| Thu 18 Apr 2024, 7:05 | | BHP GROUP LIMITED - Quarterly Activities Report |
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Quarterly Activities Report
BHP Group Limited
BHP Group Limited ABN 49 004 028 077
Registered in Australia
Registered Office: Level 18, 171 Collins Street
Melbourne VIC 3000 Share code: BHG
ISIN: AU000000BHP4
18 April 2024
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
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Operational performance Portfolio
Copper production increased 10% Completed sale of Blackwater and Daunia
Increased copper production driven by record production at We completed the strategic reshaping of our metallurgical coal
Spence, strong operational performance at Copper South business with the divestment of BHP Mitsubishi Alliance's (BMA)
Australia (and the contribution from Prominent Hill and Blackwater and Daunia mines to Whitehaven Coal on 2 April for a
Carrapateena), and improved performance and grade at Escondida. total cash consideration of up to US$4.1 bn (100%).
FY24 production guidance for BMA has been lowered to 21.5 - BMA now has a more focused operational footprint and a greater
22.5 Mt (43 - 45 Mt at 100%). Other updates to FY24 production portion of higher quality metallurgical coal (>85%) which is
guidance are reflected in the table below. FY24 unit cost expected to achieve higher relative margins in a decarbonising
guidance/1/ for BMA has been increased to US$119/t - US$125/t. world.
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ESG Governance
MSCI upgrade Board update
In March, ESG ratings provider MSCI updated BHP's overall In March, we announced the appointment of Ross McEwan and Don
company score based on their assessment of performance under Lindsay as Non-executive Directors, effective 3 April 2024 and
the Social Pillar. This reflects the progress made in Brazil, 1 May 2024 respectively. We also announced the retirement of
including in negotiations, and our commitment to deliver full Ian Cockerill as a Non-executive Director, effective 4 April
and fair remediation and compensation.
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Quarter performance YTD performance FY24 production guidance
----------------------------- ----------------- --------------------------------------
YTD Mar v YTD Mar
Production Q3 FY24 v Q2 FY24 v Q3 FY23 FY24 FY23 Previous Current
----------------------------------------- --------- --------- --------- ------- --------- ------------- -------------
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
Carajas (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.
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BHP | Operational review for the nine months ended 31 March 2024
Segment and asset performance | FY24 YTD v FY23 YTD
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Further information in Appendix 1
Detailed production and sales information for all operations in Appendix 2
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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)
YTD Mar FY23 1,240 kt
Increased production was primarily due to a higher concentrator feed grade of
FY24e 1,720 - 1,910 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
events. Concentrator feed grade for FY24 is expected to be between 0.85% and
Average realised price 0.90%, with 0.92% grade achieved in Q3 FY24. Production guidance for FY24
remains unchanged at between 1,080 and 1,180 kt.
US$3.72/lb Up 5%
Pampa Norte 200 kt Down 9%
HY24 US$3.66/lb
Spence production increased by 3% to a nine-month record of 189 kt, driven by
improved concentrator throughput and higher recoveries. Record concentrate
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.
Carajas 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
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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)
YTD Mar FY23 192 Mt
Production was marginally lower due to heavy rainfall throughout Q3 FY24, the
FY24e 254 - 264.5 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 Mining Area
C) and a bushfire near Yandi.
Average realised price
South Flank remains on track to ramp up to full production capacity of 80 Mtpa
US$104.53/wmt Up 3% (100% basis) by the end of FY24. The Port Debottlenecking Project (PDP1) was
commissioned in December 2023 and ramp up remains on track to be completed in
HY24 US$103.70/wmt CY24.
Production guidance for FY24 remains unchanged at between 250 and 260 Mt (282
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.
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Coal
Metallurgical coal
Production BMA 17.4 Mt Down 16% | 34.7 Mt (100% basis)
17.4 Mt Down 16% Following the tragic fatality of a team member in January 2024, BMA operations
were suspended for 24 hours while a safety stop was implemented across all
YTD Mar FY23 20.5 Mt mines, and for a further 3.5 days at Saraji.
FY24e 21.5 - 22.5 Mt Production has been impacted by increased planned maintenance, an extended
longwall move at Broadmeadow as well as increased stripping to improve supply
chain stability at our open cut operations to restore depleted inventory
Average realised price positions arising from extended weather impacts and labour constraints over
recent years. Our focus on restoring depleted inventory will continue into
US$272.09/t Up 6% CY25.
HY24 US$266.43/t Despite improved production in Q3 FY24, the impacts of higher than planned wet
weather, including two tropical cyclones in the region, and the temporary
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.
Energy coal
Production NSWEC 11.6 Mt Up 23%
11.6 Mt Up 23% Increased production as a result of continued strong operating performance as
improved weather conditions enabled an uplift in truck productivity. Domestic
YTD Mar FY23 9.4 Mt sales under the NSW Government Coal Market Price Emergency (Directions for Coal
Mines) Notice commenced in Q4 FY23, which has resulted in a lower proportion of
FY24e 13 - 15 Mt washed coal and further contributed to the higher volumes.
Production for FY24 is expected to be at the upper end of the guidance range of
Average realised price between 13 and 15 Mt.
US$120.97/t Down 6% 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
HY24 US$123.29/t 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 cease
mining at the asset by the end of FY30.
3
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BHP | Operational review for the nine months ended 31 March 2024
Group & Unallocated
Nickel
Production Western Australia Nickel 59 kt Up 1%
59 kt Up 1% Production increased, despite significant wet weather impacts in Q3 FY24.
Production for FY24 is expected to be in the lower half of the guidance range
YTD Mar FY23 58 kt of between 77 and 87 kt.
FY24e 77 - 87 kt As announced in our HY24 results in February 2024, we continue to review our
plans for Western Australia Nickel with a focus on preserving cash. This
includes optimising operations and maintenance schedules, reviewing capital
Average realised price plans, and reducing contractor spend and equipment hire. Our review also
includes assessing the potential to place Nickel West into a period of care and
US$18,104/t Down 1% 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 future of
HY24 US$18,602/t Western Australia Nickel by the FY24 results in August 2024.
Quarterly performance | Q3 FY24 v Q2 FY24
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Copper Iron ore
466 kt Up 7% Higher concentrator grade at Escondida and 61 Mt Down 7% Lower production at WAIO as a result of
concentrator throughput at Spence, wet weather, a bushfire near Yandi and the
Q2 FY24 437 kt partially offset by lower volumes at Q2 FY24 66 Mt impacts of the RTP1 tie-in activity,
Copper South Australia due to planned partially offset by improved underlying
maintenance and the commissioning of mine performance.
Crusher 2 at Carrapateena in Q3 FY24.
----------------------------------------------------------------- ---------------------------------------------------------------
Energy coal
Metallurgical coal
4.1 Mt Up 8% Increased production as a result of
6.0 Mt Up 6% Production increased due to improved strip favourable mining sequence, strong
ratio and yield despite unfavourable Q2 FY24 3.9 Mt production performance and a reduced
Q2 FY24 5.7 Mt weather. Operations were temporarily proportion of washed coal.
suspended for safety stops following the
fatality of a team member at Saraji.
----------------------------------------------------------------- ---------------------------------------------------------------
Nickel
19 kt Down 4% Lower volumes due to planned maintenance
at the Kwinana Refinery and a severe
Q2 FY24 20 kt weather event in March.
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The following footnotes apply to this Operational Review:
1 FY24 unit cost guidance is based on exchange rate of AUD/USD 0.67.
4
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BHP | Operational review for the nine months ended 31 March 2024
Appendix 1
Average realised prices/1/
Q3 FY24 v YTD Mar FY24 v
Q3 FY24 YTD Mar FY24 Q2 FY24 H1 FY24
--------- ------------ --------- --------------
Copper (US$/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
WAIO (100% basis)............................................. >305 Mt
