REG - BHP Group Limited - Quarterly Activities Report
21/01/2025 07:00
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RNS Number : 0330U BHP Group Limited 21 January 2025
21 January 2025
Operational review for the half year ended 31 December 2024
Strong underlying operational performance, with copper production up 10%
"BHP delivered safe and reliable performance in the first half. Our flagship
copper, iron ore and steelmaking coal assets delivered particularly strong
production in the period. Copper volumes rose 10%, with Escondida achieving a
10-year production record, more than offsetting the impact of a
weather-related power outage at Copper SA. WAIO shipped record half-year
tonnes through the port, enabled by supply chain improvements following the
completion of major debottlenecking at the port. Steelmaking coal tonnes from
the BMA operations were up 14%.
We made further progress on our growth pathways in future facing commodities.
In January, we completed the formation of Vicuña Corp. with Lundin Mining to
advance the Filo del Sol and Josemaria projects in Argentina, which we
consider to be one of the most significant global copper discoveries in
decades. In Canada, our Jansen Stage 1 potash project is now 63% complete,
with first production scheduled for late 2026, and we continue to execute
Stage 2 in parallel.
In Brazil, Samarco, BHP Brasil and Vale signed a comprehensive settlement
agreement with the Brazilian government and public authorities for the Samarco
Fundão dam failure, reflecting BHP Brasil's commitment to support the people,
communities and environment affected by the tragedy. Our WA Nickel operations
were safely transitioned into a period of temporary suspension, with many
employees moving into roles to support this phase or within other parts of
BHP.
We are well positioned to continue strong momentum into the second half with a
number of assets now expected to deliver production in the upper half of their
respective ranges, while maintaining tight cost control. BHP is in good shape
and we have a clear pathway for growth."
Mike Henry
BHP Chief Executive Officer
Summary
Operational excellence Guidance
Strong performance, Escondida up 22% Executing to plan
Group copper production increased 10%, driven by a 22% increase at Escondida. We are on track to deliver production in the upper half of the
FY25 guidance range at WAIO, BMA and NSWEC, as is Samarco. FY25 production
Strong underlying performance at all other assets, including at WAIO, where guidance at all assets remains unchanged, with the exception of Copper SA,
recent completion of the Port Debottlenecking Project (PDP1) has unlocked which has been lowered due to the impacts from the weather-related power
greater throughput, and at BMA where production increased 14% (excluding outage.
production from the now divested Blackwater and Daunia mines).
We maintain sector leading cost discipline and remain on track to deliver FY25
unit cost guidance across all assets.
Growth Social value
Clear pathways for copper growth Decarbonising our assets and value chain
In January 2025, we completed the formation of Vicuña Corp. At our 2024 AGM, we received a 92% vote in favour of our second Climate
(https://www.bhp.com/news/media-centre/releases/2025/01/bhp-and-lundin-mining-complete-the-acquisition-of-filo-corp) Transition Action Plan (CTAP)
, a 50/50 joint venture with Lundin Mining to develop the Filo del Sol and (https://www.bhp.com/sustainability/climate-change/climate-transition-action-plan)
Josemaria copper projects. BHP's total cash completion payment was US$2.0 bn. . We are taking action to decarbonise our operated assets and to support
decarbonisation in our value chain, including the opening of the Port Hedland
In November 2024, we outlined our attractive organic copper growth pipeline at solar and battery project to provide renewable power to WAIO's port facility
our Chilean copper site tour and announcing the site preferred for development of
(https://www.bhp.com/investors/presentations-events/presentations-and-briefings) (https://www.bhp.com/news/media-centre/releases/2024/12/bluescope-bhp-and-rio-tinto-select-wa-for-australias-largest-ironmaking-electric-smelting-furnace)
, with low capital intensity options in both concentrator and leaching (https://www.bhp.com/news/media-centre/releases/2024/12/bluescope-bhp-and-rio-tinto-select-wa-for-australias-largest-ironmaking-electric-smelting-furnace)
pathways. Australia's largest ironmaking electric smelting furnace (ESF)
(https://www.bhp.com/news/media-centre/releases/2024/12/bluescope-bhp-and-rio-tinto-select-wa-for-australias-largest-ironmaking-electric-smelting-furnace)
pilot plant.
Production Quarter performance YTD performance FY25 guidance
Q2 v Q1 v Q2 HY25 v HY24 Previous Current
FY25
FY25
FY24
Copper (kt) 510.7 7% 17% 987.0 10% 1,845 - 2,045 1,845 - 2,045
Escondida (kt) 339.8 12% 33% 644.0 22% 1,180 - 1,300 1,180 - 1,300 Unchanged
Pampa Norte (kt)(i) 66.2 10% 11% 126.3 (9%) 240 - 270(i) 240 - 270(i) Unchanged
Copper South Australia (kt) 71.2 (3%) (13%) 144.6 (6%) 310 - 340 300 - 325 Lowered
Antamina (kt) 30.5 (16%) (22%) 66.8 (7%) 115 - 135 115 - 135 Unchanged
Carajás (kt) 3.0 30% 67% 5.3 77% - - -
Iron ore (Mt) 66.2 2% 1% 130.9 1% 255 - 265.5 255 - 265.5
WAIO (Mt) 64.8 2% 0% 128.1 1% 250 - 260 250 - 260 Upper half
WAIO (100% basis) (Mt) 73.1 2% 1% 144.7 2% 282 - 294 282 - 294 Upper half
Samarco (Mt) 1.5 14% 13% 2.8 9% 5 - 5.5 5 - 5.5 Upper half
Steelmaking coal - BMA (Mt)(ii) 4.4 (2%) (23%) 8.9 (21%) 16.5 - 19 16.5 - 19
BMA (100% basis) (Mt)(ii) 8.9 (2%) (23%) 17.9 (21%) 33 - 38 33 - 38 Upper half
Energy coal - NSWEC (Mt) 3.7 1% (4%) 7.4 (1%) 13 - 15 13 - 15 Upper half
Nickel - Western Australia Nickel (kt)(iii) 8.0 (59%) (59%) 27.6 (31%) - - -
i HY24 includes 11 kt from Cerro Colorado which entered
temporary care and maintenance in December 2023. Excluding these volumes, HY25
production decreased 1%. Production guidance for FY25 is for Spence only.
Refer to copper (#_Copper) and the production and sales report
(#_Appendix_2_2) for further information.
ii HY24 production includes 3.5 Mt (6.9 Mt on a 100% basis) from
the Blackwater and Daunia mines which were divested on 2 April 2024. Excluding
these volumes, HY25 production increased 14%. Refer to steelmaking coal
(#_Metallurgical_coal) and the production and sales report (#_Appendix_2_2)
for further information.
iii WA Nickel ramped down and entered temporary suspension in December
2024. Refer to nickel (#_Nickel) and the production and sales report
(#_Appendix_2_2) for further information.
1
BHP | Operational review for the half year ended 31 December 2024
Summary of disclosures
BHP expects its financial results for the first half of FY25 (HY25) to reflect
certain items summarised in the table below. The table does not provide a
comprehensive list of all items impacting the period. The financial statements
are the subject of ongoing work that will not be finalised until the release
of the financial results on 18 February 2025. Accordingly, the information in
the table below contains preliminary information that is subject to update and
finalisation.
Description HY25 impact(i) Classification(ii)
(US$M)
Unit costs (at guidance FX)
At HY25, unit costs at Escondida, Spence and WAIO are expected to be within - Operating costs
their respective guidance ranges. Unit costs at Copper SA and BMA are expected
to be higher than their respective guidance ranges predominantly due to the
weather-related power outage, and the longwall move and maintenance activity
in HY25 respectively
For FY25, unit cost guidance for all assets remains unchanged, with Copper SA - Operating costs
now expected to be in the upper half of its range
Average realised exchange rates for HY25 of AUD/USD 0.66 (guidance rate -
AUD/USD 0.66) and
USD/CLP 947 (guidance rate USD/CLP 842)
Income statement
Impact of the weather-related power outage on Copper SA ~150 ↓ EBITDA
Negative EBITDA for WA Nickel ~300 ↓ EBITDA
The Group's adjusted effective tax rate for HY25 is expected to be within the - Taxation expense
guidance range of 33 - 38%
Cash flow statement
Working capital movements 150 - 250 ↓ Operating cash flow
Net cash tax paid 3,400 - 3,500 ↓ Operating cash flow
Dividends received from equity-accounted investments ~230 ↑ Operating cash flow
Impact of BHP Brasil's obligations relating to the Samarco dam failure 637 ↓ Investing cash flow
Final consideration from the divestment of BMC completed in FY22 150 ↑ Investing cash flow
Final consideration in relation to the sale of a 15% interest in Western Ridge 134 ↑ Investing cash flow
at WAIO in FY22
Dividends paid to non-controlling interests ~1,100 ↓ Financing cash flow
Payment of the H2 FY24 dividend ~3,900 ↓ Financing cash flow
Balance sheet
The Group's net debt balance as at 31 December 2024 is expected to be between - Net debt
US$11.5 and US$12.5 bn.
Following the execution of the final Samarco Settlement Agreement, the Group's
balance sheet will be impacted by the associated cash payments. See iron ore
(#_Iron_ore) section for further information on Samarco.
For FY25, the Group's net debt balance is expected to increase to around the
top end of the net debt target range of US$5 to US$15 bn following completion
of the Vicuña transaction and payment of the H2 Samarco settlement
obligations
Exceptional items
Financial impact of the Samarco dam failure Refer footnote(iii) Exceptional item
Costs associated with WA Nickel transitioning into temporary suspension 300 - 350 Exceptional item
I Numbers are not tax effected, unless otherwise noted.
Ii There will be a corresponding balance sheet, cash flow and/or
income statement impact as relevant, unless otherwise noted.
Iii Financial impact is the subject of ongoing work and is not yet
inalized. See iron ore (#_Iron_ore) section for further information on Samarco
operations.
Further information in Appendix 1 (#_Appendix_1)
Detailed production and sales information for all operations in Appendix 2
(#_Appendix_2_2)
2
BHP | Operational review for the half year ended 31 December 2024
Segment and asset performance | FY25 YTD v FY24 YTD
Copper
Production Total copper production increased 10% to 987 kt. Copper production guidance
for FY25 remains unchanged at between 1,845 and 2,045 kt.
987 kt Up 10%
Escondida 644 kt Up 22% (100% basis)
Escondida achieved a 10-year production record in HY25, primarily due to
HY24 894 kt higher concentrator feed grade of 1.03% (HY24: 0.81%) and higher recoveries as
mining progressed into areas of higher-grade ore as planned. This was
FY25e 1,845 - 2,045 kt partially offset by planned lower cathode production, as the integration of
the Full SaL project continued. The project remains on track for first
production later in FY25.
Average realised price Production guidance for FY25 remains unchanged at between 1,180 and 1,300 kt.
Concentrator feed grade for FY25 is expected to remain above 0.90%.
US$3.99/lb Up 9%
Pampa Norte 126 kt Down 9%
HY24 US$3.66/lb
Pampa Norte consists of Spence and Cerro Colorado. Cerro Colorado remains in
temporary care and maintenance having contributed 11 kt in HY24.
Spence production decreased 1% in line with lower cathode production.
Concentrator feed grade was in line with the prior period and recoveries
continue to improve.
Production guidance for FY25 for Spence remains unchanged at between 240 and
270 kt.
Copper South Australia 145 kt Down 6%
Strong underlying performance in Q1 was followed by a two-week weather-related
power outage due to a significant storm at the beginning of Q2. The integrity
of all major infrastructure was maintained at Olympic Dam during the outage.
Ramp up after the outage was achieved safely over the subsequent two weeks,
and since then performance has been strong with 30 kt of copper production
achieved across Copper SA in December.
Carrapateena continues to perform well, with higher productivity from the
sub-level cave enabled by Crusher 2. Production was lower at Prominent Hill
due to the impacts of the minor pit geotechnical instability and ventilation
constraints in Q1, which was partially offset by inventory drawdowns.
Production guidance for FY25 has been revised down to between 300 and 325 kt
as a result of the impacts from the weather-related power outage.
Other copper
At Antamina, copper production decreased 7% to 67 kt reflecting planned lower
concentrator throughput and a slight decline in ore grade. Zinc production was
39% lower at 42 kt, as a result of planned lower feed grades and throughput.
For FY25, at Antamina, copper production guidance of between 115 and 135 kt
and zinc production guidance of between 90 and 110 kt remain unchanged.
Carajás produced 5.3 kt of copper and 4.0 troy koz of gold.
3
BHP | Operational review for the half year ended 31 December 2024
Iron ore
Production Iron ore production increased 1% to 131 Mt. Production guidance for FY25
remains unchanged at between 255 and 265.5 Mt.
131 Mt Up 1%
WAIO 128 Mt Up 1% | 145 Mt (100% basis)
Production increased as a result of continued strong supply chain performance
HY24 129 Mt with record volumes delivered from the Central Pilbara hub (South Flank and
Mining Area C) following the completion of the ramp up of South Flank in FY24
FY25e 255 - 265.5 Mt and a 9% increase in productive movement across the asset. In addition, PDP1
which was delivered in CY24, has unlocked improved car dumper cycle times and
ship loader performance. This was partially offset by the planned increase in
tie-in activity of the multi-year Rail Technology Program (RTP1) and wet
Average realised price weather in December.
US$81.11/wmt Down 22% Production guidance for FY25 remains unchanged at between 250 and 260 Mt (282
and 294 Mt on a 100% basis), with production now expected to be in the upper
HY24 US$103.70/wmt half of the range.
Samarco 2.8 Mt Up 9% | 5.5 Mt (100% basis)
Production increased in line with the resumption of latent pelletising plant
capacity and restart of the second concentrator in December, ahead of
schedule. This will increase production capacity to ~16 Mtpa of pellets (100%
basis) once fully ramped up, which is expected by early FY26. Production
guidance for FY25 remains unchanged at between 5 and 5.5 Mt, with production
now expected to be in the upper half of the range.
On 25 October 2024, BHP announced an agreement
(https://www.bhp.com/news/media-centre/releases/2024/10/bhp-brasil-reaches-final-settlement)
between the Federal Government of Brazil, the State of Minas Gerais, the State
of Espírito Santo, the public prosecutors and public defenders (Public
Authorities) and Samarco, BHP Brasil and Vale (Agreement). The Agreement
delivers a full and final settlement of the Framework Agreement obligations,
the Federal Public Prosecution Office civil claim and other claims by the
Public Authorities relating to the dam failure 1 (#_ftn1) . The Agreement was
ratified by the Supreme Court of Brazil
(https://www.bhp.com/news/media-centre/releases/2024/11/samarco-update-ratification-of-agreement-with-brazilian-public-authorities)
in Brasilia on 6 November 2024.
The Agreement creates separate 'Obligation to Pay' and 'Obligations to
Perform' for BHP Brasil. As announced on 25 October 2024, the cash impact of
the Obligation to Pay was expected to be ~R$11.0 bn in FY25, ~R$7.0 bn in FY26
and ~R$5.0 bn in FY27 (100% basis). The Obligations to Perform were expected
to be ~R$6.6 bn in FY25, ~R$14.7 bn in FY26 and ~R$3.1 bn in FY27 (100%
basis) 2 (#_ftn2) . The cash impact of the obligations relating to the
Samarco dam failure was US$637 m in HY25 3 (#_ftn3) . The HY25 financial
impacts associated with the Agreement are the subject of ongoing work that
will not be finalised until the release of the financial results on 18
February 2025.
Coal
Steelmaking coal
Production BMA 8.9 Mt Down 21% | 17.9 Mt (100% basis)
Production increased 14% (excluding 3.5 Mt in HY24 from the now divested
8.9 Mt Down 21% Blackwater and Daunia mines) underpinned by improved strip ratios and
increased prime stripping as a result of an uplift in truck productivity. This
HY24 11.3 Mt was partially offset by slower production rates at Broadmeadow following the
longwall move due to geotechnical characteristics as well as the planned
FY25e 16.5 - 19 Mt increase in raw coal inventory to improve the stability of the value chain.
Production guidance for FY25 remains unchanged at between 16.5 and 19 Mt (33
and 38 Mt on a 100% basis), with production now expected to be in the upper
Average realised price half of the range. We remain focused on restoring value chain stability, in
particular building raw coal inventory, which will continue into CY26.
US$206.37/t Down 23%
HY24 US$266.43/t
BHP | Operational review for the half year ended 31 December 2024
Energy coal
Production NSWEC 7.4 Mt Down 1%
Production was broadly in line despite a higher proportion of washed coal.
7.4 Mt Down 1% Inventory was drawn down to offset the impacts of reduced truck availability
and unfavourable weather conditions.
HY24 7.5 Mt
Production guidance for FY25 remains unchanged at between 13 and 15 Mt, with
FY25e 13 - 15 Mt production now expected to be in the upper half of the range.
We still expect an outcome from the NSW Government in Q3 FY25 regarding the
modification to extend the mining consent to 30 June 2030.
Average realised price
US$124.42/t Up 1%
HY24 US$123.29/t
Group & Unallocated
Nickel
Production Western Australia Nickel 28 kt Down 31%
Production decreased significantly as expected, as we successfully
28 kt Down 31% transitioned the Nickel West supply chain (and West Musgrave project) into
temporary suspension in line with schedule. Production outcomes benefited from
HY24 40 kt the drawdown of inventory to realise additional value.
We expect costs to be elevated in HY25, as a result of operational and ramp
down activities combined with the drawdown of inventory as the operations
Average realised price transitioned to temporary suspension.
US$16,386/t Down 12% We have redeployed over 800 employees, with the majority moving to roles
across the Australian operations. BHP intends to review the decision to
HY24 US$18,602/t temporarily suspend Western Australia Nickel by February 2027.
No production guidance has been provided for FY25.
Quarterly performance | Q2 FY25 v Q1 FY25
Copper Iron ore
511 kt Up 7% Higher production at Escondida and Spence due to higher grades and mine 66 Mt Up 2% Higher production at WAIO as a result of strong supply chain performance,
sequencing, partially offset by lower volumes at Copper SA due to a
partially offset by significant wet weather.
Q1 FY25 476 kt weather-related power outage impacting Olympic Dam. Q1 FY25 65 Mt
Steelmaking coal Energy coal
4.4 Mt Down 2% Lower production due to significant wet weather and the longwall move at 3.7 Mt Up 1% Higher production due to higher wash plant feed, partially offset by lower
Broadmeadow, partially offset by inventory drawdown.
yield.
Q1 FY25 4.5 Mt Q1 FY25 3.7 Mt
Nickel
8.0 kt Down 59% Inventory was drawn down as operations transitioned into temporary suspension
as planned.
Q1 FY25 19.6 kt
5
BHP | Operational review for the half year ended 31 December 2024
Appendix 1
Average realised prices(i)
Quarter performance YTD performance
Q2 FY25 v Q1 FY25 v Q2 FY24 HY25 v HY24
Copper (US$/lb)(i)(i, iii, iv) 3.73 (12%) 1% 3.99 9%
Iron ore (US$/wmt, FOB)(v) 82.11 3% (25%) 81.11 (22%)
Steelmaking coal (US$/t)(vi, vii) 198.65 (8%) (32%) 206.37 (23%)
Thermal coal (US$/t)(viii) 124.52 0% 3% 124.42 1%
Nickel metal (US$/t)(ix) 16,842 3% 0% 16,386 (12%)
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 The large majority of copper cathodes sales were linked to index
price 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.
iii At 31 December 2024, the Group had 427 kt of outstanding copper
sales that were revalued at a weighted average price of US$3.95/lb. The final
price of these sales will be determined over the remainder of FY25. In
addition, 430 kt of copper sales from FY24 were subject to a finalisation
adjustment in the current period. The displayed prices include the impact of
these provisional pricing and finalisation adjustments.
iv Sales from Carrapateena and Prominent Hill acquired through the
purchase of OZL are included since Q4 FY24 period.
v The large majority of iron ore shipments were linked to index
pricing for the month of shipment, with price differentials predominantly a
reflection of market fundamentals and product quality. Iron ore sales for HY25
were based on an average moisture rate of 7.0% (HY24: 6.7%).
vi The large majority of steelmaking coal and energy coal exports
were linked to index pricing for the month of scheduled shipment or priced on
the spot market at fixed or index-linked prices, with price differentials
reflecting product quality.
vii From FY25, steelmaking coal refers to hard coking coal which is
generally those steelmaking coals with a Coke Strength after Reaction (CSR) of
35 and above. Comparative periods include impacts from weak coking coal, which
refers generally to those steelmaking coals with a CSR below 35, which were
sold by Blackwater and Daunia mines, divested on 2 April 2024.
viii Export sales only. Includes thermal coal sales from steelmaking coal
mines.
ix Relates to refined nickel metal only, excludes intermediate
products and nickel sulphate.
Current year unit cost guidance
FY25 guidance(i)
Unit cost Current
Escondida (US$/lb) 1.30 - 1.60 Unchanged
Spence (US$/lb) 2.00 - 2.30 Unchanged
Copper SA (US$/lb)(ii) 1.30 - 1.80 Upper half
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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