| Tue 21 Jan 2025, 7:30 | | 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
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 Vicuna 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
Fundao 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
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Operational excellence Guidance
Strong performance, Escondida up 22% Executing to plan
Group copper production increased 10%, driven by a 22% increase We are on track to deliver production in the upper half of the
at Escondida. FY25 guidance range at WAIO, BMA and NSWEC, as is Samarco. FY25
production guidance at all assets remains unchanged, with the
Strong underlying performance at all other assets, including at exception of Copper SA, which has been lowered due to the
WAIO, where recent completion of the Port Debottlenecking impacts from the weather-related power outage.
Project (PDP1) has unlocked greater throughput, and at BMA
where production increased 14% (excluding production from the We maintain sector leading cost discipline and remain on track
now divested Blackwater and Daunia mines). to deliver FY25 unit cost guidance across all assets.
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Growth Social value
Clear pathways for copper growth Decarbonising our assets and value chain
In January 2025, we completed the formation of Vicuna Corp., a At our 2024 AGM, we received a 92% vote in favour of our second
50/50 joint venture with Lundin Mining to develop the Filo del Climate Transition Action Plan (CTAP). We are taking action to
Sol and Josemaria copper projects. BHP's total cash completion decarbonise our operated assets and to support decarbonisation
payment was US$2.0 bn. in our value chain, including the opening of the Port Hedland
solar and battery project to provide renewable power to WAIO's
In November 2024, we outlined our attractive organic copper port facility and announcing the site preferred for development
growth pipeline at our Chilean copper site tour, with low of Australia's largest ironmaking electric smelting furnace
capital intensity options in both concentrator and leaching (ESF) pilot plant.
pathways.
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Quarter performance YTD performance FY25 guidance
------------------------- ---------------- ---------------------------------------
Production Q2 FY25 v Q1 FY25 v Q2 FY24 HY25 v HY24 Previous Current
----------------------------------------- ------- --------- --------- ----- --------- ------------- -------------
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
Carajas (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 and the production and sales report 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 and
the production and sales report for further information.
iii WA Nickel ramped down and entered temporary suspension in December 2024.
Refer to nickel and the production and sales report for further
information.
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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.
HY25 impact/i/
Description (US$M) Classification/ii/
--------------------------------------------------------------------------------- ---------------- -------------------------
Unit costs (at guidance FX)
At HY25, unit costs at Escondida, Spence and WAIO are expected to be within 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................................................................. -- Operating costs
For FY25, unit cost guidance for all assets remains unchanged, with Copper SA now
expected to be in the upper half of its range..................................... -- Operating costs
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 Down EBITDA
Negative EBITDA for WA Nickel..................................................... ~300 Down EBITDA
The Group's adjusted effective tax rate for HY25 is expected to be within the
guidance range of 33 - 38%........................................................ -- Taxation expense
Cash flow statement
Working capital movements......................................................... 150 - 250 Down Operating cash flow
Net cash tax paid................................................................. 3,400 - 3,500 Down Operating cash flow
Dividends received from equity-accounted investments.............................. ~230 Up Operating cash flow
Impact of BHP Brasil's obligations relating to the Samarco dam failure............ 637 Down Investing cash flow
Final consideration from the divestment of BMC completed in FY22.................. 150 Up Investing cash flow
Final consideration in relation to the sale of a 15% interest in Western Ridge at
WAIO in FY22...................................................................... 134 Up Investing cash flow
Dividends paid to non-controlling interests....................................... ~1,100 Down Financing cash flow
Payment of the H2 FY24 dividend................................................... ~3,900 Down Financing cash flow
Balance sheet
The Group's net debt balance as at 31 December 2024 is expected to be between
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
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
Vicuna transaction and payment of the H2 Samarco settlement obligations........... -- Net debt
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 finalised.
See iron ore section for further information on Samarco operations.
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Further information in Appendix 1
Detailed production and sales information for all operations in Appendix 2
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2
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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)
HY24 894 kt
Escondida achieved a 10-year production record in HY25, primarily due
FY25e 1,845 - 2,045 kt to 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 partially offset by planned lower cathode production,
Average realised price as the integration of the Full SaL project continued. The project
remains on track for first production later in FY25.
US$3.99/lb Up 9%
Production guidance for FY25 remains unchanged at between 1,180 and
HY24 US$3.66/lb 1,300 kt. Concentrator feed grade for FY25 is expected to remain above
0.90%.
Pampa Norte 126 kt Down 9%
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.
Carajas produced 5.3 kt of copper and 4.0 troy koz of gold.
3
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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)
HY24 129 Mt
Production increased as a result of continued strong supply chain
FY25e 255 - 265.5 Mt performance 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 and a 9% increase in productive movement across
Average realised price the asset. In addition, PDP1 which was delivered in CY24, has unlocked
improved car dumper cycle times and ship loader performance. This was
US$81.11/wmt Down 22% partially offset by the planned increase in tie-in activity of the
multi-year Rail Technology Program (RTP1) and wet weather in December.
HY24 US$103.70/wmt
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 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 between the Federal
Government of Brazil, the State of Minas Gerais, the State of Espirito
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/. The Agreement was
ratified by the Supreme Court of Brazil 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/. The cash impact of the
obligations relating to the Samarco dam failure was US$637 m in
HY25/3/. 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.
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Coal
Steelmaking coal
Production BMA 8.9 Mt Down 21% | 17.9 Mt (100% basis)
8.9 Mt Down 21% Production increased 14% (excluding 3.5 Mt in HY24 from the now
divested Blackwater and Daunia mines) underpinned by improved strip
HY24 11.3 Mt ratios and increased prime stripping as a result of an uplift in truck
productivity. This was partially offset by slower production rates at
FY25e 16.5 - 19 Mt Broadmeadow following the longwall move due to geotechnical
characteristics as well as the planned increase in raw coal inventory
to improve the stability of the value chain.
Average realised price
Production guidance for FY25 remains unchanged at between 16.5 and 19
US$206.37/t Down 23% Mt (33 and 38 Mt on a 100% basis), with production now expected to be
in the upper half of the range. We remain focused on restoring value
HY24 US$266.43/t chain stability, in particular building raw coal inventory, which will
continue into CY26.
1 Under the final settlement agreement, Samarco is the primary obligor for the
settlement obligations and BHP Brasil and Vale are each secondary obligors
of any obligation that Samarco cannot fund or perform in proportion to their
shareholding at the time of the dam failure, which is 50% each.
2 All financial obligations are presented on a real, undiscounted basis and
will accrue inflation at IPCA inflation rate. Payments will be made in
Brazilian Reais. The FY25 scheduled Obligation to Pay payment will include
CY24 and CY25 instalments.
3 Calculated based on actual transactional (historical) exchange rates.
4
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BHP | Operational review for the half year ended 31 December 2024
Energy coal
Production NSWEC 7.4 Mt Down 1%
7.4 Mt Down 1% Production was broadly in line despite a higher proportion of washed
coal. Inventory was drawn down to offset the impacts of reduced truck
HY24 7.5 Mt availability and unfavourable weather conditions.
FY25e 13 - 15 Mt Production guidance for FY25 remains unchanged at between 13 and 15 Mt,
with production now expected to be in the upper half of the range.
Average realised price We still expect an outcome from the NSW Government in Q3 FY25 regarding
the modification to extend the mining consent to 30 June 2030.
US$124.42/t Up 1%
HY24 US$123.29/t
------------------------------------------------------------------------------------------------
Group & Unallocated
Nickel
Production Western Australia Nickel 28 kt Down 31%
28 kt Down 31% Production decreased significantly as expected, as we successfully
transitioned the Nickel West supply chain (and West Musgrave project)
HY24 40 kt into temporary suspension in line with schedule. Production outcomes
benefited from the drawdown of inventory to realise additional value.
Average realised price 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
US$16,386/t Down 12% operations transitioned to temporary suspension.
HY24 US$18,602/t We have redeployed over 800 employees, with the majority moving to
roles across the Australian operations. BHP intends to review the decision to temporarily
suspend Western Australia Nickel by February 2027.
No production guidance has been provided for FY25.
Quarterly performance | Q2 FY25 v Q1 FY25
---------------------------------------------------------- ----------------------------------------------------------
Copper Iron ore
511 kt Up 7% Higher production at Escondida and 66 Mt Up 2% Higher production at WAIO as a result
Spence due to higher grades and mine of strong supply chain performance,
Q1 FY25 476 kt sequencing, partially offset by lower Q1 FY25 65 Mt partially offset by significant wet
volumes at Copper SA due to a weather.
weather-related power outage
impacting Olympic Dam.
---------------------------------------------------------- ----------------------------------------------------------
Steelmaking coal Energy coal
4.4 Mt Down 2% Lower production due to significant 3.7 Mt Up 1% Higher production due to higher wash
wet weather and the longwall move at plant feed, partially offset by lower
Q1 FY25 4.5 Mt Broadmeadow, partially offset by Q1 FY25 3.7 Mt yield.
inventory drawdown.
---------------------------------------------------------- ----------------------------------------------------------
Nickel
8.0 kt Down 59% Inventory was drawn down as
operations transitioned into temporary
Q1 FY25 19.6 kt suspension as planned.
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5
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BHP | Operational review for the half year ended 31 December 2024
Appendix 1
Average realised prices/i/
Quarter performance YTD performance
----------------------------------- ------------------
Q2 FY25 v Q1 FY25 v Q2 FY24 HY25 v HY24
---------- --------- ----------- --------- ----------
Copper (US$/lb)/ii, 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
WAIO (100% basis)............................................. >305 Mtpa
