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BHP BHP Group Limited

Filed: 20 Jan 21, 6:07am

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

January 20, 2021

 

 

 

BHP GROUP LIMITED

(ABN 49 004 028 077)

(Exact name of Registrant as specified in its charter)

 

VICTORIA, AUSTRALIA

(Jurisdiction of incorporation or organisation)

 

171 COLLINS STREET, MELBOURNE,

VICTORIA 3000 AUSTRALIA

(Address of principal executive offices)

 

BHP GROUP PLC

(REG. NO. 3196209)

(Exact name of Registrant as specified in its charter)

 

ENGLAND AND WALES

(Jurisdiction of incorporation or organisation)

 

NOVA SOUTH, 160 VICTORIA STREET

LONDON, SW1E 5LB

UNITED KINGDOM

(Address of principal executive offices)

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

Form 20-F    ☐ Form 40-F

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

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

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

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

 

 

 


NEWS RELEASE  LOGO

 

Release Time        

  IMMEDIATE

Date

  20 January 2021

Release Number

  01/21

BHP OPERATIONAL REVIEW FOR THE HALF YEAR ENDED 31 DECEMBER 2020

Note: All guidance is subject to further potential impacts from COVID-19 during the 2021 financial year.

 

 

We achieved another strong operational performance during the half. Measures to counter the risk from COVID-19 remain in place.

 

 

Record production was achieved at Western Australia Iron Ore (WAIO) and record average concentrator throughput was delivered at Escondida.

 

 

Group copper equivalent production was broadly flat in the December 2020 half year. Strong underlying operational performance offset the impacts of planned maintenance, natural field decline, copper grade decline and adverse weather.

 

 

Production guidance for the 2021 financial year remains unchanged for petroleum and metallurgical coal. Iron ore guidance has increased to between 245 and 255 Mt as a result of the restart of Samarco in December 2020. Copper guidance has been narrowed to between 1,510 and 1,645 kt and reflects strong performance at Escondida. Energy coal guidance has been reduced to between 21 and 23 Mt following a 91-day strike at Cerrejón.

 

 

Full year unit cost guidance(1) (based on exchange rates of AUD/USD 0.70 and USD/CLP 769) remains unchanged for the 2021 financial year.

 

 

Our major projects under development are progressing to plan. The Spence Growth Option achieved first production in December 2020, on schedule and on budget. The Jansen Stage 1 project remains on track for Final Investment Decision in the middle of the 2021 calendar year. South Flank is tracking well and is on schedule for first production in the middle of the 2021 calendar year.

 

 

In petroleum, we completed the acquisition of an additional 28% interest in Shenzi, a tier one asset with optionality, on 6 November 2020.

 

 

The financial results for the December 2020 half year are expected to reflect certain items as summarised in the table on page 3 and includes an impairment charge of between US$1.15 billion and US$1.25 billion post tax (exceptional item) in relation to New South Wales Energy Coal (NSWEC) and associated deferred tax assets.

 

Production

  Dec H20
(vs Dec19)
  Dec Q20
(vs Sep Q20)
  

Dec Q20 vs Sep Q20 commentary

Petroleum (MMboe)

   
50.5
(12
 
%) 
  
23.8
(11
 
%) 
 Lower volumes due to Hurricanes Delta and Zeta in the Gulf of Mexico and lower seasonal demand at Bass Strait, partially offset by additional Shenzi volumes from 6 November 2020, on completion of the acquisition of an increased working interest.

Copper (kt)

   
841.3
(5
 
%) 
  
428.1
4
 
 Higher volumes as a result of quarterly concentrator throughput record at Escondida and planned maintenance at Spence that impacted September 2020 quarter production.

Iron ore (Mt)

   
128.4
6
 
  
62.4
(6
 
%) 
 Lower volumes at WAIO reflects planned Mining Area C and South Flank major tie-in activity, weather impacts and a temporary power disruption at Yarnima. Samarco re-commenced iron ore pellet production in December 2020.

Metallurgical coal (Mt)

   
19.2
(5
 
%) 
  
9.5
(2
 
%) 
 Lower volumes at Queensland Coal due to significant wet weather events impacting operations and unplanned maintenance at South Walker Creek.

Energy coal (Mt)

   
8.2
(30
 
%) 
  
3.6
(23
 
%) 
 Lower volumes at NSWEC in response to reduced export shipping capacity at Newcastle Port and lower volumes at Cerrejón as a result of a 91-day strike.

Nickel (kt)

   
46.2
31
 
  
24.0
8
 
 Higher volumes due to planned maintenance undertaken in the prior period.

 

 

BHP Operational Review for the half year ended 31 December 2020  1


Summary

BHP Chief Executive Officer, Mike Henry:

“BHP delivered strong safety and operational performance in the first half of the 2021 financial year, including record production at Western Australia Iron Ore and concentrator throughput at Escondida.

Overall group production for the half was in line with previous strong results. We achieved a number of milestones, bringing on new production through the Spence Growth Option in Chile and the safe restart of Samarco in Brazil. In petroleum, we increased our stake in the high-quality Shenzi asset and Atlantis Phase 3 began production ahead of schedule. Coal production was impacted by wet weather in Australia and strike action in Colombia.

Our major development projects in iron ore, petroleum and potash are progressing well. We continue to build on our strong foundations, increasing future-facing options in copper and nickel through exploration, partnerships and acquisitions.

We are well positioned to sustainably grow shareholder and social value as the global economy recovers from the pandemic.”

Operational performance

Production and guidance are summarised below.

Note: All guidance is subject to further potential impacts from COVID-19 during the 2021 financial year.

 

Production

 Dec
H20
  Dec
Q20
  Dec H20
vs
Dec H19
  Dec Q20
vs
Dec Q19
  Dec Q20
vs
Sep Q20
  Previous
FY21
guidance
  Current
FY21
guidance
    

Petroleum (MMboe)

  50.5   23.8   (12%)   (16%)   (11%)   95 - 102   95 - 102   Upper half of range 

Copper (kt)

  841.3   428.1   (5%)   (6%)   4  1,480 - 1,645   1,510 - 1,645  

Escondida (kt)

  572.2   287.6   (5%)   (7%)   1  940 - 1,030   970 - 1,030   Narrowed range 

Pampa Norte (kt)

  96.8   54.3   (22%)   (10%)   28  240 - 270   240 - 270   Unchanged 

Olympic Dam (kt)

  99.1   47.6   16  (6%)   (8%)   180 - 205   180 - 205   Unchanged 

Antamina (kt)

  73.2   38.6   (1%)   7  12  120 - 140   120 - 140   Unchanged 

Iron ore(i) (Mt)

  128.4   62.4   6  3  (6%)   244 - 253   245 - 255   
Samarco 1 - 2 Mt
for FY21
 
 

WAIO (100% basis) (Mt)

  144.6   70.4   5  3  (5%)   276 - 286   276 - 286   Unchanged 

Metallurgical coal (Mt)

  19.2   9.5   (5%)   (13%)   (2%)   40 - 44   40 - 44  

Queensland Coal (100% basis) (Mt)

  34.1   17.1   (5%)   (13%)   0  71 - 77   71 - 77   Lower half of range 

Energy coal (Mt)

  8.2   3.6   (30%)   (41%)   (23%)   22 - 24   21 - 23  

NSWEC (Mt)

  6.9   3.2   (7%)   (14%)   (11%)   15 - 17   15 - 17   Unchanged 

Cerrejón (Mt)

  1.4   0.3   (68%)   (85%)   (67%)   ~7   ~6   Lowered 

Nickel (kt)

  46.2   24.0   31  75  8  85 - 95   85 - 95   Unchanged 

 

(i)

Iron ore comprises WAIO and Samarco (previous FY21 guidance did not include production for Samarco).    

 

 

BHP Operational Review for the half year ended 31 December 2020  2


Summary of disclosures

BHP expects its December 2020 half year financial results to reflect certain items as summarised in the table below. The table does not provide a comprehensive list of all items impacting the period. The financial statements are the subject of ongoing work that will not be finalised until the release of the financial results on 16 February 2021. Accordingly the information is subject to update.

 

Description

  H1 FY21 impact
US$M(i)
  Classification(ii) 
Gain from optimised settlement outcome for the cancellation of power contracts as part of a shift towards 100 per cent renewable energy at Escondida and Spence   ~100   h Other income 
Unit costs are expected to be in line with full year guidance (at guidance exchange rates), with Petroleum and Escondida tracking towards the lower end of guidance and Queensland Coal and NSWEC tracking slightly above guidance at H1 FY21 Note: stronger Australian dollar and weaker Chilean peso than guidance rates in the period(iii)   —     Operating costs 
Business development and evaluation expense for Petroleum   106   
Development and
evaluation expense
 
 
Exploration expense (including petroleum and minerals exploration programs)   237   Exploration expense 
Premiums paid to acquire multi-currency hybrids following the completion of value accretive repurchase programs in September 2020 and November 2020   ~400   hNet finance costs 
The Group’s adjusted effective tax rate for H1 FY21 is expected to be within the guidance range of 32 to 37 per cent   —     Taxation expense 
Completion of the transaction to acquire an additional 28 per cent working interest in Shenzi   ~480   h Investing cash outflow 
Dividends paid to non-controlling interests   ~750   h Financing cash outflow 
Commissioning of the Spence desalination plant and capitalisation of the associated lease   ~600   h Net debt 
The Group’s net debt target range is US$12 to US$17 billion, with net debt expected to be at the bottom of the range reflecting higher prices and strong operational performance partially offset by a short-term build in working capital and an adverse foreign exchange impact on expenses and capital expenditure   —     Net debt 
Impairment charge related to property, plant and equipment at NSWEC, and recoverability of associated tax losses (after tax)   1,150 – 1,250   h Exceptional item charge 
Costs directly attributable to COVID-19 (after tax)(iv)   200 – 250   h Exceptional item charge 
Financial impact on BHP Brasil of the Samarco dam failure   Refer footnote(v)   h Exceptional item charge 

 

(i)

Numbers are not tax effected, unless otherwise noted.

(ii)

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

(iii)

Average exchange rates for H1 FY21 of AUD/USD 0.72 (guidance rate AUD/USD 0.70) and USD/CLP 771 (guidance rate USD/CLP 769).

(iv)

Relates to additional costs incurred at our operated assets for the increased provision of health and hygiene services and the impacts of maintaining social distancing requirements. For example, additional accommodation and cleaning costs at the Spence Growth Option project and additional port costs at WAIO due to quarantine restrictions.

(v)

Financial impact is the subject of ongoing work and is not yet finalised.

Major development projects

In December 2020, the Spence Growth Option achieved first production on schedule and on budget. Given this, the Spence Growth Option will not be reported in future Operational Reviews.

At the end of December 2020, BHP had four major projects under development in petroleum, iron ore and potash, with a combined budget of US$8.5 billion over the life of the projects. Our major projects under development are tracking to plan.

On 15 January 2021, the Final Environmental Impact Study (FEIS) was published for the Resolution Copper Mining (RCM) project, which is a joint venture between Rio Tinto (55 per cent) and BHP (45 per cent), managed by Rio Tinto. The FEIS and subsequent Land Exchange are steps in an independent governmental, social and environmental assessment and licencing process. Any mine construction is expected to be several years away and will be subject to additional regulatory and government approvals and stakeholder consultation, including with the relevant Native American tribes to seek consent.

The Jansen Stage 1 project in Canada is expected to be presented to the BHP Board for Final Investment Decision in the middle of the 2021 calendar year.

 

 

BHP Operational Review for the half year ended 31 December 2020  3


Average realised prices

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

 

Average realised prices(i)

  Dec H20   Dec H19   Jun H20   FY20   Dec H20
vs
Dec H19
  Dec H20
vs
Jun H20
  Dec H20
vs

FY20
 

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

   41.40    60.64    37.51    49.53    (32%)   10  (16%) 

Natural gas (US$/Mscf)(ii)

   3.83    4.26    3.76    4.04    (10%)   2  (5%) 

LNG (US$/Mscf)

   4.45    7.62    6.87    7.26    (42%)   (35%)   (39%) 

Copper (US$/lb)

   3.32    2.60    2.39    2.50    28  39  33

Iron ore (US$/wmt, FOB)

   103.78    78.30    76.67    77.36    33  35  34

Metallurgical coal (US$/t)

   97.61    140.94    121.25    130.97    (31%)   (19%)   (25%) 

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

   106.30    154.01    133.51    143.65    (31%)   (20%)   (26%) 

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

   73.17    101.06    84.43    92.59    (28%)   (13%)   (21%) 

Thermal coal (US$/t)(iv)

   44.35    58.55    55.91    57.10    (24%)   (21%)   (22%) 

Nickel metal (US$/t)

   15,140    15,715    12,459    13,860    (4%)   22  9

 

(i)

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

(ii)

Includes internal sales.

(iii)

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

(iv)

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

The large majority of oil sales were linked to West Texas intermediate (WTI) or Brent based indices, with differentials applied for quality, locational and transportation costs. The large majority of iron ore shipments were linked to index pricing for the month of shipment, with price differentials predominantly a reflection of market fundamentals and product quality. Iron ore sales were based on an average moisture rate of 7.3 per cent. The large majority of metallurgical coal and energy coal exports were linked to index pricing for the month of shipment or sold on the spot market at fixed or index-linked prices, with price differentials reflecting product quality. The majority of copper cathodes sales were linked to index pricing for quotation periods one month after month of shipment, and three to four months after month of shipment for copper concentrates sales with price differentials applied for location and treatment costs.

At 31 December 2020, the Group had 349 kt of outstanding copper sales that were revalued at a weighted average price of US$3.52 per pound. The final price of these sales will be determined over the remainder of the 2021 financial year. In addition, 304 kt of copper sales from the 2020 financial year were subject to a finalisation adjustment in the current period. The provisional pricing and finalisation adjustments will increase Underlying EBITDA(2) by US$323 million in the 2021 financial year and are included in the average realised copper price in the above table.

Corporate update

BHP expects to recognise an impairment charge of between US$1.15 billion and US$1.25 billion post tax in relation to NSWEC and associated deferred tax assets, resulting in net operating assets of between US$250 million and US$350 million (excluding tax). This reflects current market conditions for Australian thermal coal, the strengthening Australian dollar, changes to the mine plan and updated assessment of the likelihood of recovering tax losses. This will be reported as an exceptional item in the December 2020 half year. The broader carrying value assessment of the Group’s assets is ongoing and will be finalised in conjunction with the release of the financial results on 16 February 2021.

During the half year, BHP has successfully reduced gross debt by a total of US$4.1 billion (excluding standard repayments on final maturity). Two multi-currency hybrid repurchase programs were completed (US$1.7 billion on 17 September 2020 and US$1.1 billion on 23 November 2020). The programs were funded from surplus cash, and will reduce future interest costs while also reducing the Group’s gross debt balance. The hybrid repurchase programs were strongly value accretive, with this being higher than the premium paid to acquire the hybrids. This premium over book value generated an upfront accounting loss of approximately US$400 million (pre-tax), which will be reported in net finance costs in the December 2020 half year financial results. BHP also redeemed US$1.0 billion of 6.250 per cent hybrid notes on 19 October 2020 and the remaining US$0.3 billion of 6.750 per cent hybrid notes on 30 December 2020. Both redemptions were also completed using surplus cash. BHP remains in a strong liquidity position.

 

 

BHP Operational Review for the half year ended 31 December 2020  4


BHP remains committed to supporting the Renova Foundation and its work to progress the remediation and compensatory programs to restore the environment and re-establish communities affected by the Samarco tragedy. Good progress continues to be made with 12th Federal Court of Belo Horizonte in Brazil which is seeking to expedite the remediation process related to the Fundão dam failure. The R$155 billion (approximately US$28 billion) Federal Public Prosecution Office claim remains suspended.

In December 2020, Samarco re-commenced iron ore pellet production as part of a gradual restart of mining and processing operations. BHP has agreed to fund a total of US$765 million in further financial support for the Renova Foundation and Samarco. This comprises US$725 million to fund the Renova Foundation until 31 December 2021, which will be offset against the Group’s provision for the Samarco dam failure, and a short-term facility of up to US$40 million(3) to be made available to Samarco until 31 December 2021.

We will provide an update to the ongoing potential financial impacts on BHP Brasil of the Samarco dam failure with the release of the financial results on 16 February 2021. Any financial impacts will continue to be treated as an exceptional item.

 

 

BHP Operational Review for the half year ended 31 December 2020  5


Petroleum

Production

 

   Dec H20   Dec Q20   Dec H20
vs
Dec H19
  Dec Q20
vs
Dec Q19
  Dec Q20
vs
Sep Q20
 

Crude oil, condensate and natural gas liquids (MMboe)

   22    11    (14%)   (20%)   (7%) 

Natural gas (bcf)

   169    79    (10%)   (11%)   (14%) 

Total petroleum production (MMboe)

   50    24    (12%)   (16%)   (11%) 

Petroleum – Total petroleum production decreased by 12 per cent to 50 MMboe. Guidance for the 2021 financial year remains unchanged at between 95 and 102 MMboe. Volumes are expected to be in the upper half of the guidance range as additional production from Shenzi, following the acquisition of a further 28 per cent working interest, is partially offset by the impacts of significant hurricane activity in the Gulf of Mexico.

Crude oil, condensate and natural gas liquids production decreased by 14 per cent to 22 MMboe due to lower demand at Bass Strait and North West Shelf, the impacts of planned tie-in and commissioning activities at Atlantis, and natural field decline across the portfolio. Production was further impacted by lower uptime at our Gulf of Mexico assets due to a more active hurricane season. These impacts were partially offset by the earlier than scheduled achievement of first production from the Atlantis Phase 3 project.

Natural gas production decreased by 10 per cent to 169 bcf, reflecting the planned Ruby shutdowns, a decrease in tax barrels at Trinidad and Tobago in accordance with the terms of our Production Sharing Contract, lower domestic gas sales at Bass Strait and North West Shelf, and natural field decline across the portfolio. This decline was partially offset by higher domestic gas sales at Macedon.

The acquisition of an additional 28 per cent working interest in Shenzi was completed on 6 November 2020. This transaction is consistent with our strategy of targeting counter-cyclical acquisitions in high-quality producing or near producing assets and brings BHP’s working interest to 72 per cent. This adds approximately 11,000 barrels of oil equivalent per day of production (90 per cent oil) as of the transaction closing date of 6 November 2020.

Projects

 

Project and
ownership

  Capital
expenditure
US$M
   Initial
production
target date
   

Capacity

  

Progress

Ruby

(Trinidad & Tobago)

68.46%

(operator)

   283    CY21   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.  On schedule and budget. The overall project is 62% complete.

Mad Dog Phase 2

(US Gulf of Mexico)

23.9% (non-operator)

   2,154    CY22   New floating production facility with the capacity to produce up to 140,000 gross barrels of crude oil per day.  On schedule and budget. The overall project is 86% complete.

The Bass Strait West Barracouta project is on schedule and budget, and is expected to achieve first production in the 2021 calendar year.

In December 2020, BHP and the North West Shelf joint venture partners executed fully-termed Gas Processing Agreements for processing third-party gas from Pluto and Waitsia projects through the North West Shelf facilities.

 

 

BHP Operational Review for the half year ended 31 December 2020  6


Petroleum exploration

Exploration and appraisal wells drilled during the December 2020 quarter are summarised below.

 

Well

  

Location

  

Target

  

Formation

age

  

BHP equity

  

Spud date

  Water
depth
  

Total well

depth

  

Status

Broadside-1

  Trinidad & Tobago Block 3  Oil  Miocene  65% (BHP Operator)  20 August 2020  2,019 m  7,064 m  Dry hole

In Trinidad and Tobago, the Broadside-1 exploration well in the Southern Licence reached the main reservoir on 22 October 2020 and did not encounter hydrocarbons. The well was a dry hole and was plugged and abandoned on 8 November 2020. The results are under evaluation to determine next steps on the Southern Licences.

In Mexico, we commenced an Ocean Bottom Node seismic acquisition(4) over the Trion field on 9 November 2020, as part of our ongoing evaluation and analysis. The survey was 95 per cent complete as of 31 December 2020 and will be completed in the March 2021 quarter. The results will be incorporated into the current evaluation of the Trion opportunity.

Petroleum exploration expenditure for the December 2020 half year was US$195 million, of which US$181 million was expensed. An approximately US$450 million exploration and appraisal program is being executed for the 2021 financial year.

 

 

BHP Operational Review for the half year ended 31 December 2020

  7


Copper

Production

 

   Dec H20   Dec Q20   Dec H20
vs

Dec H19
  Dec Q20
vs

Dec Q19
  Dec Q20
vs

Sep Q20
 

Copper (kt)

   841    428    (5%)   (6%)   4

Zinc (t)

   76,307    41,909    78  86  22

Uranium (t)

   1,819    945    (4%)   0  8

Copper – Total copper production decreased by five per cent to 841 kt. Guidance for the 2021 financial year narrowed to between 1,510 and 1,645 kt from between 1,480 and 1,645 kt.

For the December 2020 half year, our Chilean assets operated with a reduction in their operational workforces of approximately 30 per cent as a result of the comprehensive plan we have implemented for COVID-19. The operating environment across our Chilean assets is expected to remain challenging, with reductions in our workforce forecast to remain substantial during the March 2021 quarter.

Escondida copper production decreased by five per cent to 572 kt with record concentrator throughput of 386 ktpd, enabled by improved maintenance practices, offset by the impact of lower concentrator feed grade and lower cathode production. As a result of the reduced operational workforce and the need to balance mine development and production requirements, concentrator throughput continues to be prioritised over cathode production (approximately 30 kt impact on cathode volumes in the December 2020 half year). Guidance for the 2021 financial year has been narrowed to between 970 and 1,030 kt from between 940 and 1,030 kt. Production is also likely to be affected in the 2022 financial year by reduced material movement in the 2021 financial year. Guidance of an annual average of 1.2 Mt of copper production over the next five years remains unchanged.

Pampa Norte copper production decreased 22 per cent to 97 kt, largely due to planned maintenance at Spence and the impact of a reduced operational workforce due to COVID-19 preventative measures. The Spence Growth Option achieved first production in December 2020. Guidance for the 2021 financial year remains unchanged at between 240 and 270 kt, reflecting the reduced operational workforce, the start-up of the Spence Growth Option and expected grade decline of approximately five per cent (previously expected to be approximately seven per cent but updated as a result of mine plan optimisation at Spence).

Olympic Dam copper production increased by 16 per cent to 99 kt, reflecting improved smelter stability and strong underground mine performance. The physical replacement and commissioning of the refinery crane remains on track to be completed in the March 2021 quarter. Guidance for the 2021 financial year remains unchanged at between 180 and 205 kt. Production in the 2022 financial year is expected to be lower as a result of the major smelter maintenance campaign planned for the first half of the year.

Antamina copper production decreased by one per cent to 73 kt and zinc production increased by 78 per cent to a record 76 kt, reflecting lower copper head grades and higher zinc head grades. Guidance for the 2021 financial year remains unchanged with copper production of between 120 and 140 kt, and zinc production of between 140 and 160 kt.

Projects

 

Project and ownership

  Capital
expenditure
US$M
   Initial
production
target date
   

Capacity

  

Progress

Spence Growth Option (Chile) 100%

   2,460    FY21   New 95 ktpd concentrator is expected to increase payable copper in concentrate production by ~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.

The Spence Growth Option achieved first copper production in December 2020, with first production of molybdenum expected around the middle of the 2021 calendar year following completion of the molybdenum plant. First copper sales are expected during the March 2021 quarter, while ramp up to full production capacity is expected to take approximately 12 months. The commissioning of the desalination plant and capitalisation of the associated US$600 million lease (approximate) also occurred in December 2020.

 

 

BHP Operational Review for the half year ended 31 December 2020  8


Iron Ore

Production

 

   Dec H20   Dec Q20   Dec H20
vs
Dec H19
  Dec Q20
vs
Dec Q19
  Dec Q20
vs
Sep Q20
 

Iron ore production (kt)

   128,434    62,394    6  3  (6%) 

Iron ore – Total iron ore production increased by six per cent to 128 Mt. Guidance for the 2021 financial year has increased to between 245 and 255 Mt, reflecting the restart of Samarco in December 2020 (between 1 and 2 Mt).

WAIO production increased by six per cent to a six month record 128 Mt (145 Mt on a 100 per cent basis), reflecting record production at Jimblebar and strong performance across the supply chain, with significant improvements in car dumper productivity and reliability. This was partially offset by weather impacts and the planned Mining Area C and South Flank major tie-in activity. Production in the March 2021 quarter is expected to be impacted by planned Ore Handling Plant maintenance across the mines and continued Mining Area C and South Flank tie-in activity. Guidance for the 2021 financial year remains unchanged at between 244 and 253 Mt (276 and 286 Mt on a 100 per cent basis).

Samarco re-commenced iron ore pellet production in December 2020 after meeting the licencing requirements to restart operations at the Germano complex in Minas Gerais and Ubu complex in Espírito Santo, Brazil. Samarco’s operations were suspended following the failure of the Fundão dam on 5 November 2015. Samarco’s gradual restart of operations incorporates one concentrator at the Germano complex and a pelletising plant at Ubu, as well as a new system of tailings disposal combining a confined pit and tailings filtering system for dry stacking. Production for the 2021 financial year is expected to be between 1 and 2 Mt. Production capacity of approximately 8 Mtpa (100 per cent basis) is expected once ramped up.

Projects

 

Project and ownership

  Capital
expenditure
US$M
   

Initial
production
target date

  

Capacity

  

Progress

South Flank

(Australia)

85%

   3,061   Mid-CY21  Sustaining iron ore mine to replace production from the 80 Mtpa (100 per cent basis) Yandi mine.  On schedule and budget. The overall project is 90% complete.

 

 

BHP Operational Review for the half year ended 31 December 2020

  9


Coal

Production

 

   Dec H20   Dec Q20   Dec H20
vs
Dec H19
  Dec Q20
vs
Dec Q19
  Dec Q20
vs
Sep Q20
 

Metallurgical coal (kt)

   19,212    9,522    (5%)   (13%)   (2%) 

Energy coal (kt)

   8,238    3,576    (30%)   (41%)   (23%) 

Metallurgical coal – Metallurgical coal production decreased by five per cent to 19 Mt (34 Mt on a 100 per cent basis). Guidance for the 2021 financial year remains unchanged at between 40 and 44 Mt (71 and 77 Mt on a 100 per cent basis) with a stronger second half performance projected in line with our plans. Volumes are expected to be at the lower half of the guidance range following significant wet weather impacts during the December 2020 quarter. We continue to monitor for any potential impacts on volumes from restrictions on coal imports into China.

At Queensland Coal, volumes were lower as a result of planned wash plant maintenance at Saraji and Caval Ridge and significant wet weather impacts from La Niña across most operations. South Walker Creek production decreased largely due to higher strip ratios and lower yields. Poitrel was also impacted by lower yields during the period.

Energy coal – Energy coal production decreased by 30 per cent to 8 Mt. Following a strike at Cerrejón, guidance for the 2021 financial year has been reduced to between 21 and 23 Mt from between 22 and 24 Mt.

NSWEC production decreased by seven per cent to 6.9 Mt. This decrease reflects significant weather impacts and higher strip ratios, as well as lower volumes due to an increased proportion of washed coal in response to reduced port capacity, following damage to a shiploader at the Newcastle port in November 2020, and widening price quality differentials. Guidance for the 2021 financial year remains unchanged at between 15 and 17 Mt.

Cerrejón production decreased by 68 per cent to 1.4 Mt due to a 91-day strike that started on 31 August 2020. During the period, Cerrejón successfully completed negotiations with Sintracarbón and signed a new Collective Labor Agreement, effective from 1 July 2020 to 31 December 2023. Operations restarted in the first week of December 2020 and are continuing to ramp up. The impact of the strike was 1.5 Mt. Guidance for the 2021 financial year has been reduced to approximately 6 Mt from 7 Mt.

 

 

BHP Operational Review for the half year ended 31 December 2020  10


Other

Nickel production

 

   Dec H20   Dec Q20   Dec H20
vs
Dec H19
  Dec Q20
vs
Dec Q19
  Dec Q20
vs
Sep Q20
 

Nickel (kt)

   46.2    24.0    31  75  8

Nickel – Nickel West production increased by 31 per cent to 46 kt reflecting strong performance from the new mines and improved operational stability following major quadrennial maintenance shutdowns in the prior period. Guidance for the 2021 financial year remains unchanged at between 85 and 95 kt.

Potash project

 

Project and
ownership

  Investment
US$M
   

Scope

  

Progress

Jansen Potash

(Canada)

100%

   2,972   Investment to finish the excavation and lining of the production and service shafts, and to continue the installation of essential surface infrastructure and utilities.  The project is 89% complete.

Minerals exploration

Minerals exploration expenditure for the December 2020 half year was US$86 million, of which US$56 million was expensed. Greenfield minerals exploration is predominantly focused on advancing copper targets within Chile, Ecuador, Mexico, Peru, Canada, Australia and the south-west United States.

At Oak Dam in South Australia, following a successful third phase of drilling, the exploration project has been transferred to the Minerals Australia Planning and Technical team for assessment, and next stage resource definition drilling to inform future design is expected to commence around the middle of the 2021 calendar year.

During the half year, we added to our early stage optionality in future facing commodities with a signed agreement with Midland Exploration to undertake a nickel exploration alliance in north-eastern Quebec (August 2020), the completion of the acquisition of the nickel Honeymoon Well tenements and a 50 per cent interest in the Albion Downs North and Jericho exploration joint ventures (September 2020) and an Option Agreement with Encounter Resources covering the 4,500 km2 prospective Elliott Copper Project in the Northern Territory (September 2020).

 

 

BHP Operational Review for the half year ended 31 December 2020  11


Variance analysis relates to the relative performance of BHP and/or its operations during the December 2020 half year compared with the December 2019 half year, unless otherwise noted. Production volumes, sales volumes and capital and exploration expenditure from subsidiaries are reported on a 100 per cent basis; production and sales volumes from equity accounted investments and other operations are reported on a proportionate consolidation basis. Numbers presented may not add up precisely to the totals provided due to rounding. Copper equivalent production based on 2020 financial year average realised prices.

The following footnotes apply to this Operational Review:

 

(1)

2021 financial year unit cost guidance: Petroleum US$11-12/boe, Escondida US$1.00-1.25/lb, WAIO US$13-14/t and Queensland Coal US$69-75/t; based on exchange rates of AUD/USD 0.70 and USD/CLP 769.

(2)

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

(3)

Short-term facility of up to US$40 million includes US$4 million related to the decommissioning of the Germano dam which will be offset against the Group’s provision.

(4)

Permit: EIA – ASEA/UGI/DGGEERNCM/0122/2018, expediente 28TM2018X0042. CNH Revised Appraisal Plan Approval – Resolucion CNH.14.001/2020.

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

In this release, the terms ‘BHP’, the ‘Group’, ‘BHP Group’, ‘we’, ‘us’, ‘our’ and ourselves’ are used to refer to BHP Group Limited, BHP Group plc and, except where the context otherwise requires, their respective subsidiaries as defined in note 29 ‘Subsidiaries’ in section 5.1 of BHP’s 30 June 2020 Annual Report and Form 20-F. Those terms do not include non-operated assets. Notwithstanding that this release may include production, financial and other information from non-operated assets, non-operated assets are not included in the BHP Group and, as a result, statements regarding our operations, assets and values apply only to our operated assets unless stated otherwise. Our non-operated assets include Antamina, Cerrejón, Samarco, Atlantis, Mad Dog, Bass Strait and North West Shelf. BHP Group cautions against undue reliance on any forward-looking statement or guidance in this release, particularly in light of the current economic climate and significant volatility, uncertainty and disruption arising in connection with COVID-19. These forward looking statements are based on information available as at the date of this release and are not guarantees or predictions of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control and which may cause actual results to differ materially from those expressed in the statements contained in this release.

 

 

BHP Operational Review for the half year ended 31 December 2020  12


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

Authorised for lodgement by:

Geof Stapledon

Acting Group Company Secretary

 

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BHP Operational Review for the half year ended 31 December 2020  13


Production summary

 

                               
   BHP
interest
  Quarter ended   Year to date 
 Dec
2019
   Mar
2020
   Jun
2020
   Sep
2020
   Dec
2020
   Dec
2020
   Dec
2019
 

Petroleum (1)

               

Petroleum

               

Production

               

Crude oil, condensate and NGL (Mboe)

    13,412    11,589    11,355    11,507    10,729    22,236    25,919 

Natural gas (bcf)

    88.7    80.7    89.8    90.9    78.5    169.4    189.1 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total (Mboe)

    28,195    25,039    26,322    26,657    23,812    50,469    57,436 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Copper (2)

               

Copper

               

Payable metal in concentrate (kt)

               

Escondida (3)

   57.5  240.3    220.1    228.5    236.7    236.7    473.4    477.3 

Pampa Norte (4)

   100.0  —      —      —      —      0.7    0.7    —   

Antamina

   33.8  36.2    32.9    17.8    34.6    38.6    73.2    73.8 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    276.5    253.0    246.3    271.3    276.0    547.3    551.1 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cathode (kt)

               

Escondida (3)

   57.5  68.4    69.6    65.5    47.9    50.9    98.8    124.3 

Pampa Norte (4)

   100  60.0    64.3    54.5    42.5    53.6    96.1    123.9 

Olympic Dam

   100  50.5    38.4    47.6    51.5    47.6    99.1    85.6 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    178.9    172.3    167.6    141.9    152.1    294.0    333.8 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
               
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total copper (kt)

    455.4    425.3    413.9    413.2    428.1    841.3    884.9 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Lead

               

Payable metal in concentrate (t)

               

Antamina

   33.8  383    621    262    690    993    1,683    788 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    383    621    262    690    993    1,683    788 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Zinc

               

Payable metal in concentrate (t)

               

Antamina

   33.8  22,483    31,789    13,736    34,398    41,909    76,307    42,937 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    22,483    31,789    13,736    34,398    41,909    76,307    42,937 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gold

               

Payable metal in concentrate (troy oz)

               

Escondida (3)

   57.5  49,209    35,990    43,422    42,332    47,789    90,121    98,010 

Olympic Dam (refined gold)

   100  35,382    33,235    34,150    36,608    23,837    60,445    78,587 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    84,591    69,225    77,572    78,940    71,626    150,566    176,597 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Silver

               

Payable metal in concentrate (troy koz)

               

Escondida (3)

   57.5  1,798    1,390    1,599    1,580    1,627    3,207    3,424 

Antamina

   33.8  1,173    1,216    626    1,326    1,767    3,093    2,274 

Olympic Dam (refined silver)

   100  203    241    295    157    193    350    448 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    3,174    2,847    2,520    3,063    3,587    6,650    6,146 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Uranium

               

Payable metal in concentrate (t)

               

Olympic Dam

   100  949    776    1,016    874    945    1,819    1,886 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    949    776    1,016    874    945    1,819    1,886 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Molybdenum

               

Payable metal in concentrate (t)

               

Antamina

   33.8  527    491    243    284    192    476    932 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    527    491    243    284    192    476    932 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

BHP Operational Review for the half year ended 31 December 2020  14


Production summary

 

                               
      Quarter ended   Year to date 
  BHP
interest
  Dec
2019
   Mar
2020
   Jun
2020
   Sep
2020
   Dec
2020
   Dec
2020
   Dec
2019
 

Iron Ore

               

Iron Ore

               

Production (kt) (5)

               

Newman

   85  15,766    16,449    17,110    16,410    17,637    34,047    32,082 

Area C Joint Venture

   85  12,727    12,179    13,973    11,889    11,567    23,456    25,347 

Yandi Joint Venture

   85  14,857    17,491    19,087    17,666    16,413    34,079    32,684 

Jimblebar (6)

   85  17,045    13,911    16,559    20,075    16,740    36,815    31,284 

Wheelarra

   85  —      —      —      —      —      —      3 

Samarco

   50  —      —      —      —      37    37    —   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    60,395    60,030    66,729    66,040    62,394    128,434    121,400 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Coal

               

Metallurgical coal

               

Production (kt) (7)

               

BMA

   50  8,723    6,869    9,078    7,365    7,539    14,904    15,628 

BHP Mitsui Coal (8)

   80  2,201    2,353    2,536    2,325    1,983    4,308    4,654 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    10,924    9,222    11,614    9,690    9,522    19,212    20,282 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Energy coal

               

Production (kt)

               

NSW Energy Coal

   100  3,763    3,810    4,887    3,624    3,229    6,853    7,355 

Cerrejón

   33.3  2,315    1,978    767    1,038    347    1,385    4,370 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    6,078    5,788    5,654    4,662    3,576    8,238    11,725 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other

               

Nickel

               

Saleable production (kt)

               

Nickel West (9)

   100  13.7    20.9    23.9    22.2    24.0    46.2    35.3 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    13.7    20.9    23.9    22.2    24.0    46.2    35.3 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cobalt

               

Saleable production (t)

               

Nickel West

   100%   120    132    312    238    236    474    331 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    120    132    312    238    236    474    331 
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

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

(2)

Metal production is reported on the basis of payable metal.

(3)

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

(4)

Includes Cerro Colorado and Spence.

(5)

Iron ore production is reported on a wet tonnes basis.

(6)

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

(7)

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

(8)

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

(9)

Production restated to include other nickel by-products.

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

 

 

BHP Operational Review for the half year ended 31 December 2020  15


Production and sales report

 

                               
      Quarter ended   Year to date 
     Dec
2019
   Mar
2020
   Jun
2020
   Sep
2020
   Dec
2020
   Dec
2020
   Dec
2019
 

Petroleum (1)

                

Bass Strait

                

Crude oil and condensate

  (Mboe)   1,427    926    1,231    1,305    1,003    2,308    2,836 

NGL

  (Mboe)   1,405    958    1,493    1,660    1,057    2,717    3,215 

Natural gas

  (bcf)   27.8    18.4    28.1    34.1    23.4    57.5    64.4 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total petroleum products

  (Mboe)   7,465    4,957    7,408    8,648    5,960    14,608    16,784 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

North West Shelf

                

Crude oil and condensate

  (Mboe)   1,376    1,266    1,260    1,215    1,180    2,395    2,713 

NGL

  (Mboe)   200    191    203    162    165    327    402 

Natural gas

  (bcf)   32.9    35.0    35.2    29.6    30.4    60.0    65.0 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total petroleum products

  (Mboe)   7,059    7,287    7,334    6,310    6,412    12,722    13,948 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pyrenees

                

Crude oil and condensate

  (Mboe)   934    917    971    837    826    1,663    1,913 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total petroleum products

  (Mboe)   934    917    971    837    826    1,663    1,913 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other Australia (2)

                

Crude oil and condensate

  (Mboe)   1    1    1    1    1    2    9 

Natural gas

  (bcf)   11.4    11.2    11.9    12.7    12.6    25.3    23.4 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total petroleum products

  (Mboe)   1,901    1,874    1,987    2,118    2,101    4,219    3,909 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Atlantis (3)

                

Crude oil and condensate

  (Mboe)   3,525    2,769    2,223    2,421    2,385    4,806    6,284 

NGL

  (Mboe)   245    178    54    154    147    301    437 

Natural gas

  (bcf)   1.8    1.3    1.1    1.2    1.1    2.3    3.2 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total petroleum products

  (Mboe)   4,070    3,170    2,456    2,775    2,715    5,490    7,254 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Mad Dog (3)

                

Crude oil and condensate

  (Mboe)   1,202    1,272    1,297    1,211    930    2,141    2,298 

NGL

  (Mboe)   52    55    33    48    38    86    101 

Natural gas

  (bcf)   0.2    0.2    0.3    0.2    0.1    0.3    0.4 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total petroleum products

  (Mboe)   1,287    1,355    1,374    1,292    985    2,277    2,466 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shenzi (3) (4)

                

Crude oil and condensate

  (Mboe)   1,671    1,645    1,584    1,395    1,764    3,159    3,016 

NGL

  (Mboe)   94    94    40    71    87    158    164 

Natural gas

  (bcf)   0.3    0.3    0.4    0.3    0.3    0.6    0.5 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total petroleum products

  (Mboe)   1,815    1,791    1,686    1,516    1,901    3,417    3,263 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Trinidad/Tobago

                

Crude oil and condensate

  (Mboe)   166    97    72    102    96    198    341 

Natural gas

  (bcf)   14.2    14.0    12.8    12.8    10.5    23.3    32.1 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total petroleum products

  (Mboe)   2,533    2,427    2,201    2,235    1,846    4,081    5,691 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other Americas (3) (5)

                

Crude oil and condensate

  (Mboe)   230    344    198    212    190    402    415 

NGL

  (Mboe)   4    22    5    2    11    13    6 

Natural gas

  (bcf)   0.1    0.3    —      —      0.1    0.1    0.1 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total petroleum products

  (Mboe)   251    412    209    214    218    432    438 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Algeria

                

Crude oil and condensate

  (Mboe)   880    854    690    711    849    1,560    1,769 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total petroleum products

  (Mboe)   880    854    690    711    849    1,560    1,769 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

 

BHP Operational Review for the half year ended 31 December 2020  16


Production and sales report                               
      Quarter ended   Year to date 
     Dec
2019
   Mar
2020
   Jun
2020
   Sep
2020
   Dec
2020
   Dec
2020
   Dec
2019
 

Petroleum (1)

                

Total production

                

Crude oil and condensate

  (Mboe)   11,412    10,091    9,527    9,410    9,224    18,634    21,594 

NGL

  (Mboe)   2,000    1,498    1,828    2,097    1,505    3,602    4,325 

Natural gas

  (bcf)   88.7    80.7    89.8    90.9    78.5    169.4    189.1 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  (Mboe)   28,195    25,039    26,322    26,657    23,812    50,469    57,436 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

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

(2)

Other Australia includes Minerva and Macedon. Minerva ceased production in September 2019.

(3)

Gulf of Mexico volumes are net of royalties.

(4)

BHP completed the acquisition of an additional 28% working interest in Shenzi on 6 November 2020, taking its total working interest to 78%.

(5)

Other Americas includes Neptune, Genesis and Overriding Royalty Interest.

 

 

BHP Operational Review for the half year ended 31 December 2020  17


Production and sales report

 

     Quarter ended  Year to date 
     Dec
2019
  Mar
2020
  Jun
2020
  Sep
2020
  Dec
2020
  Dec
2020
  Dec
2019
 

Copper

        

Metals production is payable metal unless otherwise stated.

 

Escondida, Chile (1)

        

Material mined

  (kt)   100,057   107,268   75,062   83,357   97,274   180,631   201,083 

Sulphide ore milled

  (kt)   33,659   33,440   34,755   34,733   36,303   71,036   67,615 

Average concentrator head grade

  (%)   0.87  0.82  0.81  0.85  0.83  0.84  0.86

Production ex mill

  (kt)   246.1   230.0   236.8   243.9   246.1   490.0   491.1 

Production

        

Payable copper

  (kt)   240.3   220.1   228.5   236.7   236.7   473.4   477.3 

Copper cathode (EW)

  (kt)   68.4   69.6   65.5   47.9   50.9   98.8   124.3 

- Oxide leach

  (kt)   28.3   29.3   26.8   15.3   18.0   33.3   50.2 

- Sulphide leach

  (kt)   40.1   40.2   38.7   32.6   32.9   65.5   74.2 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total copper

  (kt)   308.7   289.7   294.0   284.6   287.6   572.2   601.6 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Payable gold concentrate

  (troy oz)   49,209   35,990   43,422   42,332   47,789   90,121   98,010 

Payable silver concentrate

  (troy koz)   1,798   1,390   1,599   1,580   1,627   3,207   3,424 

Sales

        

Payable copper

  (kt)   248.3   212.0   221.0   237.1   244.3   481.4   470.5 

Copper cathode (EW)

  (kt)   70.6   65.9   72.1   46.5   47.7   94.2   122.9 

Payable gold concentrate

  (troy oz)   49,209   35,990   43,422   42,332   47,789   90,121   98,010 

Payable silver concentrate

  (troy koz)   1,798   1,390   1,599   1,580   1,627   3,207   3,424 

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

    

Pampa Norte, Chile

        

Cerro Colorado

        

Material mined

  (kt)   18,102   18,710   15,734   12,618   6,750   19,368   33,173 

Ore milled

  (kt)   5,009   4,574   4,553   4,036   3,562   7,598   9,004 

Average copper grade

  (%)   0.57  0.54  0.60  0.66  0.58  0.62  0.56

Production

        

Copper cathode (EW)

  (kt)   13.8   20.4   16.9   15.8   15.8   31.6   30.2 

Sales

        

Copper cathode (EW)

  (kt)   15.8   18.3   18.7   14.6   16.6   31.2   30.3 

Spence

        

Material mined

  (kt)   23,132   23,304   24,082   18,260   18,485   36,745   44,172 

Ore milled (1)

  (kt)   5,133   5,191   2,829   4,408   6,809   11,217   10,768 

Average copper grade (2)

  (%)   0.90  0.87  0.95  1.10  0.76  0.89  0.93

Production

        

Payable copper

  (kt)   —     —     —     —     0.7   0.7   —   

Copper cathode (EW)

  (kt)   46.2   43.9   37.6   26.7   37.8   64.5   93.7 

Sales

        

Payable copper

  (kt)   —     —     —     —     —     —     —   

Copper cathode (EW)

  (kt)   44.3   44.8   41.0   24.1   40.9   65.0   91.0 

(1)   December 2020 quarter comprised of preliminary concentrator throughput of 1,207 kt and cathode throughput of 5,602 kt.

(2)   December 2020 quarter weighted average of preliminary concentrate grade of 0.43% and cathode grade of 0.83%.

    

    

 

 

BHP Operational Review for the half year ended 31 December 2020  18


Production and sales report

 

 
    Quarter ended  Year to date 
    Dec
2019
  Mar
2020
  Jun
2020
  Sep
2020
  Dec
2020
  Dec
2020
  Dec
2019
 

Copper (continued)

        

Metals production is payable metal unless otherwise stated.

       

Antamina, Peru

        

Material mined (100%)

 (kt)  63,224   52,872   13,975   45,458   57,029   102,487   122,523 

Sulphide ore milled (100%)

 (kt)  13,637   12,906   6,736   13,202   14,083   27,285   26,758 

Average head grades

        

- Copper

 (%)  0.96  0.88  0.91  0.94  0.97  0.96  0.97

- Zinc

 (%)  0.82  1.09  1.02  1.30  1.30  1.30  0.81

Production

        

Payable copper

 (kt)  36.2   32.9   17.8   34.6   38.6   73.2   73.8 

Payable zinc

 (t)  22,483   31,789   13,736   34,398   41,909   76,307   42,937 

Payable silver

 (troy koz)  1,173   1,216   626   1,326   1,767   3,093   2,274 

Payable lead

 (t)  383   621   262   690   993   1,683   788 

Payable molybdenum

 (t)  527   491   243   284   192   476   932 

Sales

        

Payable copper

 (kt)  43.6   30.8   18.2   33.8   40.7   74.5   76.7 

Payable zinc

 (t)  23,808   31,007   11,680   32,769   45,109   77,878   44,004 

Payable silver

 (troy koz)  1,396   815   581   1,310   1,728   3,038   2,350 

Payable lead

 (t)  432   151   188   748   945   1,693   1,276 

Payable molybdenum

 (t)  400   531   223   392   352   744   573 

Olympic Dam, Australia

        

Material mined (1)

 (kt)  2,347   1,920   1,928   2,203   2,379   4,582   4,824 

Ore milled

 (kt)  2,153   2,178   2,416   2,443   2,377   4,820   4,353 

Average copper grade

 (%)  2.36  2.31  2.17  2.03  2.02  2.03  2.33

Average uranium grade

 (kg/t)  0.71   0.69   0.60   0.53   0.60   0.56   0.68 

Production

        

Copper cathode (ER and EW)

 (kt)  50.5   38.4   47.6   51.5   47.6   99.1   85.6 

Payable uranium

 (t)  949   776   1,016   874   945   1,819   1,886 

Refined gold

 (troy oz)  35,382   33,235   34,150   36,608   23,837   60,445   78,587 

Refined silver

 (troy koz)  203   241   295   157   193   350   448 

Sales

        

Copper cathode (ER and EW)

 (kt)  49.0   41.4   48.5   49.5   46.6   96.1   81.1 

Payable uranium

 (t)  638   702   1,293   859   999   1,858   1,416 

Refined gold

 (troy oz)  36,507   36,956   37,743   36,054   21,390   57,444   76,580 

Refined silver

 (troy koz)  202   259   270   222   165   387   452 

 

(1)

Material mined refers to run of mine ore mined and hoisted.

 

 

BHP Operational Review for the half year ended 31 December 2020  19


Production and sales report

 

 
      Quarter ended   Year to date 
      Dec
2019
   Mar
2020
   Jun
2020
   Sep
2020
   Dec
2020
   Dec
2020
   Dec
2019
 

Iron Ore

                

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

 

          

Western Australia Iron Ore, Australia

                

Production

                

Newman

  (kt)   15,766    16,449    17,110    16,410    17,637    34,047    32,082 

Area C Joint Venture

  (kt)   12,727    12,179    13,973    11,889    11,567    23,456    25,347 

Yandi Joint Venture

  (kt)   14,857    17,491    19,087    17,666    16,413    34,079    32,684 

Jimblebar (1)

  (kt)   17,045    13,911    16,559    20,075    16,740    36,815    31,284 

Wheelarra

  (kt)   —      —      —      —      —      —      3 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total production

  (kt)   60,395    60,030    66,729    66,040    62,357    128,397    121,400 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total production (100%)

  (kt)   68,044    68,168    75,589    74,152    70,407    144,559    137,301 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Sales

                

Lump

  (kt)   15,982    15,617    17,252    17,056    16,703    33,759    30,767 

Fines

  (kt)   45,785    44,764    50,904    48,390    46,124    94,514    91,294 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  (kt)   61,767    60,381    68,156    65,446    62,827    128,273    122,061 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total sales (100%)

  (kt)   69,481    68,439    77,048    73,355    70,772    144,127    137,772 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

    

Samarco, Brazil (1)

                

Production

  (kt)   —      —      —      —      37    37    —   

Sales

  (kt)   —      —      —      —      —      —      —   

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

    

 

 

BHP Operational Review for the half year ended 31 December 2020  20


Production and sales report

 

 
      Quarter ended   Year to date 
      Dec
2019
   Mar
2020
   Jun
2020
   Sep
2020
   Dec
2020
   Dec
2020
   Dec
2019
 

Coal

 

Coal production is reported on the basis of saleable product.

 

Queensland Coal, Australia

                

Production (1)

                

BMA

                

Blackwater

  (kt)   1,734    1,063    1,703    1,184    1,737    2,921    2,779 

Goonyella

  (kt)   2,662    1,963    2,651    2,312    2,152    4,464    4,151 

Peak Downs

  (kt)   1,386    1,339    1,635    1,487    1,213    2,700    2,809 

Saraji

  (kt)   1,325    1,025    1,399    817    1,043    1,860    2,539 

Daunia

  (kt)   579    447    588    490    464    954    1,135 

Caval Ridge

  (kt)   1,037    1,032    1,102    1,075    930    2,005    2,215 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total BMA

  (kt)   8,723    6,869    9,078    7,365    7,539    14,904    15,628 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total BMA (100%)

  (kt)   17,446    13,738    18,156    14,730    15,078    29,808    31,256 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BHP Mitsui Coal (2)

                

South Walker Creek

  (kt)   1,196    1,577    1,264    1,238    1,118    2,356    2,574 

Poitrel

  (kt)   1,005    776    1,272    1,087    865    1,952    2,080 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total BHP Mitsui Coal

  (kt)   2,201    2,353    2,536    2,325    1,983    4,308    4,654 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Queensland Coal

  (kt)   10,924    9,222    11,614    9,690    9,522    19,212    20,282 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Queensland Coal (100%)

  (kt)   19,647    16,091    20,692    17,055    17,061    34,116    35,910 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Sales

                

BMA

                

Coking coal

  (kt)   7,179    6,417    7,547    6,187    6,531    12,718    13,737 

Weak coking coal

  (kt)   971    644    1,040    977    936    1,913    1,605 

Thermal coal

  (kt)   30    224    183    58    3    61    124 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total BMA

  (kt)   8,180    7,285    8,770    7,222    7,470    14,692    15,466 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total BMA (100%)

  (kt)   16,360    14,570    17,540    14,444    14,940    29,384    30,932 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BHP Mitsui Coal (2)

                

Coking coal

  (kt)   596    667    778    671    604    1,275    1,337 

Weak coking coal

  (kt)   1,504    1,691    1,756    1,545    1,518    3,063    3,336 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total BHP Mitsui Coal

  (kt)   2,100    2,358    2,534    2,216    2,122    4,338    4,673 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
                
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Queensland Coal

  (kt)   10,280    9,643    11,304    9,438    9,592    19,030    20,139 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Queensland Coal (100%)

  (kt)   18,460    16,928    20,074    16,660    17,062    33,722    35,605 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)   Production figures include some thermal coal.

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

    

    

NSW Energy Coal, Australia

                

Production

  (kt)   3,763    3,810    4,887    3,624    3,229    6,853    7,355 

Sales

                

Export thermal coal

  (kt)   3,952    3,403    4,871    3,168    3,940    7,108    7,027 

Inland thermal coal (1)

  (kt)   —      —      —      —      —      —      567 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  (kt)   3,952    3,403    4,871    3,168    3,940    7,108    7,594 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)   The domestic sales contract ended in the September 2019 quarter.

    

Cerrejón, Colombia

                

Production

  (kt)   2,315    1,978    767    1,038    347    1,385    4,370 

Sales thermal coal - export

  (kt)   2,261    2,028    1,143    994    370    1,364    4,330 

 

 

BHP Operational Review for the half year ended 31 December 2020  21


Production and sales report

 

 
      Quarter ended   Year to date 
      Dec
2019
   Mar
2020
   Jun
2020
   Sep
2020
   Dec
2020
   Dec
2020
   Dec
2019
 

Other

 

Nickel production is reported on the basis of saleable product

 

Nickel West, Australia

                

Mt Keith

                

Nickel concentrate

  (kt)   31.5    42.8    60.2    64.4    55.7    120.1    75.2 

Average nickel grade

  (%)   17.3    15.8    16.5    15.8    14.7    15.3    17.9 

Leinster

                

Nickel concentrate

  (kt)   56.6    57.8    72.0    66.2    72.8    139.0    123.8 

Average nickel grade

  (%)   8.6    9.8    10.2    9.0    9.5    9.3    9.4 

Saleable production

                

Refined nickel (1) (2)

  (kt)   11.1    16.6    20.5    17.3    20.4    37.7    28.5 

Intermediates and nickel by-products (1) (3)

  (kt)   2.6    4.3    3.4    4.9    3.6    8.5    6.8 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nickel (1)

  (kt)   13.7    20.9    23.9    22.2    24.0    46.2    35.3 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cobalt by-products

  (t)   120    132    312    238    236    474    331 

Sales

                

Refined nickel (1) (2)

  (kt)   10.6    16.8    19.7    17.1    20.9    38.0    27.6 

Intermediates and nickel by-products (1) (3)

  (kt)   2.7    2.9    4.2    4.6    2.6    7.2    8.4 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total nickel (1)

  (kt)   13.3    19.7    23.9    21.7    23.5    45.2    36.0 
    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cobalt by-products

  (t)   131    132    312    238    237    475    343 

 

(1)

Production and sales restated to include other nickel by-products.

(2)

High quality refined nickel metal, including briquettes and powder.

(3)

Nickel contained in matte and by-product streams.

 

 

BHP Operational Review for the half year ended 31 December 2020  22


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

   BHP Group Limited and BHP Group Plc
Date: January 20, 2021  By: 

/s/ Geof Stapledon

  Name: Geof Stapledon
  Title: Acting Group Company Secretary