REG - BHP Group Limited - Quarterly Production Report
18/04/2024 07:00
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RNS Number : 0563L BHP Group Limited 18 April 2024
18 April 2024
BHP Group Limited
Operational review for the nine months ended 31 March 2024
Solid operational performance in copper, iron ore and energy coal.
"We remain on track to meet copper, iron ore and energy coal production for
the year. Copper volumes have increased by 10 per cent reflecting strong
performance and additional tonnes from Copper South Australia, record
year-to-date performance from Spence, and improved grades and production at
Escondida.
"Western Australia Iron Ore, the lowest cost iron ore producer globally,
delivered another consistent period of production despite heavy rainfall. We
continue to invest in improvements to our rail and port operations, which are
essential for growth in the medium term to 305 million tonnes per annum and
beyond.
"At our BMA metallurgical coal operations in Queensland, significant wet
weather including the impact of two tropical cyclones and operational
challenges impacted production and unit costs, and we have revised guidance
for the year. We successfully completed the sale of the Blackwater and Daunia
mines on 2 April for a total of up to US$4.1 bn (100%).
"In Canada, the Jansen Stage 1 project remains ahead of its initial schedule
and is now 44 per cent complete. In Western Australia, we expect to announce a
decision on the future of our nickel business in the coming months, where
efforts to optimise operations and preserve value are underway."
Mike Henry
BHP Chief Executive Officer
Summary
Operational performance Portfolio
Copper production increased 10% Completed sale of Blackwater and Daunia
Increased copper production driven by record production at Spence, strong We completed the strategic reshaping of our metallurgical coal business with
operational performance at Copper South Australia (and the contribution from the divestment of BHP Mitsubishi Alliance's (BMA) Blackwater and Daunia mines
Prominent Hill and Carrapateena), and improved performance and grade at to Whitehaven Coal on 2 April for a total cash consideration of up to US$4.1
Escondida. bn (100%).
FY24 production guidance for BMA has been lowered to 21.5 - 22.5 Mt (43 - 45 BMA now has a more focused operational footprint and a greater portion of
Mt at 100%). Other updates to FY24 production guidance are reflected in the higher quality metallurgical coal (>85%) which is expected to achieve
table below. FY24 unit cost guidance(1) for BMA has been increased to US$119/t higher relative margins in a decarbonising world.
- US$125/t.
ESG Governance
MSCI upgrade Board update
In March 2024, ESG ratings provider MSCI upgraded BHP's overall company score In March, we announced the appointment of Ross McEwan and Don Lindsay as
based on their assessment of performance under the Social Pillar. This Non-executive Directors, effective 3 April 2024 and 1 May 2024 respectively.
reflects the progress made in Brazil, including in negotiations, and our We also announced the retirement of Ian Cockerill as a Non-executive Director,
commitment to deliver full and fair remediation and compensation. effective 4 April 2024.
Production Quarter performance YTD performance FY24 production guidance
Q3 FY24 v Q2 v Q3 YTD Mar FY24 v YTD Mar FY23 Previous Current
FY24
FY23
Copper (kt) 465.9 7% 15% 1,360.3 10% 1,720 - 1,910 1,720 - 1,910
Escondida (kt) 288.2 13% 15% 816.1 7% 1,080 - 1,180 1,080 - 1,180 Unchanged
Pampa Norte (kt) 61.6 3% (16%) 199.7 (9%) 210 - 250(i) 210 - 250(i) Upper end
Copper South Australia (kt) 79.0 (4%) 53% 232.7 49% 310 - 340 310 - 340 Unchanged
Antamina (kt) 33.9 (14%) 15% 105.6 4% 120 - 140 120 - 140 Unchanged
Carajás (kt) 3.2 78% 6.2 - - -
Iron ore (Mt) 61.5 (7%) 3% 190.5 (1%) 254 - 264.5 254 - 264.5
WAIO (Mt) 60.3 (6%) 3% 186.8 (1%) 250 - 260 250 - 260 Unchanged
WAIO (100% basis) (Mt) 68.1 (6%) 3% 210.2 (1%) 282 - 294 282 - 294 Unchanged
Samarco (Mt) 1.2 (10%) 12% 3.7 13% 4 - 4.5 4 - 4.5 Upper end
Metallurgical coal - BMA (Mt) 6.0 6% (13%) 17.4 (16%) 23 - 25 21.5 - 22.5 Lowered
BMA (100% basis) (Mt) 12.1 6% (13%) 34.7 (16%) 46 - 50 43 - 45 Lowered
Energy coal - NSWEC (Mt) 4.1 8% 5% 11.6 23% 13 - 15 13 - 15 Upper end
Nickel - Western Australia Nickel (kt) 18.8 (4%) (4%) 58.6 1% 77 - 87 77 - 87 Lower half
Note: changes made to FY24 production guidance since the Q2 FY24 Operational
review are shown in italics.
i Production guidance for FY24 is for Spence only and excludes
Cerro Colorado which produced 11 kt before ceasing production on 9 November
2023.
1
BHP | Operational review for the nine months ended 31 March 2024
Segment and asset performance | FY24 YTD v FY23 YTD
Further information in Appendix 1 (#_Appendix_1)
Detailed production and sales information for all operations in Appendix 2
(#_Appendix_2_1)
Copper
Production Total copper production increased by 10% to 1,360 kt. Copper production
guidance for FY24 remains unchanged at between 1,720 and 1,910 kt.
1,360 kt Up 10%
Escondida 816 kt Up 7% (100% basis)
Increased production was primarily due to a higher concentrator feed grade of
YTD Mar FY23 1,240 kt 0.85%, increasing from 0.79%, as mining progressed into areas of high grade
ore as planned following the implementation of measures to manage geotechnical
FY24e 1,720 - 1,910 kt events. Concentrator feed grade for FY24 is expected to be between 0.85% and
0.90%, with 0.92% grade achieved in Q3 FY24. Production guidance for FY24
remains unchanged at between 1,080 and 1,180 kt.
Average realised price Pampa Norte 200 kt Down 9%
US$3.72/lb Up 5% Spence production increased by 3% to a nine-month record of 189 kt, driven by
improved concentrator throughput and higher recoveries. Record concentrate
HY24 US$3.66/lb production was partially offset by lower cathode production, in line with an
expected decline in stacked feed grade. The concentrator plant modifications
which commenced in August 2022 are expected to be completed in FY24.
In March 2024, Spence achieved fully autonomous mine haulage operations (ahead
of the Q4 FY24 target date) and has deployed a total of 33 autonomous trucks.
FY24 production for Spence is expected to be at the upper end of the guidance
range of between 210 and 250kt.
Cerro Colorado entered temporary care and maintenance in December 2023, after
producing 11 kt for the period.
Copper South Australia 233 kt Up 49%
Production increased by 49% due to the addition of volumes this year from
Prominent Hill and Carrapateena, and strong underlying operational performance
at Olympic Dam including the highest quarter of material mined in over 10
years in Q3 FY24. Strong smelter performance at Olympic Dam was supported by
ongoing transfers of concentrate from Prominent Hill and initial transfers
from Carrapateena in Q3 FY24, for processing to higher margin cathode. Crusher
2 at Carrapateena was commissioned in Q3 FY24 and remains on track to ramp up
in Q4 FY24.
Production guidance for FY24 remains unchanged at between 310 and 340 kt.
We are continuing exploration drilling across the Copper South Australia
province to enhance our resource knowledge in support of our growth studies.
At Oak Dam, we are progressing the external approval process for an
underground access decline to enable faster and lower cost resource definition
drilling of the mineral deposit, and we expect to be able to provide an
Inferred Mineral Resource for Oak Dam later this calendar year.
Other copper
At Antamina, copper production increased by 4% to 106 kt, while zinc
production was 2% higher at 88 kt, both as a result of higher throughput
offsetting planned lower concentrator feed grades. Production guidance remains
unchanged for FY24, with copper production of between 120 and 140 kt, and zinc
production of between 85 and 105 kt.
Carajás produced 6.2 kt of copper and 4.1 troy koz of gold. In Q3 FY24
operations continued to ramp back up, and shipments also resumed, following
the temporary stoppage of operations between August and October 2023 due to a
geotechnical event.
2
BHP | Operational review for the nine months ended 31 March 2024
Iron ore
Production Total iron ore production decreased by 1% to 190 Mt. Production guidance for
FY24 remains unchanged at between 254 and 264.5 Mt.
190 Mt Down 1%
WAIO 187 Mt Down 1% | 210 Mt (100% basis)
Production was marginally lower due to heavy rainfall throughout Q3 FY24, the
YTD Mar FY23 192 Mt continued tie-in activity for the Rail Technology Programme (RTP1), the
impacts of the ongoing ramp up of the Central Pilbara hub (South Flank and
FY24e 254 - 264.5 Mt Mining Area C) and a bushfire near Yandi.
South Flank remains on track to ramp up to full production capacity of 80 Mtpa
(100% basis) by the end of FY24. The Port Debottlenecking Project (PDP1) was
Average realised price commissioned in December 2023 and ramp up remains on track to be completed in
CY24.
US$104.53/wmt Up 3%
Production guidance for FY24 remains unchanged at between 250 and 260 Mt (282
HY24 US$103.70/wmt and 294 Mt on a 100% basis).
Samarco 3.7 Mt Up 13% | 7.4 Mt (100% basis)
Production increased as a result of higher concentrator throughput. FY24
production is expected to be at the upper end of the 4 - 4.5 Mt guidance
range.
Coal
Metallurgical coal
Production BMA 17.4 Mt Down 16% | 34.7 Mt (100% basis)
Following the tragic fatality of a team member in January 2024, BMA operations
17.4 Mt Down 16% were suspended for 24 hours while a safety stop was implemented across all
mines, and for a further 3.5 days at Saraji.
YTD Mar FY23 20.5 Mt
Production has been impacted by increased planned maintenance, an extended
FY24e 21.5 - 22.5 Mt longwall move at Broadmeadow as well as increased stripping to improve supply
chain stability at our open cut operations to restore depleted inventory
positions arising from extended weather impacts and labour constraints over
recent years. Our focus on restoring depleted inventory will continue into
Average realised price CY25.
US$272.09/t Up 6% Despite improved production in Q3 FY24, the impacts of higher than planned wet
weather, including two tropical cyclones in the region, and the temporary
HY24 US$266.43/t suspension of operations following the fatality at Saraji have impacted our
FY24 production estimates. Production for FY24 is now expected to be between
21.5 and 22.5 Mt (43 and 45 Mt on a 100% basis). This has been lowered from 23
- 25 Mt (46 - 50 Mt on a 100% basis).
As a result, unit cost guidance for FY24(1) has increased to between US$119/t
and US$125/t, from US$110 - US$116/t.
3
BHP | Operational review for the nine months ended 31 March 2024
Energy coal
Production NSWEC 11.6 Mt Up 23%
Increased production as a result of continued strong operating performance as
11.6 Mt Up 23% improved weather conditions enabled an uplift in truck productivity. Domestic
sales under the NSW Government Coal Market Price Emergency (Directions for
YTD Mar FY23 9.4 Mt Coal Mines) Notice commenced in Q4 FY23, which has resulted in a lower
proportion of washed coal and further contributed to the higher volumes.
FY24e 13 - 15 Mt
Production for FY24 is expected to be at the upper end of the guidance range
of between 13 and 15 Mt.
Average realised price The approval process in relation to the modification request submitted to the
NSW Government to extend mining approval to 30 June 2030 will continue into
US$120.97/t Down 6% FY25. The approval would allow NSWEC to continue mining beyond its current
mining consent that expires in 2026 and proceed with a managed process to
HY24 US$123.29/t cease mining at the asset by the end of FY30.
Group & Unallocated
Nickel
Production Western Australia Nickel 59 kt Up 1%
Production increased, despite significant wet weather impacts in Q3 FY24.
59 kt Up 1% Production for FY24 is expected to be in the lower half of the guidance range
of between 77 and 87 kt.
YTD Mar FY23 58 kt
As announced in our HY24 results in February 2024, we continue to review our
FY24e 77 - 87 kt plans for Western Australia Nickel with a focus on preserving cash. This
includes optimising operations and maintenance schedules, reviewing capital
plans, and reducing contractor spend and equipment hire. Our review also
includes assessing the potential to place Nickel West into a period of care
Average realised price and maintenance and the phasing and capital spend for the development of the
West Musgrave project. We expect to provide an update on the longer-term
US$18,104/t Down 1% future of Western Australia Nickel by the FY24 results in August 2024.
HY24 US$18,602/t
Quarterly performance | Q3 FY24 v Q2 FY24
Copper Iron ore
466 kt Up 7% Higher concentrator grade at Escondida and concentrator throughput at Spence, 61 Mt Down 7% Lower production at WAIO as a result of wet weather, a bushfire near Yandi and
partially offset by lower volumes at Copper South Australia due to planned
the impacts of the RTP1 tie-in activity, partially offset by improved
Q2 FY24 437 kt maintenance and the commissioning of Crusher 2 at Carrapateena in Q3 FY24. Q2 FY24 66 Mt underlying mine performance.
Metallurgical coal Energy coal
6.0 Mt Up 6% Production increased due to improved strip ratio and yield despite 4.1 Mt Up 8% Increased production as a result of favourable mining sequence, strong
unfavourable weather. Operations were temporarily suspended for safety stops
production performance and a reduced proportion of washed coal.
Q2 FY24 5.7 Mt following the fatality of a team member at Saraji. Q2 FY24 3.9 Mt
Nickel
19 kt Down 4% Lower volumes due to planned maintenance at the Kwinana Refinery and a severe
weather event in March.
Q2 FY24 20 kt
The following footnotes apply to this Operational Review:
1 FY24 unit cost guidance is based on exchange rate of
AUD/USD 0.67.
4
BHP | Operational review for the nine months ended 31 March 2024
Appendix 1
Average realised prices(1)
Q3 FY24 YTD Mar FY24 Q3 FY24 v YTD Mar FY24 v
Q2 FY24
H1 FY24
Copper (US$/lb)(2) 3.85 3.72 5% 5%
Iron ore (US$/wmt, FOB) 106.30 104.53 (3)% 3%
Metallurgical coal (US$/t) 281.51 272.09 (4)% 6%
Hard coking coal (US$/t)(3) 293.94 281.98 (4)% 7%
Weak coking coal (US$/t)(3) 208.91 206.38 (2)% 2%
Thermal coal (US$/t)(4) 116.11 120.97 (4)% (6)%
Nickel metal (US$/t)(5) 16,581 18,104 (1)% (1)%
1 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.
2 Does not include sales from assets acquired through the purchase
of OZL.
3 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.
4 Export sales only. Includes thermal coal sales from
metallurgical coal mines.
5 Relates to refined nickel metal only, excludes intermediate
products and nickel sulphate.
Current year unit cost guidance
Previous Current
FY24 guidance(1) FY24 guidance(1)
Escondida unit cost (US$/lb)(2) 1.40 - 1.70 1.40 - 1.70 Unchanged
Spence unit cost (US$/lb) 2.00 - 2.30 2.00 - 2.30 Unchanged
WAIO unit cost (US$/t) 17.40 - 18.90 17.40 - 18.90 Unchanged
BMA unit cost (US$/t) 110 - 116 119 - 125 Increased
1 FY24 unit cost guidance is based on exchange rates of AUD/USD
0.67 and USD/CLP 810.
2 Escondida unit costs for FY24 onwards exclude revenue-based
government royalties.
Medium term guidance
Production Unit cost
guidance guidance(1)
Escondida(2) 1,200 - 1,300 kt US$1.30 - $1.60/lb(3)
Spence(4) ~250 kt
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