| Thu 17 Oct 2024, 7:30 | | BHP GROUP LIMITED - Quarterly Activities Report |
|
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
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 We released our second Climate Transition Action Plan (CTAP)
4% driven by higher concentrator feed grades and recoveries at which lays out our climate strategy and GHG emissions goals and
Escondida. Production at WAIO increased 2% following targets, and provides an in depth view of our plans and how
commissioning of the Port Debottlenecking Project (PDP1) and we're progressing against them. The CTAP will be put to a
completion of the South Flank ramp up. shareholder advisory vote at our upcoming AGM on 30 October
2024. We also announced collaborations with India's JSW Steel
and Carbon Clean and Steel Authority of India 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. with Lundin We published our outlook for the copper market, including copper
Mining through a Canadian plan of arrangement. In September, the demand, copper supply and long-term copper pricing. We expect
Filo Corp shareholders approved the plan of arrangement. We also copper demand to grow by 70% by 2050, as a result of traditional
agreed to form a 50/50 joint venture with Lundin Mining to economic growth, electrification and the energy transition, and
consolidate and advance the Filo del Sol and Josemaria copper digital infrastructure (including data centres). We will be
projects. We expect the transaction to complete in Q3 FY25, hosting an investor site visit to our Chilean copper assets in
subject to regulatory approvals. November 2024 to outline our attractive organic copper growth
pipeline in the region.
------------------------------------------------------------------------------------------------------------------------------------
Quarter performance Production guidance
----------------------------- -------------------------
Current FY25
Production Q1 FY25 v Q4 FY24 v Q1 FY24 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
Carajas (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 and 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 and steelmaking coal for further information.
-------------------------------------------------------------------------------------
[GRAPHIC] Further information in Appendix 1
Detailed production and sales information for all operations in 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)
Q1 FY24 457 kt
Increased production primarily due to a higher concentrator feed grade of 1.00% (Q1 FY24: 0.85%)
FY25e 1,845 - 2,045 kt and higher recoveries as mining progressed into areas of higher-grade ore as planned. This was
partially offset by planned lower cathode production, as the integration of the FullSaL project
continued. The project remains on track for first production later in FY25.
Average realised price A new collective agreement with Union N(degrees)1 of Operators and Maintainers was signed and
became effective for 36 months from 2 August 2024. The associated industrial action did not have
US$4.24/lb Up 17% a material impact on production during the 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.
Carajas 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)
Q1 FY24 63 Mt
Production increased as a result of strong supply chain performance with increased capacity
FY25e 255 - 265.5 Mt unlocked by PDP1. Higher volumes were delivered from the Central Pilbara hub (South Flank and
Mining Area C) following the completion 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.
Average realised price
Production guidance for FY25 remains unchanged at between 250 and 260 Mt (282 and 294 Mt on a
US$80.10/wmt Down 18% 100% basis).
Q1 FY24 US$98.04/wmt Samarco 1.3 Mt Up 4% | 2.6 Mt (100% basis)]
Production increased due to early resumption of Pelletizing Plant No. 4 enabling improved
performance. Production guidance for FY25 remains unchanged 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 Fundao
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)
4.5 Mt Down 19% Production increased 20% (excluding 1.8 Mt from Blackwater and Daunia in Q1 FY24), due to
increased stripping enabled by improved truck productivity as well as Q1 FY24 being impacted by
Q1 FY24 5.6 Mt the extended longwall move at Broadmeadow. 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
US$214.86/t Down 9% Production guidance for FY25 remains unchanged at between 16.5 and 19 Mt (33 and 38 Mt on a 100%
basis).
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%
3.7 Mt Up 2% Production increased 2%, including a higher proportion of washed coal in line with our strategy
of prioritising higher quality coals. This was enabled by a drawdown of inventory to offset the
Q1 FY24 3.6 Mt impacts of reduced truck availability and 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
Average realised price Government with an outcome anticipated in Q3 FY25.
US$124.32/t Down 1%
Q1 FY24 US$125.66/t
------------------------------------------------------------------------------------------------------------------------------------
Group & Unallocated
Nickel
Production Western Australia Nickel 19.6 kt Down 3%
19.6 kt Down 3% Production decreased as we commenced the temporary suspension of operations at Nickel West.
Operations will be suspended from October 2024 and handover activities will be completed by
Q1 FY24 20.2 kt December 2024. We continue to support the workforce through this transition period and have made
redeployment offers to a large portion of our frontline employees.
Average realised price We expect costs to remain elevated during the transition to suspension in the first half and we
plan to invest ~US$300 m per annum beginning in January 2025 to preserve optionality for a
US$16,359/t Down 20% potential restart.
Q1 FY24 US$20,354/t No production guidance has been provided for FY25.
Quarterly performance | Q1 FY25 v Q4 FY24
------------------------------------------------------------------------------------------------------------------------------------
Copper Iron ore
476 kt Down 6% Lower production due to planned maintenance, 65 Mt Down 7% Lower production at WAIO as a result of
in particular across Copper SA, lower planned equipment maintenance and increased RTP1 tie-in
Q4 FY24 505 kt concentrator throughput and production across Q4 FY24 69 Mt activity.
leaching at Escondida due to mine sequencing,
and planned lower grades at Spence.
------------------------------------------------------------------------------------------------------------------------------------
Steelmaking coal Energy coal
4.5 Mt Down 8% Lower production as a result of the ramp down 3.7 Mt Down 2% Slightly lower production due to operational
and commencement of the longwall move at challenges from truck availability and wet
Q4 FY24 4.9 Mt Broadmeadow in Q1 FY25, and higher yield and Q4 FY24 3.8 Mt weather, partially offset by a drawdown of
lower strip ratio in the prior quarter as a inventory.
result of mine sequencing.
------------------------------------------------------------------------------------------------------------------------------------
Nickel
19.6 kt Down 15% Lower production as transition of operations
to temporary suspension commenced.
Q4 FY24 23.0 kt
4
--------------------------------------------------------------------------------
BHP | Operational review for the year ended 30 September 2024
Appendix 1
Average realised prices/i/
Quarter
-------------------------
Q1 FY25 v Q4 FY24 v Q1 FY24
------- --------- ---------
Copper (US$/lb)/ii/.................................... 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
WAIO (100% basis) ....................................... >305 Mtpa
