TIDMBHP

RNS Number : 5531T

BHP Group PLC

21 July 2020

 
Release Time     IMMEDIATE 
Date             21 July 2020 
Release Number   07/20 
 

BHP OPERATIONAL REVIEW

FOR THE YEARED 30 JUNE 2020

Note: All guidance is subject to further potential impacts from COVID-19 during the 2021 financial year.

-- The commitment of our workforce, our disciplined controls and financial strength has enabled us to continue to safely operate through the COVID-19 pandemic and deliver a strong performance.

-- Met full year production guidance for iron ore, metallurgical coal and our operated copper and energy coal assets. Petroleum production marginally below guidance with lower than expected gas demand due to the impact of COVID-19 in the June 2020 quarter. Antamina and Cerrejón production lower than guidance following the temporary suspension of operations due to COVID-19, with both operations now ramping back up.

-- R ecord production was achieved at Western Australia Iron Ore (WAIO), Caval Ridge and Poitrel despite impacts from wet weather and COVID-19, while record coal was mined at Broadmeadow and record average concentrator throughput was delivered at Escondida.

-- Group copper equivalent production for the 2020 financial year broadly in line with the prior year, with volumes expected to be slightly lower in the 2021 financial year due to impacts from a reduction in operational workforces in copper in response to COVID-19 and petroleum natural field decline.

-- We expect to achieve full year unit cost guidance(1) at WAIO, Queensland Coal and New South Wales Energy Coal (NSWEC). Petroleum and Escondida unit costs are expected to be slightly better than guidance (based on 2020 financial year guidance exchange rates of AUD/USD 0.70 and USD/CLP 683).

-- Our major projects under development in petroleum and iron ore are tracking to plan. As a result of measures put in place to reduce the spread of COVID-19 in Chile, first production from the Spence Growth Option is now expected between December 2020 and March 2021. We continue to assess the impacts of COVID-19 and the temporary reduction in construction activity at Jansen.

-- As previously announced, we will provide updated capital and exploration expenditure guidance for the 2021 financial year with our full year results.

   --    An update on our short-term economic and commodities outlook is included on pages 4 to 5. 
 
Production             FY20     Jun Q20 
                     (vs FY19)   (vs Mar 
                                   Q20)    Jun Q20 vs Mar Q20 commentary 
 
Petroleum (MMboe)          109        26  Increased production at Bass Strait 
                                           due to higher seasonal demand, partially 
                                           offset by lower volumes at Atlantis 
                                           due to planned maintenance and preparation 
                                           work for Phase 3 project commissioning, 
                                           and lower demand in Trinidad and 
                                           Tobago. 
                         (10%)        5% 
                                          Higher production at Escondida (record 
                                           concentrator throughput) and Olympic 
                                           Dam (improved operating stability) 
                                           offset by lower production at Antamina 
                                           due to temporary suspension in response 
Copper (kt)              1,724       414   to COVID-19. 
                            2%      (3%) 
Iron ore (Mt)              248        67  Higher volumes reflecting record 
                                           quarter production at Mining Area 
                                           C and Yandi, strong supply chain 
                                           performance (increased car dumper 
                                           availability and utilisation and 
                                           reduced rail cycle times), coupled 
                                           with wet weather impacts in the previous 
                                           quarter. 
                            4%       11% 
                                          Higher volumes at Queensland Coal 
                                           including record production at Poitrel 
                                           mine, following significant wet weather 
Metallurgical                              events impacting operations in the 
 coal (Mt)                  41        12   prior quarter. 
                          (3%)       26% 
                                          Higher production at NSWEC was offset 
                                           by lower volumes at Cerrejón 
Energy coal                                as a result of a temporary shutdown 
 (Mt)                       23         6   in response to COVID-19. 
                         (16%)      (2%) 
                                          Higher volumes following ramp back 
                                           up to full capacity at the Kwinana 
                                           refinery and Kalgoorlie smelter during 
Nickel (kt)                 80        24   the prior quarter. 
                          (8%)       14% 
 

Summary

BHP Chief Executive Officer, Mike Henry:

"BHP safely delivered a strong operational performance in the 2020 financial year, achieving record production in a number of our operations, and an improved cost base. This performance, achieved in the face of COVID-19 and other challenges, is a result of the outstanding effort of our people and the support of our communities, governments, customers and suppliers. We have sought to support those who rely on BHP through the pandemic with increased hiring, shorter payment terms for small, local and indigenous suppliers, support for contract workers and community funding for health and social services.

Our diversified portfolio and high quality assets, together with our strong balance sheet, make us resilient to the ongoing uncertainty in the markets for our commodities. We expect to continue to generate solid cash flow through the cycle and we remain confident in the outlook for demand for our products over the medium to long-term. We continue to focus on becoming even safer, delivering exceptional operational performance, maintaining disciplined capital allocation, creating and securing more options in future facing commodities and building social value. We have learned new ways of working, both internally and with others, through the COVID-19 pandemic. We will seek to embed these in a way that helps to reinforce these priorities."

Operational performance

Production and guidance are summarised below.

Note: All guidance is subject to further potential impacts from COVID-19 during the 2021 financial year.

 
                                               Jun Q20  Jun Q20 
                                        FY20      vs       vs 
                                 Jun     vs      Jun      Mar       FY21      FY21e 
Production                FY20    Q20   FY19     Q19      Q20     guidance    vs FY20 
 
                                                                               (13%) - 
Petroleum (MMboe)           109    26   (10%)    (11%)       5%   95 - 102        (6%) 
                                                                     1,480     (14%) - 
Copper (kt)               1,724   414      2%     (7%)     (3%)    - 1,645        (5%) 
                                                                     940 -     (21%) - 
   Escondida (kt)         1,185   294      4%       2%       1%      1,030       (13%) 
                                                                     240 -      (1%) - 
    Pampa Norte (kt)        243    55    (2%)    (26%)    (15%)        270         11% 
                                                                     180 - 
    Olympic Dam (kt)        172    48      7%       5%      24%        205    5% - 19% 
                                                                     120 -      (4%) - 
    Antamina (kt)           125    18   (15%)    (52%)    (46%)        140         12% 
                                                                     244 -      (2%) - 
Iron ore (Mt)               248    67      4%       7%      11%        253          2% 
  WAIO (100% basis)                                                  276 -      (2%) - 
   (Mt)                     281    76      4%       6%      11%        286          2% 
Metallurgical coal                                                              (3%) - 
 (Mt)                        41    12    (3%)     (2%)      26%    40 - 44          7% 
  Queensland Coal (100%                                                         (2%) - 
   basis) (Mt)               73    21    (2%)     (1%)      29%    71 - 77         6 % 
                                                                                (5%) - 
Energy coal (Mt)             23     6   (16%)    (24%)     (2%)    22 - 24          4% 
                                                                                (7%) - 
  NSWEC (Mt)                 16     5   (12%)    (10%)      28%    15 - 17          6% 
                                                                               Broadly 
  Cerrejón (Mt)          7     1   (23%)    (62%)    (61%)         7   unchanged 
Nickel (kt)                  80    24    (8%)    (17%)      14%    85 - 95    6% - 19% 
------------------------  -----  ----  ------  -------  -------  ---------  ---------- 
 

Summary of disclosures

BHP expects its financial results for the second half of the 2020 financial year to reflect certain items as 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 our full year financial results on 18 August 2020. Accordingly the information is subject to update.

 
                                                                                H2 FY20 
                                                                                 impact 
Description                                                                     US$M(i)          Classification(ii) 
 
Unit costs for WAIO, Queensland Coal and NSWEC expected to be in line     Refer footnote(iii)          Operating costs 
with full year guidance 
(at guidance exchange rates) 
Unit costs for Petroleum and Escondida tracking slightly better than      Refer footnote(iii)          Operating costs 
full year guidance (at 
guidance exchange rates) due to lower price linked costs, cost 
efficiencies and deferred activity 
due to COVID-19 (Petroleum) and higher than expected by-product credits 
and lower than expected 
deferred stripping costs (Escondida) 
Increase in closure and rehabilitation provision for closed mines                   600 - 700          Operating costs 
(reported in group and unallocated) 
Exploration expense (including petroleum and minerals exploration                         286      Exploration expense 
programs) 
The Group's net debt target range is US$12 to US$17 billion, with net                       -                 Net debt 
debt expected to be 
towards the lower end of the range(iv) 
Settlement of derivative related to the funding of the interim dividend                  320   Operating cash outflow 
(Note: together with 
the payment of US$2.9 billion reported in financing cash outflow, the 
combined payment of 
US$3.3 billion represents the interim dividend determined on 18 February 
2020 in the financial 
results for the half year ended 31 December 2019) 
Insurance proceeds received in relation to the Samarco dam failure                       450    Operating cash inflow 
 (Note: income statement impact will be treated as an exceptional item) 
Dividends paid to non-controlling interests                                              430   Financing cash outflow 
Impairment charge related to property, plant and equipment at Cerro                 450 - 500  Exceptional item charge 
Colorado, in addition 
to a valuation allowance recognised against Cerro Colorado's deferred 
tax assets (after tax) 
Costs directly attributable to COVID-19 (after tax)                                 100 - 150  Exceptional item charge 
Financial impact on BHP Brasil of the Samarco dam failure                 Refer footnote(iii)         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.

   (iii)   Financial impact is the subject of ongoing work and is not yet finalised. 

(iv) Our Net Debt definition is currently under review in relation to vessel lease contracts that are priced with reference to a freight index. Such contracts are required to be re-measured to the prevailing index at each reporting date. Volatility in the index throughout FY2020 has created significant short-term fluctuation in these liabilities which, if included, does not align with how the Group uses net debt for decision making in relation to the capital allocation framework.

Major development projects

During the year, the BHP Board approved the Ruby oil and gas project in Trinidad and Tobago. At the end of the 2020 financial year, BHP had six major projects under development in petroleum, copper, iron ore and potash, with a combined budget of US$11.4 billion over the life of the projects. Our major projects under development in petroleum and iron ore are tracking to plan.

The Spence Growth Option is continuing to progress, however, as a result of measures put in place to reduce the spread of COVID-19, first production is now expected between December 2020 and March 2021. As a result of the reduction of the on-site workforce, the commissioning of the desalination plant and capitalisation of the associated US$600 million lease (approximate) will now occur in the first half of the 2021 financial year.

In June 2020, final shaft lining work for the Jansen project, which was reduced to focus on one shaft as part of our COVID-19 response plan to reduce our on-site interprovincial workforce, was resumed in both shafts. Timing for completion of the shafts continues to be under review. BHP continues to assess the impacts of COVID-19 and the temporary reduction in construction activity.

COVID-19 update

During the June 2020 quarter, our operated assets have continued with additional protocols in place to protect our workforce and communities from the spread of COVID-19, in line with guidelines from local and federal government bodies and expert health advice in the geographies where we operate.

In Australia, we have only had a small number of cases among our workforce since COVID-19 began, none with workplace exposure, and some assets are returning to more normal rosters. We remain vigilant and will continue with social distancing and hygiene practices and other protocols as appropriate to minimise the risk of transmission.

In South America, COVID-19 infection rates have seen governments continue with travel and lockdown restrictions. We continue to operate with a reduced number of people at mine sites and other operational facilities, with only business critical personnel on site. We have implemented a comprehensive plan for COVID-19 including various hygiene and health controls and a proactive testing regime for people before entering sites and boarding transportation.

In addition, we have implemented a company-wide COVID-19 app for employees and contractors so that in the event of a positive result, movement on site can be tracked to trace others who may have been in contact, and targeted isolation and sanitation can be undertaken. Medical and wellbeing support is in place for the workforce.

Our supply chains remain open and we have adequate supplies to operate and maintain critical equipment, with alternative suppliers identified for many of these.

Marketing update (2)

Short term economic outlook

The global economy has been dramatically impacted by COVID-19. Many major economies contracted heavily in the June 2020 quarter, including the United States (US), Europe and India. In contrast, China has moved from intensive viral suppression to economic recovery. Much of the developing world is still in the escalation phase of their COVID-19 outbreaks. The developed world has begun to re-emerge from wave one lockdowns, but early indications are that there is likely to be a period of uncertainty, with re-escalation of infection rates and re-implementation of COVID-19 response measures in some jurisdictions.

The pace and scope of recovery will vary across countries. Where "hibernation policies"(3) have been enacted, we anticipate a smoother resumption of activity after the first wave. A considerable amount of monetary, liquidity and fiscal policy support has been mobilised in response to COVID-19. It is still uncertain how significant the multiplier effect will be of the monetary and fiscal stimulus policies measures that have been taken. A lower multiplier could result from depressed consumer and business confidence due to the impact of COVID-19 on both jobs and profitability. A higher multiplier could occur if the lagged impact of stimulus coincides with the release of pent-up demand as economies emerge from the lockdown, with the caveat that major second waves do not occur.

The International Monetary Fund's (IMF) latest forecasts predict that the world economy will contract by 4.9 per cent in the 2020 calendar year and rebound by 5.4 per cent in the 2021 calendar year. While we plan against a range, our base case is similar across the two years. If this case eventuated, the world economy would be around 6 per cent smaller, on average, in the 2021 calendar year than it would otherwise have been if COVID-19 had not occurred.

Regionally, we note that Chinese domestic industrial activity has been improving, spurred on by supportive credit and fiscal policy. The major risk to maintaining that positive trajectory is the possibility of a widespread second wave of infections emerging. That is among the range of pathways that we consider and it is the key uncertainty in each of our regional outlooks. Elsewhere, indications are that the US, India, Japan and Europe will all experience a flatter recovery trajectory than China. Negative feedback loops to China from the downturn in the rest of the world are factored in to our range analysis.

Short term commodities outlook

Exchange traded commodity prices have recovered slightly from their March/April 2020 lows. Bulk commodity prices have diverged, with iron ore higher than in April 2020 while metallurgical coal prices are lower. Across the suite of commodities, a combination of economic supply-side curtailments and COVID-19 induced supply-side disruptions have served as a partial offset to the lower demand.

We maintain our view that steel production ex-China could contract by a double-digit percentage in the 2020 calendar year. We estimate that capacity utilisation ex-China fell to between 50 and 60 per cent across the June quarter. Steel makers from other regions, including Europe, the Americas, India and Japan have cut production. This reflects logistical difficulties created by COVID-19 (e.g. inter-state labour availability in India) as well as collapsing demand in downstream industries, such as automotive (e.g. Europe and Japan).

In China, blast furnace utilisation rates have increased from around 80 per cent earlier in February 2020 to above 90 per cent in June 2020. Daily rebar transactions were above normal seasonal levels for much of the June 2020 quarter, helping support a crude steel run-rate of 1,117 Mtpa in June 2020 (+4.5 per cent year-on-year). Year-to-date annualised production of 1,004 Mt is broadly consistent with our base case. Finished inventories have fallen as downstream activity has improved. While we note that only about 10 per cent of Chinese apparent steel demand(4) is exported in finished products, the weakness in global demand will weigh on Chinese flat products manufacturers. However, better than expected outcomes for domestic machinery and auto production have narrowed the gap between long and flat product performance seen early in the year. Electric-arc furnace utilisation fell as low as 12 per cent in February 2020, but has now recovered to normal seasonal levels around 70 per cent. We continue to believe that if China can avoid a second wave of COVID-19, steel and pig iron production can both rise in the 2020 calendar year versus the prior year.

The Platts 62% Fe Iron Ore Fines price index has been resilient so far. This reflects solid Chinese pig iron production of 935 Mtpa in June 2020 (+4.1 per cent year-on-year), and the impact of constrained Brazilian exports. Meanwhile, preliminary shipping data suggest Australian exports hit a record of 1,072 Mtpa in June 2020. Weakness ex-China is less consequential for price formation in iron ore than in other commodities.

The Platts Premium Low-Volatile Metallurgical Coal price index has been under downward pressure through the June 2020 quarter. Negative demand impacts from COVID-19 lockdowns in the major importing regions of Europe, India and developed Asia have been the major influence on the market. Chinese demand, on the other hand has been firm. However, China's coal import policy remains a key uncertainty. As demand disruption ex-China accelerated early in the June quarter, prices traded below the lows seen in the second half of the 2019 calendar year. They have since stabilised at these levels. The geographic diversification of metallurgical coal demand is a long term advantage but an impediment under today's unique circumstances. Developments in both supply and demand imply that lower quality products may face headwinds for an extended period. Premium coking coals exhibit attractive medium-term fundamentals.

The energy coal market is in a difficult state. The GCNewc 6000kcal price recently fell below the levels reached during the 2015/16 downturn. Wood Mackenzie has estimated that at late June 2020 spot prices around two-thirds of seaborne supply was likely to be earning negative margins. Short term increases in producer currencies and diesel prices have amplified cost challenges. An uplift in power demand across developed Asia as re-starts progress could help to stabilise the market. China's policy in respect of energy coal imports remains a key uncertainty.

Copper prices fell sharply in March 2020 amidst depressed macro investor sentiment. They have since rebounded, first on improving sentiment towards pro-growth assets, and more recently on news of supply challenges in South America due to COVID-19. In terms of demand fundamentals, our view is that the decline in ex-China copper demand will be less severe than for steel. Conversely, in China, copper demand could be marginally weaker than steel in the 2020 calendar year, based partly on copper's greater exposure to indirect exports from China (approximately 20 per cent versus approximately 10 per cent for steel). Copper also benefits less than steel from transport and non-power utilities infrastructure, which are benefitting from strong policy support. On the supply side, Peru and Chile have experienced difficulty in containing COVID-19, with flow-on impacts to copper operations and the broader supply chain. This has led to a material tightening of the copper concentrate balance, with treatment and refining charges moving lower in response. Scrap availability has also been constrained.

After crashing in March 2020, crude oil prices exhibited considerable volatility in April 2020. However, conditions improved in May and June 2020, as the early impact of global supply cuts, China's demand recovery and activity re-starts in the US and Europe took some pressure off global storage. Large and small producers alike have announced sharp cuts in capital spending in response to the price decline. In North America, rigs targeting oil have declined by more than 70 per cent, to a level last seen before the shale boom. We believe that the most significant risks to the physical market have passed. However, a return to pre-COVID-19 demand levels is not expected to occur before the end of the 2021 calendar year.

Average realised prices

The average realised prices achieved for our major commodities are summarised below.

 
                                                                          Jun H20   Jun H20 
                                                                  FY20       vs        vs 
Average realised                                                    vs      Jun       Dec 
 prices(i)                    Jun H20   Dec H19   FY20    FY19     FY19     H19       H19 
---------------------------  --------  --------  ------  ------  ------  --------  -------- 
Oil (crude and condensate) 
 (US$/bbl)                      37.51     60.64   49.53   66.59   (26%)     (41%)     (38%) 
Natural gas (US$/Mscf)(ii)       3.76      4.26    4.04    4.55   (11%)     (15%)     (12%) 
LNG (US$/Mscf)                   6.87      7.62    7.26    9.43   (23%)     (19%)     (10%) 
Copper (US$/lb)                  2.39      2.60    2.50    2.62    (5%)     (11%)      (8%) 
Iron ore (US$/wmt, 
 FOB)                           76.67     78.30   77.36   66.68     16%      (1%)      (2%) 
Metallurgical coal 
 (US$/t)                       121.25    140.94  130.97  179.67   (27%)     (32%)     (14%) 
    Hard coking coal 
     (US$/t)(iii)              133.51    154.01  143.65  199.61   (28%)     (34%)     (13%) 
    Weak coking coal 
     (US$/t)(iii)               84.43    101.06   92.59  130.18   (29%)     (33%)     (16%) 
Thermal coal (US$/t)(iv)        55.91     58.55   57.10   77.90   (27%)     (23%)      (5%) 
Nickel metal (US$/t)           12,459    15,715  13,860  12,462     11%        0%     (21%) 
 

(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)    Includes internal sales. 

(iii) 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.

(iv) Export sales only; excludes Cerrejón. Includes thermal coal sales from metallurgical coal mines.

The large majority of oil sales were linked to West Texas intermediate (WTI) or Brent based indices, with differentials applied for quality, locational and transportation costs. 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 were based on an average moisture rate of 7.5 per cent. The large majority of metallurgical coal and energy coal exports were linked to index pricing for the month of shipment or sold on the spot market at fixed or index-linked prices, with price differentials reflecting product quality. The 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.

At 30 June 2020, the Group had 304 kt of outstanding copper sales that were revalued at a weighted average price of US$2.73 per pound. The final price of these sales will be determined in the 2021 financial year. In addition, 322 kt of copper sales from the 2019 financial year were subject to a finalisation adjustment in the current period. The provisional pricing and finalisation adjustments will increase Underlying EBITDA(5) by US$125 million in the 2020 financial year and is included in the average realised copper price in the above table.

Corporate update

In December 2019, BHP agreed to fund a total of US$793 million in financial support for the Renova Foundation and Samarco. This comprises US$581 million to fund the Renova Foundation until 31 December 2020 which will be offset against the Group's provision for the Samarco dam failure, and a short-term facility of up to US$212 million to be made available to Samarco until 31 December 2020.

We will provide an update to the ongoing potential financial impacts on BHP Brasil of the Samarco dam failure with our full year Results Announcement on 18 August 2020. Any financial impacts will continue to be treated as an exceptional item.

Petroleum

Production

 
                                                        Jun Q20  Jun Q20 
                                                 FY20      vs       vs 
                                           Jun     vs     Jun      Mar 
                                     FY20   Q20   FY19    Q19      Q20 
                                     ----  ----  -----  -------  ------- 
Crude oil, condensate and natural 
 gas liquids (MMboe)                   49    11  (11%)    (15%)     (2%) 
Natural gas (bcf)                     360    90   (9%)     (8%)      11% 
Total petroleum production (MMboe)    109    26  (10%)    (11%)       5% 
 

Petroleum - Total petroleum production decreased by 10 per cent to 109 MMboe, with volumes marginally below guidance as a result of weaker than expected gas demand due to the impact of COVID-19 and a decrease in tax barrels at Trinidad and Tobago due to low commodity prices in the June 2020 quarter. Volumes are expected to decrease to between 95 and 102 MMboe in the 2021 financial year, reflecting expected lower gas demand in Eastern Australia and Trinidad and Tobago, the previously announced delay of several small and medium sized projects with short lifecycles and natural field decline across the portfolio.

Crude oil, condensate and natural gas liquids production decreased by 11 per cent to 49 MMboe due to the impacts of Tropical Storm Barry in the Gulf of Mexico, Tropical Cyclone Damien at our North West Shelf operations, maintenance at Atlantis and natural field decline across the portfolio. Weaker market conditions, including impacts from COVID-19, also contributed to lower volumes in the June 2020 quarter. This decline was partially offset by higher uptime at Pyrenees following the 70 day dry dock maintenance program during the prior year.

Natural gas production decreased by nine per cent to 360 bcf, reflecting a decrease in both production and tax barrels (in accordance with the terms of our Production Sharing Contract) due to weaker market conditions in Trinidad and Tobago, impacts of maintenance and Tropical Cyclone Damien at North West Shelf and natural field decline across the portfolio.

Projects

 
                                       Initial 
                         Capital      production 
Project and             expenditure     target 
 ownership                 US$M          date     Capacity                     Progress 
---------------------  ------------  -----------  ---------------------------  ----------------------- 
Atlantis Phase                  696         CY20  New subsea production        On schedule and budget. 
 3                                                 system that will tie         The overall project 
 (US Gulf of                                       back to the existing         is 79% complete. 
 Mexico)                                           Atlantis facility, with 
 44% (non-operator)                                capacity to produce 
                                                   up to 38,000 gross barrels 
                                                   of oil equivalent per 
                                                   day. 
Ruby                            283         CY21  Five production wells        On schedule and budget. 
                                                   tied back into existing 
                                                   operated processing 
                                                   facilities, with capacity 
                                                   to produce up to 16,000 
                                                   gross barrels of oil 
                                                   per day and 80 million 
                                                   gross standard cubic 
                                                   feet of natural gas 
                                                   per day. 
  (Trinidad                                                                      The overall project 
  & Tobago)                                                                      is 28% complete. 
  68.46% (operator) 
Mad Dog Phase                 2,154         CY22  New floating production      On schedule and budget. 
 2                                                 facility with the capacity   The overall project 
 (US Gulf of                                       to produce up to 140,000     is 77% complete. 
 Mexico)                                           gross barrels of crude 
 23.9% (non-operator)                              oil per day. 
 

The Bass Strait West Barracouta project is on schedule and budget, and is still expected to achieve first production in the 2021 calendar year, despite delays in component delivery and equipment fabrication due to COVID-19 restrictions.

Additional measures have been put in place across each of our projects to protect workforce health and safety as a result of COVID-19. All projects currently in execution remain on track and we do not expect an impact on the timing of first production.

As previously announced, in light of the recent significant disruption to oil and gas markets and heightened risk of interruption to field activity, we have reviewed our capital, operating, exploration and appraisal expenditure programs. We will provide updated capital and exploration expenditure guidance for the 2021 financial year with our full year Results Announcement to be released on 18 August 2020.

Petroleum exploration

No exploration and appraisal wells were drilled during the June 2020 quarter.

The Deepwater Invictus rig is anticipated to mobilise to Trinidad and Tobago in the September 2020 quarter to drill one exploration well, Broadside, in our Southern licences as part of Phase 5 of our deepwater drilling campaign, subject to any further COVID-19 constraints on mobilisation .

In the US Gulf of Mexico, following lease sale 254, blocks GC80 and GC123 were awarded in July 2020 in the central Gulf of Mexico, building on our Green Canyon position. Block GB721 was also awarded in June 2020, expanding our western Gulf of Mexico position. As previously announced, we are the apparent high bidder on Blocks AC36, AC80, AC81 in the western Gulf of Mexico. We are completing prospect maturation of the Green Canyon blocks we acquired in the recent lease sales, with plans to drill an exploration well during the 2021 calendar year.

In the Gippsland Basin, we participated in a multi-client 3D seismic survey (non-operated)(6) which is expected to be completed in the September 2020 quarter.

Petroleum exploration expenditure for the 2020 financial year was US$564 million, of which US$394 million was expensed.

Copper

Production

 
                               FY20   Jun Q20   Jun Q20 
                                 vs      vs        vs 
               FY20   Jun Q20   FY19   Jun Q19   Mar Q20 
              ------  -------  -----  --------  -------- 
Copper (kt)    1,724      414     2%      (7%)      (3%) 
Zinc (t)      88,462   13,736  (10%)     (39%)     (57%) 
Uranium (t)    3,678    1,016     3%        4%       31% 
 

Copper - Total copper production increased by two per cent to 1,724 kt. Production of between 1,480 and 1,645 kt is expected in the 2021 financial year.

For the majority of the June 2020 quarter, our Chilean assets operated with a reduction in their operational workforces of approximately 35 per cent to incorporate measures in response to COVID-19. We have implemented a comprehensive plan for COVID-19 including various hygiene and health controls and a proactive testing regime for people before entering sites and boarding transportation. The operating environment across our Chilean assets is likely to remain challenging, with reductions in our workforce expected to remain at a similar level during the September 2020 quarter.

Escondida copper production increased by four per cent to 1,185 kt, with record June 2020 quarter concentrator throughput of 382 ktpd lifting annual concentrator throughput to a record 371 ktpd. This offsets the impact of a three per cent decline in copper grade, stoppages associated with the social unrest in Chile (7 kt impact) and a reduced workforce due to COVID-19 preventative measures. The new records were achieved through continued improvements in operational and maintenance practices leading to increased availability and utilisation at the site's three concentrators. Production of between 940 and 1,030 kt is expected for the 2021 financial year, with a decline in copper grade of concentrator feed approximately four per cent. Lower volumes reflect the need to continue to balance mine development and production requirements, with processing capacity at concentrators and leaching plants, as a result of a reduced operational workforce due to COVID-19. It is expected that production levels are likely to be impacted in the 2022 financial year as a result of reduced operational workforce and material movement in the 2021 financial year. Guidance of an annual average of 1,200 kt of copper production over the next five years remains unchanged.

Pampa Norte copper production decreased by two per cent to 243 kt, with strong operating performance offset by grade decline of approximately 14 per cent. Production for the 2021 financial year is expected to be between 240 and 270 kt, reflecting the reduced operational workforce due to COVID-19, the start-up of the Spence Growth Option project and expected grade decline of approximately seven per cent. On 1 July 2020, Cerro Colorado announced it had started a four-month process to adjust its mine plan to reduce throughput and costs to achieve improved cash returns and ensure viable mining operations for the remaining period of its current environmental licence, which expires at the end of the 2023 calendar year.

Olympic Dam copper production increased by seven per cent to 172 kt supported by solid underground mine performance with strong development metres achieved, record grade and the prior period acid plant outage. This was partially offset by the impact of planned preparatory work undertaken in the September 2019 quarter related to the replacement of the refinery crane and unplanned downtime at the smelter during the March 2020 quarter. The physical replacement and commissioning of the refinery crane is expected to be completed in the March 2021 quarter. Underground development into the Southern Mine Area progressed to plan over the year, and provided access to higher copper grade ore. Following strong mine development over a number of years, we plan to draw down surplus run-of-mine stockpiles. Production for the 2021 financial year is expected to increase to between 180 and 205 kt. Production for the 2022 financial year is expected to be lower as a result of the major smelter maintenance campaign planned for the first half of the year.

Antamina copper production decreased by 15 per cent to 125 kt and zinc production decreased by 10 per cent to 88 kt, reflecting lower copper head grades and the impacts of operating with a reduced workforce and a six-week shutdown during the June 2020 quarter in response to COVID-19. Antamina is ramping back up and will continue to operate with a reduced workforce, which will impact material mined in the 2021 financial year. Copper production of between 120 and 140 kt, and zinc production of between 140 and 160 kt is expected for the 2021 financial year.

Projects

 
                                    Initial 
                        Capital    production 
Project and           expenditure    target 
 ownership               US$M         date     Capacity                                                                                       Progress 
--------------------  -----------  ----------  ---------------------------------------------------------------------------------------------  -------------------------------------------------------------------- 
Spence Growth Option        2,460        FY21  New 95 ktpd concentrator is expected to increase payable copper in concentrate production      On budget. 
                                               by 185 ktpa in the first 10 years of operation and extend the mining operations by more than 
                                               50 years. 
  (Chile)                                                                                                                                       First production is expected between December 2020 and March 2021. 
  100%                                                                                                                                          The overall project is 93% complete. 
 

The Spence Growth Option schedule is continuing to progress, however, as a result of measures put in place to reduce the spread of COVID-19, first production is now expected between December 2020 and March 2021. The commissioning of the desalination plant and capitalisation of the associated US$600 million lease (approximate) will now occur in the first half of the 2021 financial year.

Iron Ore

Production

 
                                             FY20   Jun Q20   Jun Q20 
                                               vs      vs        vs 
                            FY20    Jun Q20   FY19   Jun Q19   Mar Q20 
                           -------  -------  -----  --------  -------- 
Iron ore production (kt)   248,159   66,729     4%        7%       11% 
 

Iron ore - Total iron ore production increased by four per cent to a record 248 Mt (281 Mt on a 100 per cent basis). Production of between 244 and 253 Mt (276 and 286 Mt on a 100 per cent basis) is expected in the 2021 financial year. We continue with our program to improve productivity and provide a stable base for our tightly coupled supply chain and this includes a major maintenance campaign on car dumper three planned for the September 2020 quarter, with a corresponding impact expected on production.

WAIO achieved record production, with higher volumes reflecting record production at Jimblebar and Yandi. Weather impacts from Tropical Cyclone Blake and Tropical Cyclone Damien, were offset by strong performance across the supply chain, with significant improvements in productivity and reliability following a series of targeted maintenance programs over the past four years. This enabled WAIO to produce at a record annualised run rate above 300 Mt (100 per cent basis) during the June 2020 quarter.

Consistent with our revised mine plan, the typical specification of Jimblebar fines improved to above 60 per cent Fe grade in the June 2020 quarter.

WAIO continues to focus on operating safely and despite the de-escalation of COVID-19 restrictions in Western Australia, a series of preventative measures remain in place to minimise the spread of COVID-19. WAIO has returned to normal shift rosters and has reopened the Perth office. To meet border controls introduced by the Western Australian Government, over 900 employees and contractors in business critical roles temporarily relocated to Western Australia, including the majority of specialist roles who are based interstate, such as train drivers and train load out operators. These employees remain in Western Australia.

Mining and processing operations at Samarco remain suspended following the failure of the Fundão tailings dam and Santarém water dam on 5 November 2015. Operation readiness activities for Samarco's restart have been slowed as a result of a reduced workforce, as part of the COVID-19 response. Restart can occur when the filtration system is complete and Samarco has met all necessary safety requirements, and will be subject to final approval by Samarco's shareholders.

Projects

 
                               Initial 
                 Capital      production 
Project and     expenditure     target 
 ownership         US$M          date     Capacity              Progress 
               ------------  -----------  --------------------  --------------------- 
South Flank           3,061     Mid-CY21  Sustaining iron       On schedule and 
                                           ore mine to replace   budget. 
                                           production from 
                                           the 80 Mtpa (100 
                                           per cent basis) 
                                           Yandi mine. 
  (Australia)                                                     The overall project 
                                                                  is 76% complete. 
  85% 
 

The South Flank project is tracking well and remains on schedule for first production in the middle of the 2021 calendar year. Consistent with our other assets, measures designed to conduct safe operations in compliance with strict health and travel guidelines remain in place at South Flank to help reduce the spread of COVID-19.

Coal

Production

 
                                                             FY20                    Jun Q20                   Jun Q20 
                                                               vs                      vs                        vs 
                           FY20    Jun Q20                    FY19                   Jun Q19                   Mar Q20 
                          ------  --------  ----------------------  ------------------------  ------------------------ 
Metallurgical coal (kt)   41,118    11,614                    (3%)                      (2%)                       26% 
Energy coal (kt)          23,167     5,654                   (16%)                     (24%)                      (2%) 
 

Metallurgical coal - Metallurgical coal production was down three per cent to 41 Mt (73 Mt on a 100 per cent basis) as a result of significant wet weather events in the prior quarter and geotechnical constraints at South Walker Creek . Production is expected to be between 40 and 44 Mt (71 and 77 Mt on a 100 per cent basis) in the 2021 financial year, a similar level to the prior year as it reflects an expected deterioration in market outlook due to the impact of COVID-19. With Blackwater returning to full capacity towards the end of the September 2020 quarter after flooding in the March 2020 quarter, volumes will be weighted to the second half of the financial year.

At Queensland Coal, strong underlying operational performance, including record underground coal mined at Broadmeadow and record annual production at Caval Ridge and Poitrel, was offset by planned major wash plant shutdowns in the first half of the year and significantly higher rainfall during January and February 2020 compared with historical averages. Blackwater, our largest mine, was the most severely impacted , with mining operations stabilised during the June 2020 quarter and a return to full capacity expected towards the end of the September 2020 quarter.

Energy coal - Energy coal production decreased by 16 per cent to 23 Mt. Production is expected to be between 22 and 24 Mt in the 2021 financial year. Further potential impacts from COVID-19, including weak demand, represent possible downside risk to the 2021 financial year guidance.

NSWEC production decreased by 12 per cent to 16 Mt as a result of the change in product strategy to focus on higher quality products and unfavourable weather impacts from December 2019 to February 2020. This was partially offset by a strong performance in the June 2020 quarter driven by record truck utilisation. Production is expected to be between 15 and 17 Mt in the 2021 financial year.

Cerrejón production decreased by 23 per cent to 7 Mt due to a temporary shutdown during the June 2020 quarter in response to COVID-19, as well as a focus on higher quality products, in line with the mine plan. The temporary shutdown lasted for approximately six weeks and allowed for completion of COVID-19 control measures to meet the Colombian Government's regulations. Production is expected to be approximately 7 Mt in the 2021 financial year.

Other

Nickel production

 
                             FY20   Jun Q20   Jun Q20 
                               vs      vs        vs 
              FY20  Jun Q20   FY19   Jun Q19   Mar Q20 
              ----  -------  -----  --------  -------- 
Nickel (kt)   80.1     23.9   (8%)     (17%)       14% 
 

Nickel - Nickel West production decreased by eight per cent to 80 kt due to the major quadrennial maintenance shutdowns at the Kwinana refinery and the Kalgoorlie smelter, as well as planned routine maintenance at the concentrators, in the December 2019 quarter. Operations ramped back up to full capacity during the March 2020 quarter and ran at full capacity during the June 2020 quarter. With the major planned maintenance and the transition to new mines now complete, total nickel production is expected to increase to between 85 and 95 kt in the 2021 financial year.

Operations Services - In Australia, we have created 2,800 permanent jobs, with Operations Services deployed at 20 locations across WAIO, Queensland Coal and NSWEC and successfully accelerating safety, productivity and efficiency outcomes. In May 2020, Operations Services launched a new national training program to be delivered through the BHP FutureFit Academy which has been developed to provide a customised training pathway, utilising nationally recognised curricula for trade apprenticeships and maintenance traineeships. The first two FutureFit Academy campuses opened in Mackay in Queensland and Perth in Western Australia, with students to graduate and be deployed to an Operations Services Maintenance team from the 2021 calendar year.

Potash project

 
Project 
 and           Investment 
 ownership        US$M     Scope                           Progress 
-------------  ----------  ------------------------------  ---------------------------- 
Jansen Potash       2,700  Investment to finish            The project is 86% complete. 
                            the excavation and lining 
                            of the production and 
                            service shafts, and to 
                            continue the installation 
                            of essential surface 
                            infrastructure and utilities. 
  (Canada) 
  100% 
 

In June 2020, final shaft lining work , which was reduced to focus on one shaft as part of our COVID-19 response, was resumed in both shafts. Timing for completion of the shafts continues to be under review. BHP continues to assess the impacts of COVID-19 and the temporary reduction in construction activity.

Minerals exploration

Minerals exploration expenditure for the 2020 financial year was US$176 million, of which US$123 million was expensed. Greenfield minerals exploration is predominantly focused on advancing copper targets within Chile, Ecuador, Mexico, Peru, Canada, South Australia and the south-west United States.

At Oak Dam in South Australia, the third phase of the drilling program was completed in the June 2020 quarter, bringing the total area drilled to approximately 21,500 m and the results are currently being analysed. This follows encouraging results from the previous drilling phases, which confirmed high-grade mineralised intercepts of copper, with associated gold, uranium and silver.

In June 2020, BHP agreed to acquire the Honeymoon Well development project and a 50 per cent interest in the Albion Downs North and Jericho exploration joint ventures from MPI Nickel Pty Ltd, a wholly owned subsidiary of Norilsk Nickel Australian Holdings BV. BHP is currently a 50 per cent shareholder in the Albion Downs North and Jericho Joint Ventures. The combined tenement package is located in the northern Goldfields region of Western Australia, approximately 50 km from our Mt Keith mine and 100 km from the Leinster concentrator. Completion of the agreement is subject to a number of conditions including government and third party approvals.

Variance analysis relates to the relative performance of BHP and/or its operations during the 2020 financial year compared with the 2019 financial year, unless otherwise noted. Production volumes, sales volumes and capital and exploration expenditure from subsidiaries are reported on a 100 per cent basis; production and sales volumes from equity accounted investments and other operations are reported on a proportionate consolidation basis. Numbers presented may not add up precisely to the totals provided due to rounding. Copper equivalent production based on 2020 financial year average realised prices.

The following footnotes apply to this Operational Review:

(1) 2020 financial year unit cost guidance: Petroleum US$10.50-11.50/boe, Escondida US$1.20-1.35/lb, WAIO US$13-14/t, Queensland Coal US$67-74/t and NSWEC US$55-61/t; based on exchange rates of AUD/USD 0.70 and USD/CLP 683.

   (2)       All data presented in this report is the latest available as of 16 July 2020. 

(3) The phrase "economic hibernation" was coined by ANU Professor's Tourky and Pitchford. It describes the comprehensive support that the public balance sheet can provide to mitigate the no-fault unemployment, default and insolvency that the effort to suppress a pandemic can bring.

   (4)       Incremental to apparent demand is around 45 Mt in direct net exports of steel. 

(5) Underlying EBITDA is used to help assess current operational profitability excluding the impacts of sunk costs (i.e. depreciation from initial investment). Underlying EBITDA is earnings before net finance costs, depreciation, amortisation and impairments, taxation expense, discontinued operations and exceptional items. Underlying EBITDA includes BHP's share of profit/(loss) from investments accounted for using the equity method including net finance costs, depreciation, amortisation and impairments and taxation expense/(benefit).

   (6)       Non-operated CGG, EP:4619. 

The following abbreviations may have been used throughout this report: barrels (bbl); billion cubic feet (bcf); cost and freight (CFR); cost, insurance and freight (CIF); dry metric tonne unit (dmtu); free on board (FOB); grams per tonne (g/t); kilograms per tonne (kg/t); kilometre (km); metre (m); million barrels of oil equivalent (MMboe); million barrels of oil per day (MMbpd); million cubic feet per day (MMcf/d); million tonnes (Mt); million tonnes per annum (Mtpa); ounces (oz); pounds (lb); thousand barrels of oil equivalent (Mboe); thousand barrels of oil equivalent per day (Mboe/d); thousand ounces (koz); thousand standard cubic feet (Mscf); thousand tonnes (kt); thousand tonnes per annum (ktpa); thousand tonnes per day (ktpd); tonnes (t); and wet metric tonnes (wmt).

In this release, the terms 'BHP', 'Group', 'BHP Group', 'we', 'us', 'our' and ourselves' are used to refer to BHP Group Limited, BHP Group plc and, except where the context otherwise requires, their respective subsidiaries as defined in note 28 'Subsidiaries' in section 5.1 of BHP's 30 June 2019 Annual Report and Form 20-F, unless stated otherwise. Notwithstanding that this release may include production, financial and other information from non-operated assets, non-operated assets are not included in the BHP Group and, as a result, statements regarding our operations, assets and values apply only to our operated assets unless stated otherwise. Our non-operated assets include Antamina, Cerrejón, Samarco, Atlantis, Mad Dog, Bass Strait and North West Shelf. BHP Group cautions against undue reliance on any forward-looking statement or guidance, particularly in light of the current economic climate and significant volatility, uncertainty and disruption, including that caused by the COVID-19 outbreak. These forward looking statements are not guarantees or predictions of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control.

Further information on BHP can be found at: bhp.com

Authorised for lodgement by:

Caroline Cox

Group General Counsel and Company Secretary

 
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Production summary

 
                                                             Quarter ended                           Year to date 
 
                                 BHP        Jun        Sep        Dec        Mar        Jun         Jun         Jun 
                               interest     2019       2019       2019       2020       2020        2020        2019 
 
 Petroleum (1) 
 Petroleum 
 Production 
  Crude oil, condensate 
   and NGL (Mboe)                           13,366     12,507     13,412     11,589     11,355      48,863      55,186 
  Natural gas (bcf)                           97.8      100.4       88.7       80.7       89.8       359.6       396.9 
 
  Total (Mboe)                              29,666     29,240     28,195     25,039     26,322     108,796     121,336 
 
 
 
 Total petroleum production 
  (MMboe)                                 29,666.0   29,240.3   28,195.3   25,045.0   26,317.0   108,797.6   147,267.6 
 
 Copper (2) 
 Copper 
 Payable metal in 
  concentrate (kt) 
  Escondida (3)                 57.5%        224.1      237.0      240.3      220.1      228.5       925.9       882.1 
  Antamina                      33.8%         37.4       37.6       36.2       32.9       17.8       124.5       147.2 
 
  Total                                      261.5      274.6      276.5      253.0      246.3     1,050.4     1,029.3 
 
 
 Cathode (kt) 
  Escondida (3)                 57.5%         63.5       55.9       68.4       69.6       65.5       259.4       253.2 
  Pampa Norte (4)               100%          74.1       63.9       60.0       64.3       54.5       242.7       246.5 
  Olympic Dam                   100%          45.2       35.1       50.5       38.4       47.6       171.6       160.3 
 
  Total                                      182.8      154.9      178.9      172.3      167.6       673.7       660.0 
 
 
 
 Total copper (kt)                           444.3      429.5      455.4      425.3      413.9     1,724.1     1,689.3 
 
 
 Lead 
 Payable metal in 
  concentrate (t) 
  Antamina                      33.8%          770        405        383        621        262       1,671       2,389 
 
  Total                                        770        405        383        621        262       1,671       2,389 
 
 
 Zinc 
 Payable metal in 
  concentrate (t) 
  Antamina                      33.8%       22,469     20,454     22,483     31,789     13,736      88,462      98,112 
 
  Total                                     22,469     20,454     22,483     31,789     13,736      88,462      98,112 
 
 
 

Production summary

 
                                                            Quarter ended                     Year to date 
 
                                    BHP        Jun       Sep      Dec      Mar      Jun       Jun       Jun 
                                  interest     2019      2019     2019     2020     2020      2020      2019 
 
 Gold 
 Payable metal in concentrate 
  (troy oz) 
  Escondida (3)                    57.5%       74,704   48,801   49,209   35,990   43,422   177,422   286,006 
  Olympic Dam (refined 
   gold)                           100%        37,032   43,205   35,382   33,235   34,150   145,972   106,968 
 
  Total                                       111,736   92,006   84,591   69,225   77,572   323,394   392,974 
 
 
 Silver 
 Payable metal in concentrate 
  (troy koz) 
  Escondida (3)                    57.5%        2,074    1,626    1,798    1,390    1,599     6,413     8,830 
  Antamina                         33.8%        1,209    1,101    1,173    1,216      626     4,116     4,758 
  Olympic Dam (refined 
   silver)                         100%           268      245      203      241      295       984       923 
 
  Total                                         3,551    2,972    3,174    2,847    2,520    11,513    14,511 
 
 
 Uranium 
 Payable metal in concentrate 
  (t) 
  Olympic Dam                      100%           975      937      949      776    1,016     3,678     3,565 
 
  Total                                           975      937      949      776    1,016     3,678     3,565 
 
 
 Molybdenum 
 Payable metal in concentrate 
  (t) 
  Antamina                         33.8%          178      405      527      491      243     1,666     1,141 
 
  Total                                           178      405      527      491      243     1,666     1,141 
 
 
 
 Iron Ore 
 Iron Ore 
 Production (kt) (5) 
  Newman                            85%        17,058   16,316   15,766   16,449   17,110    65,641    66,622 
  Area C Joint Venture              85%        13,837   12,620   12,727   12,179   13,973    51,499    47,440 
  Yandi Joint Venture               85%        17,486   17,827   14,857   17,491   19,087    69,262    65,197 
  Jimblebar (6)                     85%        14,209   14,239   17,045   13,911   16,559    61,754    58,546 
  Wheelarra                         85%             5        3        -        -        -         3       159 
  Samarco                           50%             -        -        -        -        -         -         - 
 
  Total                                        62,595   61,005   60,395   60,030   66,729   248,159   237,964 
 
 

Production summary

 
                                                  Quarter ended                  Year to date 
 
                            BHP       Jun      Sep     Dec      Mar     Jun      Jun      Jun 
                          interest    2019     2019    2019     2020    2020     2020     2019 
 
 Coal 
 Metallurgical coal 
 Production (kt) (7) 
  BMA                       50%       9,090   6,905    8,723   6,869    9,078   31,575   32,136 
  BHP Mitsui Coal (8)       80%       2,804   2,453    2,201   2,353    2,536    9,543   10,265 
 
  Total                              11,894   9,358   10,924   9,222   11,614   41,118   42,401 
 
 
 Energy coal 
 Production (kt) 
  Australia                100%       5,412   3,592    3,763   3,810    4,887   16,052   18,257 
  Colombia                 33.3%      2,017   2,055    2,315   1,978      767    7,115    9,230 
 
  Total                               7,429   5,647    6,078   5,788    5,654   23,167   27,487 
 
 
 Other 
 Nickel 
 Saleable production 
  (kt) 
  Nickel West (9)          100%        28.7    21.6     13.7    20.9     23.9     80.1     87.4 
 
  Total                                28.7    21.6     13.7    20.9     23.9     80.1     87.4 
 
 
 Cobalt 
 Saleable production 
  (t) 
  Nickel West              100%         302     211      120     132      312      775      899 
 
  Total                                 302     211      120     132      312      775      899 
 
 

(1) LPG and ethane are reported as natural gas liquids (NGL). Product-specific conversions are made and NGL is reported in barrels of oil equivalent (boe). Total boe conversions are based on 6 bcf of natural gas equals 1,000 Mboe.

   (2)   Metal production is reported on the basis of payable metal. 
   (3)   Shown on a 100% basis. BHP interest in saleable production is 57.5%. 
   (4)   Includes Cerro Colorado and Spence. 
   (5)   Iron ore production is reported on a wet tonnes basis. 
   (6)   Shown on a 100% basis. BHP interest in saleable production is 85%. 

(7) Metallurgical coal production is reported on the basis of saleable product. Production figures include some thermal coal.

   (8)   Shown on a 100% basis. BHP interest in saleable production is 80%. 
   (9)   Production restated to include other nickel by-products. 

Throughout this report figures in italics indicate that this figure has been adjusted since it was previously reported.

Production and sales report

 
                                                      Quarter ended                   Year to date 
 
                                         Jun      Sep      Dec      Mar      Jun      Jun      Jun 
                                         2019     2019     2019     2020     2020     2020     2019 
 
 Petroleum (1) 
 Bass Strait 
  Crude oil and condensate    (Mboe)     1,246    1,409    1,427      926   1,231     4,993    5,193 
  NGL                         (Mboe)     1,299    1,810    1,405      958   1,493     5,666    5,435 
  Natural gas                 (bcf)       30.6     36.6     27.8     18.4    28.1     110.9    111.9 
 
  Total petroleum 
   products                   (Mboe)     7,645    9,319    7,465    4,957   7,408    29,149   29,278 
 
 
 North West Shelf 
  Crude oil and condensate    (Mboe)     1,357    1,337    1,376    1,266   1,260     5,239    5,822 
  NGL                         (Mboe)       189      202      200      191     203       796      830 
  Natural gas                 (bcf)       34.8     32.1     32.9     35.0    35.2     135.2    145.5 
 
  Total petroleum 
   products                   (Mboe)     7,346    6,889    7,059    7,287   7,334    28,569   30,902 
 
 
 Pyrenees 
  Crude oil and condensate    (Mboe)     1,001      979      934      917     971     3,801    3,324 
 
  Total petroleum 
   products                   (Mboe)     1,001      979      934      917     971     3,801    3,324 
 
 
 Other Australia 
  (2) 
  Crude oil and condensate    (Mboe)         7        8        1        1       1        11       28 
  Natural gas                 (bcf)       12.2     12.0     11.4     11.2    11.9      46.5     52.9 
 
  Total petroleum 
   products                   (Mboe)     2,040    2,008    1,901    1,874   1,987     7,770    8,845 
 
 
 Atlantis (3) 
  Crude oil and condensate    (Mboe)     3,607    2,759    3,525    2,769   2,223    11,276   14,487 
  NGL                         (Mboe)       248      192      245      178      54       669    1,006 
  Natural gas                 (bcf)        2.2      1.4      1.8      1.3     1.1       5.6      7.6 
 
  Total petroleum 
   products                   (Mboe)     4,222    3,184    4,070    3,170   2,456    12,880   16,760 
 
 
 Mad Dog (3) 
  Crude oil and condensate    (Mboe)     1,246    1,096    1,202    1,272   1,297     4,867    4,932 
  NGL                         (Mboe)        23       49       52       55      33       189      196 
  Natural gas                 (bcf)        0.2      0.2      0.2      0.2     0.3       0.9      0.8 
 
  Total petroleum 
   products                   (Mboe)     1,302    1,178    1,287    1,355   1,374     5,195    5,261 
 
 
 Shenzi (3) 
  Crude oil and condensate    (Mboe)     1,725    1,345    1,671    1,645   1,584     6,245    7,646 
  NGL                         (Mboe)       (2)       70       94       94      40       298      353 
  Natural gas                 (bcf)        0.4      0.2      0.3      0.3     0.4       1.2      1.6 
 
  Total petroleum 
   products                   (Mboe)     1,790    1,448    1,815    1,791   1,686     6,740    8,266 
 
 
 Trinidad/Tobago 
  Crude oil and condensate    (Mboe)       235      175      166       97      72       510    1,166 
  Natural gas                 (bcf)       17.3     17.9     14.2     14.0    12.8      58.9     74.8 
 
  Total petroleum 
   products                   (Mboe)     3,118    3,158    2,533    2,427   2,201    10,319   13,633 
 
 

Production and sales report

 
                                                        Quarter ended                      Year to date 
 
                                          Jun       Sep       Dec      Mar      Jun       Jun       Jun 
                                          2019      2019      2019     2020     2020      2020      2019 
 
 Other Americas 
  (3) (4) 
 Crude oil and condensate     (Mboe)        272       185       230      344      198       957       981 
 NGL                          (Mboe)          3         2         4       22        5        33        28 
 Natural gas                  (bcf)         0.1         -       0.1      0.3        -       0.4       0.4 
 
 Total petroleum 
  products                    (Mboe)        292       187       251      412      209     1,059     1,076 
 
 
 UK (5) 
  Crude oil and condensate    (Mboe)          -         -         -        -        -         -        72 
  NGL                         (Mboe)          -         -         -        -        -         -        42 
  Natural gas                 (bcf)           -         -         -        -        -         -       1.4 
 
  Total petroleum 
   products                   (Mboe)          -         -         -        -        -         -       347 
 
 
 Algeria 
  Crude oil and condensate    (Mboe)        910       889       880      854      690     3,313     3,645 
 
  Total petroleum 
   products                   (Mboe)        910       889       880      854      690     3,313     3,645 
 
 
 
 Petroleum (1) 
 
 Total production 
  Crude oil and condensate    (Mboe)     11,606    10,182    11,412   10,091    9,527    41,212    47,296 
  NGL                         (Mboe)      1,760     2,325     2,000    1,498    1,828     7,651     7,890 
  Natural gas                 (bcf)        97.8     100.4      88.7     80.7     89.8     359.6     396.9 
 
  Total                       (Mboe)     29,666    29,240    28,195   25,039   26,322   108,796   121,336 
 
 
 

(1) Total boe conversions are based on 6 bcf of natural gas equals 1,000 Mboe. Negative production figures represent finalisation adjustments.

   (2)   Other Australia includes Minerva and Macedon. 
   (3)   Gulf of Mexico volumes are net of royalties. 
   (4)   Other Americas includes Neptune, Genesis and Overriding Royalty Interest. 

(5) BHP completed the sale of its interest in the Bruce and Keith oil and gas fields on 30 November 2018. The sale has an effective date of 1 January 2018.

Production and sales report

 
                                                       Quarter ended                      Year to date 
                                      -----------------------------------------------  ------------------ 
                                         Jun       Sep       Dec       Mar      Jun       Jun       Jun 
                                         2019      2019      2019      2020     2020      2020      2019 
                                      --------  --------  --------  --------  -------  --------  -------- 
 Copper 
 Metals production is payable metal unless otherwise stated. 
 
 Escondida, Chile 
  (1) 
  Material mined              (kt)     100,693   101,026   100,057   107,268   75,062   383,413   417,469 
  Sulphide ore milled         (kt)      32,519    33,956    33,659    33,440   34,755   135,810   125,566 
  Average concentrator 
   head grade                 (%)        0.86%     0.86%     0.87%     0.82%    0.81%     0.84%     0.87% 
  Production ex 
   mill                       (kt)       230.9     245.0     246.1     230.0    236.8     957.9     909.6 
 
  Production 
  Payable copper              (kt)       224.1     237.0     240.3     220.1    228.5     925.9     882.1 
  Copper cathode 
   (EW)                       (kt)        63.5      55.9      68.4      69.6     65.5     259.4     253.2 
   - Oxide leach              (kt)        23.4      21.9      28.3      29.3     26.8     106.3      87.2 
   - Sulphide leach           (kt)        40.1      34.1      40.1      40.2     38.7     153.1     165.9 
 
  Total copper                (kt)       287.6     292.9     308.7     289.7    294.0   1,185.3   1,135.3 
 
 
                              (troy 
  Payable gold concentrate     oz)      74,704    48,801    49,209    35,990   43,422   177,422   286,006 
  Payable silver              (troy 
   concentrate                 koz)      2,074     1,626     1,798     1,390    1,599     6,413     8,830 
 
  Sales 
  Payable copper              (kt)       223.4     222.2     248.3     212.0    221.0     903.5     881.1 
  Copper cathode 
   (EW)                       (kt)        67.5      52.3      70.6      65.9     72.1     260.9     249.6 
                              (troy 
  Payable gold concentrate     oz)      74,704    48,801    49,209    35,990   43,422   177,422   286,007 
  Payable silver              (troy 
   concentrate                 koz)      2,074     1,626     1,798     1,390    1,599     6,413     8,830 
 
   (1)   Shown on a 100% basis. BHP interest in saleable production is 57.5%. 

Production and sales report

 
                                                Quarter ended                    Year to date 
                                 -------------------------------------------  ------------------ 
                                   Jun      Sep      Dec      Mar      Jun       Jun       Jun 
                                   2019     2019     2019     2020     2020      2020      2019 
                                 -------  -------  -------  -------  -------  --------  -------- 
 Pampa Norte, Chile 
  Cerro Colorado 
  Material mined         (kt)     13,534   15,071   18,102   18,710   15,734    67,617    67,458 
  Ore milled             (kt)      4,740    3,995    5,009    4,574    4,553    18,131    18,888 
  Average copper 
   grade                 (%)       0.64%    0.54%    0.57%    0.54%    0.60%     0.56%     0.60% 
 
  Production 
  Copper cathode 
   (EW)                  (kt)       23.4     16.4     13.8     20.4     16.9      67.5      75.2 
 
  Sales 
  Copper cathode 
   (EW)                  (kt)       26.8     14.5     15.8     18.3     18.7      67.3      75.1 
 
  Spence 
  Material mined         (kt)     19,213   21,040   23,132   23,304   24,082    91,558    82,513 
  Ore milled             (kt)      5,224    5,635    5,133    5,191    2,829    18,788    20,670 
  Average copper 
   grade                 (%)       1.02%    0.95%    0.90%    0.87%    0.95%     0.91%     1.09% 
 
  Production 
  Copper cathode 
   (EW)                  (kt)       50.7     47.5     46.2     43.9     37.6     175.2     171.3 
 
  Sales 
  Copper cathode 
   (EW)                  (kt)       55.0     46.7     44.3     44.8     41.0     176.8     169.9 
 
 Copper (continued) 
 Metals production is payable metal unless otherwise stated. 
 
 Antamina, Peru 
  Material mined 
   (100%)                (kt)     58,994   59,299   63,224   52,872   13,975   189,370   242,214 
  Sulphide ore milled 
   (100%)                (kt)     12,864   13,121   13,637   12,906    6,736    46,400    50,439 
  Average head grades 
   - Copper              (%)       1.02%    0.99%    0.96%    0.88%    0.91%     0.94%     1.01% 
   - Zinc                (%)       0.86%    0.80%    0.82%    1.09%    1.02%     0.92%     0.92% 
 
  Production 
  Payable copper         (kt)       37.4     37.6     36.2     32.9     17.8     124.5     147.2 
  Payable zinc           (t)      22,469   20,454   22,483   31,789   13,736    88,462    98,112 
                         (troy 
  Payable silver          koz)     1,209    1,101    1,173    1,216      626     4,116     4,758 
  Payable lead           (t)         770      405      383      621      262     1,671     2,389 
  Payable molybdenum     (t)         178      405      527      491      243     1,666     1,141 
 
  Sales 
  Payable copper         (kt)       36.0     33.1     43.6     30.8     18.2     125.7     143.6 
  Payable zinc           (t)      21,750   20,196   23,808   31,007   11,680    86,691   100,239 
                         (troy 
  Payable silver          koz)       937      954    1,396      815      581     3,746     4,393 
  Payable lead           (t)         296      844      432      151      188     1,615     2,306 
  Payable molybdenum     (t)         127      173      400      531      223     1,327     1,126 
 
 

Production and sales report

 
                                             Quarter ended                    Year to date 
                              -------------------------------------------  ------------------ 
                                Jun      Sep      Dec      Mar      Jun       Jun       Jun 
                                2019     2019     2019     2020     2020      2020      2019 
                              -------  -------  -------  -------  -------  --------  -------- 
 Olympic Dam, 
  Australia 
  Material mined 
   (1)               (kt)       2,425    2,477    2,347    1,920    1,928     8,672     9,094 
  Ore milled         (kt)       2,195    2,200    2,153    2,178    2,416     8,947     7,965 
  Average copper 
   grade             (%)        2.30%    2.31%    2.36%    2.31%    2.17%     2.28%     2.18% 
  Average uranium 
   grade             (kg/t)      0.65     0.65     0.71     0.69     0.60      0.66      0.64 
 
  Production 
  Copper cathode 
   (ER and EW)       (kt)        45.2     35.1     50.5     38.4     47.6     171.6     160.3 
  Payable uranium    (t)          975      937      949      776    1,016     3,678     3,565 
                     (troy 
  Refined gold        oz)      37,032   43,205   35,382   33,235   34,150   145,972   106,968 
                     (troy 
  Refined silver      koz)        268      245      203      241      295       984       923 
 
  Sales 
  Copper cathode 
   (ER and EW)       (kt)        50.5     32.1     49.0     41.4     48.5     171.0     158.4 
  Payable uranium    (t)        1,427      778      638      702    1,293     3,411     3,570 
                     (troy 
  Refined gold        oz)      36,133   40,073   36,507   36,956   37,743   151,279   102,664 
                     (troy 
  Refined silver      koz)        257      250      202      259      270       981       891 
 
   (1)   Material mined refers to run of mine ore mined and hoisted. 
 
 Iron Ore 
 Iron ore production and sales are reported on a wet tonnes 
  basis. 
 
 Pilbara, Australia 
  Production 
  Newman                 (kt)    17,058   16,316   15,766   16,449   17,110    65,641    66,622 
  Area C Joint 
   Venture               (kt)    13,837   12,620   12,727   12,179   13,973    51,499    47,440 
  Yandi Joint Venture    (kt)    17,486   17,827   14,857   17,491   19,087    69,262    65,197 
  Jimblebar (1)          (kt)    14,209   14,239   17,045   13,911   16,559    61,754    58,546 
  Wheelarra              (kt)         5        3        -        -        -         3       159 
 
  Total production       (kt)    62,595   61,005   60,395   60,030   66,729   248,159   237,964 
 
  Total production 
   (100%)                (kt)    71,133   69,257   68,044   68,168   75,589   281,058   269,599 
 
 
  Sales 
  Lump                   (kt)    15,568   14,785   15,982   15,617   17,252    63,636    58,205 
  Fines                  (kt)    48,064   45,509   45,785   44,764   50,904   186,962   180,631 
 
  Total                  (kt)    63,632   60,294   61,767   60,381   68,156   250,598   238,836 
 
  Total sales (100%)     (kt)    72,173   68,291   69,481   68,439   77,048   283,259   270,205 
 
 
   (1)   Shown on a 100% basis. BHP interest in saleable production is 85%. 
 
 Samarco, Brazil 
  (1) 
  Production        (kt)     -    -    -    -    -    -    - 
 
  Sales             (kt)     -    -    -    -    -    -   10 
 

(1) Mining and processing operations remain suspended following the failure of the Fundão tailings dam and Santarém water dam on 5 November 2015.

Production and sales report

 
                                              Quarter ended                   Year to date 
                               -------------------------------------------  ---------------- 
                                 Jun      Sep      Dec      Mar      Jun      Jun      Jun 
                                 2019     2019     2019     2020     2020     2020     2019 
                               -------  -------  -------  -------  -------  -------  ------- 
 Coal 
 Coal production is reported on the 
  basis of saleable product. 
 
 Queensland Coal 
  Production (1) 
  BMA 
  Blackwater            (kt)     1,735    1,045    1,734    1,063    1,703    5,545    6,603 
  Goonyella             (kt)     2,620    1,489    2,662    1,963    2,651    8,765    8,563 
  Peak Downs            (kt)     1,649    1,423    1,386    1,339    1,635    5,783    5,933 
  Saraji                (kt)     1,243    1,214    1,325    1,025    1,399    4,963    4,892 
  Daunia                (kt)       669      556      579      447      588    2,170    2,178 
  Caval Ridge           (kt)     1,174    1,178    1,037    1,032    1,102    4,349    3,967 
 
  Total BMA             (kt)     9,090    6,905    8,723    6,869    9,078   31,575   32,136 
 
  Total BMA (100%)      (kt)    18,180   13,810   17,446   13,738   18,156   63,150   64,272 
 
 
  BHP Mitsui Coal 
   (2) 
  South Walker Creek    (kt)     1,624    1,378    1,196    1,577    1,264    5,415    6,194 
  Poitrel               (kt)     1,180    1,075    1,005      776    1,272    4,128    4,071 
 
  Total BHP Mitsui 
   Coal                 (kt)     2,804    2,453    2,201    2,353    2,536    9,543   10,265 
 
 
 
  Total Queensland 
   Coal                 (kt)    11,894    9,358   10,924    9,222   11,614   41,118   42,401 
 
  Total Queensland 
   Coal (100%)          (kt)    20,984   16,263   19,647   16,091   20,692   72,693   74,537 
 
 
  Sales 
  Coking coal           (kt)     7,932    7,299    7,775    7,084    8,325   30,483   30,023 
  Weak coking coal      (kt)     2,942    2,466    2,475    2,335    2,796   10,072   12,095 
  Thermal coal          (kt)       350       94       30      224      183      531    1,027 
 
  Total                 (kt)    11,224    9,859   10,280    9,643   11,304   41,086   43,145 
 
  Total (100%)          (kt)    19,789   17,145   18,459   16,928   20,074   72,606   75,885 
 
 

(1) Production figures include some thermal coal.

(2) Shown on a 100% basis. BHP interest in saleable production is 80%.

 
 NSW Energy Coal, 
  Australia 
  Production                (kt)    5,412   3,592   3,763   3,810   4,887   16,052   18,257 
 
  Sales 
  Export thermal coal       (kt)    5,181   3,075   3,952   3,403   4,871   15,301   17,068 
  Inland thermal coal       (kt)      975     567       -       -       -      567    2,002 
 
  Total                     (kt)    6,156   3,642   3,952   3,403   4,871   15,868   19,070 
 
 
 Cerrejón, Colombia 
  Production                (kt)    2,017   2,055   2,315   1,978     767    7,115    9,230 
 
  Sales thermal coal 
   - export                 (kt)    2,245   2,069   2,261   2,028   1,143    7,501    9,331 
 

Production and sales report

 
                                               Quarter ended                Year to date 
                                  --------------------------------------  --------------- 
                                    Jun     Sep     Dec     Mar     Jun     Jun      Jun 
                                    2019    2019    2019    2020    2020    2020     2019 
                                  ------  ------  ------  ------  ------  -------  ------ 
 Other 
 Nickel production is reported on the basis of saleable product 
 
 Nickel West, Australia 
  Mt Keith 
  Nickel concentrate       (kt)     52.8    43.7    31.5    42.8    60.2    178.2   200.4 
  Average nickel grade     (%)      19.5    18.3    17.3    15.8    16.5     16.9    19.3 
 
  Leinster 
  Nickel concentrate       (kt)     48.3    67.2    56.6    57.8    72.0    253.6   244.2 
  Average nickel grade     (%)      10.8    10.0     8.6     9.8    10.2      9.7     9.1 
 
  Saleable production 
  Refined nickel (1) 
   (2)                     (kt)     19.9    17.4    11.1    16.6    20.5     65.6    73.6 
  Intermediates and 
   nickel by-products 
   (1) (3)                 (kt)      8.8     4.2     2.6     4.3     3.4     14.5    13.8 
 
  Total nickel (1)         (kt)     28.7    21.6    13.7    20.9    23.9     80.1    87.4 
 
 
  Cobalt by-products       (t)       302     211     120     132     312      775     899 
 
  Sales 
  Refined nickel (1) 
   (2)                     (kt)     19.9    17.0    10.6    16.8    19.7     64.1    74.4 
  Intermediates and 
   nickel by-products 
   (1) (3)                 (kt)      8.4     5.7     2.7     2.9     4.2     15.5    12.8 
 
  Total nickel (1)         (kt)     28.3    22.7    13.3    19.7    23.9     79.6    87.2 
 
  Cobalt by-products       (t)       302     212     131     132     312      787     899 
 

(1) Production and sales restated to include other nickel by-products.

(2) High quality refined nickel metal, including briquettes and powder.

(3) Nickel contained in matte and by-product streams.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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