REG - BHP Group Limited - Quarterly Activities Report
17/10/2024 07:00
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RNS Number : 5104I BHP Group Limited 17 October 2024
17 October 2024
Operational review for the quarter ended 30 September 2024
Strong operational performance with increased copper, iron ore and coal
production.
"BHP had a strong start to the 2025 financial year, with production up across
all major commodities for the quarter. Copper production was up 4% due to
higher grade and recoveries at Escondida, and WAIO production was up 3% as we
unlocked capacity by completing the debottlenecking work at the port.
We are also seeing signs of stabilisation in our steelmaking coal business
with production up 20% in the quarter, excluding the recently divested
Blackwater and Daunia mines.
We added to our copper growth prospects in the quarter, announcing a proposed
50/50 joint venture in Argentina with Lundin Mining to advance what we
consider to be one of the most significant global copper discoveries in
decades.
In Canada, our Jansen Stage 1 potash project is 58% complete after a
productive summer period with first production scheduled in around two years.
China has announced a series of monetary easing policies in an effort to
support economic growth, and has indicated more significant fiscal stimulus is
on the horizon. Upcoming stimulus is likely to focus on relieving local debt,
stabilising the property market and bolstering business confidence."
Mike Henry
BHP Chief Executive Officer
Summary
Operational excellence Social value
On track to meet FY25 production guidance Climate Transition Action Plan
Strong operational performance with copper production increasing 4% driven by We released our second Climate Transition Action Plan (CTAP)
higher concentrator feed grades and recoveries at Escondida. Production at (https://www.bhp.com/sustainability/climate-change/climate-transition-action-plan)
WAIO increased 2% following commissioning of the Port Debottlenecking Project which lays out our climate strategy and GHG emissions goals and targets, and
(PDP1) and completion of the South Flank ramp up. provides an in depth view of our plans and how we're progressing against them.
The CTAP will be put to a shareholder advisory vote at our upcoming AGM on 30
October 2024
(https://www.bhp.com/news/media-centre/releases/2024/09/notice-of-annual-general-meeting)
. We also announced collaborations with India's JSW Steel and Carbon Clean
(https://www.bhp.com/news/articles/2024/10/bhp-carbon-clean-and-jsw-steel-sign-agreement-to-explore-carbon-cleans-cyclonecc-technology)
and Steel Authority of India
(https://www.bhp.com/news/media-centre/releases/2024/10/bhp-and-sail-sign-mou-to-accelerate-potential-pathways-to-steel-decarbonisation)
to support decarbonisation technology in steelmaking.
Portfolio Outlook
Increased exposure to copper Copper outlook supports growth pipeline
In July, we agreed to jointly acquire Filo Corp. We published our outlook for the copper market
(https://www.bhp.com/news/media-centre/releases/2024/07/bhp-and-lundin-mining) (https://www.bhp.com/news/bhp-insights/2024/09/how-copper-will-shape-our-future)
with Lundin Mining through a Canadian plan of arrangement. In September, the , including copper demand, copper supply and long-term copper pricing. We
Filo Corp shareholders approved the plan of arrangement. We also agreed to expect copper demand to grow by 70% by 2050, as a result of traditional
form a 50/50 joint venture with Lundin Mining to consolidate and advance the economic growth, electrification and the energy transition, and digital
Filo del Sol and Josemaria copper projects. We expect the transaction to infrastructure (including data centres). We will be hosting an investor site
complete in Q3 FY25, subject to regulatory approvals. visit to our Chilean copper assets in November 2024 to outline our attractive
organic copper growth pipeline in the region.
Production Quarter performance Production guidance
Q1 FY25 v Q4 FY24 v Q1 FY24 Current FY25
guidance
Copper (kt) 476.3 (6%) 4% 1,845 - 2,045
Escondida (kt) 304.2 (2%) 11% 1,180 - 1,300 Unchanged
Pampa Norte (kt)(i) 60.1 (9%) (23%)(i) 240 - 270(i) Unchanged
Copper South Australia (kt) 73.4 (18%) 2% 310 - 340 Unchanged
Antamina (kt) 36.3 (5%) 12% 115 - 135 Unchanged
Carajás (kt) 2.3 10% 10% - -
Iron ore (Mt) 64.6 (7%) 2% 255 - 265.5
WAIO (Mt) 63.4 (7%) 2% 250 - 260 Unchanged
WAIO (100% basis) (Mt) 71.6 (7%) 3% 282 - 294 Unchanged
Samarco (Mt) 1.3 23% 4% 5 - 5.5 Unchanged
Steelmaking coal - BMA (Mt) 4.5 (8%) (19%)(ii) 16.5 - 19
BMA (100% basis) (Mt) 9.0 (8%) (19%)(ii) 33 - 38 Unchanged
Energy coal - NSWEC (Mt) 3.7 (2%) 2% 13 - 15 Unchanged
Nickel - Western Australia Nickel (kt) 19.6 (15%) (3%) - -
i Q1 FY24 includes 9.5 kt from Cerro Colorado which entered
care and maintenance in December 2023. Excluding these volumes, Q1 FY25
production decreased 13%. Production guidance for FY25 is for Spence only.
Refer to production and sales report (#_Appendix_2_2) and copper (#_Copper)
for further information.
ii Q1 FY24 production includes 1.8 Mt (3.7 Mt on a 100% basis)
from Blackwater and Daunia mines which were divested on 2 April 2024.
Excluding these volumes, Q1 FY25 production increased 20%. Refer to production
and sales report (#_Appendix_2_2) and steelmaking coal (#_Metallurgical_coal)
for further information.
Further information in Appendix 1 (#_Appendix_1)
Detailed production and sales information for all operations in Appendix 2
(#_Appendix_2)
BHP | Operational review for the year ended 30 September 2024
Segment and asset performance | FY25 YTD v FY24 YTD
Copper
Production Total copper production increased 4% to 476 kt. Copper production guidance for
FY25 remains unchanged at between 1,845 and 2,045 kt.
476 kt Up 4%
Escondida 304 kt Up 11% (100% basis)
Increased production primarily due to a higher concentrator feed grade of
Q1 FY24 457 kt 1.00% (Q1 FY24: 0.85%) and higher recoveries as mining progressed into areas
of higher-grade ore as planned. This was partially offset by planned lower
FY25e 1,845 - 2,045 kt cathode production, as the integration of the FullSaL project continued. The
project remains on track for first production later in FY25.
A new collective agreement with Union N°1 of Operators and Maintainers was
Average realised price signed and became effective for 36 months from 2 August 2024. The associated
industrial action did not have a material impact on production during the
US$4.24/lb Up 17% quarter as a result of mitigating actions taken by management, including mine
resequencing and prioritisation of ore movement.
Q1 FY24 US$3.63/lb
During Q1 FY25, one access ramp into the PL1 high grade mining area was
impacted by geotechnical instability. We utilised alternative access ramps and
completed stabilisation works, and as a result no material production impacts
are expected.
Production guidance for FY25 remains unchanged at between 1,180 and 1,300 kt,
weighted to the second half. Concentrator feed grade for FY25 is expected to
remain above 0.90%.
Pampa Norte 60 kt Down 23%
Spence production decreased 13% as expected, as a result of lower cathode
production in line with an expected decline in stacked feed grade and planned
quarterly maintenance at the concentrator. Concentrator feed grade and
recoveries are in line with prior periods.
Production guidance for Spence remains unchanged at between 240 and 270 kt for
FY25.
Cerro Colorado remains in temporary care and maintenance (having contributed
9.5 kt in Q1 FY24).
Copper South Australia 73 kt Up 2%
Higher production primarily driven by strong underlying operational
performance, particularly at Carrapateena following the commissioning of
Crusher 2 in Q3 FY24 which has enabled higher productivity from the sub-level
cave and resulted in an increase in ore mined and milled. We also completed
planned major maintenance at Olympic Dam on the hoist and underground
materials handling system, and annual planned maintenance at the refinery.
Production was lower at Prominent Hill due to minor pit geotechnical
instability and ventilation constraints which impacted trucking capacity and
ore mined, both of which have since been rectified.
Production guidance for FY25 remains unchanged at between 310 and 340 kt,
weighted to the second half.
Other copper
At Antamina, copper production increased 12% to 36 kt as a result of higher
ore grade and recoveries, partially offset by planned lower concentrator
throughput. Zinc production was 46% lower at 19 kt, as a result of planned
lower feed grades. FY25 copper production guidance of between 115 and 135 kt
and zinc production guidance of between 90 and 110 kt remain unchanged.
Carajás produced 2.3 kt of copper and 1.7 troy koz of gold.
2
BHP | Operational review for the year ended 30 September 2024
Iron ore
Production Iron ore production increased 2% to 65 Mt. Production guidance for FY25
remains unchanged at between 255 and 265.5 Mt.
65 Mt Up 2%
WAIO 63.4 Mt Up 2% | 71.6 Mt (100% basis)
Production increased as a result of strong supply chain performance with
Q1 FY24 63 Mt increased capacity unlocked by PDP1. Higher volumes were delivered from the
Central Pilbara hub (South Flank and Mining Area C) following the completion
FY25e 255 - 265.5 Mt of South Flank ramp up in FY24. We continue to progress the multi-year Rail
Technology Program (RTP1), with tie-in activity increasing in FY25.
Production guidance for FY25 remains unchanged at between 250 and 260 Mt (282
Average realised price and 294 Mt on a 100% basis).
Samarco 1.3 Mt Up 4% | 2.6 Mt (100% basis)]
US$80.10/wmt Down 18%
Production increased due to early resumption of Pelletizing Plant No. 4
enabling improved performance. Production guidance for FY25 remains unchanged
Q1 FY24 US$98.04/wmt at between 5 and 5.5 Mt. The second concentrator at Samarco is expected to
come online during Q3 FY25, which will increase production capacity to ~16
Mtpa of pellets (100% basis) once fully ramped up, which is expected to be by
the end of FY26.
BHP Brasil, Samarco and Vale have been engaging in negotiations with the
Brazilian State and Federal Governments and other public entities to seek a
settlement of obligations under the Framework Agreement, the Federal Public
Prosecution Office Claim, and other claims by government entities relating to
the Samarco dam failure. Those negotiations are ongoing.
BHP Group Limited and BHP Group (UK) Limited are defendants to a group action
claim in the English High Court, brought by over 600,000 claimants seeking
damages in relation to the Fundão Dam failure in 2015. The liability hearing
for the group action will begin on 21 October 2024.
Coal
Steelmaking coal
Production BMA 4.5 Mt Down 19% | 9 Mt (100% basis)
Production increased 20% (excluding 1.8 Mt from Blackwater and Daunia in Q1
4.5 Mt Down 19% FY24), due to increased stripping enabled by improved truck productivity as
well as Q1 FY24 being impacted by the extended longwall move at Broadmeadow.
Q1 FY24 5.6 Mt We maintain our focus on restoring value chain stability, with an increase in
raw coal inventory, which will continue into CY26.
FY25e 16.5 - 19 Mt
During the quarter we completed planned maintenance at Goonyella Riverside and
Hay Point Coal Terminal, and commenced a longwall move at Broadmeadow.
Average realised price Production guidance for FY25 remains unchanged at between 16.5 and 19 Mt (33
and 38 Mt on a 100% basis).
US$214.86/t Down 9%
Q1 FY24 US$237.07/t
3
BHP | Operational review for the year ended 30 September 2024
Energy coal
Production NSWEC 3.7 Mt Up 2%
Production increased 2%, including a higher proportion of washed coal in line
3.7 Mt Up 2% with our strategy of prioritising higher quality coals. This was enabled by a
drawdown of inventory to offset the impacts of reduced truck availability and
Q1 FY24 3.6 Mt unfavourable weather conditions.
FY25e 13 - 15 Mt Production guidance for FY25 remains unchanged at between 13 and 15 Mt.
The modification to extend mining consent to 30 June 2030 is currently being
assessed by the NSW Government with an outcome anticipated in Q3 FY25.
Average realised price
US$124.32/t Down 1%
Q1 FY24 US$125.66/t
Group & Unallocated
Nickel
Production Western Australia Nickel 19.6 kt Down 3%
Production decreased as we commenced the temporary suspension of operations at
19.6 kt Down 3% Nickel West. Operations will be suspended from October 2024 and handover
activities will be completed by December 2024. We continue to support the
Q1 FY24 20.2 kt workforce through this transition period and have made redeployment offers to
a large portion of our frontline employees.
We expect costs to remain elevated during the transition to suspension in the
Average realised price first half and we plan to invest ~US$300 m per annum beginning in January 2025
to preserve optionality for a potential restart.
US$16,359/t Down 20%
No production guidance has been provided for FY25.
Q1 FY24 US$20,354/t
Quarterly performance | Q1 FY25 v Q4 FY24
Copper Iron ore
476 kt Down 6% Lower production due to planned maintenance, in particular across Copper SA, 65 Mt Down 7% Lower production at WAIO as a result of planned equipment maintenance and
lower concentrator throughput and production across leaching at Escondida due
increased RTP1 tie-in activity.
Q4 FY24 505 kt to mine sequencing, and planned lower grades at Spence. Q4 FY24 69 Mt
Steelmaking coal Energy coal
4.5 Mt Down 8% Lower production as a result of the ramp down and commencement of the longwall 3.7 Mt Down 2% Slightly lower production due to operational challenges from truck
move at Broadmeadow in Q1 FY25, and higher yield and lower strip ratio in the
availability and wet weather, partially offset by a drawdown of inventory.
Q4 FY24 4.9 Mt prior quarter as a result of mine sequencing. Q4 FY24 3.8 Mt
Nickel
19.6 kt Down 15% Lower production as transition of operations to temporary suspension
commenced.
Q4 FY24 23.0 kt
4
BHP | Operational review for the year ended 30 September 2024
Appendix 1
Average realised prices(i)
Quarter
Q1 FY25 v Q4 FY24 v Q1 FY24
Copper (US$/lb)(i)(i) 4.24 (7%) 17%
Iron ore (US$/wmt, FOB) 80.10 (12%) (18%)
Steelmaking coal (US$/t)(iii) 214.86 (12%) (9%)
Thermal coal (US$/t)(iv) 124.32 1% (1%)
Nickel metal (US$/t)(v) 16,359 (11%) (20%)
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 Sales from Carrapateena and Prominent Hill acquired through
the purchase of OZL are included from Q4 FY24.
iii From FY25, steelmaking coal refers to hard coking coal which is
generally those steelmaking coals with a Coke Strength after Reaction (CSR) of
35 and above, and includes coals across the spectrum from Premium Coking to
Semi Hard Coking coals. Comparative periods include impacts from weak coking
coal, which refers generally to those steelmaking coals with a CSR below 35,
which were sold by Blackwater and Daunia mines, divested on 2 April 2024.
iv Export sales only. Includes thermal coal sales from steelmaking
coal mines.
v Relates to refined nickel metal only, excludes intermediate
products and nickel sulphate.
Current year unit cost guidance
Current
Unit cost FY25 guidance(i)
Escondida (US$/lb) 1.30 - 1.60 Unchanged
Spence (US$/lb) 2.00 - 2.30 Unchanged
Copper South Australia (US$/lb) 1.30 - 1.80(ii) Unchanged
WAIO (US$/t) 18.00 - 19.50 Unchanged
BMA (US$/t) 112 - 124 Unchanged
i FY25 unit cost guidance is based on exchange rates of
AUD/USD 0.66 and USD/CLP 842.
Ii Calculated using the following assumptions for by-products:
gold US$2,000/oz, and uranium US$80/lb
Medium term guidance(i)
Production Unit cost
guidance guidance(ii)
Escondida(iii) 900 - 1,000 ktpa US$1.50 - 1.80/lb
Spence ~250 ktpa US$2.05 - 2.35/lb
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