been applied in assessing the likely outcome of legal claims and determining which legal claims require recognition of a provision or disclosure of a contingent liability. The facts and circumstances relating to these cases are regularly evaluated in determining whether a provision for any specific claim is required. | Management has determined that a provision can only be recognised for obligations under the Framework Agreement and Samarco Germano dam decommissioning as at 30 June 2021.2022. It is not yet possible to provide a range of possible outcomes or a reliable estimate of potential future exposures to BHP in connection to the contingent liabilities noted below, given their status. | | | | The provisionsprovision for the Samarco dam failure and Samarco Germano dam decommissioning currently reflectonly reflects the estimatedGroup’s estimate of the remaining costs to complete Programs under the Framework Agreement and estimated costs to complete the Germano dam decommissioning and requirerequires the use of significant judgements, estimates and assumptions. Based on current estimates, it is expected that approximately 8595 per cent of remaining costs for Programs under the Framework Agreement will be incurred by December 2023.2024. | | | While the provisions haveprovision has been measured based on the latest information available, likely changes in facts and circumstances are likely in future reporting periods and may lead to material revisions to these estimates. However, it is currently not possible to determine what facts and circumstances may change, therefore revisions in future reporting periods due to the key estimates and factors outlined below cannot be reliably measured. | | | The key estimates that may have a material impact uponon the provisionsprovision in the next and future reporting periods include:include the: | | | | | | number of people eligible for financial assistance and compensation and the corresponding amount of expected compensation | | | | | | costs to complete key infrastructure programs including resettlement of the Bento Rodrigues, Gesteira and Paracatu communities | | | The provisionsprovision may also be affected by factors including but not limited to: | | | | | | resolution of existing and potential legal claims in Brazil and other jurisdictions, including the impact of ongoing settlement negotiations and outcome of the United Kingdom group action complaint | | | | | potential changes in scope of work and funding amounts required under the Framework Agreement including the impact of the decisions of the Interfederative Committee along with further technical analysis, community participation required under the Governance Agreement and rulings made by the 12 th Federal Court | | | | | | the outcome of ongoing negotiations with State and Federal Prosecutors, including review of Fundação Renova’s Programs as provided in the Governance Agreement | | | | | | actual costs incurred | | | | | | resolution of uncertainty in respect of the nature and extent of Samarco’s long-term cash generation | | | | | | costs to complete the Germano dam decommissioning | | | | | updates to discount and foreign exchange rates | | | | | | the outcomes of Samarco’s judicial reorganisation (defined below). | | | In addition, the provision may be impacted by decisions in, or resolution of, existing and potential legal claims in Brazil and other jurisdictions, including the outcome of the United Kingdom group action complaint and the negotiations seeking a definitive and substantive settlement of the obligations under the Framework Agreement and the R$155 billion (approximately US$30 billion) Federal Public Prosecution Office claim. | | Outcomes of the negotiations are highly uncertain and it is therefore not possible to provide a reliable estimate of potential outcomes. | | Given these factors, future actual expenditurescash outflows may differ from the amounts currently provided and changes to any of the key assumptions and estimates outlined above could result in a material impact to the provision in the next and future reporting periods. |
The following matters are disclosed as contingent liabilities and given the status of proceedingsthese matters it is not possible to provide a range of possible outcomes or a reliable estimate of potential future exposures for BHP, unless otherwise stated. A number of the claims below have not specified the amount of damages sought and, where this is specified, amounts could change as the matter progresses. Ultimately, all the legal matters disclosed as contingent liabilities could have a material adverse impact on BHP’s business, competitive position, cash flows, prospects, liquidity and shareholder returns. Federal Public Prosecution Office claim BHP Brasil is among the defendants named in a claim brought by the Federal Public Prosecution Office on 3 May 2016 , seeking R$155 billion (approximately US$30 billion) for reparation, compensation and moral damages in relation to the Samarco dam failure.failure. The 12th Federal Court previously suspended the Federal Public Prosecution Office claim, including a R$7.7 billion (approximately US$1.5 billion) injunction request. On 30 September 2020, Brazilian Federal and State prosecutors and public defenders filed a request for the immediate resumption of the R$155 billion (approximately US$30 billion) claim, which has beenwas suspended since the date of ratification of the Governance Agreement. The claim remains suspended after the parties toFormal suspension of the claim agreed to continue the suspensionceased on 19 March 2021.10 December 2021, however no further rulings have been made.
BHP Brasil, Samarco, Vale and Federal and State prosecutors have been engaging in negotiations to seek a definitive and substantive settlement of the obligations under the Framework Agreement and the R$155 billion (approximately US$30 billion) Federal Public Prosecution Office claim. ItThe negotiations are overseen by the President of the National Council of Justice, as the Chief Justice of the Supreme Court in Brazil and are expected to continue until at least the expected end of the term of the current President on 31 August 2022. Outcomes of the negotiations are highly uncertain and it is therefore not possible to provide a range of outcomes or a reliable estimate of potential settlement outcomes and there is a risk that a negotiated outcome may be materially higher than amounts currently reflected in the Samarco dam failure provision.
United States class action complaint – Samarco bond holders
On 14 November 2016, a putative class action complaint (Bondholder Complaint) was filed in the U.S. District Court for the Southern District of New York on behalf of purchasers of Samarco’sten-year
bond notes due 2022-2024 between 31 October 2012 and 30 November 2015. The Bondholder Complaint was initially filed against Samarco and the former chief executive officer of Samarco.The Bondholder Complaint was subsequently amended to include BHP Group Ltd, BHP Group Plc, BHP Brasil, Vale and officers of Samarco, including four of Vale and BHP Brasil’s nominees to the Samarco Board. On 5 April 2017, the plaintiff discontinued its claims against the individual defendants.
The complaint, along with a second amended complaint, had previously been dismissed by the court. The plaintiff filed a motion for reconsideration, or leave to file a third amended complaint, which was denied by the court on 30 October 2019. The plaintiff appealed this decision, which was affirmed by the court of appeals in March 2021.
Australian class action complaint BHP Group Ltd is named as a defendant in a shareholder class action filed in the Federal Court of Australia on behalf of persons who acquired shares in BHP Group Ltd on the Australian Securities Exchange or shares in BHP Group Plc on the London Stock Exchange and Johannesburg Stock Exchange in periods prior to the Samarco dam failure. The amount of damages sought is unspecified. United Kingdom group action complaint BHP Group Plc and BHP Group Ltd were named as defendants in group action claims for damages filed in the courts of England. These claims were filed on behalf of certain individuals, governments, businesses and communities in Brazil allegedly impacted by the Samarco dam failure. The amount of damages sought in these claims is unspecified. The complaintIn August 2019, the BHP parties filed a preliminary application to strike out or stay this action on jurisdictional and a subsequentother procedural grounds. That application forwas successful before the High Court and the action was dismissed. However, on 8 July 2022, the Court of Appeal reversed the dismissal decision and allowed the action to proceed in England. BHP Group Ltd and BHP Group (UK) Ltd (formerly BHP Group Plc) will seek permission to appeal have been dismissed byto the court, however an application by the claimants to reopen the proceedings was granted in July 2021, allowing the claimants to appeal previous dismissalsSupreme Court of the claim.United Kingdom. The Federal Prosecutors’ Office has filed criminal charges against BHP Brasil, Samarco and Vale and certain employees and former employees of BHP Brasil (Affected Individuals) in the Federal Court of Ponte Nova, Minas Gerais. On 3 March 2017, BHP Brasil filed its preliminary defences. The Federal Court terminated the charges against 8eight of the Affected Individuals. The Federal Prosecutors’ Office has appealed 7seven of those decisions with hearings of the appeals still pending. BHP Brasil rejects outright the charges against the company and the Affected Individuals and will defend theis defending itself from all charges andwhile fully supportsupporting each of the Affected Individuals in their defence of the charges.
Civil public action commenced by Associations concerning the use of Tanfloc for water treatment The Vila Lenira Residents Association, State of Espírito Santo Rural Producers and Artisans Association, Colatina Velha Neighborhood Residents Association, and United for the Progress of Palmeiras Neighborhood Association have filed a lawsuit against Samarco, BHP Brasil and Vale and others, including the State of Minas Gerais, the State of Espirito Santo and the Federal Government. The plaintiffs allege that the defendants carried out a clandestine study on the citizens of the locations affected by the Fundão’s Dam Failure, using TANFLOC – a tannin-based flocculant/coagulant – that is currently used for wastewater treatment applications. The plaintiffs claim that this product allegedly put the population at risk due to its alleged experimental qualities. The plaintiffs are seeking multiple kinds of relief – material damage, moral damages, loss of profits – and that the defendants should pay for water supply in all locations where there is no water source other than the Doce River. On 25 July 2022, Samarco, BHP Brasil and Vale presented their defences individually, as well as the State of Minas Gerais, the State of Espírito Santo and the Federal Government. The Court’s decision is still pending.
Civil public actions filed by State Prosecutors in Minas Gerais (claiming damages of approximately R$7.5 billion, US$1.5 billion), State Prosecutors in Espírito Santo (claiming damages of approximately R$2 billion, US$400 million), and public defenders in Minas Gerais (claiming damages of approximately R$10 billion, US$2 billion), have been consolidated before the 12th Federal Court and suspended. The Governance Agreement provides for a process to review whether these civil public claims should be terminated or suspended.
BHP Brasil is among the companies named as defendants in a number of legal proceedings initiated by individuals, non-governmental organisations, corporations and governmental entities in Brazilian Federal and State courts following the Samarco dam failure. The other defendants include Vale, Samarco and Fundação Renova. The lawsuits include claims for compensation, environmental rehabilitationreparation and violations of Brazilian environmental and other laws, among other matters. The lawsuits seek various remedies including rehabilitationreparation costs, compensation to injured individuals and families of the deceased, recovery of personal and property losses, moral damages and injunctive relief. In addition, government inquiries and investigations relating to the Samarco dam failure have been commenced by numerous agencies of the Brazilian government and are ongoing. Additional lawsuits and government investigations relating to the Samarco dam failure could be brought against BHP Brasil and possibly other BHP entities in Brazil or other jurisdictions. BHP has various third party general liability and directors and officers insurances for claims related to the Samarco dam failure made directly against BHP Brasil or other BHP entities, their directors and officers, including class actions. External insurers have been notified of the Samarco dam failure along with the third party claims and class actions referred to above. In the period since the dam failure, to 30 June 2021, the Group has recognised US$573 million other income from general liability insurance proceeds relatingrelated to the dam failure. Recoveries related to general liability insurance are now considered complete. As at 30 June 2021,2022, an insurance receivable has not been recognised forfo r any potential recoveries in respect of ongoing matters.
Under the terms of the Samarco joint venture agreement, BHP Brasil does not have an existing obligation to fund Samarco. BHP has agreed to fund a total of up to US$765 1,350 million for the Fundação Renova programs and Samarco’s working capital during calendar year 2021. This comprises up2022 . Samarco’s cash flow generation in the period was sufficient to US$725 million relating tofund its working capital and the Fundação Renova programs, until 31 December 2021, which will be offset againstas such no funding was provided by the Group’s provision for the Samarco dam failure, and a short-term working capital facility of up to US$40 million to be made available to Samarco until 31 December 2021. Amounts related to Fundação Renova and Samarco working capital incurredGroup in the six months to 30 June 2021 have been reflected in the utilisation of the provision and impairment expense respectively disclosed above. 2022
. Any additional requests for funding or future investment provided would be subject to a future decision by BHP, accounted for at that time. Samarco judicial reorganisation Samarco filed for judicial reorganisationJudicial Reorganisation (JR) in April 2021 , with the Commercial Courts of Belo Horizonte, State of Minas Gerais, Brazil (JR Court), after multiple enforcement actions taken by certain financial creditors of Samarco. Samarco’s JR filing followed unsuccessful attempts to negotiate a debt restructure with certain financial creditors and multiple legal actions filed by those creditorsSamarco which threatened Samarco’s operations. The JR Court granted a stay of the enforcement actions in Brazil until 15 October 2022 . The JR is an insolvency proceeding withthat provides a means for Samarco to seek to restructure its financial debts and establish a sustainable financial position that allows Samarco to, among other things, continue to rebuild its operations and strengthen its ability to meet its Fundação Renova funding obligations. Samarco’s operations are expected to continuehave continued during the JR proceeding. According to the list of creditors filed with the JR Court by the Judicial Administrators (who are in charge of a first review of the list of creditors filed by Samarco), Fundação Renova’s funding obligations undertaken by Samarco are not subject to the JR, although some financial creditors of Samarco have objected to this position. Some such creditors filed challenges to the list of creditors filed by the Judicial Administrators, in order to, among other things, prevent Samarco from funding Fundação Renova. In December 2021 , the 12 th Federal Court granted BHP Brasil’s request that Samarco be able to fund Fundação Renova obligations, overturning a temporary injunction against such funding previously granted by the State Court in October 2021 . BHP Brasil also obtained a preliminary injunction from the Superior Court supporting the jurisdiction of the 12 th Federal Court, and not the State Court, in this matter. An appeal against this ruling by certain financial creditors is still to be ruled upon. Samarco has, with the support of BHP Brasil and Vale, continued to meet its Fundação Renova funding obligations. In April 2022 , Samarco presented a restructure process.proposal for voting at a meeting of its creditors under the JR proceeding, which was rejected by certain of the Samarco financial creditors. Certain Samarco creditors, including a group of financial creditors and Samarco’s employee unions then proposed alternative restructure proposals. Samarco, BHP Brasil and Vale subsequently each filed objections with the JR Court to both the voting process regarding the rejection of the Samarco proposal and the restructure proposal filed by a group of financial creditors. These legal disputes, and others in the JR process, have yet to be ruled on by the JR Court. It is expected that there will be continuing litigation from creditors against Samarco and its shareholders over the course of the JR proceeding, including with respect to the treatment of Samarco’s Fundação Renova-related obligations and attempts to pierce Samarco’s corporate veil to hold BHP Brasil and Vale liable for Samarco’s debts. The duration and outcome of the JR remains uncertain with the potential for protracted litigation and appeals because, among other things, the Samarco JR is occurring under new and untested Brazilian bankruptcy legislation. While the JR is not expected to affect Samarco’s obligation or commitment to make full redress for the 2015 Fundão dam failure, and is not expected to impact Fundação Renova’s ability to undertake that remediation and compensation. Itcompensation, it is not possible to determine the outcomes of the JR or reliably estimate any impact that the reorganisation may have for BHP Brasil, including its share of the Samarco dam failure provisions.
The following section includes disclosure required by IFRS of Samarco’s provisions, contingencies and other matters arising from the dam failure for matters in addition to the above-mentioned claims to which Samarco is a party. | | | | | | Dam failure related provisions and contingencies | | | In addition to its obligations under the Framework Agreement as at 30 June 2021,2022, Samarco has recognised provisions of US$0.20.3 billion (30 June 2020:2021: US$0.2 billion), based on currently available information. The magnitude, scope and timing of these additional costs are subject to a high degree of uncertainty and Samarco has indicated that it anticipates that it will incur future costs beyond those provided. These uncertainties are likely to continue for a significant period and changes to key assumptions could result in a material change to the amount of the provision in future reporting periods. Any such unrecognised obligations are therefore contingent liabilities and, at present, it is not practicable to estimate their magnitude or possible timing of payment. Accordingly, it is also not possible to provide a range of possible outcomes or a reliable estimate of total potential future exposures at this time. | | | Samarco is also named as a defendant in a number of other legal proceedings initiated by individuals, non-governmental organisations, corporations and governmental entities in Brazilian Federal and State courts following the Samarco dam failure. The lawsuits include claims for compensation, environmental rehabilitation and violations of Brazilian environmental and other laws, among other matters. The lawsuits seek various remedies including rehabilitation costs, compensation to injured individuals and families of the deceased, recovery of personal and property losses, moral damages and injunctive relief. In addition, government inquiries and investigations relating to the Samarco dam failure have been commenced by numerous agencies of the Brazilian government and are ongoing. Given the status of proceedings it is not possible to provide a range of possible outcomes or a reliable estimate of total potential future exposures to Samarco. | | | Additional lawsuits and government investigations relating to the Samarco dam failure could be brought against Samarco. | | | | | | Samarco has standalone insurance policies in place with Brazilian and global insurers. Insurers’ loss adjusters or claims representatives continue to investigate and assist with the claims process for matters not yet settled. As at 30 June 2021,2022, an insurance receivable has not been recognised by Samarco in respect of ongoing matters. | | | | | | At 30 June 2021,2022, Samarco has commitments of US$0.7 billion (30 June 2020:2021: US$0.40.7 billion). Following the dam failure Samarco invoked force majeure clauses in a number of long-term contracts with suppliers and service providers to suspend contractual obligations. | | | Samarco non-dam failure related contingent liabilities | | | The following non-dam failure related contingent liabilities pre-date and are unrelated to the Samarco dam failure. Samarco is currently contesting both of these matters in the Brazilian courts. Given the status of these tax matters, the timing of resolution and potential economic outflow for Samarco is uncertain. | | | Brazilian Social Contribution Levy | | | Samarco has received tax assessments for the alleged non-payment of Brazilian Social Contribution Levy for the calendar years 2007-2014 totalling approximately R$5.96.2 billion (approximately US$1.2 billion). | | | Brazilian corporate income tax rate | | | Samarco has received tax assessments for alleged incorrect calculation of Corporate Income Tax (IRPJ) in respect of the 2000-2003 and 2007-2014 income years totalling approximately R$ 4.64.8 billion (approximately US$0.9 billion). |
5 Expenses and other income | | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | Employee benefits expense: | | | | | | | | | | | | | Wages, salaries and redundancies | | | | | | | 3,706 | | | | 3,683 | | | | | | | | | 129 | | | | 138 | | | | | | | | | 2 | | | | 4 | | Pension and other post-retirement obligations | | | | | | | 283 | | | | 292 | | Less employee benefits expense classified as exploration and evaluation expenditure | | | | | | | (65 | ) | | | (85 | ) | Changes in inventories of finished goods and work in progress | | | | | | | (326 | ) | | | 496 | | Raw materials and consumables used | | | | | | | 5,509 | | | | 4,591 | | Freight and transportation | | | | | | | 1,981 | | | | 2,378 | | | | | | | | | 4,404 | | | | 4,745 | | Third-party commodity purchase s | | | | | | | 1,139 | | | | 1,069 | | Net foreign exchange losses/(gains) | | | | | | | (603 | ) | | | (147 | ) | Fair value change on derivatives (1) | | | | | | | 422 | | | | 8 | | Government royalties paid and payable | | | | | | | 2,362 | | | | 2,538 | | Exploration and evaluation expenditure incurred and expensed in the current period | | | | | | | 517 | | | | 516 | | Depreciation and amortisation expense | | | | | | | 6,112 | | | | 5,829 | | | | | | | | | | | | | | | Property, plant and equipment | | | | | | | 494 | | | | 250 | | Goodwill and other intangible assets | | | | | | | – | | | | 14 | | All other operating expenses | | | | | | | 2,709 | | | | 1,703 | | | | | | | | | | | | | | | | | | | | | | | 28,775 | | | | 28,022 | | | | | | | | | | | | | | | | | | | | | | | (489 | ) | | | (57 | ) | | | | | | | | (288 | ) | | | (336 | ) | | | | | | | | | | | | | | | | | | | | | | (777 | ) | | | (393 | ) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | Employee benefits expense: | | | | | | | | | | | | | Wages, salaries and redundancies | | | | | | | 4,018 | | | | 3,318 | | | | | | | | | 88 | | | | 90 | | | | | | | | | 3 | | | | 2 | | Pension and other post-retirement obligations | | | | | | | 274 | | | | 246 | | Less employee benefits expense classified as exploration and evaluation expenditure | | | | ) | | | (26 | ) | | | (15 | ) | Changes in inventories of finished goods and work in progress | | | | ) | | | (321 | ) | | | (348 | ) | Raw materials and consumables used | | | | | | | 4,899 | | | | 5,472 | | Freight and transportation | | | | | | | 1,900 | | | | 1,838 | | | | | | | | | 4,640 | | | | 3,899 | | | Third-party commodity purchases | | | | | | | 2,220 | | | | 1,098 | | | Net foreign exchange (gains)/losses | | | | ) | | | 293 | | | | (617 | ) | Fair value change on derivatives | | | | ) | | | 87 | | | | 393 | | Government royalties paid and payable | | | | | | | 3,080 | | | | 2,171 | | Exploration and evaluation expenditure incurred and expensed in the current period | | | | | | | 134 | | | | 123 | | Depreciation and amortisation expense | | | | | | | 5,084 | | | | 4,667 | | | | | | | | | | | | | | | Property, plant and equipment | | | | | | | 2,474 | | | | 482 | | Goodwill and other intangible assets | | | | | | | 33 | | | | – | | All other operating expenses | | | | | | | 1,991 | | | | 2,634 | | | | | | | | | | | | | | | | | | | | | | | 30,871 | | | | 25,453 | | | | | | | | | | | | | | | | | | | | ) | | | (46 | ) | | | (489 | ) | (Gain)/loss on disposal of subsidiaries and operations | | | | ) | | | 2 | | | | – | | | | | | | | | (2 | ) | | | (2 | ) | | | | | ) | | | (334 | | | | (229 | ) | | | | | | | | | | | | | | | | | | | ) | | | (380 | ) | | | (720 | ) | | | | | | | | | | | | | | |
(1) | Fair value change on derivatives is principally related to commodity price contracts, foreign exchange contracts and embedded derivatives used in the ordinary course of business as well as derivatives used as part of the funding of dividends. |
(2) | Insurance recoveries is principally related to claims received from Samarco dam failure. Refer to note 4 ‘Significant events – Samarco dam failure’ for further information. |
(3) | Mainly relates to the divestment of BMC in FY2022. Refer to note 3 ‘Exceptional items’ for further information. |
| During FY2022, the Group received dividends of US$238 million from Cerrejón, which reduced completion proceeds net of transaction costs to US$50 million. Refer to note 29 ‘Investments accounted for using the equity method’ for details. |
| Other income is generally income earned from transactions outside the course of the Group’s ordinary activities and may include certain management fees from non-controlling interests and joint arrangements, dividend income, royalties and commission income and gains or losses on divestment of subsidiaries or operations.income. |
Recognition and measurement IncomeOther income is recognised when it is probable that the economic benefits associated with a transaction will flow to the Group and can be reliably measured. Dividends areDividend income is recognised upon declaration.
| | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | Total taxation expense comprises: | | | | | | | | | | | | | | | | | | | | 5,109 | | | | 5,408 | | Deferred tax expense/(benefit) | | | | | | | (335 | ) | | | 121 | | | | | | | | | | | | | | | | | | | | | | | | 4,774 | | | | 5,529 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | US$M | | | US$M | | | | | | | | Restated | | | Restated | | Total taxation expense comprises: | | | | | | | | | | | | | | | | | | | | 9,018 | | | | 4,285 | | Deferred tax expense/(benefit) | | | | | | | 1,598 | | | | (88 | ) | | | | | | | | | | | | | | | | | | | | | | | 10,616 | | | | 4,197 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | Factors affecting income tax expense for the year | | | | | | | | | | | | | Income tax expense differs to the standard rate of corporation tax as follows: | | | | | | | | | | | | | | | | | | | | 13,510 | | | | 15,049 | | | | | | | | | | | | | | | | Tax on profit at Australian prima facie tax rate of 30 per cent | | | | | | | 4,053 | | | | 4,515 | | | | | | | | | | | | | | | | Non-tax effected operating losses and capital gains (1) | | | | | | | 707 | | | | 742 | | Tax on remitted and unremitted foreign earnings | | | | | | | 225 | | | | 283 | | Tax effect of loss from equity accounted investments, related impairments and expenses (2) | | | | | | | 154 | | | | 164 | | Investment and development allowance | | | | | | | (99 | ) | | | (94 | ) | | | | | | | | (8 | ) | | | 6 | | Amounts (over)/under provided in prior years | | | | | | | 64 | | | | (21 | ) | Recognition of previously unrecognised tax assets | | | | | | | (30 | ) | | | (10 | ) | Foreign exchange adjustments | | | | | | | 20 | | | | (25 | ) | Impact of tax rates applicable outside of Australia | | | | | | | (167 | ) | | | (312 | ) | | | | | | | | (211 | ) | | | 87 | | | | | | | | | | | | | | | | | | | | | | | 4,708 | | | | 5,335 | | | | | | | | | | | | | | | | Royalty-related taxation (net of income tax benefit) | | | | | | | 66 | | | | 194 | | | | | | | | | | | | | | | | | | | | | | | 4,774 | | | | 5,529 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | US$M | | | US$M | | | | | | | | Restated | | | Restated | | Factors affecting income tax expense for the year | | | | | | | | | | | | | Income tax expense differs to the standard rate of corporation tax as follows: | | | | | | | | | | | | | | | | | | | | 24,292 | | | | 12,825 | | | | | | | | | | | | | | | | Tax on profit at Australian prima facie tax rate of 30 per cent | | | | | | | 7,288 | | | | 3,847 | | | | | | | | | | | | | | | | Non-tax effected operating losses and capital gains 1 | | | | | | | 2,640 | | | | 409 | | | Tax on remitted and unremitted foreign earnings | | | | | | | 485 | | | | 225 | | | Investment and development allowance | | | | | | | – | | | | (99 | ) | | Tax rate changes | | | | | | | (1 | ) | | | (8 | ) | | Recognition of previously unrecognised tax assets | | | | ) | | | (28 | ) | | | (7 | ) | Tax effect of loss from equity accounted investments, related impairments and expenses 2 | | | | ) | | | 315 | | | | 153 | | | Amounts (over)/under provided in prior years | | | | ) | | | (57 | ) | | | 13 | | Foreign exchange adjustments | | | | ) | | | (33 | ) | | | 41 | | Impact of tax rates applicable outside of Australia | | | | | | | (669 | ) | | | (272 | ) | | | | | | | | 436 | | | | (86 | ) | | | | | | | | | | | | | | | | | | | | | | 10,376 | | | | 4,216 | | | | | | | | | | | | | | | | Royalty-related taxation (net of income tax benefit) | | | | | | | 240 | | | | (19 | ) | | | | | | | | | | | | | | | | | | | | | | 10,616 | | | | 4,197 | | | | | | | | | | | | | | | |
(1) | Includes the tax impacts related to the exceptional impairments of US deferred tax assets in the year ended 30 June 2022, NSWEC and Potash in the year ended 30 June 2021 and Cerro Colorado in the year ended 30 June 2020, as presented in note 3 ‘Exceptional items’. There were no exceptional impairments in the year ended 30 June 2019. |
| The loss from equity accounted investments, related impairments and expenses is net of income tax, with the exception of the Samarco forward exchange derivatives described in note 4 ‘Significant events – Samarco dam failure’. This item removes the prima facie tax effect on such loss, related impairments and expenses, excluding the impact of the Samarco forward exchange derivatives which are taxable. |
Income tax recognised in other comprehensive income is as follows:
| | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | US$M | | | US$M | | | | | | | | | | | | | | | Items that may be reclassified subsequently to the income statement : | | | | | | | | | | | | | | | | | | | | | | | | | | Gains/(losses) taken to equity | | | | | | | (259 | ) | | | 94 | | (Gains)/losses transferred to the income statement | | | | ) | | | 252 | | | | (89 | ) | | | | | | | | (1 | ) | | | – | | | | | | | | | | | | | | | | | Income tax credit/(charge) relating to items that may be reclassified subsequently to the income statement | | | | | | | (8 | ) | | | 5 | | | | | | | | | | | | | | | | Items that will not be reclassified to the income statement: | | | | | | | | | | | | | Remeasurement gains/(losses) on pension and medical schemes | | | | ) | | | (21 | ) | | | 25 | | | | | | | | | 1 | | | | 1 | | | | | | | | | | | | | | | | Income tax (charge)/credit relating to items that will not be reclassified to the income statement | | | | ) | | | (20 | ) | | | 26 | | | | | | | | | | | | | | | | Total income tax credit/(charge) relating to components of other comprehensive income 1 | | | | | | | (28 | ) | | | 31 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | | | | | | | | | | | | | | Items that may be reclassified subsequently to the income statement: | | | | | | | | | | | | | | | | | | | | | | | | | | Gains/(losses) taken to equity | | | | | | | 94 | | | | 98 | | (Gains)/losses transferred to the income statement | | | | | | | (89 | ) | | | (90 | ) | | | | | | | | – | | | | – | | Income tax (charge)/credit relating to items that may be reclassified subsequently to the income statement | | | | | | | 5 | | | | 8 | | | | | | | | | | | | | | | | Items that will not be reclassified to the income statement: | | | | | | | | | | | | | Remeasurement gains/(losses) on pension and medical schemes | | | | | | | 25 | | | | 7 | | | | | | | | | 1 | | | | 12 | | | | | | | | | | | | | | | | Income tax (charge)/credit relating to items that will not be reclassified to the income statement | | | | | | | 26 | | | | 19 | | | | | | | | | | | | | | | | Total income tax (charge)/credit relating to components of other comprehensive income (1) | | | | | | | 31 | | | | 27 | | | | | | | | | | | | | | | |
(1) | Included within total income tax relating to components of other comprehensive income is US$ (28)1 million relating to deferred taxes and US$ NaNnil relating to current taxes (2020:(2021: US$(28) million and US$ nil; 2020: US$31 million and US$ NaN; 2019: US$15 million and US$12 million)nil ). |
Recognition and measurement Taxation on the profit/(loss) for the year comprises current and deferred tax. Taxation is recognised in the income statement except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case the tax effect is also recognised in equity or other comprehensive income. | | | | | | | | | | | Current tax is the expected tax on the taxable income for the year, using tax rates and laws enacted or substantively enacted at the reporting date, and any adjustments to tax payable in respect of previous years. | | Deferred tax is providedthe tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in full,the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for in accordance with IAS 12. Deferred tax is generally provided on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax is not recognised for temporary differences relating to: • initial recognition of goodwill • initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit • investment in subsidiaries, associates and jointly controlled entities where the Group is able to control the timing of the reversal of the temporary difference and it is probable that they will not reverse in the foreseeable future Deferred tax is measured at the tax rates that are expected to be applied when the asset is realised or the liability is settled, based on the laws that have been enacted or substantively enacted at the reporting date. Current and deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset and when the tax balances are related to taxes levied by the same tax authority and the Group intends to settle on a net basis, or realise the asset and settle the liability simultaneously. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. | | Royalties and resource rent taxes are treated as taxation arrangements (impacting income tax expense/(benefit)) when they are imposed under government authority and the amount payable is calculated by reference to revenue derived (net of any allowable deductions) after adjustment for temporary differences. Obligations arising from royalty arrangements that do not satisfy these criteria are recognised as current liabilities and included in expenses. |
Uncertain tax and royalty matters The Group operates across many tax jurisdictions. Application of tax law can be complex and requires judgement to assess risk and estimate outcomes, particularly in relation to the Group’s cross-border operations and transactions. These judgements are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of tax assets and tax liabilities, including deferred tax, recognised on the balance sheet and the amount of other tax losses and temporary differences not yet recognised. The evaluation of tax risks considers both amended assessments received and potential sources of challenge from tax authorities. The status of proceedings for these matters will impact the ability to determine the potential exposure and in some cases, it may not be possible to determine a range of possible outcomes or a reliable estimate of the potential exposure. The Group has unresolved tax and royalty matters for which the timing of resolution and potential economic outflow are uncertain. Tax and royalty matters with uncertain outcomes arise in the normal course of business and occur due to changes in tax law, changes in interpretation of tax law, periodic challenges and disagreements with tax authorities and legal proceedings. Tax and royalty obligations assessed as having probable future economic outflows capable of reliable measurement are provided for as at 30 June 2021.2022. Matters with a possible economic outflow and/or presently incapable of being measured reliably are contingent liabilities and disclosed in note 3432 ‘Contingent liabilities’. Details of uncertain tax and royalty matters relating to Samarco are disclosed in note 4 ‘Significant events – Samarco dam failure’.
| Key judgements and estimates | | | Income tax classification | | | : The Group’s accounting policy for taxation, including royalty-related taxation, requires management’s judgement as to the types of arrangements considered to be a tax on income in contrast to an operating cost. | | | | | | Judgement is required to determine the amount of deferred tax assets that are recognised based on the likely timing and the level of future taxable profits. Judgement is applied in recognising deferred tax liabilities arising from temporary differences in investments. These deferred tax liabilities caused principally by retained earnings held in foreign tax jurisdictions are recognised unless repatriation of retained earnings can be controlled and is not expected to occur in the foreseeable future. | | | The Group assesses the recoverability of recognised and unrecognised deferred taxes, including losses in Australia, the United States and Canada on a consistent basis. Estimates and assumptions relating to projected earnings and cash flows as applied in the Group impairment process are used for operating assets. | | | | Management applies judgements about the application of income tax legislation and its interaction with income tax accounting principles. These judgements are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of tax assets and tax liabilities, including deferred tax, recognised on the balance sheet and the amount of other tax losses and temporary differences not yet recognised. | | Where the final tax outcomes are different from the amounts that were initially recorded, these differences impact the current and deferred tax provisions in the period in which the determination is made.
| | Measurement of uncertain tax and royalty matters considers a range of possible outcomes, including assessments received from tax authorities. Where management is of the view that potential liabilities have a low probability of crystallising, or it is not possible to quantify them reliably, they are disclosed as contingent liabilities (refer to note 34 ‘Contingent liabilities’).
|
| | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | 2020 | | | 2019 | | | | | | Restated | | | Restated | | Earnings attributable to BHP shareholders (US$M) | | | | | | | | | | | | | | | | | | | | 7,956 | | | | 8,648 | | | | | | | | 11,529 | | | | 7,848 | | | | | | | | | 7,956 | | | | 8,306 | | | | | | | | 11,304 | | | | 7,956 | | Weighted average number of shares (Million) | | | | | | | | | | | | | | | | | | | | 5,057 | | | | 5,180 | | | | | | | | 5,057 | | | | 5,057 | | | | | | | | | 5,069 | | | | 5,193 | | | | | | | | 5,068 | | | | 5,069 | | Basic earnings per ordinary share (US cents) | | | | | | | | | | | | | | | | | | | | 157.3 | | | | 166.9 | | | | | | | 228.0 | | | | 155.2 | | | | | | | | | 157.3 | | | | 160.3 | | | | | | | | 223.5 | | | | 157.3 | | Diluted earnings per ordinary share (US cents) | | | | | | | | | | | | | | | | | | | | 157.0 | | | | 166.5 | | | | | | | | 227.5 | | | | 154.8 | | | | | | | | | 157.0 | | | | 159.9 | | | | | | | | 223.0 | | | | 157.0 | | Headline earnings per ordinary share (US cents) | | | | | | | | | | | | | | | | | | | | 171.1 | | | | 164.9 | | | | | | | | 284.8 | | | | 171.1 | | | | | | | | | 170.7 | | | | 164.5 | | | | | | | | 284.2 | | | | 170.7 | |
Refer to note 2927 ‘Discontinued operations’ for basic earnings per share and diluted earnings per share for Discontinued operations. Earnings on American Depositary Shares represent twice the earnings for BHP Group Limited or BHP Group Plc ordinary shares. Headline earnings is a Johannesburg Stock Exchange defined performance measure and is reconciled from earnings attributable to ordinary shareholders as follows: | | | | | | 2020 | | | 2019 | | | | | | 2021 | | 2020 | | | | | | | US$M | | | US$M | | | | | | US$M | | US$M | | Earnings attributable to BHP shareholders | | | | | | 7,956 | | | | 8,306 | | | | | | | | 11,304 | | | 7,956 | | | | | | | | | | | | | | | (Gain)/loss on sales of PP&E, Investments and Operations (1) | | | | | | 4 | | | | (52 | ) | | (Gain)/loss on sales of PP&E, Investments and Operations | | | | | ) | | | (50 | ) | | 4 | | Impairments of property, plant and equipment, financial assets and intangibles | | | | | | 494 | | | | 264 | | | | | | | | 2,633 | | | 494 | | Samarco impairment expense | | | | | | 95 | | | | 96 | | | | | | | | 111 | | | 95 | | Cerrejón impairment expense | | | | | | | – | | | | – | | | | | | | | 466 | | | | – | | | | | | | | 48 | | | | – | | | Recycling of re-measurements from equity to the income statement | | | | | | | – | | | | (6 | ) | | | Gain on disposal of BHP Mitsui Coal | | | | | | | | – | | | | – | | | Gain on merger of Petroleum | | | | | | | | – | | | | – | | | | | | | | | | – | | | 48 | | Tax effect of above adjustments | | | | | | 54 | | | | (64 | ) | | | | ) | | | (60 | ) | | 54 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 695 | | | | 238 | | | | | ) | | | 3,100 | | | 695 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,651 | | | | 8,544 | | | | | | | | 14,404 | | | 8,651 | | | | | | | | | | | | | | | | | | | | | | Diluted headline earnings | | | | | | 8,651 | | | | 8,544 | | | | | | | | 14,404 | | | 8,651 | | | | | | | | | | | | | | | | | | | | | |
(1) | Included in other income. |
(2) | Mainly represent BHP share of impairment embedded in the statutory income statement of the Group’s equity accounted investments. |
Recognition and measurement Diluted earnings attributable to BHP shareholders are equal to the earnings attributable to BHP shareholders. ThePrior to Group’s corporate structure unification, the calculation of the number of ordinary shares used in the computation of basic earnings per share iswas the aggregate of the weighted average number of ordinary shares of BHP Group Limited and BHP Group Plc outstanding during the period after deduction of the number of shares held by the Billiton Employee Share Ownership Trust and the BHP Billiton Limited Employee Equity Trust.
During December 2018, 266 million Effective from 31 January 2022, the aggregate of the weighted average number of ordinary shares of only BHP Group Limited shares were bought back and then cancelled duringis considered in the period following anoff-market
buy-back
programcomputation of US$5.2 billion relatedbasic earnings per share. Refer to the disbursement of proceeds from the disposal of Onshore US.note 16 ‘Share capital’ for details on unification.For the purposes of calculating diluted earnings per share, the effect of 11 10million dilutive shares has been taken into account for the year ended 30 June 2021 (2020: 122022 (2021: 11 million shares; 2019: 132020: 12 million shares). The Group’s only potential dilutive ordinary shares are share awards granted under the employee share ownership plans for which terms and conditions are described in note 25 ‘Employee share ownership plans’. Diluted earnings per share calculation excludes instruments which are considered antidilutive. At 30 June 2021,2022, there are 0no instruments which are considered antidilutive (2020: NaN; 2019: NaN)(2021: nil; 2020: nil).
8 Trade and other receivables | | | | | | | | | | | | | | | | 2020 | | | | | | | | US$M | | | | | | | | | 1,974 | | Loans to equity accounted investments | | | | | | | 40 | | | | | | | | | 1,617 | | | | | | | | | | | | | | | | | | | 3,631 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,364 | | | | | | | | | 267 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2021 | | | | | | | | US$M | | | | | | | | | 4,450 | | | | | | | | | 1,946 | | | | | | | | | | | | | | | | | | | 6,396 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,059 | | | | | | | | | 337 | | | | | | | | | | | |
| Other receivables mainly relate to indirect tax refunds and receivables from joint venture partners. |
Recognition and measurement Trade receivables are recognised initially at their transaction price or, for those receivables containing a significant financing component, at fair value. Trade receivables are subsequently measured at amortised cost using the effective interest method, less an allowance for impairment, except for provisionally priced receivables which are subsequently measured at fair value through the income statementprofit or loss under IFRS 9. The collectability of trade and other receivables is assessed continuously. At the reporting date, specific allowances are made for any expected credit losses based on a review of all outstanding amounts at reporting period-end. Individual receivables are written off when management deems them unrecoverable. The net carrying amount of trade and other receivables approximates their fair values. Trade receivables generally have terms of less than 30 days. The Group has no material concentration of credit risk with any single counterparty and is not dominantly exposed to any individual industry. Credit risk can arise from the non-performance by counterparties of their contractual financial obligations towards the Group. To manage credit risk, the Group maintains Group-wide procedures covering the application for credit approvals, granting and renewal of counterparty limits, proactive monitoring of exposures against these limits and requirements triggering secured payment terms. As part of these processes, the credit exposures with all counterparties are regularly monitored and assessed on a timely basis. The credit quality of the Group’s customers is reviewed and the solvency of each debtor and their ability to pay the receivable is considered in assessing receivables for impairment. The 10 largest customers represented 3134 per cent (2020: 32(2021: 31 per cent) of total credit risk exposures managed by the Group. Receivables are deemed to be past due or impaired in accordance with the Group’s terms and conditions. These terms and conditions are determined on a basis with reference to the customer’s credit quality, payment performance and prevailing market conditions. As at 30 June 2021,2022, trade receivables of US$ 68103 million (2020:(2021: US$ 2368 million) were past due but not impaired. The majority of these receivables were less than 30 days overdue. The assessment of recoverability of trade receivables at 30 June 2021 has considered the impacts ofCOVID-19
and no material recoverability issues have been identified. AsCOVID-19
continues to impact key markets in Asia, Europe and the United States, the Group continues to perform enhanced credit monitoring of commercial counterparties.At 30 June 2021,2022, trade receivables are stated net of provisions for expected credit losses of US$3 million (2020:(2021: US$ 23 million) .
The Group may accelerate trade receivables through Letters
9 Trade and other payables | | | | | | | | | | | | | | | | 2020 | | | | | | | | US$M | | | | | | | | | 4,396 | | | | | | | | | 1,372 | | | | | | | | | | | | | | | | | | | 5,768 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,767 | | | | | | | | | 1 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2021 | | | | | | | | US$M | | | | | | | | | 5,079 | | | | | | | | | 1,948 | | | | | | | | | | | | | | | | | | | 7,027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7,027 | | | | | | | | | – | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2020 | | | | | | | | | | US$M | | | | Raw materials and consumables | | | | | | | 1,797 | | | Spares, consumables and other supplies yet to be utilised in the production process or in the rendering of services. | | | | | | | | 2,814 | | | Commodities currently in the production process that require further processing by the Group to a saleable form. | | | | | | | | 711 | | | Commoditiesand not requiring further processing by the Group. | | | | | | | | | | | | | | | | | | | | 5,322 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,101 | | | | | | | | | | | 1,221 | | | Inventories classified as non-current are not expected to be utilised or sold within 12 months after the reporting date or within the operating cycle of the business. | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | 2021 | | | | | | | | | | US$M | | | | Raw materials and consumables | | | | | | | 1,904 | | | Spares, consumables and other supplies yet to be utilised in the production process or in the rendering of services. | | | | | | | | 3,046 | | | Commodities currently in the production process that require further processing by the Group to a saleable form. | | | | | | | | 834 | | | Commodities ready-for-sale and not requiring further processing by the Group. | | | | | | | | | | | | | | | | | | | | 5,784 | | | | | | | | | | | | | | | | | | | | | | | | | | Inve n tories classified as non-current are not expected to b e utilised
| | | | | | | | 4,426 | | | or sold within 12 months after the reporting date or within the
| | | | | | | | 1,358 | | |
| | | | | | | | | | | | |
(1) 1 | Inventory write-downs of US$ 58163 million were recognised during the year (2020:(2021: US$ 3758 million; 2019:2020: US$ 1637 million). Inventory write-downs of US$ 2723 million made in previous periods werewere reversed during the year (2020:(2021: US$ 1326 million; 2019:2020: US$ 218 million). |
Recognition and measurement Regardless of the type of inventory and its stage in the production process, inventories are valued at the lower of cost and net realisable value. Cost is determined primarily on the basis of average costs. costs and involves estimates of expected metal recoveries and work in progress volumes, calculated using available industry, engineering and scientific data. These estimates are periodically reassessed by the Group taking into account technical analysis and historical performance. For processed inventories, cost is derived on an absorption costing basis. Cost comprises costs of purchasing raw materials and costs of production, including attributable mining and manufacturing overheads taking into consideration normal operating capacity. Minerals inventoryInventory quantities are assessed primarily through surveys and assays, while petroleum inventory quantities are derived through flow rate or tank volume measurement and the composition is derived via sample analysis.assays.
| | | Accounting for inventory involves the use of estimates, particularly related to the measurement and valuation of inventory on hand within the production process. Key estimates, including expected metal recoveries and work in progress volumes, are calculated by engineers using available industry, engineering and scientific data. Estimates used are periodically reassessed by the Group taking into account technical analysis and historical performance. Changes in estimates are adjusted for on a prospective basis.
|
Mining and PetroleumResource assets
11 Property, plant and equipment | | | |
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| |
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| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net book value – 30 June 2021 | | | | | | | | | | | | | | Net book value – 30 June 2022 | | | | | | | | | | | | | | At the beginning of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Acquisition of subsidiaries & operations (2) | | | | | | | | | | | | | | | | | | | | | | | | | | Remeasurements of index-linked freight contracts (3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Remeasurements of index-linked freight contracts 2 | | | | | | | | | ) | | | | | | | | | | | | | | | | ) | Depreciation for the year | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | ) | | | | ) | | | | | | | | | | | | ) | Impairments for the year (4) | | | | | | | | | | | | | | | | | | | | | | | | | | Impairments for the year 3 | | | | | ) | | | | ) | | | | ) | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | ) | | | | | | | | | | | | | | | | ) | Divestment and demerger of subsidiaries and operations (5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Divestment and demerger of subsidiaries and operations 4 | | | | | ) | | | | ) | | | | ) | | | | ) | | | | ) | | | | ) | Transfers and other movements | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | ) | | | | ) | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year (6) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – Accumulated depreciation and impairments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net book value – 30 June 2020 | | | | | | | | | | | | | | At the beginning of the financial year | | | 7,885 | | | 38,174 | | | 9,211 | | | 11,149 | | | 1,622 | | | 68,041 | | | Impact of adopting IFRS 16 | | | 754 | | | 1,400 | | | | – | | | | – | | | | – | | | 2,154 | | | | | | 115 | | | 1,719 | | | 684 | | | 6,100 | | | 218 | | | 8,836 | | | Remeasurements of index-linked freight contracts (3) | | | – | | | 733 | | | | – | | | | – | | | | – | | | 733 | | | Depreciation for the year | | | (630 | ) | | (5,104 | ) | | (294 | ) | | | – | | | | – | | | (6,028 | ) | | Impairments for the year (4) | | | (17 | ) | | (189 | ) | | (288 | ) | | | – | | | | – | | | (494 | ) | | | | | (12 | ) | | (22 | ) | | | – | | | | – | | | (65 | ) | | (99 | ) | | Transfers and other movements | | | 292 | | | 2,718 | | | (661 | ) | | (3,475 | ) | | 345 | | | (781 | ) | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year (6) | | | 8,387 | | | 39,429 | | | 8,652 | | | 13,774 | | | 2,120 | | | 72,362 | | | At the end of the financial year 5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,932 | | | 97,230 | | | 13,736 | | | 13,774 | | | 2,899 | | | 141,571 | | | | | | | | | | | | | | | | | | | | | | | | | | – Accumulated depreciation and impairments | | | (5,545 | ) | | (57,801 | ) | | (5,084 | ) | | | – | | | (779 | ) | | (69,209 | ) | | | | ) | | | | ) | | | | ) | | | | ) | | | | ) | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net book value – 30 June 2021 | | | | | | | | | | | | | | At the beginning of the financial year | | | | 8,387 | | | 39,429 | | | 8,652 | | | 13,774 | | | 2,120 | | | 72,362 | | | | | | 25 | | | 3,841 | | | 797 | | | 5,961 | | | 93 | | | 10,717 | | Acquisition of subsidiaries & operations 6 | | | | – | | | 151 | | | 491 | | | | – | | | | – | | | 642 | | Remeasurements of index-linked freight contracts 2 | | | | – | | | (59 | ) | | | – | | | | – | | | | – | | | (59 | ) | Depreciation for the year | | | | (694 | ) | | (5,748 | ) | | (310 | ) | | | – | | | | – | | | (6,752 | ) | Impairments for the year 3 | | | | (208 | ) | | (877 | ) | | (687 | ) | | (745 | ) | | (66 | ) | | (2,583 | ) | | | | | (18 | ) | | (9 | ) | | | – | | | | – | | | | – | | | (27 | ) | | Divestment and demerger of subsidiaries and operations | | | | – | | | | (14
| )
| | | – | | | | (2 | )
| | | – | | | | (16
| )
| Transfers and other movements | | | | 580 | | | 7,968 | | | (2 | ) | | (8,556 | ) | | (461 | ) | | (471 | ) | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year 5 | | | | 8,072 | | | 44,682 | | | 8,941 | | | 10,432 | | | 1,686 | | | 73,813 | | | | | | | | | | | | | | | | | | | | | | | | | | | 14,545 | | | 108,049 | | | 15,059 | | | 11,177 | | | 2,531 | | | 151,361 | | – Accumulated depreciation and impairments | | | | (6,473 | ) | | (63,367 | ) | | (6,118 | ) | | (745 | ) | | (845 | ) | | (77,548 | ) | | | | | | | | | | | | | | | | | | | | | |
(1)
| Includes change in estimates and net foreign exchange gains/(losses) related to the closure and rehabilitation provisions for operating sites. Refer to note 15 ‘Closure and rehabilitation provisions’. |
(2) | Relates to the acquisition of an additional 28 per cent working interest in Shenzi.
|
(3)2 | Relates to remeasurements of index-linked freight contracts including continuous voyage charters (CVCs). Refer to note 21 ‘Leases’. |
(4) | Refer to note 13 ‘Impairment of non-current assets’ for information on impairments. |
(5) 4 | RelatesBMC and Petroleum were disposed in May 2022 and June 2022 respectively. Refer to the sale of the Neptune asset in Gulf of Mexico.notes 3 ‘Exceptional items’ and 27 ‘Discontinued operations’ for more information.
|
(6)5 | Includes the carrying value of the Group’s assets relating to land and buildings and plant and equipment of US$ 3,3502,361 million (2020:(2021: US$ 3,0473,350 million). Refer to note 21 ‘Leases’ for the movement of the right-of-use assets. |
assets.
| Relates to the acquisition of an additional 28 per cent working interest in Shenzi. |
Recognition and measurement Property, plant and equipment Property, plant and equipment is recorded at cost less accumulated depreciation and impairment charges. Cost is the fair value of consideration given to acquire the asset at the time of its acquisition or construction and includes the direct costs of bringing the asset to the location and the condition necessary for operation and the estimated future costs of closure and rehabilitation of the facility. assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. Refer to note 21 ‘Leases’ for further details. Right-of-use assets are presented within the category of property, plant and equipment according to the nature of the underlying asset leased.
Exploration and evaluation Exploration costs are incurred to discover mineral an
d petroleum deposits.resources. Evaluation costs are incurred to assess the technical feasibility and commercial viability of depositsresources found. Exploration and evaluation expenditure is charged to the income statement as incurred, except in the following circumstances in which case the expenditure may be capitalised: In respect of minerals activities:
the exploration and evaluation activity is within an area of interest that was previously acquired as an asset acquisition or in a business combination and measured at fair value on acquisition or the existence of a commercially viable mineral deposit has been established In respect of petroleum activities:
the exploration and evaluation activity is within an area of interest for which it is expected that the expenditure will be recouped by future exploitation or sale or
exploration and evaluation activity has not reached a stage that permits a reasonable assessment of the existence of commercially recoverable reserves
A regular review of each area of interest is undertaken to determine the appropriateness of continuing to carry forward costs in relation to that area. Capitalised costs are only carried forward to the extent that they are expected to be recovered through the successful exploitation of the area of interest or alternatively by its sale. To the extent that capitalised expenditure is no longer expected to be recovered, it is charged to the income statement. | Key judgements and estimates
| | Exploration and evaluation expenditure results in certain items of expenditure being capitalised for an area of interest where a judgement is made that it is likely to be recoverable by future exploitation or sale, or where the activities are judged not to have reached a stage that permits a reasonable assessment of the existence of reserves. | | Management makes certain estimates and assumptions as to future events and circumstances, in particular when making quantitative assessment of whether an economically viable extraction operation can be established. These estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, new information suggests that recovery of the expenditure is unlikely, the relevant capitalised amount is charged to the income statement. |
When proven mineral reserves are determined and development is sanctioned, capitalised exploration and evaluation expenditure is reclassified as assets under construction within property, plant and equipment. All subsequent development expenditure is capitalised and classified as assets under construction, provided commercial viability conditions continue to be satisfied. The Group may use funds sourced from external parties to finance the acquisition and development of assets and operations. Finance costs are expensed as incurred, except where they relate to the financing of construction or development of qualifying assets. Borrowing costs directly attributable to acquiring or constructing a qualifying asset are capitalised during the development phase. Development expenditure is net of proceeds from the saleable material extracted during the development phase. On completion of development, all assets included in assets under construction are reclassified as either plant and equipment or other mineral assets and depreciation commences. | | | Key judgements and estimates
| | Development activities commence after project sanctioning by the appropriate level of management. Judgement is applied by management in determining when a project is economically viable. | | In determining whether a project is economically viable, management is required to make certain estimates and assumptions as to future events and circumstances, including reserve estimates, existence of an accessible market and forecast prices and cash flows. Estimates and assumptions may change as new information becomes available. If, after having commenced the development activity, new information suggests that a development asset is impaired, the appropriate amount is charged to the income statement. |
Other mineral assets comprise: capitalised exploration, evaluation and development expenditure for assets in production mineral rights and petroleum interests acquired capitalised development and production stripping costs The process of removing overburden and other waste materials to access mineral deposits is referred to as stripping. Stripping is necessary to obtain access to mineral deposits and occurs throughout the life of an open-pit mine. Development and production stripping costs are classified as other mineral assets in property, plant and equipment. Stripping costs are accounted for separately for individual components of an ore body. The determination of components is dependent on the mine plan and other factors, including the size, shape and geotechnical aspects of an ore body. The Group accounts for stripping activities as follows: Development stripping costs These are initial overburden removal costs incurred to obtain access to mineral deposits that will be commercially produced. These costs are capitalised when it is probable that future economic benefits (access to mineral ores) will flow to the Group and costs can be measured reliably. Once the production phase begins, capitalised development stripping costs are depreciated using the units of production method based on the proven and probable reserves of the relevant identified component of the ore body which the initial stripping activity benefits.
Production stripping costs These are post initial overburden removal costs incurred during the normal course of production activity, which commences after the first saleable minerals have been extracted from the component. Production stripping costs can give rise to two benefits, the accounting for which is outlined below: | | | | | | | | Production stripping activity | Benefits of stripping activity | | Extraction of ore (inventory) in current period. | | Improved access to future ore extraction. | | | | | | | Current period | | Future period(s) | | | | | Recognition and measurement criteria | | When the benefits of stripping activities are realised in the form of inventory produced; the associated costs are recorded in accordance with the Group’s inventory accounting policy. | | When the benefits of stripping activities are improved access to future ore; production costs are capitalised when all the following criteria are met: • the production stripping activity improves access to a specific component of the ore body and it is probable that economic benefits arising from the improved access to future ore production will be realised • the component of the ore body for which access has been improved can be identified • costs associated with that component can be measured reliably | | | | | | Production stripping costs are allocated between the inventory produced and the production stripping asset using a(or (or mineral contained) strip ratio. When the current strip ratio is greater than the estimatedratio a portion of the stripping costs is capitalised to the production stripping asset. | | | | | Asset recognised from stripping activity | | Inventory | | Other mineral assets within property, plant and equipment. | | | | | | | Not applicable | | On abasis using the units of production method based on proven and probable reserves. |
| Key judgements and estimates | | | Judgement is applied by management in determining the components of an ore body. | | | Estimates are used in the determination of stripping ratios and mineral reserves by component. Changes to estimates related to (or (or mineral contained) strip ratios and the expected ore production from identified components are accounted for prospectively and may affect depreciation rates and asset carrying values. |
Depreciation of assets, other than land, assets under construction and capitalised exploration and evaluation that are not depreciated, is calculated using either the straight-line (SL) method or units of production (UoP) method, net of residual values, over the estimated useful lives of specific assets. The depreciation method and rates applied to specific assets reflect the pattern in which the asset’s benefits are expected to be used by the Group. The Group’s proved reserves for petroleum assets and provenproved and probable reserves for minerals assets are used to determine UoP depreciation unless doing so results in depreciation charges that do not reflect the asset’s useful life. Where this occurs, alternative approaches to determining reserves are applied, such as using management’s expectations of future oil and gas prices rather than yearly average prices, to provide a phasing of periodic depreciation charges that better reflects the asset’s expected useful life. Where assets are dedicated to a mine or petroleum lease, the useful lives below are subject to the lesser of the asset category’s useful life and the life of the mine or petroleum lease, unless those assets are readily transferable to another productive mine or lease. Assets classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell and therefore not depreciated. BMC and Petroleum were classified as held for sale since November 2021 and December 2021 respectively. | | | | | | | | | | | | The determination of useful lives, residual values and depreciation methods involves estimates and assumptions and is reviewed annually. Any changes to useful lives or any other estimates or assumptions, including the expected impact of climate change and the transition to a lower carbon economy, may affect prospective depreciation rates and asset carrying values. The table below summarises the principal depreciation methods and rates applied to major asset categories by the Group. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Mineral rights and
petroleum interests | | Capitalised exploration,
evaluation and
development
expenditure | | | | | | Typical depreciation methodology | | SL | | SL | | UoP | | UoP | | | | | | | | | | | | | | | | 25-50 years | | 3-30 years | | Based on the rate of depletion of reserves | | Based on the rate of depletion of reserves | | |
The Group’s commitments for capital expenditure were US$ 2,469 2,820million as at 30 June 2021 (2020:2022 (2021: US$ 2,5852,469 million). The Group’s commitments related to leases are included in
| | | | | | 2020 | | | | | 2021 | | | | | | | | | | | | Goodwill | | | Other
intangibles | | Total | | | | | | | | | | Goodwill | | | Other
intangibles | | Total | | | | | | | | | | | | | | | US$M | | | | | | | | | | | | US$M | | | US$M | | US$M | | | | | | | | | | | | | | | | | | | | | | | | | | | At the beginning of the financial y ear | | | | | | | | | | | | | | 247 | | | | 428 | | | 675 | | | Impact of change in accounting policies (1) | | | | | | | | | | | | | | 950 | | | | – | | | 950 | | | At the beginning of the financial year (restated) | | | | | | | | | | | | | | | 1,197 | | | | 428 | | | | 1,625 | | | At the beginning of the financial year | | | | | | | | | | | | | | | | 1,197 | | | | 377 | | | 1,574 | | | | | | | | | | | | | | | | | – | | | | 98 | | | 98 | | | | | | | | | | | | | | | | – | | | | 23 | | | 23 | | Amortisation for the year | | | | | | | | | | | | | | | – | | | | (118 | ) | | (118 | ) | | | | | | | | ) | | | | ) | | | – | | | | (93 | ) | | (93 | ) | Impairments for the year (2) | | | | | | | | | | | | | | | – | | | | – | | | | – | | | Impairments for the year 1 | | | | | | | | | | | | | | | | – | | | | (52 | ) | | (52 | ) | | | | | | | | | | ) | | | | ) | | | – | | | | – | | | | – | | Divestment and demerger of subsidiaries and operations | | | | | | | | | | | | | ) | | | – | | | | – | | | | – | | Transfers and other movements | | | | | | | | | | | | | | | – | | | | (31 | ) | | (31 | ) | | | | | | | | | | | | | | | – | | | | (15 | ) | | (15 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | 1,197 | | | | 377 | | | 1,574 | | | | | | | | | | | | | | | | 1,197 | | | | 240 | | | 1,437 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,197 | | | | 1,580 | | | 2,777 | | | | | | | | | | | | | | | | 1,197 | | | | 1,506 | | | 2,703 | | – Accumulated amortisation and impairment s | | | | | | | | | | | | | | – | | | | (1,203 | ) | | (1,203 | ) | | – Accumulated amortisation and impairments | | | | | | | | | ) | | | | ) | | | – | | | | (1,266 | ) | | (1,266 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)1 | Intangible assets has been restated to reflect changes to the Group’s accounting policy following a decision by the IFRS Interpretations Committee on IAS 12 ‘Income Taxes’, resulting in the retrospective recognition of US$950 million of Goodwill at Olympic Dam. Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’13 ‘Impairment of non-current assets’ for further information.information on impairments.
|
(2)2 | Relates to the merger of Petroleum with Woodside. Refer to note 13 ‘Impairment ofnon-current
assets’27 ‘Discontinued operations’ for information on impairments.more information. |
Recognition and measurement Where thethe fair value of the consideration paid for a business acquisition exceeds the fair value of the identifiable assets, liabilities and contingent liabilities acquired, the difference is treated as goodwill. Where consideration is less than the fair value of acquired net assets, the difference is recognised immediately in the income statement. Goodwill is not amortised and is measured at cost less any impairment losses. The Group capitalises amounts paid for the acquisition of identifiable intangible assets, such as software, licences and initial payments for the acquisition of mineral lease assets, where it is considered that they will contribute to future periods through revenue generation or reductions in cost. These assets, classified as finite life intangible assets, are carried in the balance sheet at the fair value of consideration paid (cost) less accumulated amortisation and impairment charges. Intangible assets with finite useful lives are amortised on a straight-line basis over their useful lives. The estimated useful lives are generally no greater than eight years. Initial payments for the acquisition of intangible mineral lease assets are capitalised and amortised over the term of the permit. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area. Capitalised costs are only carried forward to the extent that they are expected to be recovered through the successful exploitation of the area of interest or alternatively by its sale. To the extent that capitalised expenditure is no longer expected to be recovered, it is charged to the income statement.
Assets classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell and therefore not amortised.
13 Impairment of non-current assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Property,
plant and
equipment | | | Goodwill and
other intangibles | | | Equity-
accounted
investment | | | | | | | | | | | | | | | | | | | | | New South Wales Energy Coal | | Coal | | | | | | | | | | | | | | | | | | | Coal | | | | | | | | | | | | | | | | | | | G&U | | | | | | | | | | | | | | | | | | | Various | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total impairment of non-current assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net impairment of non-current assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | | | | Property,
plant and
equipment | | | Goodwill and
other intangibles | | | Equity-
accounted
investment | | | Total | | | | | | | US$M | | | US$M | | | US$M | | | US$M | | | | Copper | | | 409 | | | | – | | | | – | | | | 409 | | | | Various | | | 85 | | | | – | | | | – | | | | 85 | | | | | | | | | | | | | | | | | | | | | | Total impairment of non-current assets | | | | | 494 | | | | – | | | | – | | | | 494 | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | | | | | | | | | | | | | | | | | | | Net impairment of non-current assets | | | | | 494 | | | | – | | | | – | | | | 494 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Property,
plant and
equipment | | | Goodwill and
other intangibles | | | Equity-
accounted
investment | | | | | | | | | | | | | | | | | | | | | | Cerro Colorado | | Copper | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Various | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total impairment of non-current assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net impairment of non-current assets – Continuing operations | | | | | | | | | | | | | | | | | | | | Net impairment of non-current assets – Discontinued operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net impairment of non-current assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021
Restated | | | | | | Property,
plant and
equipment | | | Goodwill and
other intangibles | | | Equity-
accounted
investment | | | Total | | | | | | | US$M | | | US$M | | | US$M | | | US$M | | New South Wales Energy Coal | | Coal | | | 1,025 | | | | 32 | | | | – | | | | 1,057 | | | | Coal | | | – | | | | – | | | | 466 | | | | 466 | | | | G&U | | | 1,314 | | | | – | | | | – | | | | 1,314 | | | | Various | | | 135 | | | | 1 | | | | – | | | | 136 | | | | | | | | | | | | | | | | | | | | | | Total impairment of non-current assets | | | 2,474 | | | | 33 | | | | 466 | | | | 2,973 | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | Net impairment of non-current assets – Continuing operations | | | 2,474 | | | | 33 | | | | 466 | | | | 2,973 | | | Net impairment of non-current assets – Discontinued operations | | | 109 | | | | 19 | | | | – | | | | 128 | | | | | | | | | | | | | | | | | | | | | | Net impairment of non-current assets | | | 2,583 | | | | 52 | | | | 466 | | | | 3,101 | | | | | | | | | | | | | | | | | | | | | |
Recognition and measurement Impairment tests for all non-financial assets (excluding goodwill) are performed when there is an indication of impairment, although goodwillimpairment. Goodwill is tested for impairment at least annually. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash generating unit (CGU) to which the asset belongs, being the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. If the carrying amount of the asset or CGU exceeds its recoverable amount, the asset or CGU is impaired and an impairment loss is charged to the income statement so as to reduce the carrying amount in the balance sheet to its recoverable amount. Previously impaired assets (excluding goodwill)goodwill as impairment losses are not reversed in subsequent periods) are reviewed for possible reversal of previous impairment at each reporting date. Impairment reversal cannot exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised for the asset or cash generating units (CGUs).CGU. Such reversal is recognised in the income statement. There were no reversals of impairment in the current or prior year. How recoverable amount is calculated The recoverable amount is the higher of an asset’s or CGUsCGU’s fair value less cost of disposal (FVLCD) and its value in use (VIU). For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Fair value less cost of disposal FVLCD is an estimate of the amount that a market participant would pay for an asset or CGU, less the cost of disposal. FVLCD for mineral and petroleum assets is generally determined using independent market assumptions to calculate the present value of the estimated future post-tax cash flows expected to arise from the continued use of the asset, including the anticipated cash flow effects of any capital expenditure to enhance production or reduce cost, and its eventual disposal where a market participant may take a consistent view. Cash flows are discounted using an appropriate post-tax market discount rate to arrive at a net present value of the asset, which is compared against the asset’s carrying value. FVLCD may also take into consideration other market-based indicators of fair value. FVLCD are based primarily on Level 3 inputs as defined in note 23 ‘Financial risk management’ unless otherwise noted.VIU is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and its eventual disposal or closure. VIU is determined by applying assumptions specific to the Group’s continued use and cannot take into account future development. These assumptions are different to those used in calculating FVLCD and consequently the VIU calculation is likely to give a different result (usually lower) to a FVLCD calculation.
Impairment of non-current assets (excluding goodwill) Impairment of non-current assets relating to the year ended 30 June 2022 are detailed below. Impairment of Cerro Colorado The Group recognised a pre-tax impairment charge of US$455 million. The impairment charge primarily relates to an increase in closure and rehabilitation provision at Cerro Colorado due to additional work required to re-profile waste dumps for closure and an increase in scope for the following impairments tonon-currentclosure activities.
assets during the year: | | | | | | | What has been recognised?
| | At 30 June 2021, the Group determined the overall recoverable amount of the CGU to be negative US$300 million, resulting in an aggregate impairment to property, plant and equipment and intangibles of US$1,057 million for FY2021. | | At 30 June 2021, the Group determined the recoverable amount to be US$284 million, being the agreed sale proceeds of US$294 million adjusted for transaction costs, resulting in an aggregate impairment of US$466 million for FY2021. | | At 30 June 2021, the Group determined the recoverable amount to be US$3.3 billion, resulting in an impairment charge of US$1.3 billion against property, plant and equipment. | What were the drivers of impairment?
| | The impairment charges reflect the status of the divestment process and the forecast market conditions for Australian thermal coal, the strengthening Australian dollar and changes to the mine plan. | | On 28 June 2021, the Group announced that it had signed a Sale and Purchase Agreement with Glencore to divest its interest in Cerrejón. | | The impairment charge against the Group’s Potash assets reflects an analysis of recent market perspectives and the value that the Group would now expect a market participant to attribute to the Group’s investments to date. | How were the valuations calculated?
| | The 30 June 2021 valuation represents VIU, applying discounted cash flow (DCF) techniques(1)
. | | The 30 June 2021 valuation represents a FVLCD based on the expected net sale proceeds of US$284 million(1)
. | | The 30 June 2021 valuation was determined using FVLCD methodology, applying DCF techniques(1)
. | What were the significant assumptions and estimates used in the valuations?
| | The valuation for NSWEC is most sensitive to changes in energy coal prices, estimated future production volumes and discount rates. The valuation applied apost-tax
real discount rate of 6.5 per cent. The post-impairment carrying value of NSWEC’s property, plant and equipment is not material, therefore any changes to key estimates will not give rise to a further material impairment.The valuation for Potash is most sensitive to changes in the long-term potash price outlook and the risking applied to the future development phases of the potash resource. The valuation applied apost-tax
real discount rate of 6.5 per cent. In August 2021, the Group sanctioned the ongoing development of Potash following a comprehensive review of the future prospects and development opportunities. In light of this investment approval and the risking applied in the current valuation, management does not consider there to be a significant risk of a further material impairment in the next financial reporting period.Key judgements and estimates that have been applied in the valuations using DCF techniques are disclosed furtherImpairments of non-current assets relating to the year ended 30 June 2021 are detailed below.
|
Impairment of New South Wales Energy Coal (1) | Valuations are based primarily on Level 3 inputs as defined in note 23 ‘Financial risk management’.
The Group recognised pre-tax impairment charges of US$1,057 million. The recoverable amount of negative US$300 million as at 30 June 2021 was determined using VIU methodology, applying discounted cash flow (DCF) techniques. The valuation for NSWEC was most sensitive to changes in energy coal prices, estimated future production volumes and discount rates. The valuation applied a post-tax real discount rate of 6.5 per cent. The Group recognised a pre-tax impairment charge of US$466 million. The recoverable amount of US$284 million as at 30 June 2021 represented a FVLCD based on the expected net sale proceeds. Impairment of Potash assets The Group recognised a pre-tax impairment charge of US$1,314 million. The recoverable amount of US$3.3 billion as at 30 June 2021 was determined using FVLCD methodology, applying DCF techniques. The valuation was most sensitive to changes in the long-term potash price outlook and the risking applied to the future development phases of the potash resource. The valuation applied a post-tax real discount rate of 6.5 per cent. |
Impairment test for goodwill The carrying amount of goodwill has been allocated to the CGUs, or groups of CGUs, as follows: | | | | | | | | | | | | | | | 2020 | | | | | | | US$M
Restated | | | | | | | | | 1,010 | | | | | | | | | 187 | | | | | | | | | | | | | | | | | | | 1,197 | | | | | | | | | | | |
(1) | Goodwill has been restated to reflect changes to the Group’s accounting policy following a decision by the IFRS Interpretations Committee on IAS 12 ‘Income Taxes’, resulting in the retrospective recognition of US$950 million of Goodwill at Olympic Dam. Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’ for further information.
|
| | | | | | | | | | | | | | 2021 | | | | | | | | US$M | | | | | | | | | 1,010 | | | | | | | | | 187 | | | | | | | | | | | | | | | | | | | 1,197 | | | | | | | | | | | |
For the purpose of impairment testing, goodwill has been allocated to CGUs or groups of CGUs, that are expected to benefit from the synergies of previous business combinations, which represent the level at which management will monitor and manage goodwill. Olympic Dam goodwill is the most significant goodwill balance. | | | | Impairment test conclusion | | The Group’s decision during HY2021 to change the expansion strategy for Olympic Dam was identified as an indicator of impairment as at 31 December 2020. The Group performed an impairment test of the Olympic Dam CGU, including goodwill, as at 31 December 20202021 and an impairment charge was not required. A goodwill impairment test was not required at 30 June 20212022 as there were no indicators of impairment. | | | | | How did the goodwill arise? | | Goodwill arose on the acquisition of WMC Resources Ltd in June 2005. | | | | | | | Olympic Dam is part of the Copper reportable segment. | | | | | How were the valuations calculated? | | FVLCD methodology using DCF techniques has been applied in determining the recoverable amount of Olympic Dam. The calculation is based primarily on Level 3 inputs as defined in note 23 ‘Financial risk management’ | | | | | | | | | | | Significant assumptions and sensitivities | | The current valuation of Olympic Dam exceeds its carrying amount by approximately US$ 2.4 billion (2021: US$1.8 billionbillion) and is most sensitive to changes in copper and gold commodity prices, production volumes, operating costs and discount rates. The valuation applied a post-tax real discount rate of 6.5 per cent (2021: 6 per cent.cent).Management consider that there are no reasonably possible changes in copper and gold price forecasts, operating cost estimates or the discount rate that would, in isolation, result in the estimated recoverable amount being equal to the carrying amount. A production volume decrease of 6 per cent (2021: 4.8 per centcent) across all commodities (copper, gold, silver and uranium) would, in isolation, result in the estimated recoverable amount being equal to the carrying amount. Typically, changes in any one of the aforementioned assumptions (including operating performance) would be accompanied by a change in another assumption which may have an offsetting impact. Action is usually taken to respond to adverse changes in assumptions to mitigate the impact of any such change. Key judgements and estimates that have been applied in the FVLCD valuation are disclosed further below. |
Goodwill held by other CGUs is US$187 million (2020:(2021: US$187 million). This represents less than 1one per cent of net assets at 30 June 2021 (2020:2022 (2021: less than 1one per cent). There was 0no impairment of other goodwill in the year to 30 June 2021 (2020:2022 (2021: US$ NaN)nil).
Key judgements and estimates Assessment of indicators of impairment or impairment reversal and the determination of CGUs for impairment purposes require significant management judgement. Indicators of impairment may include changes in the Group’s operating and economic assumptions, including those arising from changes in reserves or mine planning, updates to the Group’s commodity supply, demand and price forecasts, or the possible additional impacts from emerging risks including those related to climate change and the transition to a low carbon economy. Impacts related to climate change and the transition to a low carbon economy may include:
| Key judgements and estimates
| | Assessment of indicators of impairment or impairment reversal and the determination of CGUs for impairment purposes require significant management judgement. | | Indicators of impairment may include changes in the Group’s operating and economic assumptions, including those arising from changes in reserves or mine planning, updates to the Group’s commodity supply, demand and price forecasts, or the possible additional impacts from emerging risks such as those related to climate change and the transition to a low carbon economy and pandemics similar to COVID-19.
| | | | Impacts related to climate change and the transition to a lower carbon economy may include:
| | • demand for the Group’s commodities decreasing, due to policy, regulatory (including carbon pricing mechanisms), legal, technological, market or societal responses to climate change, resulting in a proportion of a CGU’s reserves becoming incapable of extraction in an economically viable fashion
| | • physical impacts related to acute risks resulting from increased severity of extreme weather events, and those related to chronic risks resulting from longer-term changes in climate patterns
| | The Group continues to develop its assessment of the potential impacts of climate change and the transition to a low carbon economy. As outlined in the Basis of Preparation, where sufficiently developed, the potential financial impacts on the Group of climate change and the transition to a low carbon economy have been considered in the assessment of indicators of impairment, including:
| | • the Group’s current assumptions relating to demand for commodities and carbon pricing, including their impact on the Group’s long-term price forecasts
| | • the Group’s operational emissions reduction strategy
| | | | The macro economic disruptions relating toCOVID-19
and mitigating actions enforced by health authorities create uncertainty in the Group’s operating and economic assumptions, including commodity prices, demand and supply volumes, operating costs, and discount rates. | | However, given the long-lived nature of the majority of the Group’s assets,COVID-19
did not, in isolation, result in the identification of indicators of impairment for the Group’s asset values at 30 June 2021. |
Due to ongoing uncertainty as to the extent and duration ofCOVID-19physical impacts related to acute risks resulting from increased frequency or severity of extreme weather events, and those related to chronic risks resulting from longer-term changes in climate patterns
restrictions and the overall impact on economic activity, actual experience may materially differ from internal forecasts and may result in the reassessment of indicators of impairment for the Group’s assets in future reporting periods. | | The Group performs a recoverable amount determination for an asset or CGU when there is an indication of impairment or impairment reversal. | | When the recoverable amount is measured by reference to FVLCD, in the absence of quoted market prices or binding sale agreement, estimates are made regarding the present value of futurepost-tax
cash flows. These estimates are made from the perspective of a market participant and include prices, future production volumes, operating costs, capital expenditure, closure and rehabilitation costs, tax attributes, risking factors applied to cash flows and discount rates. The cash flow forecasts may include net cash flows expected from the extraction, processing and sale of material that does not currently qualify for inclusion in ore reserves. Reserves are included in the assessment of FVLCD to the extent that it is considered probable that a market participant would attribute value to them. | | When recoverable amount is measured using VIU, estimates are made regarding the present value of future cash flows based on internal budgets and forecasts and life of asset plans. Key estimates are similar to those identified for FVLCD, although some assumptions and values may differ as they reflect the perspective of management rather than a market participant.
| | All estimates require management judgements and assumptions and are subject to risk and uncertainty that may be beyond the control of the Group; hence, there is a possibility that changes in circumstances will materially alter projections, which may impact the recoverable amount of assets/CGUs at each reporting date.
|
The Group’s assessment of the potential impacts of climate change and the transition to a low carbon economy continues to mature. As outlined in the Basis of Preparation, where sufficiently developed, the potential financial impacts on the Group of climate change and the transition to a low carbon economy have been considered in the assessment of indicators of impairment, including: the Group’s current assumptions relating to demand for commodities and carbon pricing, including their impact on the Group’s long-term price forecasts the Group’s operational emissions reduction strategy The Group performs a recoverable amount determination for an asset or CGU when there is an indication of impairment or impairment reversal. When the recoverable amount is measured by reference to FVLCD, in the absence of quoted market prices or binding sale agreement, estimates are made regarding the present value of future post-tax cash flows. These estimates are made from the perspective of a market participant and include prices, future production volumes, operating costs, capital expenditure, closure and rehabilitation costs, taxes, risking factors applied to cash flows and discount rates. The cash flow forecasts may include net cash flows expected from the extraction, processing and sale of material that does not currently qualify for inclusion in reserves. Reserves and resources are included in the assessment of FVLCD to the extent that it is considered probable that a market participant would attribute value to them. When recoverable amount is measured using VIU, estimates are made regarding the present value of future cash flows based on internal budgets and forecasts and life of asset plans. Key estimates are similar to those identified for FVLCD, although some assumptions and values may differ as they reflect the perspective of management rather than a market participant. All estimates require management judgements and assumptions and are subject to risk and uncertainty that may be beyond the control of the Group; hence, there is a possibility that changes in circumstances will materially alter projections, which may impact the recoverable amount of assets/CGUs at each reporting date. While no indicators of impairment, or impairment reversal, were identified across the Group’s CGUs at 30 June 2022, with the exception of the Cerro Colorado CGU, the carrying value of the Spence CGU is the most susceptible to changes in the significant estimates outlined below in the next reporting period. The significant estimates impacting the Group’s recoverable amount determinations:determinations are: Commodity prices were based on latest internal forecasts which assume short-term market prices will revert to the Group’s assessment of long-term price. These price forecasts reflect management’s long-term views of global supply and demand, built upon past experience of the commodity markets and are benchmarked with external sources of information such as analyst forecasts. Prices are adjusted based upon premiums or discounts applied to global price markers based onto reflect the location, nature and quality produced,of the Group’s production, or to take into account contracted prices. Future production volumes Estimated production volumes were based on detailed data and took into account development plans established by management as part of the Group’s long-term planning process. When estimating FVLCD, assumptions reflect all reserves and resources that a market participant would consider when valuing the respective CGU, which in some cases are broader in scope than the reserves that would be used in a VIU test. In determining FVLCD, risk factors may be applied to reserves and resources which do not meet the criteria to be treated as proved. OperatingCash outflows (including operating costs, capital expenditure, closure and rehabilitation costs and capital expendituretaxes) Operating costs and capital expenditure wereCash outflows are based on internal budgets and forecasts and life of asset plans. Cost assumptions reflect management experience and expectations. Tax assumptions reflect existing tax and royalty regimes and rates applicable in the jurisdiction of the CGU. In the case of FVLCD, cash flow projections include the anticipated cash flow effects of any capital expenditure to enhance production or reduce cost where a market participant may take a consistent view. VIU does not take into account future development. The Group uses real post-tax discount rates applied to real post-tax cash flows. The discount rates are derived using the weighted average cost of capital methodology. Adjustments to the rates are made for any risks that are not reflected in the underlying cash flows, including country risk.
The movement for the year in the Group’s net deferred tax position is as follows:
| | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | | | | | | Net deferred tax (liability)/asset | | | | | | | | | | | | | At the beginning of the financial year | | | | | | | (491 | ) | | | 569 | | Impact of change in accounting policies (1) | | | | | | | – | | | | (1,021 | ) | Income tax (charge)/credit recorded in the income statement (2) | | | | | | | 335 | | | | (81 | ) | Income tax credit recorded directly in equit y | | | | | | | 34 | | | | 15 | | | | | | | | | 31 | | | | 27 | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | (91 | ) | | | (491 | ) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | US$M | | | | | Net deferred tax (liability)/asset | | | | | | | | | | | | | At the beginning of the financial year | | | | ) | | | (91 | ) | | | (491 | ) | Income tax (charge)/credit recorded in the income statement 1 | | | | ) | | | (1,325 | ) | | | 335 | | Income tax (charge)/credit recorded directly in equity | | | | | | | 42 | | | | 34 | | Divestment and demerger of subsidiaries and operations 2 | | | | ) | | | – | | | | – | | | | | | | | | (28 | ) | | | 31 | | | | | | | | | | | | | | | | At the end of the financial year | | | | ) | | | (1,402 | ) | | | (91 | ) | | | | | | | | | | | | | | |
(1) | Deferred tax has been restated to reflect changes to the Group’s accounting policy following a decision by the IFRS Interpretations Committee on IAS 12 ‘Income Taxes’, resulting in the retrospective recognition of US$1,021 million of Deferred tax. Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’ for further information.
|
(2) | Includes Discontinued operations income tax (charge)/credit to the income statement of US$ NaN (2020:(61) million (2021: US$ NaN; 2019:273 million; 2020: US$40247 million). |
| Relates to the divestment of BMC and merger of Petroleum with Woodside. Refer to notes 3 ‘Exceptional items’ and 27 ‘Discontinued operations’ for more information. |
For recognition and measurement refer to note 6 ‘Income tax expense’. The
The composition of the Group’s net deferred tax assets and liabilities recognised in the balance sheet and the deferred tax expense charged/(credited) to the income statement is as follows: | | | | | | | | Charged/(credited) to
the income statement | | | | | | | Charged/(credited) to
the income statement | | | | | | | 2020 | | | | 2020 | | | | 2020 | | 2019 | | | | | 2021 | | | | 2021 | | | | 2021 | | 2020 | | | | | | | US$M | | | | | | | | | | US$M | | | | | | | | | | | | | | | | | Type of temporary difference | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (2,749 | ) | | | | | | 2,828 | | | | | | 1,394 | | (951 | ) | | | | | | | | 398 | | | | | | – | | | | | | 51 | | 43 | | | | | | | | ) | | | (1,349 | ) | | | | | | | 4,716 | | | | | | | 488 | | | 1,394 | | | | | | | | | | 51 | | | | | | | | – | | | | | | | 347 | | | 51 | | | | | | | | 353 | | | | | | (26 | ) | | | | | | (38 | ) | | 14 | | | | | | | | 94 | | | | | ) | | | (333 | ) | | | | | | | (68 | ) | | (38 | ) | Closure and rehabilitation | | | | | | 2,100 | | | | | | (109 | ) | | | | | | (334 | ) | | (53 | ) | | | | | | | 638 | | | | ) | | | (2,086 | ) | | | | | | | (515 | ) | | (334 | ) | | | | | | | 359 | | | | | | 921 | | | | | | (119 | ) | | (179 | ) | | | | | | | 122 | | | | | | | 368 | | | | | | | (309 | ) | | (119 | ) | | | | | | | 173 | | | | | | (239 | ) | | | | | | (268 | ) | | (2 | ) | | | | | | | 108 | | | | | | | | (227 | ) | | | | | | | 77 | | | (268 | ) | | | | | | | (4 | ) | | | | | | – | | | | | | 33 | | (9 | ) | | | | | | | 11 | | | | | ) | | | (16 | ) | | | | ) | | | (31 | ) | | 33 | | | | | | | | (383 | ) | | | | | | 187 | | | | | | (132 | ) | | 56 | | | | | ) | | | (36 | ) | | | | | | | 602 | | | | | | | 68 | | | (132 | ) | Investments, including foreign tax credits | | | | | | 348 | | | | | | 458 | | | | | | (77 | ) | | 70 | | | | | | | | 147 | | | | | | | | 671 | | | | ) | | | 414 | | | (77 | ) | Foreign exchange gains and losses | | | | | | (134 | ) | | | | | | (61 | ) | | | | | | (18 | ) | | (45 | ) | | | | | | | (3 | ) | | | | | | | 133 | | | | | | | 63 | | | (18 | ) | | | | | | | 2,759 | | | | | | – | | | | | | (148 | ) | | 1,147 | | | | | | | | 1,999 | | | | | ) | | | (82 | ) | | | | | | | 678 | | | (148 | ) | | | | | | | 548 | | | | | | (245 | ) | | | | | | (793 | ) | | – | | | | | | | | | | | 68 | | | | | ) | | | (658 | ) | | | | ) | | | 67 | | | (793 | ) | | | | | | | (80 | ) | | | | | | 65 | | | | | | 114 | | (10 | ) | | | | | | | 62 | | | | | ) | | | 226 | | | | ) | | | 46 | | | 114 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,688 | | | | | | | | 3,779 | | | | | | | | (335 | ) | | | 81 | | | | | | | | 1,912 | | | | | | | | 3,314 | | | | | | | 1,325 | | | (335 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Includes deferred tax associated with the recognition of assets and lease liabilities on adoption of IFRS 16. Refer to note 21 ‘Leases’. |
(2) | FY2020 has been restated to reflect the impact of the changeto the Group’s
accounting policy following a decision by the IFRS Interpretations Committee on IAS 12 ‘Income Taxes’. Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’ for further information. |
The amount of deferred tax assets dependent on future taxable profits not arising from the reversal of existing deferred tax liabilities, and which relate to tax jurisdictions where the taxable entity has suffered a loss in the current or preceding year, was US$1,67518 million at 30 June 2021 (2020:2022 (2021: US$2,865 1,675 million). The decrease from FY2021 is primarily attributable to the disposal of assets giving rise to these deferred tax assets as part of the merger of Petroleum with Woodside. For operating assets, the group assesses the recoverability of these deferred tax assets using estimates and assumptions relating to projected earnings and cash flows as applied in the Group impairment process for associated operations. Further information on the key judgements and estimates relating to the recognition of deferred tax assets is provided in note 6 ‘Income tax expense’.
T
heThe composition of the Group’s unrecognised deferred tax assets and liabilities is as follows: | | | | | | | | | | | | | | | 2020 | | | | | | | | US$M
Restated | | | | | | | | | | | Unrecognised deferred tax assets | | | | | | | | | Tax losses and tax credits (1) | | | | | | | 4,088 | | Investments in subsidiaries (2) | | | | | | | 1,575 | | Deductible temporary differences relating to PRRT (3) | | | | | | | 2,079 | | | | | | | | | 3,265 | | Other deductible temporary differences (5) | | | | | | | 673 | | | | | | | | | | | | Total unrecognised deferred tax assets | | | | | | | 11,680 | | | | | | | | | | | | Unrecognised deferred tax liabilities | | | | | | | | | Investments in subsidiaries (2) | | | | | | | 2,375 | | Future taxable temporary differences relating to unrecognised deferred tax asset for PRRT (3) | | | | | | | 624 | | | | | | | | | | | | Total unrecognised deferred tax liabilities | | | | | | | 2,999 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2021 | | | | | | | | US$M | | Unrecognised deferred tax assets | | | | | | | | | Tax losses and tax credits 1 | | | | | | | 5,944 | | Investments in subsidiaries 2 | | | | | | | 1,712 | | Deductible temporary differences relating to PRRT 3 | | | | | | | 2,402 | | | | | | | | | 3,359 | | Other deductible temporary differences 5 | | | | | | | 1,630 | | | | | | | | | | | | Total unrecognised deferred tax assets | | | | | | | 15,047 | | | | | | | | | | | | Unrecognised deferred tax liabilities | | | | | | | | | Investments in subsidiaries 2 | | | | | | | 2,203 | | Future taxable temporary differences relating to unrecognised deferred tax asset for PRRT 3 | | | | | | | 720 | | | | | | | | | | | | Total unrecognised deferred tax liabilities | | | | | | | 2,923 | | | | | | | | | | | |
(1) | At 30 June 2021,2022, the Group had income and capital tax losses with a tax benefit of US$3,5695,777 million (2020:(2021: US$2,4053,569 million) and tax credits of US$2,3752,685 million (2020:(2021: US$1,6832,375 million), which are not recognised as deferred tax assets, because it is not probable that future taxable profits or capital gains will be available against which the Group can utilise the benefits. |
The gross amount of tax losses carried forward that have not been recognised is as follows: | | Year of expiry | | 2021 | | | 2020 | | | | | | 2021 | | | | | US$M | | | US$M | | | | | | US$M | | | | | | | | | | | | | | | | | | 474 | | | | | | | | 13 | | Later than one year and not later than two years | | | | | | | 240 | | | | | | | | 5 | | Later than two years and not later than five years | | | | | | | 2,525 | | | | | | | | 105 | | Later than five years and not later than 10 years | | | | | | | 679 | | | | | | | | 1,449 | | Later than 10 years and not later than 20 years | | | | | | | 2,379 | | | | | | | | 3,347 | | | | | | | | | 2,262 | | | | | | | | 4,799 | | | | | | | | | | | | | | | | | | | | | | | | 8,559 | | | | | | | | 9,718 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | | – | | Later than two years and not later than five years | | | | | | | 0 | | | | | | | | – | | | | | | | | | 4,150 | | | | | | | | 4,238 | | | | | | | | | | | | | | | | Gross amount of tax losses not recognised | | | | | | | 12,709 | | | | | | | | 13,956 | | | | | | | | | | | | | | | | Tax effect of total losses not recognised | | | | | | | 2,405 | | | | | | | | 3,569 | | | | | | | | | | | | | | | |
Of the US$ 2,3752,685 million of tax credits, US$ 1,805 2,129million expires not later than 10 years and US$ 570556 million expires later than 10 years and not later than 20 years. (2) | The Group had deferred tax assets and deferred tax liabilities associated with undistributed earnings of subsidiaries that have not been recognised because the Group is able to control the timing of the reversal of the temporary differences and it is not probable that these differences will reverse in the foreseeable future. Where the Group has undistributed earnings held by associates and joint interests, the deferred tax liability will be recognised as there is no ability to control the timing of the potential distributions. |
(3) | The Group had unrecognised deferred tax assets relating to Australian Petroleum Resource Rent Tax (PRRT). Recognition of a deferred tax asset for PRRT depends on benefits expected(PRRT) in FY2021. The assets giving rise to be obtained from the deduction against PRRT liabilitiesAs PRRT payments are deductible for income tax purposes, to the extent these PRRT deferred tax assets are recognised this would give risewere disposed as part of the merger of Petroleum with Woodside. Refer to a corresponding deferred tax liabilitynote 27 ‘Discontinued operations’ for income tax (presented as the future taxable temporary differences relating to the unrecognised PRRT deferred tax assets).more information. |
(4) | The Group had deductible temporary differences relating to mineral rights for which deferred tax assets had not been recognised because it is not probable that future capital gains will be available against which the Group can utilise the benefits. The deductible temporary differences do not expire under current tax legislation. |
(5) | The Group had other deductible temporary differences for which deferred tax assets had not been recognised because it is not probable that future taxable profits will be available against which the Group can utilise the benefits. The deductible temporary differences do not expire under current tax legislation. |
15 Closure and rehabilitation provisions | | | | | | | | | | | | | | | 2020 | | | | | | | | US$M | | At the beginning of the financial year | | | | | | | 6,977 | | Capitalised amounts for operating sites: | | | | | | | | | | | | | | | | 1,255 | | | | | | | | | (188 | ) | Adjustments charged/(credited) to the income statement: | | | | | | | | | Increases to existing and new provisions | | | | | | | 731 | | | | | | | | | (19 | ) | | | | | | | | (43 | ) | Other adjustments to the provision: | | | | | | | | | Amortisation of discounting impacting net finance costs | | | | | | | 356 | | Acquisition of subsidiaries and operations | | | | | | | – | | Divestment and demerger of subsidiaries and operations | | | | | | | – | | Expenditure on closure and rehabilitation activities | | | | | | | (258 | ) | Exchange variations impacting foreign currency translation reserve | | | | | | | (1 | ) | | | | | | | | | | | At the end of the financial year | | | | | | | 8,810 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 373 | | | | | | | | | 8,437 | | | | | | | | | | | | | | | | | | | 6,636 | | | | | | | | | 2,174 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2021 | | | | | | | | US$M | | At the beginning of the financial year | | | | | | | 8,810 | | Capitalised amounts for operating sites: | | | | | | | | | | | | | | | | 1,974 | | | | | | | | | 483 | | Adjustments charged/(credited) to the income statement: | | | | | | | | | Increases to existing and new provisions | | | | | | | 564 | | | | | | ) | | | 76 | | | | | | ) | | | (157 | ) | Other adjustments to the provision: | | | | | | | | | Amortisation of discounting impacting net finance costs | | | | | | | 380 | | Acquisition of subsidiaries and operations | | | | | | | 179 | | Divestment and demerger of subsidiaries and operations | | | | ) | | | (81 | ) | Expenditure on closure and rehabilitations activities | | | | ) | | | (321 | ) | Exchange variations impacting foreign currency translation reserve | | | | ) | | | 3 | | | | | | | | | – | | | | | | | | | | | | At the end of the financial year | | | | | | | 11,910 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 591 | | | | | | | | | 11,319 | | | | | | | | | | | | | | | | | | | 9,279 | | | | | | | | | 2,631 | | | | | | | | | | | |
The Group is required to close and rehabilitate sites and associated facilities at the end of or, in some cases, during the course of production to a condition acceptable to the relevant authorities, as specified in licence requirements and the Group’s environmentalclosure performance requirements as set out within The key components of closure and rehabilitation activities are: the removal of all unwanted infrastructure associated with an operation the return of disturbed areas to a safe, stable productive and self-sustaining condition, consistent with the agreed endpost-closure land use
Recognition and measurement Provisions for closure and rehabilitation are recognised by the Group when: it has a present legal or constructive obligation as a result of past events it is more likely than not that an outflow of resources will be required to settle the obligation the amount can be reliably estimated | | | Initial recognition and measurement | | Subsequent remeasurementmeasurement | Closure and rehabilitation provisions are initially recognised when an environmental disturbance first occurs. The individual site provisions are an estimate of the expected value of future cash flows required to rehabilitateclose the relevant site using current restoration standards and techniques and taking into account risks and uncertainties. Individual site provisions are discounted to their present value using currency specific discount rates aligned to the estimated timing of cash outflows. When provisions for closure and rehabilitation are initially recognised, the corresponding cost is capitalised as an asset, representing part of the cost of acquiring the future economic benefits of the operation. | | The closure and rehabilitation asset, recognised within property, plant and equipment, is depreciated over the life of the operations. The value of the provision is progressively increased over time as the effect of discounting unwinds, resulting in an expense recognised in net finance costs. The closure and rehabilitation provision is reviewed at each reporting date to assess if the estimate continues to reflect the best estimate of the obligation. If necessary, the provision is remeasured to account for factors including:such as: • additional disturbance during the period • revisions to estimated reserves, resources and lives of operations including any changes to expected operating lives arising from the Group’s latest assessment of the potential impacts of climate change and the transition to a low carbon economy• developments in technology • changes to regulatory requirements and environmental management strategies • changes in the estimated extent and costs of anticipated activities, including the effects of inflation and movements in foreign exchange rates • movements in interest rates affecting the discount rate applied | | | | | | Changes to the closure and rehabilitation estimate for operating sites are added to, or deducted from, the related asset and amortised on a prospective basis accordingly over the remaining life of the operation, generally applying the units of production method. | | | | | | | Costs arising from unforeseen circumstances, such as the contamination caused by unplanned discharges, are recognised as an expense and liability when the event gives rise to an obligation that is probable and capable of reliable estimation. |
Where future economic benefits are no longer expected to be derived through operation, changes to the associated closure and remediation costs are charged to the income statement in the period identified. This amounted to US$ 483 74million in the year ended 30 June 2021 (2020:2022 (2021: US$ 669483 million; 2019:2020: US$ 251669 million). |
Closure cost estimates are generally based on conceptual level studies early in the operating life of an asset with more detailed studies and planning performed as closure risks (including those related to climate change) are identified and/or as an asset, or parts thereof, near closure. As such, the recognition and measurement of closure and rehabilitation provisions requires the use of significant estimates and assumptions, including, but not limited to: the extent (due to legal or constructive obligations) of potential activities required for the removal of infrastructure, decharacterisation of tailings storage facilities and rehabilitation activities costs associated with future closure activities the extent and period of post-closure monitoring and maintenance, including water management applicable discount rates the timing of cash flows and ultimate closure of operations The extent, cost and timing of future closure activities may also be impacted by the potential physical impacts of climate change. In estimating the potential cost of closure activities, the Group considers factors such as long-term weather outlooks, for example forecast changes in rainfall patterns. Closure cost estimates also consider the impact of the Group’s energy transition strategy on the costs and timing of performing closure activities and the impact of new technology when appropriately developed and tested. For example, closure cost estimates largely continue to reflect the use of existing fuel sources for the Group’s equipment while the Group continues to invest in the development of alternative fuel sources and fleet electrification. Estimates for post-closure monitoring and maintenance reflect the Group’s strategies for individual sites, which may include possible relinquishment. The period of monitoring and maintenance included in the provision requires judgement and considers regulatory and licencing requirements, the outcomes of studies and management’s current assessment of stakeholder expectations. As post-closure monitoring and maintenance may be required for significant periods beyond the completion of other closure activities, it is exposed to the potential long-term impacts of climate change, particularly changes in rainfall patterns. While reflecting management’s current best estimate, the cost of post-closure monitoring and maintenance may change in future reporting periods as the understanding of, and potential long-term impacts from, climate change continue to evolve. While progressive closure is performed across a number of operations, significant activities are generally undertaken at the end of the production life at the individual sites, the estimated timing of which is informed by the Group’s current assumptions relating to demand for commodities and carbon pricing, and their impact on the Group’s long-term price forecasts.
production lives range from 2-104 years (2021: 3-91 years). Given the generally shorter remaining operational lives of the Group’s previously held Petroleum assets, the average remaining production life for all operating sites, weighted by current closure provision, has increased to approximately 29 years(2021: 27 years). The discount rates applied to the Group’s closure and rehabilitation provisions are determined by reference to the currency of the closure cash flows, the period over which the cash flows will be incurred and prevailing market interest rates (where available). The Group continues to monitor current market conditions with no change made to the Group’s discount rates in the current year.
The increase in closure and rehabilitation provisions relating to continuing operating sites reflects updates to the expected cost and timing of closure activities across the Group’s portfolio, with the most significant increases in the year ended 30 June 2022 being at BHP Mitsubishi Alliance (BMA) and Cerro Colorado.
For BMA, the increase largely reflects a preliminary assessment of the potential impacts on BMA mine lives resulting from:
the significant increase in coal royalties applicable in Queensland from 1 July 2022 consideration of the Group’s long term outlook for metallurgical coal commodity prices, which reflects a range of drivers of commodity demand and supply, for example, the latest climate-related announcements from key market countries These factors have resulted in the Group recognising that the end of operations at BMA sites may be earlier than previously anticipated. The best estimate of the impact on the estimated closure cash flows and their timing, and therefore the discounting of the provision, contributed to an increase in the provision, and associated rehabilitation asset, of approximately US$750 million. Given the timing of the announcement of the change to the Queensland coal royalty regime and the preliminary nature of the assessment, further changes to the provision may arise in future reporting periods. At Cerro Colorado, additional work required to re-profile waste dumps for closure and an increase in scope for other closure activities have contributed to an increase in the closure provision of approximately US$400 million. As operations are ongoing at Cerro Colorado the increase has initially been capitalised. However, given the proximity to closure and the estimated future cash flows of Cerro Colorado the resulting rehabilitation asset has been impaired as outlined in note 13 ‘Impairment of non-current assets’. While the closure and rehabilitation provisions reflect management’s best estimates based on current knowledge and information, further studies, trials and detailed analysis of relevant knowledge and resultant closure activities for individual assets continue to be performed throughout the life of asset. Such studies and analysis can impact the estimated costs of closure activities. Estimates can also be impacted by the emergence of new closure and rehabilitation techniques, changes in regulatory requirements and stakeholder expectations for closure (including costs associated with equitable transition), development of new technologies, risks relating to climate change and the transition to a low carbon economy, and experience at other operations. These uncertainties may result in future actual expenditure differing from the amounts currently provided for in the balance sheet. 0.5 per centincrease in the discount rates applied at 30 June 2022 would result ina decrease to the closure and rehabilitation provision of approximately US$675 million,a decrease in property, plant and equipment of approximately US$490 million in relation to operating sites and an income statementcredit of approximately US$185 million in respect of closed sites. In addition, the change would result ina decrease of approximately US$70 million to depreciation expense and a US$25 millionincrement in net finance costs for the year ending 30 June 2023. Given the long-lived nature of the majority of the Group’s assets, the majority of final closure activities are generally not expected to occur for a significant period of one-year acceleration in forecast cash flows of the Group’s closure and rehabilitation provisions, in isolation, would result in an increase to the provision of approximately US$ 185million, an increase in property, plant and equipment of US$ 125million in relation to operating sites and an income statement charge of US$ 60million in respect of closed sites. The recognition and measurement of closure and rehabilitation provisions requires the use of significant estimates and assumptions, including, but not limited to:
• the extent (due to legal or constructive obligations) of potential activities required for the removal of infrastructure and rehabilitation activities
• costs associated with future rehabilitation activities
• applicable discount rates
• the timing of cash flows and ultimate closure of operations
The extent and cost of future rehabilitation activities may also be impacted by the potential physical impacts of climate change. In estimating the potential cost of closure activities, the Group considers factors such as long-term weather outlooks, for example forecast changes in rainfall patterns, and the impact of the Group’s energy transition strategy on the costs of performing rehabilitation activities.
While progressive closure is performed across a number of operations, significant rehabilitation activities are generally undertaken at the end of the production life at the individual sites, the estimated timing of which is informed by the Group’s current assumptions relating to demand for commodities and carbon pricing, and their impact on the Group’s long-term price forecasts. Remaining production lives range from3-91
years with an average for all sites, weighted by current closure provision, of approximately 27 years. The discount rates applied to the Group’s closure and rehabilitation provisions are determined by reference to the currency of the closure cash flows, the period over which the cash flows will be incurred and prevailing market interest rates (where available). The rates were revised during the year to reflect decreases in market interest rates. The effect of changes to discount rates was an increase of approximatively US$1,085 million in the closure and rehabilitation provision of which approximately US$210 million in respect of closed sites was recognised in the income statement.While the closure and rehabilitation provisions reflect management’s best estimates based on current knowledge and information, further studies and detailed analysis of the closure activities for individual assets will be performed as the assets near the end of their operational life and/or detailed closure plans are required to be submitted to relevant regulatory authorities. Such studies and analysis can impact the estimated costs of closure activities. Estimates can also be impacted by the emergence of new restoration techniques, changes in regulatory requirements for rehabilitation, risks relating to climate change and the transition to a low carbon economy, and experience at other operations. These uncertainties may result in future actual expenditure differing from the amounts currently provided for in the balance sheet.
A further 0.5 per cent decrease in the discount rates applied at 30 June 2021 would result in an increase to the closure and rehabilitation provision of approximately US$1,075 million, an increase in property, plant and equipment of approximately US$820 million in relation to operating sites and an income statement charge of approximately US$255 million in respect of closed sites. In addition, the change would result in an increase of approximately US$115 million to depreciation expense and a US$25 million reduction in net finance costs for the year ending 30 June 2022.
Given the long-lived nature of the majority of the Group’s assets, closure activities are generally not expected to occur for a significant period of time. A one-year acceleration in forecast cash flows of the Group’s closure and rehabilitation provisions, in isolation, would result in an increase to the provision of approximately US$230 million, an increase in property, plant and equipment of US$180 million in relation to operating sites and an income statement charge of US$50 million in respect of closed sites.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020
shares | | | 2019
shares | | | | | | 2020
shares | | | 2019
shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,945,851,394 | | | | 3,211,691,105 | | | | | | | | 2,112,071,796 | | | | 2,112,071,796 | | Purchase of shares by ESOP Trusts | | | | | | | (5,975,189 | ) | | | (6,854,057 | ) | | | | | | | (185,297 | ) | | | (274,069 | ) | Employee share awards exercised following vesting | | | | | | | 6,893,113 | | | | 5,902,588 | | | | | | | | 222,245 | | | | 275,984 | | Movement in treasury shares under Employee Share Plans | | | | | | | (917,924 | ) | | | 951,469 | | | | | | | | (36,948 | ) | | | (1,915 | ) | Shares bought back and cancelled (1) | | | | | | | – | | | | (265,839,711 | ) | | | | | | | – | | | | – | | | | | | | | | | | | | | | | | | | | | | | | | | | | Closing number of shares (2) | | | | | | | 2,945,851,394 | | | | 2,945,851,394 | | | | | | | | 2,112,071,796 | | | | 2,112,071,796 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares held by the public | | | | | | | 2,945,621,003 | | | | 2,944,703,079 | | | | | | | | 2,112,069,025 | | | | 2,112,032,077 | | | | | | | | | 230,391 | | | | 1,148,315 | | | | | | | | 2,771 | | | | 39,719 | | | | | | | | | | | | | | | | | | | | | | | | | | | Special Voting share of no par value | | | | | | | 1 | | | | 1 | | | | | | | | – | | | | – | | Special Voting share of US$0.50 par value | | | | | | | – | | | | – | | | | | | | | 1 | | | | 1 | | 5.5% Preference shares of £1 each | | | | | | | – | | | | – | | | | | | | | 50,000 | | | | 50,000 | | | | | | | | | 1 | | | | 1 | | | | | | | | – | | | | – | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021
shares | | | 2020
shares | | | | | | 2021
shares | | | 2020
shares | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,945,851,394 | | | | 2,945,851,394 | | | | | | | | 2,112,071,796 | | | | 2,112,071,796 | | | | | | | | | – | | | | – | | | | | | | | – | | | | – | | Corporate structure unification | | | | | | | – | | | | – | | | | | ) | | | – | | | | – | | Purchase of shares by ESOP Trusts | | | | ) | | | (7,587,353 | ) | | | (5,975,189 | ) | | | | | | | (185,054 | ) | | | (185,297 | ) | Employee share awards exercised following vesting | | | | | | | 6,948,683 | | | | 6,893,113 | | | | | | | | 173,644 | | | | 222,245 | | Movement in treasury shares under Employee Share Plans | | | | | | | 638,670 | | | | (917,924 | ) | | | | ) | | | 11,410 | | | | (36,948 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,945,851,394 | | | | 2,945,851,394 | | | | | | | | 2,112,071,796 | | | | 2,112,071,796 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Shares held by the public | | | | | | | 2,944,982,333 | | | | 2,945,621,003 | | | | | | | | 2,112,057,615 | | | | 2,112,069,025 | | | | | | | | | 869,061 | | | | 230,391 | | | | | | | | 14,181 | | | | 2,771 | | | | | | | | | | | | | | | | | | | | | | | | | | | 5.5% Preference shares of £1 each | | | | | | | – | | | | – | | | | | | | | 50,000 | | | | 50,000 | | Special Voting share of no par value | | | | | | | 1 | | | | 1 | | | | | | | | – | | | | – | | Special Voting share of US$0.50 par
value | | | | | | | – | | | | – | | | | | | | | 1 | | | | 1 | | | | | | | | | 1 | | | | 1 | | | | | | | | – | | | | – | |
During August 2021, BHP Group Limited issued 4,400,000 fully paid ordinary shares to the BHP Billiton Limited Employee Equity Trust at A$52.99 per share, to satisfy the vesting of employee share awards and related dividend equivalent entitlements under those employee share plans. On 3 September 2021, BHP Group Plc acquired by way of gift from J.P. Morgan Limited the 50,000 issued 5.5 per cent cumulative preference shares of £1.00, in the capital of BHP Group Plc. These preference shares held by BHP Group Plc were cancelled on 31 January 2022. On 31 January 2022, 2,112,071,796 fully paid ordinary shares in BHP Group Limited were issued to BHP Group Plc shareholders in a one for one exchange of their BHP Group Plc ordinary shares, resulting in BHP Group Limited becoming the sole parent company of the Group with a single set of shareholders.BHP Group Plc had one Special Voting share on issue and BHP Group Limited hadone Special Voting share and one DLC dividend share on issue to facilitate operation of the Group’s dual listed structure.These shares were bought back for nominal value in January 2022 and subsequently cancelled. (1) | During December 2018, BHP completed anbuy-back
program of US$5.2 billion of BHP Group Limited shares related to the disbursement of proceeds from the disposal of Onshore US. |
(2) | 4,400,000 fully paid ordinary shares in BHP Group Limited were issued in order to satisfy the exercise of employee share awards during the period 1 July 2021 to 2 September 2021.
|
Recognition and measurementShare capital of BHP Group Limited and BHP Group Plcat 30 June 2022 is composed of the following classes of shares: | | | | | Ordinary shares fully paid | | | | PreferenceTreasury shares | BHP Group Limited ordinary sharesEach fully paid and BHP Group Plc ordinary shares fully paid of US$0.50 par value, represent 99.99 per cent of the total number of shares. Any profit remaining after payment of preferred distributions is available for distribution to the holdersshare of BHP Group Limited and BHP Group Plc ordinary shares in equal amounts per share. | | Each of BHP Group Limited and BHP Group Plc issued 1 Special Voting share to facilitate joint voting by shareholders of BHP Group Limited and BHP Group Plc on Joint Electorate Actions. There has been 0 movement in these shares. | | Preference shares havecarries the right to repaymentone vote at a meeting of the amount paid up on the nominal value and any unpaid dividends in priority to the holders of any other class of shares in BHP Group Plc on a return of capital or winding up. The holders of preference shares have limited voting rights if payment of the preference dividends are six months or more in arrears or a resolution is passed changing the rights of the preference shareholders. There has been 0 movement in these shares, all of which are held by JP Morgan Limited. |
| | | | | | | | | | The DLC Dividend share supports the Dual Listed Company (DLC) equalisation principles in place since the merger in 2001, including the requirement that ordinary shareholders of BHP Group Plc and BHP Group Limited are paid equal cash dividends per share. This share enables efficient and flexible capital management across the DLC and was issued on 23 February 2016 at par value of US$10. On 16 September 2020 and on 17 March 2021, BHP Group Limited paid dividends of US$1,915 million and US$1,610 million respectively to BHP (AUS) DDS Pty Ltd under the DLC dividend share arrangements. These dividends are eliminated on consolidation.Company. | | Treasury shares are shares of BHP Group Limited and BHP Group Plc andthat are held by the ESOP Trusts for the purpose of issuing shares to employees under the Group’s Employee Share Plans. Treasury shares are recognised at cost and deducted from equity, net of any income tax effects. When the treasury shares are subsequently sold or reissued, any consideration received, net of any directly attributable costs and income tax effects, is recognised as an increase in equity. Any difference between the carrying amount and the consideration, if reissued, is recognised in retained earnings. |
The following classes of shares existed prior to the Group’s unification on 31 January 2022: | | | | | | | | | | | Each of BHP Group Limited and BHP Group Plc issued oneSpecial Voting share to facilitate joint voting by shareholders of BHP Group Limited and BHP Group Plc on Joint Electorate Actions. | | Preference shares have the right to repayment of the amount paid up on the nominal value and any unpaid dividends in priority to the holders of any other class of shares in BHP Group Plc on a return of capital or winding up. The holders of preference shares have limited voting rights if payment of the preference dividends are six months or more in arrears or a resolution is passed changing the rights of the preference shareholders. | | The DLC Dividend share supported the Dual Listed Company (DLC) equalisation principles in place since the merger in 2001, including the requirement that ordinary shareholders of BHP Group Plc and BHP Group Limited are paid equal cash dividends per share. This share enabled efficient and flexible capital management across the DLC and was issued on 23 February 2016 at par value of US$10. |
| | | | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | Recognition and measurement | | | | | | | US$M | | | US$M | | | | | | | | | | | 518 | | | | 518 | | | The share premium account represents the premium paid on the issue of BHP Group Plc shares recognised in accordance with the UK Companies Act 2006. | Foreign currency translation reserve | | | | | | | 39 | | | | 37 | | | The foreign currency translation reserve represents exchange differences arising from the translation of non-US dollar functional currency operations within the Group into US dollars. | Employee share awards reserve | | | | | | | 246 | | | | 213 | | | The employee share awards reserve represents the accrued employee entitlements to share awards that have been charged to the income statement and have not yet been exercised. Once exercised, the difference between the accumulated fair value of the awards and their historical on-market purchase price is recognised in retained earnings. | | | | | | | | 50 | | | | 114 | | | The cash flow hedge reserve represents hedging gains and losses recognised on the effective portion of cash flow hedges. The cumulative deferred gain or loss on the hedge is recognised in the income statement when the hedged transaction impacts the income statement, or is recognised as an adjustment to the cost of non-financial hedged items. The hedging reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge relationship. | | | | | | | | (23 | ) | | | (74 | ) | | The cost of hedging reserve represents the recognition of certain costs of hedging for example, basis adjustments, which have been excluded from the hedging relationship and deferred in other comprehensive income until the hedged transaction impacts the income statement. | Equity investments reserve | | | | | | | 16 | | | | 17 | | | The equity investments reserve represents the revaluation of investments in shares recognised through other comprehensive income. Where a revalued financial asset is sold, the relevant portion of the reserve is transferred to retained earnings. | Capital redemption reserve | | | | | | | 177 | | | | 177 | | | The capital redemption reserve represents the par value of BHP Group Plc shares that were purchased and subsequently cancelled. The cancellation of the shares creates a non-distributable capital redemption reserve. | Non-controlling interest contribution reserve | | | | | | | 1,283 | | | | 1,283 | | | The non-controlling interest contribution reserve represents the excess of consideration received over the book value of net assets attributable to equity instruments when acquired bynon-controlling interests. | | | | | | | | | | | | | | | | | | | | | | | | 2,306 | | | | 2,285 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | Recognition and measurement | | | | | | | | | | | | | | | | | | | | | 518 | | | | 518 | | | The share premium account represented the premium paid on the issue of BHP Group Plc shares recognised in accordance with the UK Companies Act 2006.
It was transferred to the common control reserve as part of the unification of
theGroup’s corporate structure. | Capital redemption reserve | | | | | | | 177 | | | | 177 | | | The capital redemption reserve represented the par value of BHP Group Plc
shares that were purchased and subsequently cancelled. It was transferred to the common control reserve as part of unification of theGroup’s corporate
structure. | | | | | ) | | | – | | | | – | | | The common control reserve arose on unification of the Group’s corporate structure and represents the residual on consolidation between BHP Group
Ltd’s investment in BHP Group Plc’s and BHP Group Plc’s share capital, share premium and capital redemption reserve at the time of unification. | Employee share awards reserve | | | | | | | 268 | | | | 246 | | | The employee share awards reserve represents the accrued employee
entitlements to share awards that have been charged to the income statement
and have not yet been exercised. Once exercised, the difference between the accumulated fair value of the awards and their historical on-market purchase price is recognised in retained earnings. | | | | | | | | 100 | | | | 50 | | | The cash flow hedge reserve represents hedging gains and losses recognised on the effective portion of cash flow hedges. The cumulative deferred gain or loss
on the hedge is recognised in the income statement when the hedged
transaction impacts the income statement, or is recognised as an adjustment to
the cost ofnon-financial hedged items. The hedging reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is
determined to be an effective hedge relationship. | | | | | ) | | | (54 | ) | | | (23 | ) | | The cost of hedging reserve represents the recognition of certain costs of
hedging for example, basis adjustments, which have been excluded from the hedging relationship and deferred in other comprehensive income until the hedged transaction impacts the income statement. | Foreign currency translation reserve | | | | ) | | | 43 | | | | 39 | | | The foreign currency translation reserve represents exchange differences
arising from the translation ofnon-US dollar functional currency operations
within the Group into US dollars. | Equity investments reserve | | | | ) | | | 15 | | | | 16 | | | The equity investment reserve represents the revaluation of investments in
shares recognised through other comprehensive income. Where a revalued financial asset is sold, the relevant portion of the reserve is transferred to
retained earnings. | Non-controlling interest contribution reserve | | | | | | | 1,283 | | | | 1,283 | | | The non-controlling interest contribution reserve represents the excess of consideration received over the book value of net assets attributable to equity instruments when acquired bynon-controlling interests. | | | | | | | | | | | | | | | | | | | | | | | | 2,350 | | | | 2,306 | | | | | | | | | | | | | | | | | | | |
Summarised financial information relating to each of the Group’s subsidiaries with non-controlling interests (NCI) that are material to the Group before any intra-group eliminations is shown below: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | |
| | |
| | | | | | Minera
Escondida
Limitada | | | Other
individually
immaterial
subsidiaries
(incl. intra
-group
eliminations) | | | Total | | | | | | | | | | | | | | | | | 57.5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,432 | | | | | | | | | | | | | | | | | | | | | | | | | 12,121 | | | | | | | | | | | | | | | | | | | | | | | | | (1,614 | ) | | | | | | | | | | | | | | | | | | | | | | | | (4,613 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,326 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net assets attributable to NCI | | | | | | | | | | | | | | | 3,539 | | | | 771 | | | | 4,310 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,719 | | | | | | | | | | | | | | | | | | | | | | | | | 1,088 | | | | | | | | | | Other comprehensive income | | | | | | | | | | | | | | | (27 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive income | | | | | | | | | | | | | | | 1,061 | | | | | | | | | | Profit after taxation attributable to NCI | | | | | | | | | | | | | | | 462 | | | | 318 | | | | 780 | | Other comprehensive income attributable to NCI | | | | | | | – | | | | | | | | (11 | ) | | | – | | | | (11 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,637 | | | | | | | | | | | | | | | | | | | | | | | | | (919 | ) | | | | | | | | | | | | | | | | | | | | | | | | (1,920 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 757 | | | | 286 | | | | 1,043 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | | | | | | Other
individually
immaterial
subsidiaries
(incl. intra | | | | | | Minera
Escondida
Limitada | | | Other
individually
immaterial
subsidiaries
(incl. intra
-group
eliminations) | | | Total | | | | | | | | | | | | | | | | | 57.5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,996 | | | | | | | | | | | | | | | | | | | | | | | | | 11,867 | | | | | | | | | | | | | | ) | | | | | | | | | | | (1,912 | ) | | | | | | | | | | | | | ) | | | | | | | | | | | (4,733 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,218 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net assets attributable to NCI | | | | | | | | | | | | | | | 3,493 | | | | 848 | | | | 4,341 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,470 | | | | | | | | | | | | | | | | | | | | | | | | | 3,605 | | | | | | | | | | Other comprehensive income | | | | | | | | | | | | | | | 27 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total comprehensive income | | | | | | | | | | | | | | | 3,632 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profit after taxation attributable to NCI | | | | | | | | | | | | | | | 1,532 | | | | 615 | | | | 2,147 | | Other comprehensive income attributable to NCI | | | | | | | | | | | | | | | 11 | | | | – | | | | 11 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,007 | | | | | | | | | | | | | | ) | | | | | | | | | | | (655 | ) | | | | | | | | | | | | | ) | | | | | | | | | | | (4,001 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,590 | | | | 537 | | | | 2,127 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
While the Group controls Minera Escondida Limitada, the non-controlling interests hold certain protective rights that restrict the Group’s ability to sell assets held by Minera Escondida Limitada, or use the assets in other subsidiaries and operations owned by the Group. Minera Escondida Limitada is also restricted from paying dividends without the approval of the non-controlling interests.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year ended
30 June 2020 | | | Year ended
30 June 2019 | | | | | | | | | | | Per share | | | Total | | | Per share | | | Total | | | | | | | | | | | US cents | | | US$M | | | US cents | | | US$M | | Dividends paid during the period (1) | | | | | | | | | | | | | | | | | | | | | | | | | Prior year final dividend | | | | | | | | | | | 78 | | | | 3,946 | | | | 63 | | | | 3,356 | | | | | | | | | | | | | 65 | | | | 3,288 | | | | 55 | | | | 2,788 | | | | | – | | | | – | | | | – | | | | – | | | | 102 | | | | 5,158 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 143 | | | | 7,234 | | | | 220 | | | | 11,302 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year ended
30 June 2021 | | | Year ended
30 June 2020 | | | | | | | | | | | Per share | | | Total | | | Per share | | | Total | | | | | | | | | | | US cents | | | US$M | | | US cents | | | US$M | | Dividends paid during the period 1 | | | | | | | | | | | | | | | | | | | | | | | | | Prior year final dividend | | | | | | | | | | | 55 | | | | 2,779 | | | | 78 | | | | 3,946 | | | | | | | | | | | | | 101 | | | | 5,115 | | | | 65 | | | | 3,288 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 156 | | | | 7,894 | | | | 143 | | | | 7,234 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | 5.5 per cent dividend on 50,000 preference shares of £1 each determined and paid annually (2020: 5.5 per cent; 2019: 5.5 per cent).for financial years 2021 and 2020. No dividend paid for the financial year 2022. These preference shares were cancelled on 31 January 2022. |
Dividends paid during the period differs from the amount of dividends paid in the Consolidated Cash Flow Statement as a result of foreign exchange gains and losses relating to the timing of equity distributions between the record date and the payment date. Additional derivative proceeds of US$ 8127 million were received as part of the funding of the interim dividend and is disclosed in (Settlements)/proceedsProceeds/(settlements) of cash management related instruments in the Consolidated Cash Flow Statement. ThePrior to the corporate structure unification, the Dual Listed Company merger terms requirerequired that ordinary shareholders of BHP Group Limited and BHP Group Plc arewere paid equal cash dividends on a per share basis. Each American Depositary Share (ADS) represents 2two ordinary shares of BHP Group Limited or BHP Group Plc.Limited. Dividends determined on each ADS represent twice the dividend determined on BHP Group Limited or BHP Group Plc ordinary shares.share. Dividends are determined after period-end and announced with the results for the period. Interim dividends are determined in February and paid in March. Final dividends are determined in August and paid in September. Dividends determined are not recorded as a liability at the end of the period to which they relate. Subsequent to year-end, on 1716 August 2021,2022, BHP Group Limited and BHP Group Plc determined a final dividend of 175 US cents per share (US$8,857 million), which will be paid on22 September 2022 (30 June 2021: final dividend of 200 US cents per share (US$– US$10,114 million), which will be paid on 21 September 2021 (30million; 30 June 2020: final dividend of 55 US cents per share – US$2,782 million; 30 June 2019: final dividend of 78 US cents per share – US$3,944 million). BHP Group Limited dividends for all periods presented are, or will be, fully franked based on a tax rate of 30 per cent. | | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | Franking credits as at 30 June | | | | | | | 10,980 | | | | 8,681 | | Franking credits arising from the payment of current tax | | | | | | | 471 | | | | 1,194 | | | | | | | | | | | | | | | | Total franking credits available (1) | | | | | | | 11,451 | | | | 9,875 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | | | | | | Franking credits as at 30 June | | | | | | | 14,302 | | | | 10,980 | | Franking credits arising from the payment of current tax | | | | | | | 1,799 | | | | 471 | | | | | | | | | | | | | | | | Total franking credits available 1 | | | | | | | 16,101 | | | | 11,451 | | | | | | | | | | | | | | | |
(1) | The payment of the final 20212022 dividend determined after 30 June 20212022 will reduce the franking account balance by US$2,5253,796 million. |
In addition to dividends paid, the Group made an in specie dividend to eligible BHP shareholders during the period by distributing the 914,768,948 Woodside shares it received as consideration for the sale of BHP Petroleum. The closing price of Woodside shares on ASX on 31 May 2022 was A$29.76. The implied value of the in specie dividend was therefore A$27.2 billion (US$19.6 billion). At this valuation, the in specie dividend was approximately A$5.38 (US$3.86), with A$2.30 (US$1.66) of franking credits being distributed, per BHP share. Further detail are detailed in note 27 ‘Discontinued operations’. 19 Provisions for dividends and other liabilities The disclosure below excludes closure and rehabilitation provisions (refer to note 15 ‘Closure and rehabilitation provisions’), employee benefits, restructuring and post-retirement employee benefits provisions (refer to note 26 ‘Employee benefits, restructuring and post-retirement employee benefits provisions’) and provisions related to the Samarco dam failure (refer to note 4 ‘Significant events – Samarco dam failure’). | | | | | | | | | | | | | | | 2020 | | | | | | | | US$M | | Movement in provision for dividends and other liabilities | | | | | | | | | At the beginning of the financial year | | | | | | | 501 | | | | | | | | | 7,234 | | Charge/(credit) for the year: | | | | | | | | | | | | | | | | 1,027 | | | | | | | | | 3 | | | | | | | | | (356 | ) | | | | | | | | (94 | ) | | | | | | | | (99 | ) | | | | | | | | (6,876 | ) | Transfers and other movements | | | | | | | (100 | ) | | | | | | | | | | | At the end of the financial year | | | | | | | 1,240 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 258 | | | | | | | | | 982 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2021 | | | | | | | | | | Movement in provision for dividends and other liabilities | | | | | | | | | At the beginning of the financial year | | | | | | | 1,240 | | | | | | | | | 7,894 | | Charge/(credit) for the year: | | | | | | | | | | | | | | | | 260 | | | | | | | | | 2 | | | | | | | | | 20 | | | | | | ) | | | (43 | ) | | | | | ) | | | (267 | ) | | | | | ) | | | (7,901 | ) | Divestment and demerger of subsidiaries and operations | | | | ) | | | – | | Transfers and other movements | | | | ) | | | (624 | ) | | | | | | | | | | | At the end of the financial year | | | | | | | 581 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 293 | | | | | | | | | 288 | | | | | | | | | | | |
The Group seeks to maintain a strong balance sheet and deploys its capital with reference to the Capital Allocation Framework. The Group monitors capital using the net debt balance and the gearing ratio, being the ratio of net debt to net debt plus net assets. The net debt definition includes the fair value of derivative financial instruments used to hedge cash and borrowings which reflects the Group’s risk management strategy of reducing the volatility of net debt caused by fluctuations in foreign exchange and interest rates. VesselUnder IFRS 16/AASB16 ‘Leases’, vessel lease contracts under IFRS 16 are required to be remeasured at each reporting date to the prevailing freight index. While these liabilities are included in the Group interest bearing liabilities, they are excluded from the net debt calculation as they do not align with how the Group assesses net debt for decision making in relation to the Capital Allocation Framework. In addition, the freight index has historically been volatile which creates significant short-term fluctuation in these liabilities. | | | | | | | | | | | | | | | | | | | | | | | 2020
Restated | | | | | | | | | | Current | | | Non-current | | Interest bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | 737 | | | | 1,755 | | | | | | | | | | | | | 3,354 | | | | 17,691 | | | | | | | | | | | | | 853 | | | | 2,590 | | Bank overdraft and short-term borrowings | | | | | | | | | | | – | | | | – | | | | | | | | | | | | | 68 | | | | – | | | | | | | | | | | | | | | | | | | | Total interest bearing liabilities | | | | | | | | | | | 5,012 | | | | 22,036 | | | | | | | | | | | | | | | | | | | | Less: Lease liability associated with index-linked freight contracts | | | | | | | | | | | 379 | | | | 781 | | | | | | | | | | | | | | | | | | | | Less: Cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,493 | | | | – | | | | | | | | | | | | | 9,933 | | | | – | | | | | | | | | | | | | | | | | | | | Less: Total cash and cash equivalents | | | | | | | | | | | 13,426 | | | | – | | | | | | | | | | | | | | | | | | | | Less: Derivatives included in net debt | | | | | | | | | | | | | | | | | Net debt management related instruments (1) | | | | | | | | | | | (162 | ) | | | 595 | | Net cash management related instruments (2) | | | | | | | | | | | (15 | ) | | | – | | | | | | | | | | | | | | | | | | | | Less: Total derivatives included in net debt | | | | | | | | | | | (177 | ) | | | 595 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 12,044 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 52,175 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 18.8 | % | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | 2021 | | | | | | | | | | Current | | | | | Interest bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | 437 | | | | 1,823 | | | | | | | | | | | | | 1,244 | | | | 13,525 | | | | | | | | | | | | | 889 | | | | 3,007 | | Bank overdraft and short-term borrowings | | | | | | | | | | | – | | | | – | | | | | | | | | | | | | 58 | | | | – | | | | | | | | | | | | | | | | | | | | Total interest bearing liabilities | | | | | | | | | | | 2,628 | | | | 18,355 | | | | | | | | | | | | | | | | | | | | Less: Lease liability associated with index-linked freight contracts | | | | | | | | | | | 346 | | | | 679 | | | | | | | | | | | | | | | | | | | | Less: Cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,408 | | | | – | | | | | | | | | | | | | 10,838 | | | | – | | | | | | | | | | | | | | | | | | | | Less: Total cash and cash equivalents | | | | | | | | | | | 15,246 | | | | – | | | | | | | | | | | | | | | | | | | | Less: Derivatives included in net debt | | | | | | | | | | | | | | | | | Net debt management related instruments 1 | | | | ) | | | | ) | | | 20 | | | | 537 | | Net cash management related instruments 2 | | | | | | | | | | | 34 | | | | – | | | | | | | | | | | | | | | | | | | | Less: Total derivatives included in net debt | | | | ) | | | | ) | | | 54 | | | | 537 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,121 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 55,605 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6.9 | % | | | | | | | | | | | | | | | | | | |
(1) | Represents the net cross currency and interest rate swaps designated as effective hedging instruments included within current and non-current other financial assets and liabilities. |
(2) | Represents the net forward exchange contracts included within current and non-current other financial assets and liabilities. |
(3) | 30 June 2020 net assets have been restated to reflect changes to the Group’s accounting policy following a decision by the IFRS Interpretations Committee on IAS 12 ‘Income Taxes’ resulting in a retrospective decrease of US$71 million. Refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’.
|
Cash and short-term deposits are disclosed in the cash flow statement net of bank overdrafts and interest bearing liabilities at call.
| | | | | | | 2020 | | | 2019 | | | | | | 2021 | | | 2020 | | | | | | | | US$M | | | US$M | | | | | | US$M | | | US$M | | Total cash and cash equivalents | | | | | | | 13,426 | | | | 15,613 | | | | | | | | 15,246 | | | | 13,426 | | Bank overdrafts and short-term borrowings | | | | | | | – | | | | (20 | ) | | | | | | | – | | | | – | | | | | | | | | | | | | | | | | | | | | | Total cash and cash equivalents, net of overdrafts | | | | | | | 13,426 | | | | 15,593 | | | | | | | | 15,246 | | | | 13,426 | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents includes US$127 million (2021: US$159 million) restricted by legal or contractual arrangements. Recognition and measurement Cash and short-term deposits in the balance sheet comprise cash at bank and on hand and highly liquid cash deposits with short-term maturities that are readily convertible to known amounts of cash with insignificant risk of change in value. The Group considers that the carrying value of cash and cash equivalents approximate fair value due to their short termshort-term to maturity. Refer to note 21 ‘Leases’ and note 23 ‘Financial risk management’ for the recognition and measurement principles for lease liabilities and other financial liabilities. Cash and cash equivalents includes US$159 million (2020: US$96 million) restricted by legal or contractual arrangements.
Interest bearing liabilities and cash and cash equivalents include balances denominated in the following currencies: | | | | | | | | | | | | | | | | | | | | Interest bearing liabilities | | | Cash and cash equivalents | | | | | | | | 2020 | | | | | | 2020 | | | | | | | | US$M | | | | | | US$M | | | | | | | | | 14,625 | | | | | | | | 9,555 | | | | | | | | | 7,323 | | | | | | | | 4 | | | | | | | | | 3,272 | | | | | | | | 519 | | | | | | | | | 1,055 | | | | | | | | 1,011 | | | | | | | | | 597 | | | | | | | | 2,131 | | | | | | | | | 176 | | | | | | | | 206 | | | | | | | | | | | | | | | | | | | | | | | | | | | 27,048 | | | | | | | | 13,426 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | Interest bearing liabilities | | | Cash and cash equivalents | | | | | | | | 2021 | | | | | | 2021 | | | | | | | | US$M | | | | | | US$M | | | | | | | | | 11,146 | | | | | | | | 12,003 | | | | | | | | | 4,505 | | | | | | | | 4 | | | | | | | | | 3,415 | | | | | | | | 32 | | | | | | | | | 1,053 | | | | | | | | 573 | | | | | | | | | 635 | | | | | | | | 2,455 | | | | | | | | | 229 | | | | | | | | 179 | | | | | | | | | | | | | | | | | | | | | | | | | | | 20,983 | | | | | | | | 15,246 | | | | | | | | | | | | | | | | | | | |
The Group enters into derivative transactions to convert the majority of its exposures above into US dollars. Further information on the Group’s risk management activities relating to these balances is provided in note 23 ‘Financial risk management’. The Group’s liquidity risk arises from the possibility that it may not be able to settle or meet its obligations as they fall due and is managed as part of the portfolio risk management strategy. Operational, capital and regulatory requirements are considered in the management of liquidity risk, in conjunction with short-term and long-term forecast information. Recognising the cyclical volatility of operating cash flows, the Group has defined minimum target cash and liquidity buffers to be maintained to mitigate liquidity risk and support operations through the cycle. The Group’s strong credit profile, diversified funding sources, its minimum cash buffer and its committed credit facilities ensure that sufficient liquid funds are maintained to meet its daily cash requirements. The Group’s Moody’s credit rating has remained at A2/P-1 outlook stable (long-term/short-term) throughout FY2021.FY2022 and Moody’s affirmed its credit rating on 31 May 2021.2 June 2022. The Group’s Standard & Poor’s rating changed from A/A-1 outlook stable (long-term/short-term) to A/A-1 CreditWatch negative (long-term/short-term) on 23 August 2021.2021 following the announcement of the proposed merger of our petroleum business with Woodside. Upon completion of the merger, on 1 June 2022 Standard & Poor’s lowered the Group’s long-term credit rating by one notch, removed the credit rating from CreditWatch, and confirmed a credit rating of A-/A-1 outlook stable (long-term/short-term).There were 0no defaults on the Group’s liabilities during the period. The Group is exposed to credit risk from its financing activities, including short-term cash investments such as deposits with banks and derivative contracts. This risk is managed by Group Treasury in line with the counterparty risk framework, which aims to minimise the exposure to a counterparty and mitigate the risk of financial loss through counterparty failure. Exposure to counterparties is monitored at a Group level across all products and includes exposure with derivatives and cash investments. Investments and derivatives are only transacted with approved counterparties who have been assigned specific limits based on a quantitative credit risk model. These limits are updated at least bi-annually. Additionally, derivatives are subject to tenor limits and investments are subject to concentration limits by rating. Derivative fair values are inclusive of valuation adjustments that take into account both the counterparty and the Group’s risk of default. Standby arrangements and unused credit facilities The Group’s committed revolving credit facility operates as a back-stop to the Group’s uncommitted commercial paper program. The combined amount drawn under the facility or as commercial paper will not exceed US$5.5 billion. As at 30 June 2021,2022, US$ NaNnil commercial paper was drawn (2020:(2021: US$ NaN)nil). During the year, the Group completed a one-year extension to theThe facility which was amended in November 2021 for IBOR transition and is now due to mature on 10 October 20252026. A commitment fee is payable on the undrawn balance and an interest rateis payable on any drawn balance comprising an interbanka reference rate plus a margin applies to any drawn balance.margin. The agreed margins are typical for a credit facility extended to a company with the Group’s credit rating.
Maturity profile of financial liabilities The maturity profile of the Group’s financial liabilities based on the undiscounted contractual amounts, taking into account the derivatives related to debt, is as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| | |
| | |
| | |
| | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In one year or less or on demand | | | 1,722 | | | | 729 | | | | 61 | | | | 149 | | | | 980 | | | | 6,851 | | | | 10,492 | | In more than one year but not more than two years | | | 2,278 | | | | 661 | | | | 267 | | | | 80 | | | | 680 | | | | – | | | | 3,966 | | In more than two years but not more than five years | | | 4,062 | | | | 1,492 | | | | 256 | | | | 240 | | | | 1,397 | | | | – | | | | 7,447 | | | | | 7,801 | | | | 4,136 | | | | 585 | | | | 317 | | | | 1,842 | | | | – | | | | 14,681 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,863 | | | | 7,018 | | | | 1,169 | | | | 786 | | | | 4,899 | | | | 6,851 | | | | 36,586 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,087 | | | | – | | | | 586 | | | | 690 | | | | 3,896 | | | | 6,851 | | | | 29,110 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Bank loans,
debentures and
other loans | | | Expected
future
interest
payments | | | Derivatives
related to
debentures | | | Other
derivatives | | | Obligations
under
lease
liabilities | | | Trade and
other
payables (1) | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In one year or less or on demand | | | 4,138 | | | | 813 | | | | 260 | | | | 60 | | | | 927 | | | | 5,622 | | | | 11,820 | | In more than one year but not more than two years | | | 1,665 | | | | 702 | | | | 81 | | | | – | | | | 630 | | | | 1 | | | | 3,079 | | In more than two years but not more than five years | | | 5,727 | | | | 1,713 | | | | 819 | | | | – | | | | 1,335 | | | | – | | | | 9,594 | | | | | 10,101 | | | | 4,368 | | | | 974 | | | | – | | | | 1,043 | | | | – | | | | 16,486 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 21,631 | | | | 7,596 | | | | 2,134 | | | | 60 | | | | 3,935 | | | | 5,623 | | | | 40,979 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 23,605 | | | | – | | | | 1,579 | | | | 60 | | | | 3,443 | | | | 5,623 | | | | 34,310 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In one year or less or on demand | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In more than one year but not more than two years | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In more than two years but not more than five years | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Bank loans,
debentures and
other loans | | | Expected
future
interest
payments | | | Derivatives
related to
debentures | | | Other
derivatives | | | Obligations
under
lease
liabilities | | | | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | In one year or less or on demand | | | 1,722 | | | | 729 | | | | 61 | | | | 149 | | | | 980 | | | | 6,851 | | | | 10,492 | | In more than one year but not more than two years | | | 2,278 | | | | 661 | | | | 267 | | | | 80 | | | | 680 | | | | – | | | | 3,966 | | In more than two years but not more than five years | | | 4,062 | | | | 1,492 | | | | 256 | | | | 240 | | | | 1,397 | | | | – | | | | 7,447 | | | | | 7,801 | | | | 4,136 | | | | 585 | | | | 317 | | | | 1,842 | | | | – | | | | 14,681 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,863 | | | | 7,018 | | | | 1,169 | | | | 786 | | | | 4,899 | | | | 6,851 | | | | 36,586 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,087 | | | | – | | | | 586 | | | | 690 | | | | 3,896 | | | | 6,851 | | | | 29,110 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Excludes input taxes of US$17679 million (2020:(2021: US$145176 million) included in other payables. Refer to note 9 ‘Trade and other payables’. |
Movements in the Group’s lease liabilities during the year are as follows: | | | | | | | | | | | | | | | | 2020 | | | | | | | | US$M | | At the beginning of the financial year (1) | | | | | | | 715 | | | | | – | | | | 2,301 | | | | | | | | | 436 | | Remeasurements of index-linked freight contracts | | | | | | | 733 | | | | | | | | | (761 | ) | Foreign exchange movement | | | | | | | (43 | ) | Amortisation of discounting | | | | | | | 90 | | Transfers and other movements | | | | | | | (28 | ) | | | | | | | | | | | At the end of the financial year | | | | | | | 3,443 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 853 | | | | | | | | | 2,590 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2021 | | | | | | | | US$M | | At the beginning of the financial year | | | | | | | 3,443 | | | | | | | | | 1,223 | | Remeasurements of index-linked freight contracts | | | | ) | | | (59 | ) | | | | | ) | | | (879 | ) | Foreign exchange movement | | | | ) | | | 115 | | Amortisation of discounting | | | | | | | 109 | | Divestment and demerger of subsidiaries and operations 2 | | | | ) | | | – | | Transfers and other movements | | | | ) | | | (56 | ) | | | | | | | | | | | At the end of the financial year | | | | | | | 3,896 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 889 | | | | | | | | | 3,007 | | | | | | | | | | | |
(1) | Lease liability at the beginning of FY2020 relatesIncludes US$39 million (2021: US$45 million) related to existing finance leases under IAS 17/AASB 117 ‘Leases’ (IAS 17) at 1 July 2019.Discontinued operations. |
| Relates to the divestment of BMC and merger of Petroleum with Woodside. Refer to notes 3 ‘Exceptional items’ and 27 ‘Discontinued operations’ for more information. |
A significant proportion by value of the Group’s lease contracts relate to plant facilities, office buildings and vessels. Lease terms for plant facilities and office buildings typically run for over 10 years and vessels for four to 10 years. Other leases include port facilities, various equipment and vehicles. The lease contracts contain a wide range of different terms and conditions including extension and termination options and variable lease payments. The Group’s lease obligations are included in the Group’s Interest bearing liabilities and, with the exception of vessel lease contracts that are priced with reference to a freight index, form part of the Group’s net debt.
The maturity profile of lease liabilities based on the undiscounted contractual amounts is as follows: | | | | | | | | | | | | | | | 2020 | | | | | | | | US$M | | | | | | | | | | | In one year or less or on demand | | | | | | | 927 | | In more than one year but not more than two years | | | | | | | 630 | | In more than two years but not more than five years | | | | | | | 1,335 | | In more than five years (1) | | | | | | | 1,043 | | | | | | | | | | | | | | | | | | | 3,935 | | | | | | | | | | | | | | | | | | | 3,443 | | | | | | | | | | | |
| | | | | | | | | | | | | | 2021 | | | | | | | | US$M | | | | | | | | | | | In one year or less or on demand | | | | | | | 980 | | In more than one year but not more than two years | | | | | | | 680 | | In more than two years but not more than five years | | | | | | | 1,397 | | | | | | | | | 1,842 | | | | | | | | | | | | | | | | | | | 4,899 | | | | | | | | | | | | | | | | | | | 3,896 | | | | | | | | | | | |
(1) | IncludeIncludes US$707 million (2021: US$878 million (2020: US$302 million) due for payment in more than ten years. |
At 30 June 2021,2022, commitments for leases not yet commenced based on undiscounted contractual amounts were US$457928 million (2020:(2021: US$1,458 million); and commitments relating to short-term leases were US$171 million (2020: US$103457 million). Movements in the Group’s assets during the year are as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | | |
| | |
| | | | | | Land and
buildings | | | Plant and
equipment | | | Total | | | | | | | | | | | | | | US$M | | | US$M | | | US$M | | | | | | | | | | | | | | | | | | | | | | | | | | | At the beginning of the financial year (1) | | | | | | | | | | | | | | | – | | | | 492 | | | | 492 | | Assets recognised on adoption of IFRS 16 | | | – | | | | | | | | | | | | 754 | | | | 1,400 | | | | 2,154 | | | | | | | | | | | | | | | | | 104 | | | | 332 | | | | 436 | | Remeasurements of index-linked freight contract s | | | | | | | | | | | | | | | – | | | | 733 | | | | 733 | | Depreciation expensed during the period | | | | | | | | | | | | | | | (113 | ) | | | (543 | ) | | | (656 | ) | Depreciation classified as exploration | | | | | | | | | | | | | | | – | | | | (34 | ) | | | (34 | ) | | | | | | | | | | | | | | | | (2 | ) | | | (22 | ) | | | (24 | ) | Transfers and other movements | | | | | | | | | | | | | | | (54 | ) | | | – | | | | (54 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | 689 | | | | 2,358 | | | | 3,047 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 804 | | | | 3,349 | | | | 4,153 | | – Accumulated depreciation and impairments | | | | | | | | | | | | | | | (115 | ) | | | (991 | ) | | | (1,106 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | | | | | | | | | | | | | Land and
buildings | | | Plant and
equipment | | | Total | | | | | | | | | | | | | | US$M | | | US$M | | | US$M | | | | | | | | | | | | | | | | | | | | | | | | | | | At the beginning of the financial year | | | | | | | | | | | | | | | 689 | | | | 2,358 | | | | 3,047 | | | | | | | | | | | | | | | | | 25 | | | | 1,227 | | | | 1,252 | | Remeasurements of index-linked freight contracts | | | | | | | | ) | | | | ) | | | – | | | | (59 | ) | | | (59 | ) | Depreciation expensed during the period | | | | ) | | | | ) | | | | ) | | | (111 | ) | | | (670 | ) | | | (781 | ) | Depreciation classified as exploration | | | | | | | | ) | | | | ) | | | – | | | | (19 | ) | | | (19 | ) | | | | | ) | | | | | | | | ) | | | (30 | ) | | | (2 | ) | | | (32 | ) | Divestment and demerger of subsidiaries and operations | | | | ) | | | | ) | | | | ) | | | – | | | | – | | | | – | | Transfers and other movements | | | | ) | | | | ) | | | | ) | | | 65 | | | | (123 | ) | | | (58 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | 638 | | | | 2,712 | | | | 3,350 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 897 | | | | 4,393 | | | | 5,290 | | – Accumulated depreciation and impairments | | | | ) | | | | ) | | | | ) | | | (259 | ) | | | (1,681 | ) | | | (1,940 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Right-of-use assets atRelates to the beginningdivestment of FY2020 relatesBMC and merger of Petroleum with Woodside. Refer to assets previously held under finance leases under IAS 17 at 1 July 2019.notes 3 ‘Exceptional items’ and 27 ‘Discontinued operations’ for more information.
|
assets are included within the underlying asset classes in Property, plant and equipment. Refer to note 11 ‘Property, plant and equipment’.
Amounts recorded in the income statement and the cash flow statement for the year were: | | | | | | | | | | | | | | | | | 2020 | | | | | | | | | | US$M | | | | | | | | | | | | | | | | | | | | | | 656 | | | Profit from operations | Short-term, low-value and variable lease costs (1) | | | | | | | 675 | | | Profit from operations | Interest on lease liabilities | | | | | | | 90 | | | Financial expenses | | | | | | | | | | | | | | | | | | | 671 | | | Cash flows from financing activities | | | | | | | | 90 | | | Cash flows from operating activities |
| | | | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 753 | | | | 623 | | | Profit from operations | Short-term, low-value and variable lease costs | | | | | | | 834 | | | | 637 | | | Profit from operations | Interest on lease liabilities | | | | | | | 102 | | | | 82 | | | Financial expenses | | | | | | | | | | | | | | | | | | | | | | | 732 | | | | 632 | | | Cash flows from financing activities | | | | | | | | 102 | | | | 82 | | | Cash flows from operating activities |
(1) | Relates to US$ 546585 million of variable lease costs (2020:(2021: US$ 438510 million; 2020: US$415 million), US$ 316222 million of short-term lease costs (2020:(2021: US$ 211294 million; 2020: US$201 million) and US$ 3340 million of low-value lease costs (2020:(2021: US$ 2630 million; 2020: US$21 million). Variable lease costs include contracts for hire of mining service equipment, drill rigs and transportation services. These contracts contain variable lease payments based on usage and asset performance. |
Recognition and measurement All leases with the exception of short-term (under 12 months) and low-value leases are recognised on the balance sheet, as a asset and a corresponding interest bearing liability. Lease liabilities are initially measured at the present value of the future lease payments from the lease commencement date and are subsequently adjusted to reflect the interest on lease liabilities, lease payments and any remeasurements due to, for example, lease modifications or a change to future lease payments linked to an index or rate. Lease payments are discounted using the interest rate implicit in the lease, where this is readily determinable. Where the implicit interest rate is not readily determinable, the interest payments are discounted at the Group’s incremental borrowing rate, adjusted to reflect factors specific to the lease, including where relevant the currency, tenor and location of the lease. In addition to containing a lease, the Group’s contractual arrangements may include non-lease components. For example, certain mining services arrangements involve the provision of additional services, including maintenance, drilling activities and the supply of personnel. The Group has elected to separate these non-lease components from the lease components in measuring lease liabilities. Non-lease components are accounted for in accordance with the accounting policies applied to each underlying good or service received.Low-value and short-term leases continue to be expensed to the income statement. Variable lease payments not dependent on an index or rate are excluded from lease liabilities, and expensed to the income statement. assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost will initially correspond to the lease liability, adjusted for initial direct costs, lease payments made prior to lease commencement, capitalised provisions for closure and rehabilitation and any lease incentives.incentives received.The lease asset and liability associated with all index-linked freight contracts, including continuous voyage charters (CVCs), are measured at each reporting date based on the prevailing freight index (generally the Baltic C5 index). Lease costs are recognised in the income statement over the lease term in the form of depreciation on the asset and the unwinding of finance charges representing the unwind of the discount on the lease liability. Lease costs for the year ended 30 June 2019 represent operating lease expenses previously reported under IAS 17.Where the Group is the operator of an unincorporated joint operation and all investors are parties to a lease, the Group recognises its proportionate share of the lease liability and associated asset. In the event the Group is the sole signatory to a lease, and therefore has the sole legal obligation to make lease payments, the lease liability is recognised in full. Where the associated asset is sub-leased (under a finance sub-lease) to a joint operation, for instance where it is dedicated to a single operation and the joint operation has the right to direct the use of the asset, the Group (as lessor) recognises its proportionate share of the asset and a net investment in the lease, representing amounts to be recovered from the other parties to the joint operation. If the Group is not party to the head lease contract but sub-leases the associated asset (as lessee), it recognises its proportionate share of the asset and a lease liability which is payable to the operator. | Key judgements and estimates Certain contractual arrangements not in the form of a lease require the Group to apply significant judgement in evaluating whether the Group controls the right to direct the use of assets and therefore whether the contract contains a lease. Management considers all facts and circumstances in determining whether the Group or the supplier has the rights to direct how, and for what purpose, the underlying assets are used in certain mining contracts and other arrangements, including outsourcing arrangements,and shipping arrangements and power purchase agreements.arrangements. Judgement is used to assess which decision-making rights mostly affect the benefits of use of the assets for each arrangement. | | | Where a contract includes the provision of non-lease services, judgement is required to identify the lease and non-lease components. | | | Where the Group cannot readily determine the interest rate implicit in the lease, estimation is involved in the determination of the weighted average incremental borrowing rate to measure lease liabilities. The incremental borrowing rate reflects the rates of interest a lessee would have to pay to borrow over a similar term, with similar security, the funds necessary to obtain an asset of similar value to the asset in a similar economic environment. Under the Group’s portfolio approach to debt management, the Group does not specifically borrow for asset purchases. Therefore, the incremental borrowing rate is estimated with reference toreferencing the Group’s corporate borrowing portfolio and other similar rated entities, adjusted to reflect the terms and conditions of the lease (including the impact of currency, credit rating of subsidiary entering into the lease and the term of the lease), at the inception of the lease arrangement or the time of lease modification. | | | The Group estimates stand-alone prices, where such prices are not readily observable, in order to allocate the contractual payments between lease and non-lease components. |
| | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | | | | | | | | | | | | | | Interest expense using the effective interest rate method: | | | | | | | | | | | | | Interest on bank loans, overdrafts and all other borrowings | | | | | | | 1,099 | | | | 1,296 | | Interest capitalised at 2.83% (2020: 4.14%; 2019: 4.96%) (1) | | | | | | | (308 | ) | | | (248 | ) | Interest on lease liabilities | | | | | | | 90 | | | | 47 | | Discounting on provisions and other liabilities | | | | | | | 452 | | | | 470 | | | | | | | | | | | | | | | Fair value change on hedged loans | | | | | | | 721 | | | | 729 | | Fair value change on hedging derivatives | | | | | | | (788 | ) | | | (809 | ) | Loss on bond repurchase (2) | | | | | | | – | | | | – | | Exchange variations on net debt | | | | | | | (18 | ) | | | 6 | | | | | | | | | 14 | | | | 19 | | | | | | | | | | | | | | | | | | | | | | | 1,262 | | | | 1,510 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (351 | ) | | | (446 | ) | | | | | | | | | | | | | | | | | | | | | | 911 | | | | 1,064 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | Interest expense using the effective interest rate method: | | | | | | | | | | | | | Interest on bank loans, overdrafts and all other borrowings | | | | | | | 607 | | | | 1,093 | | Interest capitalised at 2.90% (2021: 2.83%; 2020: 4.14%) | | | | ) | | | (204 | ) | | | (265 | ) | Interest on lease liabilities | | | | | | | 102 | | | | 82 | | Discounting on provisions and other liabilities | | | | | | | 353 | | | | 343 | | | | | | | | | | | | | | | Fair value change on hedged loans | | | | ) | | | (779 | ) | | | 721 | | Fair value change on hedging derivatives | | | | | | | 704 | | | | (788 | ) | | | | | | | | 395 | | | | – | | Exchange variations on net debt | | | | ) | | | 99 | | | | (18 | ) | | | | | | | | 13 | | | | 24 | | | | | | | | | | | | | | | | | | | | | | | 1,290 | | | | 1,192 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | (67 | ) | | | (334 | ) | | | | | | | | | | | | | | | | | | | | | | 1,223 | | | | 858 | | | | | | | | | | | | | | | |
(1) 1 | Interest has been capitalised at the rate of interest applicable to the specific borrowings financing the assets under construction or, where financed through general borrowings, at a capitalisation rate representing the average interest rate on such borrowings. Tax relief for capitalised interest is approximately US$7434 million (2020:(2021: US$9261 million; 2019:2020: US$7480 million). |
(2) 2 | Relates to the additional cost on settlement of 2two multi-currency hybrid debt repurchase programs and the unwind of the associated hedges, included in a total cash payment of US$3,402 million disclosed in repayment of interest bearing liabilities in the Consolidated Cash Flow Statement. |
Recognition and measurement Interest income is accrued using the effective interest rate method. Finance costs are expensed as incurred, except where they relate to the financing of construction or development of qualifying
23 Financial risk management Financial and capital risk management strategy The financial risks arising from the Group’s operations comprise market, liquidity and credit risk. These risks arise in the normal course of business and the Group manages its exposure to them in accordance with the Group’s portfolio risk management strategy. The objective of the strategy is to support the delivery of the Group’s financial targets, while protecting its future financial security and flexibility by taking advantage of the natural diversification provided by the scale, diversity and flexibility of the Group’s operations and activities. As part of the risk management strategy, the Group monitors target gearing levels and credit rating metrics under a range of different stress test scenarios incorporating operational and macroeconomic factors (refer to 1.16 ‘Robust risk assessment and viability statement’).factors. The Group’s activities expose it to market risks associated with movements in interest rates, foreign currencies and commodity prices. Under the strategy outlined above, the Group seeks to achieve financing costs, currency impacts, input costs and commodity prices on a floating or index basis. This strategy gives rise to a risk of variability in earnings, which is measured under the Cash Flow at Risk (CFaR) framework. In executing the strategy, financial instruments are potentially employed in three distinct but related activities. The following table summarises these activities and the key risk management processes: | | | | | Key risk management processes | | | On an exception basis, hedging for the purposes of mitigating risk related to specific and significant expenditure on investments or capital projects will be executed if necessary to support the Group’s strategic objectives. | | Execution of transactions within approved mandates. | | | 2 Economic hedging of commodity sales, operating costs, short-term cash deposits, other monetary items and debt instruments | | | | | | Where Group commodity production is sold to customers on pricing terms that deviate from the relevant index target and where a relevant derivatives market exists, financial instruments may be executed as an economic hedge to align the revenue price exposure with the index target and US dollars. | | Measuring and reporting the exposure in customer commodity contracts and issued debt instruments. | | | | Where debt is issued in a currency other than the US dollar and/or at a fixed interest rate, fair value and cash flow hedges may be executed to align the debt exposure with the Group’s functional currency of US dollars and/or to swap to a floating interest rate. | | Executing hedging derivatives to align the total group exposure to the index target. | | | | Where short-term cash deposits and other monetary items are denominated in a currency other than US dollars, derivative financial instruments may be executed to align the foreign exchange exposure to the Group’s functional currency of US dollars. | | Execution of transactions within approved mandates. | | | 3 Strategic financial transactions | | | | | | Opportunistic transactions may be executed with financial instruments to capture value from perceived market over/under valuations. | | Execution of transactions within approved mandates. |
Primary responsibility for the identification and control of financial risks, including authorising and monitoring the use of financial instruments for the above activities and stipulating policy thereon, rests with the Financial Risk Management Committee under authority delegated by the Chief Executive Officer. The Group is exposed to interest rate risk on its outstanding borrowings and short-term cash deposits from the possibility that changes in interest rates will affect future cash flows or the fair value of fixed interest rate financial instruments. Interest rate risk is managed as part of the portfolio risk management strategy. The majority of the Group’s debt is issued at fixed interest rates. The Group has entered into interest rate swaps and cross currency interest rate swaps to convert most of its fixed interest rate exposure to floating US dollar interest rate exposure. As at 30 June 2021, 82 2022,80 per cent of the Group’s borrowings were exposed to floating interest rates inclusive of the effect of swaps (2020: 87(2021: 82 per cent).
The fair value of interest rate swaps and cross currency interest rate swaps in hedge relationships used to hedge both interest rate and foreign currency risks are shown in the valuation hierarchy of this note.in section 23.4 ‘Derivatives and hedge accounting’. Based on the net debt position as at 30 June 2021,2022, taking into account interest rate swaps and cross currency interest rate swaps, it is estimated that a oneone percentage point increase in the US LIBOR interest rate will increase the Group’s equity and profit after taxation by US$729 million (2020: decrease(2021: increase of US$477 million). This assumes the change in interest rates is effective from the beginning of the financial year and the fixed/floating mix and balances are constant over the year. Interest Rate Benchmark Reform The London Interbank Offered Rate (LIBOR) and other benchmark interest rates are expected to bebeing replaced by alternative risk-free rates (ARR) by the end of CY2021 as part of inter-bank offer rate (IBOR) reform. Sterling LIBOR ceased to be published on 1 January 2022 and USD LIBOR will no longer be published after 30 June 2023. The Group has established a project to assessassessed the implicationsimplication of IBOR reform across the Group, and to manage and execute the transition from current discontinuing IBORs rates to ARR, including updatinghas updated various policies, systems and processes. A detailed due diligence review has identified a rangeprocesses including the adoption of contracts thatthe International Swaps and Derivatives Association (ISDA) IBOR Fallbacks Protocol. In November 2021, the Group amended its US$5.5 billion revolving credit facility to reference IBORs, including derivative instruments, money market deposits, lease agreements, supply contracts and joint venture agreements. The Group isARRs. Furthermore, in March 2022 Escondida executed the process of developing action plans for each of these arrangements to ensure a smooth transition to ARR.Group’s first Secured Overnight Financing Rate (SOFR) linked loans. The Group has early adopted amendments to IFRS 9/AASB 9 ‘Financial Instruments’, IFRS 7/AASB 7 ‘Financial Instruments:Instruments (IFRS 7): Disclosures’ and IFRS 16/AASB 16 ‘Leases’ in relation to IBOR reform (refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’). In particular,early adopted by the IBOR reform impactsGroup in previous periods impact the Group’s cross currency and interest rate swaps, which reference US LIBOR, and the associated hedge accounting. Refer to section 23.4 ‘Derivatives and hedge accounting’ for further information.
The US dollar is the predominant functional currency within the Group and as a result, currency exposures arise from transactions and balances in currencies other than the US dollar. The Group’s potential currency exposures comprise: translational exposure in respect of non-functional currency monetary items transactional exposure in respect of non-functional currency expenditure and revenues The Group’s foreign currency risk is managed as part of the portfolio risk management strategy. Translational exposure in respect of non-functional currency monetary items Monetary items, including financial assets and liabilities, denominated in currencies other than the functional currency of an operation are periodically restated at the end of each reporting period to US dollar equivalents and the associated gain or loss is taken to the income statement. The exception is foreign exchange gains or losses on foreign currency denominated provisions for closure and rehabilitation at operating sites, which are capitalised in property, plant and equipment. The Group has entered into cross currency interest rate swaps and foreign exchange forwards to convert its significant foreign currency exposures in respect of monetary items into US dollars. Fluctuations in foreign exchange rates are therefore not expected to have a significant impact on equity and profit after tax. The following table shows the foreign currency risk arising fromcarrying values of financial assets and liabilities which areat the end of the reporting period denominated in currencies other than the US dollar:dollar that are exposed to foreign currency risk: | | | | | | | | | Net financial (liabilities)/assets - by currency of denomination | | | | | 2020 | | | | | | | | US$M | | | | | | | | | (3,788 | ) | | | | | | | | (369 | ) | | | | | | | | 587 | | | | | | | | | 619 | | | | | | | | | (17 | ) | | | | | | | | | | | | | | | | | | (2,968 | ) | | | | | | | | | | |
| | | | | | | | | Net financial (liabilities)/assets - by currency of denomination | | | | | 2021 | | | | | | | | US$M | | | | | | ) | | | (4,421 | ) | | | | | ) | | | (649 | ) | | | | | | | | 535 | | | | | | | | | 366 | | | | | | | | | 128 | | | | | | | | | | | | | | | | ) | | | (4,041 | ) | | | | | | | | | | |
The principal non-functional currencies to which the Group is exposed are the Australian dollar, the Chilean peso, the Pound sterling and the Euro. Based on the Group’s net financial assets and liabilities as at 30 June 2021,2022, a weakening of the US dollar against these currencies ( one cent strengthening in Australian dollar, 10 pesos strengthening in Chilean peso, one penny strengthening in Pound sterling and one centstrengthening in Euro), with all other variables held constant, would decrease the Group’s equity and profit after taxation by US$ 21 16million (2020:(2021: decrease of US$ 1221 million). Transactional exposure in respect of non-functional currency expenditure and revenues Certain operating and capital expenditure is incurred in currencies other than an operation’s functional currency. To a lesser extent, certain sales revenue is earned in currencies other than the functional currency of operations and certain exchange control restrictions may require that funds be maintained in currencies other than the functional currency of the operation. These currency risks are managed as part of the portfolio risk management strategy. The Group may enter into forward exchange contracts when required under this strategy. The risk associated with commodity prices is managed as part of the portfolio risk management strategy. Substantially all of the Group’s commodity production is sold on market-based index pricing terms, with derivatives used from time to time to achieve a specific outcome. Financial instruments with commodity price risk comprise forward commodity and other derivative contracts with a net assetsliabilities at fair value of US$ 13856 million (2020: US$159 million). Significant commodity price risk instruments within other derivative balances include derivatives embedded in physical commodity purchase and sales contracts of gas in Trinidad and Tobago with a (2021:net assets fair value of US$ 121 million (2020: US$180 million). These are included within other derivatives and fair value measurement related to these resulted in an expense of US$59 million (2020: expense of US$22 million).
The potential effect on these derivatives’ fair values of using reasonably possible alternative assumptions in the valuation models, based on a change in the most significant input, such as commodity prices, by 10 per cent with all other factors held constant (including the pricing on underlying physical exposures), would increase or decrease profit after taxation by US$26 million (2020: US$8138 million).
Provisionally priced commodity sales and purchases contracts Provisionally priced sales or purchases volumes are those for which price finalisation, referenced to the relevant index, is outstanding at the reporting date. Provisional pricing mechanisms within these sales and purchases arrangements have the character of a commodity derivative. Trade receivables or payables under these contracts are carried at fair value through profit andor loss using a method categorised as Level 2 valuation inputs based on forecast selling prices in the quotation period. The Group’s exposure at 30 June 20212022 to the impact of movements in commodity prices upon provisionally invoiced sales and purchases volumes was predominately around copper. The Group had 254289 thousand tonnes of copper exposure as at 30 June 2021 (2020: 3012022 (2021: 254 thousand tonnes) that was provisionally priced. The final price of these sales and purchases volumes will be determined during the first half of FY2022.FY2023. A 10 per cent change in the price of copper realised on the provisionally priced sales, with all other factors held constant, would increase or decrease profit after taxation by US$ 166 162million (2020:(2021: US$ 134166 million). The relationship between commodity prices and foreign currencies is complex and movements in foreign exchange rates can impact commodity prices.
Refer to note 20 ‘Net debt’ for details on the Group’s liquidity risk. Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily from customer receivables) and from its financing activities, including deposits with banks and financial institutions, other short-term investments, interest rate and currency derivative contracts and other financial instruments. Refer to note 8 ‘Trade and other receivables’ and note 20 ‘Net debt’ for details on the Group credit risk. 23.2 Recognition and measurement All financial assets and liabilities, other than derivatives and trade receivables, are initially recognised at the fair value of consideration paid or received, net of transaction costs as appropriate. Financial assets are initially recognised on their trade date. Financial assets are subsequently carried at fair value or amortised cost based on: the Group’s purpose, or business model, for holding the financial asset whether the financial asset’s contractual terms give rise to cash flows that are solely payments of principal and interest The resulting Financial Statements classifications of financial assets can be summarised as follows: | | | | | | | | | | | Solely principal and interest | | Hold in order to collect contractual cash flows | | Amortised cost | | | | | | Solely principal and interest | | Hold in order to collect contractual cash flows and sell | | Fair value through other comprehensive income | | | | | | Solely principal and interest | | Hold in order to sell | | Fair value through profit or loss | | | | | | Other | | Any of those mentioned above | | Fair value through profit or loss |
Solely principal and interest refers to the Group receiving returns only for the time value of money and the credit risk of the counterparty for financial assets held. The main exceptions for the Group are provisionally priced receivables and derivatives which are measured at fair value through the income statementprofit or loss under IFRS 9. The Group has the intention of collecting payment directly from its customers in most cases, however the Group also participates in receivables financing programs in respect of selected customers. Receivables in these portfolios which are classified as ‘hold in order to sell’, are provisionally priced receivables and are therefore held at fair value through profit or loss prior to sale to the financial institution. With the exception of derivative contracts and provisionally priced trade payables which are carried at fair value through profit or loss, the Group’s financial liabilities are classified as subsequently measured at amortised cost. The Group may in addition elect to designate certain financial assets or liabilities at fair value through profit or loss or to apply hedge accounting where they are not mandatorily held at fair value through profit or loss. Derivatives are initially recognised at fair value on the date the contract is entered into and are subsequently remeasured at their fair value.
The carrying amount of financial assets and liabilities measured at fair value is principally calculated based on inputs other than quoted prices that are observable for these financial assets or liabilities, either directly (i.e. as unquoted prices) or indirectly (i.e. derived from prices). Where no price information is available from a quoted market source, alternative market mechanisms or recent comparable transactions, fair value is estimated based on the Group’s views on relevant future prices, net of valuation allowances to accommodate liquidity, modelling and other risks implicit in such estimates. The inputs used in fair value calculations are determined by the relevant segment or function. The functions support the assets and operate under a defined set of accountabilities authorised by the Executive Leadership Team. Movements in the fair value of financial assets and liabilities may be recognised through the income statement or in other comprehensive income.income according to the designation of the underlying instrument. For financial assets and liabilities carried at fair value, the Group uses the following to categorise the inputs to the valuation method used based on the lowest level input that is significant to the fair value measurement as a whole: | | | | | | | IFRS 13 Fair value hierarchy | | | | | | | Valuation methodinputs | | Based on quoted prices (unadjusted) in active markets for identical financial assets and liabilities. | | Based on inputs other than quoted prices included within Level 1 that are observable for the financial asset or liability, either directly (i.e. as unquoted prices) or indirectly (i.e. derived from prices). | | Based on inputs not observable in the market using appropriate valuation models, including discounted cash flow modelling. |
23.3 Financial assets and liabilities The financial assets and liabilities are presented by class in the table below at their carrying amounts. | | | | | | | | | | | | | | | | | |
| | | | | | | | 2020
US$M
Restated | | Current cross currency and interest rate swaps ( 2) | | | 2 | | | Fair value through profit or loss | | | 20 | | | | 3 | | Current other derivative contracts (3) | | | 2,3 | | | Fair value through profit or loss | | | 207 | | | | 45 | | Current other investments (4) | | | 1,2 | | | Fair value through profit or loss | | | 3 | | | | 36 | | Non-current cross currency and interest rate swaps (2) | | | 2 | | | Fair value through profit or loss | | | 1,123 | | | | 2,009 | | Non-current other derivative contracts (3) | | | 2,3 | | | Fair value through profit or loss | | | 152 | | | | 159 | | Non-current investment in share s | | | 3 | | | Fair value through other comprehensive income | | | 31 | | | | 32 | | Non-current other investments (4)(5) | | | 1,2,3 | | | Fair value through profit or loss | | | 304 | | | | 322 | | | | | | | | | | | | | | | | | Total other financial assets | | | | | | | | | 1,840 | | | | 2,606 | | Cash and cash equivalents | | | | | | Amortised cost | | | 15,246 | | | | 13,426 | | Trade and other receivables (6) | | | | | | Amortised cost | | | 2,363 | | | | 1,633 | | Provisionally priced trade receivables | | | 2 | | | Fair value through profit or loss | | | 3,547 | | | | 1,480 | | Loans to equity accounted investments | | | | | | Amortised cost | | | | | | | 40 | | | | | | | | | | | | | | | | | | | | | | | | | | 22,996 | | | | 19,185 | | | | | | | | | | | | | | | | | | | | | | | | | | 85,931 | | | | 86,548 | | | | | | | | | | | | | | | | | | | | | | | | | | 108,927 | | | | 105,733 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Current cross currency and interest rate swaps (2) | | | 2 | | | Fair value through profit or loss | | | | | | | 165 | | Current other derivative contracts (3) | | | 2,3 | | | Fair value through profit or loss | | | 52 | | | | 60 | | Current other financial liabilities (7) | | | | | | Amortised cost | | | 78 | | | | – | | Non-current cross currency and interest rate swaps (2) | | | 2 | | | Fair value through profit or loss | | | 586 | | | | 1,414 | | Non-current other financial liabilities (7) | | | | | | Amortised cost | | | 560 | | | | – | | | | | | | | | | | | | | | | | Total other financial liabilities | | | | | | | | | 1,276 | | | | 1,639 | | Trade and other payables (8) | | | | | | Amortised cost | | | 6,277 | | | | 5,354 | | Provisionally priced trade payables | | | 2 | | | Fair value through profit or loss | | | 574 | | | | 269 | | | | | | | | Amortised cost | | | 2,260 | | | | 2,492 | | | | | | | | Amortised cost | | | 14,769 | | | | 21,045 | | | | | | | | | | | 3,896 | | | | 3,443 | | | | | | | | Amortised cost | | | 58 | | | | 68 | | | | | | | | | | | | | | | | | Total financial liabilities | | | | | | | | | 29,110 | | | | 34,310 | | | | | | | | | | | | | | | | | | | | | | | | | | 24,212 | | | | 19,248 | | | | | | | | | | | | | | | | | | | | | | | | | | 53,322 | | | | 53,558 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | IFRS 13 Fair value hierarchy Level 1 | | | | | | | | 2021
US$M | | Current cross currency and interest rate swaps | | | 2 | | | Fair value through profit or loss | | | | | | | 20 | | Current other derivative contracts | | | 2,3 | | | Fair value through profit or loss | | | | | | | 207 | | Current other financial assets | | | | | | Amortised cost
| | | | | | | – | | Current other investments | | | 1,2 | | | Fair value through profit or loss | | | | | | | 3 | | Non-current cross currency and interest rate swaps | | | 2 | | | Fair value through profit or loss | | | | | | | 1,123 | | Non-current other derivative contracts | | | 2,3 | | | Fair value through profit or loss | | | | | | | 152 | | Non-current other financial assets | | | 3 | | | Fair value through profit or loss | | | | | | | – | | Non-current investment in shares | | | 1,3
| | | Fair value through other comprehensive income | | | | | | | 31 | | Non-current other investments | | | 1,2 | | | Fair value through profit or loss | | | | | | | 304 | | | | | | | | | | | | | | | | | | Total other financial assets | | | | | | | | | | | | | 1,840 | | Cash and cash equivalents | | | | | | Amortised cost | | | | | | | 15,246 | | Trade and other receivables | | | | | | Amortised cost | | | | | | | 2,363 | | Provisionally priced trade receivables | | | 2 | | | Fair value through profit or loss | | | | | | | 3,547 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 22,996 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 85,931 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 108,927 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Current cross currency and interest rate swaps | | | 2 | | | Fair value through profit or loss | | | | | | | – | | Current other derivative contracts 3 | | | 2,3 | | | Fair value through profit or loss | | | | | | | 52 | | Current other financial liabilities | | | | | | Amortised cost | | | | | | | 78 | | Non-current cross currency and interest rate swaps | | | 2 | | | Fair value through profit or loss | | | | | | | 586 | | Non-current other derivative contracts | | | 2,3 | | | Fair value through profit or loss | | | | | | | – | | Non-current other financial liabilities | | | | | | Amortised cost | | | | | | | 560 | | | | | | | | | | | | | | | | | | Total other financial liabilities | | | | | | | | | | | | | 1,276 | | | | | | | | Amortised cost | | | | | | | 6,277 | | Provisionally priced trade payables | | | 2 | | | Fair value through profit or loss | | | | | | | 574 | | | | | | | | Amortised cost | | | | | | | 2,260 | | | | | | | | Amortised cost | | | | | | | 14,769 | | | | | | | | | | | | | | | 3,896 | | | | | | | | Amortised cost | | | | | | | 58 | | | | | | | | | | | | | | | | | | Total financial liabilities | | | | | | | | | | | | | 29,110 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 24,212 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 53,322 | | | | | | | | | | | | | | | | | |
(1) | All of the Group’s financial assets and financial liabilities recognised at fair value were valued using market observable inputs categorised as Level 2 with the exception of theunless specified itemsotherwise in the following footnotes. |
(2) | Cross currency and interest rate swaps are valued using market data including interest rate curves (which include the base LIBOR rate and swap rates) and foreign exchange rates. A discounted cash flow approach is used to derive the fair value of cross currency and interest rate swaps at the reporting date. |
(3
)
| Includes other derivative contracts of US$ nil (2021: US$121 million (2020: US$179 million) categorised as Level 3. Significant items arein FY2021 were derivatives embedded in physical commodity purchase and sales contracts of gas in Trinidad and Tobago with net assets fair valuewhich were disposed as part of the merger of the Petroleum business during the period. |
| 4 | Includes receivables contingent on outcome of future events relating to mining, and regulatory approvals of US$ 121233 million (2020:(2021: US$ 180 million) nil). |
(4) 5 | Includes investments held by BHP Billiton Foundation which are restricted and not available for general use by the Group of US$ 260 252million (2020:(2021: US$ 296260 million) of which other investment (US(mainly US Treasury Notes) of US$ 72 119million categorised as Level 1 (2020:(2021: US$ 8772 million). |
(5) | Includes other investments of US$46 million (2020: US$47 million) categorised as Level 3.
|
(6) 6 | Excludes input taxes of US$ 486 427million (2020:(2021: US$ 478486 million) included in other receivables. |
(7)7 | Includes the discounted settlement liability in relation to the cancellation of power contracts at the Group’s Escondida operations. |
(8) 8 | Excludes input taxes of US$ 176 79million (2020:(2021: US$ 145176 million) included in other payables. |
(9) 9 | All interest bearing liabilities, excluding lease liabilities, are unsecured. |
The carrying amounts in the table above generally approximate to fair value. In the case of US$ million (2020:(2021: US$ 3,0193,018 million) of fixed rate debt not swapped to floating rate, the fair value at 30 June 20212022 was US$ 4,052 3,126million (2020:(2021: US$ 4,1144,052 million). The fair value is determined using a method that can be categorised as Level 2 and uses inputs based on benchmark interest rates, alternative market mechanisms or recent comparable transactions. For financial instruments that are carried at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each reporting period. There were 0no transfers between categories during the period.
Offsetting financial assets and liabilities The Group enters into money market deposits and derivative transactions under International Swaps and Derivatives Association master netting agreements that do not meet the criteria in IAS 32 ‘Financial Instruments: Presentation’ for offsetting, but allow for the related amounts to be set-off in certain circumstances. The amounts set out as cross currency and interest rate swaps in the table above represent the derivative financial assets and liabilities of the Group that may be subject to the above arrangements and are presented on a gross basis. 23.4 Derivatives and hedge accounting The Group uses derivatives to hedge its exposure to certain market risks and may elect to apply hedge accounting. Derivatives are included within financial assets or liabilities at fair value through profit or loss unless they are designated as effective hedging instruments. Financial instruments in this category are classified as current if they are due or expected to be settled within 12 months otherwise they are classified as non-current. Where hedge accounting is applied, at the start of the transaction, the Group documents the type of hedge, the relationship between the hedging instrument and hedged items and its risk management objective and strategy for undertaking various hedge transactions. The documentation also demonstrates that the hedge is expected to be effective. The Group applies the following types of hedge accounting to its derivatives hedging the interest rate and currency risks inof its notes and debentures: Fair value hedges – the fair value gain or loss on interest rate and cross currency swaps relating to interest rate risk, together with the change in the fair value of the hedged fixed rate borrowings attributable to interest rate risk are recognised immediately in the income statement. If the hedge no longer meets the criteria for hedge accounting, the fair value adjustment on the note or debenture is amortised to the income statement over the period to maturity using a recalculated effective interest rate. Cash flow hedges – changes in the fair value of cross currency interest rate swaps which hedge foreign currency cash flows on the notes and debentures are recognised directly in other comprehensive income and accumulated in the cash flow hedging reserve. To the extent a hedge is ineffective, changes in fair value are recognised immediately in the income statement. When a hedging instrument expires, or is sold, terminated or exercised, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is amortised to the income statement over the period to the hedged item’s maturity. When hedged, the Group hedges the full notional value of notes or debentures. However, certain components of the fair value of derivatives are not permitted under IFRS 9 to be included in the hedge accounting above. Certain costs of hedging are permitted to be recognised in other comprehensive income. Any change in the fair value of a derivative that does not qualify for hedge accounting, or is ineffective in hedging the designated risk due to contractual differences between the hedged item and hedging instrument, is recognised immediately in the income statement. The table below shows the carrying amounts of the Group’s notes and debentures by currency and the derivatives which hedge them: The carrying amount of the notes and debentures includes foreign exchange remeasurement to period-end rates and fair value adjustments when included in a fair value hedge. The breakdown of the hedging derivatives includes remeasurement of foreign currency notional values at period-end rates, fair value movements due to interest rate risk, foreign currency cash flows designated into cash flow hedges, costs of hedging recognised in other comprehensive income, ineffectiveness recognised in the income statement and accruals or prepayments. The hedged value of notes and debentures includes their carrying amounts adjusted for the offsetting derivative fair value movements due to foreign currency and interest rate risk remeasurement.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value of derivatives | | | | | | | Carrying
amount of
notes and
debentures | | | Foreign
exchange
notional
at spot
rates | | | | | | Recognised
in cash flow
hedging
reserve | | | Recognised
in cost of
hedging
reserve | | | Recognised in the income statement (1) | | | | | | | | | Hedged value of notes and debentures (2) | | | | | A | | | B | | | C | | | D | | | E | | | F | | | G | | | B to G | | | A + B + C | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value of derivatives | | | | | | | Carrying
amount of
notes and
debentures | | | Foreign
exchange
notional
at spot
rates | | | | | | Recognised
in cash flow
hedging
reserve | | | Recognised
in cost of
hedging
reserve | | | Recognised in the income statement 1 | | | | | | | | | Hedged value of notes and debentures 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value of derivatives | | | | | | | Carrying
amount of
notes and
debentures | | | Foreign
exchange
notional
at spot
rates | | | Interest
rate risk | | | Recognised
in cash flow
hedging
reserve | | | Recognised
in cost of
hedging
reserve | | | Recognised in the income statement 1 | | | Accrued
cash
flows | | | Total | | | Hedged value of notes and debentures 2 | | | | | A | | | B | | | C | | | D | | | E | | | F | | | G | | | B to G | | | A + B + C | | | | | 6,270 | | | | – | | | | (318 | ) | | | – | | | | – | | | | 11 | | | | 77 | | | | (230 | ) | | | 5,952 | | | | | 3,387 | | | | 435 | | | | (544 | ) | | | (81 | ) | | | 25 | | | | (34 | ) | | | 53 | | | | (146 | ) | | | 3,278 | | | | | 4,486 | | | | 73 | | | | (418 | ) | | | (33 | ) | | | 27 | | | | 7 | | | | 49 | | | | (295 | ) | | | 4,141 | | | | | 626 | | | | 142 | | | | (21 | ) | | | (28 | ) | | | 25 | | | | (2 | ) | | | (2 | ) | | | 114 | | | | 747 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 14,769 | | | | 650 | | | | (1,301 | ) | | | (142 | ) | | | 77 | | | | (18 | ) | | | 177 | | | | (557 | ) | | | 14,118 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value of derivatives | | | | | | | Carrying
amount of
notes and
debentures | | | Foreign
exchange
notional
at spot
rates | | | Interest
rate risk | | | Recognised
in cash flow
hedging
reserve | | | Recognised
in cost of
hedging
reserve | | | Recognised
in the
income
statement (1) | | | Accrued
cash
flows | | | Total | | | Hedged
value of
notes and
debentures (2) | | | | | A | | | B | | | C | | | D | | | E | | | F | | | G | | | B to G | | | A + B + C | | | | | 9,926 | | | | – | | | | (742 | ) | | | – | | | | – | | | | 29 | | | | 74 | | | | (639 | ) | | | 9,184 | | | | | 3,245 | | | | 764 | | | | (730 | ) | | | (16 | ) | | | 13 | | | | (18 | ) | | | 47 | | | | 60 | | | | 3,279 | | | | | 7,294 | | | | 500 | | | | (576 | ) | | | (55 | ) | | | 21 | | | | 65 | | | | 32 | | | | (13 | ) | | | 7,218 | | | | | 580 | | | | 199 | | | | (32 | ) | | | – | | | | (2 | ) | | | (4 | ) | | | (2 | ) | | | 159 | | | | 747 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 21,045 | | | | 1,463 | | | | (2,080 | ) | | | (71 | ) | | | 32 | | | | 72 | | | | 151 | | | | (433 | ) | | | 20,428 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) 1 | Predominantly related to ineffectiveness. |
(2) | Includes US$3,018 million (2020:(2021: US$ 3,019 3,018million) of fixed rate debt not swapped to floating rate that is not in a hedging relationship. |
The weighted average interest rate payable is USD LIBOR + 2.181.74 per cent (2020:(2021: USD LIBOR + 2.952.18 per cent). Refer to note 22 ‘Net finance costs’ for details of net finance costs for the year.
Interest Rate Benchmark Reform IBOR reform impacts the Group’s cross currency and interest rate swaps, which reference 3-month US LIBOR, and the associated hedge accounting. At 30 June 2021,2022, the notional value of hedging instruments that reference 3-month US LIBOR is US$ 15.6 billion (2021: US$ 16.8 billion. It is anticipated that the Secured Overnight Financing Rate (SOFR)billion). The SOFR benchmark rate will beis being widely adopted by market participants and effectively replaceas the replacement for US LIBOR in new contracts during FY2022.contracts. However, a number of US LIBOR settings, including 3-month US LIBOR, will continue to be published until 30 June 2023. Accordingly, absent of any agreement with counterparties to transition to an alternative risk-free rate before this date, the Group’s existing cross currency and interest rate swaps with maturity dates beyond 30 June 2023 will only transition to ARR once US LIBOR publication ceases. As at 30 June 2021,2022, the Group has not transitioned any of its existing cross currency and interest rate swaps to alternative risk-free rates.rates, however it is expecting to commence active transition of the existing cross currency and interest rate swaps portfolio to alternative benchmark rates during FY2023. The following table shows the notional value of the Group’s hedging instruments that are expected to expire before 30 June 2023. | | | | | | | | | | | | | | |
| | | Notional value to mature before
LIBOR expires FY2023
| | | | USD | | | | | | | | | | | | | | | | | | | | | Cross-currency interest rate swaps | | EUR | | | | | | | | | | | | GBP | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Notional value to mature before
LIBOR expires FY2023 | | | | USD | | | | | | | | | | | | | | | | | | | | | Cross-currency interest rate swaps | | EUR | | | | | | | | | | | | GBP | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
In addition, the Group has other arrangements which reference 3-month US LIBOR benchmarks and extend beyond 2021.2022. These include USD bank loans of US$ 2.31.6 billion and an undrawn revolving credit facility (refer(2021: US$2.3 billion). Refer to note 20 ‘Net debt’). The Group has earlypreviously adopted amendments to IFRS 9 ‘Financial Instruments’ and IFRS 7 ‘Financial Instruments: Disclosures’ in relation to IBOR Reform (refer to note 39 ‘New and amended accounting standards and interpretations and changes to accounting policies’).Reform. These amendments provide reliefs from applying specific hedge accounting requirements to hedging arrangements directly impacted by these reforms. In particular, where changes to the Group’s instruments arise solely as a result of IBOR reform and do not change the economic substance of the Group’s arrangements, the Group is able to maintain its existing hedge relationships and accounting. The Group has appliedcontinued to apply these reliefs, resulting in no impact on the Group’s hedge accounting. Upon transition to alternative risk-free rates, the Group will seek to apply further reliefs in IFRS 9 and continue to apply hedge accounting to its hedging arrangements.
Movements in reserves relating to hedge accounting The following table shows a reconciliation of the components of equity and an analysis of the movements in reserves for all hedges. For a description of these reserves, refer to note 17 ‘Other ‘Other equity’. | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the beginning of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Add: Change in fair value of hedging instrument recognised in OCI | | | | | ) | | | | | | | | ) | | | | | | | | | | | | | | | | ) | Less: Reclassified from reserves to interest expense – recognised through OCI | | | | | | | | | ) | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash flow hedging
reserve | | Cost of hedging
reserve | | Total | | | | | | | | | | | | | | | | | | | | | Gross | | Tax | | Net | | Gross | | Tax | | | Net | | | | | | At the beginning of the financial yea r | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the beginning of the financial year | | | | 71 | | | | (21 | ) | | | 50 | | | | (32 | ) | | | 9 | | | | (23 | ) | | | 27 | | Add: Change in fair value of hedging instrument recognised in OCI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 863 | | | | (259 | ) | | | 604 | | | | – | | | | – | | | | – | | | | 604 | | Less: Reclassified from reserves to financial expenses – recognised through OCI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Less: Reclassified from reserves to interest expense – recognised through OCI | | | | (792 | ) | | | 238 | | | | (554 | ) | | | (45 | ) | | | 14 | | | | (31 | ) | | | (585 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 142 | | | | (42 | ) | | | 100 | | | | (77 | ) | | | 23 | | | | (54 | ) | | | 46 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cash flow hedging
reserve | | | Cost of hedging
reserve | | | Total | | | | | Gross | | | Tax | | | Net | | | Gross | | | Tax | | | Net | | | | | At the beginning of the financial year | | | 163 | | | | (49 | ) | | | 114 | | | | (106 | ) | | | 32 | | | | (74 | ) | | | 40 | | Add: Change in fair value of hedging instrument recognised in OCI | | | (315 | ) | | | 94 | | | | (221 | ) | | | – | | | | – | | | | – | | | | (221 | ) | Less: Reclassified from reserves to financial expenses – recognised through OCI | | | 223 | | | | (66 | ) | | | 157 | | | | 74 | | | | (23 | ) | | | 51 | | | | 208 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | 71 | | | | (21 | ) | | | 50 | | | | (32 | ) | | | 9 | | | | (23 | ) | | | 27 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Changes in interest bearing liabilities and related derivatives resulting from financing activities The movement in the year in the Group’s interest bearing liabilities and related derivatives are as | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest bearing liabilities | | |
| | | | | | | | | | | | | | | | Bank
overdraft
and short-
term
borrowings | | | | | | Cross
currency
and
interest
rate swaps | | | | | At the beginning of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Proceeds from interest bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Settlements of debt related instruments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Repayment of interest bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Change from Net financing cash flows | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | 579 | | | | – | | | | – | | | | – | | | | (184 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Remeasurement of index-linked freight contracts | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Other interest bearing liabilities/derivative related changes | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest bearing liabilities | | | Derivatives
(assets)/
liabilities | | | | | | | Bank
loans | | | Notes and
debentures | | | Lease
liabilities | | | Bank
overdraft
and short-
term
borrowings | | | Other | | | Cross
currency
and
interest
rate swaps | | | Total | | At the beginning of the financial year | | | 2,498 | | | | 21,529 | | | | 715 | | | | 20 | | | | 66 | | | | 204 | | | | | | Proceeds from interest bearing liabilitie s | | | 514 | | | | – | | | | – | | | | – | | | | – | | | | – | | | | 514 | | Settlements of debt related instruments | | | – | | | | – | | | | – | | | | – | | | | – | | | | (157 | ) | | | (157 | ) | Repayment of interest bearing liabilities | | | (522 | ) | | | (859 | ) | | | (671 | ) | | | – | | | | 5 | | | | – | | | | (2,047 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Change from Net financing cash flows | | | (8 | ) | | | (859 | ) | | | (671 | ) | | | – | | | | 5 | | | | (157 | ) | | | (1,690 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | 720 | | | | – | | | | – | | | | – | | | | (788 | ) | | | | | | | | – | | | | (354 | ) | | | (43 | ) | | | – | | | | (4 | ) | | | 316 | | | | | | Leases recognised on IFRS 16 transition | | | – | | | | – | | | | 2,301 | | | | – | | | | – | | | | – | | | | | | | | | – | | | | – | | | | 436 | | | | – | | | | – | | | | – | | | | | | Remeasurement of index-linked freight contracts | | | – | | | | – | | | | 733 | | | | – | | | | – | | | | – | | | | | | Other interest bearing liabilities/derivative related changes | | | 2 | | | | 9 | | | | (28 | ) | | | (20 | ) | | | 1 | | | | (8 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | 2,492 | | | | 21,045 | | | | 3,443 | | | | – | | | | 68 | | | | (433 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest bearing liabilities | | | | | | | | | | | | | | | | | | | Bank overdraft and short-term borrowings | | | | | | Cross currency a n d interest rate swaps | | | | | At the beginning of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Proceeds from interest bearing liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Settlements of debt related instruments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Repayment of interest bearing liabilities 1 | | | | ) | | | | ) | | | | ) | | | | | | | | ) | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Change from Net financing cash flows | | | | | | | | ) | | | | ) | | | | | | | | ) | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Divestment and demerger of subsidiaries and operations | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | ) | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Remeasurement of index-linked freight contracts | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | Other interest bearing liabilities/derivative related changes | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest bearing liabilities | | | Derivatives
(assets)/
liabilities | | | | | | | Bank
loans | | | Notes and
debentures | | | Lease
liabilities | | | Bank
overdraft
and
short-term
borrowings | | | Other | | | Cross
currency
and
interest
rate swaps | | | Total | | At the beginning of the financial year | | | 2,492 | | | | 21,045 | | | | 3,443 | | | | – | | | | 68 | | | | (433 | ) | | | | | Proceeds from interest bearing liabilities | | | 504 | | | | – | | | | – | | | | – | | | | 64 | | | | – | | | | 568 | | Settlements of debt related instruments | | | – | | | | – | | | | – | | | | – | | | | – | | | | 167 | | | | 167 | | Repayment of interest bearing liabilities 1 | | | (737 | ) | | | (6,888 | ) | | | (770 | ) | | | – | | | | – | | | | – | | | | (8,395 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Change from Net financing cash flows | | | (233 | ) | | | (6,888 | ) | | | (770 | ) | | | – | | | | 64 | | | | 167 | | | | (7,660 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | 579 | | | | – | | | | – | | | | – | | | | (184 | ) | | | | | | | | – | | | | (764 | ) | | | – | | | | – | | | | – | | | | 704 | | | | | | | | | (1 | ) | | | 798 | | | | 115 | | | | – | | | | (14 | ) | | | (796 | ) | | | | | | | | – | | | | – | | | | 1,223 | | | | – | | | | – | | | | – | | | | | | Remeasurement of index-linked freight contracts | | | – | | | | – | | | | (59 | ) | | | – | | | | – | | | | – | | | | | | Other interest bearing liabilities/derivative related changes | | | 2 | | | | (1 | ) | | | (56 | ) | | | – | | | | (60 | ) | | | (15 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | 2,260 | | | | 14,769 | | | | 3,896 | | | | – | | | | 58 | | | | (557 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Includes US$33 million (2021: US$38 million) of Discontinued operations cash flows. |
24 Key management personnel Key management personnel compensation | | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | US$ | | | US$ | | Short-term employee benefits | | | | | | | 12,564,637 | | | | 11,557,506 | | | | | | | | | 1,172,727 | | | | 1,490,716 | | | | | | | | | 13,514,588 | | | | 15,821,972 | | | | | | | | | | | | | | | | | | | | | | | 27,251,952 | | | | 28,870,194 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | US$ | | | US$ | | Short-term employee benefits | | | | | | | 14,081,625 | | | | 12,564,637 | | | | | | | | | 744,951 | | | | 1,172,727 | | | | | | | | | 11,601,866 | | | | 13,514,588 | | | | | | | | | | | | | | | | | | | | | | | 26,428,442 | | | | 27,251,952 | | | | | | | | | | | | | | | |
Key Management Personnel (KMP) includes the roles which have the authority and responsibility for planning, directing and controlling the activities of BHP. These are Non-executive Directors, the CEO, the Chief Financial Officer, the President Minerals Australia, the President Minerals Americas and the Senior Executive Officer (i.e. President Petroleum.Petroleum until 31 May 2022).Transactions and outstanding loans/amounts with key management personnel There were 0no purchases by key management personnel from the Group during FY2021 (2020:FY2022 (2021: US$ NaN; 2019:nil; 2020: US$ NaN)nil). There were 0no amounts payable by key management personnel at 30 June 2021 (2020:2022 (2021: US$ NaN; 2019:nil; 2020: US$ NaN)nil). There were 0no loans receivable from or payable to key management personnel at 30 June 2021 (2020:2022 (2021: US$ NaN; 2019:nil; 2020: US$ NaN)nil). Transactions with personally related entities A number of Directors of the Group hold or have held positions in other companies (personally related entities) where it is considered they control or significantly influence the financial or operating policies of those entities. There were 0no reportable transactions with those entities and no amounts were owed by the Group to personally related entities at 30 June 2021 (2020:2022 (2021: US$ NaN; 2019:nil; 2020: US$ NaN)nil). For more information on remuneration and transactions with key management personnel, refer to section 2.2.the Remuneration Report under Governance. 25 Employee share ownership plans Awards, in the form of the right to receive ordinary shares in either BHP Group Limited or BHP Group Plc, have been granted under the following employee share ownership plans: Cash and Deferred Plan (CDP), Short-Term Incentive Plan (STIP), Long-Term Incentive Plan (LTIP), Management Award Plan (MAP), Transitional and Commencement KMP awards and the all-employee share plan, Shareplus. Following unification of our dual listed company structure in January 2022, employees holding unvested BHP Group Plc awards received one BHP Group Limited award per BHP Group Plc award held at the time of unification. Vesting of awards will stay on the original timeframes. Employees holding BHP Group Plc acquired shares under Shareplus received one BHP Group Limited share for each BHP Group Plc share owned.Some awards are eligible to receive a cash payment, or the equivalent value in shares, equal to the dividend amount that would have been earned on the underlying shares awarded to those participants (the Dividend Equivalent Payment, or DEP). The DEP is provided to the participants once the underlying shares are allocated or transferred to them. Awards under the plans do not confer any rights to participate in a share issue; however, there is discretion under each of the plans to adjust the awards in response to a variation in the share capital of BHP Group Limited orLimited. On completion of the merger between BHP Petroleum and Woodside on 1 June 2022, adjustments were made to unvested awards held under the above mentioned employee share ownership plans to ensure participants continue to be appropriately treated. The number of ‘Uplift’ awards granted of 1,574,034 shares was calculated based on the number of unvested awards held prior to the merger multiplied by 1.1205 being the USD value of the in specie dividend divided by the closing BHP Group Plc.Limited share price on 31 May 2022 (converted into USD on the same date) plus one.
The table below provides a description of each of the | | | | | | | | | | | | | | | Transitional and
Commencement KMP
awards | | | | | Short-term incentive | | Long-term incentive | | Long-term incentive | | All-employee share purchase plan | | | | | | | | | | | | | | | | | The CDP was implemented in FY2020 as a replacement for the STIP, both of which are generally plans for Executive KMP and members of the Executive Leadership Team who are not Executive KMP. Under the CDP, two thirds of the value of a participant’s short-term incentive amount is awarded as rights to receive BHP Group Limited or BHP Group Plc shares at the end of the vesting period (and the remaining one third is delivered in cash). Two awards of deferred shares are granted, each of the equivalent value to the cash award, vesting in two and five years respectively. Under STIP, half of the value of a participant’s short-term incentive amount is awarded as rights to receive BHP Group Limited or BHP Group Plc shares at the end of the two-year vesting period. | | The LTIP is a plan for Executive KMP and members of the Executive Leadership Team who are not Executive KMP, and awards are granted annually. The MAP is a plan for BHP senior management who are not KMP. The number of share rights awarded is determined by a participant’s role and grade. | | Awards may be granted to new Executive KMP recruited into or within the Group to bridge the time-based gap between the vesting of awards either granted in their non-KMP roles or to replace awards foregone from a previous company. | | sharesacquire shares in any plan year. On
the third anniversary of the start of a plan year, , the
number of acquired shares. | | | | | | | | | | | | | | | | | | | | CDP: Service conditions only for the two-year award. Vesting of the five-year award is subject to service conditions and also to holistic review of performance at the end of the five-year vesting period, including a five-year view on HSEC performance, profitability, cash flow, balance sheet health, returns to shareholders, corporate governance and conduct. STIP: Service conditions only. | | LTIP: Service and performance conditions. BHP’s Total Shareholder Return (TSR)(1) performance relative to the Peer Group TSR over a five-year performance period determines the vesting of 67 per cent of the awards, while performance relative to the Index TSR (being the index value where the comparator group is a market index) determines the vesting of 33 per cent of the awards. For the awards to vest in full, BHP’s TSR must exceed the Peer Group TSR and Index TSR (if applicable) by a specified percentage per year, determined for each grant by the Remuneration Committee. From the establishment of the LTIP in 2004 until the awards granted in December 2016, this percentage was set at 5.5 per cent per year. For awards granted from December 2017 onwards, 25 per cent of the award will vest where BHP’s TSR is equal to the median TSR of the relevant comparator group(s), as measured over the performance period. Where TSR is below the median, awards will not vest. Vesting occurs on a sliding scale when BHP’s TSR measured over the performance period is between the median TSR of the relevant comparator group(s) up to a nominated level of TSR outperformance over the relevant comparator group(s), as determined by the Committee, above which 100 per cent of the award will vest. MAP: Service conditions only. | | Service and performance conditions. The Remuneration Committee has absolute discretion to determine if the performance condition has been met and whether any, all or part of the award will vest (or otherwise lapse), having regard to personal performance and the underlying financial performance of the Group during the performance period. To the extent the performance condition is not achieved, awards will lapse. There is no retesting of the performance condition. Vested awards may be subject to a holding lock. | | Service conditions only. | | | | | | | | | |
| | | | | | | | | | | | | | | Transitional and
Commencement KMP
awards | | | | | | | | | | | | | | | | | 3 years | | | | | | | | | | | | | | | | Dividend Equivalent Payment | | | | | | | | No | | | | | | | | | | | | | | | | | | None | | None | | None | | None |
(1) | BHP’sFor LTIP awards granted prior to unification and where the five-year performance period ends after unification, the TSR at the start of the performance period is based on the weighted average of the TSRs of BHP Group Limited and BHP Group Plc.Plc and the TSR at the end of the performance period is based on the TSR of BHP Group Limited. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | at the
beginning
of the
financial
year | | | Number of
awards
issued
during the
year | | | Number of
awards
vested and
exercised | | | | | | Number of BHP Group Plc awards transferred to BHP Group Limited on unification 1 | | | at the end
of the
financial
year | | | Weighted
average
remaining
contractual
life (years) | | | Weighted
average
share
price at
exercise
date | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transitional and Commencement KMP
awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| On unification of the Group’s corporate structure on 31 January 2022 (refer note 16 ‘Share capital’ for details) 161,642 of unvested awards over BHP Group Plc shares lapsed and were replaced by equivalent awards over BHP Group Limited on the terms of the MAP awards. |
Under the rules of the Shareplus, on unification, holders of acquired BHP Group Plc shares, exchanged them for BHP Group Limited shares on the same terms of other BHP Group Plc shareholders. As participants were not eligible for matching shares in BHP Group Plc, BHP Group Limited made an equivalent offer of rights to match 280,494 unvested awards, which will vest based on their original timeline and will be satisfied with the delivery of BHP Group Limited shares. F-58Given the unification had no impact on the vesting timelines or the terms and conditions of the MAP awards and Shareplus, the changes did not represent a modification that changed the fair value of the awards. | There were 2,761 number of awards vested and exercisable at the end of the financial year. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
at the
beginning
of the
financial
year | | | Number of
awards
issued
during the
year | | | Number of
awards
vested and
exercised | | | | | |
at the end
of the
financial
year | | | Number of
awards
vested and
exercisable
at the end
of the
financial
year | | | Weighted
average
remaining
contractual
life (years) | | | Weighted
average
share
price at
exercise
date | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transitional and Commencement KMP awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Short-term incentive awards that were granted to BHP senior management who were not KMP. Awards were last granted in FY2018. All awards had vested or lapsed at 30 June 2021.
|
Employee share awardspre-tax
expense is US$123.525 million (2020: US$128.999 million; 2019: US$138.275 million).Fair value and assumptions in the calculation of fair value for awards issued | | | | | | | | | | | | | | | | | | | | | | | | | | | Weighted
average fair
value of
awards
granted
during the
year US$ | | | | | | | | | Share price at grant date | | | Estimated
volatility
of share
price | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | A$38.36/A$36.91/A$35.90/A$45.88 | | | | | | | | | | Transitional and Commencement KMP awards | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Weighted
average fair
value of
awards
granted
during the
year US$ | | | | | | | | | | | | Estimated
volatility
of share
price | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | A$51.33/A$36.39/
A$46.55/
A$50.58
| | | | | | |
| 5.0% up to 30 June
2022 and 7.5% per
annum thereafter | | | | | | | | | |
| | | | | | | | | | |
| | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 5.0% up to 30 June
2022 and 7.5% per
annum thereafter | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Includes LTIP awards granted on 20 October 2020, 2 November 2020 and 1 December 2020.
|
(2) | Includes MAP awards granted on 2117 August 2020, 242021, 29 September 2020, 20 October 20202021, 1 March 2022, 30 March 2022 and 7 April 2021.17 June 2022. |
Recognition and measurement The fair value at grant date of equity-settled share awards is charged to the income statement over the period for which the benefits of employee services are expected to be derived. The fair values of awards granted were estimated using a Monte Carlo simulation methodology and Black-Scholes option pricing technique and consider the following factors: expected life of the award current market price of the underlying shares expected volatility using an analysis of historic volatility over different rolling periods. For the LTIP, it is calculated for all sector comparators and the published MSCI World index risk-free interest rate, which is an applicable government bond rate market-based performance hurdles Where awards are forfeited because non-market-based vesting conditions are not satisfied, the expense previously recognised is proportionately reversed. The tax effect of awards granted is recognised in income tax expense, except to the extent that the total tax deductions are expected to exceed the cumulative remuneration expense. In this situation, the excess of the associated current or deferred tax is recognised in equity and forms part of the employee share awards reserve. The fair value of awards as presented in the tables above represents the fair value at grant date. In respect of employee share awards, the Group utilises the Billiton Employee Share Ownership Trust and the BHP Billiton Limited Employee Equity Trust. The trusteestrustee of these trusts arethis trust is an independent companies,company, resident in Jersey. The trusts usetrust uses funds provided by the Group to acquire ordinary shares to enable awards to be made or satisfied. The ordinary shares may be acquired by purchase in the market or by subscription at not less than nominal value.
26 Employee benefits, restructuring and post-retirement employee benefits provisions | | | | | | | | | | | | | | | 2020 | | | | | | | | US$M | | | | | | | | | 1,313 | | | | | | | | | 34 | | Post-retirement employee benefits (3) | | | | | | | 547 | | | | | | | | | | | | | | | | | | | 1,894 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,283 | | | | | | | | | 611 | |
| | | | | | | | | | | | | | | 2021 | | | | | | | | US$M | | | | | | | | | 1,624 | | | | | | | | | 54 | | Post-retirement employee benefits | | | | | | | 534 | | | | | | | | | | | | | | | | | | | 2,212 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,606 | | | | | | | | | 606 | |
| | | | | | | | | | | | | | | | | | | | | | | | | Post- retirement employee benefits (3) | | | | | At the beginning of the financial year | | | | | | | | | | | | | | | | | Charge/(credit) for the year: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Remeasurement gains taken to retained earning s | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transfers and other movements | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Post- retirement employee benefits 3 | | | | | | | | | | | | | | | | | | | At the beginning of the financial year | | | | | | | | | | | | | | | | | Charge/(credit) for the year: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | ) | | | | | ) | | | | ) | | | | ) | | | | ) | | | | | ) | | | | ) | | | | ) | | | | ) | Remeasurement gains taken to retained earnings | | | | | | | | | | | | ) | | | | ) | | | | | ) | | | | ) | | | | ) | | | | ) | | Divestment and demerger of subsidiaries and operations | | | | ) | | | | ) | | | | ) | | | | ) | Transfers and other movements | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | The expenditure associated with total employee benefits will occur in a pattern consistent with when employees choose to exercise their entitlement to benefits. |
(2) | Total restructuring provisions include provisions for terminations and office closures. |
(3) | Refer to note 27 ‘PensionThe net liability recognised in the Consolidated Balance Sheet includes US$165 million present value of funded defined benefits pension obligation (2021: US$377 million) offset by fair value of defined benefit scheme assets US$(169) million (2021: US$(398) million), US$85 million present value of unfunded defined pension and other post-retirement obligations’medical benefits obligation (2021: US$321 million) and US$200 million unfunded post-employment benefits obligation in Chile (2021: US$234 million).
|
Recognition and measurement Provisions are recognised by the Group when: there is a present legal or constructive obligation as a result of past events it is more likely than not that a permanent outflow of resources will be required to settle the obligation the amount can be reliably estimated and measured at the present value of management’s best estimate of the cash outflow required to settle the obligation at the reporting date | | | | | | | | Liabilities for benefits accruing to employees up until the reporting date in respect of wages and salaries, annual leave and any accumulating sick leave accrued up untilare recognised in the reporting date that areperiod the related service is rendered. Liabilities recognised in respect of short-term employee benefits expected to be settled within 12 months are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for other long-term employee benefits, including long service leave are measured as the present value of estimated future payments for the services provided by employees up to the reporting date and disclosed within employee benefits.date. Liabilities that are not expected to be settled within 12 months are discounted at the reporting date using market yields of high-quality corporate bonds or government bonds for countries where there is no deep market for corporate bonds. The rates used reflect the terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. In relation to industry-based long service leave funds, the Group’s liability, including obligations for funding shortfalls, is determined after deducting the fair value of dedicated assets of such funds. Liabilities for short and long-term employee benefits (other than unpaid wages and salaries) are disclosed within employee benefits. Liabilities for unpaid wages and salaries are recognised in other creditors. |
| | | | | | | | Restructuring provisions are recognised when: • the Group has developed a detailed formal plan identifying the business or part of the business concerned, the location and approximate number of employees affected, a detailed estimate of the associated costs, and an appropriate timeline • the restructuring has either commenced or been publicly announced and can no longer be withdrawn Payments falling due greater thanthat are not expected to be settled within 12 months afterof the reporting date are discountedmeasured at the present value of the estimated future cash payments expected to present value.be made by the Group. |
27 Pension and other post-retirement obligations
The Group operates or participates in a number of pension (including superannuation) schemes throughout the world. The funding of the schemes complies with local regulations. The assets of the schemes are generally held separately from those of the Group and are administered by trustees or management boards.
| | | Schemes/Obligations
Post-retirement employee benefits | | | Defined contribution pension schemes and multi-employer pension schemes | | For defined contribution schemes or schemes operated on an industry-wide basis where it is not possible to identify assets attributable to the participation by the Group’s employees, the pension charge is calculated on the basis of contributions payable. The Group contributed US$ 334 324million during the financial year (2020:(2021: US$ 260301 million; 2019:2020: US$ 274243 million) to defined contribution plans and multi-employer defined contribution plans. These contributions are expensed as incurred. | | | Defined benefit pension and post-retirement medical schemes | | The Group operates or participates in a number of defined benefit pension schemes throughout the world, all of which are closed to new entrants. The funding of the schemes complies with local regulations. The assets of the schemes are generally held separately from those of the Group and are administered by trustees or management boards. The Group also operates a number of unfunded post-retirement medical schemes in the United States, Canada and Europe. For defined benefit pension schemes, the cost of providing pensions is charged to the income statement so as to recognise current and past service costs, net interest cost on the net defined benefit obligations/plan assets and the effect of any curtailments or settlements. Remeasurement gains and losses are recognised directly in equity. Anan asset or liability is consequently recognised in the balance sheet based onat the present value of defined benefit obligations less, where funded, the fair value of plan assets, except that any such asset cannot exceed the present value of expected refunds from and reductions in future contributions to the plan. Defined benefit obligationsFull actuarial valuations are estimatedprepared by discounting expected future paymentslocal actuaries for all schemes, using discount rates based on market yields at the reporting date on high-quality corporate bonds in countries that have developed corporate bond markets. However, where developed corporate bond markets do not exist, the discount rates are selectedor by reference to national government bonds. In both instances, thebonds if high-quality corporate bonds are selected with terms to maturity and currency that match, as closely as possible, the estimated future cash flows.not available. The Group has closed all defined benefit pension schemes to new entrants. Defined benefit pension schemes remain operating in Australia, the United States, Canada and Europe for existing members. Full actuarial valuations are prepared and updated annually to 30 June by local actuaries for all schemes. The Group operates final salary schemes (that provide final salary benefits only),non-salary
related schemes (that provide flat dollar benefits) and mixed benefit schemes (that consist of a final salary defined benefit portion and a defined contribution portion). | | | Defined benefit post-retirement medical schemes
| | The Group operates a number of post-retirement medical schemes in the United States, Canada and Europe and certain Group companies provide post-retirement medical benefits to qualifying retirees. In some cases, the benefits are provided through medical care schemes to which the Group, the employees, the retirees and covered family members contribute. Full actuarial valuations are prepared by local actuaries for all schemes. These schemes are recognised on the same basis as described for defined benefit pension schemes. All of the post-retirement medical schemes in the Group are unfunded. | | | Defined benefit post-employment obligations
| | The Group has a legal obligation to provide post-employment benefits to employees in Chile. The benefit is a function of an employee’s final salary and years of service.These obligations are recognised on the same basis as described for defined benefit pension schemes.Full actuarial valuations are prepared by local actuaries. These post-employment obligations are unfunded.
|
The Group’s defined benefit schemes/obligations expose the Group to a number of risks, including asset value volatility, interest rate variations, inflation, longevity and medical expense inflation risk.
Recognising this, the Group has adopted an approach of moving away from providing defined benefit pensions. The majority of Group-sponsored defined benefit pension schemes have been closed to new entrants for many years. Existing benefit schemes and the terms of employee participation in these schemes are reviewed on a regular basis.
The Group follows a coordinated strategy for the funding and investment of its defined benefit pension schemes (subject to meeting all local requirements). The Group’s aim is for the value of defined benefit pensionWhere funded, scheme assets to be maintained at close to the value of the corresponding benefit obligations, allowing for some short-term volatility.
Scheme assets are invested in a diversified range of asset classes, predominantly comprising bonds and equities.
The Group’s aim is to progressively shift defined benefit pension scheme assets towards investments that match the anticipated profile of the benefit obligations, as funding levels improve and benefit obligations mature. Over time, this is expected to result in a further reduction in the total exposure of pension scheme assets to equity markets. For pension schemes that pay lifetime benefits, the Group may consider and support the purchase of annuities to back these benefit obligations if it is commercially sensible to do so.
Net liability recognised in the Consolidated Balance Sheet
The net liability recognised in the Consolidated Balance Sheet is as follows:
| | | | | | | | | | | | | | | | | | | |
| | | Post-retirement medical schemes | | | | | | | | 2020 | | | | | | 2020 | | | | | | | | US$M | | | | | | US$M | | Present value of funded defined benefit obligation | | | | | | | 613 | | | | | | | | 0 | | Present value of unfunded defined benefit obligation | | | | | | | 354 | | | | | | | | 214 | | Fair value of defined benefit scheme assets | | | | | | | (634 | ) | | | | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | 333 | | | | | | | | 214 | | | | | | | | | | | | | | | | | | | | | | | | | | | 0 | | | | | | | | 0 | | Unrecognised past service credits | | | | | | | 0 | | | | | | | | 0 | | Adjustment for employer contributions tax | | | | | | | 0 | | | | | | | | 0 | | | | | | | | | | | | | | | | | | | | Net liability recognised in the Consolidated Balance Sheet | | | | | | | 333 | | | | | | | | 214 | | | | | | | | | | | | | | | | | | | |
The Group has no legal obligation to settle these liabilities with any immediate contributions or additionalone-off
contributions. The Group intends to continue to contribute to each defined benefit pension and post-retirement medical scheme in accordance with the latest recommendations of each scheme actuary. | | | | | | | | | | | | | | | | | | | 2020 | �� | | 2019 | | | | | | | | Number | | | Number | | Average number of employees (1) | | | | | | | | | | | | | | | | | | | | 20,967 | | | | 18,146 | | | | | | | | | 7,330 | | | | 6,979 | | | | | | | | | 1,296 | | | | 1,999 | | | | | | | | | 1,939 | | | | 1,743 | | | | | | | | | 57 | | | | 59 | | | | | | | | | | | | | | | | Total average number of employees | | | | | | | 31,589 | | | | 28,926 | | | | | | | | | | | | | | | |
(1) | Average employee numbers include the Executive Director and 100 per cent of employees of subsidiary companies. Employees of equity accounted investments and joint operations are not included. Part-time employees are included on a full-time equivalent basis. Employees of businesses disposed of during the year are included for the period of ownership. Contractors are not included.
|
Group and related party information 2927 Discontinued operations
On 28 September 2018, BHP completed22 November 2021, the sale of 100 per centGroup and Woodside signed a binding SSA for the merger of the issuedGroup’s oil and gas portfolio with Woodside. Woodside has subsequently acquired the entire share capital of BHP Billiton Petroleum (Arkansas) Inc. and 100 per cent of the membership interestsInternational Pty Ltd (‘BHP Petroleum’) in BHP Billiton Petroleum (Fayetteville) LLC, which held the Fayetteville assets,exchange for a gross cash consideration of US$0.3 billion.new Woodside ordinary shares. On 31 October 2018, BHP completed the sale of 100 per cent of the issued share capital of Petrohawk Energy Corporation, the BHP subsidiary which held the Eagle Ford (being Black Hawk and Hawkville), Haynesville and Permian assets, for a gross cash consideration of US$10.3 billion (net of customary completion adjustments of US$0.2 billion).
While the merger had an economic effective date at which the right to economic profits transferred to the purchasers wasof 1 July 2018,2021, the Group continued to control the Onshore USPetroleum assets and carry on business in the normal course for 11 months until the completion dates of their respective transactions.1 June 2022 (Completion Date). As such, the Group continued to recogniserecognises its share of revenue, expenses, net finance costs and associated income tax expense related to the Discontinued operation until the completion date. In addition,Completion Date. As consideration for the sale of BHP Petroleum, the Group provided transitional servicesreceived 914,768,948 newlyissued Woodside ordinary shares at Completion Date. On the Completion Date, the Group paid a fully franked in specie dividend in the form of Woodside shares to the buyer, which ceased in July 2019.eligible BHP shareholders. Eligible BHP shareholders received one Woodside share for every The completion adjustments included a reduction in sale proceeds, basedshares they held on the operating cash generatedGroup’s register at the record date of 26 May 2022.
As part of completion and retained by the Group in the period prior to completion, in order to transferreflect the economic profits fromeffective date, the Group made a net cash payment of US$0.7 billion to Woodside in addition to US$0.4 billion in cash that was left in the BHP Petroleum bank accounts to fund ongoing operations. The total cash transfer of US$1.1 billion reflects the net cash flows generated by BHP Petroleum between 1 July 20182021 and Completion Date adjusted for dividends Woodside would have paid on the newly issued Woodside ordinary shares, had them erger completed on 1 July 2021. The net cash completion payment to completion dateWoodside is subject to a customary post-completion review, which may result in an adjustment to the buyers. Therefore,amount paid. BHP Mitsui Coal Pty Ltd (BMC), while being divested on 3 May 2022, is not considered to meet the pre-tax
profit from operating the assets is largely offset by apre-tax
loss on disposal. Accordingly, the net loss from Discontinued operations predominantly relates to incremental costs arising criteria for classification as a consequence ofDiscontinued operation given its relative size to the divestment, including restructuring costs and provisions for surplus office accommodation, and tax expenses largely triggered by the completion of the transactions. There was no contribution of Discontinued operations for the year ended 30 June 2021Group and the year ended 30 June 2020. Coal segment. For further information, refer to note 3 ‘Exceptional items’.
The contribution of Discontinued operations included withinto the Group’s profit and cash flows for the year ended 30 June 2019 areis detailed below: Income statement – Discontinued operations | | | | | | | 2019 | | | | US$M | | | | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | US$M | | | US$M | | | | | | | | | 3,896 | | | | 4,007 | | | | | | | | | 130 | | | | 57 | | Expenses excluding net finance costs | | | | ) | | | (3,629 | ) | | | (3,322 | ) | Loss from equity accounted investments, related impairments and expenses | | | | ) | | | (6 | ) | | | (4 | ) | | | | | | | | | | | | | | | | | | | | | | 391 | | | | 738 | | | | | | | | | | | | | | | | | | | | ) | | | (88 | ) | | | (70 | ) | | | | | | | | 6 | | | | 17 | | | | | | | | | | | | | | | | | | | | ) | | | (82 | ) | | | (53 | ) | | | | | | | | | | | | | | | | | | | | | | 309 | | | | 685 | | | | | | | | | | | | | | | | | | | | ) | | | (545 | ) | | | (492 | ) | Royalty-related taxation (net of income tax benefit) | | | | ) | | | 11 | | | | (85 | ) | | | | | | | | | | | | | | | | | | | ) | | | (534 | ) | | | (577 | ) | | | | | | | | | | | | | | | Profit/(loss) after taxation from operating activities | | | | | | | (225 | ) | | | 108 | | | | | | | | | | | | | | | | Net gain on Petroleum merger with Woodside (after tax) | | | | | | | – | | | | – | | | | | | | | | | | | | | | | Profit/(loss) after taxation | | | | | | | (225 | ) | | | 108 | | | | | | | | | | | | | | | | Attributable to non-controlling interests | | | | | | | – | | | | – | | Attributable to BHP shareholders | | | | | | | (225 | ) | | | 108 | | | | | | | | | | | | | | | | Basic earnings/(loss) per ordinary share (cents) | | | | | | | (4.5 | ) | | | 2.1 | | Diluted earnings/(loss) per ordinary share (cents) | | | | | | | (4.5 | ) | | | 2.1 | | | | | | | | | | | | | | | |
Profit after taxation from operating activities
| | | 175 | | | | | | | | | | (510 | ) | | | | | | | | | (335 | ) | | | | | | Attributable tonon-controlling
interests | | | 7 | | Attributable to BHP shareholders
| | | (342 | ) | | | | | | Basic loss per ordinary share (cents)
| | | (6.6 | ) | Diluted loss per ordinary share (cents)
| | | (6.6 | ) | | | | | |
The total comprehensive income attributable to BHP shareholders from Discontinued operations was a gain of US$10,596 million (30 June 2021: loss of US$ 342 million in FY2019.231 million; 30 June 2020: gain of US$118 million).The conversion of options and share rights would decrease the loss per share for the year ended 30 June 2019 and2021, therefore its impact has been excluded from the diluted earnings per share calculation. Cash flows from Discontinued operations | | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | US$M | | | US$M | | | | | | | | | 1,351 | | | | 1,021 | | | | | | ) | | | (1,520 | ) | | | (1,033 | ) | | | | | ) | | | (38 | ) | | | (39 | ) | | | | | | | | | | | | | | | Net increase/(decrease) in cash and cash equivalents from Discontinued operations | | | | | | | (207 | ) | | | (51 | ) | | | | | | | | | | | | | | | Net cash completion payment on merger of Petroleum with Woodside | | | | ) | | | – | | | | – | | Cash and cash equivalents disposed | | | | ) | | | – | | | | – | | | | | | | | | | | | | | | | | | | | | | | (207 | ) | | | (51 | ) | | | | | | | | | | | | | | |
| Includes purchases of property, plant and equipment and capitalised exploration of US$1,144million related to drilling and development expenditure (30 June 2021: US$1,020 million; 30 June 2020: US$1,079 million),proceeds from sale of subsidiaries, operations and joint operations, net of cash of US$91million (30 June 2021:investment of US$480 million; 30 June 2020: US$ nil), proceeds from sale of assets of US$151 million (30 June 2021: US$39 million; 30 June 2020: US$78 million) and other investing outflows of US$2million (30 June 2021:outflow of US$59 million; 30 June 2020:outflow of US$32 million). |
| Represents net repayment of interest bearing liabilities of US$33million (30 June 2021: US$38 million; 30 June 2020: US$39 million). |
Exceptional items – Discontinued operations Exceptional items are those gains or losses where their nature, including the expected frequency of the events giving rise to them, and impact is considered material to the Financial Statements. Items related to Discontinued operations included within the Group’s profits for the year ended 30 June 2022 are detailed below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Exceptional items by category | | | | | | | | | | | | | Net gain on Petroleum merger with Woodside 1 | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | Attributable to non-controlling interests | | | | | | | | | | | | | Attributable to BHP shareholders | | | | | | | | ) | | | | | | | | | | | | | | | | | | |
| The tax expense associated with the exceptional item reflects the tax impact of transaction costs and other restructuring related activities undertaken pre-merger. There are no further tax impacts arising on the net gain on merger of our Petroleum business with Woodside as generated tax losses were either offset with capital gains in other entities in the Group, or not recognised on the basis that it is not probable that future capital gains will be available against which the Group can utilise the tax losses. |
Net gain on disposal of Discontinued operations
Details of the net gain on Petroleum merger with Woodside is presented below: | | | | | | | | 2019 | | | | | | | | | | 474 | | Net investing cash flows(1)Assets
| | | (443 | ) | Net financingCash and cash flowsequivalents
| | | | | Trade and other receivables | | | | | | | | | | | | | | | Property, plant and equipment | | | | | | | | | | Investments accounted for using the equity method | | | | | | Deferred tax assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest bearing liabilities | | | | | | Tax payables | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value of Woodside shares1 | | | | | Net cash completion payment on merger of Petroleum with Woodside2 | | | | | | Foreign currency translation reserve transferred to the income statement | | | | | | Other provisions and related indemnities recognised at completion | | | | | | Transaction and other directly attributable costs | | | | ) | | Income tax expense | | | | ) | | | | | | | Net increase in cash and cash equivalents from Discontinued operationsgain on Petroleum merger with Woodside | | | 18 | | | | | | | Net proceeds received from the sale of Onshore US
| | | 10,531 | | Less Cash and cash equivalents
| | | (104 | ) | | | | | | Proceeds from divestment of Onshore US, net of its cash
| | | 10,427 | | | | | | | | | | 10,445 | | | | | | |
(1) | Includes purchases of property, plant and equipment of US$443 million.
|
(2) | Includes net repayment of interest bearing liabilities of US$6 million and dividends paid tonon-controlling
interests of US$7 million. |
Net loss on disposal of Discontinued operations
Details of the net loss on disposal for the year ended 30 June 2019 is presented in the table below: | | | | | | | 2019 | | | | US$M | | | | | 11,111 | | | | | | | Lessnon-controlling
interest share of net assets disposed | | | (168 | ) | | | | | | BHP Share of net assets disposed
| | | 10,943 | | | | | | | | | | 10,555 | | | | | (54 | ) | | | | (68 | ) | | | | | | | | | (510 | ) | | | | | | |
| Represents the consideration received being the fair value of 914,768,948 Woodside ordinary shares received using the closing ASX share price of A$29.76 on 31 May 2022 (US$21.39 equivalent based on an exchange rate of AUD/USD 0.7187). |
| Reflects the net cash flows generated by BHP Petroleum between 1 July 2021 and Completion Date adjusted for dividends Woodside would have paid on the newly issued Woodside ordinary shares, had them erger completed on 1 July 2021. |
The Exceptional items related to Discontinued operations included within the Group’s profit for the years ended 30 June 2021 and 30 June 2020 are outlined below: | | | | | | | | | | | | | | | Gross | | | Tax | | | Net | | | | | US$M | | | US$M | | | US$M | | Exceptional items by category | | | | | | | | | | | | | Impairment of Potash assets 1 | | | – | | | | (278 | ) | | | (278 | ) | | | | (47 | ) | | | 8 | | | | (39 | ) | | | | | | | | | | | | | | | | | | (47 | ) | | | (270 | ) | | | (317 | ) | | | | | | | | | | | | | | | Attributable to non-controlling interests | | | – | | | | – | | | | – | | Attributable to BHP shareholders | | | (47 | ) | | | (270 | ) | | | (317 | ) | | | | | | | | | | | | | | |
| The exceptional item reflects the impairment of tax losses originally expected to be recoverable against taxable profits from the Group’s Potash assets. The impairment is included in Discontinued operations as the entity with the losses transferred to Woodside and therefore the losses are no longer available to the Group. |
| | | | | | | | | | | | | | | Gross | | | Tax | | | Net | | | | | US$M | | | US$M | | | US$M | | Exceptional items by category | | | | | | | | | | | | | | | | (6 | ) | | | 2 | | | | (4 | ) | | | | | | | | | | | | | | | | | | (6 | ) | | | 2 | | | | (4 | ) | | | | | | | | | | | | | | | Attributable to non-controlling interests | | | – | | | | – | | | | – | | Attributable to BHP shareholders | | | (6 | ) | | | 2 | | | | (4 | ) | | | | | | | | | | | | | | |
S
ignificantSignificant subsidiaries of the Group are those with the most significant contribution to the Group’s net profit or net assets. The Group’s interest in the subsidiaries’ results are listed in the table below. For a complete list of the Group’s subsidiaries, refer to Exhibit 8.1 - List of Subsidiaries. | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2020
% | | | | | | | | | | | | | | | | | Australia | | Coal mining | | | | | | | 80 | | Hunter Valley Energy Coal Pty Ltd | | Australia | | Coal mining | | | | | | | 100 | | | | | | | | | | | | | | | BHP Olympic Dam Corporation Pty Ltd | | Australia | | Copper and uranium mining | | | | | | | 100 | | Compañia Minera Cerro Colorado Limitada | | Chile | | Copper mining | | | | | | | 100 | | | | Chile | | Copper mining | | | | | | | 57.5 | | | | Chile | | Copper mining | | | | | | | 100 | | | | | | | | | | | | | | | BHP Iron Ore (Jimblebar) Pty Ltd (2) | | Australia | | | | | | | | | 85 | | | | Australia | | | | | | | | | 100 | | | | Australia | | Iron ore and coal mining | | | | | | | 100 | | BHP (Towage Service) Pty Ltd | | Australia | | Towing services | | | | | | | 100 | | | | | | | | | | | | | | | BHP Billiton Freight Singapore Pte Limited | | Singapore | | Freight services | | | | | | | 100 | | BHP Billiton Marketing AG | | Switzerland | | Marketing and trading | | | | | | | 100 | | BHP Billiton Marketing Asia Pte Ltd | | Singapore | | Marketing support and other services | | | | | | | 100 | | | | | | | | | | | | | | | BHP Billiton Finance B.V. | | The
Netherlands | | | | | | | | | 100 | | BHP Billiton Finance Limited | | Australia | | Finance | | | | | | | 100 | | BHP Billiton Finance (USA) Limited | | Australia | | Finance | | | | | | | 100 | | | | Canada | | | | | | | | | 100 | | BHP Group Operations Pty Ltd | | Australia | | Administrative services | | | | | | | 100 | | | | Australia | | Nickel mining, smelting, refining and administrative services | | | | | | | 100 | | WMC Finance (USA) Limited | | Australia | | Finance | | | | | | | 100 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | 2021
% | | | | | | | | | | | | | | | | | Australia | | Coal mining | | | | | | | 80 | | Hunter Valley Energy Coal Pty Ltd | | Australia | | Coal mining | | | | | | | 100 | | | | | | | | | | | | | | | BHP Olympic Dam Corporation Pty Ltd | | Australia | | Copper and uranium mining | | | | | | | 100 | | Compañia Minera Cerro Colorado Limitada | | Chile | | Copper mining | | | | | | | 100 | | | | Chile | | Copper mining | | | | | | | 57.5 | | | | Chile | | Copper mining | | | | | | | 100 | | | | | | | | | | | | | | | BHP Iron Ore (Jimblebar) Pty Ltd 3 | | Australia | | Iron ore mining | | | | | | | 85 | | | | Australia | | Service company | | | | | | | 100 | | BHP (Towage Service) Pty Ltd | | Australia | | Towing services | | | | | | | 100 | | | | | | | | | | | | | | | BHP Billiton Freight Singapore Pte Limited | | Singapore | | Freight services | | | | | | | 100 | | BHP Billiton Marketing AG | | Switzerland | | Marketing and trading | | | | | | | 100 | | BHP Billiton Marketing Asia Pte Ltd | | Singapore | | Marketing support and other services | | | | | | | 100 | | | | | | | | | | | | | | | BHP Billiton Finance B.V. | | The Netherlands | | Finance | | | | | | | 100 | | BHP Billiton Finance Limited | | Australia | | Finance | | | | | | | 100 | | BHP Billiton Finance (USA) Limited | | Australia | | Finance | | | | | | | 100 | | | | Canada | | Potash development | | | | | | | 100 | | BHP Group Operations Pty Ltd | | Australia | | Administrative services | | | | | | | 100 | | | | Australia | | Nickel mining, smelting, refining and administrative services | | | | | | | 100 | | WMC Finance (USA) Limited | | Australia | | Finance | | | | | | | 100 | |
| 1 | The divestment of BHP’s 80 per cent interest in BHP Mitsui Coal Pty Ltd (BMC) to Stanmore Resources Limited was completed on 3 May 2022. Refer to note 3 ‘Exceptional items’ for further information. |
(1) | As the Group has the ability to direct the relevant activities at Minera Escondida Ltda, it has control over the entity. The assessment of the most relevant activity in this contractual arrangement is subject to judgement. The Group establishes the mine plan and the operating budget and has the ability to appoint the key management personnel, demonstrating that the Group has the existing rights to direct the relevant activities of Minera Escondida Ltda. |
(2) | The Group has an effective interest of 92.5 per cent in BHP Iron Ore (Jimblebar) Pty Ltd; however, by virtue of the shareholder agreement with ITOCHU Iron Ore Australia Pty Ltd and Mitsui & Co. Iron Ore Exploration & Mining Pty Ltd, the Group’s interest in the Jimblebar mining operation is 85 per cent, which is consistent with the other respective contractual arrangements at Western Australia Iron Ore. |
3129 Investments accounted for using the equity method S
ignificantSignificant interests in equity accounted investments of the Group are those with the most significant contribution to the Group’s net profit or net assets. The Group’s ownership interest in equity accounted investments results are listed in the table below. For a complete list of the Group’s associates and joint ventures, refer to Exhibit 8.1 - List of Subsidiaries. | | | | | | | | | | | | | | Country of
incorporation/
principal
place of
business | | | | | | | | | | | |
| | 2020
% | | |
| | 2021
% | | | | | | Associate | | Coal mining in Colombia | | 31 December | | | | | | | 33.33 | | | | | | Anguilla/Colombia/Ireland | | Associate | | Coal mining in
Colombia | | 31 December | | | | | | | 33.33 | | Compañía Minera Antamina S.A. (Antamina) | | Peru | | Associate | | Copper and zinc mining | | 31 December | | | | | | | 33.75 | | | Peru | | Associate | | Copper and zinc
mining | | 31 December | | | | | | | 33.75 | | Samarco Mineração S.A. (Samarco) | | Brazil | | Joint venture | | Iron ore mining | | 31 December | | | | | | | 50.00 | | | Brazil | | Joint venture | | Iron ore mining | | 31 December | | | | | | 50.00 | |
| At 30 June 2021, the Group’s investment in Cerrejón was classified as ‘Assets held for sale’ and payables owed to Cerrejón was classified as ‘Liabilities directly associated with the assets held for sale’. During FY2022 the Group received dividends of US$238 million from Cerrejón and on 11 January 2022, BHP completed the sale of its 33.33 per cent interest in Cerrejón to Glencore. In accordance with the sale agreement, the final sale proceeds was adjusted for the dividends received to a final number of US$50 million. |
Voting in relation to relevant activities in Antamina, and Cerrejón, determined to be the approval of the operating and capital budgets, does not require unanimous consent of all participants to the arrangement, therefore joint control does not exist. Instead, because the Group has the power to participate in the financial and operating policies of the investee, these investments arethis investment is accounted for as associates.an associate. Samarco is jointly owned by BHP Billiton Brasil Ltda (BHP Brasil) and Vale S.A. (Vale). As the Samarco entity has the rights to the assets and obligations to the liabilities relating to the joint arrangement and not its owners, this investment is accounted for as a joint venture. The Group is restricted in its ability to make dividend payments from its investments in associates and joint ventures as any such payments require the approval of all investors in the associates and joint ventures. The ownership interest at the Group’s and the associates’ or joint ventures’ reporting dates are the same. When the annual financial reporting date is different to the Group’s, financial information is obtained as at 30 June in order to report on an annual basis consistent with the Group’s reporting date. The movement for the year in the Group’s investments accounted for using the equity method is as follows: | | | | | Investment in
joint ventures | | | Total equity
accounted
investments | | At the beginning of the financial year | | | | | | | | | | | | | Profit/(loss) from equity accounted investments, related impairments and expenses (1) | | | | | | | | | | | | | Investment in equity accounted investments | | | | | | | | | | | | | Dividends received from equity accounted investments | | | | | | | | | | | | | Transfer to assets held for sale (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | Investment in
joint ventures | | | Total equity
accounted
investments | | | At the beginning of the financial year | | | | | | | | | | | | | Loss from equity accounted investments, related impairments and expenses | | | | | | | | ) | | | | ) | | Investment in equity accounted investments | | | | | | | | | | | | | Dividends received from equity accounted investments 3 | | | | ) | | | | | | | | ) | | Divestment and demerger of equity accounted investments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At the end of the financial year | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) 1 | US$ (990)(676) million represents US$ (111) million impairment relating to US$(111) million funding provided during the period, US$(1,000)(663) million movement in the Samarco dam failure provision including US$ (842)(747) million change in estimate and US$ (158)84 million exchange translation, US$ (15)68 million movement in provisions related to the Samarco Germano dam decommissioning provision including US$ 656 million change in estimate and US$ (21)12 million exchange translation and US$ 136 (81)million fair value change on forward exchange derivatives. Refer to note 4 ‘Significant events – Samarco dam failure’ for further information. |
(2) | On 28 June 2021, the Group announced the divestmentIncludes share of its 33.3 per cent interest in Cerrejón to Glencore, for US$294 million cash consideration. The transaction has an effective economic dateoperating losses of 31 December 2020. The purchase price is subject to adjustments at transaction completion which may include an adjustment for the dividends paid by Cerrejón to the Group during the periodequity accounted investments from signing to completion. An impairment chargeDiscontinued operations of US$ 4664 million (before tax) was recognised in the year ended 30 June 2021 reducing the carrying value of the Group’s investment in Cerrejón at 30 June 2021 to(2021: US$ 284 million, being the agreed sale proceeds of6 million; 2020: US$ 294
million adjusted for expected transaction costs.4 million). Refer to note 13 ‘Impairment of non-current assets’ for details.27 ‘Discontinued operations’. |
At 30 June 2021, the Group’s investment of US$284 million in Cerrejón along with a loan due from Cerrejón of US$40 million, has been classified as ‘Assets held for sale’. Payables owed to Cerrejón of US$17 million have been classified as ‘Liabilities directly associated with the assets held for sale’. Subject to the satisfaction of customary competition and regulatory requirements, the transaction is expected to be completed within 12 months from the balance sheet date.
| Includes dividends received from equity accounted investments from Discontinued operations of US$10 million (2021: US$10 million; 2020: US$12 million). |
he following table summarises the financial information relating to each of the Group’s significant equity accounted investments. Information of the Group’s investment in Cerrejón has not been included for FY2021 following its classification as ‘Assets held for sale’. BHP Brasil’s 50 per cent portion of Samarco’s commitments, for which BHP Brasil has no funding obligation, is US$350 million (2020:(2021: US$200350 million).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Current assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Current liabilities | | | | ) | | | | | | | | ) | | | | | | | | | | | | | ) | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net assets/(liabilities) – 100% | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net assets/(liabilities) – Group share | | | | | | | | | | | | ) | | | | | | | | | | Adjustments to net assets related to accounting policy adjustments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment of the carrying value of the investment in Samarco | | | | | | | | | | | | ) | | | | | | | | | | Additional share of Samarco losses | | | | | | | | | | | | | | | | | | | | | | Unrecognised losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Carrying amount of investments accounted for using the equity
method | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profit/(loss) from Continuing operations – 100% | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of profit/(loss) of equity accounted investments | | | | | | | | | | | | | | | | | | | | | Impairment of the carrying value of the investment in Samarco | | | | | | | | | | | | | | | | | | | | | Additional share of Samarco losses | | | | | | | | | | | | | | | | | | | | | | Fair value change on forward exchange derivatives | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profit/(loss) from equity accounted investments, related
impairments and expenses | | | | | | | | ) | | | | ) | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | Comprehensive income – 100% | | | | | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of comprehensive income/(loss) – Group share in equity
accounted investments | | | | | | | | ) | | | | ) | | | | | | | | ) | | | | | | | | | | | | | | | | | | | | | | | Dividends received from equity accounted investments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Individually immaterial (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net assets/(liabilities) – 100% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net assets/(liabilities) – Group share | | | | | | | | | | | | | | | | | | | | | | | | | Adjustments to net assets related to accounting policy adjustments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Impairment of the carrying value of the investment in Samarco | | | | | | | | | | | | | | | | | | | | | | | | | Additional share of Samarco losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Carrying amount of investments accounted for using the equity method | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profit/(loss) from Continuing operations – 100% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of profit/(loss) of equity accounted investments | | | | | | | | | | | | | | | | | | | | | | | | | Impairment of the carrying value of the investment in Cerrejón | | | | | | | | | | | | | | | | | | | | | | | | | Impairment of the carrying value of the investment in Samarco | | | | | | | | | | | | | | | | | | | | | | | | | Additional share of Samarco losses | | | | | | | | | | | | | | | | | | | | | | | | | Fair value change on forward exchange
derivatives | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profit/(loss) from equity accounted investments, related impairments and expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Comprehensive income – 100% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of comprehensive income/(loss) – Group share in equity accounted investments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Dividends received from equity accounted investments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Associates | | | Joint ventures | | | | | | | Antamina | | | Cerrejón | | | | | | | | | Individually
immaterial | | | Total | | | | | 1,499 | | | | – | | | | | | | | 509 | 3
| | | | | | | | | | | | 4,885 | | | | – | | | | | | | | 4,380 | | | | | | | | | | | | | (1,285 | ) | | | – | | | | | | | | (9,222 | ) 4 | | | | | | | | | | | | (1,062 | ) | | | – | | | | | | | | (7,627 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net assets/(liabilities) – 100% | | | 4,037 | | | | – | | | | | | | | (11,960 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net assets/(liabilities) – Group share | | | 1,362 | | | | – | | | | | | | | (5,980 | ) | | | | | | | | | Adjustments to net assets related to accounting policy adjustments | | | – | | | | – | | | | | | | | 280 | 5
| | | | | | | | | | | | – | | | | – | | | | | | | | 516 | 6
| | | | | | | | | Impairment of the carrying value of the investment in Samarco | | | – | | | | – | | | | | | | | (1,041 | ) 7 | | | | | | | | | Additional share of Samarco losses | | | – | | | | – | | | | | | | | 4,442 | 8
| | | | | | | | | | | | – | | | | – | | | | | | | | 1,783 | 9
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Carrying amount of investments accounted for using the equity
method | | | 1,362 | | | | – | | | | 380 | | | | – | | | | – | | | | 1,742 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,822 | | | | 844 | | | | | | | | 814 | | | | | | | | | | Profit/(loss) from Continuing operations – 100% | | | 1,847 | | | | (43 | ) | | | | | | | (2,202 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of profit/(loss) of equity accounted investments | | | 623 | | | | (14 | ) | | | | | | | (1,076 | ) 11 | | | | | | | | | Impairment of the carrying value of the investment in Cerrejón | | | – | | | | (466 | ) | | | | | | | – | | | | | | | | | | Impairment of the carrying value of the investment in Samarco | | | – | | | | – | | | | | | | | (111 | ) 7 | | | | | | | | | Additional share of Samarco losses | | | – | | | | – | | | | | | | | 85 | | | | | | | | | | Fair value change on forward exchange derivatives | | | – | | | | – | | | | | | | | 136 | | | | | | | | | | | | | – | | | | – | | | | | | | | (24 | ) 9 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profit/(loss) from equity accounted investments, related impairments
and expenses | | | 623 | | | | (480 | ) | | | (68 | ) | | | (990 | ) | | | – | | | | (915 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Comprehensive income/(loss) – 100% | | | 1,847 | | | | (43 | ) | | | | | | | (2,202 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of comprehensive income/(loss) – Group share in equity accounted investments | | | 623 | | | | (480 | ) | | | (68 | ) | | | (990 | ) | | | – | | | | (915 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Dividends received from equity accounted investments | | | 714 | | | | 13 | | | | 10 | | | | – | | | | – | | | | 737 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Associates | | | Joint ventures | | | | | | | Antamina | | | Cerrejón | | | Individually
immaterial | | | | | | Individually
immaterial | | | Total | | | | | 2,464 | | | | 1,091 | | | | | | | | 26 | | | | | | | | | | Profit/(loss) from Continuing operations – 100% | | | 629 | | | | (182 | ) | | | | | | | (3,617 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of profit/(loss) of equity accounted investments | | | 212 | | | | (68 | ) | | | | | | | (1,918 | ) | | | | | | | | | Impairment of the carrying value of the investment in Samarco | | | – | | | | – | | | | | | | | (95 | ) | | | | | | | | | Additional share of Samarco losses | | | – | | | | – | | | | | | | | 93 | | | | | | | | | | | | | – | | | | – | | | | | | | | 1,412 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profit/(loss) from equity accounted investments, related impairments and expenses | | | 212 | | | | (68 | ) | | | (144 | ) | | | (508 | ) | | | – | | | | (508 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Comprehensive income/(loss) – 100% | | | 629 | | | | (182 | ) | | | | | | | (3,617 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of comprehensive income/(loss) – Group share in equity accounted investments | | | 212 | | | | (68 | ) | | | (144 | ) | | | (508 | ) | | | – | | | | (508 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Dividends received from equity accounted investments | | | 105 | | | | 9 | | | | 12 | | | | – | | | | – | | | | 126 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Associates | | | Joint ventures | | | | | | | Antamina | | | Cerrejón | | | Individually
immaterial (1) | | | Samarco (2) | | | Individually
immaterial | | | Total | | | | | 974 | | | | 712 | | | | | | | | 49 | (3) | | | | | | | | | | | | 4,743 | | | | 2,462 | | | | | | | | 3,601 | | | | | �� | | | | | | | | (239 | ) | | | (170 | ) | | | | | | | (7,961 | ) (4) | | | | | | | | | | | | (1,173 | ) | | | (854 | ) | | | | | | | (5,447 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net assets/(liabilities) – 100% | | | 4,305 | | | | 2,150 | | | | | | | | (9,758 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net assets/(liabilities) – Group share | | | 1,453 | | | | 717 | | | | | | | | (4,879 | ) | | | | | | | | | Adjustments to net assets related to accounting policy adjustments | | | – | | | | 59 | | | | | | | | 256 | (5) | | | | | | | | | | | | – | | | | – | | | | | | | | 405 | (6) | | | | | | | | | Impairment of the carrying value of the investment in Samarco | | | – | | | | – | | | | | | | | (930 | ) (7) | | | | | | | | | Additional share of Samarco losses | | | – | | | | – | | | | | | | | 3,341 | (8) | | | | | | | | | | | | – | | | | – | | | | | | | | 1,807 | (9) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Carrying amount of investments accounted for using the equity method | | | 1,453 | | | | 776 | | | | 356 | | | | – | | | | – | | | | 2,585 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,464 | | | | 1,091 | | | | | | | | 26 | | | | | | | | | | Profit/(loss) from Continuing operations – 100% | | | 629 | | | | (182 | ) | | | | | | | (3,617 | ) (10) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of profit/(loss) of equity accounted investments | | | 212 | | | | (68 | ) | | | | | | | (1,918 | ) (11) | | | | | | | | | Impairment of the carrying value of the investment in Samarco | | | – | | | | – | | | | | | | | (95 | ) (7) | | | | | | | | | Additional share of Samarco losses | | | – | | | | – | | | | | | | | 93 | | | | | | | | | | | | | – | | | | – | | | | | | | | 1,412 | (9) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profit/(loss) from equity accounted investments, related impairments and expenses | | | 212 | | | | (68 | ) | | | (148 | ) | | | (508 | ) | | | – | | | | (512 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Comprehensive income/(loss) – 100% | | | 629 | | | | (182 | ) | | | | | | | (3,617 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of comprehensive income/(loss) – Group share in equity accounted investments | | | 212 | | | | (68 | ) | | | (148 | ) | | | (508 | ) | | | – | | | | (512 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Dividends received from equity accounted investments | | | 105 | | | | 9 | | | | 12 | | | | – | | | | – | | | | 126 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Associates | | | Joint ventures | | | | | | | Antamina | | | Cerrejón | | | Individually
immaterial | | | Samarco (2) | | | Individually
immaterial | | | Total | | | | | 3,203 | | | | 2,094 | | | | | | | | 24 | | | | | | | | | | Profit/(loss) from Continuing operations – 100% | | | 1,168 | | | | 309 | | | | | | | | (2,166 | ) (10) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of profit/(loss) of equity accounted investments | | | 394 | | | | 103 | | | | | | | | (1,075 | ) (11) | | | | | | | | | Impairment of the carrying value of the investment in Samarco | | | – | | | | – | | | | | | | | (96 | ) (7) | | | | | | | | | Additional share of Samarco losses | | | – | | | | – | | | | | | | | 108 | | | | | | | | | | | | | – | | | | – | | | | | | | | 118 | (9) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Profit/(loss) from equity accounted investments, related impairments and expenses | | | 394 | | | | 103 | | | | (98 | ) | | | (945 | ) | | | – | | | | (546 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Comprehensive income/(loss) – 100% | | | 1,168 | | | | 309 | | | | | | | | (2,166 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Share of comprehensive income/(loss) – Group share in equity accounted investments | | | 394 | | | | 103 | | | | (98 | ) | | | (945 | ) | | | – | | | | (546 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | Dividends received from equity accounted investments | | | 361 | | | | 134 | | | | 15 | | | | – | | | | – | | | | 510 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | The unrecognised share of gain for the period was US$ 16 million (2021: unrecognised share of loss for the period was US$40 million (2020: unrecognised share of loss for the period was US$12 million), which increaseddecreased the cumulative losses to US$233 217 million (2020:(2021: increase to US$ 193233 million). |
(2) 2 | Refer to note 4 ‘Significant events – Samarco dam failure’ for further information regarding the financial impact of the Samarco dam failure in November 2015 on BHP Brasil’s share of Samarco’s losses. |
| Includes cash and cash equivalents of US$134106 million (2020:(2021: US$15134 million). |
(4) | Includes current financial liabilities (excluding trade and other payables and provisions) of US$6,5676,837 million (2020:(2021: US$6,0236,567 million). |
(5) | Relates mainly to dividends declared by Samarco that remain unpaid at balance date and which, in accordance with the Group’s accounting policy, are recognised when received not receivable. |
(6) | Working capital funding provided to Samarco during the period is capitalised as part of the Group’s investments in joint ventures and disclosed as an impairment included within the Samarco impairment expense line item. |
(7) | In the year ended 30 June 2016 BHP Brasil adjusted its investment in Samarco to US$ NaNnil (resulting from US$(655) million share of loss from Samarco and US$(525) million impairment). Additional cumulative impairment losses relating to working capital funding of US$(516) million have also been recognised. |
(8) | BHP Brasil has recognised accumulated additional share of Samarco losses of US$(4,442)(5,326) million resulting from US$(3,945)(4,539) million provisions relating to the Samarco dam failure, including US$(497)(787) million recognised as net finance costs. |
(9) | Share of Samarco’s losses for which BHP Brasil does not have an obligation to fund. |
(10) | Includes depreciation and amortisation of US$ 205 million (2021: US$154 million (2020:million; 2020: US$84 million; 2019: US$85 million), interest income of US$ 19 million (2021: US$1 million
(million; 2020: US$16 million; 2019: US$22 million), interest expense of US$ 628 million (2021: US$492 million (2020:million;2020 : US$588 million; 2019: US$342 million) and income tax
(expense)/ benefit of US$ (7) million (2021: US$(303) million (2020:million; 2020: US$(256) million; 2019: US$52 million). |
(11) | Includes accounting policy adjustments mainly related to the removal of foreign exchange gains on excluded dividends payable. |
30 Interests in joint operations Significant joint operations of the Group are those with the most significant contributions to the Group’s net profit or net assets. The Group’s interest in the joint operations results are listed in the table below. For a complete list of the Group’s investments in joint operations, refer to Exhibit 8.1 - List of Subsidiaries. | | | | | | | | | | | | | | | | | | | | | | Significant joint operations | | | | | |
| | | 2020
% | | | | US | | | | | | | | | 44 | | | | Australia | | | | | | | | | 50 | | | | | | | | | | | | | 71.43 | | | | | | | | | | | | | 23.9 | | | | | | | | | | | | | 12.5–16.67 | | | | Australia | | | | | | | | | 40–71.43 | | ROD Integrated Development (2) | | | | | | | | | | | 29.50 | | | | | | | | | | | | | 44 | | | | Trinidad and Tobago | | | | | | | | | 45–68.46 | | | | Australia | | | | | | | | | 85 | | | | Australia | | | | | | | | | 85 | | | | Australia | | | | | | | | | 85 | | Central Queensland Coal Associates | | Australia | | | | | | | | | 50 | |
| | | | | | | | | | | | | | | | | | | | | | Significant joint operations | | | | | | | | | 2021
% | | | | Australia | | Iron ore mining | | | | | | | 85 | | | | Australia | | Iron ore mining | | | | | | | 85 | | | | Australia | | Iron ore mining | | | | | | | 85 | | | Central Queensland Coal Associates | | Australia | | Coal mining | | | | | | | 50 | | | | US | | Hydrocarbons production | | | | | | | 44 | | | | Australia | | Hydrocarbons production | | | | | | | 50 | | | | Australia | | Hydrocarbons production | | | | | | | 71.43 | | | | US | | Hydrocarbons production | | | | | | | 23.9 | | | | Australia | | Hydrocarbons production | | | | | | | 12.5–16.67 | | | | Australia | | Hydrocarbons production | | | | | | | 40–71.43 | | ROD Integrated Development 2 | | Algeria | | Hydrocarbons production | | | | | | | 28.85 | | | | US | | Hydrocarbons production | | | | | | | 72 | | | | Trinidad and Tobago | | Hydrocarbons production | | | | | | | 45–68.46 | |
(1) | While the Group may hold a greater than 50 per cent interest in these joint operations, all the participants in these joint operations approve the operating and capital budgets and therefore the Group has joint control over the relevant activities of these arrangements.
|
(2) | Group interest reflects the working interest and may varybased on the Group’s effective interest in producing wells. |
(3) | Increase in Group interest reflects the acquisition of an additional 28 per cent working interest in Shenzi. The transaction was completed on 6 November 2020 for a purchase price of US$480 million after customary post-closing adjustments. Shenzi continues to be accounted for as a joint operation because BHP continues to have joint decision-making rights with the other joint venture partner (Repsol). The assets and liabilities related to the acquired interests have been accounted for in line with the principles of IFRS 3/AASB 3 ‘Business Combinations’ with no remeasurement of the Group’s previous interest. The acquisition resulted in increases to property plant and equipment of US$642 million, inventory of US$17 million and closure and rehabilitation liabilities of US$179 million. Fair value of the identifiable assets and liabilities approximate the consideration paid and therefore 0 goodwill or bargain purchase gain has been recognised for the acquisition.
|
(4) | Trinidad/Tobago joint operations include Greater Angostura and Ruby.
|
(5) | These contractual arrangements are controlled by the Group and do not meet the definition of joint operations. However, as they are formed by contractual arrangement and are not entities, the Group recognises its share of assets, liabilities, revenue and expenses arising from these arrangements. |
| These joint operations formed part of the Group’s oil and gas portfolio that merged with Woodside on 1 June 2022. Refer to note 27 ‘Discontinued operations’ for details. |
Assets held in joint operations subject to significant restrictions are as follows: | | | | | | | | | | | | | | | | | | | | 2020 | | | | | | | | US$M | | | | | | | | | 2,059 | | | | | | | | | 37,193 | | | | | | | | | | | | | | | | | | | 39,252 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | 2021 | | | | | | | | US$M | | | | | | | | | 2,260 | | | | | | | | | 38,725 | | | | | | | | | | | | | | | | | | | 40,985 | | | | | | | | | | | |
(1) | While the Group is unrestricted in its ability to sell a share of its interest in these joint operations, it does not have the right to sell individual assets that are used in these joint operations without the unanimous consent of the other participants. The assets in these joint operations are also restricted to the extent that they are only available to be used by the joint operation itself and not by other operations of the Group. |
3331 Related party transactions
The Group’s related parties are predominantly subsidiaries, associates and joint ventures, and key management personnel of the Group. Disclosures relating to key management personnel are set out in note 24 ‘Key management personnel’. Transactions between each parent company and its subsidiaries are eliminated on consolidation and are not disclosed in this note. All transactions to/from related parties are made at arm’s length, i.e. at normal market prices and rates and on normal commercial terms. Outstanding balances at year-end are unsecured and settlement occurs in cash. Loan amounts owing from related parties represent secured loans made to associates and joint ventures under co-funding arrangements. Such loans are made on an arm’s length basis. NaNNo guarantees are provided or received for any related party receivables or payables.
NaNNo provision for expected credit losses has been recognised in relation to any outstanding balances and 0no expense has been recognised in respect of expected credit losses due from related parties.
There were 0no other related party transactions in the year ended 30 June 2021 (2020:2022 (2021: US$ NaN)nil), other than those with post-employment benefit plans for the benefit of Group employees. These are shown in note 27 ‘Pension26 ‘Employee benefits, restructuring and other post-retirement obligations’employee benefits provisions’. Related party transactions with Samarco are described in note 4 ‘Significant events – Samarco dam failure’. Further disclosures related to related party transactions are as follows: Transactions with related parties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2020 | | | | | | | | US$M | | | | | | US$M | | | | | | | | | – | | | | | | | | – | | Purchases of goods/services | | | | | | | – | | | | | | | | 967.276 | | | | | | | | | – | | | | | | | | 2.370 | | | | | | | | | – | | | | | | | | – | | | | | | | | | – | | | | | | | | 126.187 | | Net loans (repayments from)/made to related parties | | | | | | | – | | | | | | | | 12.273 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | | | | | 2021 | | | | | | | | US$M | | | | | | US$M | | | | | | | | | – | | | | | | | | – | | Purchases of goods/services | | | | | | | – | | | | | | | | 1,564.073 | | | | | | | | | – | | | | | | | | 2.241 | | | | | | | | | – | | | | | | | | – | | | | | | | | | – | | | | | | | | 737.250 | | Net loans made to/(repayments from) related parties | | | | | | | – | | | | | ) | | | (12.108 | ) | | | | | |
Outstanding balances with related parties | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2021 | | | | | | 2021 | | | | | | | | US$M | | | | | | US$M | | Trade amounts owing to related parties | | | | | | | – | | | | | | | | 316.269 | | Loan amounts owing to related parties | | | | | | | – | | | | | | | | 17.097 | | Trade amounts owing from related parties | | | | | | | – | | | | | | | | 0.004 | | Loan amounts owing from related parties | | | | | | | – | | | | | | | | 40.651 | |
Outstanding balances with related parties
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2020 | | | | | | | | US$M | | | | | | US$M | | Trade amounts owing to related parties | | | | | | | – | | | | | | | | 69.490 | | Loan amounts owing to related parties | | | | | | | – | | | | | | | | 5.097 | | Trade amounts owing from related parties | | | | | | | – | | | | | | | | 0.473 | | Loan amounts owing from related parties | | | | | | | – | | | | | | | | 40.759 | |
Unrecognised items and uncertain events 3432 Contingent liabilities | | | | | | | | | | | | | | | 2020 | | | | | | | | US$M | | Associates and joint ventures (1) | | | | | | | 1,314 | | Subsidiaries and joint operations (1) | | | | | | | 1,534 | | | | | | | | | | | | | | | | | | | 2,848 | | | | | | | | | | | |
| | | | | | | | | | | | | | | 2021 | | | | | | | | US$M | | Associates and joint ventures 1 | | | | | | | 1,532 | | Subsidiaries and joint operations 1 | | | | | | | 1,615 | | | | | | | | | | | | | | | | | | | 3,147 | | | | | | | | | | | |
(1) 1 | There are a number of matters, for which it is not possible at this time to provide a range of possible outcomes or a reliable estimate of potential future exposures, and for which no amounts have been included in the table above. |
A contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. A contingent liability may also be a present obligation arising from past events but is not recognised on the basis that an outflow of economic resources to settle the obligation is not viewed as probable, or the amount of the obligation cannot be reliably measured. When the Group has a present obligation, an outflow of economic resources is assessed as probable and the Group can reliably measure the obligation, a provision is recognised. The Group has entered into various counter-indemnities of bank and performance guarantees related to its own future performance, which are in the normal course of business. The likelihood of these guarantees being called upon is considered remote. The Group presently has tax matters, litigation and other claims, for which the timing of resolution and potential economic outflow are uncertain. Obligations assessed as having probable future economic outflows capable of reliable measurement are provided at reporting date and matters assessed as having possible future economic outflows capable of reliable measurement are included in the total amount of contingent liabilities above. Individually significant matters, including narrative on potential future exposures incapable of reliable measurement, are disclosed below, to the extent that disclosure does not prejudice the Group. | | | Uncertain tax and royalty matters | | The Group is subject to a range of taxes and royalties across many jurisdictions, the application of which is uncertain in some regards. Changes in tax law, changes in interpretation of tax law, periodic challenges and disagreements with tax authorities, and legal proceedings result in uncertainty of the outcome of the application of taxes and royalties to the Group’s business. Areas of uncertainty at reporting date include the application of taxes and royalties to the Group’s cross-border operations and transactions. To the extent uncertain tax and royalty matters give rise to a contingent liability, an estimate of the potential liability is included within the table above, where it is capable of reliable measurement. |
| | | | | Samarco contingent liabilities | | The table above includes contingent liabilities related to the Group’s equity accounted
accounted investment in Samarco to the extent they are capable of reliable measurement. Details of contingent liabilities related to Samarco are disclosed in note 4 ‘Significant events – Samarco dam failure’. |
| | | | | AsWhere the Group divests or demerges entities, it is generally agreed to provide certain indemnities to the acquiring or demerged entity. Such indemnities include those provided as part of the demerger of South32 Limited (South32)South 32 Ltd in May 2015, certain indemnities were agreed underdivestment of Group’s Onshore US assets in September 2018 and October 2018, divestment of BMC in May 2022 and the Separation Deed. Subject to certain exceptions, BHP Group Limited indemnifies South32 against claims and liabilities relating tomerger of the Group Businesses and former Group Businesses prior to the demerger and South32 indemnifies the Group against all claims and liabilities relating to the South32 Businesses and former South32 Businesses.Group’s Petroleum business with Woodside in June 2022. No material claims have been made pursuant to the Separation Deedthese indemnities as at 30 June 2021.2022. |
On 27 July 2021, the Group entered into a definitive Support Agreement with Noront Resources (Noront) to make an all-cash takeover offer for Noront.
On 17 August 2021, the Group announced a major growth investment of US$5.7 billion (C$7.5 billion) in the Jansen Stage 1 potash project, which is aligned with its strategy of growing its exposure to future facing commodities in world class assets.
On 17 August 2021, the Group announced the proposed merger of our Petroleum assets with Woodside. On completion of the proposed transaction, BHP’s oil and gas business would merge with Woodside, and Woodside would issue new shares to be distributed to BHP shareholders, at which time it is expected that Woodside would be owned 52 per cent and 48 per cent by existing Woodside and BHP shareholders, respectively. The merger, which has a proposed effective date of 1 July 2021, is subject to confirmatory due diligence, negotiation and execution of full form transaction documents, and satisfaction of conditions precedent including shareholder, regulatory and other approvals. The Group continues to assess the full financial reporting impacts of the proposed merger. However, the preliminary terms of the merger did not provide an indicator of impairment for our Petroleum assets at 30 June 2021. The merger is expected to be completed during the first half of CY2022, at which time, we would derecognise the carrying value of our Petroleum assets, which at 30 June 2021 included, but was not limited to, property plant and equipment and closure and rehabilitation provisions of approximately US$11.9 billion and US$3.9 billion, respectively.
On 17 August 2021, the Group announced its intention to realise simplification and enhanced strategic flexibility benefits through unifying its corporate structure under its existing Australian parent company.
Other than the matters outlined above,elsewhere in the Financial Statements, no matters or circumstances have arisen since the end of the financial year that have significantly affected, or may significantly affect, the operations, results of operations or state of affairs of the Group in subsequent accounting periods.
3634 Auditor’s remuneration | | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | Fees payable to the Group’s auditors for assurance services | | | | | | | | | | | | | Audit of the Group’s Annual Report | | | | | | | 11.196 | | | | 6.764 | | Audit of the accounts of subsidiaries, joint ventures and associates | | | | | | | 1.262 | | | | 5.127 | | Audit-related assurance services required by legislation to be provided by the auditor | | | | | | | 1.815 | | | | 1.358 | | Other assurance and agreed-upon procedures under legislation or contractual arrangements | | | | | | | 2.003 | | | | 1.266 | | | | | | | | | | | | | | | | | | | | | | | 16.276 | | | | 14.515 | | | | | | | | | | | | | | | | Fees payable to the Group’s auditors for non-assurance services | | | | | | | | | | | | | | | | | | | | 0.400 | | | | 0.013 | | | | | | | | | | | | | | | | | | | | | | | 0.400 | | | | 0.013 | | | | | | | | | | | | | | | | | | | | | | | 16.676 | | | | 14.528 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | | | | US$M | | | US$M | | Fees payable to the Group’s auditors for assurance services | | | | | | | | | | | | | Audit of the Group’s Annual Report | | | | | | | 10.642 | | | | 11.196 | | Audit of the accounts of subsidiaries, joint ventures and associates | | | | | | | 1.234 | | | | 1.262 | | Audit-related assurance services required by legislation to be provided by the auditor | | | | | | | 1.770 | | | | 1.815 | | Other assurance and agreed-upon procedures under legislation or contractual arrangements | | | | | | | 1.867 | | | | 2.003 | | | | | | | | | | | | | | | | | | | | | | | 15.513 | | | | 16.276 | | | | | | | | | | | | | | | | Fees payable to the Group’s auditors for non-assurance services | | | | | | | | | | | | | | | | | | | | – | | | | 0.400 | | | | | | | | | | | | | | | | | | | | | | | – | | | | 0.400 | | | | | | | | | | | | | | | | | | | | | | | 15.513 | | | | 16.676 | | | | | | | | | | | | | | | |
In each of FY2021 and FY2020, allAll amounts were paid to EY or EY affiliated firms. Fees arefirms with fees determined, and predominantly billed, in US dollars. In FY2019, all amounts were paid to KPMG or KPMG affiliated firms, being the Group’s auditors for the financial year. Fees were determined in local currencies and predominantly billed in US dollars based on the exchange rate at the beginning of the financial year.
Fees payable to the Group’s auditors for assurance services For all periods disclosed, 0 fees are payable in respect of the audit of pension funds.
Audit of the Group’s Annual Report comprises fees for auditing the statutory financial report of the Group and includes audit work in relation to compliance with section 404 of the US Sarbanes-Oxley Act. Audit-related assurance services required by legislation to be provided by the auditors mainly comprises review of half-year reports. Other assurance services comprise assurance in respect of the Group’s sustainability reporting and economic contribution reporting,report, in addition to the audits of the financial reports prepared in connection with the merger of BHP’s oil and comfort letters.gas portfolio with Woodside and the unification of BHP’s dual listed corporate structure. Fees payable to the Group’s auditors for other services No amounts were payable for other services in FY2022 or FY2021. In prior years, amountsAmounts for other services in FY2020 comprised tax compliance services (2020:
(US$ 0.269 million; 2019: US$0.013 million) and tax advisory services of (2020: US$(US$ 0.131 million; 2019: US$ NaN) million).
3735 Not required for US Reportingreporting
3836 Not required for US Reportingreporting
37 New and amended accounting standards and interpretations and changes to accounting policies AmendedNew and amended accounting standardspronouncements adopted in the current year
The adoption of amendmentsnew and revisions toamended accounting pronouncements applicable from 1 July 2020, including the change in definition of a business under the amendments to IFRS 3/AASB 3 ‘Business Combinations’ and revisions to the Conceptual Framework for Financial Reporting2021 did not haveresult in a significant impact on the Group’s Financial Statements. The Group has early adopted ‘Interest This includes the Interest Rate Benchmark (IBOR) Reform – Phase 2 (Amendments to IFRS 9/AASB 9 ‘Financial Instruments’, IAS 39/AASB139 ‘Financial Instruments: Recognition and Measurement’; IFRS 7/AASB 7 ‘Financial Instruments: Disclosures’; IFRS 4/AASB 4 ‘Insurance Contracts’ and IFRS 16/AASB 16 ‘Leases’). These amendments address the financial reporting impacts from IBOR reform and supplement the IBOR Reform Phase 1 amendments to IFRS 7 and IFRS 9 which were early adopted by the Group in the financial year ended 30 June 2020. Refer to note 23 ‘Financial risk management’ for information on IBOR reform.prior year.
IssuedNew and amended accounting pronouncements on issue but not yet effective
From 1 July 2022, the Group will adopt an amendment to IAS 16/AASB 116 ‘Property, Plant and Equipment’ thatrequires an entity to recognise the sales proceeds from selling items produced while preparing property, plant and equipment for its intended use, and the related cost, in profit or loss, instead of deducting the amounts received from the cost of the asset. The amendment is applied retrospectively, but only to items of property, plant and equipment that became ready for its intended use on or after 1 July 2020. The impact of the amendment on the Group is not expected to be significant and the Group has not identified any material amounts deducted from the cost of assets since 1 July 2020. A number of other accounting standards and interpretations have been issued and will be applicable in future periods. While these remain subject to ongoing assessment, no significant impacts have been identified to date. These standardspronouncements have not been applied in the preparation of these Financial Statements. Changes in accounting policies
On 29 April 2020, the IFRS Interpretations Committee issued a decision on the application of IAS 12 ‘Income Taxes’ when the recovery of the carrying amount of an asset gives rise to multiple tax consequences, concluding that an entity must account for distinct tax consequences separately. As a result, the Group has changed its accounting policy for assets that have no deductible or depreciable amount for income tax purposes, but do have a deductible amount for capital gains tax (CGT) when determining deferred tax. The Group’s policy had been to use only the amount deductible for CGT purposes whereas the Group will now account for the distinct income tax and CGT consequences arising from the expected manner of recovery. The assets impacted by the change predominately relate to mineral rights.
Retrospective application of the accounting policy change has resulted in the following adjustments:
F-Consolidated Balance Sheet
The consolidated balance sheet as at 1 July 2019 has been updated for the following:
| | | | | | | | | Increase in Deferred tax liabilities
| | | 1,021 | | Increase in Goodwill (included within Intangible assets)
| | | 950 | | Decrease in Retained earnings
| | | (71 | ) | | | | | |
The goodwill recognised as a result of the change in accounting policy relates to Olympic Dam and has been tested for impairment in the period, with no impairment charge being required. Refer to note 13 ‘Impairment of non-current assets’ for information on impairments. The comparative balance sheet as at 30 June 2020 has been restated to reflect these amounts.
Consolidated Statement of Changes in Equity
The consolidated statement of changes in equity as at 1 July 2018 and 1 July 2019 has been updated to reflect the reduction in retained earnings of US$71 million.
Consolidated Income Statement, Consolidated Statement of Comprehensive Income
The impact of the accounting policy change on the consolidated income statement and consolidated statement of comprehensive income is de minimus and therefore the comparative information has not been restated.
Consolidated Cash Flow Statement
The change in accounting policy has no impact on the consolidated cash flow statement.
Further impacts of the accounting policy change are disclosed in notes 1 ‘Segment reporting’, 12 ‘Intangible assets’ and 14 ‘Deferred tax balances’.
3.2 Not required for US Reporting
3.2A1A Reports of Independent Registered Public Accounting FirmsFirm
Report of Independent Registered Public Accounting FirmsFirm To the membersShareholders and the Board of Directors of BHP Group Limited and BHP Group Plc Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of BHP Group Limited BHP Group Plc and their respective subsidiaries (the “BHP Group” or “the Group”“Company”) as of 30 June 20212022 and 2020,2021, the related consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity, and consolidated cash flow statements for each of the twothree years in the period ended 30 June 2021,2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the BHP GroupCompany at 30 June 20212022 and 2020,2021, and the results of its operations and its cash flows for each of the twothree years in the period ended 30 June 2021,2022, in conformity with International Financial Reporting Standards (“IFRS”) and interpretations as issued by the International Accounting Standards Board. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the BHP Group’sCompany’s internal control over financial reporting as of 30 June 2021,2022, based on criteria established in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring OrganizationsOrganisations of the Treadway Commission (2013 framework), as applicable and our report dated 216 September 20212022 expressed an unqualified opinion thereon. These consolidated financial statements are the responsibility of the BHP Group’sCompany’s management. Our responsibility is to express an opinion on the BHP Group’s consolidatedCompany’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the BHP GroupCompany in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether to due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the Risk and Audit Committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| | | | | Carrying value of non-current assetsproperty, plant and equipment
|
| | Description of the Matter | | As disclosed in Notes 3,Note 11 12, 13 and 31 to the consolidated financial statements the Group hadCompany recorded US$73,81361,295 million in property plant and equipment US$1,437 million in intangible assets and US$1,742 million in investments accounted for using the equity method as of 30 June 20212022. The Company performs an assessment of indicators of impairment and recorded an impairment charge of US$4,239 million (including tax impacts) related to the Potash, New South Wales Energy Coal (NSWEC) and Cerrejónreversal for all cash generating units (CGU). The Group assessed at the recoverable amountend of Olympic Dam; no impairment charge was required. The Group performs impairment assessments for all CGUs where there are indicators of impairment. Where such indicators exist, the Group determines the recoverable value based on the higher of the value in use (VIU) or Fair Value Less Cost of Dispose model (FVLCD) for each CGU. |
reporting period. | Auditing management’s assessment of indicators of impairment indicators and subsequent impairment estimatesreversal was complex due to the high degree of estimation uncertainty in forecasting the future cash flows for each CGU which formCGU. Specifically, the basisindicators of the VIUimpairment or impairment reversal and FVLCD. Specifically, the forecasted cash flows wereare sensitive to changes in significant assumptions, such as forecast commodity prices, reserve quantities, discount rates and discount rates.the possible impacts related to climate change and the transition to a low carbon economy, which includes carbon price assumptions and the Company’s operational emissions reduction strategy. |
| | How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the controls over the Group’sCompany’s process to identify indicators of impairment and the assessment of the recoverable amounts of CGUs for which an indicator ofor impairment was identified. |
reversal. | We performed an independent analysis for indicators of impairment.impairment and impairment reversal. Our procedures involved assessing the key inputs such as forecast commodity prices, reserve quantities, and discount rates and the impact of climate change and the transition to a low carbon economy used in the assessment of indicators of impairment indicators. |
or impairment reversal. | Our testing of management’s estimates of the recoverable amount for the Potash, NSWEC, Cerrejón and Olympic Dam CGUs included, among others, evaluating the significant assumptions used and testing the completeness and accuracy of the underlying data. We involved our valuation professionalsand climate change specialists to assist in assessing the reasonableness of commodity prices by comparing the forecasted commodity and carbon price assumptions to analysts’analyst and broker forecasts and those used by other market participants. In addition, our valuation professionalsspecialists assisted in testing the discount rates used, including a comparison to external market data and evaluating whether the valuation methodology used was consistent with industry practice. We compared the projected cash flows against approved budgets and plans and performed a retrospective comparison to actual historical data for the material cashflow forecasts. In addition, we performed sensitivity analyses over the significant assumptions used within the impairment forecasts. |
| To test the reserve quantities, we examined the information provided by the Group’sCompany’s experts and we involved our mining and oil and gas reserve professionalsspecialists to assist in the assessment of the reserve estimation methodology against the relevant industry and regulatory guidance. |
| With the assistance of our climate change specialists, we tested that the Company’s forecast cash flows incorporated the Company’s operational emissions reduction strategy. In addition, we tested the mathematical accuracy of the models used and assessed the competence, qualifications, and objectivity of management’s internal and external specialists. Finally, we assessed the adequacy of the disclosures within Notes 3,11,12,1311 and 3113 of the consolidated financial statements. |
| | Closure and rehabilitation provisions |
| | Description of the Matter | | As disclosed in Note 15 to the consolidated financial statements, the GroupCompany recorded US$11,9108,689 million in closure and rehabilitation provisions as ofat 30 June 2021.2022. Provisions for closure and rehabilitation are recognised by the GroupCompany when there is a present legal or constructive obligation, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reasonablyreliably estimated. |
| The GroupCompany estimates the individual site provisions using the expected value of future cash flows required to close and rehabilitate the relevant site using current restoration standards and techniques and taking into account risks and uncertainties. Individual site provisions are discounted to theirthe present value using currency specific risk-free discount rates aligned to the estimated timing of cash outflows. |
| Auditing management’s closure and rehabilitation provisions was complex and highly judgemental due to the significant estimation uncertainty within the key assumptions. Specifically, there was significant judgement in determining the expected life of sites including the site,impact of the Company’s climate related strategies, estimated cost and extent of rehabilitation activities, timing of activities, and the discount rates used. As a result of these inputs the provision hasprovisions have a significant estimation uncertainty and a wide range of potential outcomes. |
| | How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Group’sCompany’s closure and rehabilitation provision estimate process. Specifically, our procedures involved testing the controls around the significant assumptions used within the estimate, such as the estimated cost and extent of rehabilitation activities, in addition to the timing of activities. |
| Our procedures included evaluation of the Group’sCompany’s process for identifying legal and regulatory obligations for closure and rehabilitation, and the completeness and accuracy of data used within management’s estimate. |
| We tested that the future rehabilitation costs were consistent with the approved closure plans prepared by management’s internal specialists. We compared the expected life of the sitesites and resulting timing of closure activities used in the provision to the life of asset plans prepared by management’s internal specialists. |
| With the assistance of our environmental professionalsspecialists, we evaluated a sample of closure and rehabilitation provisions for operating and closed sites within the Group.sites. Our testing included evaluating the closure and rehabilitation plan based on the relevant legal and regulatory requirements. In addition, we compared the timing of future cash flows and cost estimates against the closure and rehabilitation plan, environmental studies, and industryindustrial practices. We evaluated the discount rates used against market data. |
| With the assistance of our climate change and environmental specialists, we evaluated the Company’s consideration of physical risks, estimates related to post closure monitoring and maintenance and the timing of closure activities impacted by mine operating lives within the closure and rehabilitation provision. We tested the mathematical accuracy of the closure and rehabilitation provision calculations and assessed the competence, qualifications, and objectivity of management’s internal and external specialists. Finally, we assessed the adequacy of the disclosures within Note 15 to the consolidated financial statements. |
| | | | | Samarco dam failure provisions recognised, including the Germano dam decommissioning and contingent liabilities disclosed |
| | Description of the Matter | | As described in Notes 3, 4, and 3432 to the consolidated financial statements, the BHP GroupCompany recorded lossesa loss of US$1,0871,032 million (pre-tax) for the year ended 30 June 20212022 and hadrecognised provisions of US$2,5603,237 million for the Samarco dam failure and US$232184 million for the Germano dam decommissioning as of 30 June 2021.2022. The GroupCompany recognises a provision when it has a present obligation, and an outflow of economic resources is probable, and the obligation can be reliably measured. |
| Auditing management’s estimate of the Samarco dam failure provisions and contingent liabilities disclosure was complex and highly judgemental due to the significant estimation uncertainty in determining the measurement and completeness of future cash outflows, as well as the extent of the Group’sCompany’s legal obligations to fund the costs under the Framework and Governance Agreements. In particular, thereThere was significant judgement in determining the nature and extent of remediation activities, the cost estimates for remediation and the number and categorisation of impacted people entitled to compensation. As a result of these inputs the provision has a significant estimation uncertainty and a wide range of potential outcomes. |
| | How We Addressed the Matter in Our Audit | | We obtained an understanding, evaluated the design and tested the operating effectiveness of the Group’sCompany’s controls in determining the Samarco dam failure provisions. Specifically, we tested management’s controls over the significant assumptions as described above and the completeness and accuracy of data used within management’s estimates. |
| To test the provisions, we performed audit procedures that included, amongamongst others, assessing methodologies and testing the significant assumptions discussed above and the underlying data used by the GroupCompany in its analysis. We tested a sample of cost estimates used to source documents such as court decisions outlining compensation levels. We compared the nature and extent of activities included in the forecasted cash flows to the Framework Agreement. We also tested the mathematical accuracy of the models.models used to calculate the provisions. To assess management’s ability to forecast, we compared the prior year’syears forecasted cash flows to actual results. |
results and understood key differences. | To assess the status of claims we held discussions with internal and external legal counsel regarding ongoing Samarco dam failure litigation matters. In addition, we obtained legal confirmations and inspected communications with the Group’sCompany’s external legal counsel. |
| We evaluated the competence, qualifications and objectivity of the Group’sCompany’s experts who assisted management in estimating the provision by considering the scope of work, their professional qualifications and remuneration structure. We also assessed the adequacy and completeness of the disclosures within NotesNote 4 and 3432 to the consolidated financial statements. |
| | | We have served as BHP Group Limited’s auditor since 1 July 2019
| | We have served as BHP Group Plc’s auditor since 1 July 2019
|
We have served as BHP Group Limited’s auditor since 2019
Report of Independent Registered Public Accounting FirmsFirm To the membersShareholders and the Board of Directors of BHP Group Limited and BHP Group Plc Opinion on Internal Control Over Financial Reporting We have audited BHP Group Limited BHP Group Plc and their respectiveits subsidiaries’ internal control over financial reporting as of 30 June 2021,2022, based on criteria established in Internal Control—Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)Framework) (the “COSO criteria”). In our opinion, BHP Group Limited BHP Group Plc and their respectiveits subsidiaries (the “BHP Group”“Company”) maintained, in all material respects, effective internal control over financial reporting as of 30 June 2021,2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the BHP GroupCompany as of 30 June 20212022 and 2020,2021, the related consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes inof equity, and consolidated cash flow statements for each of the twothree years in the period ended 30 June 2021,2022, and the related notes (collectively referred to as the “consolidated financial statements”) and our report dated 216 September 20212022 expressed an unqualified opinion thereon. The BHP Group’sCompany’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying section 2.10 Risk and Audit Committee7.2 Corporate Governance Report / Management’s assessment of internal control over financial reporting. Our responsibility is to express an opinion on the BHP Group’sCompany’s internal control over financial reporting based on our audits.audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the BHP GroupCompany in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our auditsaudit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our auditsaudit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audits provideaudit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Overover Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizationsauthorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorizedunauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Report of Independent Registered Public Accounting Firms
To the members of BHP Group Plc and BHP Group Limited:
Opinion on the Consolidated Financial Statements
We have audited the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, and consolidated cash flow statement of the BHP Group (comprising BHP Group Plc, BHP Group Limited and their respective subsidiaries) for the year ended 30 June 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations of the BHP Group and its cash flows for the year ended 30 June 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Revisions due to Changes in Accounting Principles, Additional Disclosure of Earnings per Share, Revision of Segment Reporting, and Change in Definition of Net Debt
As discussed in Note 39 of the consolidated financial statements, BHP Group adopted a change in accounting principle following a decision by the IFRS Interpretations Committee on IAS 12 ‘Income Taxes’. This revision has been retrospectively adjusted as of 1 July 2018, and for the year ended 30 June 2019.
As disclosed in Note 7 of the consolidated financial statements, certain additional earnings per share disclosures have been included in the consolidated financial statements.
As discussed in Notes 3, 4, and 31 of the consolidated financial statements, BHP Group adopted an amendment to IAS 28 ‘Investments in Associates and Joint Ventures’ as of 1 July 2019, which required reclassification of certain exceptional items. This revision has been retrospectively adjusted for the year ended 30 June 2019.
As discussed in Note 1 of the consolidated financial statements, BHP Group revised certain segment reporting. This revision has been retrospectively adjusted for the year ended 30 June 2019.
As discussed in Note 20 of the consolidated financial statements, BHP Group made a change in the definition of net debt. This revision has been retrospectively adjusted for the year ended 30 June 2019.
These consolidated financial statements are the responsibility of the BHP Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ KPMG LLPErnst & Young We served as BHP Group’s auditor from 2002 to 2019.
17 September 2019, except as to Notes 1, 3, 4, 20, and 31, which are as of 22 September 2020 and as to Notes 7 and 39, which are as of 14 September 2021.
We served as BHP Group’s auditor from 2002 to 2019.
176 September 2019, except as to Notes 1, 3, 4, 20, and 31, which are as of 22 September 2020 and as to Notes 7 and 39, which are as of 14 September 2021.2022
| | | | | KPMG, an Australian partnership, and KPMG LLP, a
UK limited liability partnership, member firms of the
KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG
International”), a Swiss entity.
| | KPMG’s liability limited by a scheme approved
under Professional Standards Legislation.
| | Registered in England No OC301540
Registered office: 15 Canada Square, London, E14 5GL
For full details of our professional registration please
refer to ‘Regulatory Information’ under ‘About/About
KPMG’ at www.kpmg.com/uk
|
3.3 Director’s2 Directors’ declaration
In accordance with a resolution of the Directors of BHP Group Limited, and BHP Group Plc, the Directors declare that: | (a) | in the Directors’ opinion and to the best of their knowledge the Financial Statements and notes set out in sections 3.1 and 3.2, are in accordance with the UK Companies Act 2006 and the Australian Corporations Act 2001 (Cth), including: |
| | (i) | complying with the applicable Accounting Standards and the Australian Corporations Regulations 2001 (Cth); and |
| | (ii) | giving a true and fair view of the assets, liabilities, financial position and profit or loss of each of BHP Group Limited BHP Group Plc,and the Group and the undertakings included in the consolidation taken as a whole as at 30 June 20212022 and of their performance for the year ended 30 June 20212022 |
| (b) | the Financial Statements also comply with International Financial Reporting Standards, as disclosed in section 3.1the Basis of preparation to the Financial Statements |
| (c) | to the best of the Directors’ knowledge, the management report (comprising the Strategic ReportOperating and Financial Review and Directors’ Report) includes a fair review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that the Group faces |
| (d) | in the Directors’ opinion there are reasonable grounds to believe that each of BHP Group Limited BHP Group Plc and the Group will be able to pay its debts as and when they become due and payable |
| (e) | as at the date of this declaration, there are reasonable grounds to believe that BHP Group Limited and each of the Closed Group entities identified in Exhibit 8.1 -– List of Subsidiaries will be able to meet any liabilities to which they are, or may become, subject because of the Deed of Cross Guarantee between BHP Group Limited and those group entities pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 |
| (f) | the Directors have been given the declarations required by Section 295A of the Australian Corporations Act 2001 (Cth) from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 20212022 |
Signed in accordance with a resolution of the Board of Directors. Dated this 2nd16th day of September 2021August 2022
3.4 Statement of Directors’ responsibilities in respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report and the Group and Parent Company Financial Statements in accordance with applicable law and regulations. References to the ‘Group and Parent Company Financial Statements’ are made in relation to the Group and individual Parent Company Financial Statements of BHP Group Plc.
UK company law requires the Directors to prepare Group and Parent company Financial Statements for each financial year. The Directors are required to prepare the Group Financial Statements in accordance with International Accounting Standards in conformity with the requirements of the UK Companies Act 2006 and have elected to prepare the Parent company Financial Statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including Financial Reporting Standard 101 Reduced Disclosure Framework (‘FRS 101’).
Under UK company law the Directors must not approve the Group Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Parent Company and of the profit or loss of the Group and the Parent Company for that period.
Under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules, Group Financial Statements are required to be prepared in accordance with IFRSs adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
In preparing each of the Group and Parent company Financial Statements, the Directors are required to:
select suitable accounting policies in accordance with IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ and then apply them consistently
make judgements and accounting estimates that are reasonable and prudent
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information
provide additional disclosures when compliance with the specific requirements in IFRSs (or in respect of the Parent Company Financial Statements, FRS 101) is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group’s financial position and financial performance;
for the Group Financial Statements, state whether International Accounting Standards in conformity with the requirements of the Companies Act 2006 and IFRSs adopted pursuant to Regulation(EC) No 1606/2002 as it applies in the European Union have been followed, subject to any material departures disclosed and explained in the Financial Statements
for the Parent Company Financial Statements, state whether applicable UK Accounting Standards, including FRS 101, have been followed, subject to any material departures disclosed and explained in the Parent Company Financial Statements
assess the Group and parent company’s ability to continue as a going concern, disclosing, as applicable, related matters
use the going concern basis of accounting unless they either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company’s and Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and the Group and enable them to ensure that the Financial Statements comply with the UK Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and the Parent Company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
3.53 Not required for US Reportingreporting
3.64 Included as item 3.2Asection 1A
3.7 Supplementary oil and gas information – unaudited
In accordance with the requirements of the Financial Accounting Standards Board (FASB) Accounting Standard Codification ‘ExtractiveActivities-Oil
and Gas’ (Topic 932) and SEC requirements set out in Subpart 1200 of RegulationS-K,
the Group is presenting certain disclosures about its oil and gas activities. These disclosures are presented below as supplementary oil and gas information, in addition to information disclosed in section 1.17.1 ‘Petroleum’ and section 4.6.1 ‘Petroleum reserves’.The information set out in this section is referred to as unaudited as it is not included in the scope of the audit opinion of the independent auditor on the Financial Statements, refer to section 3.6 ‘Independent Auditors’ reports’.
Proved oil and gas reserves and net crude oil and condensate, natural gas, LNG and NGL production information is included in section 4.5.2 ‘Production – Petroleum’ and section 4.6.1 ‘Petroleum reserves’.
Capitalised costs relating to oil and gas production activities
The following table shows the aggregate capitalised costs relating to oil and gas exploration and production activities and related accumulated depreciation, depletion, amortisation and valuation provisions.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | 754 | | | | 580 | | | | 1,334 | | | | | 17,882 | | | | 13,210 | | | | 1,972 | | | | 33,064 | | | | | | | | | | | | | | | | | | | | | | | 17,882 | | | | 13,964 | | | | 2,552 | | | | 34,398 | | Less: Accumulated depreciation, depletion, amortisation and valuation provisions | | | (12,720 | ) | | | (8,329 | ) | | | (1,483 | ) | | | (22,532 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10 | | | | 808 | | | | 576 | | | | 1,394 | | | | | 17,079 | | | | 12,538 | | | | 1,743 | | | | 31,360 | | | | | | | | | | | | | | | | | | | | | | | 17,089 | | | | 13,346 | | | | 2,319 | | | | 32,754 | | Less: Accumulated depreciation, depletion, amortisation and valuation provisions | | | (11,423 | ) | | | (8,726 | ) | | | (1,370 | ) | | | (21,519 | ) | | | | | | | | | | | | | | | | | | | | | | 5,666 | | | | 4,620 | | | | 949 | | | | 11,235 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10 | | | | 875 | | | | 458 | | | | 1,343 | | | | | 16,514 | | | | 11,751 | | | | 1,625 | | | | 29,890 | | | | | | | | | | | | | | | | | | | | | | | 16,524 | | | | 12,626 | | | | 2,083 | | | | 31,233 | | Less: Accumulated depreciation, depletion, amortisation and valuation provisions | | | (10,867 | ) | | | (8,339 | ) | | | (1,302 | ) | | | (20,508 | ) | | | | | | | | | | | | | | | | | | | | | | 5,657 | | | | 4,287 | | | | 781 | | | | 10,725 | | | | | | | | | | | | | | | | | | | |
(1) | Other is primarily comprised of Algeria, Mexico, and Trinidad and Tobago.
|
Costs incurred relating to oil and gas property acquisition, exploration and development activities
The following table shows costs incurred relating to oil and gas property acquisition, exploration and development activities (whether charged to expense or capitalised). Amounts shown include interest capitalised.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Acquisitions of proved property | | | | | | | | | | | | | | | | | Acquisitions of unproved property | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Acquisitions of proved property | | | – | | | | – | | | | – | | | | – | | Acquisitions of unproved property | | | – | | | | 38 | | | | 6 | | | | 44 | | | | | 38 | | | | 278 | | | | 370 | | | | 686 | | | | | 232 | | | | 676 | | | | 100 | | | | 1,008 | | | | | | | | | | | | | | | | | | | | | | | 270 | | | | 992 | | | | 476 | | | | 1,738 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Acquisitions of proved property | | | – | | | | – | | | | – | | | | – | | Acquisitions of unproved property | | | – | | | | 5 | | | | – | | | | 5 | | | | | 44 | | | | 190 | | | | 492 | | | | 726 | | | | | 132 | | | | 792 | | | | 54 | | | | 978 | | | | | | | | | | | | | | | | | | | | | | | 176 | | | | 987 | | | | 546 | | | | 1,709 | | | | | | | | | | | | | | | | | | | |
(1) | Represents gross exploration expenditure, including capitalised exploration expenditure, geological and geophysical expenditure and development evaluation costs charged to income as incurred.
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(2) | Total costs include US$1,160 million (2020: US$1,178 million; 2019: US$1,275 million) capitalised during the year.
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(3) | Total costs include Onshore US assets of US$ NaN (2020: US$ NaN; 2019: US$331 million).
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(4) | Other is primarily comprised of Algeria, Canada, Mexico and Trinidad and Tobago.
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Results of operations from oil and gas producing activities
The following information is similar to the disclosures in note 1 ‘Segment reporting’ in section 3.1, but differs in several respects as to the level of detail and geographic information. Amounts shown in the following table exclude financial income, financial expenses, and general corporate overheads. Further, the amounts shown below include Onshore US however the disclosures in note 1 ‘Segment reporting’ in Section 3.1 do not.
Income taxes were determined by applying the applicable statutory rates topre-tax
income with adjustments for permanent differences and tax credits. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,272 | | | | 1,244 | | | | 368 | | | | 3,884 | | | | | (487 | ) | | | (267 | ) | | | (93 | ) | | | (847 | ) | | | | (23 | ) | | | (164 | ) | | | (305 | ) | | | (492 | ) | Depreciation, depletion, amortisation and valuation provision (2) | | | (1,210 | ) | | | (489 | ) | | | (113 | ) | | | (1,812 | ) | | | | (125 | ) | | | – | | | | (11 | ) | | | (136 | ) | | | | | | | | | | | | | | | | | | | | | | | 427 | | | | 324 | | | | (154 | ) | | | 597 | | | | | (89 | ) | | | (22 | ) | | | (7 | ) | | | (118 | ) | | | | (46 | ) | | | (78 | ) | | | (115 | ) | | | (239 | ) | | | | 11 | | | | – | | | | – | | | | 11 | | | | | | | | | | | | | | | | | | | | Results of oil and gas producing activities (6) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,535 | | | | 1,101 | | | | 350 | | | | 3,986 | | | | | (575 | ) | | | (161 | ) | | | (80 | ) | | | (816 | ) | | | | (37 | ) | | | (271 | ) | | | (252 | ) | | | (560 | ) | Depreciation, depletion, amortisation and valuation provision (2) | | | (906 | ) | | | (476 | ) | | | (75 | ) | | | (1,457 | ) | | | | (177 | ) | | | (1 | ) | | | (13 | ) | | | (191 | ) | | | | | | | | | | | | | | | | | | | | | | | 840 | | | | 192 | | | | (70 | ) | | | 962 | | | | | (78 | ) | | | (24 | ) | | | (10 | ) | | | (112 | ) | | | | (275 | ) | | | (35 | ) | | | (157 | ) | | | (467 | ) | | | | (85 | ) | | | – | | | | – | | | | (85 | ) | | | | | | | | | | | | | | | | | | | Results of oil and gas producing activities (6) | | | 402 | | | | 133 | | | | (237 | ) | | | 298 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,404 | | | | 2,675 | | | | 610 | | | | 6,689 | | | | | (752 | ) | | | (568 | ) | | | (118 | ) | | | (1,438 | ) | | | | (44 | ) | | | (162 | ) | | | (229 | ) | | | (435 | ) | Depreciation, depletion, amortisation and valuation provision (2) | | | (917 | ) | | | (621 | ) | | | (103 | ) | | | (1,641 | ) | | | | (198 | ) | | | – | | | | (25 | ) | | | (223 | ) | | | | | | | | | | | | | | | | | | | | | | | 1,493 | | | | 1,324 | | | | 135 | | | | 2,952 | | | | | (80 | ) | | | (34 | ) | | | (13 | ) | | | (127 | ) | | | | (530 | ) | | | (193 | ) | | | (267 | ) | | | (990 | ) | | | | (164 | ) | | | – | | | | – | | | | (164 | ) | | | | | | | | | | | | | | | | | | | Results of oil and gas producing activities (6) | | | 719 | | | | 1,097 | | | | (145 | ) | | | 1,671 | | | | | | | | | | | | | | | | | | | |
(1) | Includes sales to affiliated companies of US$51 million (2020: US$62 million; 2019: US$75 million).
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(2) | Includes valuation provision of US$101 million (2020: US$12 million; 2019: US$21 million).
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(3) | Includes royalties and excise duty.
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(4) | Represents the unwinding of the discount on the closure and rehabilitation provision.
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(5) | Includes petroleum resource rent tax and petroleum revenue tax where applicable.
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(6) | Amounts shown exclude financial income, financial expenses and general corporate overheads and, accordingly, do not represent all of the operations attributable to the Petroleum segment presented in note 1 ‘Segment reporting’ in section 3.1.
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(7) | Results of oil and gas producing activities includes Onshore US assets of US$ NaN (2020: US$ NaN; 2019: US$431 million).
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(8) | Other is primarily comprised of Algeria, Canada, Mexico, Trinidad and Tobago and the United Kingdom (divested 30 November 2018).
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Standardised measure of discounted future net cash flows relating to proved oil and gas reserves (Standardised measure)
The following tables set out the standardised measure of discounted future net cash flows, and changes therein, related to the Group’s estimated proved reserves as presented in section 4.6.1 Petroleum reserves, and should be read in conjunction with that disclosure.
The analysis is prepared in compliance with FASB Oil and Gas Disclosure requirements, applying certain prescribed assumptions under Topic 932 including the use of unweighted averagemarket prices for the previous12-months,
year-end
cost factors, currently enacted tax rates and an annual discount factor of 10 per cent to year-end quantities of net proved reserves.Certain key assumptions prescribed under Topic 932 are arbitrary in nature and may not prove to be accurate. The reserve estimates on which the Standard measure is based are subject to revision as further technical information becomes available or economic conditions change.
Discounted future net cash flows like those shown below are not intended to represent estimates of fair value. An estimate of fair value would also take into account, among other things, the expected recovery of reserves in excess of proved reserves, anticipated future changes in commodity prices, exchange rates, development and production costs as well as alternative discount factors representing the time value of money and adjustments for risk inherent in producing oil and gas.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Discount at 10 per cent per annum | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,526 | | | | 12,997 | | | | 1,660 | | | | 26,183 | | | | | (4,027 | ) | | | (4,943 | ) | | | (494 | ) | | | (9,464 | ) | | | | (4,124 | ) | | | (3,242 | ) | | | (433 | ) | | | (7,799 | ) | | | | (187 | ) | | | (880 | ) | | | (473 | ) | | | (1,540 | ) | | | | | | | | | | | | | | | | | | | | | | 3,188 | | | | 3,932 | | | | 260 | | | | 7,380 | | Discount at 10 per cent per annum | | | (642 | ) | | | (1,586 | ) | | | (94 | ) | | | (2,322 | ) | | | | | | | | | | | | | | | | | | | | | | 2,546 | | | | 2,346 | | | | 166 | | | | 5,058 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 18,292 | | | | 18,076 | | | | 1,807 | | | | 38,175 | | | | | (4,710 | ) | | | (4,917 | ) | | | (459 | ) | | | (10,086 | ) | | | | (3,860 | ) | | | (4,516 | ) | | | (226 | ) | | | (8,602 | ) | | | | (2,551 | ) | | | (1,657 | ) | | | (711 | ) | | | (4,919 | ) | | | | | | | | | | | | | | | | | | | | | | 7,171 | | | | 6,986 | | | | 411 | | | | 14,568 | | Discount at 10 per cent per annum | | | (1,926 | ) | | | (3,396 | ) | | | (94 | ) | | | (5,416 | ) | | | | | | | | | | | | | | | | | | | | | | 5,245 | | | | 3,590 | | | | 317 | | | | 9,152 | | | | | | | | | | | | | | | | | | | |
(1) | Other is primarily comprised of Algeria and Trinidad and Tobago.
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(2) | Future income taxes include credits to be received as a result of oil and gas operations and the utilisation of future tax losses by the Group.
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Changes in the Standardised measure are presented in the following table.
| | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | Changes in the Standardised measure | | | | | | | | | | | | | Standardised measure at the beginning of the year | | | | | | | 9,152 | | | | 10,240 | | | | | | | | | | | | | | | Prices, net of production costs | | | | | | | (5,633 | ) | | | 3,821 | | Changes in future development costs | | | | | | | 330 | | | | (228 | ) | Revisions of reserves quantity estimates (1) | | | | | | | (229 | ) | | | 1,268 | | | | | | | | | 1,313 | | | | 1,178 | | Changes in production timing and other | | | | | | | (310 | ) | | | (618 | ) | | | | | | | | | 4,623 | | | | 15,661 | | | | | | | | | | | | | | | | Sales of oil and gas, net of production costs | | | | | | | (2,980 | ) | | | (5,029 | ) | | | | | | | | | | | | | | | | | | | | | | – | | | | – | | | | | | | | | – | | | | (1,489 | ) | Previously estimated development costs incurred | | | | | | | 1,005 | | | | 545 | | Extensions, discoveries, and improved recoveries, net of future costs | | | | | | | 145 | | | | (33 | ) | Changes in future income taxes | | | | | | | 2,265 | | | | (503 | ) | | | | | | | | | | | | | | | Standardised measure at the end of the year | | | | | | | 5,058 | | | | 9,152 | | | | | | | | | | | | | | | |
(1) | Changes in reserves quantities are shown in the Petroleum reserves tables in section 4.6.1.
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(2) | Onshore US assets disposal in 2019.
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Accounting for suspended exploratory well costs
Refer to note 11 ‘Property, plant and equipment’ in section 3.1 for a discussion of the accounting policy applied to the cost of exploratory wells. Suspended wells are also reviewed in this context.
The following table provides the changes to capitalised exploratory well costs that were pending the determination of proved reserves for the three years ended 30 June 2021, 30 June 2020 and 30 June 2019.
| | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | Movement in capitalised exploratory well costs | | | | | | | | | | | | | At the beginning of the year | | | | | | | 1,040 | | | | 794 | | Additions to capitalised exploratory well costs pending the determination of proved reserves | | | | | | | 120 | | | | 297 | | Capitalised exploratory well costs charged to expense | | | | | | | – | | | | (9 | ) | Capitalised exploratory well costs reclassified to wells, equipment, and facilities based on the determination of proved reserves | | | | | | | (6 | ) | | | (42 | ) | | | | | | | | (65 | ) | | | – | | | | | | | | | | | | | | | | | | | | | | | 1,089 | | | | 1,040 | | | | | | | | | | | | | | | |
The following table provides an ageing of capitalised exploratory well costs, based on the date the drilling was completed, and the number of projects for which exploratory well costs has been capitalised for a period greater than one year since the completion of drilling.
Exploration activity typically involves drilling multiple wells, over a number of years, to fully evaluate and appraise a project. The term ‘project’ as used in this disclosure refers primarily to individual wells and associated exploratory activities.
| | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | | | | | | | US$M | | | US$M | | Ageing of capitalised exploratory well costs | | | | | | | | | | | | | Exploratory well costs capitalised for a period of one year or less | | | | | | | 120 | | | | 210 | | Exploratory well costs capitalised for a period greater than one year | | | | | | | 969 | | | | 830 | | | | | | | | | | | | | | | | | | | | | | | 1,089 | | | | 1,040 | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | 2019 | | Number of projects that have been capitalised for a period greater than one year | | | | | | | 14 | | | | 13 | | | | | | | | | | | | | | | |
Drilling and other exploratory and development activities
The number of crude oil and natural gas wells drilled and completed for each of the last three years was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | – | | | | | – | | | | – | | | | – | | | | – | | | | 1 | | | | 1 | | | | 1 | | | | | 1 | | | | 1 | | | | 2 | | | | 1 | | | | – | | | | 1 | | | | 3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | 1 | | | | 2 | | | | 1 | | | | 1 | | | | 2 | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | | – | | | | – | | | | 1 | | | | – | | | | 1 | | | | 1 | | | | | 1 | | | | – | | | | 1 | | | | 33 | | | | – | | | | 33 | | | | 34 | | | | | 4 | | | | 2 | | | | 6 | | | | – | | | | – | | | | – | | | | 6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5 | | | | 2 | | | | 7 | | | | 34 | | | | – | | | | 34 | | | | 41 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Includes Onshore US assets net productive development wells of NaN (2020: NaN; 2019: 33). Includes Onshore US assets net exploratory wells of NaN for 2021, 2020 and 2019.
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(2) | Other is primarily comprised of Algeria, Mexico and Trinidad and Tobago. |
The number of wells drilled refers to the number of wells completed at any time during the respective year, regardless of when drilling was initiated. Completion refers to the installation of permanent equipment for production of oil or gas, or, in the case of a dry well, to reporting to the appropriate authority that the well has been abandoned.
An exploratory well is a well drilled to find oil or gas in a new field or to find a new reservoir in a field previously found to be productive of oil or gas in another reservoir. A development well is a well drilled within the limits of a known oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.
A productive well is an exploratory, development or extension well that is not a dry well. Productive wells include wells in which hydrocarbons were encountered and the drilling or completion of which, in the case of exploratory wells, has been suspended pending further drilling or evaluation. A dry well (hole) is an exploratory, development, or extension well that proves to be incapable of producing either oil or gas in sufficient quantities to justify completion as an oil or gas well.
Oil and gas properties, wells, operations, and acreage
The following tables show the number of gross and net productive crude oil and natural gas wells and total gross and net developed and undeveloped oil and natural gas acreage as at 30 June 2021. A gross well or acre is one in which a working interest is owned, while a net well or acre exists when the sum of fractional working interests owned in gross wells or acres equals one. Productive wells are producing wells and wells mechanically capable of production. Developed acreage is comprised of leased acres that are within an area by or assignable to a productive well. Undeveloped acreage is comprised of leased acres on which wells have not been drilled or completed to a point that would permit the production of economic quantities of oil and gas, regardless of whether such acres contain proved reserves.
The number of productive crude oil and natural gas wells in which the Group held an interest at 30 June 2021 was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 334 | | | | 166 | | | | 176 | | | | 66 | | | | 510 | | | | 232 | | | | | 55 | | | | 27 | | | | – | | | | – | | | | 55 | | | | 27 | | | | | 61 | | | | 23 | | | | 8 | | | | 4 | | | | 69 | | | | 27 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Other is primarily comprised of Algeria and Trinidad and Tobago.
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Of the productive crude oil and natural gas wells, 131 (net: 60) operated wells had multiple completions.
Developed and undeveloped acreage (including both leases and concessions) held at 30 June 2021 was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,423 | | | | 897 | | | | 391 | | | | 148 | | | | | 92 | | | | 41 | | | | 403 | | | | 339 | | | | | 160 | | | | 67 | | | | 3,394 | | | | 3,104 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1
)
| Developed acreage in Other primarily consists of Algeria and Trinidad and Tobago.
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(2) | Undeveloped acreage in Other primarily consists of Barbados, Canada, Mexico and Trinidad and Tobago.
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Approximately 139 thousand gross acres (22 thousand net acres), 386 thousand gross acres (241 thousand net acres) and 121 thousand gross acres (103 thousand net acres) of undeveloped acreage will expire in the years ending 30 June 2022, 2023 and 2024 respectively, if the Group does not establish production or take any other action to extend the terms of the licences and concessions.
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