Wrap Text
Operational Review for the nine months ended 31 March 2020
BHP Group Plc
Registration number 3196209
Registered in England and Wales
Share code: BHP
ISIN: GB00BH0P3Z91
NEWS RELEASE LOGO
Release Time IMMEDIATE
Date 21 April 2020
Release Number 4/20
BHP OPERATIONAL REVIEW
FOR THE NINE MONTHS ENDED 31 MARCH 2020
Note: All guidance is subject to potential impacts from COVID-19 during the June
2020 quarter.
. Our highest priority is the safety, health and wellbeing of our workforce
and communities. We have taken action to reduce the spread of COVID-19.
. Our financial position is strong. Underpinned by our low-cost operations,
our business is resilient and expected to continue to generate solid cash
flow.
. Strong underlying operational performance across the portfolio offset the
impacts of planned maintenance, natural field decline and wet weather in
Australia. Group copper equivalent production was broadly unchanged over
the nine months ended March 2020, with volumes for the full year now
expected to be in line with last year.
. Record production was achieved at Western Australia Iron Ore (WAIO) and
Caval Ridge, while record average concentrator throughput was delivered at
Escondida and record ore was stacked at Spence.
. Production guidance for the 2020 financial year remains unchanged for
petroleum, iron ore and metallurgical coal. Copper guidance for our
operated assets is broadly unchanged and Antamina guidance is under review
following temporary suspension of operations due to COVID-19. Energy coal
production guidance is under review with Cerrejon placed on temporary care
and maintenance due to COVID-19.
. Full year unit cost guidance/(1)/ remains unchanged for the 2020 financial
year.
. 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, the Spence Growth Option schedule and timing for completion of
the shafts at Jansen are under review.
. We have flexibility in our capital and exploration expenditure. We are
reviewing our guidance for the 2021 financial year and it will be lower
than the current guidance of around US$8 billion. We will provide updated
guidance with our full year results.
. An update on COVID-19 measures and our short-term economic and commodities
outlook is included on pages 3 to 5.
Mar YTD20 Mar Q20
Production (vs Mar YTD19) (vs Dec Q19) Mar Q20 vs Dec Q19 commentary
---------- -------------- ------------ -----------------------------
Petroleum (MMboe) ............ 82 25 Lower production due to increased downtime at Bass Strait caused by
(10%) (11%) adverse weather conditions, planned maintenance at Atlantis and lower
seasonal gas sales.
Copper (kt) .................. 1,310 425 Lower production at Escondida due to the impact of expected lower copper
5% (7%) grades, partially offset by continued strong concentrator throughput.
Lower volumes at Olympic Dam due to unplanned downtime at the smelter.
Iron ore (Mt) ................ 181 60 Production was broadly flat at WAIO despite weather impacts from
3% (1%) Tropical Cyclone Blake and Tropical Cyclone Damien, reflecting increased
car dumper availability and reliability.
Metallurgical coal (Mt) ...... 30 9 Lower volumes at Queensland Coal due to substantially higher
(3%) (16%) rainfall in January and February 2020, by a factor of almost two at
Peak Downs and almost three at Blackwater compared with historical averages.
Energy coal (Mt) 18 6 Volumes broadly flat at New South Wales Energy Coal (NSWEC), while
(13%) (5%) lower volumes at Cerrejon as a result of a focus on higher quality
products.
Nickel (kt) 56 21 Higher volumes following completion of major maintenance activities at
(4%) 53% the Kwinana refinery and Kalgoorlie smelter in the prior quarter.
--------------------------------------------------------------------------------
BHP Operational Review for 1
the nine months ended 31 March 2020
Summary
BHP Chief Executive Officer, Mike Henry:
"We have operated safely for the quarter and have achieved another strong
operational performance.
We have implemented extensive measures across our operations to keep our people
and communities safe from COVID-19. Working closely with relevant authorities
and medical experts, strict travel and working practice arrangements have been
established, including deferral of non-critical activity on our operating sites
to support social distancing, revised rosters to reduce people travelling to
site, more intensive site cleaning and health checks. I am encouraged to know
that the small number of colleagues from our 72,000 strong global workforce who
have tested positive for the virus have recovered or are recovering well.
The coupling of our disciplined controls, the commitment of people across BHP,
and our financial strength has enabled us to continue to safely operate and
supply our customers with the critical resources they require, and to continue
to provide jobs and an underpinning of economic activity both locally and around
the world. We have accelerated payments to many of our suppliers and have
established COVID-19 relief funds to help our communities and local health and
social services. BHP is committed to playing its part in the collective, global
response to this pandemic. Our business continuity plans have been effective and
our operations have continued to perform well, thanks to the effort of our
employees, contractors and suppliers. We have delivered strong performance
across the portfolio despite the impacts of planned maintenance, natural field
decline and wet weather in Australia. Western Australia Iron Ore achieved record
year-to-date production, while Escondida production also increased supported by
record concentrator throughput.
While demand in China has strengthened in recent weeks, we expect other major
economies, including the US, Europe and India, to contract sharply in the June
2020 quarter. The situation remains fluid, however, with our strong financial
position and low-cost operations, our business is resilient, with capacity to
generate solid cash flow through this period and emerge well placed as the
global economy recovers.
Our priorities are the continued safety of our people, continuing reliable
operations and supporting our customers, suppliers and communities in these challenging times."
Operational performance
Production and guidance are summarised below.
Note: All guidance is subject to potential impacts from COVID-19 during the June
2020 quarter.
Mar YTD20 Mar Q20 Mar Q20 Previous Current
Mar Mar vs vs vs FY20 FY20
Production YTD20 Q20 Mar YTD19 Mar Q19 Dec Q19 guidance guidance
--------------------------------------- ----- ------- --------- ------- ------- ------------- ------------- ------------------
Petroleum (MMboe)...................... 82 25 (10%) (13%) (11%) 110 - 116 110 - 116 Bottom of range
Copper (kt)............................ 1,310 425 5% 1% (7%) 1,705 - 1,820 Under review
Escondida (kt)....................... 891 290 5% 8% (6%) 1,160 - 1,230 1,160 - 1,230 Unchanged
Pampa Norte (kt)..................... 188 64 9% (4%) 7% 230 - 250 230 - 250 Unchanged
Olympic Dam (kt)..................... 124 38 8% (24%) (24%) 180 - 205 ~170 Lowered
Antamina (kt)........................ 107 33 (3%) (5%) (9%) ~135 Under review
Iron ore (Mt).......................... 181 60 3% 7% (1%) 242 - 253 242 - 253
WAIO (100% basis) (Mt)............... 205 68 4% 7% 0% 273 - 286 273 - 286 Unchanged
Metallurgical coal (Mt)................ 30 9 (3%) (7%) (16%) 41 - 45 41 - 45
Queensland Coal (100% basis) (Mt).... 52 16 (3%) (8%) (18%) 73 - 79 73 - 79 Lower end of range
Energy coal (Mt)....................... 18 6 (13%) (14%) (5%) 24 - 26 Under review
NSWEC (Mt)........................... 11 4 (13%) (16%) 1% 15 - 17 15 - 17 Unchanged
Cerrejon (Mt)........................ 6 2 (12%) (10%) (15%) ~9 Under review
Nickel (kt)............................ 56 21 (4%) 9% 53% ~87 80 - 83 Lowered
--------------------------------------------------------------------------------
BHP Operational Review for 2
the nine months ended 31 March 2020
Major development projects
At the end of March 2020, 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 currently tracking to plan and are subject to
potential impacts from COVID-19.
The Spence Growth Option is continuing to progress, however the schedule is
under review with first production potentially a few months later than December
2020 as a result of the measures taken to facilitate social distancing
protocols. First production is still expected to be in the 2021 financial year.
In March 2020, final shaft lining work at Jansen for two shafts was reduced to
focus on one shaft at a time, with reduced crews. This reduction in activity was
taken as part of our COVID-19 response plan and was aligned with the Provincial and
Federal Government of Canada's emergency measures for COVID-19. It reflects a
reduction in the number of contractors and in the need for out-of-Province
workers on site. Timing for completion of the shafts continues to be under
review. BHP will continue to assess the impacts of COVID-19 and the temporary
reduction in activity.
COVID-19 update on operations
At this time, among our global workforce of 72,000 people, BHP has had a small
number of confirmed cases of COVID-19, all of whom have either recovered or are
recovering well. Our protocols have functioned effectively and there has not
been any transmission from these individuals to co-workers.
BHP has taken action to help keep its people, their families and communities
safe. Strict health and travel guidelines have been put in place to reduce the
spread of COVID-19. While each of our operated sites is different, these measures include:
. Reduced number of people at mine sites and other operational facilities to
business critical employees and contractors only.
. Changed rosters to reduce workforce movements. In addition, some
non-residential workers have temporarily relocated to the jurisdiction of
operation to meet tighter border controls.
. Regular health screenings and temperature checks for workers, for example
before boarding planes or buses and when entering sites.
. Strong uptake of social distancing practices and changes to the way we
travel to work, operate at work and run accommodation camps including
hygiene practices and deep cleaning to reduce the risk of transmission.
. Further information on the measures we have implemented is available at:
bhp.com/covid-19.
We continue to monitor the situation and to update our measures based on advice
from country-specific health authorities and governments.
Our operations continue to run well. The changes we have put in place have
resulted in the deferral of non-critical activity. Our supply chains remain open
and we have adequate supplies to operate and maintain critical equipment, with
alternative suppliers identified for many of these.
Our financial position is strong. As at 31 December 2019/(2)/, net debt was
US$12.8 billion, at the lower end of our target range, and cash and cash
equivalents were US$14.3 billion. This strong position, combined with our
low-cost operations, means our business is resilient and expected to generate
solid cash flow through the cycle.
We are in a differentiated position to be able to continue to provide regional
jobs, products to customers and payments to suppliers. In doing so, we can help
underpin continued economic activity. We have accelerated payments to many of
our suppliers and established funds to help support regional and Indigenous
communities and health and community services. We are committed to playing our
part in the collective response to the COVID-19 pandemic.
--------------------------------------------------------------------------------
BHP Operational Review for 3
the nine months ended 31 March 2020
Our strong position allows us to continue to invest through the cycle and we
have flexibility in our capital and exploration expenditure. We are reviewing
our capital and exploration guidance for the 2021 financial year and it will
be lower than the current guidance of around US$8 billion. We will provide
updated guidance with our full year Results Announcement to be released on
18 August 2020.
Marketing update/(3)/
Short term economic outlook
The global economy has been dramatically impacted by COVID-19. Many major
economies will contract heavily in the June 2020 quarter, including the United
States (US), Europe and India. In contrast, China has moved from intensive viral
suppression to early indications of economic recovery. The majority of heavy
industrial activity had restarted as of the end of March 2020, albeit with
considerable variation across provinces and sectors. We note that the developed
world in aggregate may have tentatively passed the peak in new COVID-19 cases
for wave one infections, while the developing world is unfortunately still in
the escalation phase/(4)/.
The arc of recovery will vary widely across countries. Where "hibernation
policies"/(5)/ have been enacted, we anticipate a smoother resumption of
activity after the first wave than would otherwise have been the case. A
considerable amount of monetary, liquidity and fiscal policy support has been
mobilised in response to COVID-19. Early indications are that liquidity support
measures have been effective in dampening financial volatility. It is still
uncertain whether traditional monetary and fiscal stimulus policies will have
below-average or above-average multiplier effects. A lower multiplier could
result from depressed consumer and business confidence due to the deleterious
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 wake from hibernation, with the important caveat that major
second waves are averted. Each is a plausible book-end for assessing where the
global economy might be as the 2021 calendar year approaches.
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 second wave of infections emerging. That is
among the range of pathways that we consider and it is the key caveat for each
of our regional outlooks. Indications are that the US and Europe will see a more
protracted period of activity disruption, a deeper labour market impact and a
flatter trajectory for the recovery once it arrives. India, Japan and South
Korea will see negative impacts on industrial activity from their own
suppression efforts and those of their trading partners. 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 commodities have been sold rapidly down close to, or even
through, cash cost support. Bulk prices have been more resilient. Across the
portfolio, a combination of economic curtailments and COVID-19 induced
disruptions are a partial offset to the demand shock.
Based on our bottom-up analysis, informed by engagement with our customers, we
expect that steel production ex-China could contract by a double-digit
percentage in the 2020 calendar year. Steel makers from a variety of regions,
including Europe, the Americas, India and Japan have announced or signalled full shutdowns or
curtailments in the June 2020 quarter. This reflects both 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, where at one stage every major auto plant on the Continent was
constrained). Some of our customers are choosing to reduce production at their
blast furnaces in the face of this demand shock.
In China, blast furnace utilisation rates have increased from around 73 per cent earlier
in the year to almost 79 per cent in April. Daily rebar transactions are now at or above normal seasonal
levels. Finished inventories are falling as downstream activity improves,
although the level is still very high relative to history. While we note that
only about 10 per cent of Chinese apparent steel demand/(6)/ is exported in
finished products (for example in excavators, ships or wind turbines), the depth
of the weakness in global demand will weigh on Chinese flat products
manufacturers. Electric-arc furnace utilisation fell as low as 12 per cent, but
has now recovered to 56 per cent. If China can avoid a second wave of COVID-19,
steel production may rise slightly in the 2020 calendar year.
The Platts 62% Fe Iron Ore Fines price index has been resilient to the COVID-19
shock so far. This outcome reflects solid Chinese pig iron production in the
year-to-date (1.7 per cent increase from last year), and a
--------------------------------------------------------------------------------
BHP Operational Review for 4
the nine months ended 31 March 2020
continuation of the relatively soft seaborne supply picture that was in
evidence prior to the shock. Port outflows have been roughly 10 per cent higher
year-on-year from March 2020 through mid-April 2020. Chinese
domestic production had fallen back to less than 190 Mtpa in February 2020, but
has since recovered to around 202 Mtpa. That compares to 211 Mtpa in December
2019. Chinese port stocks have declined consistently since February 2020, with
the latest weekly data showing an 18 per cent decline (26 Mt) year-on-year. Weakness
ex-China is less consequential for price formation in iron ore than in other
commodities, with China's 1.1 billion tonne import requirement set
against Japan's 120 Mt, Europe's 100 Mt and South Korea's 75 Mt, for example
(all figures rounded).
The Platts Premium Low-Volatile Metallurgical Coal price index actually
increased during the first few weeks of the COVID-19 outbreak, partly reflecting
supply disruptions in China, Mongolia, Australia and elsewhere. However, as
COVID-19 began to spread to the major importing regions of Europe, India and
developed Asia, the demand side of the equation has begun to outweigh
constrained supply. As the velocity of demand disruption accelerated in late
March 2020 and early April 2020, prices have returned to the lows seen in the
second half of the 2019 calendar year. The geographic diversification of
metallurgical coal demand is a long term advantage but an impediment under
today's unique circumstances.
Copper prices fell sharply to levels close to cost support in March 2020 amidst
depressed macro investor sentiment. They have since stabilised a little above
the March lows. Our judgement, informed by our regular customer engagements, is
that the decline in ex-China 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 (approximately 20 per cent versus approximately 10 per cent), although
recent trends within our customer base have been promising relative to top-down
expectations. On the supply side, evidence of both economic curtailments and
COVID-19 related disruptions have emerged. We note that marginal sources of
supply behaved quite rationally during the 2015/16 downturn, with a number of
smaller, higher cost operations across multiple continents choosing to
curtail/(7)/. Additionally, we observe that prices that are challenging for
higher cost mines are also associated with lower availability of scrap. This is
another mechanism whereby the copper market dynamically rebalances at times of
stress.
Crude oil fundamentals shifted abruptly in March 2020 as the result of
collapsing transport activity on the demand side and the unexpected flip of the
OPEC Plus grouping from supply discipline to a price war. After crashing in
March 2020, prices have exhibited considerable two-way volatility in April 2020,
with speculation of a grand bargain to curtail global supply offset by the
physical reality of the current glut. Notwithstanding the April 9 2020 agreement
by OPEC Plus to cut output by 10 MMbpd, with possibly more to come from G-20
producers, such is the scale of the demand loss that global storage capacity is
expected to be tested over coming weeks and months. It is possible that
differentials for inland crudes that are disadvantaged with respect to storage
availability will remain historically wide over this phase of market adjustment.
Large and small producers alike have announced sharp cuts in capital spending in
response to the price decline.
Average realised prices
The average realised prices achieved for our major commodities are summarised
below.
--------------------------------------------------------------------------------
BHP Operational Review for 5
the nine months ended 31 March 2020
Mar Q20 Mar YTD20
vs vs
Average realised prices/(i)/ Mar YTD20 Mar Q20 Dec H19 FY19 Dec H19 FY19
---------------------------- --------- ------- ------- ------ ------- ---------
Oil (crude and condensate) (US$/bbl)...... 57.63 51.19 60.64 66.59 (16%) (13%)
Natural gas (US$/Mscf)/(ii)/.............. 4.07 3.56 4.26 4.55 (16%) (11%)
LNG (US$/Mscf)............................ 7.62 7.61 7.62 9.43 0% (19%)
Copper (US$/lb)........................... 2.43 2.08 2.60 2.62 (20%) (7%)
Iron ore (US$/wmt, FOB)................... 76.97 74.28 78.30 66.68 (5%) 15%
Metallurgical coal (US$/t)................ 138.31 132.72 140.94 179.67 (6%) (23%)
Hard coking coal (US$/t)/(iii)/......... 151.35 145.69 154.01 199.61 (5%) (24%)
Weak coking coal (US$/t)/(iii)/......... 98.59 93.36 101.06 130.18 (8%) (24%)
Thermal coal (US$/t)/(iv)/................ 59.42 61.13 58.55 77.90 4% (24%)
Nickel metal (US$/t)...................... 14,552 12,644 15,715 12,462 (20%) 17%
(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 Cerrejon. Includes thermal coal sales from
metallurgical coal mines.
The oil sales were linked to West Texas intermediate (WTI) or Brent
based contracts, with price differentials applied for quality, locational and
transportation costs. The large majority of iron ore shipments were linked to
the index price for the month of shipment, with price differentials
predominantly a reflection of market fundamentals and product quality. The large
majority of metallurgical coal and energy coal exports were linked to the index
price for the month of shipment or sold on the spot market at fixed or
index-linked prices, with price differentials reflecting product quality.
Petroleum
Production
Mar YTD20 Mar Q20 Mar Q20
vs vs vs
Mar YTD20 Mar Q20 Mar YTD19 Mar Q19 Dec Q19
--------- ------- --------- ------- -------
Crude oil, condensate and natural gas liquids (MMboe)... 38 12 (10%) (12%) (14%)
Natural gas (bcf)....................................... 270 81 (10%) (13%) (9%)
Total petroleum production (MMboe)...................... 82 25 (10%) (13%) (11%)
Petroleum - Total petroleum production decreased by 10 per cent to 82 MMboe.
Guidance for the 2020 financial year remains unchanged at between 110 and 116
MMboe, with volumes expected to be at the bottom of the guidance range.
Potential impacts from COVID-19, including weakness in customer demand, in the
June 2020 quarter represent possible downside risk to full year guidance.
Crude oil, condensate and natural gas liquids production declined by 10 per cent
to 38 MMboe due to the impacts of Tropical Storm Barry in the Gulf of Mexico,
Tropical Cyclone Damien at our North West Shelf operations and natural field
decline across the portfolio. 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 10 per cent to 270 bcf, reflecting a
decrease in tax barrels at Trinidad and Tobago in accordance with the terms of
our Production Sharing Contract, impacts of maintenance and Tropical Cyclone
Damien at North West Shelf, reduced domestic gas sales in Western Australia and
natural field decline across the portfolio.
--------------------------------------------------------------------------------
BHP Operational Review for 6
the nine months ended 31 March 2020
Projects
Capital Initial
Project and expenditure production
ownership US$M target date Capacity Progress
----------- ----------- ----------- -------------------------------------- ---------------------------------------
Atlantis Phase 3 696 CY20 New subsea production system that On schedule and budget. The overall
(US Gulf of Mexico) will tie back to the existing project is 53% complete.
44% (non-operator) Atlantis facility, with capacity to
produce up to 38,000 gross barrels
of oil equivalent per day.
Ruby 283 CY21 Five production wells tied back into On schedule and budget. The overall
(Trinidad & Tobago) existing operated processing project is 23% complete.
68.46% (operator) 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.
Mad Dog Phase 2 2,154 CY22 New floating production facility with On schedule and budget. The overall
(US Gulf of Mexico) the capacity to produce up to 140,000 project is 70% complete.
23.9% (non-operator) gross barrels of crude oil per day.
The Bass Strait West Barracouta project is on schedule and budget, and is
expected to achieve first production in the 2021 calendar year.
Across each of our projects currently in execution, additional measures have
been put in place to protect workforce health and safety as a result of
COVID-19. These projects are tracking to plan and at this point, we do not
expect an impact on the timing of first production.
In light of the recent significant disruption to oil and gas markets and
heightened risk of interruption to field activity, we are reviewing our capital,
operating, exploration and appraisal expenditure programs, and where relevant,
together with our joint venture partners.
--------------------------------------------------------------------------------
BHP Operational Review for 7
the nine months ended 31 March 2020
While we are completing our five year plan, we can highlight the following
flexibility for the 2021 financial year:
. The confirmed delay of the Scarborough gas development to the 2021 calendar
year, as announced by Woodside (the operator) on 27 March 2020. A final
investment decision by BHP is now expected to be approximately 12 months
later than the original timing, which was from the middle of the 2020
calendar year.
. The potential deferral of approximately US$200 million non-committed
exploration and appraisal expenditure in the 2021 financial year,
representing approximately 30 per cent of the average annual exploration
spend over the last two years.
. In conjunction with joint venture partners, the potential delay of several
small and medium sized projects with short lifecycles, to a time when we
expect prices to be higher.
These actions will result in the deferral of production in the 2021 and 2022
financial years, however the reduction in capital projects across the sector may
provide the opportunity to further enhance the cost competitiveness of these
options.
Beyond these projects, our Petroleum growth portfolio includes many attractive
opportunities progressing through development studies and related activities,
which do not have material investment levels in the 2021 financial year,
including Trion and Trinidad and Tobago North.
We will provide updated capital and exploration expenditure guidance for the
2021 financial year with our full year Results Announcement released on 18
August 2020.
Petroleum exploration
No exploration and appraisal wells were drilled during the March 2020 quarter.
During the March 2020 quarter, the Deepwater Invictus rig completed regulatory
abandonment work on Shenzi appraisal and exploration boreholes and is currently
in the US Gulf of Mexico undergoing maintenance. The Deepwater Invictus rig is
anticipated to mobilise to Trinidad and Tobago in the middle of the 2020
calendar year to drill one exploration well, Broadside, in our Southern licences
as part of Phase 5 of our Deepwater drilling campaign, subject to any potential
COVID-19 constraints on mobilisation.
In the US Gulf of Mexico, we were the apparent high bidder on blocks GC80 and
GC123 in the central Gulf of Mexico, building on our Green Canyon position.
Additionally, we were the apparent high bidder on blocks AC36, AC80, AC81 and
GB721, which would expand our position in the western Gulf of Mexico.
Petroleum exploration expenditure for the nine months ended March 2020 was
US$405 million, of which US$246 million was expensed. A US$0.6 billion
exploration and appraisal program is being executed for the 2020 financial year
and reflects a reduction of US$0.1 billion from prior guidance as a result of
slightly later timing for the commencement of our Phase 5 Deepwater drilling
campaign in Trinidad and Tobago.
--------------------------------------------------------------------------------
BHP Operational Review for 8
the nine months ended 31 March 2020
Copper
Production
Mar YTD20 Mar Q20 Mar Q20
vs vs vs
Mar YTD20 Mar Q20 Mar YTD19 Mar Q19 Dec Q19
--------- ------- --------- ------- -------
Copper (kt)......... 1,310 425 5% 1% (7%)
Zinc (t)............ 74,726 31,789 (1%) 52% 41%
Uranium (t)......... 2,662 776 3% (30%) (18%)
Copper - Total copper production increased by five per cent to 1,310 kt.
Guidance for the 2020 financial year is broadly unchanged for our operated
assets and reflects lower volumes at Olympic Dam. Guidance for Antamina is under
review due to impacts from COVID-19.
Escondida copper production increased by five per cent to 891 kt, supported by
record average concentrator throughput of 367 ktpd, which offset expected grade
decline. Strong concentrator throughput was driven by ongoing improvements in
maintenance and operational performance and was achieved despite Escondida
operating with a reduced headcount on site during March 2020. Guidance for the
2020 financial year remains unchanged at between 1,160 and 1,230 kt. Continued
improvements in concentrator throughput are expected to offset a reduction of
approximately five per cent in the copper grade of concentrator feed in the 2020
financial year versus the prior year.
Pampa Norte copper production increased by nine per cent to 188 kt, with record
ore stacked at Spence in the nine months to March 2020. Guidance for the 2020
financial year remains unchanged at between 230 and 250 kt, including expected
grade decline of approximately 10 per cent.
For the June 2020 quarter, our Chilean copper operations are expected to operate
with a reduction of more than 30 per cent in their operational workforces as we
have prioritised critical roles for operational continuity and incorporated a
series of planned preventative measures for COVID-19.
Olympic Dam copper production increased by eight per cent to 124 kt as a result
of the prior period acid plant outage, 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. Production for the 2020 financial year is now expected
to be approximately 170 kt. The physical replacement of the refinery crane and
commissioning planned for commencement in the March 2020 quarter, has been
impacted by COVID-19 restrictions, and completion is now expected by the end of
the 2020 calendar year.
Antamina copper production decreased by three per cent to 107 kt and zinc
production decreased by one per cent to 75 kt, reflecting lower copper head
grades. During March 2020, Antamina operated with a reduced workforce in
response to COVID-19, before being given Government approval to demobilise the
workforce and then taking a decision on 14 April 2020 to temporarily suspend operations.
Timing on resuming operations at Antamina is uncertain and guiidance for the 2020 financial
year is under review. The Peruvian state of emergency has been extended until 26 April 2020.
Projects
Capital Initial
Project and expenditure production
ownership US$M target date Capacity Progress
----------- ----------- ----------- -------------------------------------- ------------------------------------
Spence Growth Option.... 2,460 Under New 95 ktpd concentrator is expected On budget.
(Chile) review to increase payable copper in The schedule is under review.
100% concentrate production by ~185 ktpa in The overall project is 91% complete.
the first 10 years of operation and
extend the mining operations by more
than 50 years.
The Spence Growth Option is continuing to progress, however the schedule is
under review with first production potentially delayed until early in the 2021
calendar year as a result of lower headcount on site, reflecting the decision to
reduce the occupancy at the construction camp, to facilitate social distancing
protocols. As a result of the reduction of the on-site workforce, the
commissioning of the desalination plant could potentially be delayed a few
months until the first
--------------------------------------------------------------------------------
BHP Operational Review for 9
the nine months ended 31 March 2020
half of the 2021 financial year. The capitalisation of the lease will follow
commissioning, with an update on the timing and recognition on the balance sheet
to be provided in the June 2020 Quarter Operational Review to be released on 21
July 2020.
Iron Ore
Production
Mar YTD20 Mar Q20 Mar Q20
vs vs vs
Mar YTD20 Mar Q20 Mar YTD19 Mar Q19 Dec Q19
--------- ------- --------- -------- -------
Iron ore production (kt)...... 181,430 60,030 3% 7% (1%)
--------- ------- --------- -------- -------
Iron ore - Total iron ore production increased by three per cent to 181 Mt (205
Mt on a 100 per cent basis). Guidance for the 2020 financial year remains
unchanged at between 242 and 253 Mt (273 and 286 Mt on a 100 per cent basis).
WAIO achieved record production, with higher volumes reflecting record
production at Jimblebar and the impact of the train derailment in the previous
period. Weather impacts from Tropical Cyclone Blake and Tropical Cyclone Damien
were offset by strong performance across the supply chain, including improved
car dumper reliability, with completion of a major car dumper maintenance
campaign in October 2019, implementation of improved maintenance strategies, and
delivery of consistent performance across our mine operations. This strong
performance has resulted in healthy stock levels across our mines.
Consistent with our revised mine plan, Jimblebar fines Fe grade has improved
during the March 2020 quarter, with the typical specification expected to return
to above 60 per cent in the June 2020 quarter.
WAIO continues to focus on operating safely and has incorporated a series of
preventative measures to help reduce the spread of COVID-19. We have reduced the
number of workers on our sites, with those not critical to operations working
from home. To meet border controls introduced by the Western Australian
Government, over 900 employees and contractors in business critical roles have
been temporarily relocated to Western Australia, including the majority of
specialist roles who are based interstate, such as train drivers and train load
out operators.
Mining and processing operations at Samarco remain suspended following the
failure of the Fundao tailings dam and Santarem water dam on 5 November 2015.
Approval of the Corrective Operating Licence (LOC) for Samarco's operating
activities at its Germano Complex was received in October 2019. As a result of
precautions taken for COVID-19, operation readiness activities for restart have
been slowed, with only critical activities being undertaken. 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
Capital Initial
Project and expenditure production
ownership US$M target date Capacity Progress
----------- ----------- ----------- -------------------------------------- ------------------------------------
South Flank ........... 3,061 CY21 Sustaining iron ore mine to replace On schedule and budget.
(Australia) production from the 80 Mtpa (100 per The overall project is 66% complete.
85% cent basis) Yandi mine.
The South Flank project is tracking well and remains on schedule for first
production in the 2021 calendar year. As at the end of March 2020, approximately
80 per cent of the contracts awarded are being performed in Australia, of which
95 per cent is within Western Australia. Some interstate employees have
relocated to Western Australia to help with the project delivery. Consistent
with our operations, the South Flank project continues to implement increased
measures to conduct safe operations in compliance with strict health and travel
guidelines put in place to help reduce the spread of COVID-19.
--------------------------------------------------------------------------------
BHP Operational Review for 10
the nine months ended 31 March 2020
Coal
Production
Mar YTD20 Mar Q20 Mar Q20
vs vs vs
Mar YTD20 Mar Q20 Mar YTD19 Mar Q19 Dec Q19
--------- ------- --------- ------- -------
Metallurgical coal (kt)......... 29,504 9,222 (3%) (7%) (16%)
Energy coal (kt)................ 17,513 5,788 (13%) (14%) (5%)
Metallurgical coal - Metallurgical coal production was down three per cent to 30
Mt (52 Mt on a 100 per cent basis). Guidance for the 2020 financial year remains
unchanged at between 41 and 45 Mt (73 and 79 Mt on a 100 per cent basis), with
volumes now expected to be at the lower end of the guidance range following
significantly higher rainfall during January and February 2020, by a factor of
almost two at Peak Downs and almost three at Blackwater compared with historical averages.
Potential impacts from COVID-19, including weak demand as a result of customer disruptions,
in the June 2020 quarter, represent possible downside risk to full year guidance.
At Queensland Coal, strong underlying operational performance, was offset by
planned major wash plant shutdowns in the first half of the year and significant
wet weather impacts in the March 2020 quarter. Blackwater, our largest mine,
was the most severely impacted, with five site evacuations
following the flooding of pits and haul roads during January and February 2020.
Mining operations at Blackwater are expected to be stabilised in the June 2020
quarter and to return to full capacity during the September 2020 quarter as
inventory levels are rebuilt. We are implementing further measures to reduce the
risk of COVID-19 and meet new restrictions on interstate travel, including
temporarily relocating workers and amending rosters to minimise travel within
Queensland, while further protecting the community and facilitating the
continuation of safe mining operations.
Energy coal - Energy coal production decreased by 13 per cent to 18 Mt. As a
result of actions by the Colombian Government to contain the spread of COVID-19,
a decision has been made to place Cerrejon on temporary care and maintenance,
and guidance for the 2020 financial year is now under review.
New South Wales Energy Coal production decreased by 13 per cent to 11 Mt as a
result of the change in product strategy to focus on higher quality products. In
addition, reduced air quality at our operations negatively impacted production
in December 2019 and January 2020, with wet weather further constraining
operations during February 2020. Guidance for the 2020 financial year remains
unchanged at between 15 and 17 Mt. The COVID-19 situation continues to be monitored with
preventative measures in place to protect the workforce, including reduced site
travel, social distancing practices and strict hygiene protocols.
Cerrejon production decreased by 12 per cent to 6 Mt mainly due to a focus on
higher quality products, in line with the mine plan. On 23 March 2019, following
the Colombian Government's declaration of a 15-day national quarantine to
contain the spread of COVID-19, a decision was made to ramp down operations at
Cerrejon and place it on temporary care and maintenance. Discussions about the
timing of production resumption are ongoing. Guidance for the 2020 financial
year is under review.
--------------------------------------------------------------------------------
BHP Operational Review for 11
the nine months ended 31 March 2020
Other
Nickel production
Mar YTD20 Mar Q20 Mar Q20
vs vs vs
Mar YTD20 Mar Q20 Mar YTD19 Mar Q19 Dec Q19
--------- ------- --------- ------- -------
Nickel (kt)..................... 56.2 20.9 (4%) 9% 53%
Nickel - Nickel West production decreased by four per cent to 56 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. With the transition to new mines underway, first ore was
achieved at Yakabindie, a new open-cut development at Mt Keith, during the
quarter. Production for the 2020 financial year is now expected to be
lower than the 2019 financial year due to the extended shutdown. We continue to
take action to reduce the risk of COVID-19 and safely conduct operations in
compliance with strict health and travel guidelines, including the reduction in the
number of people at our operational facilities and sites through flexible shifts.
Operations Services - In Australia, we have created over 2,000 permanent jobs,
with Operations Services deployed at 14 locations across WAIO, Queensland Coal
and NSWEC and successfully accelerating safety and productivity outcomes.
Potash project
Project and Investment
ownership US$M Scope Progress
----------- ---------- ------------------------------------------------- ------------------------------------------
Jansen Potash......... 2,700 Investment to finish the excavation and lining The project is 85% complete. Shaft
(Canada) of the production and service shafts, and to completion timing is under review.
100% continue the installation of essential surface
infrastructure and utilities.
In March 2020, final shaft lining work at Jansen for two shafts was reduced to
focus on one shaft at a time, with reduced crews. This reduction in activity was
taken as part of our COVID-19 response plan and was aligned with the Provincial
and Federal Government of Canada's emergency measures for COVID-19 and reflects
a reduction in the number of contractors and the need for out-of-Province
workers on site. Timing for completion of the shafts continues to be under
review. BHP will continue to assess the impacts of COVID-19 and the temporary
reduction in activity.
Minerals exploration
Minerals exploration expenditure for the nine months ended March 2020 was US$124 million,
of which US$89 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 remains
on track to be completed in the June 2020 quarter. This follows encouraging
results from the previous drilling phases, which confirmed high-grade
mineralised intercepts of copper, with associated gold, uranium and silver.
--------------------------------------------------------------------------------
BHP Operational Review for 12
the nine months ended 31 March 2020
Variance analysis relates to the relative performance of BHP and/or its
operations during the nine months ended March 2020 compared with the nine months
ended March 2019, 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 2019 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) The inclusion of derivatives (US$0.4 billion) and the application of IFRS 16
Leases (US$1.9 billion) increased net debt by US$2.3 billion to US$12.8
billion at 31 December 2019, compared to US$9.2 billion reported at 30 June
2019. Figures exclude cash inflows and outflows since 31 December 2019,
including the dividend payment of US$3.3 billion determined in respect of
December 2019 half year paid on 24 March 2020. In addition, the Group has
access to a US$5.5 billion undrawn revolving credit facility. There are no
covenants on our revolving credit facility.
(3) All data presented in this report is the latest available as of 13 April,
2020.
(4) Based on global tracking activity conducted by Exante Data.
(5) 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.
(6) Incremental to apparent demand is around 35 Mt in direct net exports of
steel.
(7) Wood Mackenzie documents 848 kt of annualised economic supply disruptions,
from 36 operations, across the 2015 and 2016 calendar years.
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, Cerrejon, 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
the significant volatility, uncertainty and disruption caused by the COVID-19
outbreak.
--------------------------------------------------------------------------------
BHP Operational Review for 13
the nine months ended 31 March 2020
Further information on BHP can be found at: bhp.com
Sponsor: UBS South Africa (Pty) Limited
Authorised for lodgement by:
Rachel Agnew
Company Secretary
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: +61 411 071 715 Tel: +61 3 9609 2222 Mobile: +61 499 249 005
Europe, Middle East and Africa Europe, Middle East and Africa
Neil Burrows Elisa Morniroli
Tel: +44 20 7802 7484 Mobile: +44 7786 661 683 Tel: +44 20 7802 7611 Mobile: +44 7825 926 646
Americas Americas
Judy Dane Brian Massey
Tel: +1 713 961 8283 Mobile: +1 713 299 5342 Tel: +1 713 296 7919 Mobile: +1 832 870 7677
BHP Group Limited ABN 49 004 028 077 BHP Group plc Registration number 3196209
LEI WZE1WSENV6JSZFK0JC28 LEI 549300C116EOWV835768
Registered in Australia Registered in England and Wales
Registered Office: Level 18, 171 Collins Street Registered Office: Nova South, 160 Victoria Street
Melbourne Victoria 3000 Australia London SW1E 5LB United Kingdom
Tel +61 1300 55 4757 Fax +61 3 9609 3015 Tel +44 20 7802 4000 Fax +44 20 7802 4111
Members of the BHP Group which is
headquartered in Australia
LOGO
Follow us on social media
--------------------------------------------------------------------------------
BHP Operational Review for 14
the nine months ended 31 March 2020
Production summary
Quarter ended Year to date
------------------------------------ ---------------
Mar Jun Sep Dec Mar Mar Mar
BHP 2019 2019 2019 2019 2020 2020 2019
interest ------ ------- ------- ------ ------ ------- -------
Petroleum /(1)/
Petroleum
Production
Crude oil, condensate and NGL (Mboe)... 13,236 13,366 12,507 13,412 11,589 37,508 41,820
Natural gas (bcf)...................... 92.9 97.8 100.4 88.7 80.7 269.8 299.1
------ ------- ------- ------ ------ ------- -------
Total (Mboe)........................... 28,719 29,666 29,240 28,195 25,039 82,475 91,670
------ ------- ------- ------ ------ ------- -------
Copper /(2)/
Copper
Payable metal in concentrate (kt)
Escondida /(3)/........................ 57.5% 205.4 224.1 237.0 240.3 220.1 697.4 658.0
Antamina............................... 33.8% 34.5 37.4 37.6 36.2 32.9 106.7 109.8
------ ------- ------- ------ ------ ------- -------
Total.................................. 239.9 261.5 274.6 276.5 253.0 804.1 767.8
------ ------- ------- ------ ------ ------- -------
Cathode (kt)
Escondida /(3)/........................ 57.5% 62.4 63.5 55.9 68.4 69.6 193.9 189.7
Pampa Norte /(4)/...................... 100% 67.2 74.1 63.9 60.0 64.3 188.2 172.4
Olympic Dam............................ 100% 50.2 45.2 35.1 50.5 38.4 124.0 115.1
------ ------- ------- ------ ------ ------- -------
Total.................................. 179.8 182.8 154.9 178.9 172.3 506.1 477.2
------ ------- ------- ------ ------ ------- -------
------ ------- ------- ------ ------ ------- -------
Total copper (kt)......................... 419.7 444.3 429.5 455.4 425.3 1,310.2 1,245.0
------ ------- ------- ------ ------ ------- -------
Lead
Payable metal in concentrate (t)
Antamina............................... 33.8% 456 770 405 383 621 1,409 1,619
------ ------- ------- ------ ------ ------- -------
Total.................................. 456 770 405 383 621 1,409 1,619
------ ------- ------- ------ ------ ------- -------
Zinc
Payable metal in concentrate (t)
Antamina............................... 33.8% 20,848 22,469 20,454 22,483 31,789 74,726 75,643
------ ------- ------- ------ ------ ------- -------
Total.................................. 20,848 22,469 20,454 22,483 31,789 74,726 75,643
------ ------- ------- ------ ------ ------- -------
Gold
Payable metal in concentrate (troy oz)
Escondida /(3)/........................ 57.5% 73,998 74,704 48,801 49,209 35,990 134,000 211,302
Olympic Dam (refined gold)............. 100% 28,609 37,032 43,205 35,382 33,235 111,822 69,936
------ ------- ------- ------ ------ ------- -------
Total.................................. 102,607 111,736 92,006 84,591 69,225 245,822 281,238
------ ------- ------- ------ ------ ------- -------
Silver
Payable metal in concentrate (troy koz)
Escondida /(3)/........................ 57.5% 2,189 2,074 1,626 1,798 1,390 4,814 6,756
Antamina............................... 33.8% 1,062 1,209 1,101 1,173 1,216 3,490 3,549
Olympic Dam (refined silver)........... 100% 230 268 245 203 241 689 655
------ ------- ------- ------ ------ ------- -------
Total.................................. 3,481 3,551 2,972 3,174 2,847 8,993 10,960
------ ------- ------- ------ ------ ------- -------
Uranium
Payable metal in concentrate (t)
Olympic Dam............................ 100% 1,106 975 937 949 776 2,662 2,590
------ ------- ------- ------ ------ ------- -------
Total.................................. 1,106 975 937 949 776 2,662 2,590
------ ------- ------- ------ ------ ------- -------
Molybdenum
Payable metal in concentrate (t)
Antamina............................... 33.8% 82 178 405 527 491 1,423 963
------ ------- ------- ------ ------ ------- -------
Total.................................. 82 178 405 527 491 1,423 963
------ ------- ------- ------ ------ ------- -------
--------------------------------------------------------------------------------
BHP Operational Review for 15
the nine months ended 31 March 2020
Production summary
Quarter ended Year to date
------------------------------------ ---------------
Mar Jun Sep Dec Mar Mar Mar
BHP 2019 2019 2019 2019 2020 2020 2019
interest ------ ------- ------- ------ ------ ------- -------
Iron Ore
Iron Ore
Production (kt) /(5)/
Newman................................. 85% 15,608 17,058 16,316 15,766 16,449 48,531 49,564
Area C Joint Venture................... 85% 11,627 13,837 12,620 12,727 12,179 37,526 33,603
Yandi Joint Venture.................... 85% 15,214 17,486 17,827 14,857 17,491 50,175 47,711
Jimblebar /(6)/........................ 85% 13,658 14,209 14,239 17,045 13,911 45,195 44,337
Wheelarra.............................. 85% 10 5 3 -- -- 3 154
Samarco................................ 50% -- -- -- -- -- -- --
------ ------- ------- ------ ------ ------- -------
Total.................................. 56,117 62,595 61,005 60,395 60,030 181,430 175,369
------ ------- ------- ------ ------ ------- -------
Coal
Metallurgical coal
Production (kt) /(7)/
BMA.................................... 50% 7,608 9,090 6,905 8,723 6,869 22,497 23,046
BHP Mitsui Coal /(8)/.................. 80% 2,269 2,804 2,453 2,201 2,353 7,007 7,461
------ ------- ------- ------ ------ ------- -------
Total.................................. 9,877 11,894 9,358 10,924 9,222 29,504 30,507
------ ------- ------- ------ ------ ------- -------
Energy coal
Production (kt)
Australia.............................. 100% 4,552 5,412 3,592 3,763 3,810 11,165 12,845
Colombia............................... 33.3% 2,199 2,017 2,055 2,315 1,978 6,348 7,213
------ ------- ------- ------ ------ ------- -------
Total.................................. 6,751 7,429 5,647 6,078 5,788 17,513 20,058
------ ------- ------- ------ ------ ------- -------
Other
Nickel
Saleable production (kt)
Nickel West /(9)/...................... 100% 19.2 28.7 21.6 13.7 20.9 56.2 58.7
------ ------- ------- ------ ------ ------- -------
Total.................................. 19.2 28.7 21.6 13.7 20.9 56.2 58.7
------ ------- ------- ------ ------ ------- -------
Cobalt
Saleable production (t)
Nickel West............................ 100% 194 302 211 120 132 463 597
------ ------- ------- ------ ------ ------- -------
Total.................................. 194 302 211 120 132 463 597
------ ------- ------- ------ ------ ------- -------
(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.
--------------------------------------------------------------------------------
BHP Operational Review for 16
the nine months ended 31 March 2020
Production and sales report
Quarter ended Year to date
------------------------------------------- ----------------
Mar Jun Sep Dec Mar Mar Mar
2019 2019 2019 2019 2020 2020 2019
------- ------- ------- ------- ------- ------- -------
Petroleum /(1)/
Bass Strait
Crude oil and condensate....................... (Mboe) 893 1,246 1,409 1,427 926 3,762 3,947
NGL............................................ (Mboe) 849 1,299 1,810 1,405 958 4,173 4,136
Natural gas.................................... (bcf) 21.0 30.6 36.6 27.8 18.4 82.8 81.3
------- ------- ------- ------- ------- ------- -------
Total petroleum products....................... (Mboe) 5,242 7,645 9,319 7,465 4,957 21,741 21,633
------- ------- ------- ------- ------- ------- -------
North West Shelf
Crude oil and condensate....................... (Mboe) 1,431 1,357 1,337 1,376 1,266 3,979 4,465
NGL............................................ (Mboe) 193 189 202 200 191 593 641
Natural gas.................................... (bcf) 36.6 34.8 32.1 32.9 35.0 100.0 110.7
------- ------- ------- ------- ------- ------- -------
Total petroleum products....................... (Mboe) 7,724 7,346 6,889 7,059 7,287 21,235 23,556
------- ------- ------- ------- ------- ------- -------
Pyrenees
Crude oil and condensate....................... (Mboe) 940 1,001 979 934 917 2,830 2,323
------- ------- ------- ------- ------- ------- -------
Total petroleum products....................... (Mboe) 940 1,001 979 934 917 2,830 2,323
------- ------- ------- ------- ------- ------- -------
Other Australia /(2)/
Crude oil and condensate....................... (Mboe) 6 7 8 1 1 10 21
Natural gas.................................... (bcf) 13.0 12.2 12.0 11.4 11.2 34.6 40.7
------- ------- ------- ------- ------- ------- -------
Total petroleum products....................... (Mboe) 2,173 2,040 2,008 1,901 1,874 5,783 6,804
------- ------- ------- ------- ------- ------- -------
Atlantis /(3)/
Crude oil and condensate....................... (Mboe) 3,888 3,607 2,759 3,525 2,769 9,053 10,880
NGL............................................ (Mboe) 275 248 192 245 178 615 758
Natural gas.................................... (bcf) 2.0 2.2 1.4 1.8 1.3 4.5 5.4
------- ------- ------- ------- ------- ------- -------
Total petroleum products....................... (Mboe) 4,496 4,222 3,184 4,070 3,170 10,424 12,538
------- ------- ------- ------- ------- ------- -------
Mad Dog /(3)/
Crude oil and condensate....................... (Mboe) 1,258 1,246 1,096 1,202 1,272 3,570 3,686
NGL............................................ (Mboe) 58 23 49 52 55 156 173
Natural gas.................................... (bcf) 0.2 0.2 0.2 0.2 0.2 0.6 0.6
------- ------- ------- ------- ------- ------- -------
Total petroleum products....................... (Mboe) 1,349 1,302 1,178 1,287 1,355 3,821 3,959
------- ------- ------- ------- ------- ------- -------
Shenzi /(3)/
Crude oil and condensate....................... (Mboe) 1,881 1,725 1,345 1,671 1,645 4,661 5,921
NGL............................................ (Mboe) 112 (2) 70 94 94 258 355
Natural gas.................................... (bcf) 0.4 0.4 0.2 0.3 0.3 0.8 1.2
------- ------- ------- ------- ------- ------- -------
Total petroleum products....................... (Mboe) 2,060 1,790 1,448 1,815 1,791 5,054 6,476
------- ------- ------- ------- ------- ------- -------
Trinidad/Tobago
Crude oil and condensate....................... (Mboe) 284 235 175 166 97 438 931
Natural gas.................................... (bcf) 19.5 17.3 17.9 14.2 14.0 46.1 57.5
------- ------- ------- ------- ------- ------- -------
Total petroleum products....................... (Mboe) 3,534 3,118 3,158 2,533 2,427 8,118 10,514
------- ------- ------- ------- ------- ------- -------
Other Americas /(3) (4)/
Crude oil and condensate....................... (Mboe) 284 272 185 230 344 759 709
NGL............................................ (Mboe) 18 3 2 4 22 28 25
Natural gas.................................... (bcf) 0.2 0.1 -- 0.1 0.3 0.4 0.3
------- ------- ------- ------- ------- ------- -------
Total petroleum products....................... (Mboe) 335 292 187 251 412 850 784
------- ------- ------- ------- ------- ------- -------
UK /(5)/
Crude oil and condensate....................... (Mboe) -- -- -- -- -- -- 72
NGL............................................ (Mboe) -- -- -- -- -- -- 42
Natural gas.................................... (bcf) -- -- -- -- -- -- 1.4
------- ------- ------- ------- ------- ------- -------
Total petroleum products....................... (Mboe) -- -- -- -- -- -- 347
------- ------- ------- ------- ------- ------- -------
--------------------------------------------------------------------------------
BHP Operational Review for 17
the nine months ended 31 March 2020
Production and sales report
Quarter ended Year to date
------------------------------------------- ----------------
Mar Jun Sep Dec Mar Mar Mar
2019 2019 2019 2019 2020 2020 2019
------- ------- ------- ------- ------- ------- -------
Algeria
Crude oil and condensate....................... (Mboe) 866 910 889 880 854 2,623 2,735
------- ------- ------- ------- ------- ------- -------
Total petroleum products....................... (Mboe) 866 910 889 880 854 2,623 2,735
------- ------- ------- ------- ------- ------- -------
Petroleum /(1)/
Total production
Crude oil and condensate....................... (Mboe) 11,731 11,606 10,182 11,412 10,091 31,685 35,690
NGL............................................ (Mboe) 1,505 1,760 2,325 2,000 1,498 5,823 6,130
Natural gas.................................... (bcf) 92.9 97.8 100.4 88.7 80.7 269.8 299.1
------- ------- ------- ------- ------- ------- -------
Total.......................................... (Mboe) 28,719 29,666 29,240 28,195 25,039 82,475 91,670
------- ------- ------- ------- ------- ------- -------
(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.
--------------------------------------------------------------------------------
BHP Operational Review for 18
the nine months ended 31 March 2020
Production and sales report
Quarter ended Year to date
------------------------------------------- ----------------
Mar Jun Sep Dec Mar Mar Mar
2019 2019 2019 2019 2020 2020 2019
------- ------- ------- ------- ------- ------- -------
Copper
Metals production is payable metal unless otherwise stated.
Escondida, Chile /(1)/
Material mined.................................... (kt) 103,936 100,693 101,026 100,057 107,268 308,351 316,776
Sulphide ore milled............................... (kt) 32,027 32,519 33,956 33,659 33,440 101,055 93,047
Average concentrator head grade................... (%) 0.82% 0.86% 0.86% 0.87% 0.82% 0.85% 0.88%
Production ex mill................................ (kt) 216.9 230.9 245.0 246.1 230.0 721.1 678.7
Production
Payable copper.................................... (kt) 205.4 224.1 237.0 240.3 220.1 697.4 658.0
Copper cathode (EW)............................... (kt) 62.4 63.5 55.9 68.4 69.6 193.9 189.7
- Oxide leach..................................... (kt) 20.9 23.4 21.9 28.3 29.3 79.5 63.8
- Sulphide leach.................................. (kt) 41.5 40.1 34.1 40.1 40.2 114.4 125.8
------- ------- ------- ------- ------- ------- -------
Total copper...................................... (kt) 267.8 287.6 292.9 308.7 289.7 891.3 847.7
------- ------- ------- ------- ------- ------- -------
Payable gold concentrate.......................... (troy oz) 73,998 74,704 48,801 49,209 35,990 134,000 211,302
Payable silver concentrate........................ (troy koz) 2,189 2,074 1,626 1,798 1,390 4,814 6,756
Sales
Payable copper.................................... (kt) 212.0 223.4 222.2 248.3 212.0 682.5 657.7
Copper cathode (EW)............................... (kt) 56.6 67.5 52.3 70.6 65.9 188.8 182.1
Payable gold concentrate.......................... (troy oz) 73,999 74,704 48,801 49,209 35,990 134,000 211,303
Payable silver concentrate........................ (troy koz) 2,189 2,074 1,626 1,798 1,390 4,814 6,756
(1) Shown on a 100% basis. BHP interest in saleable production is 57.5%.
Pampa Norte, Chile
Cerro Colorado
Material mined.................................... (kt) 15,561 13,534 15,071 18,102 18,710 51,883 53,924
Ore milled........................................ (kt) 4,277 4,740 3,995 5,009 4,574 13,578 14,148
Average copper grade.............................. (%) 0.63% 0.64% 0.54% 0.57% 0.54% 0.55% 0.59%
Production
Copper cathode (EW)............................... (kt) 18.2 23.4 16.4 13.8 20.4 50.6 51.8
Sales
Copper cathode (EW)............................... (kt) 15.5 26.8 14.5 15.8 18.3 48.6 48.3
Spence
Material mined.................................... (kt) 18,632 19,213 21,040 23,132 23,304 67,476 63,300
Ore milled........................................ (kt) 4,376 5,224 5,635 5,133 5,191 15,959 15,446
Average copper grade.............................. (%) 1.03% 1.02% 0.95% 0.90% 0.87% 0.91% 1.12%
Production
Copper cathode (EW)............................... (kt) 49.0 50.7 47.5 46.2 43.9 137.6 120.6
Sales
Copper cathode (EW)............................... (kt) 46.1 55.0 46.7 44.3 44.8 135.8 114.9
--------------------------------------------------------------------------------
BHP Operational Review for 19
the nine months ended 31 March 2020
Production and sales report
Quarter ended Year to date
------------------------------------------- ----------------
Mar Jun Sep Dec Mar Mar Mar
2019 2019 2019 2019 2020 2020 2019
------- ------- ------- ------- ------- ------- -------
Copper (continued)
Metals production is payable metal unless otherwise stated.
Antamina, Peru
Material mined (100%)............................. (kt) 57,900 58,994 59,299 63,224 52,872 175,395 183,220
Sulphide ore milled (100%)........................ (kt) 11,466 12,864 13,121 13,637 12,906 39,664 37,575
Average head grades
- Copper.......................................... (%) 1.04% 1.02% 0.99% 0.96% 0.88% 0.94% 1.01%
- Zinc............................................ (%) 0.87% 0.86% 0.80% 0.82% 1.09% 0.90% 0.94%
Production
Payable copper.................................... (kt) 34.5 37.4 37.6 36.2 32.9 106.7 109.8
Payable zinc...................................... (t) 20,848 22,469 20,454 22,483 31,789 74,726 75,643
Payable silver.................................... (troy koz) 1,062 1,209 1,101 1,173 1,216 3,490 3,549
Payable lead...................................... (t) 456 770 405 383 621 1,409 1,619
Payable molybdenum................................ (t) 82 178 405 527 491 1,423 963
Sales
Payable copper.................................... (kt) 33.3 36.0 33.1 43.6 30.8 107.5 107.6
Payable zinc...................................... (t) 20,595 21,750 20,196 23,808 31,007 75,011 78,489
Payable silver.................................... (troy koz) 1,027 937 954 1,396 815 3,165 3,456
Payable lead...................................... (t) 749 296 844 432 151 1,427 2,010
Payable molybdenum................................ (t) 256 127 173 400 531 1,104 999
Olympic Dam, Australia
Material mined /(1)/.............................. (kt) 2,191 2,425 2,477 2,347 1,920 6,744 6,669
Ore milled........................................ (kt) 2,371 2,195 2,200 2,153 2,178 6,531 5,770
Average copper grade.............................. (%) 2.22% 2.30% 2.31% 2.36% 2.31% 2.33% 2.14%
Average uranium grade............................. (kg/t) 0.65 0.65 0.65 0.71 0.69 0.68 0.63
Production
Copper cathode (ER and EW)........................ (kt) 50.2 45.2 35.1 50.5 38.4 124.0 115.1
Payable uranium................................... (t) 1,106 975 937 949 776 2,662 2,590
Refined gold...................................... (troy oz) 28,609 37,032 43,205 35,382 33,235 111,822 69,936
Refined silver.................................... (troy koz) 230 268 245 203 241 689 655
Sales
Copper cathode (ER and EW)........................ (kt) 47.4 50.5 32.1 49.0 41.4 122.5 107.9
Payable uranium................................... (t) 550 1,427 778 638 702 2,118 2,143
Refined gold...................................... (troy oz) 27,574 36,133 40,073 36,507 36,956 113,536 66,531
Refined silver.................................... (troy koz) 241 257 250 202 259 711 634
(1) Material mined refers to run of mine ore mined and hoisted.
--------------------------------------------------------------------------------
BHP Operational Review for 20
the nine months ended 31 March 2020
Production and sales report
Quarter ended Year to date
------------------------------------------- ----------------
Mar Jun Sep Dec Mar Mar Mar
2019 2019 2019 2019 2020 2020 2019
------- ------- ------- ------- ------- ------- -------
Iron Ore
Iron ore production and sales are reported on a wet tonnes basis.
Pilbara, Australia
Production
Newman............................................ (kt) 15,608 17,058 16,316 15,766 16,449 48,531 49,564
Area C Joint Venture.............................. (kt) 11,627 13,837 12,620 12,727 12,179 37,526 33,603
Yandi Joint Venture............................... (kt) 15,214 17,486 17,827 14,857 17,491 50,175 47,711
Jimblebar /(1)/................................... (kt) 13,658 14,209 14,239 17,045 13,911 45,195 44,337
Wheelarra......................................... (kt) 10 5 3 -- -- 3 154
------- ------- ------- ------- ------- ------- -------
Total production.................................. (kt) 56,117 62,595 61,005 60,395 60,030 181,430 175,369
------- ------- ------- ------- ------- ------- -------
Total production (100%)........................... (kt) 63,609 71,133 69,257 68,044 68,168 205,469 198,466
------- ------- ------- ------- ------- ------- -------
Sales
Lump.............................................. (kt) 13,603 15,568 14,785 15,982 15,617 46,384 42,637
Fines............................................. (kt) 41,981 48,064 45,509 45,785 44,764 136,058 132,567
------- ------- ------- ------- ------- ------- -------
Total............................................. (kt) 55,584 63,632 60,294 61,767 60,381 182,442 175,204
------- ------- ------- ------- ------- ------- -------
Total sales (100%)................................ (kt) 62,853 72,173 68,291 69,481 68,439 206,211 198,032
------- ------- ------- ------- ------- ------- -------
(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 Fundao tailings dam and Santarem water dam on 5 November 2015.
--------------------------------------------------------------------------------
BHP Operational Review for 21
the nine months ended 31 March 2020
Production and sales report
Quarter ended Year to date
------------------------------------------- ----------------
Mar Jun Sep Dec Mar Mar Mar
2019 2019 2019 2019 2020 2020 2019
------- ------- ------- ------- ------- ------- -------
Coal
Coal production is reported on the basis of saleable product.
Queensland Coal
Production /(1)/
BMA
Blackwater ....................................... (kt) 1,484 1,735 1,045 1,734 1,063 3,842 4,868
Goonyella ........................................ (kt) 2,141 2,620 1,489 2,662 1,963 6,114 5,943
Peak Downs ....................................... (kt) 1,468 1,649 1,423 1,386 1,339 4,148 4,284
Saraji ........................................... (kt) 1,250 1,243 1,214 1,325 1,025 3,564 3,649
Daunia ........................................... (kt) 470 669 556 579 447 1,582 1,509
Caval Ridge ...................................... (kt) 795 1,174 1,178 1,037 1,032 3,247 2,793
------- ------- ------- ------- ------- ------- -------
Total BMA ........................................ (kt) 7,608 9,090 6,905 8,723 6,869 22,497 23,046
------- ------- ------- ------- ------- ------- -------
Total BMA (100%) ................................. (kt) 15,216 18,180 13,810 17,446 13,738 44,994 46,092
------- ------- ------- ------- ------- ------- -------
BHP Mitsui Coal /(2)/
South Walker Creek ............................... (kt) 1,429 1,624 1,378 1,196 1,577 4,151 4,570
Poitrel .......................................... (kt) 840 1,180 1,075 1,005 776 2,856 2,891
------- ------- ------- ------- ------- ------- -------
Total BHP Mitsui Coal ............................ (kt) 2,269 2,804 2,453 2,201 2,353 7,007 7,461
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Total Queensland Coal ............................ (kt) 9,877 11,894 9,358 10,924 9,222 29,504 30,507
------- ------- ------- ------- ------- ------- -------
Total Queensland Coal (100%) ..................... (kt) 17,485 20,984 16,263 19,647 16,091 52,001 53,553
------- ------- ------- ------- ------- ------- -------
Sales
Coking coal ...................................... (kt) 7,221 7,932 7,299 7,775 7,084 22,158 22,091
Weak coking coal ................................. (kt) 3,282 2,942 2,466 2,475 2,335 7,276 9,153
Thermal coal ..................................... (kt) 379 350 94 30 224 348 677
------- ------- ------- ------- ------- ------- -------
Total ............................................ (kt) 10,882 11,224 9,859 10,280 9,643 29,782 31,921
------- ------- ------- ------- ------- ------- -------
Total (100%) ..................................... (kt) 19,176 19,789 17,145 18,459 16,928 52,532 56,096
------- ------- ------- ------- ------- ------- -------
(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) 4,552 5,412 3,592 3,763 3,810 11,165 12,845
Sales
Export thermal coal............................... (kt) 3,529 5,181 3,075 3,952 3,403 10,430 11,887
Inland thermal coal............................... (kt) 302 975 567 -- -- 567 1,027
------- ------- ------- ------- ------- ------- -------
Total ............................................ (kt) 3,831 6,156 3,642 3,952 3,403 10,997 12,914
------- ------- ------- ------- ------- ------- -------
Cerrejon, Colombia
Production........................................ (kt) 2,199 2,017 2,055 2,315 1,978 6,348 7,213
Sales thermal coal - export....................... (kt) 2,200 2,245 2,069 2,261 2,028 6,358 7,086
--------------------------------------------------------------------------------
BHP Operational Review for 22
the nine months ended 31 March 2020
Production and sales report
Quarter ended Year to date
------------------------------------------- ----------------
Mar Jun Sep Dec Mar Mar Mar
2019 2019 2019 2019 2020 2020 2019
------- ------- ------- ------- ------- ------- -------
Other
Nickel production is reported on the basis of saleable product
Nickel West, Australia
Mt Keith
Nickel concentrate................................ (kt) 52.5 52.8 43.7 31.5 42.8 118.0 147.6
Average nickel grade.............................. (%) 19.2 19.5 18.3 17.3 15.8 17.1 19.3
Leinster
Nickel concentrate................................ (kt) 51.8 48.3 67.2 56.6 57.8 181.6 195.9
Average nickel grade.............................. (%) 9.3 10.8 10.0 8.6 9.8 9.5 8.6
Saleable production
Refined nickel /(1)(2)/........................... (kt) 17.6 19.9 17.4 11.1 16.6 45.1 53.7
Intermediates and nickel by-products /(1)(3)/..... (kt) 1.6 8.8 4.2 2.6 4.3 11.1 5.0
------- ------- ------- ------- ------- ------- -------
Total nickel /(1)/................................ (kt) 19.2 28.7 21.6 13.7 20.9 56.2 58.7
------- ------- ------- ------- ------- ------- -------
Cobalt by-products................................ (t) 194 302 211 120 132 463 597
Sales
Refined nickel /(1)(2)/........................... (kt) 17.9 19.9 17.0 10.6 16.8 44.4 54.5
Intermediates and nickel by-products /(1)(3)/..... (kt) 0.1 8.4 5.7 2.7 2.9 11.3 4.4
------- ------- ------- ------- ------- ------- -------
Total nickel /(1)/................................ (kt) 18.0 28.3 22.7 13.3 19.7 55.7 58.9
------- ------- ------- ------- ------- ------- -------
Cobalt by-products................................ (t) 194 302 212 131 132 475 597
(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.
--------------------------------------------------------------------------------
BHP Operational Review for 23
the nine months ended 31 March 2020
Date: 21-04-2020 07:05:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
