BHP announces major changes

BHP announces major changes
Mining News Pro - Diversified miner BHP has reported an 80% increase in profit for the 2021 financial year, along with a 69% increase in underlying earnings before interest, taxes, depreciation and amortisation (Ebitda) when compared with the previous financial year.

“BHP’s performance over the past year illustrates the strength of our portfolio, balance sheet, people and performance culture. Including the record dividend announced today of $2 per share, we have returned over $15-billion to shareholders over the past year,” said chairperson Ken MacKenzie.

Profis from operations in this financial year increased from the $14.4-billion announced in 2020, to $25.9-billion, while underlying Ebitda increased from $22-billion to $37.3-billion.

Net operating cash flow for the full year were up 73%, from $15.7-billion to $27.2-billion, with net debt decreasing 66%, from $12-billion to $4-billion.

Attributable profit was reported at $11.3-billion, which includes an exceptional loss of $5.8-billion predominantly related to the impairments of BHP’s potash and energy coal assets, and the current year impact of the Samarco dam failure. Underlying attributable profit of $17.1-billion was reported, up 88% on the previous financial year.

BHP told shareholders that the full-year results were drive by strong underlying performance across its portfolio of assets, including record production from its Western Australian iron-ore assets, the Goonyella and Olympic Dam operations and record levels of concentrator throughput at Escondida, offset by the impacts of overall grade decline at its copper assets, natural field decline in Petroleum, adverse weather and planned maintenance across a number of its assets.

In addition to the stellar results, BHP on Tuesday also announced a $5.7-billion investment into the Stage 1 development of its Jansen potash project, in Canada, aligning with its strategy of growing its exposure to "future facing" commodities, while also unveiling a merger of its petroleum business with Australia’s Woodside to create a a global top 10 independent energy company with a large-scale portfolio of producing, development and exploration assets.

“BHP is in a strong position to manage its future in a time of rapid change. We have a clear strategy and are executing against it. Jansen Stage 1 will give BHP exposure to a commodity with a strong demand outlook and decades of potential growth. The agreement to pursue a merger of BHP’s petroleum business with Woodside will maximise the value of our oil and gas assets through increased operating scale and synergies, with a more diversified product portfolio to support the energy transition,” said MacKenzie.

BHP also announced the intended unification of its corporate structure to a single primary listing on the Australian Securities Exchange (ASX), to make BHP simpler and more agile.

BHP currently operates as a dual-listed company with two parent entities, both holding primary listings: BHP Group Limited in Australia (BHP Ltd) and BHP Group Plc (BHP Plc) in the UK.

BHP is proposing to adopt a single company structure under BHP Ltd with a primary listing on the ASX. Under a unified corporate structure, BHP Ltd shares would be listed on the Australian, London and Johannesburg stock exchanges, with an American Depository Receipt programme on the New York Stock Exchange.

“Now is the right time to unify BHP’s corporate structure. BHP will be simpler and more efficient, with greater flexibility to shape our portfolio for the future. Our plans announced today will better enable BHP to pursue opportunities in new and existing markets and create value and returns over generations.”

BHP CEO Mike Henry pointed out that consistent with BHP’s strategy to secure further growth opportunities in future facing commodities, the company also recently made a public offer to acquire Canada’s Noront Resources to gain access to a highly prospective nickel basin in an attractive region.

Noront’s board has unanimously recommended shareholders accept BHP’s offer.

“BHP’s products are essential to global economic growth, improved living standards and the energy transition,” Henry said.

“The world will need more copper and nickel for electrification, renewable power and electric vehicles, iron-ore and high-quality metallurgical coal to produce the steel for infrastructure, including that required for decarbonisation, and the potash required for sustainable global food production.

“We are actively positioning BHP to meet the world’s needs and to continue to sustainably generate value for our shareholders, employees, and business partners, as well as for our host communities and governments.”

BHP on Tuesday announced that capital and exploration expenditure in 2021 reached $7.1-billion, which was in line with guidance, and for 2022 this target has been set at $6.7-billion for minerals and $2.3-billion for petroleum. The capital expenditure guidance includes $800-million for exploration work.

At the end of the 2021 financial year, BHP had two major projects under development, which were Mad Dog Phase 2 in petroleum and Jansen mine shafts in potash. Both of these projects are tracking to plan.

The $5.7-billion investment in Jensen Stage 1 was also announced on Tuesday, with BHP earlier in August having announced a $544-million investment into the Shenzi North development, in the Gulf of Mexico, following the successful acquisition of an additional 28 per cent working interest in Shenzi in November 2020

Meanwhile, BHP noted that the planned major smelter maintenance campaign and subsequent ramp up at its Olympic Dam operation is now planned between September 2021 and March 2022, having moved from its previous date of between August 2021 and February 2022, due to the ongoing Covid-19 state border restrictions limiting personnel coming to site.

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