TIDMBHP
RNS Number : 9556R
BHP Group Limited
01 November 2023
Exchange release
1 November 2023
BHP Annual General Meeting 2023 speeches and presentation
The following documents are attached and will be presented at
the 2023 Annual General Meeting of BHP Group Limited to be held
today:
1. Chair address
2. CEO address
In addition, the AGM presentation has been submitted to the FCA
National Storage Mechanism and will shortly be available for
inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
These documents can also be accessed via BHP's website at
bhp.com/agm
Authorised for release by Stefanie Wilkinson, Group Company
Secretary.
Contacts
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Australia and Asia Australia and Asia
Gabrielle Notley John-Paul Santamaria
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Europe, Middle East and Africa Europe, Middle East and Africa
Neil Burrows James Bell
+44 7786 661 683 +44 7961 636 432
Americas Americas
Renata Fernandaz Monica Nettleton
+56 9 8229 5357 +1 (416) 518-6293
BHP Group Limited
ABN 49 004 028 077
LEI WZE1WSENV6JSZFK0JC28
Registered in Australia
Level 18, 171 Collins Street
Melbourne
Victoria 3000 Australia
Tel: +61 1300 55 4757 Fax: +61
3 9609 3015
BHP Group is headquartered in
Australia
bhp.com
BHP Group Limited AGM
1 November 2023
Ken Mackenzie, Chair
Welcome to everyone with us here in South Australia today and
watching online.
Our results for the 2023 financial year demonstrate BHP's focus
on consistently executing our strategy to deliver results.
Our operating performance and financial results were strong, and
we made good progress towards our social value targets and
goals.
We believe our company is well positioned to continue to create
value today, and for decades to come. I'd like to take this
opportunity to explain why, focusing on:
-- Our approach to safety, culture and capability
-- Our role in a sustainable global future
-- Our strong, consistent performance and returns, and
-- Our focus on social value
Safety and culture
At BHP, safety is our number one priority. The two tragic
fatalities this year at Western Australia Iron Ore and at Olympic
Dam were stark reminders of the reason why safety must always be
our number one priority.
Our commitment to the goal of zero fatalities and serious
injuries at BHP remains unwavering. We are continuing to drive our
safety culture to eliminate fatalities and serious injuries.
This safety culture goes beyond operational safety and includes
addressing sexual harassment, racism and bullying in our workplace.
We still have more work to do, but we are making progress on our
commitment to provide a safe, inclusive workplace culture where
everyone can bring the best of themselves to work.
Our role in a global future
Mining, and BHP, have a clear and undeniable role in the
critical global energy transition required for more sustainable
development.
Metals and minerals produced from mining are essential for
decarbonisation, the energy transition and to meet the demands of a
growing population, who are increasingly urbanised and seeking a
higher standard of living.
Over the last three years, we have made strategic decisions to
reshape our portfolio to align with these global megatrends.
We unified our corporate structure to provide greater strategic
flexibility, we merged our former petroleum business with Woodside
to create a top 10 global independent energy company, and we
approved an investment of $5.7 billion US dollars to develop Stage
1 of the Jansen project in Canada, with first production expected
in late 2026.
And just yesterday, the Board approved a further investment of
$4.9 billion US dollars for Stage 2 of that project, which Mike
will touch on shortly.
This deliberate reshaping of our portfolio, positions BHP to
create value for today and into the future. We now have a portfolio
that stands to benefit from the increased demand generated from the
global megatrends playing out around us.
Our portfolio includes copper for renewable energy, nickel for
electric vehicles, iron ore and higher-quality metallurgical coal
for the steel required to build decarbonisation and other new
infrastructure, and we're moving into potash, which we expect to be
vital for food security and more sustainable farming to support a
growing population.
Our recent portfolio changes continue this theme. We are
consolidating our metallurgical coal portfolio in Queensland to
focus on the higher-quality metallurgical coals preferred by our
steelmaking customers.
Copper South Australia
And our successful acquisition of OZ Minerals in May this year
adds complementary copper and nickel assets and creates an exciting
opportunity for BHP here in South Australia.
We are combining the Carrapateena and Prominent Hill mines
acquired from OZ Minerals with the Olympic Dam asset and Oak Dam
project, to create a new copper province - which we call Copper
South Australia. This new copper province will unlock long-term
value and create significant synergies.
But it's essential to understand - and I know Mike is going to
talk about this shortly - that the right conditions will need to be
met for Copper South Australia to compete with other options in our
Capital Allocation Framework.
Beyond this available growth from our existing assets, we have
four further levers to pursue growth: technology and innovation,
early-stage entry, exploration and mergers & acquisitions. We
are making good progress on each of these fronts. But it's
important to note that we are not pursuing growth for growths sake,
but to create value for shareholders.
Strong, consistent performance and returns
We use our Capital Allocation Framework to assess the most
effective and efficient way to deploy our capital. It is deeply
embedded in our decision making, and is one of the reasons we have
been able to consistently deliver substantial shareholder returns
and create financial and social value for our partners and
stakeholders.
FY23 highlights
In the 2023 Financial Year, we had earnings of more than $13
billion US dollars. These results were delivered against a back
drop of global uncertainty, weaker commodity prices and
inflationary pressures.
We also continued to produce strong margins and a consistently
high baseline of cash flow. Over the past decade, we have delivered
average margins of 55 per cent and generated average net operating
cash flows of $20 billion US dollars per year. This stability is a
hallmark for BHP and demonstrates the quality of our portfolio and
the consistency of our returns, despite the cyclical volatility in
the resources sector.
Using our Capital Allocation Framework, this year's result has
flowed through to a full year dividend to shareholders of $1.70 US
per share, fully franked, which was a 64 per cent payout ratio.
This was the third largest ordinary dividend in our history.
To put these results into context, over the last two years, BHP
has been the largest dividend payer globally across all sectors and
the largest dividend payer on the ASX100.
In terms of total shareholder returns, over the past 5 years,
our total shareholder return was approximately 15% per annum, and
includes delivering more than $50 billion US dollars in cash
dividends to our shareholders.
We also created significant financial value in the communities
where we operate through payments to suppliers, wages to our
employees, contributions to communities and taxes and royalties
paid to governments. In the 2023 Financial Year, our total economic
contribution was over $54 billion US dollars. This includes $2.6
billion US dollars paid to local suppliers who support our
operations.
Social value
We are also continuing to deliver tangible outcomes in each of
the six pillars of our social value framework, which are focused on
decarbonisation, the environment, Indigenous partnerships,
workforce, communities, and supply chains.
The work we do in these areas is vital to our business.
Delivering social value can help us become a partner of choice with
customers, suppliers and communities.
Addressing operational greenhouse gas emissions is an important
part of our commitment to sustainability. We have a Scope 1 and 2
decarbonisation target of at least a 30% reduction in our
operational greenhouse gas emissions by the 2030 financial year
compared with our baseline 2020 financial year. In the 2023
Financial Year, we further reduced our operational emissions by 11
per cent from the previous year, and we remain on track to achieve
our 2030 target.
Our future progress towards greenhouse gas emissions reductions
won't be linear as we look to grow our business, but we have a
comprehensive plan that is underpinned by clear actions that
support emissions reduction now and through to the 2030 Financial
Year.
Our relationships with Traditional Owners and other Indigenous
partners are some of the most important relationships to BHP. We
operate on the traditional lands of Indigenous peoples at many of
our locations in Australia and around the world. We partner widely
with Indigenous communities and have long-term agreements with
Traditional Owners and First Nations partners.
These are critical relationships for BHP's ability to start new
projects, expand existing projects, and to grow our business.
We recognise that we can contribute positively to the lives and
aspirations of Indigenous peoples and communities by providing
opportunities for employment and supporting Indigenous enterprises.
This year we spent more than $330 million US dollars with
Indigenous suppliers globally. This is more than double last year's
figure.
We are the largest Indigenous employer in the Australian
resources sector with over 8 per cent Indigenous employment. In
Chile, our Indigenous employment is close to 10 per cent and at our
Jansen Potash Project in Canada it is almost 8 per cent.
Finally, this year we published our Reconciliation Action Plan
which we developed in partnership with Traditional Owners. This was
the sixth iteration of our Reconciliation Action Plan since 2007.
We remain committed to incorporating Indigenous perspectives and
voices into the way we operate and manage our business, and to
working closely with Traditional Owners.
Board and succession, and conclusion
Now, before I hand across to Mike Henry, I would again like to
acknowledge and thank Terry Bowen who will retire as a director at
the conclusion of this meeting.
And I am pleased to confirm that Michelle Hinchliffe will step
into the role of Chair of the Risk and Audit Committee following
Terry's retirement. Michelle brings significant experience in risk
management and financial controls.
In closing, I believe that BHP is in a strong and exciting
position.
It is a belief powered by the global megatrends - population
growth, increased urbanisation... and the energy transition which
are all increasing demand for mineral resources.
We've made a number of strategic portfolio and structural
changes over the last three years. And we are further positioning
our portfolio to benefit from that demand.
We will continue to drive a culture of safe and reliable
operations while maintaining rigorous capital discipline- and we
are making good progress on social value, which is vital for
sustainable long term shareholder returns.
Thank you for your continued support and for investing in the
future of BHP.
It is now my pleasure to invite your CEO Mike Henry to speak
with you.
Thank you.
Mike Henry, CEO
Thanks Ken, and thanks to everyone here with us in Adelaide
today and watching online.
Safety
I will start with safety, and 2023 was a difficult year from a
safety perspective for the Company.
Tragically two of our colleagues lost their lives while on the
job. This included a fatal incident at the Olympic Dam asset here
in South Australia.
Our thoughts remain with their families, friends and colleagues.
These events underscore the absolute importance of safety first. We
remain resolute in our commitment to eliminating fatalities and
serious injuries across BHP.
Strong operational performance
Turning now to broader business performance, as you've just
heard from Ken, this financial year we delivered another strong set
of results.
We met production guidance across all of our four commodities,
and achieved record annual production at Western Australia Iron
Ore, Olympic Dam and Spence. We managed inflation well.
We made a significant economic and social contribution to the
regions where we operate, and delivered US$8.6 billion cash back to
shareholders in dividends.
We have continued to expand and execute our suite of growth
options, and that includes progressing projects, advancing studies,
and exploring new prospects.
We continue to invest in technology, innovation and early-stage
options.
And of course, we undertook the successful acquisition of OZ
Minerals.
Operational performance
In terms of underlying operations, this year we demonstrated
strong performance across the business, thanks to the efforts of
our more than 80,000 employees and contractors.
Now if I unpack that a bit...
Western Australia Iron Ore achieved record production volumes
and remains the lowest cost of the major iron ore producers. In
fact, our iron ore operations generate around five US dollars more
per tonne in free cash flow than that reported by our largest
competitor, and when you multiply that by the hundreds of millions
of tonnes we produce each year you get a sense for the relative
performance of this asset. We are ensuring we get maximum returns
for every dollar of shareholder capital invested in this
business.
In Copper, Escondida's production increased by five per cent,
year-on-year. Unit costs increased by 17 per cent, primarily driven
by inflationary pressure. This was a solid outcome in the context
of what other producers are experiencing; however, we remain very
focused on mitigating the impacts of inflation.
We achieved record production at Spence following higher
concentrator throughput, and at Olympic Dam, with continued strong
performance at our concentrator and smelter.
This disciplined operational performance has underpinned
continued, strong returns to shareholders. In fact, BHP was among
the highest dividend payers globally in the 2022 calendar year, of
any company in any sector.
Portfolio and growth
Of course our business isn't just about today, it's about
delivering value for shareholders long-term, so I do want to spend
a few minutes on portfolio and growth.
The resources industry is cyclical, and commodity prices will
always impact overall sector profitability.
This cyclicality is a key reason why we seek to have assets that
are low on the cost curve. This ensures they are more resilient at
all points in the cycle.
This allows us to focus even more intensely on managing the
things within our control - safety and productivity. It allows us
to do all we can to maximise the returns from the assets we operate
and the capital we have invested in them.
We seek a portfolio of assets that is deliberately structured to
take advantage of the megatrends occurring across the globe.
We see potential for growth in those commodities essential to
the needs of urbanisation, decarbonisation, and a growing
population, and we are making the investments needed to unlock
productivity, progress towards decarbonising our assets, and
deliver growth.
We're working hard to define the path forward for Escondida
which is the world's largest copper mine and resource[1] and which
is well-placed to be one of the most responsible copper producers
globally, given its transition to full renewable power and
desalinated water usage.
At WAIO, we produced 285 million tonnes of iron ore in FY23,
progressing towards 305 million tonnes per annum, with studies into
reaching 330 million tonnes underway. Iron ore is essential for the
steel needed for infrastructure for the energy transition and
ongoing urbanisation.
[1] On a contained metals and equity share basis
Significant growth opportunities ahead
We also have a significant, exciting growth path ahead of us in
potash in Canada. Potash, used in fertilisers, will be essential
for food security and more sustainable farming, against the
backdrop of a growing global population.
We believe the long-term fundamentals for the potash market are
compelling and they have further improved since we sanctioned
Jansen Stage 1. Stage 1 is now 32 per cent complete - and remains
on budget and ahead of its original schedule, with first production
expected late in the 2026 calendar year.
And just yesterday the Board approved the decision to invest
US$4.9 billion into Jansen Stage 2, underscoring our confidence in
potash and marking the next phase of our growth in Canada.
Stage 2 will help to transform Jansen into one of the world's
largest potash mines, doubling production capacity to 8.5 Mtpa, and
positioning BHP as one of the leaders in the global potash
industry.
And we're able to deliver Stage 2 at a lower capital intensity
because of the infrastructure delivered in Stage 1.
Jansen is a world-class asset in an investment friendly
jurisdiction. It will create value for generations to come.
We have continued to increase our copper and nickel prospects
globally. These interests include Oak Dam in South Australia,
Kabanga Nickel in Tanzania, and Ocelot in the United States. They
also include projects in Serbia and Peru, and the Filo del Sol
project in Argentina and Chile.
We are also consolidating our coal portfolio to focus on the
higher quality metallurgical coals that are increasingly preferred
by our customers - most recently through the up to US$4.1 billion
divestment of our Blackwater and Daunia mines, part of the BMA
business, which we expect to complete in the fourth quarter of
FY24.
Creating potential for future growth
And of course, there's OZ Minerals. Bringing OZ into BHP creates
the potential for further growth in the near and long term, in the
newly aggregated copper province for BHP assets here in South
Australia.
We believe that with stable and competitive government policies
in place in South Australia, there will be a strong case for future
capital investment in these assets relative to other potential
investment options in our portfolio.
I really do want to thank Premier Malinauskas and his government
for the constructive way we are working together towards delivering
this shared objective.
Globally, the mining sector is at a crossroads. The energy
transition and broader decarbonisation efforts are expected to
progressively shift demand growth towards future-facing
commodities. A massive wave of capital investment will be required
to meet demand for these minerals.
Within this environment of heightened global competition,
Australia has a once-in-a-generation opportunity to capture an
outsized share of this investment flow, and enjoy the far-reaching
future economic and societal benefits it could deliver. However, we
can only succeed if we are willing and able to compete.
This will require government and industry to work together to
improve the competitiveness of Australia's mining sector so that
the nation can enjoy the future benefits this opportunity can
bring.
It's against this backdrop that we are closely watching policy
changes at the Australian Federal Government level, some of which
risks our national competitiveness.
In particular, BHP shares concerns of the broader business
community that the Australian Government's Same Job Same Pay
proposal will increase costs and reduce Australia's investment
competitiveness at a time when competition for investment is fierce
globally and other nations are working to become more competitive
and more attractive.
Prior to the last election, we were on the record as supporting
the principle of focused legislative reform to protect vulnerable
and low paid workers. However, the Same Job Same Pay bill goes well
and truly beyond this. The proposed changes are not about 'closing
loopholes' but are the most significant and far-reaching changes to
Australian workplace relations since WorkChoices.
BHP strongly opposed the Same Job Same Pay bill not only because
of the damage it threatens to do to our business, but also for the
hit it will have on Australia's economy, to Australian jobs and to
Australia's productivity and international competitiveness.
The bill could reduce the value of any potential growth plans
for a copper province of BHP assets here in South Australia by up
to US$2 billion. And it risks directly impacting dividends for the
17 million Australians who hold BHP shares directly, or indirectly
via superannuation.
This is not just about BHP. These concerns are shared by
businesses large and small across the country, and getting these
policies wrong risks impacting Australians' retirement savings.
A competitive labour market with strong links between labour
costs and productivity is essential to the long-term success of our
industry and the Australian economy. We will continue to engage the
Australian Federal Government constructively, together with the
wider business community to highlight the negative impact of these
policies.
Delivering strong social value
When it comes to growth, the opportunities that we're able to
access and develop cannot be realised without delivering strong
social value. Social value goes hand in hand with long term
shareholder value.
Our access to the best resources, markets, partners and talent
is contingent on making a positive contribution to society and
building strong relationships with partners, local communities, and
First Nations peoples.
Our approach is disciplined and proactive, and it's delivering
tangible outcomes. This year we:
-- Reduced our operational greenhouse gas emissions by 11% from
the year prior, and we remain on track to achieve our 2030 target
to reduce operational GHG emissions by at least 30 per cent from
FY2020 levels.
-- We doubled our spend with Indigenous suppliers globally to
more than US$330 million and here in Australia, we released our
sixth Reconciliation Action Plan which was recognised with
'Elevate' status by Reconciliation Australia.
-- And we further advanced female employee participation to more
than 35 per cent globally - more than double from 2016 when we set
our aspirational goal to achieve gender balance in our employee
workforce by the end of FY2025.
Social value is fundamental to our success and future
competitiveness and is an important point of differentiation from
our competitors.
Creating value now, and into the future
Before I conclude, I'd like to echo Ken's thanks to Terry Bowen
for his extensive contributions to the Board and the company. Terry
has brought a wealth of experience and insight over his time with
BHP, and I wish him the best in his future ventures.
At BHP we're focused on creating value now, and into the future.
We think and plan in decades.
By 2050 the global population is projected to be around 10
billion, about two-thirds of whom will live in urban areas. These
global citizens will quite rightly be seeking to improve their
standard of living - raising demand for housing, better food,
consumer goods, cars, infrastructure, power and utilities.
These factors, together with the energy transition, are very
metals and minerals intensive. The two to four-fold increase in
demand we expect for key BHP commodities over the next three
decades, versus the three decades past, presents both challenge and
opportunity.
BHP will continue to plan strategically, responsibly, and
consistently in seeking to help meet that demand.
We will maintain our focus on operational performance, delivery,
and growth. We will remain disciplined in capital allocation, as we
create value and generate returns.
I am confident in the strength of our company, now and into the
future, and greatly appreciate your ongoing support.
Thank you.
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