18
April 2024
BHP Group Limited
Operational review for the nine
months ended 31 March 2024
Solid operational performance in
copper, iron ore and energy coal.
"We remain on track to meet
copper, iron ore and energy coal production for the year. Copper
volumes have increased by 10 per cent reflecting strong performance
and additional tonnes from Copper South Australia, record
year-to-date performance from Spence, and improved grades and
production at Escondida.
"Western Australia Iron Ore, the
lowest cost iron ore producer globally, delivered another
consistent period of production despite heavy rainfall. We continue
to invest in improvements to our rail and port operations, which
are essential for growth in the medium term to 305 million tonnes
per annum and beyond.
"At our BMA metallurgical coal
operations in Queensland, significant wet weather including the
impact of two tropical cyclones and operational challenges impacted
production and unit costs, and we have revised guidance for the
year. We successfully completed the sale of the Blackwater and
Daunia mines on 2 April for a total of up to US$4.1 bn
(100%).
"In Canada, the Jansen Stage 1
project remains ahead of its initial schedule and is now 44 per
cent complete. In Western Australia, we expect to announce a
decision on the future of our nickel business in the coming months,
where efforts to optimise operations and preserve value are
underway."
Mike
Henry
BHP
Chief Executive Officer
Summary
|
Operational performance
|
Portfolio
|
|
Copper production increased
10%
|
Completed sale of Blackwater and
Daunia
|
|
Increased copper production driven
by record production at Spence, strong operational performance at
Copper South Australia (and the contribution from Prominent Hill
and Carrapateena), and improved performance and grade at
Escondida.
FY24 production guidance for BMA
has been lowered to 21.5 - 22.5 Mt (43 - 45 Mt at 100%). Other
updates to FY24 production guidance are reflected in the table
below. FY24 unit cost guidance1 for BMA has been
increased to US$119/t - US$125/t.
|
We completed the strategic
reshaping of our metallurgical coal business with the divestment of
BHP Mitsubishi Alliance's (BMA) Blackwater and Daunia mines to
Whitehaven Coal on 2 April for a total cash consideration of up to
US$4.1 bn (100%).
BMA now has a more focused
operational footprint and a greater portion of higher quality
metallurgical coal (>85%) which is expected to achieve higher
relative margins in a decarbonising world.
|
|
ESG
|
Governance
|
|
MSCI upgrade
|
Board update
|
|
In March 2024, ESG ratings
provider MSCI upgraded BHP's overall company score based on their
assessment of performance under the Social Pillar. This reflects
the progress made in Brazil, including in negotiations, and our
commitment to deliver full and fair remediation and
compensation.
|
In March, we announced the
appointment of Ross McEwan and Don Lindsay as Non-executive
Directors, effective 3 April 2024 and 1 May 2024 respectively. We
also announced the retirement of Ian Cockerill as a Non-executive
Director, effective 4 April 2024.
|
|
Production
|
Quarter
performance
|
YTD
performance
|
FY24
production guidance
|
|
|
Q3 FY24
|
v Q2
FY24
|
v Q3
FY23
|
YTD Mar FY24
|
v YTD Mar FY23
|
Previous
|
Current
|
|
|
Copper (kt)
|
465.9
|
7%
|
15%
|
1,360.3
|
10%
|
1,720 -
1,910
|
1,720 -
1,910
|
|
|
Escondida (kt)
|
288.2
|
13%
|
15%
|
816.1
|
7%
|
1,080 -
1,180
|
1,080 -
1,180
|
Unchanged
|
|
Pampa Norte (kt)
|
61.6
|
3%
|
(16%)
|
199.7
|
(9%)
|
210 - 250i
|
210 - 250i
|
Upper end
|
|
Copper South Australia
(kt)
|
79.0
|
(4%)
|
53%
|
232.7
|
49%
|
310 -
340
|
310 -
340
|
Unchanged
|
|
Antamina (kt)
|
33.9
|
(14%)
|
15%
|
105.6
|
4%
|
120 -
140
|
120 -
140
|
Unchanged
|
|
Carajás (kt)
|
3.2
|
78%
|
|
6.2
|
|
-
|
-
|
-
|
|
Iron ore (Mt)
|
61.5
|
(7%)
|
3%
|
190.5
|
(1%)
|
254 -
264.5
|
254 -
264.5
|
|
|
WAIO (Mt)
|
60.3
|
(6%)
|
3%
|
186.8
|
(1%)
|
250 -
260
|
250 -
260
|
Unchanged
|
|
WAIO (100% basis)
(Mt)
|
68.1
|
(6%)
|
3%
|
210.2
|
(1%)
|
282 -
294
|
282 -
294
|
Unchanged
|
|
Samarco (Mt)
|
1.2
|
(10%)
|
12%
|
3.7
|
13%
|
4
- 4.5
|
4
- 4.5
|
Upper end
|
|
Metallurgical coal - BMA
(Mt)
|
6.0
|
6%
|
(13%)
|
17.4
|
(16%)
|
23 -
25
|
21.5 -
22.5
|
Lowered
|
|
BMA (100% basis)
(Mt)
|
12.1
|
6%
|
(13%)
|
34.7
|
(16%)
|
46 -
50
|
43 -
45
|
Lowered
|
|
Energy coal - NSWEC
(Mt)
|
4.1
|
8%
|
5%
|
11.6
|
23%
|
13 -
15
|
13 -
15
|
Upper
end
|
|
Nickel - Western Australia Nickel
(kt)
|
18.8
|
(4%)
|
(4%)
|
58.6
|
1%
|
77 -
87
|
77 -
87
|
Lower
half
|
|
|
|
|
|
|
|
|
|
|
Note: changes made to FY24
production guidance since the Q2 FY24 Operational review are shown
in italics.
i Production
guidance for FY24 is for Spence only and excludes Cerro Colorado
which produced 11 kt before ceasing production on 9 November
2023.
1
BHP |
Operational review for the nine months ended 31 March
2024
Segment and asset performance |
FY24 YTD v FY23 YTD
|
|
Further information in
Appendix 1
Detailed production and sales
information for all operations in Appendix 2
|
Copper
|
Production
1,360 kt Up 10%
YTD Mar FY23 1,240 kt
FY24e 1,720 - 1,910 kt
Average realised price
US$3.72/lb Up 5%
HY24 US$3.66/lb
|
Total copper production increased
by 10% to 1,360 kt. Copper production guidance for FY24 remains
unchanged at between 1,720 and 1,910 kt.
Escondida 816 kt
Up 7% (100%
basis)
Increased production was primarily
due to a higher concentrator feed grade of 0.85%, increasing from
0.79%, as mining progressed into areas of high grade ore as planned
following the implementation of measures to manage geotechnical
events. Concentrator feed grade for FY24 is expected to be between
0.85% and 0.90%, with 0.92% grade achieved in Q3 FY24. Production
guidance for FY24 remains unchanged at between 1,080 and 1,180
kt.
Pampa Norte 200 kt Down 9%
Spence production increased by 3%
to a nine-month record of 189 kt, driven by improved concentrator
throughput and higher recoveries. Record concentrate production was
partially offset by lower cathode production, in line with an
expected decline in stacked feed grade. The concentrator plant
modifications which commenced in August 2022 are expected to be
completed in FY24.
In March 2024, Spence achieved
fully autonomous mine haulage operations (ahead of the Q4 FY24
target date) and has deployed a total of 33 autonomous
trucks.
FY24 production for Spence is
expected to be at the upper end of the guidance range of between
210 and 250kt.
Cerro Colorado entered temporary
care and maintenance in December 2023, after producing 11 kt for
the period.
Copper South Australia 233 kt Up 49%
Production increased by 49% due to
the addition of volumes this year from Prominent Hill and
Carrapateena, and strong underlying operational performance at
Olympic Dam including the highest quarter of material mined in over
10 years in Q3 FY24. Strong smelter performance at Olympic Dam was
supported by ongoing transfers of concentrate from Prominent Hill
and initial transfers from Carrapateena in Q3 FY24, for processing
to higher margin cathode. Crusher 2 at Carrapateena was
commissioned in Q3 FY24 and remains on track to ramp up in Q4
FY24.
Production guidance for FY24
remains unchanged at between 310 and 340 kt.
We are continuing exploration
drilling across the Copper South Australia province to enhance our
resource knowledge in support of our growth studies. At Oak Dam, we
are progressing the external approval process for an underground
access decline to enable faster and lower cost resource definition
drilling of the mineral deposit, and we expect to be able to
provide an Inferred Mineral Resource for Oak Dam later this
calendar year.
Other copper
At Antamina, copper production
increased by 4% to 106 kt, while zinc production was 2% higher at
88 kt, both as a result of higher throughput offsetting planned
lower concentrator feed grades. Production guidance remains
unchanged for FY24, with copper production of between 120 and 140
kt, and zinc production of between 85 and 105 kt.
Carajás produced 6.2 kt of copper
and 4.1 troy koz of gold. In Q3 FY24
operations continued to ramp back up, and shipments also resumed, following the temporary stoppage of
operations between August and October 2023 due to a geotechnical
event.
|
2
BHP |
Operational review for the nine months ended 31 March
2024
Iron ore
|
Production
190 Mt Down 1%
YTD Mar FY23 192 Mt
FY24e 254 - 264.5 Mt
Average realised price
US$104.53/wmt Up 3%
HY24 US$103.70/wmt
|
Total iron ore production
decreased by 1% to 190 Mt. Production guidance for FY24 remains
unchanged at between 254 and 264.5 Mt.
WAIO 187
Mt Down 1% | 210
Mt (100% basis)
Production was marginally lower due
to heavy rainfall throughout Q3 FY24, the continued tie-in activity
for the Rail Technology Programme (RTP1), the impacts of the
ongoing ramp up of the Central Pilbara hub (South Flank and Mining
Area C) and a bushfire near Yandi.
South Flank remains on track to
ramp up to full production capacity of 80 Mtpa (100% basis) by the
end of FY24. The Port Debottlenecking Project (PDP1) was
commissioned in December 2023 and ramp up remains on track to be
completed in CY24.
Production guidance for FY24
remains unchanged at between 250 and 260 Mt (282 and 294 Mt on
a 100% basis).
Samarco 3.7
Mt Up 13% | 7.4 Mt (100%
basis)
Production increased as a result of
higher concentrator throughput. FY24 production is expected to be
at the upper end of the 4 -
4.5 Mt guidance range.
|
Coal
Metallurgical coal
|
Production
17.4 Mt Down 16%
YTD Mar FY23 20.5 Mt
FY24e 21.5 - 22.5 Mt
Average realised price
US$272.09/t Up 6%
HY24 US$266.43/t
|
BMA 17.4
Mt Down 16% |
34.7 Mt (100% basis)
Following the tragic fatality of a
team member in January 2024, BMA operations were suspended for 24
hours while a safety stop was implemented across all mines, and for
a further 3.5 days at Saraji.
Production has been impacted by
increased planned maintenance, an extended longwall move at
Broadmeadow as well as increased stripping to improve supply chain
stability at our open cut operations to restore depleted inventory
positions arising from extended weather impacts and labour
constraints over recent years. Our focus on restoring depleted
inventory will continue into CY25.
Despite improved production in Q3
FY24, the impacts of higher than planned wet weather, including two
tropical cyclones in the region, and the temporary suspension of
operations following the fatality at Saraji have impacted our FY24
production estimates. Production for FY24 is now expected to be
between 21.5 and 22.5 Mt (43 and 45 Mt on a 100% basis).
This has been lowered from 23 - 25 Mt (46 - 50 Mt on a 100% basis).
As a result, unit cost guidance for
FY241 has increased to between US$119/t and US$125/t,
from US$110 - US$116/t.
|
3
BHP |
Operational review for the nine months ended 31 March
2024
Energy coal
|
Production
11.6 Mt Up 23%
YTD Mar FY23 9.4 Mt
FY24e 13 - 15 Mt
Average realised price
US$120.97/t Down 6%
HY24 US$123.29/t
|
NSWEC 11.6 Mt Up 23%
Increased production as a result
of continued strong operating performance as improved weather
conditions enabled an uplift in truck productivity. Domestic sales
under the NSW Government Coal Market Price Emergency (Directions
for Coal Mines) Notice commenced in Q4 FY23, which has resulted in
a lower proportion of washed coal and further contributed to the
higher volumes.
Production for FY24 is expected to
be at the upper end of the guidance range of between 13 and 15
Mt.
The approval process in relation
to the modification request submitted to
the NSW Government to extend mining approval to 30 June 2030
will continue into FY25. The approval would
allow NSWEC to continue mining beyond its current mining consent
that expires in 2026 and proceed with a managed process to cease
mining at the asset by the end of FY30.
|
Group &
Unallocated
Nickel
|
Production
59 kt Up
1%
YTD Mar FY23 58 kt
FY24e 77 -
87 kt
Average realised price
US$18,104/t Down 1%
HY24 US$18,602/t
|
Western Australia Nickel
59 kt Up 1%
Production increased, despite
significant wet weather impacts in Q3 FY24. Production for FY24 is expected to be in the lower half of
the guidance range of between 77 and 87 kt.
As announced in our HY24 results
in February 2024, we continue to review our plans for Western
Australia Nickel with a focus on preserving cash. This includes
optimising operations and maintenance
schedules, reviewing capital plans, and
reducing contractor spend and equipment
hire. Our review also includes assessing
the potential to place Nickel West into a period of care and
maintenance and the phasing and capital spend for the development
of the West Musgrave project. We expect to provide an update on the
longer-term future of Western Australia Nickel by the FY24 results
in August 2024.
|
Quarterly performance | Q3 FY24 v
Q2 FY24
|
Copper
|
Iron ore
|
|
466 kt Up
7%
Q2 FY24 437 kt
|
Higher concentrator grade at
Escondida and concentrator throughput at Spence, partially offset
by lower volumes at Copper South Australia due to planned
maintenance and the commissioning of Crusher 2 at Carrapateena in
Q3 FY24.
|
61 Mt Down 7%
Q2 FY24 66 Mt
|
Lower production at WAIO as a
result of wet weather, a bushfire near Yandi and the impacts of the
RTP1 tie-in activity, partially offset by improved underlying mine
performance.
|
|
Metallurgical coal
|
Energy coal
|
|
6.0 Mt Up 6%
Q2 FY24 5.7 Mt
|
Production increased due to
improved strip ratio and yield despite unfavourable weather.
Operations were temporarily suspended for safety stops following
the fatality of a team member at Saraji.
|
4.1 Mt Up
8%
Q2 FY24 3.9 Mt
|
Increased production as a result
of favourable mining sequence, strong production performance and a
reduced proportion of washed coal.
|
|
Nickel
|
|
|
19 kt Down 4%
Q2 FY24 20 kt
|
Lower volumes due to planned
maintenance at the Kwinana Refinery and a severe weather event in
March.
|
|
|
The following footnotes apply to
this Operational Review:
1 FY24
unit cost guidance is based on exchange rate of AUD/USD
0.67.
4
BHP |
Operational review for the nine months ended 31 March
2024
Appendix 1
Average realised
prices1
|
|
Q3
FY24
|
YTD Mar
FY24
|
Q3 FY24
v
Q2
FY24
|
YTD Mar
FY24 v
H1
FY24
|
|
Copper
(US$/lb)2
|
3.85
|
3.72
|
5%
|
5%
|
|
Iron ore (US$/wmt, FOB)
|
106.30
|
104.53
|
(3)%
|
3%
|
|
Metallurgical coal
(US$/t)
|
281.51
|
272.09
|
(4)%
|
6%
|
|
Hard coking coal
(US$/t)3
|
293.94
|
281.98
|
(4)%
|
7%
|
|
Weak coking coal
(US$/t)3
|
208.91
|
206.38
|
(2)%
|
2%
|
|
Thermal coal
(US$/t)4
|
116.11
|
120.97
|
(4)%
|
(6)%
|
|
Nickel metal
(US$/t)5
|
16,581
|
18,104
|
(1)%
|
(1)%
|
1 Based on provisional,
unaudited estimates. Prices exclude sales from equity accounted
investments, third party product and internal sales, and represent
the weighted average of various sales terms (for example: FOB, CIF
and CFR), unless otherwise noted. Includes the impact of
provisional pricing and finalisation adjustments.
2 Does not include sales from assets acquired through the
purchase of OZL.
3 Hard coking coal (HCC)
refers generally to those metallurgical coals with a Coke Strength
after Reaction (CSR) of 35 and above, which includes coals across
the spectrum from Premium Coking to Semi Hard Coking coals, while
weak coking coal (WCC) refers generally to those metallurgical
coals with a CSR below 35.
4 Export sales only. Includes thermal coal sales from
metallurgical coal mines.
5 Relates to refined
nickel metal only, excludes intermediate products and nickel
sulphate.
Current year unit cost
guidance
|
|
Previous
|
Current
|
|
|
|
FY24
guidance1
|
FY24
guidance1
|
|
|
Escondida unit cost
(US$/lb)2
|
1.40 - 1.70
|
1.40 - 1.70
|
Unchanged
|
|
Spence unit cost
(US$/lb)
|
2.00 -
2.30
|
2.00 -
2.30
|
Unchanged
|
|
WAIO unit cost (US$/t)
|
17.40 -
18.90
|
17.40 -
18.90
|
Unchanged
|
|
BMA unit cost (US$/t)
|
110 -
116
|
119 -
125
|
Increased
|
1 FY24 unit cost guidance is based on exchange rates of AUD/USD
0.67 and USD/CLP 810.
2
Escondida unit costs for FY24 onwards exclude revenue-based
government royalties.
Medium term guidance
|
|
Production
|
Unit
cost
|
|
|
guidance
|
guidance1
|
|
Escondida2
|
1,200 -
1,300 kt
|
US$1.30 - $1.60/lb3
|
|
Spence4
|
~250
kt
|
|
|
WAIO (100% basis)
|
>305
Mt
|
<US$17/t
|
1 Medium term
unit cost guidance is based on exchange rates of
AUD/USD 0.67 and USD/CLP 810.
2 Medium term refers to an average across FY25 and
FY26.
3 Escondida unit costs
for FY24 onwards exclude revenue-based government
royalties.
4 Average of 250 ktpa over five years on the basis that
remediation of the previously identified TSF anomalies does not
impact operations.
Major projects
|
Commodity
|
Project
and ownership
|
Project
scope / capacity
|
Capital
expenditure
US$M
|
First
production
target date
|
Progress
|
|
Potash
|
Jansen Stage 1
(Canada)
100%
|
Design, engineering and
construction of an underground potash mine and surface
infrastructure, with capacity to produce 4.15 Mtpa.
|
5,723
|
End-CY26
|
Project
is 44%
complete
|
|
Potash
|
Jansen Stage 2
(Canada)
100%
|
Development of additional mining
districts, completion of the second shaft hoist infrastructure,
expansion of processing facilities and addition of rail cars to
facilitate production of an incremental 4.36 Mtpa.
|
4,859
|
FY29
|
Approval
announced October 2023
|
Exploration
Minerals exploration and evaluation expenditure was US$311 m
for YTD March 24 (YTD Mar 23: US$239 m) of which US$267 m was
expensed (YTD Mar 23: US$196 m).
5
BHP |
Operational review for the nine months ended 31 March
2024
Variance analysis relates to the
relative performance of BHP and/or its operations during the
nine months ended March 2024 compared with the nine months ended March 2023, unless otherwise noted. Production
volumes, sales volumes and capital and exploration expenditure from
subsidiaries are reported on a 100% 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.
The following abbreviations may
have been used throughout this report:
billion tonnes (Bt); cost and freight (CFR); cost, insurance and
freight (CIF), carbon dioxide equivalent (CO2-e), dry metric tonne
unit (dmtu); free on board (FOB); giga litres (GL); greenhouse gas
(GHG); grams per cubic centimeter (g/cm3), grams per tonne (g/t);
high-potential injury (HPI); kilograms per tonne (kg/t); kilometre
(km); million ounces per annum (Mozpa); metres (m), million pounds
(Mlb); million tonnes (Mt); million tonnes per annum (Mtpa); ounces
(oz); OZ Minerals Limited (OZL); part per million (ppm), pounds
(lb); thousand ounces (koz); thousand ounces per annum (kozpa);
thousand tonnes (kt); thousand tonnes per annum (ktpa); thousand
tonnes per day (ktpd); tonnes (t); total recordable injury
frequency (TRIF); wet metric tonnes (wmt); and year to date
(YTD).
In this release, the terms 'BHP',
the 'Group', 'BHP Group', 'we', 'us', 'our' and 'ourselves' are
used to refer to BHP Group Limited and, except where the context
otherwise requires, our subsidiaries. Refer to note 30
'Subsidiaries' of the Financial Statements in BHP's 30 June 2023
Annual Report for a list of our significant subsidiaries. Those
terms do not include non-operated assets. 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
and Samarco. BHP Group cautions against undue reliance on any
forward-looking statement or guidance in this release. These
forward-looking statements are based on information available as at
the date of this release and 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 and which may cause actual results to differ materially
from those expressed in the statements contained in this
release.
Further information on BHP can be
found at bhp.com
Authorised for lodgement
by:
Stefanie Wilkinson
Group Company Secretary
|
Media Relations
Email: media.relations@bhp.com
|
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Investor Relations
Email: investor.relations@bhp.com
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Australia and Asia
Gabrielle Notley
Tel: +61 3 9609 3830 Mobile:
+61 411 071 715
Europe, Middle East and
Africa
Neil Burrows
Tel: +44 20 7802 7484 Mobile:
+44 7786 661 683
Americas
Renata Fernandez
Mobile: +56 9 8229 5357
|
|
Australia and Asia
John-Paul Santamaria
Mobile: +61 499 006 018
Europe, Middle East and
Africa
James Bell
Tel: +44 20 7802 7144 Mobile:
+44 7961 636 432
Americas
Monica Nettleton
Mobile: +1 416 518 6293
|
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BHP Group Limited ABN 49 004 028
077
LEI WZE1WSENV6JSZFK0JC28
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Tel +61 1300 55 4757 Fax +61 3 9609
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11