TIDMBHP
RNS Number : 9356Y
BHP Group PLC
14 May 2019
Issued by: BHP Group Plc
Date: 14 May 2019
To: London Stock Exchange
JSE Limited
For Release: Immediately
Contact: Helen Ratsey +44 (0) 20 7802 7540
------------------- --------------------------------------------------
BHP - 2019 Global Metals, Mining and Steel Conference Presentation
-----------------------------------------------------------------------
UK Listing Authority Submissions
The following document has today been submitted to the National
Storage Mechanism and will shortly be available for inspection at
www.hemscott.com/nsm.do:
-- 2019 Global Metals, Mining and Steel Conference Presentation.
The document may also be accessed via BHP's website -
bhp.com
NEWS RELEASE
Release Time IMMEDIATE
Date 14 May 2019
Release Number 11/19
BHP CEO speaks at Bank of America Merrill Lynch Global Metals,
Mining and Steel Conference
BHP Chief Executive Officer, Andrew Mackenzie, today said BHP's
focus remains clear: to maximise cash flow, maintain capital
discipline and increase value and returns.
Speaking at the Bank of America Merrill Lynch Global Metals,
Mining and Steel Conference in Barcelona, Mr Mackenzie, said BHP's
strategy provides the framework to make the most of our portfolio
while developing options to secure future success.
Since the beginning of 2016, BHP has strengthened its balance
sheet through a US$16 billion reduction in net debt, reinvested
US$20 billion in the business and returned more than US$25 billion
to shareholders.
"We have increased volumes, reduced costs, and kept our people
safer at work. These actions lifted return on capital by around 50
per cent," Mr Mackenzie said. "These are strong outcomes. There is
still substantial opportunity to maximise the value of existing
assets to release latent capacity and improve performance.
"We have shaped our portfolio around commodities with attractive
fundamentals and we hold exploration licences and development
options in the world's premier copper, oil and potash basins.
"Developments such as climate change and dramatic shifts in
technology present both challenges and opportunities. To make sure
that we secure the future prosperity of our Company, we constantly
test our current assets and future options against many divergent
scenarios for how the world will look well into the future.
Decarbonisation, the electrification of transport, the future of
work and food security are examples of strategic themes that we
monitor.
"For example, Nickel West, which we will now retain in the
portfolio, offers high-return potential as a future growth option,
linked to the expected growth in battery markets and the relative
scarcity of quality nickel sulphide supply.
"While nobody can predict what will happen with absolute
precision, I am confident BHP's portfolio can thrive under almost
all plausible outcomes in this changing world."
Mr Mackenzie said BHP was well placed in the short, medium and
longer term with strict financial discipline and a transparent and
consistent approach to capital allocation.
"Our institutionalised capital allocation framework
transparently directs cash to its best use, be that development
opportunities, the balance sheet, or returns to shareholders. We
have a resilient portfolio, a transformation agenda and a suite of
options and ideas to create future value at the right time. We have
demonstrated this is the right formula for our shareholders.
"Regardless of how the world evolves, BHP is set up for a strong
future."
An audio-webcast of the presentation will be made available at:
https://edge.media-server.com/m6/p/d2ky883h
A summary of guidance and project details contained in the
presentation is included below.
Guidance
Asset FY19e Medium term
Production Unit costs(1) Production Unit costs(1)
====================== ============= =============== ================== =============
Western Australia 265-270 Mt <US$15/t 290 Mt <US$13/t
Iron Ore (100% basis) (100% basis)
---------------------- ------------- --------------- ------------------ -------------
Conventional Petroleum 113-118 MMboe <US$11/boe 110 MMboe average <US$13/boe
---------------------- ------------- --------------- ------------------ -------------
Queensland Coal 43-46 Mt US$68-72/t 49-54 Mt US$57-64/t
---------------------- ------------- --------------- ------------------ -------------
Escondida 1.12-1.18 Mt <US$1.15/lb 1.20 Mt average <US$1.15/lb
---------------------- ------------- --------------- ------------------ -------------
Future options
Options Potential execution timing Capex Tollgate IRR(2) Risk(3) Description
(US$m) (%) (1-5)
================== ========================== ========== =================== ====== ========= ==================
Ruby <1 year >250 Feasibility >15 ---- Tie back into
Petroleum existing
processing
facilities in
Trinidad & Tobago
------------------ -------------------------- ---------- ------------------- ------ --------- ------------------
Mad Dog northwest <5 years >250 Pre-feasibility * Non- Incremental
water injection operated production of
Petroleum existing A-Spar
production wells
in Mad Dog field
------------------ -------------------------- ---------- ------------------- ------ --------- ------------------
Scarborough <5 years <2,000 Pre-feasibility * Non- Tie back
Petroleum operated development to
existing LNG
facility
------------------ -------------------------- ---------- ------------------- ------ --------- ------------------
Olympic Dam BFX(4) <5 years Up to Pre-feasibility 12-25 ---- Development into
Copper 2,500 the Southern Mine
Area,
debottlenecking of
existing surface
infrastructure
to increase
production to
240--300 ktpa
------------------ -------------------------- ---------- ------------------- ------ --------- ------------------
Resolution >5 years <3,000 Concept 15 Non- Underground block
Copper operated cave with
attractive grade
profile and
competitive cost
curve position
------------------ -------------------------- ---------- ------------------- ------ --------- ------------------
Jansen Stage 1(5) <5 years 5,300 - Feasibility 14-15 ------ Tier 1 resource
Potash 5,700 with potential
initial capacity
of 4.3--4.5 Mtpa,
with valuable
expansion
optionality
------------------ -------------------------- ---------- ------------------- ------ --------- ------------------
Jansen Stage >15 years 4,000 Opportunity 20 ---- Sequenced
2-4(5) per stage assessment brownfield
Potash expansions of up
to 12 Mtpa (4 Mtpa
per stage)
================== ========================== ========== =================== ====== ========= ==================
Aggregate 17 Aggregate unrisked
value(2) of US$14
billion spanning
commodities and
time periods
================== ========================== ========== =================== ====== ========= ==================
Note: * Mad Dog northwest water injection and Scarborough IRRs
under review with joint venture partners.
Exploration
Options Location Ownership Maturity Earliest first Description
production
===================== ======================= ========= =========== ====================== ======================
Trion Mexico - Gulf of Mexico 60% Appraisal Mid 2020s Large oil discovery in
Petroleum Operator the Mexican deepwater
Gulf of Mexico
--------------------- ----------------------- --------- ----------- ---------------------- ----------------------
Wildling US - Gulf of Mexico 80+% Appraisal Mid 2020s Large oil resource
Petroleum Operator across multiple
horizons near operated
infrastructure in US
Gulf of Mexico
--------------------- ----------------------- --------- ----------- ---------------------- ----------------------
Samurai US - Gulf of Mexico 50% Appraisal Early 2020s Oil discovery in the
Petroleum Wildling mini basin
--------------------- ----------------------- --------- ----------- ---------------------- ----------------------
Northern Gas Trinidad and Tobago 70% Exploration Mid 2020s Potential material gas
Petroleum Operator play in Deepwater
Trinidad, well
positioned to the
Atlantic LNG plant
onshore T&T
--------------------- ----------------------- --------- ----------- ---------------------- ----------------------
Magellan Southern Gas Trinidad and Tobago 65% Exploration Mid 2020s Potential material gas
Petroleum Operator play in Deepwater
Trinidad, well
positioned to the
Atlantic LNG plant
onshore T&T
--------------------- ----------------------- --------- ----------- ---------------------- ----------------------
Western GOM US - Gulf of Mexico 100% Frontier Early 2030s Acquired a significant
Petroleum Operator acreage position in
Western Gulf of Mexico
--------------------- ----------------------- --------- ----------- ---------------------- ----------------------
Trinidad Oil Trinidad and Tobago 65-70% Frontier Late 2020s Potential oil play in
Petroleum Operator deepwater Trinidad
--------------------- ----------------------- --------- ----------- ---------------------- ----------------------
Orphan Basin Canada 100% Frontier Early 2030s Recent bid success for
Petroleum Operator blocks with large oil
resource potential in
the offshore Orphan
Basin
in Eastern Canada
===================== ======================= ========= =========== ====================== ======================
Multi-billion barrel equivalent risked potential; unrisked NPV of up to US$15 billion(6)
======================================================================================================================
1. Based on an exchange rate of AUD/USD 0.75 and USD/CLP 663.
Unit costs are in nominal terms.
2. Calculated at 2019 analyst consensus price forecasts (except
Potash which are at CRU and Integer price forecasts); ungeared,
post-tax, nominal rates.
3. Risk profile is based on a BHP assessment of each project
against defined quantified and non-quantified risk metrics rated
out of 5; 5 represents more risk.
4. IRR of 12% to 25% represents different development options of
varying levels of certainty. The upper end of range relates to
investment in a potential lower capital and production development
towards BFX.
5. Based on CRU and Integer (Argus Media) price assumptions
(2025-2035 average mid-case: CRU US$325/t and Integer (Argus Media)
US$342/t). Jansen Stage 1 IRR of 14-15% reflects capex range and
excludes remaining funded investment of
US$0.3 billion for completion of the shafts and installation of
essential service infrastructure and utilities. Jansen Stages 2-4
capex is presented in real terms (July 2019) - those options would
be brownfield and predominately require surface infrastructure,
with shorter construction schedules and less risk than Stage 1. The
execution of future stages would be subject to our review of supply
and demand fundamentals and successful competition for capital
under our Capital Allocation Framework. However, we expect that
each subsequent expansion would be approved for development after
the previous expansion had reached 3 to 4 years of full production.
The existing shafts are capable of supporting production for
Stages 2-4.
6. Petroleum exploration and appraisal NPV: Unrisked values at
BHP long-term price forecasts.
Further information on BHP can be found at: bhp.com
Media Relations Investor Relations
Email: media.relations@bhp.com Email: investor.relations@bhp.com
Australia and Asia Australia and Asia
Gabrielle Notley Tara Dines
Tel: +61 3 9609 3830 Mobile: Tel: +61 3 9609 2222 Mobile:
+61 411 071 715 +61 499 249 005
United Kingdom and South Africa United Kingdom and South Africa
Neil Burrows Elisa Morniroli
Tel: +44 20 7802 7484 Mobile: Tel: +44 20 7802 7611 Mobile:
+44 7786 661 683 +44 7825 926 646
North America Americas
Judy Dane James Wear
Tel: +1 713 961 8283 Mobile: Tel: +1 713 993 3737 Mobile:
+1 713 299 5342 +1 347 882 3011
BHP Group Limited ABN 49 004 BHP Group Plc Registration
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