Annual
Report
2022
Bringing people and
resources together to
build a better world
Contents
02–05
Overview
Our performance
Chair’s review
Chief Executive Officer’s review
06–88
Operating and
Financial Review
1
2
2.1
2.2
3
4
4.1
4.2
Our business
Delivering value
Our business model
How we create and grow value
Positioning for the future
Chief Financial
Officer’s review
Financial review
Group overview
Key performance indicators
4.3
4.4
5
5.1
5.2
5.3
6
7
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
7.11
7.12
7.13
02
04
05
06
08
08
10
15
17
18
18
18
Financial results
Debt and sources of liquidity
Our assets
Minerals Australia
Minerals Americas
Commercial
People and culture
Sustainability
Our sustainability approach
Our material
sustainability issues
Our sustainability performance:
Non-financial key
performance indicators
Safety
Sexual harassment
Health
Ethics and business conduct
Climate change
Value chain sustainability
Community
Human rights
Security services
Indigenous peoples
19
21
23
23
26
27
28
31
31
33
33
35
36
37
39
41
52
53
54
56
56
7.14
7.15
7.16
7.17
7.18
7.19
8
9
9.1
10
10.1
10.2
10.3
10.4
10.5
11
11.1
11.2
12
02
Our performance
08
Delivering value
28
People and culture
Social investment
Environment
Water
Biodiversity and land
Tailings storage facilities
Independent limited
assurance report
Samarco
How we manage risk
Risk factors
Performance by commodity
Copper
Iron Ore
Coal
Other assets
Impact of changes to
commodity prices
Non-IFRS financial
information
Definition and calculation of
non-IFRS financial information
Definition and calculation
of principal factors
Other information
15
Positioning for
the future
89–124
Governance
125–193
Financial Statements
194–242
Additional Information
Corporate Governance Statement
Directors’ Report
Remuneration Report
Consolidated Financial Statements
Notes to the Financial Statements
Financial information summary
Information on mining operations
Financial information by commodity
Production
Mineral Resources and Ore Reserves
Major projects
People – Performance data
Legal proceedings
Shareholder information
Glossary
Company details
refer to OFR 12.1
Forward-looking statements
refer to OFR 12.2
Cover image: Oxidised copper ore deposit – Getty Images.
BHP
Annual Report 2022
58
59
60
61
62
64
65
66
67
74
74
75
76
77
77
78
86
87
88
90
101
107
126
134
195
196
206
208
209
226
226
227
229
236
BHP, bringing
people and
resources
together
to build a
better world.
Our values
Sustainability
Putting health and safety first, being environmentally
responsible and supporting our communities.
Integrity
Doing what is right and doing what we say we will do.
Respect
Embracing openness, trust, teamwork, diversity and
relationships that are mutually beneficial.
Performance
Achieving superior business results by stretching
our capabilities.
Simplicity
Focusing our efforts on the things that matter most.
Accountability
Defining and accepting responsibility and delivering
on our commitments.
We are successful when:
– Our people start each day with a sense of purpose
and end the day with a sense of accomplishment.
– Our teams are inclusive and diverse.
– Our communities, customers and suppliers value
their relationships with us and are better off for
our presence.
– Our asset portfolio is world class and
sustainably developed.
– Our operational discipline and financial strength
enables our future growth.
– Our shareholders receive a superior return on
their investment.
– Our commodities support continued economic
growth and decarbonisation.
BHP
Annual Report 2022
01
Our performance
Safe, reliable
production
29% reduction in
freshwater withdrawals
compared to adjusted
FY2017 baseline,²
exceeding our 15%
five-year target.
Fatality-free for the
third consecutive
year; high-potential
injury frequency rate
down 30%.
Record sales volumes
at Western Australia
Iron Ore; record
material mined at
Escondida and near-
record concentrator
throughout.
Indigenous peoples
employee representation
at end of FY2022:
8.3 %
in Minerals Australia
operations in Australia
8.7%
in Minerals Americas
operations in Chile, and
7.2 %
in Jansen Potash Project
and operations in Canada
32.3 %
female employee
representation at end of
FY2022, a 2.5 percentage
point increase from the
start of the year.
02
BHP
Annual Report 2022
These strong results were due to safe and reliable operations, project
delivery and capital discipline, which allowed us to capture the value
of strong commodity prices.
Mike Henry, Chief Executive Officer
Record underlying
earnings per share1
470.6 USc
2022
470.6 USc
2021
337.7 USc
Record shareholder cash
dividends per share³
325 USc
Ore leaving South Flank’s
Primary Crusher 2, one of two
at South Flank that are the
largest in BHP.
2022
325 USc
2021
301 USc
Jansen Stage 1
tracked to plan;
production shafts
completed
in June quarter.
Working to bring forward
first potash production.
Completed unification
of dual listed
structure, Petroleum
merger with Woodside
and divestment of
BHP Mitsui Coal and
Cerrejón interests.
15 %
reduction in operational greenhouse gas
emissions from adjusted FY2017 baseline,5
exceeding our five-year target and on track to
be reduced by at least 30% by FY2030 (from
FY2020 levels).
1
For more information on Non-IFRS Financial Information, refer to OFR 11.
2 For information on adjustment to the FY2017 baseline, refer to OFR 7.16.
3 This excludes the 386 US cents in specie dividend from distributing Woodside shares received as
4
consideration for the sale of BHP Petroleum.
Total economic contribution includes payments to suppliers, wages and benefits for employees and
contractors, dividends, taxes and royalties and voluntary social investment on a Total operations basis.
5 For information on adjustment to the FY2017 baseline, refer to OFR 7.8.
Profit from operations
US$34.1 bn
2022
34.1 bn
2021
25.5 bn
Total economic
contribution4
US$78.1 bn
2022
78.1 bn
2021
40.9 bn
BHP
Annual Report 2022
03
Board succession
We welcomed Michelle Hinchliffe and Catherine
Tanna to the BHP Board as independent
Non-executive Directors. Both bring over 35
years’ experience to BHP – Michelle in financial
controls and risk management, and Catherine
in energy, long-life capital allocation and
HSE. We are delighted to welcome Michelle
and Catherine.
At the other end of the succession process,
we will farewell Malcolm Broomhead and John
Mogford at the conclusion of the 2022 Annual
General Meeting. Both have announced their
intention to retire following exceptional periods
of service, and I would like to thank Malcolm and
John for their outstanding contribution to BHP
and the Board.
FY2022 was a successful year of transformation
for our business. I am confident we are building
BHP for the future and to create enduring
value for our shareholders and communities,
customers, suppliers and partners.
Thank you for your continued support of BHP.
Ken MacKenzie
Chair
Chair’s review
Dear Shareholders,
I am pleased to provide BHP’s Annual Report for
FY2022 which was a transformational year for
your company.
During the year BHP:
– unified our dual listed company structure
under a single parent company listed on the
Australian Securities Exchange
– merged our Petroleum business with
Woodside to create a top 10 energy provider
and provide shareholders with further choice
as to their exposure to oil and gas
– simplified the coal portfolio through the sale of
our interests in Cerrejón and BHP Mitsui Coal
to concentrate on higher-quality metallurgical
coal which is forecast to be critical for
making the steel necessary to support
decarbonisation and infrastructure growth
over coming decades
– approved an investment of US$5.7 billion
in our Jansen Potash Project in Canada,
marking BHP’s entry into a new commodity
which provides shareholders with exposure to
the growing population megatrend
Your Board would like to thank all shareholders
for the trust you have shown in supporting these
changes which set your company up to deliver
value into the future.
That trust is built over time and through
performance, and this year Mike Henry, his
management team and all our people, have
continued to deliver strong operational and
financial performance through a challenging
period of ongoing pandemic disruption, global
supply chain challenges and cost pressures.
Safety and wellbeing
In terms of safety, FY2022 was the third
consecutive year in which there were no
workplace occupational fatalities, and the Group
made strong progress on other leading safety
indicators such as a 30 per cent reduction in
high-potential injuries.
These are pleasing indicators of the progress
we can make when our focus is unwavering.
To achieve truly safe, inclusive and diverse
workplaces for all our people we know we must
bring this same focus to bear on all aspects of
workplace safety including addressing sexual
harassment, racism and bullying.
The value we create
It is against a backdrop of commitment to
performance and continuous improvement, that
BHP has delivered considerable value to you,
our shareholders.
In FY2022, the Board determined dividends
worth US$36 billion to shareholders (including
the distribution of Woodside shares). This takes
the total amount returned to shareholders over
the past four years to more than US$50 billion.
But it is not just value to shareholders. This year,
we also made substantial headway in our
sustainability aspirations and focus on social
value. We provided shareholders with the first
‘Say on Climate’ shareholder resolution in the
Australian market, and our Climate Transition
Action Plan (Plan) was supported by almost
85 per cent of shareholders. This Plan aligns
our climate goals with our strategic goals, and
provides a clear basis for measuring BHP’s
climate performance.
We also launched a social value framework and
scorecard with 2030 goals to bring additional
transparency to our social value goals and
outcomes. We are working hard to embed social
value in our strategy, capital allocation decisions,
plans, processes and culture. It is not only the
right thing to do, but we believe it provides a
significant competitive advantage for BHP and is
vital to delivering long-term sustainable value.
As well as the value delivered to shareholders,
this year, we made significant contributions to
the communities where we operate, through
employment, partnerships, and taxes and
royalties paid to governments. This amounted
to US$57.5 billion in Australia, US$7.7 billion
in Chile and US$12.9 billion in the rest of the
world, and our local procurement has increased
40 per cent over the past three years with
US$2.7 billion directed to 2,700 local suppliers
during FY2022.
FY2022 was a successful year of
transformation for our business. I am
confident we are building BHP for the
future and to create enduring value for
our shareholders and communities,
customers, suppliers and partners.
04
BHP
Annual Report 2022
Chief Executive Officer’s review
Dear Shareholders,
BHP performed well in FY2022. Our strong
production outcomes and solid cost control
allowed us to capture the greatest benefit from
the tailwind of high commodity prices during
the year. It was pleasing to all of us at BHP to
be able to deliver not only record returns to
shareholders, but also record contributions to
our other stakeholders. We paid record taxes
and royalties during the year of US$17.3 billion,
slightly higher than our cash returns to
shareholders of US$16.4 billion.
Most importantly, we did so safely and
sustainably. No one has lost their life while
working at BHP for over three and a half
consecutive years now. This is a very significant
milestone, but we must guard against
complacency. We will continue to prioritise our
efforts to reduce fatal risk from our workplaces.
We also reduced our operational greenhouse
gas emissions by 24 per cent over the past two
years and have reduced freshwater withdrawals
by almost 30 per cent since 2017.
We were successful in partially mitigating the
impacts of a number of external challenges,
including the ongoing pandemic, to deliver well
against our production and unit cost guidance for
the year. We achieved record full-year shipments
from our Western Australia Iron Ore business for
the third year running, and we remain the world’s
lowest cost major producer. In copper, our
Escondida business in Chile had record material
mined and near-record concentrator throughput,
while Olympic Dam in South Australia performed
strongly in the fourth quarter after our major
smelter maintenance overhaul, which takes
place every four years.
We anticipate the economic headwinds,
including inflation and tight labour markets, and
the impacts from COVID-19 will continue through
the year ahead. We aim to navigate these
challenges better than our competitors and have
the focus and capabilities in place to enable us
to do so. Our continued high performance in the
past year is thanks to 80,000 highly capable,
diverse, engaged people across BHP, who have
continued to show tremendous resilience in the
face of the multiple challenges thrown at us by
the external environment.
We will be safer, more reliable, lower cost and
more productive if we are able to more fully
harness the experience, passion and ingenuity
of everyone across BHP. This is being hard-
wired through the BHP Operating System (BOS),
which is building a continuous improvement
culture and capability right through to the
fingertips of the company. This shift, coupled
with our progress on creating a more inclusive
and diverse workforce is unlocking performance
and achieving this in a way that is exciting for
BHP and more fulfilling for our people.
During the year, we launched our new social
value framework and set short-term milestones
as well as 2030 goals under each of our six
social value pillars. Our commitment to social
value contributes to the relevant United Nations
(UN) Sustainable Development Goals and aligns
with our continued support for the UN Global
Compact and its 10 principles.
FY2022 was a year in which we also made
significant progress transforming our business
for the future through reshaping our portfolio and
simplifying our corporate structure. We divested
our Petroleum business and created a stronger,
more resilient stand-alone business by merging
it with Woodside, creating more choice
and opportunity for value for shareholders.
We further optimised our coal portfolio through
the divestment of our stakes in BHP Mitsui
Coal and in Cerrejón. We approved the Jansen
Stage 1 Potash Project in Canada, opening up
a new long-term growth front for the company
in potash, a fertiliser that will enable more
sustainable farming globally. Finally, we unified
our corporate structure, removing the more
complex dual listed structure in place since the
BHP and Billiton merger of 2001.
We now have a leaner, more agile and more
efficient BHP, with a portfolio more aligned to
the global megatrends unfolding around us, and
better positioned to grow value by supplying the
commodities required for a decarbonising world.
I am excited about our plans for the year ahead
and for the future. Despite external volatility,
the fundamentals that underpin our business
are positive and strongly position BHP for
enduring success.
Thank you for your ongoing support.
Mike Henry
Chief Executive Officer
I am proud to say that the proportion of females
and Indigenous peoples at BHP continues to
grow. Representation of female employees
reached 32.3 per cent in FY2022 and the
executive leadership team is fully balanced.
Indigenous peoples now represent 8.3 per cent
of our operational workforce in Australia, 8.7
per cent in Chile and 7.2 per cent in our Jansen
Potash Project in Canada.
While we have made strong progress in
improving the composition of our workforce,
you will see in this year’s report increased
disclosure in respect of cases of sexual
harassment, racism and bullying that have
occurred during the year in the company. I am
ashamed that these behaviours still occur in
BHP. We are fiercely determined to stop them
from happening. During the year, we progressed
work on upgrading our facilities, improving
our processes, providing more support to
impacted persons and bystanders, and shifting
culture. In the past year, we invested more
than US$200 million to improve the security
and experience in our accommodation villages,
established a global support service to provide
dedicated, end-to-end case coordination for
anyone impacted by sexual harassment, and
enhanced training programs, including for both
leaders and bystanders. Most recently we took
time out from work and production across all of
BHP to discuss sexual harassment, racism and
bullying. These Safety Stops involved the whole
of the workforce globally and were intended to
build awareness, understanding, capability, and
collective commitment to action.
As well as building an even safer and more
inclusive workplace at BHP, we must help to
build a better world for all of our stakeholders.
We aim to create social value, which is the
positive contribution BHP makes to society: our
people, partners, the economy, the environment
and local communities for the mutual benefit of
shareholders and the community. We see this
as fundamental to our long-term success and a
competitive advantage that will support growth.
BHP performed well in FY2022 with strong
production outcomes and solid cost
control. We paid record taxes and royalties
during the year of US$17.3 billion and cash
returns to shareholders of US$16.4 billion.
And most importantly, we did so safely
and sustainably.
BHP
Annual Report 2022
05
1 Our business
BHP, bringing people and resources
together to build a better world
We will responsibly manage the most resilient long-term portfolio of
assets, in highly attractive commodities, and will grow value through being
excellent at operations, discovering and developing resources, acquiring
the right assets and options, and capital allocation.
Through our differentiated approach to social value, we will be a trusted
partner who creates value for all stakeholders.
Global
Total economic contribution¹
US$78.1 bn
Taxes and royalties paid²
US$17.3 bn
Payments to suppliers²
US$18.8 bn
Number of employees and
contractors³
79,471
Key
BHP principal office locations
BHP mining locations
Iron ore
Copper
Coal
Nickel
Potash
Non-operated joint venture
Rest of the world
Total economic contribution¹
US$12.9 bn
Taxes and royalties paid²
US$1.3 bn
Payments to suppliers²
US$2.6 bn
Number of employees and
contractors³
5,431
Chile
Total economic contribution¹
US$7.7 bn
Taxes and royalties paid²
US$2.6 bn
Payments to suppliers²
US$4.3 bn
Number of employees and
contractors³
24,620
1 Total economic contribution includes payments to suppliers, wages and benefits for employees and contractors, dividends,
taxes and royalties and voluntary social investment on a Total operations basis.
2 Presented on a Total operations basis.
3 Employee data is based on a ‘point-in-time’ snapshot of employees as at 30 June 2022 including employees on extended
absence, without adjustment for BHP ownership percentage. Contractor data is collected from internal surveys and the
organisation systems and averages for a 10-month period, July 2021 and April 2022.
4 Excludes BMC and Cerrejón production. The divestment of BHP’s 33.33 per cent interest in Cerrejón to Glencore and
of BHP’s 80 per cent interest in BMC to Stanmore Resources Limited were completed on 11 January 2022 and 3 May
2022 respectively.
06
BHP
Annual Report 2022
Our commodities
Iron ore
Copper
Coal
Nickel
Potash
FY2022 production
253.2 Mt
FY2022 production
1,574 kt
FY2022 production4
42.8 Mt
FY2022 production
76.8 kt
Revenue
US$30.8 bn
Revenue
US$16.8 bn
Revenue
US$15.5 bn
Revenue
US$1.9 bn
Jansen Stage 1 is our
US$5.7 bn
potash project
Underlying EBITDA
US$21.7 bn
Underlying EBITDA
US$8.6 bn
Underlying EBITDA
US$9.5 bn
Underlying EBITDA
US$420 m
Australia
Total economic contribution¹
US$57.5 bn
Taxes and royalties paid²
US$13.4 bn
Payments to suppliers²
US$11.9 bn
Number of employees and
contractors³
49,420
BHP
Annual Report 2022
07
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 2 Delivering value
2 Delivering value
2.1 Our business model
By prioritising both financial and social value,
we deliver long-term value and resilience for our
shareholders and all our stakeholders.
What we need
Our people
We employ around 80,000 people across the
globe. Our aim is for them to be engaged and
supported in a way that sees them work in safer
and more productive ways.
We are on track to meet our aspirational goal
of a gender-balanced workforce by FY2025
and have raised the proportion of Indigenous
employees in Australia, Chile and at our Jansen
Potash Project in Canada.
More inclusive and diverse teams are delivering
safer and better business performance at BHP.
Strong, mutually beneficial
relationships
We seek to build long-term mutually beneficial
relationships with our stakeholders and
partners based on respect, transparency
and trust.
– Suppliers: More than 8,000 suppliers
in 47 countries provide us with goods
and services.
– Partners: We seek to be the partner of
choice for customers, business partners
and community stakeholders.
For more information
refer to OFR 6.
For more information
refer to OFR 2.2.
Exceptional capability
Operational excellence and capital discipline
are key to generating long-term value.
Industry-leading knowledge and
operating capability
For more information
refer to OFR 2.2.
Effective risk management
For more information
refer to OFR 9.
Disciplined use of capital
For more information
refer to OFR 2.2.
World-class assets
We have a portfolio of large, high-quality, low-
cost assets. We are investing in technology
to improve productivity and drive sustainable
growth across our operations.
Responsible natural resource
management
We seek to efficiently and responsibly manage
water and power and to be long-term stewards
of more than 8 million hectares of land and sea.
For more information
refer to OFR 5.
For more information
refer to OFR 7.
Value outcomes
Land
rehabilitated¹
23,812 hectares
FY2021 27,377 hectares
Tax, royalty and other
payments to governments³
US$17.3 bn
FY2021 US$11.1 bn
Investment in
community initiatives
US$186.4 m
FY2021 $174.8 m
Payments to suppliers³
US$18.8 bn
FY2021 US$16.5 bn
Operational electricity sourced
from renewables5
46%
FY2021 1%
Shareholder
dividends6
US$36.0 bn
FY2021 US$15.2 bn
Total freshwater
withdrawals²
107.4 Gl
29% from adjusted FY2017 baseline
Salary, wages and
incentives for our employees4
US$4.5 bn
FY2021 US$4.4 bn
Operational greenhouse gas
emissions7
11.0 MtCO2-e
25% from FY2021
1 Data does not include land managed for rehabilitation or conservation as part of social investment.
2 For information on adjustment to the FY2017 baseline, refer to OFR 7.16.
3 Presented on a Total operations basis. For more information refer to BHP Economic Contribution Report 2022.
4 Calculated on an accruals and presented on a Total operations basis. For more information refer to BHP Economic Contribution Report 2022.
5 Operational electricity comprises approximately one quarter of our total operational energy consumption.
6 This includes US$19.6 billion in specie dividend from distributing Woodside shares received as consideration for the sale of BHP Petroleum.
7 Adjusted for Discontinued operations (Petroleum) and the divestment of BMC.
08
BHP
Annual Report 2022
What we do
Development
and mining
We strive to achieve the
industry’s best performance in
safety, operational excellence,
project management and
allocation of capital.
Exploration
and acquisition
We seek to add high-
quality Tier 1 copper and
nickel interests through
our exploration activities
and early-stage entry and
acquisition options.
Our strategy
We will responsibly manage the most
resilient long-term portfolio of assets,
in highly attractive commodities, and
will grow value through being excellent
at operations, discovering and developing
resources, acquiring the right assets
and options, and capital allocation.
Through our differentiated approach to
social value, we will be a trusted partner
who creates value for all stakeholders.
Closure and
rehabilitation
We consider closure and
rehabilitation throughout the
asset life cycle to help minimise
our impact and optimise post-
closure value for all.
Process
and logistics
We process and refine
ore, safely manage
waste and efficiently and
sustainably transport our
products to customers.
Sales,
marketing and
procurement
We maximise value
through our centralised
marketing and procurement
organisations, commercial
expertise, understanding of
markets and customer and
supplier relationships.
BHP
Annual Report 2022
09
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 2 Delivering value continued
2.2 How we create and grow value
We produce some of the essential resources
needed to support global megatrends, such as
decarbonisation, and we strive to produce them
sustainably, efficiently and ethically.
We seek to create value with the communities
where we operate and for our shareholders:
– We are committed to continuous improvement
and we strive to operate more reliably and
productively than our competitors. Being the
best operator will help us safely generate
better return on capital employed and
outcompete others for new opportunities.
– We have delivered strong and consistent
results and returns through our portfolio
and operating discipline. We achieved net
operating cashflow on a Total operations
basis of US$32.2 billion in FY2022, above
US$15 billion for the sixth consecutive year.
those around us creates optionality, stronger
relationships and access to more diverse
thinking. It helps us be more creative and to
find different ways to problem solve. It also
means we are better able to see things
coming towards us and can act pre-emptively.
Aligning strongly with partners can prevent
issues or delays with projects and, if issues do
arise, means we are better able to collectively
work on solutions.
– We assess and rank decarbonisation
projects across our operated assets through
our Capital Allocation Framework (CAF).
During FY2022, we integrated our 1.5°C
Paris-aligned scenario into our strategy
and capital allocation process, helping to
ensure our capital expenditure plans are not
misaligned with the Paris Agreement’s aim to
pursue efforts to limit global warming to 1.5°C.
manage risk, streamline processes and
improve productivity.
– The combination of our people, strategy and
operational systems will help us to outperform
our competitors and attract a lower cost of
capital, while our CAF helps us make better
use of this capital.
We bring together essential resources, a strong
balance sheet and a differentiated operating
capability underpinned by our technical
Centres of Excellence and the BHP Operating
System (BOS).
This combination of operational excellence, a
strong portfolio of large, long-life, quality assets
and focus on social value will assist us to grow
value more consistently for all stakeholders and
underpin continued attractive returns and long-
term value for our shareholders.
– We believe our focus on social value will
– We recruit and retain the best people and
lead to us being the partner of choice with
communities, governments, suppliers and
customers. We seek respectful, mutually
beneficial relationships with the communities
where we operate and the suppliers,
customers and governments we interact with.
Our experience has been that engaging with
empower them to run our operations safely
and productively. We promote an inclusive
and diverse environment where safety and
wellbeing are the highest priorities, invest in
development programs to build capability and
improve performance and offer competitive
remuneration. We invest in technology to
Our people
Health and safety
Our highest priority is the safety of our workforce and the communities
where we operate. We achieved a third consecutive year without a
fatality and have seen a sustained improvement in the high-potential
injury frequency rate which fell by 30 per cent in FY2022 from FY2021.
We are committed to protecting the health and wellbeing of our
workforce. Over the past five years, we have achieved a 68 per cent
reduction in the total number of workers exposed to our most material
occupational exposures.
For more information
refer to OFR 7.4 and 7.6.
Our focus on safety and health underpins our strong operational
performance and this includes eliminating sexual harassment, racism
and bullying. We are committed to eliminating incidents of sexual
harassment in our workplaces and accommodation villages, and have
strengthened our approach to prevention, reporting and response.
Our focus on gender balance is an important factor in addressing this
unacceptable behaviour.
For more information
refer to OFR 7.5.
Inclusion and diversity
We continue to build a more inclusive and diverse workforce that
further enhances our performance and better reflects the communities
where we operate:
– We remain on track to achieve our aspirational goal for a gender-
balanced employee workforce globally by FY2025.
For more information
refer to OFR 6.
– We made progress during FY2022 against targets for increased
Indigenous employment in our Minerals Australia operations,
Minerals Americas operations in Chile and our Jansen Potash
Project in Canada.
For more information
refer to OFR 6.
10
BHP
Annual Report 2022
Our portfolio
We are reshaping our portfolio to focus on higher-quality iron ore and metallurgical coal preferred by our steelmaking customers, copper for
electrification and renewable energy, nickel for electric vehicles and potash to make food production and land use more efficient and sustainable.
For more information
refer to OFR 3.
Iron ore
Copper
Metallurgical coal
Nickel
Potash
We are the lowest-cost major iron ore producer globally.1 Western Australia Iron Ore
(WAIO) is one of the lowest emissions intensity iron ore operations² and is increasing
its grade as the new South Flank mine ramps up. WAIO achieved record sales
volumes in FY2022, allowing us to capitalise on the opportunity presented by higher
iron ore prices.
For more information
refer to OFR 5.1.
We hold the world’s largest copper endowment.³ We are using technical innovation such
as new floatation technology to help lower energy costs and unlock value and are looking
to secure more copper resources through exploration, acquisition and early-stage entry.
Escondida in Chile is the world’s largest copper mine. Escondida had record material mined
and near-record concentrator throughput in FY2022, while Olympic Dam in South Australia
performed strongly in the June 2022 quarter after planned major smelter maintenance.
For more information
refer to OFR 5.1 and 5.2.
Our metallurgical coal operations in Queensland focus on higher-quality product and have
one of the lowest production emissions intensities of benchmarked mines.² We believe that
a wholesale shift away from blast furnace steelmaking, which uses metallurgical coal, is
still decades in the future and that metallurgical coal will remain an essential input into the
steelmaking process, which is critical to support decarbonisation infrastructure. We recently
completed the sale of our interest in BHP Mitsui Coal (BMC), further focusing our coal portfolio
on higher-quality coals for steelmaking with greater potential upside for quality premiums as
steelmakers seek to improve blast furnace utilisation and reduce emissions intensity.
For more information
refer to OFR 5.1.
We hold the second-largest nickel sulphide endowment globally4 and our nickel
operations in Western Australia have one of the lowest production emissions
intensities of benchmarked mines.² We achieved our first saleable production of nickel
sulphate crystals for the lithium-ion battery industry in the December 2021 quarter.
We are growing value by supplying 87 per cent of BHP’s battery-suitable nickel to
battery material suppliers in FY2022. We are seeking more nickel resources through
exploration, acquisition and early-stage entry.
For more information
refer to OFR 5.1.
We are developing one of the world’s largest potash mines in Canada. The proposed
mine has been designed based on a sustainable approach with a relatively low
emissions footprint and low water intensity compared to existing potash mines.
The Jansen Potash Project is expected to increase BHP’s product diversification,
customer base and operating footprint, opening up a new future growth front.
The US$5.7 billion Jansen Stage 1 is tracking to plan and opportunities to bring
forward Jansen S1 continue to be assessed.
For more information
refer to OFR 5.2.
1 Based on published C1 unit costs of major iron ore producers. There may be differences in the manner that third parties calculate or report unit costs data compared to
BHP, which means that third-party data may not be comparable to our data.
2 For more information refer to OFR 7.8.
3 Based on ownership interest. Peers include: Anglo American, Antofagasta, Codelco, First Quantum Minerals, Freeport, Glencore, Rio Tinto, Southern Copper and Teck.
Source peers: Wood Mackenzie Ltd, Q1 2022.
4 Based on ownership interest. Source peers: MinEx Consulting.
BHP
Annual Report 2022
11
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 2 Delivering value continued
Social value
Social value is BHP’s positive contribution to society – our people, partners, the
economy, the environment and local communities. It is about creating enduring,
mutual benefit for BHP, our shareholders and the broader community.
Doing this well is essential to better business outcomes and long-term
shareholder value, and will create a competitive advantage.
(CTAP) received majority approval from shareholders in the ‘Say on
Climate’ advisory vote at our 2021 Annual General Meetings.
– We are working to create nature-positive4 outcomes through the new goal
we have set to have at least 30 per cent of the land and water we steward
under conservation, restoration or regenerative practices by 2030.
How social value can create
competitive advantage
We recognise that decisions we make have the potential to positively
or negatively impact those around us, and the environment.
Our aim with social value is to be deliberate and proactive in taking into
account social, environmental and financial impact in the choices we make.
Embedding social value into everything we do will open up opportunities,
increase resilience and help us manage risk. It will influence our access
to resources, partners, markets, the best talent, and capital.
Our commitment to social value
We have been committed to sustainability and social value for many
years and are making progress in responsibly providing more of the
resources the world needs:
– We have set GHG emissions reduction targets and goals (that are
described in OFR 7.8) and our Climate Transition Action Plan 2021
For more information refer to 2030 social
value scorecard below and OFR 7.15.
– We are working to transition our operations to renewable electricity.
For more information,
refer to OFR 5.1 and 7.8.
– We are working with suppliers to drive innovation by participating in
initiatives such as Komatsu’s GHG Alliance, which aims to develop
commercially viable zero-GHG emissions haul trucks.
For more information
refer to OFR 7.8.
– Our spend with Indigenous businesses increased by 75 per cent to
US$149.9 million in FY2022 and the number of Indigenous vendors
engaged rose by 53 per cent to 148. WAIO announced its intention
to more than double its spend with Indigenous vendors to more than
US$300 million by the end of FY2024.
For more information
refer to OFR 7.13.
2030 social value scorecard1
How we will report from FY2023
Planet • People • Prosperity
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Decarbonisation
Healthy
environment
Indigenous
partnerships
Safe, inclusive and
future-ready workforce
Thriving, empowered
communities
Responsible
supply chains
At least 30% reduction in operational GHG
emissions, support 40% emissions intensity
reduction of BHP-chartered shipping of
our products, and support development of
technologies and pathways capable of 30%
emissions intensity reduction in integrated
steelmaking.2,3
Create nature-positive4 outcomes by having at
least 30% of the land and water we steward
under conservation, restoration or regenerative
practices. In doing so we focus on areas of
highest ecosystem value both within and outside
our own operational footprint, in partnership with
Indigenous peoples and local communities.
% reduction in operational emissions
from FY20203
% area under nature-positive management
practices5
% reduction in emissions intensity of
BHP-chartered shipping of our products3
Available in FY2023
$ committed in steelmaking partnerships
and ventures to date (US$)
# assets with natural capital account6
Available from FY2023
Respectful relationships that hear and act upon the
distinct perspectives, aspirations and rights
of Indigenous peoples and support the delivery
of mutually beneficial and jointly defined outcomes.
A thriving workforce that is safe, healthy, gender
Partner with communities and stakeholders
Together with our partners, we create sustainable,
balanced at every level, culturally diverse10 and
to co-create and implement plans that
ethical and transparent supply chains.
inclusive and skilled for the future.
deliver jointly defined economic, social and
environmental outcomes.
% Indigenous workforce participation, by region
$ Indigenous procurement (US$)
Available in 2024
# reduction in life-altering injury or illness11
% co-created plans
Available in FY2023
Delivery metric to be added in FY2024
% engagement and Perception Survey
# community feedback on co-creation and
wellbeing score
% female workforce representation
Diversity index available in FY2024
implementation process
Available in FY2024
$ total economic contribution (US$)
# customer Net Promoter Score (NPS)14
# supplier Net Promoter Score (NPS)14
Australia
Canada
Chile
Progress
on plan8
O
O
O
Traffic light
Traffic light
Traffic light
Relationship
health9
O
O
O
s FY2023: 95% of study phase
projects are presented for tollgates or
meet milestones as scheduled in BHP’s
operational decarbonisation plan
FY2024: Operationalise five low/
zero GHG emission vessels
FY2024: Complete at least one pilot or
industrial scale steelmaking-related plant trial
FY2023: Publish context-based water targets
FY2023: Complete important
biodiversity and ecosystems (IBE) baseline
mapping for all land and water areas7
FY2024: Establish ‘nature-positive’ asset
plans to deliver the Group-level 2030 goal
FY2023: Release revised Global
Indigenous Peoples Strategy
FY2023: Increase formal Indigenous
voice mechanisms in decision-making
FY2024: Co-create plans which define
priorities and are designed to deliver
mutually beneficial outcomes
FY2023: Achieve 100% adherence
to sexual harassment program12
FY2023: Release Equitable Transition
principles – refer to OFR 7.1
FY2024: Implement LME Responsible
Sourcing requirements
FY2024: >90% implementation of plan for
FY2023/2024: Embed co-creation
controls identified and approved through the Fatality
approach including metrics and measurement
FY2024: Complete ICMM Performance
Expectations for all operating assets
FY2025: Implement co-created plans that
are designed to deliver jointly defined outcomes
FY2024: Determine ethical supplier
improvement plans with partners, where required
Elimination Program and 100% adherence
to the psychosocial risk13 management program
FY2024: Female workforce
representation exceeds 37%
BHP commits to social investment of at least 1% pre-tax profit15
1
In setting BHP’s 2030 goals, we had regard to existing public sustainability frameworks, including the UN Sustainable Development Goals, the Paris Agreement, Convention on
Biological Diversity, The Global Business Collaboration for Better Workplace Mental Health, and the UN Declaration of the Rights of Indigenous Peoples. Our pillars map to the
UN Sustainable Development Goals as follows: Decarbonisation – Goal 13; Healthy environment – Goals 6, 14, 15; Indigenous partnerships – Goals 8, 10, 17; Safe, inclusive
and future-ready workforce – Goals 3, 5, 10; Thriving, empowered communities – Goals 3, 4, 6, 7, 8, 9, 10, 11, 16 and Responsible supply chains – Goals 10, 12, 16, 17.
2 With widespread adoption expected post-2030.
3 These positions are expressed using terms that are defined in the Glossary to this Report, including the terms ‘target’, ‘goal’, ‘net zero’ and ‘carbon neutral’. The baseline
year(s) of our targets will be adjusted for any material acquisitions and divestments, and to reflect progressive refinement of emissions reporting methodologies. The targets’
boundaries may in some cases differ from required reporting boundaries. The use of carbon offsets will be governed by BHP’s approach to carbon offsetting described
at bhp.com/climate. The Scopes 1 and 2 operational emissions target is for FY2030. The Scope 3 goals are for CY2030. For further information on our GHG targets and
goals, refer to ‘BHP’s climate change targets and goals’ in OFR 7.8.
4 Nature positive is defined by the WBCSD/TNFD as ‘A high-level goal and concept describing a future state of nature (e.g. biodiversity, ecosystem services and natural capital)
which is greater than the current state.’ It includes land and water management practices that halt and reverse nature loss – that is, supporting healthy, functioning ecosystems.
5 Land under stewardship which has a formal management plan including nature-positive practices.
6 Natural capital accounts are a way to measure the amount, condition and value of environmental assets in a given area. It helps describe changes in ecosystems and
how these impact wellbeing and economies.
12
BHP
Annual Report 2022
2030 social value scorecard1
How we will report from FY2023
Social value
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– We completed our most recent five-year sustainability targets in FY2022.
Highlights included three years fatality-free, a reduction in the total
number of workers exposed to our most material occupational exposures
by 68 per cent, a 15 per cent decrease in operational GHG emissions
from our adjusted FY2017 baseline, social investment of US$681.4 million
over five years and a 29 per cent reduction in freshwater withdrawal
volumes from our adjusted FY2017 baseline.
For more information
refer to OFR 7.3 and 7.8.
Our expenditure with local suppliers was primarily in Australia (59 per cent)
and Chile (30 per cent). Of our total supplier spend, 94.4 per cent was in the
regions where we operate.
2030 social value scorecard
In June 2022, we launched our social value scorecard with 2030
goals, metrics and milestones (below). We believe it will enhance
our opportunity to run our business in a way that delivers long-term,
sustainable value to BHP, our shareholders and the broader community.
– Our Chilean operations Escondida and Spence, and Olympic Dam in
Australia were awarded the Copper Mark during FY2022 recognising
responsible production practices.
This scorecard provides clarity to our teams on our ambitions and
allows us to measure progress, transparently report and hold ourselves
to account.
For more information on our social value performance
refer to OFR 7.
Supporting local economic development
We aim to source and promote locally available goods and services as an
important part of our external expenditure to help local communities thrive.
Our operated assets develop local procurement plans designed to identify
opportunities for local suppliers, including small businesses.
In FY2022, BHP made US$18.8 billion in payments to suppliers globally,
including US$17.6 billion in payments to more than 8,000 suppliers in the
regions where we operate. Of the latter amount, US$2.7 billion, or 15.2
per cent, was paid to local suppliers in the communities where we operate.
Our metrics will evolve over time and some are future metrics that will
be developed in the coming years. They show where we are headed
with measuring our performance.
At its core, this scorecard represents an emphasis on partnerships,
listening and co-design, recognising that it is not for us alone to decide
what is of value to communities or the environment, and that addressing
challenges like climate change require collaboration.
We will disclose our performance against this scorecard every year as
part of our Annual Report, starting in FY2023.
Decarbonisation
Healthy
environment
Indigenous
partnerships
Safe, inclusive and
future-ready workforce
Thriving, empowered
communities
Responsible
supply chains
At least 30% reduction in operational GHG
Create nature-positive4 outcomes by having at
Respectful relationships that hear and act upon the
emissions, support 40% emissions intensity
least 30% of the land and water we steward
distinct perspectives, aspirations and rights
reduction of BHP-chartered shipping of
under conservation, restoration or regenerative
of Indigenous peoples and support the delivery
our products, and support development of
practices. In doing so we focus on areas of
of mutually beneficial and jointly defined outcomes.
A thriving workforce that is safe, healthy, gender
balanced at every level, culturally diverse10 and
inclusive and skilled for the future.
Partner with communities and stakeholders
to co-create and implement plans that
deliver jointly defined economic, social and
environmental outcomes.
Together with our partners, we create sustainable,
ethical and transparent supply chains.
% reduction in operational emissions
% area under nature-positive management
% Indigenous workforce participation, by region
technologies and pathways capable of 30%
highest ecosystem value both within and outside
emissions intensity reduction in integrated
our own operational footprint, in partnership with
Indigenous peoples and local communities.
steelmaking.2,3
from FY20203
% reduction in emissions intensity of
BHP-chartered shipping of our products3
# assets with natural capital account6
Available from FY2023
practices5
Available in FY2023
$ committed in steelmaking partnerships
and ventures to date (US$)
$ Indigenous procurement (US$)
Available in 2024
Progress
on plan8
Relationship
health9
Australia
Canada
Chile
O
O
O
Traffic light
Traffic light
Traffic light
O
O
O
# reduction in life-altering injury or illness11
Available in FY2023
% co-created plans
Delivery metric to be added in FY2024
% engagement and Perception Survey
wellbeing score
% female workforce representation
Diversity index available in FY2024
# community feedback on co-creation and
implementation process
Available in FY2024
$ total economic contribution (US$)
# customer Net Promoter Score (NPS)14
# supplier Net Promoter Score (NPS)14
s FY2023: 95% of study phase
e
projects are presented for tollgates or
meet milestones as scheduled in BHP’s
operational decarbonisation plan
FY2024: Operationalise five low/
zero GHG emission vessels
FY2024: Complete at least one pilot or
industrial scale steelmaking-related plant trial
FY2023: Publish context-based water targets
FY2023: Release revised Global
FY2023: Complete important
biodiversity and ecosystems (IBE) baseline
mapping for all land and water areas7
Indigenous Peoples Strategy
FY2023: Increase formal Indigenous
voice mechanisms in decision-making
FY2024: Establish ‘nature-positive’ asset
plans to deliver the Group-level 2030 goal
FY2024: Co-create plans which define
priorities and are designed to deliver
mutually beneficial outcomes
FY2023: Achieve 100% adherence
to sexual harassment program12
FY2024: >90% implementation of plan for
controls identified and approved through the Fatality
Elimination Program and 100% adherence
to the psychosocial risk13 management program
FY2024: Female workforce
representation exceeds 37%
FY2023: Release Equitable Transition
principles – refer to OFR 7.1
FY2023/2024: Embed co-creation
approach including metrics and measurement
FY2025: Implement co-created plans that
are designed to deliver jointly defined outcomes
FY2024: Implement LME Responsible
Sourcing requirements
FY2024: Complete ICMM Performance
Expectations for all operating assets
FY2024: Determine ethical supplier
improvement plans with partners, where required
7 All land and water areas across Minerals Americas and Minerals Australia.
8 Progress to plan will be partner-measured using a traffic light score on Indigenous partnership satisfaction in relation to the milestones agreed in partnership.
9 Relationship health will be partner-measured using a traffic light score.
10 Cultural diversity in our workforce will be measured based on our substantive progress towards reflecting the cultural diversity of the community.
11 Reduction in life-altering injury or illness: includes life-altering or long-term permanent disabling injuries and illnesses as defined by the BHP Risk Management Framework.
12 The core components of the sexual harassment program include: culture, leadership and training; security measures at accommodation villages; recruitment processes;
contractor and third-party engagement; emergency response; trauma-informed (wellbeing) care; accessible, confidential reporting and person-centric investigations; and
appropriate disciplinary action.
13 Psychosocial risks or hazards are factors in the design or management of work or the social conditions that increase the risk of work-related stress and can lead to
psychological or physical harm. Examples of psychosocial hazards include exposure to unreasonable behaviours, including bullying, racism and sexual harassment,
fatigue, poor supervisor support, poor communication or change management or high job demands.
14 Net Promoter Scores show respective feedback from our customers and suppliers, and measures the willingness of our customers/suppliers to recommend BHP
to others. It is used as a proxy for gauging overall satisfaction.
15 Social investment to be assessed as a total over the entire period to FY2030, rather than a specific annual commitment. This investment is in addition to our direct
operational decision-making and financial contributions.
BHP
Annual Report 2022
13
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information
2 Delivering value continued
Exceptional performance
Operational excellence
We seek to continuously improve performance by empowering our people
through BOS principles, practices and tools. BOS is, at its heart, a people
program. It is designed to provide a way of working that creates a culture at
BHP where we make continuous improvement central to everyone’s role.
We continued to deploy BOS throughout our business in FY2022 and
expect full deployment by the end of FY2024. BOS has delivered over
US$2 billion in estimated, recurring and one-time cost and revenue
improvements since we developed it in CY2018. Based on the success
we are seeing, we believe it will deliver further gains in the future.
Embracing technology and innovation
The power of data, innovation and technology, together with the BOS,
have helped accelerate continuous improvement across our value chain,
from the geoscience required in exploration through to the marketing of
our products.
Financial excellence
We use the Capital Allocation Framework (CAF) to assess the most
effective and efficient way to deploy capital. This prioritises maintaining
safe and reliable operations, meeting our social value and GHG emissions
reductions targets, goals and strategies, keeping our balance sheet strong
and delivering strong growth and returns for our shareholders. We then look
at what would be the most valuable risk-adjusted use for any excess capital.
We evaluate the range of investment opportunities and aim to optimise the
portfolio based on our assessment of risk, returns and future optionality.
We then develop a long-term capital plan and guidance for the Group.
Since the CAF’s introduction in FY2016, we have balanced reinvestment
in the business with cash returns to shareholders. We want shareholders
to see the short-term benefit of these cash returns and trust us to plan for
the future by investing where it matters.
We have used technology to:
What is the BHP Operating System?
The BHP Operating System (BOS) is a way of working that seeks
to make improvement part of what we do every day through the
application of BOS tools and practices. It is anchored in three
principles that will help us deliver exceptional safety and productivity
performance and an inclusive and empowered culture:
– Serve our customers – deliver what internal and external
customers need, at the right time and at the appropriate levels of
quality and cost.
– Pursue operating perfection – pursue 100 per cent safety for our
people, 100 per cent value for our customers, 0 per cent waste.
– Empower our people – support our people with the right
conditions and leadership to excel. They know their work and how
to improve it.
Through BOS principles and practices we are delivering more to our
employees and contractors, suppliers, shareholders, customers and
the communities whose resources we develop.
– maintain safe, predictable and productive operations
– drive productivity improvements, with an emphasis on automation and
real-time data-driven insights and decision-making
– help drive inclusion and diversity by providing greater opportunities for
roles that were traditionally labour intensive
– unlock the next stage of value growth at BHP, from realising greater
margins at our existing operations to finding new assets
– improve sustainability outcomes through innovation
The use of technology such as in autonomous trucks, production
innovation such as primary sulphide leaching at our copper assets (which
has helped us to extract more copper from ore) and digital transformation
across all parts of our business has helped to improve safety, increase
productivity, reduce costs, build capability and accelerate value creation.
Examples of our application of technology and innovation in FY2022 include:
– We continued to automate our global trucking fleets. At South Flank we
began to automate our fleet of 41 Komatsu haul trucks in the June 2022
quarter, with the program expected to be completed within 18 months.
We continued deployment at Goonyella Riverside (expected to be
completed by the end of December 2022) and completed the rollout at
Daunia. We also commenced autonomous drilling at Spence. We expect
to commence the rollout of automated trucks at Spence in FY2023.
– We began testing two automated shiploaders at the Port Hedland
export facility in Western Australia. In what we believe is a world first,
3D laser scan technology has been used in the A$50 million project.
We intend to fully automate eight shiploaders by FY2024. The project
is expected to enable an increase in production of more than 1 million
tonnes of iron ore each year through greater precision, reduced
spillage, faster load times and equipment optimisation.
– Our in-house Grade Adjustment Model has been introduced at multiple
WAIO sites and is expected to enable a US$22.8 million annual
revenue uplift at WAIO. The model uses machine learning to target a
reduction in iron ore grade variability across the supply chain. It uses
data sources that capture movements of ore to map the iron grade
coming from the mine to the iron ore grade shipped at port.
– Through our Maintenance and Engineering Centre of Excellence,
we continued the rollout of our Total Equipment Strategies (TES),
which were initially applied to our mobile fleets and have been
extended to our fixed plant. These strategies use mathematical
analysis of breakdowns, maintenance patterns and original equipment
manufacturer recommendations to recalibrate our maintenance
programs to increase availability and reliability, and reduce
maintenance costs and inventory values. For example, at our Newman
iron ore operation in Western Australia, the mobile TES project for
CAT 6060 excavators helped to extend the average equipment
life by 40 per cent and delivered an availability uplift of 2 per cent.
The outcome is 3.5 years of extra life which has helped to achieve
capital productivity by deferral of US$120 million of capital expenditure
over five years.
14
BHP
Annual Report 2022
3 Positioning for the future
Reshaping our corporate structure and portfolio
In FY2022, we took steps to create
Investing in a new commodity
– potash
a simpler, more agile and efficient
Potash enables more efficient and sustainable
BHP, better able to capitalise on the
farming which we believe will be increasingly
megatrends shaping our world.
important in feeding a growing population, and
potentially opens a new long-term growth front
for BHP.
A simpler corporate structure
For the past two decades we operated with a
dual listed company (DLC) structure with two
parent companies – BHP Group Limited in
Australia with its shares listed on the Australian
Securities Exchange and BHP Group Plc (now
known as BHP Group (UK) Ltd) in the United
Kingdom with its shares listed on the London
Stock Exchange.
Following shareholder approval in January 2022,
we unified our corporate structure to one parent
company and one share price – under BHP
Group Limited. We believe unification gives us
a corporate structure that is simpler, more agile
and more efficient.
Merging Petroleum
with Woodside
During FY2022, we merged our Petroleum business
with Woodside Energy Group Ltd (Woodside) to
create a global top 10 independent energy company
by production. Woodside acquired BHP’s Petroleum
business in exchange for Woodside shares that
were distributed to BHP shareholders through an in
specie dividend.
Based on Woodside’s share price of US$21.39
(A$29.76) at 31 May 2022, the closing date
of the transaction, the implied value of BHP’s
Petroleum business was US$19.6 billion
(A$27.2 billion).
BHP shareholders gained exposure to assets in
Woodside through the transaction and greater
choice about how to weight their exposure to
the different investment and sector propositions.
The transaction increased BHP’s portfolio
weighting towards future facing commodities
that support economic growth and have potential
upside through the energy transition.
Consolidating our coal portfolio
In January 2022, we divested our 33.3 per cent
interest in Cerrejón, a non-operated energy
coal joint venture in Colombia, to Glencore,
for a total cash consideration of approximately
US$294 million.
In May 2022, we divested our 80 per cent
interest in BHP Mitsui Coal Pty Ltd (BMC), a
metallurgical coal joint venture in Queensland
operated by BMC, to Stanmore Resources
Limited, for a total cash consideration of up to
US$1.35 billion in paid and deferred amounts,
plus a final completion adjustment amount.
In June 2022, we announced that, following a
two-year review, we would retain New South
Wales Energy Coal (NSWEC). We will be seeking
approvals to continue mining at NSWEC beyond
its current mining consent that expires in 2026
and intend to proceed with a managed process to
cease mining at the asset by the end of FY2030.
These portfolio changes are consistent with our
strategy to focus on producing higher-quality
metallurgical coal.
In August 2021, we approved US$5.7 billion
in capital expenditure for Jansen Stage 1
in Saskatchewan, Canada, with first potash
production expected in CY2027. We are working
to bring forward Jansen Stage 1 first production
and are assessing options to accelerate Jansen
Stage 2.
The US$2.97 billion Jansen project to finish
the excavation and lining of the production and
service shafts, and to continue the installation
of essential surface infrastructure and utilities,
was completed in June 2022. For FY2023,
approximately US$740 million in capital
expenditure is planned for work at Jansen
Stage 1, which will continue to focus on civil
and mechanical construction on the surface and
underground, as well as equipment procurement
and port construction.
Unlocking growth potential
at our assets
The large endowments we have under our
control are becoming increasingly valuable as
the resources industry finds high-quality, Tier 1
(large, low-cost and long-life) resources harder
to access, deeper, of lower grade, or in countries
with more challenging operating conditions.
Copper
We hold the largest copper endowment in the
world at among the highest average grade.¹
– This includes 27 billion tonnes of ore at an
average grade of 0.52 per cent at Escondida,
where we are targeting an annual average of
1.2 million tonnes (Mt) of copper production
over the medium term, a 20 per cent increase
on Escondida’s FY2022 production of 1 Mt.
– On the basis that tailings storage facility
anomalies are resolved, production at
Spence is expected to reach and average
approximately 270 kilotonnes per annum
(ktpa) of production for four years (including
cathodes) following the completion of Spence
Growth Option (SGO) plant modifications.
This will be supported by capital expenditure
of approximately US$100 million, which is
planned for the SGO plant modifications and
these are currently planned to be completed
in CY2023, with further studies ongoing for
additional capacity uplift.
– At Olympic Dam, we have improved operating
stability over time. Smelter operations have
been strong following our planned major
smelter maintenance, completed in January
2022. The next major rebuild is not expected
for six years.
Nickel
We hold the second-largest nickel sulphide
endowment globally² and own the majority of
tenements of known resource in the Agnew-
Wiluna basin in Western Australia.
– Our nickel sulphate plant at Nickel West
delivered first crystals in October 2021,
allowing us to add further value to our nickel
production. We intend to capitalise on the
expected ongoing global demand for nickel
for the electric vehicle industry, as the
method we use to produce nickel sulphate
results in a product we believe is ideal for
battery production.
– We continue to explore ways to increase the
scale of Nickel West.
Iron Ore
We are one of the world’s largest iron ore
producers and expect to increase production
over the medium-term.
– We have secured an increase to our WAIO
iron ore environmental licence to expand
port operations up to 330 million tonnes per
annum (Mtpa) subject to the outcomes of a
standard appeals process.
– The ramp up of WAIO’s US$3.6 billion South
Flank mine is ahead of schedule and we have
revised our medium-term production guidance
to more than 300 Mtpa. We are assessing
expansion alternatives to take us toward
330 Mtpa of production.
1 Based on ownership interest. Peers include: Anglo
American, Antofagasta, Codelco, First Quantum
Minerals, Freeport, Glencore, Rio Tinto, Southern
Copper and Teck. Source peers: Wood Mackenzie
Ltd, Q1 2022.
2 Based on ownership interest. Source peers:
MinEx Consulting.
BHP
Annual Report 2022
15
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 3 Positioning for the future continued
Growth through exploration, focused on copper and nickel
BHP exploration regions
Southwest
United States
Northwest
Mexico
Eastern
Canada
Colombia
Ecuador
Peru
Chile
Copper exploration regions
Nickel exploration regions
Western Australia
South Australia
Northern
Territory
Our exploration program is focused on copper
and nickel. We look to identify and gain access
to new search spaces to test targets capable
of delivering high-quality, Tier 1 deposits, and
maintain research and technology activities
aligned with our exploration strategy.
Despite the slowdown and restrictions on
movement due to the COVID-19 pandemic,
in FY2022 our field teams pursued copper
opportunities in Chile, Colombia, Peru, Ecuador,
the United States and Australia. This involved
early-stage reconnaissance work through target
definition and drill testing.
Elsewhere for copper, we continued to seek,
secure and test concessions in regions such
as Ecuador, South Australia, Chile, Mexico,
and Peru.
We have also increased the number of high-
quality nickel projects within the exploration
pipeline. We are actively exploring nickel
targets in Western Australia, while in Canada,
we continued our partnership with Midland
Exploration Inc in Canada through our 5 per cent
interest and collaboration on a target generation
program. BHP made a US$40 million investment
in Kabanga Nickel in Tanzania in FY2022, which
offers an opportunity to expand the immediate
search space to add to the known resource.
Our business partnerships continued to deliver
encouraging results. In Ecuador, we maintained
a 13.6 per cent ownership in SolGold plc,
the majority owner and operator of the Alpala
porphyry copper-gold project. In Mexico, we
continued our financial agreement with Riverside
Resources, a US company with significant
operating experience in Mexico, securing
additional areas that are scheduled to be drill
tested during FY2023. In Australia, we initiated
work with Encounter Resources to explore for
sediment-hosted copper deposits in the Northern
Territory. We also entered into a Letter of Intent
with Mundoro to cooperatively explore for copper
resources in the highly prospective belt in Serbia
and Bulgaria. Several drill-ready targets are
scheduled to be tested during FY2023.
16
BHP
Annual Report 2022
Exploration expenditureOur resource assessment exploration expenditure increased by 30 per cent in FY2022 to US$179 million, while our greenfield expenditure increased by 43 per cent to US$77 million. Expenditure on resources assessment and greenfield exploration over the last three financial years is set out below. Year ended 30 June2022 US$M2021 US$M2020 US$MGreenfield exploration775444Resources assessment179138132Total metals exploration and assessment256192176Exploration expenseExploration expense represents that portion of exploration expenditure that is not capitalised in accordance with our accounting policies, as set out in Financial Statements note 11 ‘Property, plant and equipment’.Exploration expense for each segment over the last three financial years is set out below.Year ended 30 June2022 US$M2021 US$M2020 US$MExploration expenseCopper855354Iron Ore545547Coal679Group and unallocated items1541913Total Group1991341231 Group and unallocated items includes functions, other unallocated operations, including Potash, Nickel West and legacy assets (previously disclosed as closed mines in the Petroleum reportable segment), and consolidation adjustments. Chief Financial Officer’s review
Dear Shareholders,
I am pleased to report on BHP’s FY2022
financial results.
BHP delivered strong financial results this year
against a backdrop of increasing economic
volatility, inflationary impacts and supply
chain pressures.
Managing uncertainty and risk is a core part of
our business, and our systems and processes
have allowed us to address these challenges
in a disciplined way. This, combined with our
focus on operational excellence and safety,
quality assets and leading approach to social
value means we remain positioned to deliver
consistently strong results through the cycle.
Our operational performance, combined
with higher prices for most of our core
commodities, drove our positive results this year.
Excluding Petroleum, underlying EBITDA was
up 16 per cent to US$40.6 billion at a record
margin of 65 per cent. Underlying attributable
profit increased to US$21.3 billion (for
continuing operations).
The shareholder dividend for the first half was
150 US cents per share. Combined with 175
US cents per share in the second half, the total
return to shareholders in FY2022 was a record
US$16.4 billion, which represents a 77 per cent
payout ratio. We also distributed US$19.6 billion
as an in specie dividend through the merger of
our Petroleum business with Woodside.
BHP’s total direct economic contribution in
FY2022 was US$78.1 billion. This includes
payments to suppliers, wages and benefits for
around 80,000 employees and contractors,
dividends, taxes, royalties and voluntary
investment in social projects across the
communities where we operate.
US$78.1 bn
Our total FY2022 economic contribution
US$17.3 bn
Tax, royalty and other payments
to governments in FY2022
325 US cents
Shareholder dividends per share
48.7 per cent
Underlying return on capital employed
In FY2022, our tax, royalty and other payments
to governments totalled US$17.3 billion.
Of this, 77.5 per cent or US$13.4 billion was
paid in Australia. During the last decade, we
paid US$90.5 billion globally in taxes, royalties
and other payments, including US$70 billion
(approximately A$90.1 billion) in Australia.
BHP’s global adjusted effective tax rate in
FY2022 was 32.1 per cent,1 which is broadly
in line with our average adjusted effective tax
rate over the past decade of 33.3 per cent.1
Once royalties are included, our FY2022 rate
increases to 38.9 per cent.1
We continue to use our Capital Allocation
Framework to decide where to direct cash
to generate the strongest returns. Over the
year, underlying return on capital employed
strengthened to 48.7 per cent.
We are proud of these results, the record
shareholder returns, and the economic
contribution we have made to the governments
and communities where we operate.
Thank you for your continued support.
David Lamont
Chief Financial Officer
1 Presented on a Total operations basis.
Our operational performance, combined
with higher prices for most of our core
commodities, drove underlying EBITDA
(excluding Petroleum) up 16 per cent
to US$40.6 billion, at a record margin
of 65 per cent. Underlying attributable
profit increased to US$21.3 billion
(for continuing operations)
BHP
Annual Report 2022
17
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 4 Financial review
4.1 Group overview
We prepare our Consolidated Financial
Statements in accordance with International
Financial Reporting Standards (IFRS), as issued
by the International Accounting Standards
Board. We publish our Consolidated Financial
Statements in US dollars. All Consolidated
Income Statement, Consolidated Balance
Sheet and Consolidated Cash Flow Statement
information below has been derived from audited
Financial Statements.
For more information
refer to Financial Statements.
We use various non-IFRS financial information
to reflect our underlying performance. Non-IFRS
financial information is not defined or specified
under the requirements of IFRS however, is
derived from the Group’s Consolidated Financial
Statements prepared in accordance with IFRS.
Non-IFRS Financial Information is consistent
with how management reviews financial
performance of the Group with the Board and
the investment community. OFR 11 ‘Non-IFRS
financial information’ includes our non-IFRS
financial information and OFR 11.1 ‘Definition
and calculation of non-IFRS financial information’
outlines why we believe non-IFRS financial
information is useful and the relevant calculation
methodology. We believe non-IFRS financial
information provides useful information, however
it should not be considered as an indication of,
or as a substitute for, statutory measures as an
indicator of actual operating performance (such
as profit or net operating cash flow) or any other
measure of financial performance or position
presented in accordance with IFRS, or as a
measure of a company’s profitability, liquidity
or financial position.
4.2 Key performance
indicators
Our key performance indicators (KPIs) enable us to
measure our sustainable development and financial
performance. These KPIs are used to assess
performance of our people throughout the Group.
For information on our approach
to performance and reward
refer to Remuneration Report.
For information on our overall approach
to executive remuneration, including
remuneration policies and remuneration
outcomes refer to Remuneration Report.
Following BHP’s sale of the Onshore US assets
in FY2019 and subsequently the merger of
our Petroleum business with Woodside in
FY2022, the contribution of these assets to the
Group’s results are presented as Discontinued
operations. To enable more meaningful
comparisons with prior year disclosures and in
some cases to comply with applicable statutory
requirements, the data in OFR 4.2, except
for Underlying EBITDA, has been presented
to include Petroleum assets. Footnotes to
tables and infographics indicate whether data
presented in OFR 4.2 is inclusive or exclusive
of Petroleum assets. Details of the contribution
of the Petroleum assets to the Group’s results
are disclosed in Financial Statements note 27
‘Discontinued operations’.
18
BHP
Annual Report 2022
Summary of financial measures
Year ended 30 June
US$M
Consolidated Income Statement (Financial Statements 1.1)
Revenue1
Profit/(loss) after taxation from Continuing operations1
Profit/(loss) after taxation from Continuing and Discontinued operations
attributable to BHP shareholders
Dividends per ordinary share – paid during the period (US cents)
Dividends per ordinary share – determined in respect of the period (US cents)
In specie dividend on merger of Petroleum with Woodside (US cents)
Basic earnings/(loss) per ordinary share (US cents)
Consolidated Balance Sheet (Financial Statements 1.3)
Total assets
Net assets
Consolidated Cash Flow Statement (Financial Statements 1.4)
Net operating cash flows
Capital and exploration expenditure2
Other financial information (OFR 11)
Net debt
Underlying attributable profit
Underlying attributable profit – Continuing operations1
Underlying EBITDA1
Underlying basic earnings per share (US cents)
Underlying basic earnings per share – Continuing operations (US cents)1
Underlying return on capital employed (per cent)
2022
2021
65,098
22,400
30,900
350.0
325.0
386.4
610.6
95,166
48,766
32,174
7,545
333
23,815
21,319
40,634
470.6
421.2
48.7
56,921
13,676
11,304
156.0
301.0
–
223.5
108,927
55,605
27,234
7,120
4,121
17,077
16,985
35,073
337.7
335.9
32.5
1 Comparative periods have been adjusted for the effects of applying IFRS 5 ‘Non-current Assets Held for Sale and
Discontinued Operations’ and discloses them on the same basis as the current period figures. Refer to Financial
Statements note 27 ‘Discontinued operations’ for further information.
Includes US$1,434 million related to Discontinued operations (FY2021: US$1,316 million).
2
Underlying attributable profit1,3
US$ billion
Underlying EBITDA2,3
US$ billion
25
20
15
10
5
0
8
.
3
2
1
.
7
1
9
.
8
1
.
9
1
.
9
FY2018 FY2019 FY2020 FY2021 FY2022
50
40
30
20
10
0
6
.
0
4
1
.
5
3
8
.
9
1
1
.
9
1
9
.
9
1
FY2018 FY2019 FY2020 FY2021 FY2022
Net operating cash flows1
US$ billion
Underlying return on capital
employed1,3
Per cent
35
28
21
14
7
0
.
2
2
3
.
2
7
2
.
5
8
1
.
9
7
1
7
.
5
1
FY2018 FY2019 FY2020 FY2021 FY2022
50
40
30
20
10
0
.
7
8
4
.
5
2
3
0
.
6
1
9
.
6
1
2
.
4
1
FY2018 FY2019 FY2020 FY2021 FY2022
Includes data for Continuing and Discontinued operations for the financial years being reported.
1
2 Excludes data from Discontinued operations for the financial years being reported.
3 For more information on non-IFRS financial information refer to OFR 11.
Profit after taxation
from Continuing and
Discontinued operations
Profit after taxation
Made
up of
Adjusted
for
Exceptional items
before taxation
Tax effect of
exceptional items
Exceptional items
after tax attributable
to non-controlling
interests
Exceptional items
attributable to BHP
shareholders –
Continuing operations
Exceptional items
attributable to
BHP shareholders
– Discontinued
operations
Profit after taxation
from Continuing
and Discontinued
operations attributable
to non-controlling
interests
Reconciling our financial results to our key performance indicators
Measure
US$M
US$M
US$M
Profit
Earnings
Cash
Returns
Profit after taxation
from Continuing and
Discontinued operations
33,055
Net operating cash
flows from Continuing
operations
33,055
Profit after taxation
from Continuing and
Discontinued operations
29,285
Profit after taxation
Profit after taxation
Cash generated by the Group’s
consolidated operations, after
dividends received, interest, proceeds
and settlements of cash management-
related instruments, taxation and
royalty-related taxation. It excludes
cash flows relating to investing and
financing activities
US$M
33,055
Net operating cash
flows from Discontinued
operations
620
454
–
Exceptional items before
taxation
Tax effect of exceptional
items
Depreciation and
amortisation excluding
exceptional items
1,074
Impairments of property,
plant and equipment,
financial assets and
intangibles excluding
exceptional items
(8,159)
Net finance costs
excluding exceptional
items from Continuing
operations
(2,155)
Taxation expense
excluding exceptional
items
Profit after taxation from
Discontinued operations
(including exceptional
items)
620
454
5,683
515
679
10,283
(10,655)
2,889 Exceptional items after
(7,085)
taxation
Net finance costs
excluding exceptional
items from Discontinued
operations
Net finance costs
excluding exceptional
items from Continuing
operations
Income tax expense on
net finance costs
Profit after taxation
excluding net finance
costs and exceptional
items
Net assets at the
beginning of period
159
679
(287)
26,521
55,605
Net debt at the beginning
of period
4,121
Capital employed at the
beginning of period
59,726
Net assets at the
end of period
Net debt at the
end of period
48,766
333
Capital employed at the
end of period
Average capital employed
49,099
54,413
48.7%
To reach
our KPIs
Why do we
use it?
Underlying attributable profit 23,815 Underlying EBITDA
40,634 Net operating cash flows
32,174 Underlying return
Underlying attributable profit allows the
comparability of underlying financial
performance by excluding the impacts
of exceptional items.
Underlying EBITDA is used to help
assess current operational profitability
excluding the impacts of sunk costs
(i.e. depreciation from initial investment).
It is a measure that management uses
internally to assess the performance
of the Group’s segments and make
decisions on the allocation of resources.
Net operating cash flows provide
insights into how we are managing
costs and increasing productivity
across BHP.
on capital employed
Underlying return on capital employed
is an indicator of the Group’s capital
efficiency. It is provided on an underlying
basis to allow comparability of underlying
financial performance by excluding the
impacts of exceptional items.
4.3 Financial results
The following table provides more information on the revenue and expenses of the Group in FY2022.
Year ended 30 June
Continuing operations
Revenue1
Other income
Expenses excluding net finance costs
Loss from equity accounted investments, related impairments and expenses
Profit from operations
Net finance costs
Total taxation expense
Profit after taxation from Continuing operations
Discontinued operations
Profit/(loss) after taxation from Discontinued operations
Profit after taxation from Continuing and Discontinued operations
Attributable to non-controlling interests
Attributable to BHP shareholders
1
Includes the sale of third-party products.
2022
US$M
65,098
1,398
(32,371)
(19)
34,106
(969)
(10,737)
22,400
10,655
33,055
2,155
30,900
2021
US$M
Restated
2020
US$M
Restated
56,921
380
(30,871)
(915)
25,515
(1,223)
(10,616)
13,676
(225)
13,451
2,147
11,304
38,924
720
(25,453)
(508)
13,683
(858)
(4,197)
8,628
108
8,736
780
7,956
BHP
Annual Report 2022
19
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information
4 Financial review continued
Profit after taxation attributable to BHP
shareholders increased from US$11.3 billion
in FY2021 to US$30.9 billion in FY2022.
Attributable profit of US$30.9 billion includes
an exceptional gain of US$7.1 billion (after
tax), compared to an attributable profit of
US$11.3 billion including an exceptional
loss of US$5.8 billion (after tax) in the prior
period. The FY2022 exceptional gain includes
a US$1.1 billion exceptional loss related to
Continuing operations comprising of Samarco
dam failure impacts, corporate structure
unification costs and US deferred tax asset
impairments partially offset by the net gain on
disposal of BMC. The net gain on merger of our
Petroleum business with Woodside is included
as an exceptional item related to Discontinued
operations included within Profit/(loss) after
taxation from Discontinued operations.
For more information on Exceptional items
refer to Financial Statements
note 3 ‘Exceptional items’ and
Financial Statements note 27
‘Discontinued operations’.
Revenue of US$65.1 billion increased by
US$8.2 billion, or 14 per cent from FY2021.
This increase was mainly due to higher average
realised prices for metallurgical coal, thermal
coal, copper and nickel, partially offset by lower
average realised prices for iron ore.
Lower volumes were experienced across the
Group’s portfolio due to COVID-19 impacts, the
planned major smelter maintenance campaign
at Olympic Dam and lower feed grade at
Escondida and Spence. Volume decline was
partially offset by higher concentrate sales at
Spence reflecting the continued ramp up of the
Spence Growth Option.
For information on our average realised
prices and production of our commodities
refer to OFR 10.
Total expenses excluding net finance costs of
US$32.4 billion increased by US$1.5 billion, or
5 per cent from FY2021. This included higher
raw materials and consumables of US$1.1 billion
due to South Flank operational ramp up and
higher input prices mainly due to higher diesel
and acid prices, higher royalties of US$0.9 billion
mainly driven by prices for metallurgical coal
and thermal coal and US$0.7 billion third-party
purchases mainly due to higher nickel prices.
Higher depreciation and amortisation expense
of US$0.6 billion reflected the commissioning
of South Flank, Spence Growth Option, and the
completion of the major smelter maintenance
at Olympic Dam. The increase also included
US$0.4 billion of costs related to corporate
structure unification. This was partly offset by
lower impairments of US$2.0 billion mainly
due to Potash and NSWEC asset impairment
charges in the prior period.
Loss from equity accounted investments, related
impairments and expenses of US$19 million
decreased by US$0.9 billion from FY2021.
The decrease was primarily related to a lower
increase in the Samarco Dam failure provision
compared to FY2021 and US$0.5 billion
impairment of Cerrejón in FY2021.
For more information on the total impact
of the Samarco dam failure provision
and impairment charges connected
with equity accounted investments,
refer to Financial Statements note
3 ‘Exceptional items’ and Financial
Statements note 13 ‘Impairment of non-
current assets’ respectively.
Net finance costs of US$1.0 billion decreased
by US$0.3 billion, or 21 per cent from FY2021.
This was mainly due to premiums of US$395 million
paid as part of the multi-currency hybrid debt
repurchase programs completed during FY2021.
For more information on net finance costs
refer to Financial Statements note 22 ‘Net
finance costs’.
Total taxation expense of US$10.7 billion increased
by US$0.1 billion from FY2021. The increase is
primarily due to higher profits from higher prices
offset by FY2021 reduction of US tax credits
related to Chilean taxes and tax losses assessed
as not recoverable not repeating.
For more information on income tax
expense refer to Financial Statements note
6 ‘Income tax expense’.
Principal factors that affect Underlying EBITDA
The following table and commentary describes the impact of the principal factors1 that affected Underlying EBITDA for FY2022 compared with FY2021.
Underlying EBITDA for year
ended 30 June 2021 (Restated)
Net price impact:
US$M
35,073
Change in sales prices
6,594 Higher average realised prices for metallurgical coal, thermal coal, copper and nickel, partially offset by lower
Price-linked costs
(1,047)
average realised prices for iron ore.
Increased royalties reflecting higher realised prices for metallurgical coal and thermal coal and higher third-party
concentrate purchase costs reflecting higher nickel prices, partially offset by lower royalties for iron ore.
Change in volumes
Change in controllable cash costs
Change in other costs:
Exchange rates
Inflation
Fuel, energy, and consumable
price movements
Non-cash
Asset sales
Ceased and sold operations
5,547
(1,212) Lower volumes across our operations associated with the impacts of COVID-19 (US$952 million), lower volumes
at Olympic Dam as a result of the planned major smelter maintenance campaign, lower copper concentrator feed
grade at Escondida, lower BMA volumes due to significant wet weather impacts, and lower volumes at Nickel West
due to an unplanned smelter outage in the June 2022 quarter. This was partially offset by higher concentrate sales
at Spence reflecting the continued ramp up of the Spence Growth Option and favourable weather compared to the
prior year at WAIO.
(540) Higher costs across our operations due to the impacts of COVID-19 (US$277 million) reported as an exceptional
item last year, higher costs at WAIO due to South Flank operational ramp-up expenditure and higher rail
maintenance costs. Higher costs at Escondida due to an increase in material mined and workforce bonus payments
for a new collective bargaining agreement. Higher costs at Spence due to a ramp-up of concentrate volumes, and a
prior year one-off gain due to the cancellation of power contracts at Escondida and Spence. This was partially offset
by favourable inventory movements at Olympic Dam, Nickel West, Escondida and Spence, and lower costs at BMA
due to cost efficiency initiatives.
Impact of movements in the Australian dollar and Chilean peso against the US dollar.
1,180
Impact of inflation on the Group’s cost base.
(867)
(660) Predominantly higher diesel and acid prices.
(3)
(350)
2
1,668 Reflects the contribution of BMC prior to divestment and a decrease in costs related to the closure and rehabilitation
provision for closed mines of US$297 million compared with the prior year.
Other items
446 Other includes higher recovery of freight costs caused by movements in the freight index on consecutive voyage
charter (CVC) voyages and higher average realised sales prices received by Antamina, partially offset by the write-
off of iron ore dormant stockpiles.
Underlying EBITDA for year
ended 30 June 2022
40,634
1 For information on the method of calculation of the principal factors that affect Underlying EBITDA, refer to OFR 11.2.
20
BHP
Annual Report 2022
Discontinued operations
On 22 November 2021, the Group and
Woodside signed a binding Share Sale
Agreement (SSA) for the merger of the assets
with Woodside. Woodside has subsequently
acquired the entire share capital of BHP
Petroleum International Pty Ltd (BHP Petroleum)
in exchange for new Woodside ordinary shares.
While the merger had an economic effective
date of 1 July 2021, the Group continued to
control the Petroleum assets and carry on
business in the normal course for 11 months
until 1 June 2022 (Completion Date). As such,
the Group recognises its share of revenue,
expenses, net finance costs and associated
income tax expense related to the discontinued
operation until the Completion Date.
All income and expense items relating to the
Petroleum Discontinued Operation have been
removed from the individual line items in the
Consolidated Income Statement. The post-tax
loss of the Petroleum Discontinued Operation
is presented as a single amount in the line
item titled ‘Profit/(loss) after taxation from
Discontinued operations’.
Petroleum’s contribution to BHP’s 2022 financial
results comprised a US$2.5 billion profit
after taxation.
As consideration for the sale of BHP Petroleum,
the Group received 914,768,948 newly issued
Woodside ordinary shares at Completion Date.
On the Completion Date, the Group paid a
fully franked in specie dividend in the form of
Woodside shares to eligible BHP shareholders.
Eligible BHP shareholders received one
Woodside share for every 5.5340 BHP shares
they held on the Group’s register at the record
date of 26 May 2022. As part of completion and
in order to reflect the economic effective date, the
Group made a net cash payment of US$0.7 billion
to Woodside in addition to US$0.4 billion in
cash that was left in the BHP Petroleum bank
accounts to fund ongoing operations. The total
cash transfer of US$1.1 billion reflects the net
cash flows generated by BHP Petroleum between
1 July 2021 and Completion Date adjusted for
dividends Woodside would have paid on the
newly issued Woodside ordinary shares, had
the merger completed on 1 July 2021. The net
cash completion payment to Woodside is subject
to a customary post-completion review, which
may result in an adjustment to the amount paid.
The merger generated a net gain after tax of
US$8.2 billion that has been included in the
line item titled ‘Profit/(loss) after taxation from
Discontinued operations’ and treated as an
exceptional item.
For further information refer to
Financial Statements note 27
‘Discontinued operations’.
Cash flow
The following table provides a summary of the Consolidated Cash Flow Statement contained in Financial Statements 1.4, excluding the impact of foreign
currency exchange rate changes on cash and cash equivalents.
Year ended 30 June
Net operating cash flows from Continuing operations
Net operating cash flows from Discontinued operations
Net operating cash flows
Net investing cash flows from Continuing operations
Net investing cash flows from Discontinued operations
Net cash completion payment on merger of Petroleum with Woodside
Cash and cash equivalents disposed on merger of Petroleum with Woodside
Net investing cash flows
Net financing cash flows from Continuing operations
Net financing cash flows from Discontinued operations
Net financing cash flows
Net increase/(decrease) in cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents from Continuing operations
Net increase/(decrease) in cash and cash equivalents from Discontinued operations
Net cash completion payment on merger of Petroleum with Woodside
Cash and cash equivalents disposed on merger of Petroleum with Woodside
2022
US$M
29,285
2,889
32,174
(4,973)
(904)
(683)
(399)
(6,959)
(22,734)
(33)
(22,767)
2,448
1,578
1,952
(683)
(399)
2021
US$M
Restated
2020
US$M
Restated
25,883
1,351
27,234
(6,325)
(1,520)
−
−
(7,845)
(17,884)
(38)
(17,922)
1,467
1,674
(207)
−
−
14,685
1,021
15,706
(6,583)
(1,033)
−
−
(7,616)
(9,713)
(39)
(9,752)
(1,662)
(1,611)
(51)
−
−
Net operating cash inflows from Continuing
operations of US$29.3 billion increased
by US$3.4 billion. This reflects higher net
commodity prices, favourable foreign exchange
and strong underlying operational performance
partially offset by COVID-19 impacts.
Net investing cash outflows from Continuing
operations of US$5.0 billion decreased by
US$1.4 billion. This is primarily due to net
proceeds received of US$1.3 billion, including
adjustment for working capital, related to the
sale of BHP’s 80 per cent interest in BMC to
Stanmore Resources Limited completed in the
current period.
For more information and a breakdown of
capital and exploration expenditure on a
commodity basis refer to OFR 10.
Net financing cash outflows from Continuing
operations of US$22.7 billion increased by
US$4.9 billion. This increase reflects higher
dividends paid to BHP shareholders of
US$10.0 billion offset by lower net repayments
of interest bearing liabilities of US$5.6 billion
mainly due to bond maturity payments and early
repayment of hybrid bonds executed in the
FY2021 year.
For more information, refer to Financial
Statements note 20 ‘Net debt’.
4.4 Debt and sources
of liquidity
Our policies on debt and liquidity management
have the following objectives:
Net cash flows from Discontinued operations
relate to the Group’s Petroleum business that
was merged with Woodside on 1 June 2022.
For further information, refer to
Financial Statements note 27
‘Discontinued operations’.
Underlying return on capital employed
(ROCE) of 48.7 per cent increased by 16.2
percentage points (FY2021: 32.5 per cent)
reflecting the significant increase in profit
after taxation excluding net finance costs and
exceptional items of US$6.4 billion. The increase
is also due to the disposal of the Group’s
Petroleum business and BMC reducing average
capital employed.
For more information on Assets under
Construction refer to Financial Statements
note 11 ‘Property, plant and equipment’.
– a strong balance sheet through the cycle
– diversification of funding sources
– maintain borrowings and excess cash
predominantly in US dollars
Interest bearing liabilities,
net debt and gearing
At the end of FY2022, Interest bearing liabilities
were US$16.4 billion (FY2021: US$21.0 billion)
and Cash and cash equivalents were
US$17.2 billion (FY2021: US$15.2 billion).
This resulted in Net debt1 of US$0.3 billion,
which represented a decrease of US$3.8 billion
compared with the net debt position at 30 June
2021. This was primarily due to significant
operating cash flows generated from strong
coal and copper prices and reliable operating
performance which more than offset the payment
1 We use non-IFRS financial information to reflect our underlying financial performance. For a discussion on the non-IFRS financial information we use refer to OFR 11. For the
definition and method of calculation of non-IFRS financial information refer to OFR 11.1. For the composition of net debt refer to Financial Statements note 20 ‘Net debt’.
BHP
Annual Report 2022
21
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 4 Financial review continued
of record dividends. Gearing, which is the ratio
of Net debt to Net debt plus Net assets, was 0.7
per cent at 30 June 2022, compared with 6.9 per
cent at 30 June 2021.
During FY2022, gross debt decreased by
US$4.6 billion to US$16.4 billion as at 30 June
2022. This decrease includes a US$0.5 billion
repayment of 3.25 per cent USD senior notes
that matured on 21 November 2021 and
US$0.7 billion repayment of 2.875 per cent
USD senior notes that matured on 24 February
2022. The reduction also includes US$2.3 billion
of favourable foreign exchange and interest
rate adjustments, along with US$0.5 billion of
coal and Petroleum leases disposed following
the coal divestments and merger of Petroleum
business with Woodside.
At the subsidiary level, Escondida refinanced
US$0.9 billion of long-term debt and borrowed
US$0.3 billion in long-term debt.
Funding sources
No new Group-level debt was issued in FY2022
and debt that matured during the year was
not refinanced.
Our Group-level borrowing facilities are not
subject to financial covenants. Certain specific
financing facilities in relation to specific assets
are the subject of financial covenants that vary
from facility to facility, as is considered normal
for such facilities.
In addition to the Group’s uncommitted debt issuance programs, we hold the following committed
standby facility:
Revolving credit facility1
Total financing facility
Facility
available
2022
US$M
5,500
5,500
Drawn
2022
US$M
Undrawn
2022
US$M
–
–
5,500
5,500
Facility
available
2021
US$M
5,500
5,500
Drawn
2021
US$M
Undrawn
2021
US$M
–
–
5,500
5,500
1 During the year we completed a one-year extension of the facility which is now due to mature on 10 October
2026. The committed US$5.5 billion revolving credit facility operates as a back-stop to the Group’s uncommitted
commercial paper program. The combined amount drawn under the facility or as commercial paper will not
exceed US$5.5 billion. As at 30 June 2022, US$ nil commercial paper was drawn (FY2021: US$ nil), therefore
US$5.5 billion of committed facility was available to use (FY2021: US$5.5 billion). A commitment fee is payable
on the undrawn balance and interest is payable on any drawn balance comprising a reference rate plus a margin.
The agreed margins are typical for a credit facility extended to a company with the Group’s credit rating.
For more information on the maturity profile of our debt obligations and details of our standby
and support agreements refer to Financial Statements note 23 ‘Financial risk management’.
Information in relation to our material off-balance sheet arrangements, principally contingent
liabilities, commitments for capital expenditure and commitments under leases at 30 June
2022 is provided in Financial Statements note 11 ‘Property, plant and equipment’, Financial
Statements note 21 ‘Leases’ and Financial Statements note 32 ‘Contingent liabilities’,
respectively.
In our opinion, working capital is sufficient for
our present requirements. Our Moody’s credit
rating has remained at A2/P-1 outlook stable
(long-term/short-term) throughout FY2022 and
Moody’s affirmed its credit rating on 2 June
2022. Our Standard & Poor’s credit rating
changed from A/A-1 outlook stable (long-term/
short-term) to A/A-1 CreditWatch negative
(long-term/short-term) on 23 August 2021,
following the announcement of the proposed
merger of our Petroleum business with
Woodside. Upon completion of the merger, on
1 June 2022 Standard & Poor’s lowered the
Group’s long-term credit rating by one notch,
removed the credit rating from CreditWatch,
and confirmed a credit rating of A-/A-1 outlook
stable (long-term/short-term). Credit ratings
are forward-looking opinions on credit risk.
Moody’s and Standard & Poor’s credit ratings
express the opinion of each agency on the ability
and willingness of BHP to meet its financial
obligations in full and on time. A credit rating
is not a recommendation to buy, sell or hold
securities and may be subject to suspension,
reduction or withdrawal at any time by an
assigning rating agency. Any credit rating
should be evaluated independently of any
other information.
The following table expands on the net debt, to provide more information on the cash and non-cash movements in FY2022.
Year ended 30 June
Net debt at the beginning of the financial year
Net operating cash flows
Net investing cash flows
Free cash flow – Total operations
Carrying value of interest bearing liability net repayments
Net settlements of interest bearing liabilities and debt related instruments
Dividends paid
Dividends paid to non-controlling interests
Other financing activities1
Other cash movements
Fair value adjustment on debt (including debt related instruments)2
Foreign exchange impacts on cash (including cash management related instruments)
Lease additions
Divestment and demerger of subsidiaries and operations
Others
Non-cash movements
Net debt at the end of the financial year
(4,121)
25,215
(20,787)
2022
US$M
32,174
(6,959)
2,227
(2,474)
(17,851)
(2,540)
(149)
5
27
(736)
492
(428)
(12,044)
19,389
(10,253)
2021
US$M
27,234
(7,845)
7,433
(7,424)
(7,901)
(2,127)
(234)
58
(1)
(1,079)
−
(191)
(640)
(333)
(1,213)
(4,121)
1 Other financing activities mainly comprises purchases of shares by Employee Share Option Plan trusts of US$149 million (FY2021: US$234 million).
2 The Group hedges against the volatility in both exchange and interest rates on debt, and also exchange on cash, with associated movements in derivatives reported in Other
financial assets/liabilities as effective hedged derivatives (cross currency and interest rate swaps), in accordance with accounting standards. For more information, refer to
Financial Statements note 23 ‘Financial risk management’.
Dividends
Our dividend policy provides for a minimum
50 per cent payout of Underlying attributable
profit (Continuing operations) at every reporting
period. The minimum dividend payment for the
second half of FY2022 was US$1.15 per share.
The Board determined to pay an additional
amount of US$0.60 per share, taking the final
dividend to US$1.75 per share (US$8.9 billion).
In total, cash dividends of US$16.4 billion
(US$3.25 per share) have been determined
for FY2022. These returns are covered by
total free cash flow of US$25.2 billion in
FY2022. In addition, an in specie dividend
of US$19.6 billion (US$3.86 per share) was
determined in FY2022, distributing the Woodside
shares received as consideration for the sale of
BHP Petroleum.
The total dividends determined in FY2022,
both cash and in specie, was US$36.0 billion
(US$7.11 per share).
22
BHP
Annual Report 2022
5 Our assets
Western Australia Iron Ore
5.1 Minerals Australia
Minerals Australia includes operated assets
in Western Australia, Queensland, New
South Wales and South Australia, focused
on iron ore, metallurgical coal, copper,
nickel and energy coal. The commodities
produced by our Minerals Australia assets
are transported by rail and road to port and
exported to our global customers.
Western
Australia
Existing
operations
Non-operational
mines
Port
Port Hedland
Nelson Point
Nimingarra
Goldsworthy
Rail Line
Marble Bar
Yarrie
Port Hedland –
Newman Rail Line
Chichester
Deviation
Finucane Island
South Hedland
Karratha
Great
Northern
Highway
Karijini
National
Park
Yandi
Mining Area C
South Flank
Newman
East
Newman West
Orebody 18
Jimblebar
Newman
Jimblebar
Iron Ore
Western Australia Iron Ore
Overview
Western Australia Iron Ore (WAIO) is an
integrated system of four processing hubs
and five open-cut operational mines in the
Pilbara region of northern Western Australia,
connected by more than 1,000 kilometres of rail
infrastructure and port facilities.
WAIO’s Pilbara reserve base is relatively
concentrated, allowing development through
integrated mining hubs connected to the mines
and satellite orebodies by conveyors or spur
lines. This approach seeks to maximise the
value of installed infrastructure by using the
same processing plant and rail infrastructure for
several orebodies.
Ore is crushed, beneficiated (where necessary)
and blended at the processing hubs – Mt
Newman operations (which has our beneficiation
plant), Yandi, Mining Area C and Jimblebar
– to create lump and fines products that are
transported along the Port Hedland–Mt Newman
rail line to the Finucane Island and Nelson Point
port facilities at Port Hedland.
There are four main WAIO joint ventures (JVs):
Mt Newman, Yandi, Mt Goldsworthy (which
includes the new South Flank mining area)
and Jimblebar. BHP’s interest in each is 85
per cent, with Mitsui and ITOCHU owning the
remaining 15 per cent. The joint ventures are
unincorporated, except Jimblebar.
BHP, Mitsui, ITOCHU and POSCO are also
participants in the POSMAC JV. BHP’s interest
in POSMAC is 65 per cent. The ore from the
POSMAC JV is sold to the main joint ventures.
All ore is transported on the Mt Newman JV
and Mt Goldsworthy JV rail lines. The Nelson
Point port facility is owned by the Mt Newman
JV and the Finucane Island facility is owned
by the Mt Goldsworthy JV. On 7 September
2021, BHP received regulatory approval
to increase its export capacity at WAIO’s
Port Hedland operations up to 330 million
tonnes per annum (Mtpa) (100 per cent
basis) subject to the outcomes of a standard
appeals process. We are assessing 330 Mtpa
expansion alternatives.
Our near-term focus remains on sustainable
production of 290 Mtpa of iron ore in the short
term. Successful tie-in of capital projects,
including the port debottlenecking project,
is expected to enable growth in excess of
300 Mtpa in the medium term.
Key developments in FY2022
WAIO’s production of 249 million tonnes (Mt)
or 283 Mt on a 100 per cent basis was in
line with the prior period, primarily reflecting
continued strong supply chain performance
and favourable weather compared to the prior
period, offset by the impacts of temporary labour
constraints relating to COVID-19 and planned
major maintenance including the Jimblebar train
load out and car dumper one. Our preventative
maintenance programs continue to underpin the
strength of the WAIO supply chain, delivering
increased car dumper, reclaimer and ship loader
availability year-on-year and enabling record
sales volumes of 284 Mt (100 per cent basis).
South Flank ramp up to full production capacity
of 80 Mtpa (100 per cent basis) is ahead of
schedule with an average rate of 67 Mtpa
achieved in the June 2022 quarter contributing
to record production from the Mining Area
C hub and record lump sales in FY2022.
Yandi continues its end-of-life ramp-down as
South Flank continues to ramp up. Yandi is
expected to provide supply chain flexibility with
a lower level of production to continue for a
few years.
Testing of two new automated shiploaders
has commenced at our Port Hedland
operations. This project is utilising 3D laser
technology, which is expected to support the
full automation of WAIO’s eight shiploaders by
CY2023. Together with planned autonomous
haulage rollouts at both South Flank and
Newman West, these initiatives are expected
to deliver significant safety, production and
cost improvements as well as new job and
development opportunities for our people.
BHP
Annual Report 2022
23
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 5 Our assets continued
Olympic Dam
Coober Pedy
Olympic Dam
Port Augusta
Port Lincoln
Adelaide
Victor Harbor
Kangaroo
Island
South Australia
Olympic Dam
Port
Highway
Copper
Olympic Dam
Overview
Located in South Australia, Olympic Dam (BHP
ownership: 100 per cent) is one of the world’s
most significant deposits of copper, gold, silver
and uranium. It comprises underground and
surface operations, and is a fully integrated
processing facility from ore to metal.
Ore mined underground is hauled by an
automated train system to crushing, storage
and ore hoisting facilities or trucked directly to
the surface.
Olympic Dam has a fully integrated metallurgical
complex with a grinding and concentrating
circuit, a hydrometallurgical plant incorporating
solvent extraction circuits for copper and
uranium, a copper smelter, a copper
refinery, including an electro-refinery and an
electrowinning-refinery, and a recovery circuit for
precious metals.
Key developments in FY2022
Olympic Dam copper production decreased
by 33 per cent to 138 kilotonnes (kt) primarily
as a result of a major smelter maintenance
campaign (SCM21) completed in January 2022
which was delayed due to COVID-19 impacts
on the availability of the workforce. Near-record
production in the June 2022 quarter followed the
successful ramp up of the smelter to full capacity
in April 2022. Average copper grade of 2.14 per
cent was achieved in FY2022 as the majority of
material mined is from the Southern Mine Area,
investment in which over the past few years
enabled strong underground mine performance
and a stable ore blend to be delivered to the
processing plant. The maintenance campaign
included the rebuild of the flash furnace and its
ancillary equipment, and refurbishment of the
acid plant, which has resulted in significant plant
improvements. Short-term focus is on delivering
operational stability and improved production
performance, through debottlenecking
existing facilities.
Olympic Dam
Australia, Olympic Dam entered a Memorandum
of Understanding with the South Australian
Government, SA Water and OZ Minerals to
progress a business case to examine the
building of a desalination plant and pipeline.
Olympic Dam has also entered into a renewable
energy supply arrangement to enable the asset
to draw energy supplies from a solar-wind hybrid
plant to reduce the Scope 2 greenhouse gas
emissions from its electricity consumption by
2025. In FY2022, Olympic Dam became the
first Australian copper mine to be awarded the
Copper Mark, an international accreditation that
recognises responsible production practice.
The Oak Dam exploration program is continuing
next stage resource definition drilling with six drill
rigs now active on site, an increase from two drill
rigs previously, after commencing the program in
May 2021. This program is focused on resource
definition and potential development pathways.
.
Coal
BHP Mitsubishi Alliance
Overview
BHP Mitsubishi Alliance (BMA) (BHP ownership:
50 per cent) operates seven metallurgical coal
mines – Goonyella Riverside, Broadmeadow,
Daunia, Peak Downs, Saraji, Blackwater and
Caval Ridge in the Bowen Basin, Queensland.
With the exception of the Broadmeadow
underground longwall operation, BMA’s mines
are open cut. A small proportion of BMA’s
production is sold as energy coal. BMA has
access to infrastructure, including a modern,
multi-user rail network and owns and operates
its own coal-loading terminal at Hay Point,
near Mackay. BMA has contracted capacity
at two other multi-user port facilities – the
Port of Gladstone (RG Tanna Coal Terminal)
and Dalrymple Bay Coal Terminal (DBCT).
Following BHP’s divestment of BHP Mitsui Coal
Pty Ltd (BMC), BMA no longer has contracted
access to BMC’s port allocations at DBCT and
North Queensland Export Terminal (NQXT).
Key developments in FY2022
In February 2022, to support future secure and
sustainable water sources for regional South
BMA production decreased by 9 per cent
to 29 Mt or 58 Mt on a 100 per cent basis.
24
BHP
Annual Report 2022
BHP Mitsubishi Alliance
(BMA)
North Queensland
Export Terminal
Bowen
Queensland,
Australia
Collinsville
Goonyella
Riverside
Broadmeadow
Dalrymple
Bay
Mackay
BMA Mine
BMA Terminal
Terminal
Rail
BMA Hay Point
Coal Terminal
Moranbah
Caval
Ridge
Daunia
Peak Downs
Saraji
Dysart
Emerald
Rockhampton
RG
Tanna
Blackwater
Blackwater
Gladstone
Significant wet weather impacts across most
BMA operations and labour constraints, including
COVID-19 related absences, which impacted
stripping and mine productivity, more than offset
record production at the Broadmeadow mine.
Following the automation of Daunia’s truck
fleet in November 2021, the automation of
Goonyella’s pre-strip truck fleet was completed
in March 2022 with the Goonyella coal truck fleet
expected to be fully autonomous by the end of
December 2022.
During the year, BMA commenced a project for
the fabrication and installation of a new berth
superstructure and shiploader at Hay Point
Coal Terminal, with a focus on improving the
facility’s operational resilience to withstand
significant weather events and increasing its
throughput capacity.
In response to regular wet weather events,
BMA is continuing to implement a range of wet
weather mitigation measures which are aimed
at improving the ability to operate in adverse
weather conditions. These measures include
using drone mapping and rain on grid modelling
to manage surface water flows to less impactful
areas, improved road preparation and the use
of nitrogen filled tyres to enable operation in
lightning conditions.
Following the announcement of the change to
the Queensland royalty regime from 1 July 2022,
we will assess the impact on BMA economic
reserves and mine lives, as well as the impact
on production, jobs and the communities
of Central Queensland. This further cost
pressure is expected to discourage investment,
operational growth, job creation and local
business spending across the state.
New South Wales Energy Coal
Nickel West
Gunnedah
Tamworth
Quirindi
Muswellbrook
Mt Arthur
Singleton
Cessnock
Maitland
Newcastle
NSW,
Australia
NSWEC
Port
Rail
New South Wales Energy Coal
BHP Mitsui Coal divestment
Overview
New South Wales Energy Coal (NSWEC) (BHP
ownership: 100 per cent) comprises the Mt
Arthur Coal open-cut energy coal mine in the
Hunter Valley. It has access to infrastructure in
the Hunter Region, including a multi-user rail
network and coal loading terminal access at
the Port of Newcastle through Newcastle Coal
Infrastructure Group (BHP ownership: 28 per
cent) and Port Waratah Coal Services.
Key developments in FY2022
NSWEC production decreased by 4 per cent
to 14 Mt primarily reflecting lower volumes due
to an increased proportion of washed coal to
capitalise on higher margins for higher quality
coals, COVID-19 related labour constraints
which impacted stripping performance and mine
productivity and wet weather. Higher-quality
coals made up almost 90 per cent of sales
compared to approximately 60 per cent of sales
in the prior year, generating a price premium of
nearly 150 per cent between high-quality and
lower-quality coals in FY2022.
On 16 June 2022, we announced that we
will retain NSWEC in our portfolio, seek the
relevant approvals to continue mining beyond
its current mining consent that expires in
CY2026 and proceed with a managed process
to cease mining at the asset by the end of
FY2030. A review was announced in August
2020 and a trade sale process for NSWEC was
conducted, however the process did not result in
a viable offer. Our assessment of the resource
economics, geotechnical profile and future
investment requirements led us to determine that
continued mining in the near term and moving to
closure in FY2030 provides the optimal financial
outcome when compared to alternate options.
Continuation of mining to the end of FY2030 is
expected to afford eight years to work with our
people, state and federal governments and local
communities in the Hunter Valley region on an
equitable transition approach that supports long-
term community sustainability.
On 3 May 2022, we completed the divestment of
our 80 per cent interest in BMC, a metallurgical
coal joint venture in Queensland operated
by BMC, to Stanmore Resources Limited.
Stanmore Resources paid US$1.1 billion cash
consideration at completion plus a preliminary
completion adjustment of approximately
US$200 million for working capital. The sum
of US$100 million cash remains payable to
BHP on 3 November 2022, with potential for an
additional amount of up to US$150 million in a
price-linked earnout payable to BHP in CY2024.
The total cash consideration for the transaction
is up to US$1.35 billion plus the final completion
adjustment amount.
Nickel
Nickel West
Overview
Nickel West (BHP ownership: 100 per cent)
is a fully integrated nickel business located
in Western Australia, with three streams
of concentrate. It comprises open-cut and
underground mines, concentrators, a smelter
and refinery. Nickel West owns the majority of
tenements of known resource in the Agnew-
Wiluna basin in Western Australia.
Disseminated sulphide ore is mined at the
Mt Keith open-pit operation and Mt Keith
Satellite mine (Yakabindie) and crushed and
processed onsite to produce nickel concentrate.
Nickel sulphide ore is mined at the Cliffs and
Leinster underground mines and processed
through a concentrator and dryer at Leinster.
A concentrator plant in Kambalda processes ore
and concentrate purchased from third parties.
The three streams feed the Kalgoorlie nickel
smelter, which uses a flash furnace to produce
nickel matte. The Kwinana nickel refinery then
turns this into nickel powder, briquettes and
nickel sulphate.
Newman
Western
Australia
Nickel West
Port
Highway
Cliffs
Mt Keith
Leinster
Geraldton
Mt Keith Satellite
(Yakabindie)
Kalgoorlie Smelter
Kambalda
Concentrator
Ravensthorpe
Fremantle
Perth
Kwinana Refinery
Albany
Key developments in FY2022
Nickel West production decreased by 14 per
cent to 77 kt primarily due to the significant
impacts of COVID-19 related labour absences
and workforce shortages, and unplanned
downtime at the oxygen plant leading to a 15-
day smelter outage in the June 2022 quarter.
The nickel sulphate plant at the Kwinana nickel
refinery has been commissioned, with first
saleable production achieved in the December
2021 quarter. The plant is expected to produce
approximately 100 kilotonnes per annum
(ktpa) of nickel sulphate for the lithium-ion
battery industry.
Leinster B11, BHP’s first block cave, continues
development whilst producing. Ore is being
hoisted to the Leinster concentrator and the
undercut and drawbell development essential to
this mining method are expected to be complete
in CY2023.
Nickel West expanded its commitment to
sourcing renewable energy through the
execution of power purchase agreements for
100 per cent output of the 75MW Flat Rocks
Wind Farm and for 50 per cent of the 100MW
Merredin Solar Farm. The combined output
from these two renewable farms is expected to
generate the equivalent of greater than 100 per
cent of the current power requirements of Nickel
West’s Kalgoorlie nickel smelter, Kambalda
nickel concentrator and Kwinana nickel refinery
from CY2024.
TransAlta has begun construction at the
Northern Goldfields Solar Project, a large-scale,
off-grid mining solar and battery energy storage
systems, to help power Nickel West’s Mt Keith
and Leinster operations. The solar project due
to be commissioned in early 2023, is expected
to reduce Scope 2 emissions by 12 per cent at
these operations.
BHP
Annual Report 2022
25
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 5 Our assets continued
Escondida and Pampa Norte
Jansen Potash Project
ARGENTINA
Minera Escondida
Assiniboia
Weyburn
5.2 Minerals Americas
The Minerals Americas asset group includes
projects, operated assets and non-operated
joint ventures in Canada, Chile, Peru, the
United States and Brazil.
Our operated copper assets in the Americas,
Escondida and Pampa Norte, are open-cut
mines that produce copper concentrate and
copper cathodes. The non-operated assets
in the Minerals Americas portfolio are open-
cut mines that produce copper (Antamina)
and iron ore (Samarco). We have a 45 per
cent interest in the Resolution copper
project in the United States and a 100 per
cent interest in the Jansen Potash Project in
Canada. The commodities produced by our
Minerals Americas assets are transported to
port by pipeline, rail or road and exported to
customers around the world.
26
BHP
Annual Report 2022
PERU
Cerro
Colorado
Chile
BOLIVIA
Mine
Iquique
BOLIVIA
Pica
Pacific
Ocean
CHILE
Tocopilla
Calama
Spence
Mejillones
Antofagasta
Copper
Escondida
Overview
Escondida (BHP ownership: 57.5 per cent) is a
leading producer of copper concentrate, with by-
products including gold and silver, and cathodes
located in the Atacama Desert in northern Chile.
Escondida’s two pits feed three concentrator
plants, as well as two leaching operations (oxide
and sulphide).
Key developments in FY2022
Escondida copper production decreased by
6 per cent to 1,004 kt primarily due to higher
than expected concentrator feed grade decline
of 4 per cent, public road blockades affecting
access to site for both workers and supplies, and
the impact of a reduced operational workforce
from COVID-19. Despite these challenges,
Escondida achieved record material mined
for the 2022 financial year and near-record
concentrator throughput of 367 ktpd.
Pampa Norte
Overview
Pampa Norte (BHP ownership: 100 per cent)
consists of two assets in the Atacama Desert in
northern Chile – Spence and Cerro Colorado.
Spence produces copper cathodes and copper
concentrate, with by-products including gold,
silver and molybdenum.
Cerro Colorado produces copper cathodes.
Its current environmental licence expires at the
end of CY2023.
Key developments in FY2022
Pampa Norte copper production increased by
29 per cent to 281 kt reflecting the ramp up of the
Spence Growth Option, partially offset by the impact
of lower cathode production as a result of a 14 per
cent decline in Pampa Norte stacking feed grade.
The molybdenum plant at Spence produced and
sold its first batch of molybdenum concentrate
during Q4 FY2022. During May 2022, the new
copper concentrator in Spence was inaugurated.
The concentrator operates on desalinated seawater
and is powered from renewable sources, and will
allow the operation to be extended by 50 years.
Saskatchewan,
Canada
BHP project
BHP mineral
leases
Prince Albert
Wolverine
Burr
Saskatoon
Jansen
Young
Boulder
Yorkton
Moose Jaw
Regina
Melville
Potash
Jansen Potash Project
Overview
The Jansen Potash Project (BHP ownership:
100 per cent) is located about 140 kilometres
east of Saskatoon, Canada.
Jansen’s large resource provides the opportunity
to develop the project in stages, with Jansen
Stage 1 (Jansen S1) expected to produce
approximately 4.35 Mt of potash per annum
on completion in CY2027 and sequenced
brownfield expansions of up to 12 Mtpa
(approximately 4 Mtpa per stage).
BHP holds mineral leases covering around
9,600 square kilometres in the Saskatchewan
potash basin.
Key developments in FY2022
Excavation and lining of the production and
service shafts was completed in June 2022.
On 17 August 2021, BHP approved
US$5.7 billion (C$7.5 billion) in capital
expenditure for Jansen S1. Jansen S1 includes
the design, engineering and construction of
an underground potash mine and surface
infrastructure, including a processing facility, a
product storage building and rail infrastructure.
Jansen S1 product is intended to be shipped
to export markets through Westshore, in Delta,
British Columbia. The project includes funding
for the required port and rail infrastructure.
First ore is targeted in CY2027, with construction
expected to take approximately six years,
followed by a ramp-up period of two years.
Opportunities to bring forward Jansen S1
continue to be assessed. In addition to Jansen
S1, study of Jansen Stage 2 (Jansen S2)
has commenced.
Antamina
0
50km
Resolution Copper
Samarco
East Clear Creek
Arizona,
USA
17
Tangle Creek
Cave Creek
Turkey Creek
Phoenix
60
60
Resolution Copper
Route
Oak Flat
Resolution Copper
Dripping Springs
Belo
Horizonte
(Main
offices)
Nova Era –
Antônio Dias
(Guilman-Amorim
hydroelectric plant)
Mt Graham
Mining Lease
Minas Gerais,
Espírito Santo,
Brazil
Samarco
1st pipeline
2nd pipeline
3rd pipeline
Pipeline 2
operational;
pipelines 1 and 3
non-operational
Vitória
(Sales office)
10
Kitt Peak
USA
Mariana –
Ouro Preto
(Germano
operational
unit)
Mt Lemmon
Tucson
Mica Mountain
10
19
Appleton Ranch
Muniz Freire
(Muniz Freire
hydroelectric
plant)
Anchieta
(Operational
unit and
ocean terminal
at Ponta Ubu)
Huari
Huaraz
San Marcos
Antamina
mine
Huarmey
Punta
Lobitos
Huari
Province,
Ancash,
Peru
Antamina mine
Port
Pipeline
Lima
MEXICO
Non-operated minerals joint
ventures
Copper
Antamina
Overview
Antamina (BHP ownership: 33.75 per cent)
is a large, low-cost copper and zinc mine in
north central Peru with by-products, including
molybdenum and silver. Antamina is operated
independently by Compañía Minera Antamina S.A.
Key developments in FY2022
Antamina copper production increased by 4 per
cent to 150 kt (BHP share), reflecting higher
copper head grades. Zinc production decreased
by 15 per cent to 123 kt (BHP share) reflecting
lower zinc head grades.
In April 2022, Antamina submitted to Peruvian
authorities a modification of the Environmental
Impact Assessment to sustain mine life from
2028 to 2036 entirely within Antamina’s current
operational area.
Resolution Copper
Overview
Resolution Copper (BHP ownership: 45 per
cent), located in the US state of Arizona, is
operated by Rio Tinto (55 per cent ownership
interest). Resolution Copper is one of the
largest undeveloped copper projects in the
world and has the potential to become one of
the largest copper producers in North America.
The Resolution Copper deposit lies more than
1,600 metres beneath the surface.
Key developments in FY2022
During FY2022, Resolution continued the
engineering and permitting phase of the project.
The project is subject to a federal permitting
process led by the US Forest Service. The US
Forest Service published a Final Environmental
Impact Statement in January 2021, which
was rescinded in March 2022 for the stated
purpose of conducting additional analysis
and consultation with Native American tribes.
The project team has been cooperating with the
US Forest Service as it completes this additional
review. During this time, Resolution has sought
to deepen its engagement and relationships with
local communities and Native American tribes.
Iron ore
Samarco
Overview
Samarco (BHP ownership: 50 per cent)
comprises a mine and three concentrators
located in the Brazilian state of Minas Gerais,
and four pellet plants and a port located
in Anchieta in the state of Espírito Santo.
Three 400-kilometre pipelines connect the
mine site to the pelletising facilities. Samarco is
operated independently by Samarco Mineração
S.A. Samarco’s main product is iron ore pellets.
Pellets are independently marketed by Samarco
and sold to customers around the world.
Key developments in FY2022
Samarco produced 4 million tonnes of pellets
and ore fines in FY2022 (BHP Share),
operating at 26 per cent of its total 26 Mtpa
production capacity following the resumption
of operations in December 2020. Studies to
increase production to 100 per cent by FY2029
are progressing.
The progressive decharacterisation of Samarco’s
upstream tailings dam structures is on track
and planned to be completed by FY2029.
These structures have been certified by
independent third parties as stable, are following
local stability and monitoring requirements, and
have not received tailings since 2015.
Broader studies to unlock solutions for Samarco
to operate without tailings dams beyond FY2030
are continuing.
For more information on the Fundão
dam failure and the response
refer to OFR 8.
5.3 Commercial
BHP’s Commercial function seeks
to maximise commercial and
social value while minimising
costs across the end-to-end
supply chain.
The function is organised around the following
core activities in our value chain, supported by
credit and market risk management and strategy
and planning activities.
Sales and Marketing
Sales and Marketing connects BHP’s resources
to market through commercial expertise, sales
and operations planning, customer insights and
proactive risk management. It presents a single
face to markets across multiple assets, with a
view to realising maximum value for our products
and supporting sustainability initiatives in our
downstream supply chain.
Maritime and Supply Chain
Excellence
Maritime and Supply Chain Excellence manages
BHP’s enterprise-wide maritime transportation
strategy and the chartering of ocean freight
to meet BHP’s inbound and outbound
transportation needs. It focuses on supply
chain excellence and sourcing cost-efficient
marine freight in addition to partnering within
the maritime ecosystem to reduce the GHG
emissions intensity of BHP-chartered shipping
of our products. It also seeks to manage supply
chain risk by vetting the safety performance of
the ships loading BHP cargo.
Procurement
Our global Procurement team connects asset
teams and suppliers to procure the goods and
services used by our projects, operated assets
and functions globally. Procurement partners with
our suppliers to optimise equipment performance,
reduce operating costs, optimise working capital
and generate social value. Through innovation we
work with suppliers to reduce the GHG emissions
intensity of inbound goods and services and
the operational GHG emissions of our operated
assets. Procurement manages supply chain
BHP
Annual Report 2022
27
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 5 Our assets continued
risk, fosters supplier innovation and develops
sustainable relationships with global suppliers
and local businesses in the communities where
we operate.
Warehousing, Inventory, Logistics
and Property
Warehousing, Inventory, Logistics and Property
designs and operates our inbound supply chain
networks for the delivery and warehousing
of spare parts, operating supplies and
consumables, and designs and operates our
office workspaces globally.
Market Analysis and Economics
Our Market Analysis and Economics team
develops BHP’s proprietary view on the outlook
for commodity demand and prices, as well as
our input costs, the world economy, climate
change and financial markets. The team works
with our Procurement, Maritime and Supply
Chain Excellence, and Sales and Marketing
sub-functions to help optimise end-to-end
commercial value, and with the Portfolio Strategy
and Development and External Affairs functions
to identify and respond to long-run strategic
changes in our operating environment.
Global Business Services
Global Business Services unites shared services
and repeatable process activity across the Group
into a single operation. Commencing operation
in FY2022 with the BHP Operating System
and with process transformation capabilities
at its core, it has the mandate to aggregate,
operate and improve end-to-end processes
on behalf of assets and functions to drive
operational excellence.
6 People and culture
Our employees and contractors,
around 80,000 globally, are the
foundation of our business.
We aim to attract, recruit, empower and retain
the best people.
To enable our people to perform at their best,
safety is our highest priority and we invest in
technology and innovative and effective ways to
manage risk, streamline processes and improve
productivity. We offer competitive remuneration
and invest in development programs to build
capability and improve performance.
Developing our capabilities
and an enabled culture
To drive continuous improvement, we
respect people’s differences and encourage
self-accountability, a hunger to learn and a
commercial mindset.
One of the ways we seek to achieve this is by
applying the BHP Operating System (BOS)
practices to help build leader capability. BOS is a
way of leading and working that focuses on the
safety of our people, value for our customers,
setting clear goals and measuring progress and a
mindset of zero waste. In FY2022, we continued
to train our leaders through BOS learning
academies to improve operational capability
and culture, with more than 3,000 people
leaders participating.
28
BHP
Annual Report 2022
Three times a year we ask our employees and
contractors about their experiences working with
BHP via a short Engagement and Perception
Survey. After each survey, our team leaders
assess what is working well, what they can
learn from others and take action to address
improvement areas. Despite significant
absences and workplace disruptions caused
by COVID-19, we maintained a high response
rate of 82 per cent of employees in March 2022
(81 per cent in February 2021) and achieved
a strong engagement score of 82 per cent
favourable (84 per cent in February 2021).
In particular, 80 per cent of our employees
and 88 per cent of our contractors (from 7,932
responses) would recommend BHP as a great
place to work, which places us in the top
third of global organisations as benchmarked
by Qualtrics.
In FY2022, we transformed our approach
to developing frontline leadership with the
launch of BHP Leadership Programs for
supervisors, superintendents and managers.
Through a combination of assessment,
workshops, experiences and coaching, the
suite of programs is designed to identify and
develop leaders and prepare them to take
on greater responsibility. We anticipate more
than 1,000 leaders each year will develop
their ability through these programs to lead
inclusively, ethically and through complexity
as they play their critical role to deliver
continuous improvement.
Our Operations Services business unit provides
maintenance and production services across
our Minerals Australia assets. It employs people
on a permanent basis and supports skills
building through a structured coaching and
in-field training program designed to enable
our workforce to deliver consistent equipment
operation and maintenance that balances safety,
maximum productivity and equipment reliability.
Operations Services had more than 3,500
employees as at 30 June 2022 and is expected
to continue to grow.
To help bolster Australia’s skills base and create
new career pathways into the mining sector,
the BHP FutureFit Academy located in Perth,
Western Australia and Mackay, Queensland,
provides a pathway to join Minerals Australia
through an accredited maintenance and
production traineeship or a trade apprenticeship.
Once trained and qualified, employees move
to one of our Australian operations.
The FutureFit Academy training includes the
skills required for an increasingly technological
and digitised world and focuses on our safety,
respectful behaviour, culture, and productive
ways of working. This helps FutureFit graduates
to be ‘BHP site ready’ when they graduate.
In FY2022, the FutureFit Academy trained more
than 417 apprentices and trainees, with 175
graduating. In FY2023, the FutureFit Academy
is expanding the program to include Western
Australia Iron Ore (WAIO) and Nickel West.
New curricula will be offered, including belt
splicing, electrical and auto electrical. The belt
splicing program will commence at Newman in
August 2022. For more information on BHP’s
FutureFit Academy see our case study at bhp.
com/people.
In Minerals Americas, the focus has been
on implementing an integrated approach to
capability building through defining frameworks
and programs for workforce upskilling and
reskilling as we transition into autonomous
operations at our operated assets. Early career
programs (for graduates and trainees in roles
such as operators, maintainers, supervisors
and engineers) are also a key area to build
a sustainable base of diverse talent with the
required capabilities. We will also continue
building partnerships with training and
learning institutions to develop those identified
capabilities for the future.
The talent market is dynamic and increasingly
competitive. We continue to work on our
attraction and retention strategies through
strategic workforce planning, talent acquisition,
inclusion and diversity, internal talent
management, employee mobility and our total
value proposition.
We believe we are strongly and competitively
placed in the market and regularly review our
positioning and total reward strategies, with
culture being our competitive edge. We have
deployed new proactive recruitment methods,
including recruitment marketing and talent
pooling, strategies for securing critical skills
and made improvements to our recruitment
processes to increase speed while maintaining
our focus on the suitability of candidates.
Inclusion and diversity
We believe that an inclusive and diverse
workforce promotes safety, productivity and
wellbeing, and underpins our ability to attract
and retain employees. Our systems, processes
and practices are designed to support fair
treatment for our people.
Our Inclusion and Diversity Position Statement
confirms our vision, commitment and
contributions to inclusion and diversity. We have
further work to do to achieve this goal.
Our strategy is to focus on attracting and
retaining a workforce that is truly representative
of society. We intend to do this by addressing
the barriers and impacts of bias and racism
experienced by people within underrepresented
groups by listening to their experience combined
with insights from our engagement surveys and
the recently deployed self-identification survey,
‘Tell Us About You’. So far, around 10,000 people
have confidentially shared with us information
about themselves (a 22 per cent response rate),
which is a good starting point and we expect to
see participation grow over time. Our intention
is to contrast this data with national/regional
census data over time to measure how diverse
we are against the general population.
To help mitigate gender pay disparities, we
have taken steps to reduce potential bias in
remuneration at the time of recruitment and
we conduct an annual gender pay review,
the results of which are reported to the BHP
Remuneration Committee.
Respect is one of our values under Our Charter
and is fundamental to building stronger teams
and being an inclusive and diverse workplace.
For some people, this has not been their
experience of working at BHP and we are
determined to address this.
For information on our approach
to addressing workplace sexual
harassment refer to OFR 7.5.
Our ambition to achieve a more diverse and
inclusive workplace is focused on four areas:
– embedding flexibility into the way we work
– encouraging and working with our supply
chain partners to support our commitment
to inclusion and diversity
– uncovering and taking steps to mitigate potential
bias in our systems, policies and processes
and in behaviours through the Respectful
Behaviour campaign
– ensuring our workplaces are safe for and
attractive to a diverse range of people
Gender balance1
In CY2016, we announced our aspiration to
achieve gender balance within our employee
workforce globally by the end of FY2025, which
we define as a minimum 40 per cent women
and 40 per cent men in line with the definitions
used by entities such as the International
Labour Organisation and HESTA.
We increased the representation of women
working at BHP in FY2022 by 2.5 percentage
points, with almost 8,000 more female
employees at the end of the year than in 2016.
At 30 June 2022, women represented 32.3 per
cent of our employee workforce, up from 17.6
per cent when we set our aspirational goal.
We are confident of achieving gender balance by
the end of FY2025.
The percentage of employees newly hired to work
for BHP in FY2022 was 52.7 per cent male and
47.3 per cent female. This is a marked increase
on our baseline for our aspirational goal, which
was 10.4 per cent female hired in FY2015.
We also improved our representation of women
in leadership by 2.7 percentage points compared
to FY2021, with 27.9 per cent female people
leaders at the end of FY2022.
To further accelerate female representation in
FY2022, we:
– continued market mapping to proactively
target people or groups of people not actively
looking to work for BHP or our industry
– implemented a ‘Tell Us About You’ survey, our
first self-identification survey to measure the
rich diversity of our workforce
– integrated inclusive leadership capabilities at
all levels of our leadership learning curriculum
– embedded the Ways of Working Framework
to guide employees and leaders to ‘Work
where you get great outcomes’
– launched Phase 3 of the Respectful Behaviour
campaign to reinforce our zero tolerance
of sexual harassment, racism and bullying
including global ‘Stop for Safety’ sessions for
all employees and contractors
The table below shows the gender composition of our employees, senior leaders and the Board over the last
three financial years1,2
Female employees
Male employees
Female people leaders
Male people leaders
Female Executive Leadership Team members
Male Executive Leadership Team members
Female Board members
Male Board members
2022
12,674
26,536
1,695
4,380
5
5
4
8
2021
11,868
27,953
1,439
4,276
5
5
4
8
2020
9,961
27,557
1,157
4,002
4
6
3
9
1 Based on a ‘point-in-time’ snapshot of employees
as at 30 June 2022, including employees on
extended absence, as used in internal management
reporting for the purposes of monitoring progress
against our goals. This does not include contractors.
People leaders as defined as employees with one
or more direct report.
1 Based on a ‘point-in-time’ snapshot of employees as at 30 June 2022, as used in internal management
reporting for the purposes of monitoring progress against our goals. In FY2021 and FY2022 this includes
employees on extended absence, 660 at 30 June 2021 and 948 in 2022, who were previously not included
in the active headcount.
2 For FY2022, this does not include employees who left BHP via the merger of BHP Petroleum and Woodside
(approximately 1,000 employees) or the sale of BHP Mitsui Coal to Stanmore Resources (approximately
500 employees).
BHP
Annual Report 2022
29
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 6 People and culture continued
Indigenous employment
Indigenous peoples are critical partners
of BHP’s operations around the world.
We recognise, as part of our Global Indigenous
Peoples Strategy, that we can contribute to the
economic empowerment of Indigenous peoples
through providing opportunities for employment,
training, procurement and by supporting
Indigenous enterprises.
We have set targets to increase Indigenous
employment in our Minerals Australia operations,
Minerals Americas operations in Chile and
our Jansen Potash Project and operations
in Canada.
In our Minerals Australia operations, we
have achieved the Australian Indigenous
employment target of 8 per cent ahead of
schedule (8.3 per cent of employees at 30 June
2022) through significant effort with targeted
Indigenous recruitment campaigns, a tailored
application process focused on the cultural
needs of applicants and BHP’s commitment to
the regional communities where we operate.
A key focus in Australia now is the retention
and development of our Indigenous workforce.
New targets have been set and engagement
strategies are being developed as part of
BHP’s next Minerals Australia Reconciliation
Action Plan.
From FY2023 the targets for Indigenous
employee representation are 9.7 per cent by
the end of FY2027 in our Minerals Australia
operations, 10 per cent by the end of FY2025
in our Minerals Americas operations in Chile
and 20 per cent by the end of FY2026 in
our Jansen Potash Project and operations
in Canada.
For information on our 2030 goals
related to Indigenous partnerships
refer to OFR 7.13.
LGBT+ inclusion
Our LGBT+ ally employee inclusion group,
Jasper, established in 2017, is a natural
extension of our inclusion and diversity
aspirations and reflects our value of Respect
under Our Charter.
Its membership base grew to around 2,000 in
FY2022, with eight regional chapters globally.
In FY2022, we continued to close gaps for
LGBT+ inclusion, such as releasing guidelines
and implementing support for transgender
and gender diverse recruitment, and updated
our parental leave policy to be more inclusive
by making language more gender neutral
and ensuring it applies to birth, long-term
guardianship and adoption aligned to changes
in Australia.
Flexible working
Our flexible working has evolved throughout the
COVID-19 pandemic and we have embedded
a hybrid working model for employees in non-
operational roles, allowing office and home-
based working arrangements, while requiring 30
to 50 per cent of work to be based in the office,
depending on the nature of work.
We understand many site-based employees
are in roles that cannot be performed remotely.
We continue to seek to provide flexible working
30
BHP
Annual Report 2022
Indigenous employee representation1
Location
Period
Target (%) 30 June 2022 (%)
Minerals America operations employees in Chile
Minerals Australia operations employees in Australia2
Jansen Potash Project and operation employees
in Canada3
By the end of FY2026
By the end of FY2025
By the end of FY2027
10.0
8.0
20.0
8.7
8.3
7.2
1 Point in time data at 30 June 2022.
2
Indigenous employee representation overall in Australia as at 30 June 2022 was 7.4 per cent including Minerals
Australia operations, 8.3 per cent Indigenous, and non-operational locations, 2.5 per cent Indigenous.
Indigenous workforce representation at Potash Jansen Project and operations of 20.7 per cent includes
employees, 7.2 per cent Indigenous, and contractors, 23.8 per cent Indigenous.
3
through lifestyle-friendly rosters with some sites
within WAIO moving away from two weeks
on (seven days, seven nights)/one week off
rosters to eight days on (dayshift)/six days off
then seven days on (nightshift)/seven days
off rosters.
Part-time and job-share arrangements have
increased including at senior levels.
Employee relations
Our four key focus areas for employee
relations are:
– creating relations with our workforce based
on a culture of trust and cooperation
– negotiating where there are requirements to
collectively bargain (and recognising the rights
of our workforce to collectively bargain)
– closing out agreements with our workforce
in South America and Australia, with no
lost time due to industrial action, to the
extent possible
– ensuring we comply with legal obligations
and regional labour regulations
In Australia, we are monitoring potential
industrial relations legislative reform after the
Government indicated an intention to introduce
draft legislation during CY2022 that could
have a material impact on our cost of labour
and industrial landscape and negatively
impact productivity.
Minerals Australia participated in five collective
bargaining processes during FY2022:
– BHP Iron Ore Pty Ltd commenced bargaining
in January 2022 for the BHPIO Locomotive
Drivers Agreement 2022, which is ongoing.
– OS MCAP Pty Ltd recommenced bargaining
in December 2022 for the Operations
Services Production Agreement 2018,
which is ongoing.
– OS ACPM Pty Ltd recommenced bargaining
in December 2022 for the Operations
Services Maintenance Agreement 2018,
which is ongoing.
– BHP Coal Pty Ltd commenced bargaining
in February 2021 for the BMA Enterprise
Agreement 2021, which is ongoing.
– BM Alliance Coal Operations Pty Ltd
commenced bargaining in June 2022
for the BMACO Broadmeadow Mine
Agreement 2022, which is ongoing.
Minerals Americas participated in two collective
bargaining processes during FY2022:
– Escondida: O&M union N°1 of 2,333 employees
signed in August 2021 for 36 months.
– Cerro Colorado: O&M union N°1 of 705
employees signed in September 2021 for
36 months.
Negotiations to renew the collective agreements
with BHP Chile’s Specialists & Supervisors
Union (150 employees) and Escondida’s
Intermel Union (140 employees) are expected to
be completed in FY2023.
There were no legal industrial actions or strikes
at Minerals Americas operated assets, Minerals
Australia operated assets or our Jansen Potash
Project and operations in Canada in FY2022.
Impacts and challenges from COVID-19
related to our people
The rising numbers of COVID-19 cases and
measures taken by governments within Australia
and Chile to control its spread in FY2022
resulted in continued changes to working
patterns for our employees and contractors
and unplanned absences. As a result of the
COVID-19 restrictions, we implemented controls
across our business to reduce the number of
workers required onsite and manage planned
and unplanned absences, such as temporary
remote working arrangements, increased
health and safety requirements, asset-based
vaccination campaigns, self-testing and
office-testing campaigns and hybrid working.
In Australia we also introduced vaccination
against COVID-19 as a site access requirement
after consultation with employees and unions.
In Canada, all employees are required to remain
fully vaccinated against COVID-19 to perform
work at site including a third booster shot.
With state border closures restricting the
mobilisation of employees and contractors to
our operating sites in Australia at times during
FY2022, changes to rosters and hours of work
were made to ensure operational requirements
for essential work were met. There has also
been a further extension of flexible work options
for employees and contractors in Australia in
response to government-imposed lockdowns
preventing them from attending their normal
place of work. Flexible work options, including
staggered start times, working from home and
adapted working hours were in place across
many of our office settings.
For information on the impact of COVID-19
on our workforce refer to OFR 7.6.
More information on people is available
at bhp.com/people.
7 Sustainability
Our commitment to social value reflects our purpose and BHP’s role in
supplying products essential for the transition of society towards a more
sustainable future, a role that we seek to perform in a responsible way.
7.1 Our sustainability
approach
Our management of sustainability helps
generate social value. We also know our
stakeholders and partners are increasingly
focused on our sustainability performance and
use it as a key determinant in assessing BHP
and our industry. We strive to continuously
improve and exceed these expectations.
A commitment to sustainability sometimes
requires us to make difficult choices and we
seek to gain and maintain the support of all
our stakeholders and partners as we manage
complex issues. We respect the right of every
stakeholder and partner to challenge the choices
we make and recognise that by listening to
their views and concerns BHP becomes a
better company.
We define our approach to sustainability through
Our Charter and it is governed through the Our
Requirements standards. These standards
describe our mandatory minimum performance
requirements and provide the foundation to
develop and implement management systems
at our operated assets.
Our approach to sustainability is overseen
by BHP’s Board. The Board’s Sustainability
Committee advises and assists the Board
in its oversight of the Group’s health, safety,
environmental and community (HSEC) matters.
For more information about the
Sustainability Committee and its work refer
to the Corporate Governance Statement
Sustainability targets and goals
We set clear direction through our social
value framework and we embed and measure
sustainability performance through our public
sustainability targets and goals. We completed
our most recent five-year sustainability targets
in FY2022.
For more information on our
performance against these targets
refer to OFR 7.3.
This year we developed new 2030 goals under
the pillars of People, Planet and Prosperity in line
with the World Economic Forum and the United
Nations (UN) Development Program, following
extensive internal and external engagement
(refer to OFR 2.2). The 2030 goals comprise
overarching long-term goals across six key focus
areas and are underpinned by short-term metrics
and milestones. We are working to embed them
through asset plans and capital allocation.
The key changes compared to the previous
five-year sustainability targets include a new
time horizon of seven years to align with BHP’s
2030 climate change targets and goals and
reference timelines set out in global frameworks
and agreements, such as the UN Sustainable
Development Goals, the Paris Agreement,
the Convention of Biological Diversity and the
Global Goal for Nature. The goals provide
opportunities for BHP to engage and work
in partnership with others, build capability
and co-design approaches to deliver positive
outcomes and shared prosperity for people and
our planet. They are reinforced by our continued
commitment to pursue zero significant health,
safety, environment, community or supply chain
events and to making a social investment of at
least 1 per cent pre-tax profit.¹
1 To date, our voluntary social investment has been
calculated as 1 per cent of the average of the
previous three years’ pre-tax profit. For FY2023-
FY2030, our social investment will be assessed as
a total over the seven-year goals period to FY2030,
rather than calculated as an average of the previous
three years’ pre-tax profit.
BHP
Annual Report 2022
31
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
Equitable change and transitions
We recognise that changes in our business,
ranging from the opening to the closing of a
mine, can have significant, and sometimes
disproportionate, effects on communities where
we operate. We also recognise that these same
communities are navigating broader shifts
in the global economy, such as the energy
transition and digital disruption, and that the
scope and nature of these transitions will
continue to evolve.
We are committed to working with communities
we are a part of in periods of change and
transition to achieve long-term mutual value.
Our approach will be grounded in our
existing strategies, policies and frameworks
in relation to our people, the environment,
communities and other stakeholders and
partners. The interconnection of these policies
and frameworks¹ aims to ensure change and
transitions are equitable and deliberately
considered across the life cycle of our business
and for the communities where we operate.
Our approach to equitable change and
transitions will:
– Recognise our responsibility to our workforce
– where a major change in our business
is expected to affect our workforce, we will
engage in meaningful dialogue and support
those impacted.
– Create opportunity for meaningful engagement
and co-designed processes – we will seek
to develop relationships with stakeholders
and partners, including government, local
businesses, community members, suppliers,
Indigenous peoples and workers, that support
understanding of the issues and co-creation of
solutions. We will communicate transparently
on the types of changes the business needs to
make and enable active participation of those
most impacted.
– Recognise the impacts associated with
gender, land connectedness and social and
economic vulnerability – we will not assume
all people are affected similarly. We will seek
to understand how impacts may be differently
experienced, including for Indigenous
peoples, and recognise that plans and
solutions must take into account the particular
strengths of each community and tackle the
unique impacts they experience.
– Recognise that the economic, social and
environmental dimensions of sustainable
development are interrelated – we will aim
to avoid or mitigate adverse environmental
impacts of change and transitions,
while pursuing opportunities to build
climate resilience and environmentally
sustainable communities.
Given change and transitions will involve
multiple actors, we will seek to be a catalyst to
bring people together and use our relationships
to advocate for equitable change and transitions
in line with the above principles.
1 These include our Indigenous Peoples
Framework, Social Value Framework, Inclusion
and Diversity Statement, Climate Change
Strategy, approach to the environment, Closure
Strategy, Human Rights Policy Statement, and
approach to community engagement.
Our sustainability approach – TCFD index1
Disclosure requirement
Reference in this Report
Governance
Disclose the organisation’s governance around climate-related risks and opportunities.
a) Describe the board’s oversight of climate-related risks and opportunities.
b) Describe management’s role in assessing and managing climate-related risks and opportunities.
OFR 7.8
OFR 7.8
Strategy
Disclose the actual and potential impacts of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial planning where such information is material.
a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.
b) Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and
financial planning.
OFR 7.8
OFR 7.8; 9; 9.1
Financial Statements 1.5; 1.6
c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios,
OFR 7.8; 9; 9.1
including a 2°C or lower scenario.
Risk management
Financial Statements 1.5; 1.6
Disclose how the organisation identifies, assesses, and manages climate-related risks.
a) Describe the organisation’s processes for identifying and assessing climate-related risks.
b) Describe the organisation’s processes for managing climate-related risks.
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the
OFR 7.8; 9
OFR 7.8; 9
OFR 7.8; 9
organisation’s overall risk management.
Metrics and targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and
opportunities where such information is material.
a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities
in line with its strategy and risk management process.
OFR 7.8
Remuneration Report 3.2
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
OFR 7.8
c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance
OFR 7.3; 7.8
against targets.
Cross-industry metrics
– GHG emissions: absolute Scope 1, Scope 2, and Scope 3; emissions intensity.
– Transition risks: amount and extent of assets or business activities vulnerable to transition risks.
– Physical risks: amount and extent of assets or business activities vulnerable to physical risks.
– Climate-related opportunities: proportion of revenue, assets, or other business activities aligned with climate-
related opportunities.
OFR 7.8
OFR 7.8
OFR 7.8
OFR 7.8
– Capital deployment: amount of capital expenditure, financing, or investment deployed toward climate-related risks
OFR 7.8
and opportunities.
– Internal carbon prices: price on each tonne of GHG emissions used internally by an organisation.
– Remuneration: proportion of executive management remuneration linked to climate considerations.
OFR 7.8
OFR 7.8
Remuneration Report 3.2
1
Our sustainability standards index is included in our ESG Standards and Databook, available at bhp.com/sustainability.
32
BHP
Annual Report 2022
Reporting standards
and frameworks
We commit to many sustainability frameworks,
standards and initiatives and disclose
data according to their requirements.
Our sustainability reporting, including on
our website and in our ESG Standards and
Databook, is prepared in accordance with
the Global Reporting Initiative (GRI) 2021
Sustainability Reporting Standards, the
International Council on Mining and Metals
(ICMM) Sustainable Development Framework,
the Task Force on Climate-related Financial
Disclosures (TCFD) recommendations and
the Sustainability Accounting Standards Board
(SASB) Metals and Mining standard. It also
serves as our UN Global Compact (UNGC)
Communication on Progress on implementation
of the UNGC Ten Principles and support for
its broader development objectives. We have
included a summary of our TCFD disclosures in
the table below.
There are also responsible mining and sourcing
standards that we commit to voluntarily or as
part of our memberships.
For more information about our
implementation of these standards refer to
OFR 7.9 Value Chain Sustainability
7.2 Our material
sustainability issues
Annual sustainability
materiality assessment
Each year we identify the sustainability
issues most material to our business and
stakeholders by assessing the economic,
social, environmental and cultural impact of our
activities and business relationships.
In FY2022, we adopted the approach of the
Global Reporting Initiative (GRI 3: Material
Topics 2021) to consider actual and potential
negative and positive impacts of our business
in order to determine our material sustainability
issues for reporting. In doing so we considered
BHP’s material risk profile1, information
recorded in our internal event management
system, our social value framework and
social investment priorities and a number
of other sources. These included issues
raised at our Annual General Meetings and
through industry sustainability standards and
benchmark assessments. We also consult with
stakeholders, such as through the BHP Forum
on Corporate Responsibility, via ESG investor
round tables and advisory groups and with
internal stakeholders via focused discussions.
The material sustainability issues identified
through our FY2022 assessment are shown in
the table below. These issues are consistent
with our FY2021 assessment with the addition of
security services, sexual harassment and value
chain sustainability.
1
‘Material’ in this context refers to the materiality of a
risk under BHP’s Risk Framework. For information
on our Risk Framework refer to OFR 9.
7.3 Our sustainability
performance:
Non-financial key
performance indicators
We completed our most recent five-
year sustainability targets in FY2022.
Highlights include three years fatality-free, a
reduction in the total number of workers exposed
to our most material occupational exposures
by 68 per cent, a 15 per cent decrease in
operational greenhouse gas (GHG) emissions
from our adjusted FY2017 baseline, social
investment of US$681.4 million over five years
and a 29 per cent reduction in freshwater
withdrawal volumes from our adjusted
FY2017 baseline.
The FY2017 baselines and FY2018 – FY2022
data for our occupational exposures, GHG
emissions and withdrawal of freshwater have
been adjusted for the merger of our Petroleum
business with Woodside and divestment of our
interest in BHP Mitsui Coal (BMC) in FY2022,
(to exclude data related to those operations),
together with adjustments made and reported in
previous years to ensure ongoing comparability
of performance. FY2022 data for safety, social
investment and significant community and
environmental events includes the operated
assets in our Petroleum business up to the date
of the merger (1 June 2022) and BMC up to the
date of completion of the sale (3 May 2022).
Material sustainability issues identified in this year’s assessment
Environment
Climate change
OFR 7.8
Environment
OFR 7.15
People
People
OFR 6
Safety
OFR 7.4
Biodiversity and land
OFR 7.17
Water
OFR 7.16
Tailings storage
facilities
OFR 7.18
Health (including
COVID-19)
OFR 7.6
Sexual harassment
OFR 7.5
Security services
OFR 7.12
Social
Governance
Other
Indigenous
peoples (including
cultural heritage)
OFR 7.13
Community
OFR 7.10
Human rights
OFR 7.11
Ethics and
business conduct
OFR 7.7
Sustainability
governance
OFR 7.1
Value chain
sustainability
OFR 7.9
Critical incident
risk management
OFR 8; 9.1
Digital security
OFR 9.1
Economic performance
ECR
Market presence
Annual Report 2022
Public policy
OFR 8
Tax
ECR
BHP
Annual Report 2022
33
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
Our sustainability performance: Non-financial key performance indicators
Target
Zero work-related fatalities
FY2022 result
Year-on-year
Zero work-related fatalities and there was a 30 per cent decrease in the high-
potential injury frequency rate from FY2021. High-potential injury trends remain
a primary focus to assess progress against our most important safety objective,
eliminating fatalities.
Year-on-year improvement of total recordable injury
frequency (TRIF)4 per million hours worked
An increase in total recordable injury frequency (TRIF) of 8 per cent from
FY2021. This shift was influenced by COVID-19 through an 8 per cent
reduction in hours worked between the first and second halves of FY2022.
TRIF has decreased by 9 per cent since FY2018.
50 per cent reduction in the number of
workers potentially exposed5 to our most
material exposures of diesel particulate matter,
respirable silica and coal mine dust compared
to our FY20176 baseline by FY2022
We exceeded our target by reducing the total number of workers potentially
exposed to our most material exposures by 68 per cent compared to our
adjusted FY2017 baseline6
Adjusted FY2017 baseline6
FY20186
FY20196
FY20206
FY20216,7
FY20226
e
l
p
o
e
P
y
t
e
i
c
o
S
e
t
a
m
i
l
C
e
g
n
a
h
c
t
n
e
m
n
o
r
i
v
n
E
Zero significant community events8
No significant community events resulting from BHP operated activities were
recorded in FY2022
Not less than 1 per cent of pre-tax profits9
invested in community programs that contribute
to the quality of life in the communities where
we operate and support the achievement of
the UN Sustainable Development Goals10
By FY2022, implement our Indigenous Peoples
Strategy across all our operated assets through the
development of Regional Indigenous Peoples Plans
By FY2022, maintain operational (Scope 1 and
Scope 2) GHG emissions at or below FY2017
levels12 while we continue to grow our business
Social investment of US$681.4 million over five years
Regional Indigenous People Plans have been implemented across Australia
(Reconciliation Action Plan (RAP)) and North and South America
Exceeded our short-term target with a 15 per cent decrease in operational GHG
emissions from our adjusted FY2017 baseline12
Zero significant environmental events8
No significant environmental events resulting from BHP operated activities were
recorded in FY2022
Reduce FY2022 withdrawal of fresh water13
by 15 per cent from FY2017 levels
Exceeded our target, with a 29 per cent reduction in freshwater withdrawal
volumes compared to our adjusted FY2017 baseline14
By FY2022, improve marine and
terrestrial biodiversity outcomes by:
– developing a framework to evaluate and verify the
benefits of our actions, in collaboration with others
– contributing to the management of areas of national
or international conservation significance exceeding
our disturbed land footprint (‘area conserved’ target)
Biodiversity framework was developed with the support of Conservation
International and Proteus, a cross-sector partnership between the
UN Environment Programme World Conservation Monitoring Centre
(UNEP WCMC) and business
‘Area conserved’ target has been met by our operational and voluntary
conservation investments over the target period, given BHP’s FY2022
total disturbed land footprint was 149,312 hectares
FY20181
FY20192
FY2020
FY2021
FY20223
FY20181
FY20192
FY2020
FY2021
FY20223
FY2018
FY2019
FY2020
FY2021
FY20223
FY20181
FY201911
FY2020
FY2021
FY20223
2
1
0
0
0
4.4
4.7
4.2
3.7
4.0
4,176
2,803
2,160
1,683
1,372
1,333
0
0
0
0
0
US$77.1 million
US$93.5 million
US$149.6 million
US$174.8 million
US$186.4 million
Adjusted FY2017 baseline12 12.9 million
tonnes carbon dioxide equivalent (MtCO2-e)
FY201812
13.8 MtCO2-e
FY201912
14.1 MtCO2-e
FY202012
14.5 MtCO2-e
FY202112
14.6 MtCO2-e
FY202212
11.0 MtCO2-e
FY2018
FY2019
FY2020
FY2021
FY20223
0
0
0
0
0
Adjusted FY2017 baseline14
FY201814
FY201914
FY202014
FY202114
FY202214
152,249 ML
133,265ML
149,237ML
122,331ML
108,440ML
107,398ML
Year-on-year progress on development of
framework to evaluate and verify the benefits
of our actions
The total land set aside for conservation on
land on which we operate and other land
we steward was 65,870 hectares in FY2022.
In addition to these conservation areas, we
made several voluntary investments over the
target period, of which an area of 4,465,260
hectares contributed to the achievement of the
‘area conserved’ target
1 FY2018 data includes Continuing and Discontinued operations (Onshore US assets).
2 FY2019 data includes Discontinued operations (Onshore US assets) to 28 February 2019 and Continuing operations.
3 FY2022 data includes the operated assets in our Petroleum business up to the date of the merger with Woodside (1 June 2022) and BMC up to the date of completion of the sale
(3 May 2022).
4 The sum of (fatalities + lost-time cases + restricted work cases + medical treatment cases) multiplied by 1 million/actual hours worked by our employees and contractors. Stated in units
of per million hours worked. We adopt the US Government’s Occupational Safety and Health Administration Guidelines for the recording and reporting of occupational injuries and illnesses.
5 For exposures exceeding our FY2017 baseline occupational exposure limits without considering protection afforded by the use of personal protective equipment (where required).
The baseline exposure profile (as at 30 June 2017) is derived through a combination of quantitative exposure measurements and qualitative assessments undertaken by specialist
occupational hygienists consistent with best practice as defined by the American Industrial Hygiene Association.
6 The FY2017 baseline has been adjusted for Discontinued operations (Onshore US assets and Petroleum) and the divestment of BMC. These adjustments have also been applied
to FY2018-FY2022 emissions stated in this table to aid comparability.
7 As of FY2021, the Occupational Exposure Limit for Coal was reduced to 1.5 mg/m3 compared to 2.0 mg/m3 in previous years.
8 A significant event resulting from BHP operated activities is one with an actual severity rating of four or above, based on our internal severity rating scale (tiered from one to five
by increasing severity) as defined in our mandatory minimum performance requirements for risk management.
9 To date, our voluntary social investment has been calculated as 1 per cent of the average of the previous three years’ pre-tax profit. For FY2023–FY2030, our social investment
will be assessed as a total over the seven-year goals period to FY2030, rather than calculated as an average of the previous three years’ pre-tax profit.
10 Expenditure includes BHP’s equity share for operated and non-operated joint ventures, and comprises cash, administrative costs, including costs to facilitate the operation of the
BHP Foundation.
11 FY2019 data includes Discontinued operations (Onshore US assets) to 31 October 2018 and Continuing operations.
12 FY2017 baseline has been adjusted for Discontinued operations (Onshore US assets and Petroleum) and the divestment of BMC and for methodological changes (use of
Intergovernmental Panel on Climate Change (IPCC) Assessment Report 5 Global Warming Potentials and the move to a facility-specific emissions calculation methodology for fugitives
at Caval Ridge). These adjustments have also been applied to FY2018-FY2022 emissions stated in this table to aid comparability.
13 ‘Withdrawal’ is defined as water withdrawn and intended for use (in accordance with ‘Water Reporting Good Practice Guide’, ICMM (2021)). ‘Fresh water’ is defined as waters other than
seawater, wastewater from third parties and hypersaline groundwater. Freshwater withdrawal also excludes entrained water that would not be available for other uses. These exclusions
have been made to align with the target’s intent to reduce the use of freshwater sources subject to competition from other users or the environment.
14 The FY2017 baseline has been adjusted to account for: the materiality of the strike affecting water withdrawals at Escondida in FY2017 and improvements to water balance methodologies
at WAIO and BMA, exclusion of hypersaline, wastewater, entrainment, supplies from desalination and removal of data for Discontinued operations (Onshore US assets and Petroleum) and
BMC. These adjustments have also been applied to FY2018-FY2022 freshwater withdrawal stated in this table to aid comparability.
34
BHP
Annual Report 2022
7.4 Safety
Our highest priority is the
safety of our workforce and the
communities where we operate.
Our safety performance
In FY2022, we recorded:
– no fatalities at BHP
– a decrease of 30 per cent in the high-
potential injury frequency rate from
FY2021. The highest number of events
with potential for one or more fatalities was
related to vehicle and mobile equipment
accidents. High-potential injury trends
remain a primary focus to assess progress
against our most important safety objective,
eliminating fatalities
– an increase in total recordable injury
frequency (TRIF) of 8 per cent from FY2021.
This shift was influenced by COVID-19
through an 8 per cent reduction in hours
worked between the first and second halves
of FY2022. TRIF has decreased by 9 per cent
since FY2018. The highest number of injuries
was related to slips, trips and falls for both
employees and contractors
– a consistent application of field leadership
activities, which occurred at a sustainable
frequency rate of 9,341 activities per million
hours worked with over 1,517,117 activities
completed and more than 68,000 employees
and contractors participating in the program at
least once. Scheduled activities compared to
non-scheduled activities increased by 46 per
cent from FY2021 and coaching increased by
6 per cent
– one safety fine at our operated assets
Our results were achieved through a sustained
focus on improving our management of risk,
including through new and existing programs
such as:
– Fatality Elimination Program
– Integrated Contractor Management Program
– Field Leadership Program
Fatality Elimination Program
In FY2022, we continued our Fatality Elimination
Program (FEL) towards our goal of no fatalities
across our business.
Fatality elimination is not a new priority for
us. We have been seeking to improve our
safety performance for many years and have
considerably reduced high-potential injuries.
However, there continues to be more to do to
systematise a common set of controls.
In FY2022 we:
– developed five-year fatality elimination
roadmap guidelines, including the
recommended sequencing of strengthened
controls based on effort, cost and near miss
reduction impact
– updated the Our Requirements for Safety
standard to reflect FEL deliverables
– created the ‘Control Shift’ methodology for
assets to replicate FEL processes for specific
risks not considered within our top 10 risks
(i.e. vehicle and mobile equipment, dropped
object, electrical, lifting, geotechnical failure,
entanglement/crushing, energy release, loss
of containment, fire/explosion, fall from height)
– created an online dashboard to enhance
local implementation plans, providing global
visibility of challenges, similarities and
differences, thereby assisting assets with
their implementation
– published technical bulletins related to FEL
controls to provide detailed implementation
guidance based on site experience and
lessons learnt
– undertook a human performance
benchmarking study to identify the latest
developments and best practices in the field
of human behaviour
Performance data – workforce health and safety for FY20221
High-potential injuries2
Year ended 30 June
High-potential injuries
High-potential injury frequency3
Total recordable injury frequency
Year ended 30 June
Total recordable injury frequency4
2022
23
2021
33
2020
42
Employees
Contractors
0.03
0.03
2022
4.0
2021
3.7
2020
4.2
Total recordable injury frequency3
Employees
Contractors
0.77
0.82
1 Data includes BMC up to the date of completion of the sale (3 May 2022) and operated assets in our Petroleum
business up to the date of the merger with Woodside (1 June 2022).
2 High-potential injury includes injuries with fatality potential. The basis of calculation was revised in FY2020 from
event count to injury count as part of a safety reporting methodology improvement.
3 Employee and contractor frequency per 200,000 hours worked.
4 Combined employee and contractor frequency per 1 million hours worked.
Integrated Contractor
Management Program
Our Integrated Contractor Management
Program is designed to make it safer and easier
for contractors to work with us. Introduced in
FY2020, the program is focused on building
long-term mutually beneficial relationships,
integrating and simplifying processes and
systems, and creating an inclusive, respectful
and caring workforce culture. Since its
introduction, the program has standardised
roles and responsibilities of contract owners
and promoted improved partnerships with BHP
service providers through the implementation
of the Our Requirements for Contractor
Management standard for existing and new
onsite service contracts.
In FY2022 we:
– developed the scope of work library
as an online resource containing best
practice examples for different types of
contractor engagements
– created contract execution plans as a
means of applying the Our Requirements for
Contractor Management standard
– established an integration stream ensuring
enhancements are holistic and cover
functional interactions
– undertook assurance and audit activities
across BHP including contractor engagements
– implemented a contractor perception survey
that runs in parallel with our internal survey.
The survey highlighted some results on
the experience of our contractor workforce
consistent with the internal survey and other
areas of focus
– determined organisational design changes
to improve contract ownership and
management practices
– commenced deployment of a technology
solution which supports an enterprise-
wide approach to contractor on-boarding
and management
Field Leadership Program
Leaders spending time in the field is vital to
maintaining safe operations. Our global Field
Leadership Program encourages the workforce
to provide feedback to their leaders about
safety to reinforce an interdependent culture of
safety. It involves leaders engaging with workers
in the field to drive a common approach to
improving health, safety and environment (HSE)
performance. The program helps verify that
critical safety controls are in place, being applied
and are effective in managing risks that have the
potential to result in fatalities.
In FY2022 we:
– enhanced the efficiency and effectiveness
of supervisor time in the field by integrating
the BHP Operating System (BOS) process
confirmation and field leadership planned
task observation processes into a planned
task confirmation
– continued to improve the quality of field
leadership activities by increasing coaching
and delivery of field leadership engagements
– conducted field leadership activities to
support the verification of risks that have
BHP
Annual Report 2022
35
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
the potential to result in fatalities across our
operated assets
– embedded the global, standardised field
leadership procedure designed to increase
the effectiveness of field leadership activities
across the business
– conducted field leadership on COVID-19
controls, designed to sustain effectiveness
within the changing environment
More information
on safety is available at bhp.com/safety
7.5 Sexual harassment
Sexual harassment1 is not acceptable and is
contrary to our values. Our position on this is
clear and aligned to our aspiration of a gender-
balanced employee workforce by FY2025.
Gender balance in every team and at every level
is an important part of our approach to eliminate
sexual harassment.
The Australian Human Rights Commission’s most
recent national survey on sexual harassment
in Australian workplaces has found that 71 per
cent of Australians have been sexually harassed
in their lifetimes and 39 per cent of Australian
women experienced sexual harassment in the
workplace in the five years to 2018. The same
survey concluded that in the mining industry
an estimated 74 per cent of women and 32 per
cent of men had experienced workplace sexual
harassment in the past five years. Back in
2018, we accepted those findings as true for
our industry and for BHP globally, and we have
focused on understanding why the behaviours
exist, and what we needed to do to urgently
address them at BHP.
We are deeply sorry and apologise unreservedly
to those who have experienced, or continue
to experience, any form of sexual harassment
anywhere at BHP. We recognise the harmful
impacts on individuals resulting from
these behaviours.
We understand that it can be difficult for people
to come forward to report sexual harassment
and thank all of those who have, for their
courage in doing so. We are also grateful to
our employees and other stakeholders for
their insights and suggestions for changes in
our workplaces. Their feedback informs our
approach. We are determined to make continued
progress in eliminating sexual harassment and in
ensuring our workplaces are safe and inclusive
for everyone.
1
‘Sexual harassment’ is, as defined in the Respect@
Work report, an unwelcome sexual advance,
unwelcome request for sexual favours or other
unwelcome conduct of a sexual nature, which
makes a person feel offended, humiliated and/
or intimidated, where a reasonable person would
anticipate that reaction in the circumstances.
Sexual harassment encompasses a range of
conduct including displaying sexually graphic
images, sexually suggestive comments, suggestive
or inappropriate looks, gestures or staring, non-
consensual touching or acts of a sexual nature and
sexual assault.
2 EthicsPoint is our confidential reporting tool. It is
accessible to all, including external stakeholders and
the public, to report conduct that may be unethical,
illegal or inconsistent with Our Code of Conduct.
3 This does not include investigations that are
currently in progress.
36
BHP
Annual Report 2022
Our approach to prevent
sexual harassment
In 2018, we defined sexual harassment as a
health and safety risk, to be overseen in the same
way as other occupational health and safety risks.
This approach provides the right framework for
addressing these behaviours, allowing us to apply
a systematic, risk-based approach to evaluating
and managing the risks. Our approach includes
conducting risk assessments to identify scenarios
in which sexual harassment risks may arise, their
causes and the controls we can implement to
prevent them and reduce harm.
As part of our risk assessment processes,
we engaged members of our workforce with
experience at site and accommodation villages,
and experts in health and safety, harassment and
inclusion and diversity. Through this, we identified
factors that can contribute to the risk of workplace
sexual harassment that are more pronounced
in the mining industry, as well as factors that are
common across all industries and workplaces.
Examples of risks that can be more pronounced
in the mining industry include isolated or remote
working locations, a largely male-dominated
workforce and accommodation villages.
Taking these into account, we identified and
developed controls and actions to help prevent
sexual harassment and reduce its harmful
impacts. Our core controls and areas for
action are culture, leadership and training;
security measures at accommodation villages;
recruitment processes; contractor and third-party
engagement; emergency response; trauma-
informed (wellbeing) care; accessible, confidential
reporting and person-centred investigations; and
appropriate disciplinary action.
Reports of sexual harassment
The reporting rate of sexual harassment at BHP
has increased in recent years. We believe this
reflects the actions we have taken to increase
awareness and promote and centralise reporting
and investigations, along with broader societal
developments and intolerance of this behaviour.
Since October 2020, BHP managers and leaders
have been required to enter any serious conduct
issues raised directly with them, including sexual
harassment, into EthicsPoint2 (anonymously if
requested). This year, 47 per cent of reports
received into EthicsPoint have been logged
by managers or leaders in accordance with
this policy.
During FY2022, across BHP’s global operations
and offices, 103 reported and investigated
cases of conduct of sexual harassment were
substantiated.3
Of the 103 substantiated cases:
– 37 involved non-consensual kissing or
touching of a sexual nature, which includes a
broad range of behaviour of varying severity.
None of these cases involved non-consensual
penetration or intercourse, however we
recognise that this conduct can occur and has
occurred in the past,
– 66 involved other forms of sexual harassment,
including inappropriate comments of a sexual
nature, unwelcome gestures or comments,
sending inappropriate text messages or
images, or other unwanted advances
or invitations,
– Of these 103 substantiated cases, in 101
cases the individual responsible has had their
employment terminated (or they have been
removed from site if a contractor), they have
resigned or are otherwise no longer working
at BHP.
In addition to the matters listed above, in FY2022
87 reports of sexual harassment went through
Alternative Resolution Options (AROs). AROs are
alternative forms of response and resolution
other than investigations, including supported
conversations with respondents, additional
training, monitoring or awareness raising on
BHP’s expectations of respectful behaviours in
the workplace. This process only occurs where an
ARO is proportionate to the nature of the conduct
and with the agreement of the impacted person.
We continue to work with external experts on
how best to respond to cases to ensure we have
a proportionate approach to reports. We will
continue to monitor and review the use of AROs
to ensure it is meeting the needs of impacted
people where it is used and to improve reporting
to support organisational learnings.
We will continue to encourage reporting and we
are committed to taking action. We put the needs
of anyone impacted by this behaviour at the
forefront of our processes and we are committed
to validating, caring for and supporting anyone in
our business who is affected by this behaviour.
This includes internal practical and wellbeing
support mechanisms, support through our tailored
Employee Assistance Program and options to
access trauma-specific clinical and non-clinical
care with experienced clinicians.
We are committed to working closely with our
people, others in industry and other stakeholders
to implement the necessary processes and
systems designed to ensure our workplaces are
safe and inclusive for everyone.
Actions we are taking
Oversight
In FY2022, a Project Management Office (PMO)
was established through the office of the CEO
to provide central governance over all sexual
harassment work. The priority focus areas
of that work include driving progress toward
gender balance, creating a safe and respectful
workplace, building accountability and capability
of leaders, upskilling our workforce to be ‘active
bystanders’, enhancing our policies, processes
and controls, and providing person-centred and
trauma-informed response and support. The PMO
reports on progress against implementation of
our critical controls and other key focus areas
that underpin our overarching sexual harassment
prevention strategy to senior management and
the Board.
Security and physical infrastructure
We have continued to invest in security programs
and physical infrastructure designed to prevent
and respond to sexual harassment at our
accommodation facilities. Our minimum security
requirements for all BHP owned and operated
accommodation villages include requirements for
access controls, village policies and procedures
to manage respectful behaviours, CCTV, lighting,
security signage, room allocation procedures,
security personnel and incident response.
Reporting and response
We encourage our workforce to report concerns,
including providing centralised and confidential
reporting tools and mandatory reporting
requirements for line leaders. We do not tolerate
any form of retaliation for raising a concern
and we address these actions if they occur.
We ceased using non-disclosure agreements
(NDAs) or imposing confidentiality obligations on
complainants in settlement agreements relating to
sexual harassment in March 2019 and we do not
enforce any NDAs or confidentiality obligations on
complainants in historical agreements.
Investigation of reports of sexual harassment
are conducted by our specialised Central
Investigation team, which is independent of our
other business units. This team includes experts
trained in a person-centred, trauma-informed
approach to ensure that the impacted person is
placed at the centre of all decisions made during
the investigation process and to minimise the risk
of further harm to that individual.
We established our global Support Service in
FY2022, to provide dedicated, end-to-end case
coordination for anyone impacted by sexual
harassment, designed to ensure they obtain
appropriate support and information. The Support
Service can also provide resolution options when
an investigation is not wanted by the impacted
person or cannot proceed.
Communication of expectations
Our position on sexual harassment has been
reinforced through regular senior leadership
communications. These include messages
from our CEO, on-site signage regarding our
expectations and avenues for support, and we
have provided sexual harassment prevention
training to BHP line leaders, aimed at setting
clear expectations about appropriate conduct
and driving consistent disciplinary outcomes.
Across June and July 2022, we held Safety Stops
specifically focused on sexual harassment, racism
and bullying for our teams globally. The stops
were intended to build awareness, understanding,
and capability, as well as to reinforce expectations
within our teams.
Alcohol use
As part of our commitment to health and safety,
all workplaces should be free from the use of
alcohol and illegal drugs, and the misuse of
other substances, in accordance with Our Code
of Conduct. All those who attend a BHP site,
including employees, are expected to be alcohol
and drug free, and may be asked to undergo
random alcohol and drug testing. We also provide
support for those who need it to address an
alcohol or drug dependency.
For accommodation villages, our Minerals
Australia Alcohol Management Standard was
implemented across our owned and operated
village facilities from 1 July 2021. It includes
a range of limits on alcohol consumption.
Residents and visitors who breach the standard
may be subject to action, including removal of
access to the village for a resident or visitor,
or disciplinary action for employees. Since the
introduction of the standard, our reviews have
indicated that there has been a reduction in
alcohol consumption, and residents are making
healthier choices, with an increase in the use of
recreational facilities. Alcohol is not permitted at
our accommodation villages in Chile and Canada.
Listening to employees, measuring progress
and assigning accountability
We have channels through which the Board and
senior leaders receive information on workplace
culture and conduct. These include anonymous
employee and contractor perception surveys and
our Field Leadership Program. Our perception
surveys are conducted three times per year and
were redesigned in FY2021 to include more
targeted questions to provide leaders with greater
insight into key safety and engagement metrics,
which we have identified as critical foundations for
our culture. Executive leadership and Group-wide
performance criteria are linked to remuneration
that includes progress towards greater inclusion,
diversity and gender representation. In FY2022,
we introduced key performance indicators for
our Executive Leadership Team and other BHP
employees that linked remuneration outcomes to
progress against our program of work to address
sexual harassment. This includes implementation
of controls in line with BHP’s sexual harassment
risk assessments.
Engaging with and learning from others
We continue to measure and test our focus and
areas for action. In FY2022 we:
– engaged and learnt from external experts who
reviewed the controls we have in place and
advised on best practice in preventing sexual
harassment, and minimising further harm
when responding to sexual harassment
– engaged Kristen Hilton (former Victorian
Equal Opportunity and Human Rights
Commissioner) to provide expert guidance on
our prevention and response framework
– conducted a sexual harassment audit across
Minerals Americas further to the FY2021
sexual harassment audit conducted across
Minerals Australia
– contributed to knowledge sharing with other
industry participants in relation to addressing
sexual harassment, and considered broader
learnings from external reports such as the
Australian Human Rights Commission’s
Respect@Work: Sexual Harassment National
Inquiry Report and the Report into Workplace
Culture at Rio Tinto by Elizabeth Broderick & Co
– worked with our contracting and supplier
organisations to address sexual harassment,
including collaboration on response protocols,
joint training sessions and knowledge sharing
– undertook a series of listening workshops
Through these initiatives we identified a need
for further focus on preventative controls,
particularly with respect to culture and
behaviours. This is in addition to the controls
already in place or committed for implementation
in FY2022 which included security,
accommodation standards, alcohol measures,
recruitment and discipline.
We are committed to working with others in
the industry and beyond to address sexual
harassment risks. BHP is a member of the
Minerals Council of Australia Respect@Work
Taskforce and the Chamber of Minerals &
Energy WA Safe and Respectful Behaviours
Working Group. Both groups aim to build industry
capability and capacity though sharing knowledge
and developing shared resources.
In FY2022, we participated in Western Australia’s
parliamentary inquiry into sexual harassment
against women in the FIFO mining industry
(WA Inquiry), including through a detailed
written submission in August 2021 (available at
parliament.wa.gov.au). BHP welcomes the final
report titled ‘Enough is enough’ released on
23 June 2022. We acknowledge the significant
work of the parliamentary committee and
in particular, the many people who shared
their stories and experiences as part of the
inquiry process.
Continuing to make progress
While we have made progress, there is still
much more to do. Our focus in FY2023 will be
to continue:
– focusing on increasing female leader
representation across our operations
– continuous improvement across our suite
of controls
– engaging with our people, encouraging and
empowering them to take action as active
bystanders and enhance capability
– encouraging increased reporting
– enhancing our approach to supporting
impacted persons to thrive at BHP and have
successful careers with us
7.6 Health
We are committed to protecting
the health and wellbeing
of our workforce.
We set clear mandatory minimum performance
standards to identify, assess and manage health
risks and their potential impacts and monitor the
health of our workforce.
Occupational illness
The reported occurrence of occupational illness1
for employees in FY2022 was 265, which was
3.89 per million hours worked, representing a
decrease in incidence compared to FY2021,
which was 4.36 per million hours worked.
For our contractor workforce, the reported
occupational illness1 in FY2022 was 151, which
was 1.61 per million hours worked, representing
a decrease in incidence compared to FY2021
which was 1.87 per million hours worked. Due to
regulatory regimes and limited access to data,
we do not have full oversight of the incidence of
contractor noise-induced hearing loss (NIHL) cases.
Musculoskeletal illness is the predominant
occupational illness category representing 65
per cent of our workforce illnesses. These are
conditions impacting the musculoskeletal system
and connective tissues caused by repetitive work-
related stress or strain or exposure over time.
1 An illness that occurs as a consequence of work-
related activities or exposure.
BHP
Annual Report 2022
37
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
Musculoskeletal illness does not include disorders
caused by slips, trips, falls or similar incidents.
Noise-induced hearing loss contributes to the
second highest illness category representing
10 per cent of illnesses. Where workers are
exposed to noise above acceptable levels,
workers are placed in hearing conservation
programs, which include a periodic hearing test
and hearing protection fit testing. Through our
Sustainability in Design program, we have
also established design recommendations that
seek to eliminate or reduce high or prolonged
noise exposures. Other illness categories
include skin diseases, temperature-related
illnesses, mental illness, bites, stings and
other unspecified illnesses.
Our occupational illness data excludes
cases of COVID-19 among our employees
and contractors. In settings of high levels of
community transmission and with an evolving
understanding of the epidemiological criteria for
infection and COVID-19 variants with evidence of
increased transmission, it is difficult to conclude,
with reasonable certainty, that a person was
infected because of work-related activities or
exposure. For information on our response to
COVID-19, refer to ‘COVID-19’ further in 7.6.
Occupational exposures
Occupational exposure limits (OELs) for our
most material exposures are set according
to the latest scientific evidence, which for a
number of agents, such as diesel particulate
matter (DPM), resulted in lower limits than
Occupational illness
Per million employee hours worked1,2,3
5.0
4.0
3.0
2.0
1.0
0
3
7
.
0
1
7
.
2
8
4
.
1
1
5
.
0
8
4
.
2
9
1
.
1
2
7
.
0
5
5
.
2
1
1
.
1
7
8
.
0
4
8
.
2
9
5
.
0
5
7
.
0
9
6
.
2
2
9
.
0
5
7
.
0
4
5
.
2
0
6
.
0
FY2017
FY2018
FY2019
FY2020
FY2021
FY2022
Noise-induced hearing loss Musculoskeletal illness Other illnesses
1 Data includes BMC up to the date of completion of the sale (3 May 2022), operated assets in our Petroleum
business up to the date of the merger with Woodside (1 June 2022) and Onshore US assets up to the date of
completion of the sale (31 October 2018), as applicable.
2 Occupational illnesses excludes COVID-19 related data.
3 Due to the lag nature of incident reporting and subsequent verification, final results may vary post reporting.
Prior year data has not been adjusted.
Occupational illness
Per million contractor hours worked1,2,3,4
2.25
2.00
1.75
1.50
1.25
1.00
0.75
0.50
0.25
0
8
6
.
0
4
2
.
1
6
5
.
0
6
0
.
1
1
5
.
0
2
9
.
0
7
5
.
0
0
3
.
1
4
5
.
0
6
0
.
1
4
4
.
0
7
9
.
0
2
0
.
0
FY2017
FY2018
FY2019
FY2020
FY2021
FY2022
Noise-induced hearing loss Musculoskeletal illness Other illnesses
1 Data includes BMC up to the date of completion of the sale (3 May 2022), operated assets in our Petroleum
business up to the date of the merger with Woodside (1 June 2022) and Onshore US assets up to the date of
completion of the sale (31 October 2018), as applicable.
2 Occupational illnesses excludes COVID-19 related data.
3 Due to the lag nature of incident reporting and subsequent verification, final results may vary post reporting.
Prior year data has not been adjusted.
4 Due to regulatory regimes and limited access to data, we do not have full oversight of the incidence
of contractor noise-induced hearing loss (NIHL) cases.
38
BHP
Annual Report 2022
the applicable regulatory requirements.
Where exposures potentially exceed regulatory
limits or our stricter limits, respiratory protective
equipment is required.
For our most material exposures of DPM, silica
and coal mine dust, we had a five-year target to
achieve, by the end of FY2022, a 50 per cent
reduction in the number of workers potentially
exposed1 as compared to our 30 June 2017
baseline exposure profile.2,3,4 Exposure data
in this Report in all cases is presented without
considering protection afforded by the use of
personal protective equipment (where required).
We are pleased to have achieved our target by
reducing the total number of workers potentially
exposed to our most material exposures by
68 per cent. That achievement at the end
of FY2022 in number of workers potentially
exposed to levels exceeding our OELs include;
no workers potentially exposed to coal mine
dust, 78 per cent reduction in the number of
workers potentially exposed to DPM5 and a 61
per cent reduction in the number of workers
potentially exposed to respirable silica.
This year, an internal audit conducted on FY2021
workforce occupational exposures data at Nickel
West identified that a statistical analysis error
resulted in an underestimation of the number of
workers assessed as potentially exposed to DPM.
This has resulted in an increase in the FY2021
total number of workers potentially exposed
to material exposures compared to what was
reported last year.
With the conclusion of our five-year public target,
we will continue to manage exposures to as
low as reasonably practicable by focusing our
efforts in FY2023 on further implementation
of exposure reduction projects, sustaining the
exposure reductions achieved by leveraging
our Risk Framework and identifying exposure
reduction opportunities for inclusion in FY2024
plans and beyond.
Coal mine dust lung disease
As at 30 June 2022, 12 cases of coal mine dust
lung disease (CMDLD)6 among our employees
were reported to the Queensland Department of
Natural Resources Mines and Energy (DNRME).7
In addition to these cases, there were four
1 For exposures exceeding our FY2017 occupational
exposure limits, without considering protection
afforded by the use of personal protective equipment
(where required).
2 The baseline exposure profile is derived through a
combination of quantitative exposure measurements
and qualitative assessments undertaken by
specialist occupational hygienists consistent with
best practice as defined by the American Industrial
Hygiene Association.
3 Occupational Exposure target excludes Projects.
4 The FY2017 to FY2022 data has been adjusted
to exclude Discontinued operations (Onshore US
assets, Petroleum) and the divestment of BMC.
5 FY2021 data includes adjustment to DPM exposures
as a result of misstatement in previous year.
6 CMDLD is the name given to the lung diseases
related to exposure to coal mine dust and includes
coal workers’ pneumoconiosis, silicosis, mixed
dust pneumoconiosis and chronic obstructive
pulmonary disease.
7 Cases reported to DNRME are not an indication
of work relatedness. BHP evaluates each case
for work relatedness and where identified, the
case will be included in illness reporting.
Exposure reduction trend over time1,2,3,4,5
Business conduct cases
by issue type FY2022
4,200
3,500
2,800
2,100
1,400
700
0
6
5
4
1
,
6
0
6
2
,
4
1
1
0
0
5
5
9
2
,
2
8
7
7
3
3
8
7
,
1
9
6
1
4
1
5
1
,
2
1
3
6
4
0
,
1
4
1
7
2
3
6
0
0
,
1
FY2017
FY2018
FY2019
FY2020
FY2021
FY2022
Coal mine dust exposures Silica exposures DPM (Diesel) exposures
Harassment and bullying
Sexual harassment
Fraud
Discrimination
Other1
Health, safety or environment breach
Retaliation for speaking up
49.6%
11.9%
9.8%
8.4%
8.6%
9.8%
2%
1 For exposures exceeding our FY2017 occupational exposure limits, without considering protection afforded by
the use of personal protective equipment (where required).
2 The baseline exposure profile is derived through a combination of quantitative exposure measurements and
qualitative assessments undertaken by specialist occupational hygienists consistent with best practice as defined
by the American Industrial Hygiene Association.
3 Occupational Exposure target excludes Projects
4 The FY2017 to FY2022 data has been adjusted to exclude Discontinued operations (Onshore US assets,
Petroleum) and the divestment of BMC.
5 FY2021 data includes adjustment to DPM exposures as a result of misstatement in previous year.
1
Inclusions are anti-competitive behaviour;
attempts to identify an anonymous reporter,
community relations or human rights breach;
cybersecurity or data privacy breach; deficiencies
in a business conduct investigation; improper
political or governmental conduct; inappropriate or
unauthorised external communication; information
on other support service providers; physical
violence; and trade control breach.
coal mine dust lung disease claims accepted
in FY2022, which consisted of three former
workers and one current worker. For cases
involving current employees, we offer counselling,
medical support and redeployment options
where relevant.
Mental health
The mental health of our people continues to be
a focus. In FY2022, we continued to implement
our Group-wide Mental Health Framework to
raise awareness of mental wellbeing, reduce
stigma and increase the capacity of our
leaders to recognise and support individuals
experiencing mental illness. As a founding
member of the Global Business Collaboration
for Better Workplace Mental Health, we continue
to contribute to the global business-led alliance
to advocate for and accelerate positive change
for mental health in the workplace worldwide.
To support the proactive management of mental
wellbeing and give our workforce the tools and
skills needed to build resilience and positive
mental health, we provide and promote the
Employee Assistance Program, our mental
health toolkit, Thrive, education and awareness
campaigns (including stigma reduction) and the
BHP Resilience Program.
In May 2022, we continued with our annual
BHP Mental Health month, with the aim of
increasing mental wellbeing and encouraging
everyone to support and look out for one
another. We continued to support global mental
health campaigns during FY2022, including
World Mental Health Day, R U OK? Day and
Movember. In FY2022, we also commenced
work to develop a Group-wide psychosocial risk
management approach with the aim of taking a
proactive and systemic approach to sustaining
a mentally healthy workplace. This process will
contribute to achieving our 2030 goal for a safe,
inclusive and future ready workforce.
COVID-19
We continued to navigate the challenges of
the global COVID-19 pandemic, including high
community transmissions and variants that are
more transmissible. In FY2022, we continued
to adapt COVID-19 controls based on current
scientific evidence and medical advice designed
to protect our workforce and minimise the risk
of workplace transmission.
We strongly support vaccination as a control
to protect the health of our workforce and the
communities where we operate. As part of our
COVID-19 controls, we require vaccinations as
a condition of workplace entry subject to local
laws and regulatory requirements. We also
implemented pre-entry testing programs across
our operations and offices globally – aimed at
reducing workplace transmissions.
More information on health, including
a case study on how we supported our
people and the communities where we
operate through COVID-19, is available at
bhp.com/health.
7.7 Ethics and
business conduct
Our conduct
Our Code of Conduct (Our Code)1 brings our
values to life so we can make the right choices
every day. It applies to everyone who works
for us, with us, or on our behalf. To ensure all
employees and contractors understand how
Our Code applies, regular training is mandatory.
There are consequences for breaching Our
Code and we encourage people to speak up
where a decision or action is not in line with Our
Code or Our Charter.
Our Code is available in
five languages and accessible at bhp.com.
BHP encourages individuals to speak up and
report concerns about any conduct that is
inconsistent with Our Charter, Our Code or
internal requirements, or conduct that may be
illegal or improper. BHP requires reports of
business conduct concerns to be treated with
appropriate confidentiality and prohibits any
kind of retaliation against people who make or
may make a report, or who cooperate with an
investigation. We consider all forms of retaliation
to be misconduct and grounds for disciplinary
action, up to and including termination
of employment.
In FY2022, 5,402 reports were received into
EthicsPoint (of these 4,714 were classified as
business conduct concerns)2 representing an
increase of 33 per cent in business conduct
concerns from FY2021. These include reports
directly made by employees, contractors or
community members. It also includes reports
made to leaders (31 per cent) who are then
required to register them in EthicsPoint.
We believe the increase corresponds to the
continuous effort by BHP to promote the
reporting of disrespectful behaviour to create
an environment in which people can feel safe
speaking up. The introduction of a global service
to support people involved in sexual harassment
incidents and discuss resolution options has also
encouraged employees and contractors to report
instances of sexual harassment. Of the business
Information is available at bhp.com/our-approach/our-company/our-code-of-conduct/.
1
2 Some EthicsPoint reports are enquiries, or are not related to business conduct concerns, or are a duplicate
of an existing report.
BHP
Annual Report 2022
39
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information
We also prohibit facilitation payments, which
are payments to government officials for routine
government actions. Our people must take care
that third parties acting on our behalf do not
violate anti-corruption laws. Disciplinary action
including dismissal, or termination of contractual
relationships, may follow from a breach of
these requirements.
To manage corruption risk, we work to ensure
optimal resource allocation to areas of our
business with the highest exposure to corruption
risks. The identification, assessment and
management of corruption risks associated
with growth opportunities remains a significant
area of focus for our Compliance function, via
a sub-team dedicated to supporting functions
that are responsible for initiating transactions
and growth opportunities in countries with high
corruption risks.
All activities that potentially involve higher
exposure to corruption risk require review
or approval by our Compliance function, as
documented in our anti-corruption compliance
framework. In FY2022 Compliance and Global
Corporate Affairs implemented a new end-to-end
workflow system for sponsorships, donations
and community development projects, which
provides greater data for enhanced monitoring
and increased governance over contracting and
post-contact expenditure reporting.
Our Compliance function regularly reviews our
anti-corruption framework for compliance with
the requirements of the US Foreign Corrupt
Practices Act, the UK Bribery Act, the Australian
Criminal Code and the applicable laws and
regulatory developments of all places where
we do business. These laws are consistent
with the standards of the OECD Convention on
Combating Bribery of Foreign Public Officials in
International Business Transactions.
Our Compliance function is independent of our
assets and regions and reports to the Chief
Legal Governance and External Affairs Officer.
The Chief Compliance Officer also reports
quarterly to the Risk and Audit Committee on
compliance issues and meets at least annually
with the Committee Chair.
The Compliance team also participates in
anti-corruption risk assessments in respect of
our operated assets or functions, our interests
in non-operated assets and new business
opportunities that we consider are exposed to
material anti-corruption risks. In FY2022, the
team provided input into 44 anti-corruption
risk assessments.
Risk awareness in first-line employees remains
a critical preventative measure. Anti-corruption
training is required to be provided to all
employees and contractors as part of mandatory
annual training on Our Code. Our Compliance
function also regularly communicates and
engages with identified higher-risk roles.
In FY2022, additional risk-based anti-corruption
training was undertaken by 1,578 employees and
contractors, as well as employees of some of our
business partners and community partners.
More information on ethics and business
conduct is available at bhp.com/ethics
7 Sustainability continued
conduct reports received, 36 per cent were
made anonymously,1 compared with 42 per cent
in FY2021. Of the total business conduct reports
closed during FY2022, 43 per cent contained
one or more substantiated allegations.2
Transparency and accountability
We support initiatives by governments of the
countries where we operate to publicly disclose
the content of our licences or contracts for the
development and production of minerals that
form the basis of our payments to government,
as outlined in the Extractive Industries
Transparency Initiative (EITI) Standard.
Other initiatives include our work in partnership
with Transparency International, our
representation on the Board of the EITI, our
financial support for and Steering Committee
membership of the Bribery Prevention Network
(in Australia) and our funding of the BHP
Foundation, including its Natural Resource
Governance Global Program.
In FY2022, we also continued our active and
public support for ultimate beneficial ownership
transparency. This support included co-hosting
(with EITI, Open Ownership and the B Team) a
Beneficial Ownership Transparency Forum in
London and leading efforts with EITI for BHP
and other leading resources companies to
publicly commit to a Statement by Companies
on Beneficial Ownership Transparency, launched
at the Forum. Through the Statement, BHP and
other leading resources companies recognise
the need for publicly available company
ownership information and (among other things)
commit to promote the global adoption of
beneficial ownership transparency, to disclose
beneficial ownership data, and to identify and
use beneficial ownership data in due diligence
processes. Our efforts are complementary to
BHP Foundation’s partnership with EITI and
Open Ownership to support governments to
transform the availability and use of beneficial
ownership data for effective governance in the
extractive sector.
Multi-lateral measures to improve governance,
such as these, should help ensure transparency
and accountability are cornerstones of a successful
energy transition that benefits the citizens of
countries bestowed with critical minerals.
Anti-corruption
We continue our commitment to the global fight
against corruption in the resources industry.
Our commitment to anti-corruption is embodied
in Our Charter and Our Code.
As part of this commitment, we prohibit
authorising, offering, giving or promising
anything of value directly or indirectly to anyone
to influence them in their role, or to encourage
them to perform their work disloyally or
otherwise improperly.
1 This excludes reports not containing a business
conduct concern and excludes reports logged by
leaders on behalf of others.
2 The calculation is based on reports received and
completed in FY2022, containing one or more
substantiated allegations. Not all reports resulted
in a finding. This can occur if there is insufficient
information, the respondent is not able to be
identified, was previously terminated, or that the
impacted person did not wish to proceed.
40
BHP
Annual Report 2022
7.8 Climate change
We believe the world must pursue the aims of
the Paris Agreement with increased levels of
national and global ambition to limit the impacts
of climate change.
In September 2021, we published our Climate
Transition Action Plan (CTAP), which sets out
our strategic approach to achieving our long-
term GHG emissions reduction goals.
The CTAP, together with more information
on our climate positions, actions
and performance is available at
bhp.com/climate.
BHP’s climate change targets
and goals1
Following completion of a number of portfolio
changes in FY2022, we have taken the opportunity
to streamline the expression (without change to the
substance) of the climate change targets and goals
we outlined in the CTAP, as set out here.
To support the net zero transition that the
world must make, we will continue to pursue
sustainable provision of our products,
many of which are essential building blocks
of decarbonisation.
For operational greenhouse gas (GHG)
emissions (Scope 1 and Scope 2 from our
operated assets), we have:
– a medium-term target to reduce operational
GHG emissions by at least 30 per cent from
FY2020 levels by FY2030
– a long-term goal to achieve net zero
operational GHG emissions by 2050
Climate Transition Action
Plan progress
For value chain greenhouse gas (GHG)
emissions (Scope 3):
FY2022 progress on operational
decarbonisation targets and goals
– We are pursuing the long-term goal of net
zero Scope 3 GHG emissions by 2050.
Achievement of this goal is uncertain,
particularly given the challenges of a net zero
pathway for our customers in steelmaking,
and we cannot ensure the outcome alone.
To progress towards this goal:2
– We will target net zero by 2050 for the
operational GHG emissions of our direct
suppliers.3
– We will target net zero by 2050 for GHG
emissions from all shipping of BHP products.
– We will continue to partner with customers
and others to try to accelerate the transition
to carbon neutral steelmaking and other
downstream processes.
– Our 2030 goals are to:
– support industry to develop technologies
and pathways capable of 30 per cent
emissions intensity reduction in integrated
steelmaking, with widespread adoption
expected post 2030
– support 40 per cent emissions intensity
reduction of BHP-chartered shipping of
BHP products
To support progress towards our long-term goal
to achieve net zero operational GHG emissions
by 2050, in FY2022, we achieved our short-term
target due to significant progress made through
the execution of Power Purchase Agreements
(PPAs), particularly in Chile at two of our
copper operated assets but also increasingly
across our Australian operations. Meeting our
FY2022 target keeps us on track to achieve our
FY2030 medium-term target.
1 These positions are expressed using terms that are
defined in the Glossary to this Report, including the
terms ‘target’, ‘goal’, ‘net zero’ and ‘carbon neutral’.
The baseline year(s) of our targets will be adjusted
for any material acquisitions and divestments,
and to reflect progressive refinement of emissions
reporting methodologies. The targets’ boundaries
may in some cases differ from required reporting
boundaries. The use of carbon offsets will be
governed by BHP’s approach to carbon offsetting
described at bhp.com/climate.
2 The targets are referable to a FY2020 baseline year.
Our ability to achieve the targets is subject to the
widespread availability of carbon neutral solutions to
meet our requirements, including low/zero-emissions
technologies, fuels, goods and services.
3 Operational GHG emissions of our direct suppliers
means the Scope 1 and Scope 2 emissions of our
direct suppliers included in BHP’s Scope 3 reporting
categories of purchased goods and services
(including capital goods), fuel- and energy-related
activities, business travel and employee commuting.
Targets
Short-term: Target to maintain operational
GHG emissions at or below FY2017 levels
by FY2022, while we continue to grow our
business.
Medium-term: Target to reduce operational
GHG emissions by at least 30 per cent from
FY2020 levels by FY2030.
Baseline (adjusted)1
FY2017:12.9 MtCO2-e
FY2022 result (adjusted)1
11.0 MtCO2-e
FY2020: 14.5 MtCO2-e
15% below the adjusted
FY2017 baseline
11.0 MtCO2-e
24% reduction from the
adjusted FY2020 baseline
FY2022 progress
We have achieved and exceeded our FY2022 target by
15 per cent on the basis of significant progress securing
renewable energy supply via PPAs, notably in Minerals
Americas, with Escondida and Spence mostly supplied
by renewable energy for their electricity in the first half of
CY2022.
FY2022 progress on value chain decarbonisation targets and goals
Targets and goals
Steelmaking
2030 goal: Support industry to develop
technologies and pathways capable of 30 per
cent emissions intensity reduction in integrated
steelmaking, with widespread adoption expected
post 2030.
Maritime
2030 goal: Support 40 per cent emissions intensity
reduction of BHP-chartered shipping of BHP
products.
Target: We will target net zero by 2050 for GHG
emissions from all shipping of BHP products.
FY2022 progress
– Announced a Memorandum of Understanding (MOU) for up to US$10 million investment with POSCO
in October 2021 to jointly study optimising coal/coke quality for low-carbon blast furnace operation and
Carbon Capture Utilisation and Storage (CCUS).
– This, together with MOUs announced in FY2021, provides up to US$75 million for steel decarbonisation
partnerships with four key customers representing approximately 12 per cent of reported global steel production.
For more information refer to our steel decarbonisation framework in Value chain GHG emissions.
– Commenced feasibility studies with Baowu, HBIS, JFE, into CCUS and Direct Reduced Iron (DRI)
technologies, use of hydrogen in steelmaking, and iron ore blends suitable for DRI production.
– Invested US$11 million in venture investments in electrolysis technology companies Electrasteel and
Boston Metal.
– In May 2022, we joined the First Mover’s Coalition as a member in the shipping sector, on the basis of
committing that 10 per cent of BHP’s products shipped to our customers, on our time charter vessels, will
be on vessels using zero emissions fuels by 2030.2
– Formed a consortium with Rio Tinto, Oldendorff, Star Bulk, and the Global Maritime Forum to analyse and
support the potential to develop an iron ore maritime green corridor, fuelled by green ammonia.
– Chartered the world’s first LNG-fuelled Newcastlemax bulk carriers to transport iron ore from Western
Australia to Asia for five years. The fuel, along with improved efficiency of the vessel design, is expected to
significantly reduce GHG emissions intensity per voyage.
1 Adjustment for divestments and methodology changes: FY2017 baseline has been adjusted for Discontinued operations (Onshore US assets and Petroleum) and the divestment of
BMC, and for methodological changes (use of Intergovernmental Panel on Climate Change (IPCC) Assessment Report 5 (AR5) Global Warming Potentials and move to facility-
specific emissions calculation methodology for fugitives at Caval Ridge). These adjustments have also been applied to the GHG emissions stated in this table to aid comparability.
2 Subject to the availability of technology, supply, safety standards, and the establishment of reasonable thresholds for price premiums.
BHP
Annual Report 2022
41
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information
7 Sustainability continued
FY2022 progress on CTAP climate change commitments
Commitment
FY2022 progress
Assessing capital alignment with a 1.5ºC world
– our approach to strategy and operational and
commercial decision-making in consideration of
a range of different global, sectoral and regional
scenarios, including a 1.5ºC outcome
Climate policy engagement – including our
strengthened approach to industry associations to
ensure our review identifies areas of inconsistency
with the Paris Agreement
Just transition – our approach to dealing with the
challenges associated with the transition of our
communities and workforce as assets come to the
end of their operating life
Climate governance
and management
Climate change is a material governance and
strategic issue for us. Our Board is actively
engaged in the governance of climate change
issues, including our strategic approach,
oversight of material risk management and
performance against our targets, goals and
strategies, supported by the Sustainability
Committee and the Risk and Audit Committee.
The Board strengthened the link between
executive remuneration and delivery of
our climate change strategy in 2020, with
performance on decarbonisation and adaptation
now representing 10 per cent of the Cash and
Deferred Plan scorecard.
The Board obtains advice from climate change
experts, including by seeking the input of
management (including Dr Fiona Wild, our
Vice President Sustainability and Climate
Change) and independent advisers. In addition,
our Forum on Corporate Responsibility
(which includes Don Henry, former CEO of
the Australian Conservation Foundation and
Changhua Wu, former Greater China Director,
the Climate Group) engages with operational
management teams and with the Sustainability
Committee and the Board as appropriate.
Below Board level, key decisions in relation
to climate change are made by the CEO and
management, in accordance with their delegated
authority. Our Executive Leadership Team (ELT)
is held to account for a range of measures,
including climate-related performance, which
are then cascaded through the organisation.
While our Board is ultimately responsible for our
strategic approach to climate change issues,
management has primary responsibility for
the design and implementation of our climate
change strategy with execution overseen by the
Climate Change Steering Committee. BHP has
a dedicated Climate Change team responsible
for advising the ELT. The team collaborates
with BHP’s asset and function teams, external
partners and industry to develop practical
climate change solutions, designed to preserve
and unlock long-term value for BHP. It regularly
– The impact of our 1.5°C Paris-aligned scenario on portfolio value was assessed and reviewed against the
portfolio mix and major capital allocation decisions. All investment decisions now require an assessment
of viability under our 1.5°C scenario. Work continues to determine future climate requirements for planning
and capital allocation processes.
– We plan to publish our next formal industry association review in the second half of CY2022.
– As part of our normal practice, we intend to analyse the industry association reviews published by our
peers and relevant material published by civil society groups and other stakeholders, with the goal of
strengthening our own review methodology, where possible.
– We have set out our Equitable Change and Transition Position establishing our approach to changes and
transitions in our communities. Refer to OFR 7.1.
prepares information and advice for the ELT,
Sustainability Committee, Risk and Audit
Committee and the Board on climate-related
strategy, risks (both threats and opportunities)
and performance against climate-related metrics.
It also uses key risk indicators to help monitor
performance against our appetite for climate
change-related risks and monitors relevant
signposts through our emerging risk process.
Climate-related activity is also undertaken
across the Group, including in our Portfolio
Strategy and Development; Commercial;
Planning and Technical; and Environment teams.
Climate risk management
BHP applies a single, Group-wide approach
to the management of risk, known as the Risk
Framework. Risks are assessed to determine
their potential impacts and likelihood, enable
prioritisation and determine risk treatment
options. We then implement controls designed to
prevent, minimise or mitigate threats, and enable
or enhance opportunities. Risks and controls are
reviewed periodically and on an ad hoc basis to
evaluate performance.
For more information on BHP’s Risk
Framework refer to OFR 9.
Climate-related risks can be grouped into
two categories:
– Transition risks arise from policy, regulatory,
legal, technological, market and other societal
responses to the challenges posed by
climate change and the transition to a low-
carbon economy.
For more information refer to
Transition risks.
– Physical risks refer to acute risks that are
event-driven, including increased severity
and frequency of extreme weather events,
and chronic risks resulting from longer-term
changes in climate patterns.
For more information
refer to Physical risks.
Transition risks
Transition risks are identified, assessed and
managed in line with BHP’s Risk Framework.
We consider these across short (up to two
years), medium (two to five years) and long-term
(five to 30 years) time horizons.
For more information on risks associated
with the transition to a low-carbon
economy and why these risks are
important to BHP, potential threats and
opportunities, and key management
actions refer to OFR 9.1.
Scenario analysis
When forming strategy, we consider the impact
of a range of future pathway scenarios, including
our 1.5°C Paris-aligned scenario,1 and potential
responses to the threats and opportunities
presented by climate change. At the time of
publication of this Report, signposts do not yet
indicate the appropriate measures are in place
to drive decarbonisation at the pace or scale
required for us to assess achieving the aims of
the Paris Agreement as the most likely future
outcome. However, as governments, institutions,
companies and society increasingly focus
on addressing climate change, the potential
for a non-linear and/or more rapid transition
and the subsequent impact on threats and
opportunities increases.
We seek to maximise our exposure to products
with significant opportunity under all scenarios
and to minimise the risk that capital will be
stranded in a rapidly decarbonising world –
through portfolio commodity mix and the position
of our operated assets on their cost curves.
Two scenarios (Central Energy View and Lower
Carbon View)2 are currently being used as
inputs to our operational planning cases, based
on our current estimates of the most likely
range of future states for the global economy
and associated sub-systems. In addition to our
operational planning scenarios, we utilise a
range of scenarios, including our 1.5°C Paris-
aligned scenario when testing the resilience
of our portfolio, forming strategy and making
investment decisions. These scenarios are
reviewed periodically to reflect new information
and are benchmarked against scenarios
from the Intergovernmental Panel on Climate
Change (IPCC) and third-party energy and
resource research organisations (including the
1 This scenario aligns with the aims of the Paris Agreement and requires steep global annual emissions reduction, sustained for decades, to stay within a 1.5°C carbon budget.
1.5°C is above pre-industrial levels. For more information about the assumptions, outputs and limitations of our 1.5°C Paris-aligned scenario refer to the BHP Climate Change
Report 2020 available at bhp.com.
2 Central Energy View reflects, and is periodically updated to respond to, existing policy trends and commitments. Lower Carbon View accelerates decarbonisation trends and
policies, particularly in easier-to-abate sectors such as power generation and light duty vehicles. For more information refer to the BHP Climate Change Report 2020 available
at bhp.com.
42
BHP
Annual Report 2022
International Energy Agency, IHS Markit, Wood
Mackenzie, Bloomberg New Energy Finance and
CRU); an update of the scenarios is expected
during FY2023.
The energy and resources modelling from BHP’s
1.5°C scenario, which was conducted in 2020,
remains consistent with the updated carbon
budget released in the Working Group I report
as the first part of the IPCC’s Sixth Assessment
Report (AR6) in 2021.
Capital alignment
During FY2022, we systematically integrated
our 1.5°C Paris-aligned scenario into our
strategy and capital allocation process to test the
extent to which our capital allocation is aligned
with a rapidly decarbonising global economy.
Specifically, we apply our 1.5°C scenario to
assess whether future demand for our products
under that scenario supports ongoing capital
investment. Our analysis and that of others,
including the International Energy Agency,
have shown that many of the commodities we
currently produce are critical for the aims of the
Paris Agreement to be met.
The impact of our 1.5°C scenario on our portfolio
value was assessed after the merger of our
Petroleum business with Woodside and the sale
of a number of our coal assets, and was reviewed
against portfolio mix and major capital allocation
decisions. Our portfolio value increased under
the 1.5°C scenario, consistent with the demand
outcomes of the analysis published in the BHP
Climate Change Report 20201 that indicated the
world would need around twice as much steel,
copper and potash, and four times as much nickel
in the next 30 years as it did in the last 30. It also
indicated a reduction in the future demand for oil
and energy coal.
Our focus for capital expenditure is now on
commodities we assess as having a significant
upside through the transition. Furthermore, the
internal allocation of capital under our Capital
Allocation Framework and all major investment
decisions now require an assessment of
investment viability under our 1.5°C Paris-
aligned scenario.
Through these processes, we demonstrate
our commitment to ensuring our capital
expenditure plans are not misaligned with the
Paris Agreement’s aim to pursue efforts to
limit global warming to 1.5°C. Our total capital
and exploration expenditure for Continuing
operations in FY2022 was US$6.1 billion, of
which US$73 million or 1 per cent was for
our energy coal assets. Spend in FY2022
and all currently approved spend for energy
coal assets is limited to maintenance capital.
Additional capital is expected to be required
for the proposed life extension of the Mt Arthur
Coal mine through to the end of FY2030, should
relevant approvals be received. This is expected
to provide certainty for our people and the
community about the future of the mine and time
to work together with the community on a plan
that contributes to helping the region diversify
and strengthen its economy.
In FY2020, we announced a commitment of at
least US$400 million to invest in GHG emissions
reduction across our operated assets and value
chain over the five-year life of our Climate
Investment Program. We spent US$47 million
on initiatives consistent with this program in
FY2022, targeting operational, maritime, and
steelmaking emissions and BHP Ventures
investments. This figure does not include the
operating expenditure associated with renewable
electricity arrangements established at a number
of our operations, which collectively represented
the main source of operational emissions
abatement for BHP in FY2022. More than
US$200 million has been included in approved
budgets for FY2023 as our decarbonisation
programs further mature, and we will continue
expenditure of up to US$75 million over the
coming years channelled towards partnerships
with our customers in the steel sector.
Our capital allocation process is structured
to ensure capital expenditure plans are
aligned with our FY2030 and 2050 operational
emissions reduction target and goal. We expect
to spend around US$4 billion on operational
decarbonisation by FY2030, with plans reflecting
an annual capital allocation of between
approximately US$200 million and approximately
US$600 million per year over the next five years.
Going forward, as our climate response is further
integrated into business-as-usual planning,
our spending on climate initiatives is expected
to become increasingly indistinguishable from
normal business spending.
How we think about and use carbon pricing
Our assets and markets are likely to continue
to be subject to variations in regulation and
levels of carbon pricing depending on location
and industry. Similarly, the competitiveness
of our products and the processes in which
they are used will be impacted by the adoption
of carbon legislation in customer countries.
We utilise an explicit regulatory carbon price
forecast for major BHP operational, competitor
and customer countries. In determining our
forecast, we consider factors such as a country’s
current and announced climate policies and
targets and societal factors such as public
acceptance and demographics. We forecast the
global range of regional carbon prices to reach
between US$0-175/tCO2-e in FY2030, and
US$10-250/tCO2-e in FY2050, and US$10-175/
tCO2-e in FY2030 and US$100-250/tCO2-e in
FY2050 in BHP’s current major operational and
market countries.
We have incorporated regional carbon price
assumptions in our planning, investment
decisions and asset valuations for more than
10 years. They are used together with our
operational planning cases based on the current
economic outlook for asset planning, asset
valuations and operational decision-making.
Our carbon price forecasts are also used along
with other qualitative and quantitative metrics,
such as the outcomes of our Paris-aligned 1.5°C
scenario analysis (refer to ‘Scenario analysis’
and ‘Capital alignment’), in our assessment
of investments under the Capital Allocation
Framework and to inform our portfolio strategy
and investment decisions.
When considering initiatives to meet our
operational emission medium-term target
and long-term goal, we consider a number
of additional metrics including the initiatives’
position on our internal marginal abatement
project cost curve, technology maturity and
ultimate abatement potential. This informs the
implied costs and benefits of our decarbonisation
initiatives, allowing us to prioritise and rank those
initiatives based on an implied price on carbon.
Green revenue
Green revenue is intended as a measure of
the extent to which products and services
contribute to the transition to a green economy.2
While these contributions will be measured on
a range of important indicators (including water
conservation, biodiversity or reforestation),
much of the discussion about green revenue
remains focused on the contribution to the
transition to clean energy that is vital for climate
change mitigation.
We expect many of the resources we produce
to be important for the energy transition.
For example, the International Energy Agency’s
‘The Role of Critical Minerals in Clean Energy
Transitions’ report3 highlights the critical role
of copper and nickel, and BHP’s own 1.5°C
scenario4 indicates the case for copper, nickel
and potash could be more compelling as the
world takes action to decarbonise. Iron ore
also fares slightly better under our 1.5°C
scenario versus certain other scenarios, as
steel requirements of the energy transition are
expected to be considerable.
In FY2022, we consulted with investors,
industry and standard setters to explore
ways of establishing clear methodologies
for classification and measurement of green
revenue within the resources sector. As yet, no
agreed or established approach exists. A green
revenue measure based on end use continues
to be challenging for copper and steel as they
undergo multiple stages of processing and have
a diverse range of end uses. This challenge
is despite the widely recognised importance
1 There are inherent limitations with scenario analysis and it is difficult to predict which, if any, of the scenarios might eventuate. Scenarios do not constitute definitive outcomes
for us. Scenario analysis relies on assumptions that may or may not be, or prove to be, correct and may or may not eventuate, and scenarios may be impacted by additional
factors to the assumptions disclosed.
2 A green economy is defined by the UN Environment Programme (unep.org/regions/asia-and-pacific/regional-initiatives/supporting-resource-efficiency/green-economy) as
low-carbon, resource efficient and socially inclusive. In a green economy, growth in employment and income are driven by public and private investment into such economic
activities, infrastructure and assets that allow reduced carbon emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of biodiversity and
ecosystem services.
3 The Role of Critical Minerals in Clean Energy Transitions – World Energy Outlook Special Report, May 2021.
BHP
Annual Report 2022
43
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
of copper for the energy transition and the
ongoing role for steel in development as well
as decarbonisation.
We are continuing our approach to reporting
green revenue based on end use, using
nickel and uranium by way of illustration
as they are the most straightforward of our
commodities for which to determine contribution
to the energy transition from their end use.
Battery manufacture contributes to climate
change mitigation.1 Therefore, for illustrative
purposes,2 we have measured the revenue
from our sales to battery materials suppliers as
green revenue. Battery-suitable nickel is defined
as nickel briquettes, nickel powder and nickel
sulphate. It does not include off-specification
nickel metal. A total of 87 per cent of BHP’s
battery-suitable nickel was sold to global battery
material suppliers in FY2022,3 an increase of 15
per cent on FY2021. For FY2022, BHP’s green
revenue from battery-suitable nickel amounted
to US$1,164 million,4 an increase of 53 per cent
on FY2021.
Australian uranium is sold for nuclear power
generation only, a low emissions source
of electricity. Therefore, also for illustrative
purposes, we have measured all revenue
from uranium as green revenue. For FY2022,
BHP’s green revenue from uranium was
US$207 million, which is a decrease of 17 per
cent on FY2021.
Emissions intensity of production
As well as assessing commodities based
on their end uses, it is important to consider
the GHG emissions associated with the
production of commodities in determining their
role in the transition to a net zero economy.
Given production of many commodities is
expected to need to continue or even increase,
it is critical that their production has the lowest
possible associated GHG emissions and
optimal performance under other sustainability
indicators. For example, our Chilean copper
operated asset, Escondida, is aiming to have
100 per cent renewable electricity supply by
the mid-2020s and sources desalinated water
for operational purposes, minimising water
extraction from sensitive Andean aquifers.
1
For example, the EU taxonomy recognises
battery manufacture as a significant contributor
to climate change mitigation. The EU Taxonomy
is a classification system, establishing a list of
environmentally sustainable economic activities.
Note the EU taxonomy does not presently
cover the mining sector. For more information
refer to 32021R2139 – EN – EUR-Lex,
available at eur-lex.europa.eu/legal-content/EN/
TXT/?uri=celex%3A32021R2139.
2 Recognising that a settled methodology for
3
4
classifying green revenue in the resources sector
has yet to be determined.
Based on percentage of battery-suitable nickel sales
to battery material suppliers. Where a customer’s
planned end use is not known with certainty
to be for battery supply, assumptions of usage
have been made using historical nickel usage for
those customers.
Calculated based on gross revenue from battery-
suitable nickel multiplied by percentage of BHP’s
sales of battery-suitable nickel, as applicable to
battery material suppliers.
44
BHP
Annual Report 2022
2021 Carbon Intensity – Copper Mines1,2
Tonnes CO2-equivalent per tonne of copper equivalent
25
20
15
10
5
0
m
a
D
c
i
p
m
y
l
O
FY22 PPA Impacts
e
t
r
o
N
a
p
m
a
P
i
a
d
d
n
o
c
s
E
0%
25%
50%
75%
100%
Scope 1 & 2
Freight + Downstream
Scope 1 & 2
Freight + Downstream
Source: Skarn Associates, BHP
2021 Carbon Intensity – Nickel2,3
Tonnes CO2-equivalent per tonne of nickel equivalent
200
160
120
80
40
0
t
s
e
W
l
e
k
c
i
N
0%
25%
50%
75%
100%
Scope 1 & 2
Upstream + Freight + Port + Ocean + Downstream
Scope 1 & 2
Freight + Port + Ocean
Source: Skarn Associates, BHP
1
2
3
The copper mines emissions intensity curve is based on CY2021 data estimates from Skarn Associates.
The emissions intensity basis is tonnes of CO2-equivalent per tonne of copper equivalent finished metal per mine.
We have overlayed Escondida, Pampa Norte (comprised of Spence and Cerro Colorado) and Olympic Dam with
reported BHP data points for CY2021 for: i) production (copper – concentrate and cathode; copper equivalent
tonnes); ii) Scope 1 emissions; and iii) Scope 2 emissions. For copper cathode only, emissions intensity
estimates from freight only are included and utilise Skarn Associates’ data. This is to avoid double counting as
smelting and refining emissions would already be included in the Scopes 1 and 2 emissions of BHP assets for
cathode production. Downstream emissions intensity estimates of copper concentrate, relating to smelting and
refining – to produce finished metal as well as emissions from freight – utilise Skarn Associates’ data across the
dataset. Noting the renewable PPA arrangements that commenced at Escondida and Spence in FY2022, we
have also provided the indicative emission intensities for Escondida and Pampa Norte based on FY2022 data
(noting the rest of the of data in the curve is based on CY2021 data).
Copper-and-Nickel equivalent calculations: For the copper mines and nickel emission intensity curves, the basis
of the intensity is tonne of copper equivalent and nickel equivalent production respectively. Copper equivalent
and nickel equivalent production allows comparison of single commodity operations with those that produce by-
and co-products. For example, Escondida’s copper equivalent production is calculated as Escondida’s CY2021
revenue, divided by the CY2021 average realised copper price. For FY2022 estimates in the copper mines
intensity curve – highlighting renewable PPA impacts – FY2022 revenue, divided by the FY2022 average realised
copper price are used.
The nickel emissions intensity curve is based on CY2021 data estimates from Skarn Associates. The emissions
intensity basis is tonnes of CO2-equivalent per tonne of nickel equivalent in first saleable metal. Under the Skarn
Associates methodology, this includes processed output from the mine, concentrator and smelter (production
and emissions from refineries are not included). For Nickel West, this includes only production attributable to
BHP ores (Mt Keith and Leinster) and excludes any production and emissions from third party ores. We have
overlayed Nickel West with reported BHP data points for CY2021 for: i) production attributable to BHP ores
(nickel tonnes and nickel equivalent tonnes); ii) Scope 1 emissions; and iii) Scope 2 emissions. To calculate
nickel equivalent production, we have used average realised CY2021 nickel prices as well as Skarn Associates’
estimate for the CY2021 cobalt price. For emissions, we have pro-rated Scopes 1 and 2 emissions from the
Kalgoorlie smelter to account for emissions attributable to BHP production only (i.e. excluding third-party
feed) and excluded emissions from the Kambalda concentrator. To avoid double counting, we have removed
Skarn Associates’ estimated intensity for downstream processing (i.e. that attributable to smelting) and have
not included emissions from the Kwinana refinery as this is outside of the boundary of the Skarn Associates’
methodology. Emissions intensity estimates for Upstream+Freight+Port+Ocean utilises Skarn Associates data
across the dataset. Upstream emissions are applicable to only Nickel pig iron (NPI) and Ferro-nickel (FeNi)
plants’ emissions relating to upstream mining and logistics per Skarn Associates’ methodology.
2021 Carbon Intensity – Seaborne Iron Ore1
Kilograms CO2-equivalent per tonne of iron ore (wet)
250
200
150
100
50
0
I
O
A
W
0%
25%
50%
75%
100%
Scope 1 & 2 (includes integrated: Rail + Port + Ocean)
Scope 1 & 2 (includes integrated: Rail + Port + Ocean)
Non-integrated: Rail + Port + Ocean
Non-integrated: Rail + Port + Ocean
Source: Skarn Associates, BHP
1 The iron ore emissions intensity curve is based on CY2021 data estimates from Skarn Associates for seaborne
iron ore operations. The emissions intensity basis is kilograms of CO2-equivalent per tonne of iron ore (wet basis)
produced per mine. BHP operations have been aggregated to WAIO level and overlayed with reported BHP
data points for CY2021 for: i) iron ore production (wet basis); ii) Scope 1 emissions; and iii) Scope 2 emissions
incorporating integrated rail, port and ocean emissions. Non-integrated Port + Rail + Ocean emissions intensity
estimates utilise Skarn Associates data across the dataset. In case of WAIO, only the emissions from non-
integrated Ocean freight are applicable as Rail & Port emissions are included as part of Scopes 1 and 2 emissions.
2021 Carbon Intensity – Metallurgical Coal2
Tonnes CO2-equivalent per tonne of saleable metallurgical coal
2.00
1.60
1.20
0.80
0.40
0.0
0%
A
M
B
25%
50%
75%
100%
Scope 1 & 2
Freight + Port + Ocean
Scope 1 & 2
Freight + Port + Ocean
Source: Skarn Associates, BHP
2 The metallurgical coal emissions intensity curve is based on CY2021 data estimates from Skarn Associates.
The emissions intensity basis is tonnes of CO2-equivalent per tonne of saleable coal produced per mine.
BHP operations have been aggregated to BMA level, noting BMC is not highlighted as a BHP operation given
the recent divestment of BHP’s interest in BMC. BMA has been overlayed with reported BHP data points for
CY2021 for: i) metallurgical coal production; ii) Scope 1 emissions; and iii) Scope 2 emissions incorporating BHP
operated integrated rail and port emissions. Emission intensity estimates for Freight + Port + Ocean logistics
of metallurgical coal products utilise Skarn Associates data across the dataset. As BMA utilises both integrated
(included in Scopes 1 and 2 emissions) and third-party rail and port services, this may result in partial double
counting of emissions. We have also updated the global warming potential factor for CH4 to the IPCC AR5 across
the dataset for better comparability.
This year, in addition to the absolute emissions
from each of our operated assets, we disclose
CY2021 GHG operational emissions intensity
estimates for BHP’s iron ore, metallurgical coal,
copper and nickel operated assets compared
to other mines. Due to the different structure
of various mines to aid comparability and
consistency with the Skarn Associates3 data for
the non-BHP mines, we have included select
Scope 3 emissions estimates for downstream
transport and processing of the commodity,
where appropriate. Given the commencement
of renewable PPAs at Escondida and at Spence
(which, together with Cerro Colorado, comprises
Pampa Norte) during FY2022, we have also
overlayed the FY2022 intensity of Escondida
and Pampa Norte to reflect an indicative change
in emissions intensity on the curve from these
initiatives from FY2022 onwards. Based on this
analysis, GHG emissions intensity of BHP’s
operated assets is estimated to be either in the
lowest quartile or the lowest half of the mines
covered. As our decarbonisation strategy is
executed, we expect the emissions intensity of
our operated assets to further decline.
Other sustainability indicators for our operated
assets are disclosed in our ESG Standards and
Databook available at bhp.com/sustainability.
More information on our performance in
relation to absolute GHG emissions is provided
in ‘Operational GHG emissions and energy
consumption’ and ‘Value chain GHG emissions’.
Equitable change and transitions
There are communities around the world that rely
on mining certain commodities that may therefore
be disproportionately impacted by the transition
to a low-carbon economy. Solutions will require
a multi-stakeholder approach including the local
community, investors, financiers, government at
all levels and, of course, resource companies
such as BHP.
We have outlined our approach to equitable
change and transition, taking into account
the Paris Agreement and the International
Labour Organisation’s (ILO’s) Just Transition
Guidelines, in OFR 7.1, recognising the role
of BHP through changes and transitions.
The approach to equitable change and transition
will inform implementation of our strategy for
decarbonisation and adaptation to the potential
physical impacts of climate change, as well as
apply to the intended closure of NSWEC.
Physical risks
Our Adaptation Strategy outlines the proactive
and collaborative approach we need to take
to build the safety, productivity and climate
resilience of our operated assets, investments,
portfolio, supply chain, communities and
ecosystems by adapting to the physical risks
of climate change. We have analysed specific
climate-related hazards and developed a more
detailed approach to enable financial and
economic evaluation of physical climate risks
and adaptation measures in future years.
BHP requires operated assets and functions to
identify and progressively assess potential physical
climate change risks (including to our value chain)
and build climate change adaptation into their
plans, activities and investments. In FY2022, we
progressed our Adaptation Strategy, conducting
a physical climate risk identification process
for our operated assets and supply chain.
Risks associated with each hazard were prioritised
in accordance with our risk process under BHP’s
Risk Framework, including consideration of their
materiality. Across our portfolio of operated assets
and associated value chains, we have identified a
number of common, high potential impact physical
climate risks; where the ‘Highest potential impact
physical climate risks across BHP’s operated
assets’ table presents the top eight.4
3 For more information refer to skarnassociates.com/ghg.
4 The first seven risks in the table were selected
based on the number of operated assets that
identified them as material in accordance with
BHP’s Risk Framework and the average Maximum
Foreseeable Loss severity rating assigned to each.
The absence of a tick means either the risk was
identified at the asset, but not rated as material
under our Risk Framework, or that it was not
identified for that asset. Legacy assets and non-
operated joint ventures have been excluded from
the analysis. Legacy assets are to be included in
the risk evaluations planned for FY2023. The eighth
risk in the table is a collation of material value chain
risks with implications across the regions; its position
in the table does not indicate its level of potential
impact relative to the other risks.
BHP
Annual Report 2022
45
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information
7 Sustainability continued
Highest potential impact physical climate risks across BHP’s operated assets
Minerals Australia
Minerals Americas
Risk description
BMA
NSWEC
Nickel
West
Olympic
Dam
WAIO Escondida Jansen
Pampa
Norte
Risk management1
Geotechnical instability
and erosion of tailings
storage facility
(TSF) landforms and
structures under
conditions of extreme
rainfall, leading to
TSF failure
Water shortages
impacting production,
associated activities
(e.g. dust suppression,
ore handling) and
reputation due
to changes in
average rainfall
and temperature/
evaporation
Flooding of mine and/
or key production
infrastructure (e.g.
plants, conveyor
belts etc.) due to
extreme precipitation
Disruption and/or
damage to port and
coastal infrastructure
and operations due
to higher sea levels,
cyclones, storm
surge and changes in
marine ecosystems
Workforce health and
safety incidents due to
extreme events (e.g.
extreme temperature
causing heat stress)
Disruption and/or
damage to electrical
infrastructure (e.g.
motors, cooling and
control systems) due to
extreme temperatures
Disruption and/or
damage to water
supply infrastructure
due to extreme
precipitation or flooding
Disruption in the
supply of critical
production inputs and
critical infrastructure
due to extreme
weather events
Identified as value chain risks across the relevant regions
Our approach to TSF failure risk management at operated assets is
multi-dimensional and includes the following key elements: maintenance
of dam integrity; operation, surveillance and maintenance; emergency
preparedness and response; TSF governance and standards; and
Group-level oversight and assurance.
The Our Requirements for Tailings Storage Facilities standard is aligned
to the Global Industry Standard on Tailings Management (GISTM) and
we contribute to efforts to improve TSF management across the mining
industry, including through the ICMM Tailings Working Group. For more
information on our management of TSF failure risk refer to OFR 7.18.
We are working to incorporate climate risk management into the TSF
life cycle and have conducted a detailed study on the potential impact
of climate change on Laguna Seca TSF at Escondida.
We have a range of risk management measures for our water-related
risks, including consideration of climate change projections as relevant
(and where available), covered in more detail at bhp.com/water.
Per above, risk management measures for our water-related risks are
covered in more detail at bhp.com/water.
We have developed internal guidance on incorporating climate change
projections into mine water planning, hydrologic assessment and
infrastructure design.
We are conducting a pilot study on quantifying the potential impact of this
risk, to inform future value-at-risk assessments. While our methodology is
still under development, our intent is to support more effective decision-
making when prioritising capital investment in risk controls.
We maintain response plans for various scenarios that could impact our
ability to access key markets, including physical disruptions of outbound
supply chain logistics.
Stockpile and capacity management and use of weather forecasts are
some of the tools that may assist in minimising operational disruption at
our ports from weather and/or climate-related events.
We are undertaking more detailed evaluations of the potential climate
change impacts for our port and coastal infrastructure, including at Port
Hedland and Hay Point.
The Our Requirements for Health, Our Requirements for Safety and
Our Requirements for Community standards, together with BHP’s Risk
Framework, govern our health and safety risk management approach.
At our operating sites, we have weather detection monitoring (e.g.
wet bulb temperature) and associated weather preparation and response
plans (including Trigger Action Response Plans (TARPs)) to enable
our response to potential extreme weather events. Our sites also have
Emergency Management Plans in place, and personnel trained in
emergency response.
We aim to operate our critical equipment in accordance with industry best
practice and ensure that critical equipment components are compliant
with relevant design standards. We have extensive inspection and
maintenance routines, hold inventory of critical spares, and undertake
detailed contingency planning, in order to remain resilient in the face
of potential equipment failure or inefficiencies.
A number of our sites in FY2023 will evaluate the potential impact
on electrical infrastructure of extreme temperatures under different
climate scenarios.
Regular maintenance of water infrastructure, such as treatment plants,
pipelines and tanks is critical to ensure that water is adequate for our
operated assets, both in quantity and quality.
BHP requires our water infrastructure to be designed and constructed to
meet internal and external standards.
We assess supply categories according to commercial dependency and
supplier risk, both elements that have informed our selection of key value
chain inputs for further evaluation of physical climate risk. This work aims
to minimise potential adverse impacts from physical climate risk in our
value chain.
At our Spence copper asset, we have assessed supply chain resilience
in relation to the impact that swells, extreme rainfall, earthquakes and
tsunamis could have on the supply of diesel, sulphuric acid and supplies
for concentrates. The assessment identified specific mitigating controls
for consideration by the asset.
1 The risk management measures in this column describe our current approach, which is subject to review for new or additional climate-related measures arising from the
subsequent risk evaluation work program planned across all of our operated assets (including legacy assets) in FY2023.
46
BHP
Annual Report 2022
The risk management column in the table
describes our current approach, which is
subject to review for new or additional climate-
related measures arising from the subsequent
risk evaluation work program planned for our
operated assets (including legacy assets)
in FY2023.
To underpin the subsequent risk evaluation
work program planned across all of our
operated assets (including legacy assets)
and key supply chain infrastructure, we have
sourced projections of acute and chronic
climate variables from a leading climate science
consultancy. The risk evaluation process will be
a further step toward identifying and prioritising
additional adaptation measures and reporting
potential financial impacts in later years,
including a value-at-risk range. We have already
allocated US$200 million to studies on physical
climate risk prevention and mitigation measures
at our Minerals Americas operated assets.
We have also identified a number of
opportunities to adapt to the potential physical
impacts of climate change, primarily related to
improving operational efficiency and innovation,
taking collaborative action to grow the resilience
of our value chain, and supporting local
communities and ecosystems. In FY2023,
we plan to undertake risk evaluations at our
operated assets (including legacy assets)
including assessment of chronic physical risks,
implement any ‘quick win’ adaptation actions
and initiate studies on measures expected to
require significant capital investment. We also
plan to further study prioritised value chain risks
to understand with more specificity where risk
is concentrated. These actions are intended
to contribute to addressing the climate-related
risks noted under the Inadequate business
resilience risk factor in OFR 9.1. We also intend
to continue to build an understanding of how
the communities where we operate may be
impacted by future climate events and embed
consideration of ecosystem-based adaptation, to
contribute to both climate resilience and BHP’s
biodiversity commitments and goals.
Operational GHG emissions and
energy consumption
We recognise the role we must play in helping
the world achieve its decarbonisation ambitions.
This includes reducing our operational emissions
and working with our supply chains to reduce
their emissions. Looking to the future, our aim
remains to position BHP to thrive in a low-carbon
world by minimising emissions from existing
products while helping to provide commodities
that the world needs to achieve a net zero future.
Refer to ‘BHP’s climate change targets and
goals’ for our operational emissions target
and goal.
1 Baseline adjusted to remove Discontinued
operations (Onshore US assets and Petroleum) and
BMC and for method changes (use of IPCC AR5
Global Warming Potentials (GWP) and a move to
facility-specific emissions calculation methodology
for fugitives at Caval Ridge) to ensure ongoing
comparability of performance. For more information
refer to the BHP Scopes 1, 2 and 3 GHG emissions
calculation methodology available at bhp.com/climate.
2 Original baseline adjusted in FY2019 to remove
Discontinued operations (Onshore US assets).
We review our performance against targets
annually and consider opportunities to
accelerate ambition regularly. We have
successfully achieved our short-term target
set in 2018 to maintain operational GHG
emissions at or below adjusted FY2017 levels by
FY2022, while continuing to grow our business.
Our performance against our short-term target
is described in ‘Operational GHG emissions and
energy consumption – FY2022 performance’.
Our operational GHG emissions are measured
against our target performance based on an
operational control, market-based methodology.
We also disclose operational GHG emissions
by equity share and financial control in our
ESG Standards and Databook available at
bhp.com/climate.
Operational GHG emissions and energy
consumption – FY2022 performance
In FY2022, our operational GHG emissions
were 15 per cent lower than the adjusted
FY2017 baseline1 of 12.9 MtCO2-e on the
basis of operated assets held by BHP as at
30 June 2022, demonstrating achievement of
our short-term target for FY2022. With inclusion
of BHP’s recent divestments, Discontinued
operations (Petroleum) and BMC operations
(both annualised for FY2022), operational GHG
emissions were also 15 per cent lower than the
previously adjusted FY2017 baseline.2
In FY2022, total operational energy consumption
decreased 4 per cent from FY2021. This was
largely driven by reduced energy use at Olympic
Dam due to scheduled maintenance and
reduced fuel consumption at our operated coal
assets. Scope 1 and 2 emissions decreased
25 per cent from FY2021 primarily due to an
increase in the renewable component of our
energy consumption at Escondida and Pampa
Norte in Chile.
Operational energy consumption by source (PJ)1,2
Year ended 30 June
2022
2021
2020
Consumption of fuel
– Coal and coke
– Natural gas
– Distillate/gasoline
– Other
Consumption of electricity
– Consumption of electricity from grid
Total operational energy consumption
Total operational energy consumption
(adjusted for divested operations)8
Operational energy consumption from renewable sources3
Operational energy intensity (gigajoules per tonne of copper
equivalent production)9
Operational GHG emissions (MtCO2-e)1,4,5,11
Year ended 30 June 2022
Scope 1 GHG emissions6
Scope 2 GHG emissions7
Total operational GHG emissions
Scope 1 GHG emissions (adjusted for divested operations)8
Scope 2 GHG emissions (adjusted for divested operations)8
Total operational GHG emissions
(adjusted for divested operations)8
Carbon offsets retired12
Total operational GHG emissions (including carbon offsets)12
Operational GHG emissions intensity
(tonnes CO2-e per tonne of copper equivalent production)9
Percentage of Scope 1 GHG emissions covered under
an emissions-limiting regulation10
Percentage of Scope 1 GHG emissions from methane13
Scope 2 GHG emissions (location based)7
112
1
22
87
2
37
33
149
132
17.1
18
2022
9.2
3.1
12.3
7.9
3.0
11.0
–
12.3
1.5
78%
18%
4.8
118
1
23
91
3
37
33
155
137
0.5
21
2021
10.1
6.2
16.3
8.8
6.1
14.9
0.3
16.0
2.2
81%
22%
5.0
114
1
21
90
2
36
32
150
135
0.0
19
2020
9.6
6.3
15.9
8.3
6.2
14.6
2.0
81%
19%
5.1
1 Data in italics indicates that data has been adjusted since it was previously reported. FY2021 originally reported
energy data that has been restated is 92 PJ distillate/gasoline consumption, and 2 PJ other energy consumption,
due to amended classification of petroleum based oils and greases to the ‘other’ category. FY2021 originally
reported emissions data that has been restated is 10.0 MtCO2-e for Scope 1 GHG emissions and 16.2 MtCO2-e
for total operational GHG emissions, due to minor amendments to fugitive emissions from the coal operated
assets as part of the annual reconciliation process for Australian regulatory reporting purposes. FY2021 and
FY2020 ‘Total operational GHG emissions (adjusted for divested operations)’ have been restated from 16.2 and
15.9 Mt CO2-e respectively due to the exclusion of Discontinued operations (Petroleum) and BMC (also see
footnote 8). Previously reported data excluded Discontinued operations (Onshore US assets) only. Additionally,
non-material adjustments in prior year asset-level data and changes to presentation of the data has, in certain
instances, resulted in minor impacts to the rounding of data since it was previously reported.
2 Calculated based on an operational control approach in line with World Resources Institute/World Business
Council for Sustainable Development guidance. Consumption of fuel and consumption of electricity refers to
annual quantity of energy consumed from the combustion of fuel; and the operation of any facility; and energy
consumed resulting from the purchase of electricity, heat, steam or cooling by the company for its own use.
Data has been rounded to the nearest 1 PJ to be consistent with asset/regional energy information in this Report.
In some instances, the sum of totals for sources, commodities and assets may differ due to rounding.
BHP
Annual Report 2022
47
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
3 Renewable energy consumption includes third-party supplied electricity from renewable generation where
PPAs are in place specifying generation requirements, evidenced by Renewable Energy Certificates (RECs) or
supplier-provided documentation in line with the Greenhouse Gas Protocol Scope 2 Guidance unless otherwise
specified. Renewable energy consumption at Escondida and Pampa Norte is currently sourced from invoice data;
some refinements may need to be made to renewable energy reported from these assets in the future.
4 BHP currently uses GWP from the IPCC AR5 based on a 100-year timeframe for all operations.
Minerals Americas operated assets transitioned from IPCC Assessment Report 4 (AR4) to AR5 GWP in FY2022;
all other operated assets transitioned in FY2021.
5 Scope 1 and Scope 2 GHG emissions have been calculated based on an operational control approach (unless
otherwise stated) in line with the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard.
For more information refer to the BHP Scope 1, 2 and 3 GHG emissions calculation methodology available at
bhp.com/climate. Data has been rounded to the nearest 0.1 MtCO2-e to be consistent with asset/regional GHG
emissions information in this Report. In some instances, the sum of totals for sources, commodities and assets
may differ due to rounding.
6 Scope 1 refers to direct GHG emissions from operated assets. Scope 1 emissions currently include diesel
consumed in explosives; some refinements may be made to emissions reported from this source in future.
7 Scope 2 refers to indirect GHG emissions from the generation of purchased or acquired electricity, steam, heat
or cooling that is consumed by operated assets. Our Scope 2 GHG emissions have been calculated using the
market-based method, in line with the Greenhouse Gas Protocol Scope 2 Guidance unless otherwise specified.
A residual mix emission factor is currently unavailable to account for grid electricity emissions remaining after
removal of quantities directly contracted between parties; this may result in double counting of low emissions
or renewable electricity contributions across grid-supplied consumers. Scope 2 emissions from Escondida and
Pampa Norte are currently sourced from metered data; some refinements may need to be made to emissions
reported from these assets in the future.
8 Divested operations are BMC (sale completed on 3 May 2022), BHP’s Petroleum business (merger with
Woodside completed on 1 June 2022) and Onshore US assets (sale completed on 31 October 2018). Non-
material acquisitions and divestments are included in the total.
9 For this purpose, copper equivalent production has been calculated based on FY2022 average realised product
prices for FY2022 production, FY2021 average realised product prices for FY2021 production and FY2020
average realised product prices for FY2020 production. Production figures used are consistent with energy and
GHG emissions reporting boundaries (i.e. BHP operational control) and are taken on 100 per cent basis.
10 Scope 1 GHG emissions from BHP’s facilities covered by the Safeguard Mechanism administered by the Clean
Energy Regulator in Australia, Saskatchewan Output-Based Performance Standards (OBPS) program in Canada,
and the distillate and gasoline emissions from turbine boilers at the cathode plant at Escondida covered by the
Green Tax legislation in Chile. FY2020 has been restated from 80 per cent due to changes in reported emissions
at Australian Petroleum operations.
11 More information on our strategy to further reduce GHG emissions, including our investments in low-emissions
technology and natural climate solutions, is available in the BHP Climate Change Report 2020 and the BHP
Climate Transition Action Plan 2021 available at bhp.com/climate.
12 From FY2021, we have calculated an additional operational GHG emissions total for the reporting year including
contributions from the retirement of a quantity of carbon offsets. This figure is calculated by subtracting the
number of carbon offsets retired, if any (each equivalent to a single tonne of CO2-e reduced or ‘removed’ from
the atmosphere) from the total GHG emissions reported under our operational control boundary for the year.
This is not intended to establish a recurrent approach. More information on our approach to carbon offset use
and the specifics of the carbon offsets retired in FY2021 is available at bhp.com/climate. BHP is committed to
transparently disclosing the carbon offsets that we retire towards meeting our own climate change targets and
goals. We did not retire any offsets for this purpose in FY2022.
13 In FY2022, the Caval Ridge operation moved to a facility-specific emissions calculation methodology for
fugitive emissions as detailed in the NGER (Measurement) Determination 2008 (Method 2 – extraction of coal).
When comparing FY2022 to FY2021, this methodology change contributed 1.6 per cent of the overall 4 per cent
reduction in our Percentage of Scope 1 GHG emissions from methane.
Our operational
decarbonisation pathway
Decarbonising electricity
Decarbonising electricity by switching to
renewables at our operated assets is a priority
decarbonisation lever for this decade, in
addition to a focus on preparing the business for
widespread diesel displacement in the 2030s.
The majority of our electricity supply is delivered
via electricity networks and is accounted for as
Scope 2 emissions. We are currently working to
reduce Scope 2 emissions via renewable energy
PPAs, such as those already executed in Chile,
Queensland, South Australia and grid connected
sites in Western Australia. Additionally, work
is underway to decarbonise remote power
demands in Western Australia either through
PPAs with independent power producers or via
‘behind the meter’ renewable energy installations
where we self-generate electricity in the Pilbara.
Power decarbonisation progressed with key
successes in FY2022 including:
– The Minerals Americas PPAs became
operational in August 2021 and January 2022,
with Escondida and Spence aiming to use 100
per cent renewable electricity by the mid-2020s.
– BMA’s PPA with CleanCo will deliver
approximately 50 per cent of its annual
electricity from renewable sources by 2025.1
– Nickel West signed PPAs to provide its
operations with renewable power, with
agreements for the Flat Rocks Wind Farm,
the Merredin Solar Farm and the Northern
Goldfields Solar Project.
– Olympic Dam entered into renewable energy
supply arrangements for up to 50 per cent of
its electricity by 2025.2
Decarbonising diesel
Diesel displacement represents the largest
technical challenge to our decarbonisation
pathway for operated assets in terms of the
magnitude of GHG emissions abatement
required, predominantly driven by consumption
by our haul truck fleet. We are taking steps now
to accelerate the essential role that original
equipment manufacturers must play in the
development of new equipment to address
emissions from our trucks and rail fleet.
This includes partnerships to trial battery-
electric locomotives, to develop electrified haul
trucks and collaboration such as the ‘Charge
On Innovation Challenge’ aimed at developing
Including the purchase of large-scale generation certificates (LGCs).
1
2 Including the purchase of LGCs. A portion of the LGCs are to be created from the new Port Augusta Renewable
Energy Park.
48
BHP
Annual Report 2022
concepts for large-scale haul truck electrification
and charging systems. In addition to progressing
the availability of fleet solutions for zero
emission material movement, we are working
on readying the business for electrification of
material movement by better understanding the
energy balance associated with a fully electrified
operation, quantifying future electricity demand
and associated infrastructure requirements (e.g.
transmission lines), modelling potential changes
to our concept of operations, and evaluating our
reliance on supporting infrastructure such as
trolley lines and fast charging capabilities.
Decarbonising fugitive emissions
Although currently relatively small in relation
to other emissions sources at BHP’s operated
assets, fugitive methane emissions pose
considerable technical and economic challenges
for our abatement ambitions. We are working
closely with a range of leading organisations
in technology, research and industry across
the globe, to develop new approaches and
address the issue collectively. This includes
investigating opportunities for improving the
comprehensiveness and accuracy of methane
emissions measurement. Under current
reporting requirements, we use a combination
of direct measurement and default, production-
based factors for different coal mine methane
sources. While emerging satellite and aerial-
based sensing technology is providing new
and potentially valuable perspectives, much
more work is required to understand its
practical application to geographically large,
diffuse sources of very dilute methane such as
open-cut coal mines – particularly in crowded
neighbourhoods such as the Bowen Basin and
Hunter Valley where numerous mines co-exist in
close proximity with a range of other significant
industrial and agricultural methane sources.
Project prioritisation
Through studies and our capital allocation
process, we seek to optimise the risk and reward
proposition for operational decarbonisation
projects to allocate capital and optimise
decarbonisation at a portfolio level. We have
developed an internal marginal abatement cost
curve designed to support the allocation of
capital towards the most economically efficient
and effective decarbonisation projects.
We regularly monitor our forecasted operational
GHG emissions to check we are on track.
As a result of actions taken in recent years,
particularly securing the supply of renewable
energy at some operations, we achieved our
short-term target, for FY2022, and our currently
projected performance in FY2030 is tracking
to plan against our medium-term target.
Progression of planned project studies are
regularly reviewed.
Value chain GHG emissions
We recognise the importance of supporting the
climate transition in our value chain. In 2020,
BHP set Scope 3 emissions goals for 2030
to support decarbonisation for processing
of our steelmaking products and maritime
transportation of our products. In 2021, we
added to these goals with a long-term goal and
targets for Scope 3, supported by an action
plan of working with industry, including our
customers and suppliers, to achieve sectoral
decarbonisation. Refer to ‘BHP’s climate
change targets and goals’ for our goals and
targets for Scope 3 emissions. As a producer
of materials that are essential building blocks
of decarbonisation, BHP is supporting the global
transition to a more sustainable development
trajectory by evolving the solutions we provide
to our customers and the solutions we procure
from our suppliers and partners.
Progress in FY2022
Steelmaking
In FY2022, we progressed our work in
supporting the steelmaking industry to
accelerate decarbonisation. To support positive
climate outcomes in both the near term and long
term, we believe it is important to help enable
our customers at whatever stage of the ‘steel
Steel decarbonisation framework
decarbonisation framework’ they are in. This
‘steel decarbonisation framework’ is designed
by BHP to describe the technology pathways
to decarbonising the global integrated iron and
steel industry.
BHP’s customers in steelmaking are diverse,
with some integrated steelmakers in the
‘optimisation’ stage, focused on energy and
process efficiency, increasing scrap ratios and
raw materials optimisation. Other customers
are exploring ‘transition’ stage solutions like
alternative fuels, modified blast furnace (BF)
operations, and end-of-pipe solutions like
Carbon Capture and Utilisation (CCU) and
Carbon Capture, Utilisation and Storage
(CCUS). Some companies are investigating
the viability of ‘green end-state’ technologies,
such as hydrogen-based direct reduction iron
(DRI) with electric arc furnace steelmaking
and direct electrolysis processes, like molten-
oxide electrolysis.
Potential
emissions
intensity
reduction
Customer
partnerships
Optimisation stage
20% CO2 reduction vs. BAU1
Transition stage
Green end state
50-60% CO2 reduction vs. BAU
90% CO2 reduction vs. BAU
– HBIS: Enhanced
lump utilisation,
slag recycling
– Baowu: Modified
BF oxygen and
hydrogen injection
– POSCO: Coke
– Baowu & POSCO:
– HBIS: Hydrogen DRI
– JFE: DRI pathways with
BHP ores
quality optimisation
– JFE: Coking coal
and iron ore impact
on agglomeration
Innovation &
technology
– R&D novel
beneficiation
technologies
CCUS application within
integrated steelmaking
– Tata: Use of biomass
and CCU
– R&D ultramafic
sequestration
– R&D with Hatch and
– R&D microalgae
blending for premium
coking coal quality
University of Newcastle
on hydrogen injection into
modified BF
– Supported the CCUS
Knowledge Centre, as a
member of the CO2CRC
– Ventures completed lab
trials producing metallic iron
using BHP ores with Boston
Metal and Electra Steel
Product &
portfolio
– Studying beneficiation at our Jimblebar iron
ore operation
– Studying improvements of BMA metallurgical
coal quality
– Testing programs to assess
performance of BHP’s ores
in DRI and electric furnace
steel production
Advocacy &
standards
– Joined the Global Low-Carbon Metallurgy Innovation Alliance, which is led by Baowu and
includes World Steel Association and many steel industry stakeholders
– Engage with industry decarbonisation initiatives, including our customers,
Responsible Steel, and the Australia Industry Energy Transition Initiative, by sharing
expertise and participating in consultation on emissions standards and accelerating
decarbonisation pathways
1 BAU means business as usual, referring to a trajectory of steelmaking emissions intensity if no changes occur.
Our strategy to support steelmaking is to
partner, innovate, advocate and supply the
optimal products across these stages. Access by
steelmakers to higher-quality metallurgical coal
and iron ore products, which enables them to
be more efficient and lower-emissions intensity,
is an important component of the transition
to a low-carbon future. To support this, we
are assessing the opportunity to implement
beneficiation at our Jimblebar iron ore operation
and metallurgical coal product improvements at
our BMA operations.
In FY2022, BHP signed a Memorandum of
Understanding (MOU) to partner with South
Korean steelmaking company POSCO to
study optimising coal/coke quality for low-
carbon blast furnace operation and CCUS.
This is in addition to our existing partnerships
with Baowu, JFE and HBIS. Across the four
partnerships, we are working with companies
that represent approximately 12 per cent of
reported global steel production capacity,
covering 31 per cent of our direct sales in iron
ore and 19 per cent in metallurgical coal in
FY2022. BHP has committed to invest up to
US$75 million in research and development
of steel decarbonisation pathways through
these customer partnerships. The goal of these
partnerships is to support the maturation and
scaling-up of fit-for-purpose solutions across
the steelmaking value-chain in all stages of
steel decarbonisation.
We intend to progress our customer partnerships
over three phases:
1. Conduct feasibility studies or lab/bench-scale
research and development in priority areas.
2. Pilot-scale trial, where we jointly test potential
solutions to key technical challenges
at a larger scale that is sufficient to
understand the impact of raw material and
operational parameters.
3. Trial at a customer plant, where we focus
on optimal, high impact decarbonisation
solutions for deployment on a limited basis
at select sites.
In FY2023, we intend to progress a subset of
existing customer partnerships on projects that
in aggregate have the potential to deliver 30 per
cent emissions intensity reduction if adopted at
scale post-2030. We will also continue exploring
other partnerships that are complementary to
our geographic or technology priorities, or that
can help make existing projects more effective
and efficient. For instance, on 20 July 2022,
we announced a new MOU with Tata Steel
to collaborate on the use of biomass as a
source of energy and the application of CCU
in steel production.
Maritime
Our strategy for supporting the maritime
industry’s climate transition includes advocacy,
adoption of low- and zero-emissions fuels or
other efficiency technologies (like wind-assisted
propulsion) and deploying real-time data
analytics to optimise vessel and route selection
to improve operational efficiency. For example,
in FY2022:
– Advocacy: We signed the industry call to
action with more than 150 other organisations
urging governments to commit to
decarbonising international shipping by 2050,
surpassing the levels of ambition set out in
the International Maritime Organisation’s
Initial GHG Strategy. This is in addition to the
advocacy work we do with the Global Centre
for Maritime Decarbonisation in Singapore,
of which we became a founding member
in FY2021.
– Zero-emission fuels: We joined the US
Government’s First Mover’s Coalition,
launched at COP26 in Glasgow, as a member
in the shipping sector. This means we commit
to 10 per cent of BHP’s products shipped to
our customers on our time charter vessels
being on vessels using zero-emissions
fuels by FY2030.2 BHP has also formed a
consortium with Rio Tinto, Oldendorff, Star
Bulk and the Global Maritime Forum to
analyse and support the development of an
iron ore maritime green corridor, fuelled by
green ammonia.
2 Subject to the availability of technology, supply,
safety standards and the establishment of
reasonable thresholds for price premiums.
BHP
Annual Report 2022
49
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
– Transition fuels: We progressed use of LNG
as a transitional fuel. BHP has chartered the
world’s first LNG-fuelled Newcastlemax bulk
carriers to transport iron ore from Western
Australia to Asia from Eastern Pacific Shipping
(EPS) for five years and awarded the LNG
fuel contract to Shell. The fuel, along with
improved efficiency of the vessel design, is
expected to reduce GHG emissions intensity
by up to 30 per cent on a per voyage basis.
We have already operationalised two vessels
and expect to deliver another three vessels
in FY2023. BHP is also exploring biofuels as
an interim GHG emission abatement option
for shipping. In FY2022, we issued a Request
for Proposal for procurement of sustainable-
certified (REDII or ISCC)1 biodiesel.
Procurement
In FY2022, we conducted a survey and
assessment of the climate positions of our top
500 direct suppliers, representing approximately
76 per cent of our spend.2 Through this study,
we found that 27 per cent of the suppliers
surveyed have Scope 1 and Scope 2 targets
and/or goals aligned with our own. In the coming
years, we intend to systematise our tracking
and engagement of suppliers in relation to their
public climate strategies.
In order to engage and incentivise our suppliers,
we integrated climate commitments into our
sourcing document and evaluation criteria.
We intend to continue to refine and integrate
metrics related to incentivising positive climate
outcomes from our suppliers going forward.
Scope 3 GHG emissions
performance
The most material part of BHP’s reported
Scope 3 emissions inventory comes from
the downstream processing of our products,
in particular from the emissions generated
by steelmaking through the processing of
iron ore and metallurgical coal. We estimate
that in FY2022, emissions associated with
the processing of our sold products was
307 MtCO2-e, an increase of 2 per cent from
FY2021. The increase comes primarily from
an increase in the production of iron ore
from Samarco.
After the merger of our Petroleum business with
Woodside, emissions associated with the use
of our energy products is now only from energy
coal,3 which in FY2022 was 38 MtCO2-e.
We are also progressing and improving our
approach and methodology for GHG emissions
estimations. Key refinements to our methodology
for Scope 3 this year, in line with the GHG
Protocol, include:
– Categories 1 and 2 Purchased goods and
services (including capital goods): We
piloted switching the emissions estimation
of high-spend goods from select categories
(including explosives, grinding media,
conveyor belts, tyres, and select bulk
materials) from spend-based emissions
factors to industry average quantity-based
emissions factors or emissions factors
sourced directly from suppliers.
and non-battery products to increase
transparency as our nickel business grows
to be sufficiently material to report.
– Categories 4 and 9 Upstream and
downstream transportation and
distribution: We successfully developed
and operationalised a carbon accounting
and decision support system tailored
to ship chartering, leveraging DNV’s
Veracity platform.
– Category 10 Processing of sold products:
– We increased the granularity of calculations
for downstream emissions associated with
the processing of our copper products,
removing the double counting of our Scope
1 and 2 emissions previously present in
our calculations.
– We also began reporting downstream
Scope 3 emissions for nickel processing
accounting for emissions from battery
– Category 11 Use of sold products: BHP
has historically marketed a small portion of
BMA products against thermal coal indexes.
In FY2022, this portion was approximately
6 per cent, up from 2 per cent in FY2021.
For purposes of enhancing the transparency
and accuracy of our Scope 3 emissions
reporting, for FY2022 we have broken out
the energy coal portion of BMA product.
The portion of energy coal in BMA’s product
mix is influenced by both production and
market forces; we anticipate that assessments
into improved product quality will support
a reduction in BMA products marketed as
thermal coal.
For more information refer to the
BHP Scope 1, 2 and 3 GHG emissions
calculation methodology available
at bhp.com/climate.
Scope 3 GHG emissions by category (MtCO2-e)1
Year ended 30 June
Upstream
Purchased goods and services
(including capital goods)2
Fuel and energy related activities
Upstream transportation and distribution3
Business travel4
Employee commuting4
Downstream
Downstream transportation and distribution5
Investments (i.e. our non-operated assets)6
Processing of sold products7
GHG emissions from steelmaking8
– Iron ore processing to crude steel
– Metallurgical coal processing to crude steel9
Copper processing10
Nickel processing11
Total processing of sold products
Use of sold products
Energy coal12,13
Natural gas13
Crude oil and condensates13
Natural gas liquids13
Total use of sold products
Total Scope 3 GHG emissions
Total Scope 3 GHG emissions
(adjusted for divested operations)14
2022
2021
2020
9.9
1.0
4.6
0.1
0.3
3.2
2.7
305.3
270.8
34.5
1.0
0.3
306.7
37.6
17.4
15.9
1.7
72.6
401.2
364.3
10.1
1.1
4.8
0.1
0.4
3.1
2.7
300.5
260.7
39.8
1.0
301.5
38.3
19.5
16.8
1.8
76.4
400.1
359.7
9.8
1.2
4.6
0.1
0.2
2.9
2.7
292.9
252.8
40.1
1.0
294.0
56.4
20.6
17.9
1.9
96.8
412.3
369.5
1 Scope 3 GHG emissions have been calculated using methodologies consistent with the Greenhouse Gas Protocol
2
3
Corporate Value Chain (Scope 3) Accounting and Reporting Standard (Scope 3 Standard). Scope 3 GHG emissions
reporting necessarily requires a degree of overlap in reporting boundaries due to our involvement at multiple points in
the life cycle of the commodities we produce and consume. For more information on the calculation methodologies,
assumptions and key references used in the preparation of our Scope 3 GHG emissions data refer to the BHP Scope
1, 2 and 3 GHG emissions calculation methodology available at bhp.com/climate.
In FY2022, we made further improvements in how we calculate Scope 3 GHG emissions associated with the
‘Purchased goods and services (including capital goods)’ category by switching the emissions estimation of high-
spend goods from select categories (including explosives, grinding media, conveyor belts, tyres, and select bulk
materials) from spend-based emissions factors to industry average quantity-based emissions factors or emissions
factors sourced directly from suppliers. Previously reported GHG emissions for the ‘Purchased goods and services
(including capital goods)’ category were 8.9 MtCO2-e in FY2021 and 8.8 MtCO2-e in FY2020.
Includes product transport where freight costs are covered by BHP, for example under Cost and Freight (CFR)
or similar terms, as well as purchased transport services for process inputs to our operations. In FY2022, we
successfully developed and operationalised a carbon accounting and decision support system tailored to ship
chartering, leveraging DNV’s Veracity platform. This also resulted in a restatement of our maritime emissions in
the ‘Upstream transportation and distribution’ category for FY2021 and FY2020. For FY2022, we have also added
GHG emissions associated with inbound freight to this category of purchased goods that we transitioned to a
quantity method in the ‘Purchased goods and services (including capital goods)’ category. Previously reported GHG
emissions for the ‘Upstream transportation and distribution’ category were 3.8 MtCO2-e in both FY2021 and FY2020.
4 Minor restatements of emissions for Scope 3 GHG emissions associated with the ‘Business travel’ and ‘Employee
commuting’ categories, resulting from adjustments to underlying data due to spend data reclassifications, have been
made for both FY2021 and FY2020.
1 Renewable Energy Directive or International Sustainability and Carbon Certification.
2 This percentage is calculated as a share of our total spend in FY2021, and total spend is defined as the categories of spend that are relevant to Scope 3 emissions reporting
categories, which excludes intra-company payments, internal payroll, community and charitable donations, and expenses associated with regulatory compliance and taxation.
In line with our reporting methodology for Scope 3 emissions, we define our energy products as oil, gas and energy coal. We account for metallurgical coal within the
‘Processing of sold products’ category (within emissions from steelmaking).
3
50
BHP
Annual Report 2022
5 This category includes emissions associated with transportation of BHP’s products to the customer where we do
not cover the freight costs, for example under Free on Board (FOB), Ex Works (EXW) or similar terms. In FY2022,
we successfully developed and operationalised a carbon accounting and decision support system tailored to ship
chartering, leveraging DNV’s Veracity platform. This also resulted in a restatement of our maritime emissions in the
‘Downstream transportation and distribution’ category for FY2021 and FY2020. Previously reported GHG emissions
for this category were 3.8 MtCO2-e in FY2021 and 4.0 MtCO2-e in FY2020.
6 For BHP, this category covers the Scope 1 and Scope 2 GHG emissions (on an equity basis) from our assets that
are owned as a joint venture but not operated by BHP. In FY2022, all GHG emissions estimates from non-operated
assets were developed from data provided directly by operators. Emissions from Tamakaya Energía SpA (i.e.
the Kelar Power plant) that are additional to the emissions reported under Scope 2 for Escondida and Pampa Norte
under the operational control boundary are reported in the Scope 3 ‘Investments’ (i.e. our non-operated assets)
category. The categorisation of Scope 3 emissions from Tamakaya Energía SpA is under review and may change
in the future. Tamakaya Energía SpA emissions for FY2021 and FY2020 have been restated to include emissions
associated with Kelar Power Plant generation that was sold to the grid and to update data that was provisional in
FY2021. Due to the effective economic date of 31 December 2020 for the sale of BHP’s interest in Cerrejón, Scope
1 and Scope 2 emissions (on an equity basis) from Cerrejón are not included in FY2022. Scope 1 and 2 emissions
(on an equity basis) from our Petroleum non-operated assets are reported for the Rhourde Ouled Djemma (ROD)
Integrated Development, Algeria up to the date of divestment of our interest in the ROD Integrated Development
in April 2022, and for the other Petroleum non-operated assets up to the completion date of the merger of our
Petroleum business with Woodside of 1 June 2022. Previously reported GHG emissions for this category were
2.5 MtCO2-e in FY2021 and 2.6 MtCO2-e in FY2020.
7 Scope 3 GHG emissions associated with downstream processing of our zinc, gold, silver, ethane, cobalt, and
uranium oxide products are not currently included, as production volumes are relatively low and a large range
of possible end uses apply and/or downstream emissions are estimated to be immaterial. Processing/refining of
petroleum products is also excluded as these emissions are considered immaterial compared to the end-use product
combustion reported in the ‘Use of sold products’ category.
8 All our iron ore and metallurgical coal products are assumed to be processed into steel. Allocation of steelmaking
GHG emissions to BHP’s metallurgical coal is based on the global average input mass ratio of metallurgical coal vs
iron ore to the blast furnace-basic oxygen furnace (BF-BOF) steelmaking route. The GHG emission factor used to
estimate Scope 3 GHG emissions reflects the blast furnace integrated steelmaking route into which the majority of
BHP’s steelmaking raw materials portfolio is sold. The estimation also considers BHP iron ore product quality and
its impact on the amount of ore required to produce steel. We will monitor and adjust, as required, the balance of
intensity factors to reflect any evolution in our product quality and/or flows through to other pathways (such as direct
reduced iron electric arc furnace (DRI-EAF)).
9 Emissions associated with customers’ processing of metallurgical coal products (on an equity basis) from BMC
are reported up to the completion date of divestment of our interest in BMC of 3 May, 2022. This does not have an
impact on total GHG emissions reported from steelmaking due to the integrated nature of our calculations with our
iron ore production volumes, and therefore does not impact the illustrative ‘Total Scope 3 emissions (adjusted for
divested operations)’ figure provided at the end of the table. See footnote 14 for more details.
10 In FY2022, we increased the granularity of calculations for downstream emissions associated with the processing of
our copper products. We now split our product volumes into copper concentrates that are processed into cathodes
by third parties and our own copper cathodes, which are assumed to be processed into copper semi-fabricated
products. This has also removed the double counting of our Scope 1 and 2 emissions previously present in our
calculations. This has resulted in a restatement of copper processing in the ‘Processing of sold products’ category for
FY2021 and FY2020. Previously reported GHG emissions for copper processing in the ‘Processing of sold products’
category were 5.0 MtCO2-e in FY2021 and 5.2 MtCO2-e in FY2020.
11 In FY2022, we also began reporting downstream Scope 3 emissions for nickel processing to increase transparency
as our nickel business grows to be sufficiently material to report. Our methodology covers downstream emissions
from customers’ processing of BHP’s nickel products in four segments. Based on sales data, we estimate emissions
of (1) our nickel intermediates that goes to third-party refiners; (2) nickel metal that goes into stainless steel and
alloys production; (3) nickel metal that goes into nickel sulphate (NiSO4) for battery value chains; and (4) BHP’s
NiSO4 that goes directly into battery precursor active material production. Historical emissions have not been
retroactively reported as GHG emissions for nickel processing in the ‘Processing of sold products’ category are
estimated to be immaterial.
12 BHP has historically marketed a small portion of BMA products against thermal coal indexes. In FY2022, this portion
was approximately 6 per cent, up from 2 per cent in FY2021. For purposes of enhancing the transparency and
accuracy of our Scope 3 emissions reporting, for FY2022 we have estimated the energy coal component of BMA
production based on the percentage of BMA product marketed as thermal coal and associated GHG emissions and
included that under energy coal in the ‘Use of sold products’ category. We have not restated energy coal emissions
in the ‘Use of sold products’ category for FY2021 and FY2020 as the energy coal component of BMA’s sales in those
years is estimated to be immaterial. We will continue to review the energy coal contribution from BMA in future years.
Due to the effective economic date of 31 December 2020 for sale of BHP’s interest in Cerrejón, Scope 3 emissions
for customers’ processing of product from Cerrejón are not included in FY2022.
13 All crude oil and condensates are conservatively assumed to be refined and combusted as diesel. Energy coal,
natural gas and natural gas liquids are assumed to be combusted. Scope 3 emissions associated with customers’
use of energy products from our Petroleum business were reported up to the date of divestment of our interest in
the ROD Integrated Development in April 2022, and up to the effective date of the merger of our Petroleum business
with Woodside of 1 June 2022 for the other Petroleum assets.
14 Due to the merger of our Petroleum business with Woodside (completed on 1 June 2022), divestment of our interest
in the ROD Integrated Development (completed in April 2022), divestment of our interest in BMC (completed on
3 May 2022), and divestment of our interest in Cerrejón (completed 31 December 2020), associated downstream
Scope 3 emissions from the ‘Use of sold products’ and ‘Investments’ categories are removed to generate this
illustrative total, noting that other categories have not been removed for the merger or divestments due to the
complexity of underlying data. Due to the current methodology we use for estimating steelmaking emissions, the
removal of BMC emissions does not impact the total for ‘Processing of sold products’ category (also see footnote 9).
Due to the effective economic date of 31 December 2020 for sale of BHP’s interest in Cerrejón, Scope 3 emissions
(on an equity basis) from Cerrejón are not included in FY2022 reporting. As a result, the removal of Cerrejón
only impacts FY2021 and FY2020 emissions totals for the ‘Total Scope 3 GHG emissions (adjusted for divested
operations)’ figure.
Natural climate solutions
Investing in natural ecosystems is a cost-
effective and immediately available solution
to mitigate climate change that often provides
sustainability co-benefits, such as biodiversity
conservation, improved water quality or
support for local communities. We support
the development of market mechanisms that
channel private sector finance into projects
that increase carbon storage or avoid GHG
emissions through conservation, restoration
and improved management of terrestrial
landscapes, wetlands and coastal and marine
ecosystems. We focus on project support,
governance, knowledge and innovation, and
market stimulation for carbon credits generated
by these projects. For example, in FY2022 we
launched a new A$3 million grants program to
help drive the development of the Australian blue
carbon market by providing funding and support
to emerging blue carbon projects.1
Governance
BHP advocates for the development of efficient
global carbon markets that facilitate high-quality
offsetting that is both cost-effective and delivers
broader sustainability co-benefits. We are an
active member on several international carbon
markets bodies including the International
Emissions Trading Association and the Taskforce
on Scaling Voluntary Carbon Markets.
Use of carbon credits or offsets
BHP prioritises emissions reduction at our
operated assets to achieve our Scope 1
and 2 target and goal, with investments in
external carbon offset projects considered
complementary to this ‘structural abatement’.
Although we prioritise internal emission
reduction, we acknowledge a role for offsets
in a temporary or transitional capacity while
abatement options are being studied, as well
as for ‘hard to abate’ emissions with limited or
no current technological solutions, and where
access to renewable energy is constrained.
BHP has five potential ‘use cases’ for carbon
offsets, to complement the structural emissions
abatement that we prioritise (refer to the ‘BHP
Carbon Offset Use Cases’ table). This includes
contributing to our Scope 1, 2 and 3 emission
reduction targets and goals and complying
with emissions regulations (e.g. under the
Australian Safeguard mechanism) as we
work to decarbonise our business. We use
our social investment to fund research into
new and emerging natural carbon offsetting
methodologies, and to fund offsets projects with
social value co-benefits in line with our social
value framework.2 We also explore commercial
opportunities to work with organisations in our
value chain to supply offsets to supplement their
focus on emissions abatement, including the
bundling of offsets into product transactions.3
Sourcing
We perform due diligence designed to ensure
we invest in carbon offsets that adhere to the
following minimum quality standards:4
– Registered under an internationally
recognised standard that independently
verifies and issues voluntary carbon credits
and/or satisfies national carbon offset
standards for compliance offsets.
– Adheres to a robust emission reduction
accounting methodology to provide
assurance of the volume of emissions
reduced through a project.
– Demonstrates that the emissions
reductions are additional to ensure that the
emissions would not have been reduced in
the absence of a carbon offset market.
– Has a high likelihood of permanence to
ensure the emissions reduction are ongoing
and not reversed (e.g. in the case of forestry
projects, the trees are not cut down or
destroyed by a natural disaster).
– Provides robust mitigation against leakage
ensuring an offsetting project does not
increase emissions elsewhere (e.g. an area is
protected from deforestation through offsetting
but another forest area is destroyed).
1 For more information refer to bhp.com/news/articles/2022/06/new-bhp-grants-to-support-blue-carbon-market.
2 For more information refer to bhp.com/sustainability/communities/social-investment.
3 For example, we undertook a pilot carbon neutral commodity transaction with US copper cable and wire manufacturer, Southwire. We did not retire any of the offsets tied to
that transaction against our own voluntary targets or goals. For more information refer to bhp.com/news/media-centre/releases/2021/10/bhp-and-southwire-collaborate-for-
first-carbon-neutral-copper-cathode-delivery.
4 For more information refer to bhp.com/sustainability/climate-change/carbon-offsets.
BHP
Annual Report 2022
51
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
BHP carbon offset use cases
BHP may use carbon offsets in five cases, to complement the structural emissions abatement that we prioritise
1.
Scope 1 and 2
voluntary targets
and goals
2.
Scope 3 voluntary
targets and goals
3.
Regulatory compliance
4.
Social investment
5.
Commercial
opportunities
– Demonstrates high environmental and
social integrity ensuring no broader social
or environmental harm (e.g., hydropower
projects that require forest clearing and
community displacement).
– Restrict early vintage years to avoid
claiming emissions reduction from activities
that occurred a long time ago; typically this
means not purchasing offsets with a vintage
greater than five years.
BHP’s carbon offsets are from a variety of
sources including (but not limited to) spot
markets and project origination. We see a
role for offsets from solutions that remove
atmospheric carbon as well as avoid emissions.
While we prioritise offsets from nature-based
solutions, we also consider the sourcing of
offsets from engineered solutions.
BHP is committed to transparently disclosing the
carbon offsets that we retire towards meeting our
own climate change targets and goals. We did
not retire any offsets for this purpose in FY2022.
Engagement and disclosure
Achieving the aims of the Paris Agreement will
require supportive policy across jurisdictions
globally. The policy-making process is complex,
and change is unlikely to be smooth or linear.
We believe BHP can best support policy
development by ensuring we meet our own
climate targets, goals and strategies, continuing
to make the case for the economic opportunities
arising from the energy transition, and focusing
on those policy areas where we are likely to
have the greatest ability to influence change.
Our Global Climate Policy Standards clarify
how our policy positions on climate change
should be reflected in our own advocacy and
the advocacy of the associations we belong to.
Over the past five years, we have introduced a
range of measures to strengthen governance
of our membership of industry associations and
monitor their climate change advocacy.
More information on our approach to
industry associations is available at
bhp.com/about/operating-ethically/
industry-associations.
BHP was one of the first companies to
align its climate-related disclosures with the
recommendations of the Financial Stability Board’s
TCFD, of which our Vice President Sustainability
52
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Annual Report 2022
and Climate Change, Dr Fiona Wild, has been
a member since its inception in late 2015.
We published our Climate Change Report in
2020, and also participate in the CA100+ Net Zero
Carbon Benchmark (NZCB), which assesses the
world’s largest corporate GHG emitters on their
progress in the transition to the net zero future.
In September 2021, we published the CTAP,
which sets out the steps BHP intends to take to
reduce GHG emissions to net zero within our
own operations and to pursue net zero in our
value chain. The CTAP received approval from
84.9 per cent of shareholders in the ‘Say on
Climate’ advisory vote at our AGMs in 2021.
We also engage on policy matters directly with
government and through our membership of
industry associations and issue-specific coalitions
and initiatives. Examples of these engagements
are provided at bhp.com and in the ’Climate policy
engagement’ section of our CTAP.
Our TCFD-aligned disclosures and information in
support of our NZCB assessment can be found
throughout this Report, in our BHP Climate Change
Report 2020 and CTAP and at bhp.com. For a
navigator showing where to find relevant information
in relation to the TCFD recommendations refer to
‘TCFD index’ in OFR 7.1.
7.9 Value chain
sustainability
Our role as both a supplier and a customer
means it is important we have a coordinated and
integrated approach to sustainability across the
value chain. We strive to work with our customers,
suppliers and other stakeholders in the value chain
to create social value through sustainable practices
across the full life cycle of our products.
BHP takes a systems approach to value chain
sustainability, designed to assess and work with
others to improve the sustainability impacts
of our upstream supply chains, inbound and
outbound logistics, and our products as they
move through extraction, processing and use.
In FY2022, BHP developed a sustainability
standards strategy that defines our pathway
for the implementation of responsible mining
and sourcing standards. The strategy is
focused on the foundations needed to enable
a more efficient adoption of standards to better
position BHP’s participation in the sustainability
standards landscape. We also established a
global sustainability standards team to enhance
our systems and processes, integrate planning
and enable a more strategic approach to the
governance and implementation of sustainability
standards across BHP’s operated assets.
This team also has accountability for sustainability
reporting and disclosure, bringing together our
work on sustainability standards and further
strengthening our approach to transparency and
standards across the value chain.
The standards that form part of our strategy are:
– the Copper Mark
– the London Metal Exchange (LME) Policy on
Responsible Sourcing of LME-Listed Brands
– the ICMM Mining Principles and associated
Performance Expectations
– the Global Industry Standard on
Tailings Management
– Towards Sustainable Mining (TSM)
Accreditations
Our Chilean operations Escondida and Spence,
and Olympic Dam in Australia were awarded the
Copper Mark during FY2022 to recognise their
responsible production practices. The Copper
Mark is a voluntary assurance framework that
independently assesses participants in 32 critical
areas, including environment, community,
human rights and governance issues for mining,
smelting and refining operations.
Escondida, Spence and Olympic Dam also
completed independent third-party verification
of self-assessments against the ICMM Mining
Principles and associated Performance
Expectations. The ICMM Mining Principles require
member companies to conduct a prioritisation
process to determine which assets will be subject
to third-party validation across a three-year cycle.
All BHP’s operated assets have completed their
self-assessments and the external validation
sequence has been determined in consideration
of commitments made by BHP to other
standards, such as Copper Mark and the LME
Policy on Responsible Sourcing of LME-Listed
Brands, to enable operational efficiencies.
We recognise the importance of engaging in
the sustainability standards ecosystem and
we support simplification of the standards
landscape and convergence of standards.
Integrating multiple global and commodity-
Using offsets to meet the target and goal that we have set for our operational emissions, as we work to decarbonise our business. Working with our suppliers and customer on the use of offsets to supplement their focus on emissions abatement.Using offsets to comply with regulation in our operational locations, as we work to decarbonise our business.Offsets generated through our actions to develop global carbon markets, invest in nature and support communities to deliver social value.Bundling offsets into BHP product transactions to differentiate our products and supplement our customers’ focus on emissions abatement. specific standards is a complex task and in
FY2022 we engaged in a number of forums
focused on sustainability standards – through
the ICMM, the Minerals Council of Australia and
the Mining Association of Canada as well as with
standard-setting bodies like the Copper Mark,
and the OECD and LME.
In FY2022, BHP disclosed aspects of our
sustainability performance through the
LMEpassport, which is the LME’s new digital
credentials register to enable companies
that trade LME-listed brands to disclose their
sustainability metrics and certifications at
corporate, asset and brand levels. BHP added
information related to our copper and nickel
LME-registered products from Olympic Dam,
Escondida, Pampa Norte and Nickel West.
Due diligence
In FY2022, a cross-functional team defined
a clear scope and began developing a
due diligence management system for our
minerals and metals supply chain that aligns
with the OECD Due Diligence Guidance for
Responsible Supply Chains of Minerals from
Conflict-Affected and High-Risk Areas (OECD
Guidance). This means that, for our operated
assets and our inbound supply chain of minerals
and metals, BHP intends to adopt the OECD
Guidance’s Annex I five-step, risk-based due
diligence framework in the form of a new due
diligence management system. The new system
will involve updating policies and procedures,
and ensuring appropriate resources designed
to identify, assess and manage risks in our
minerals and metals supply chain where there
is any origin, transport or trade association with
conflict-affected and/or high-risk areas.
Alignment with the OECD Guidance is a
reflection of better practice supply chain due
diligence and it is also a requirement under
the responsible sourcing standards of leading
mining and metals industry bodies, including
the LME, the Copper Mark, the ICMM, and
TSM. In FY2023, we aim to finalise our OECD-
aligned due diligence management system and
commence implementation of that system for our
minerals and metals supply chain.
For more information about the scope of
our OECD-aligned due diligence refer to
our Modern Slavery Statement 2022 to be
published in September 2022 at bhp.com.
Emerging sustainability initiatives
We also continue to identify sustainability-related
opportunities in BHP’s value chain.
We see traceability as a key enabler to lifting
sustainability standards across the value chain.
In FY2022, BHP and leading US copper cable
and wire manufacturer, Southwire, completed their
first ‘carbon neutral’1 copper transaction, involving
delivery from BHP’s mines in Chile to Southwire’s
processing activities in Georgia, United States.
The pilot forms part of a collaboration for BHP
that reflects our Climate Transition Action Plan
commitment to support industry to develop
technologies for improved traceability and the
pursuit of carbon-neutral production.
Additionally, circular economy principles
are an increasingly critical consideration for
building sustainable supply chains in relation
to our commodities that meet growing demand
for our products, support goals to reduce
GHG emissions and minimise the impact
of mining and downstream processing on
the environments and communities where
we operate. Across the business, we are
working to identify opportunities that leverage
our capabilities to create solutions that can
contribute towards a circular economy.
7.10 Community
Making a positive contribution to the social and
economic wellbeing of the communities where we
operate requires long-term partnerships based on
respect, transparency and trust. Our actions and
approach are governed by the Our Requirements
for Community standard and Our Code.
Community understanding
We understand our activities have the potential
to create social, cultural, environmental and
human rights impacts, both positive and
negative. To analyse the potential risks to
communities where we operate, we conduct
due diligence to better understand social and
human rights contexts, work collaboratively
with our community stakeholders, and look for
opportunities to create social value.
As part of our due diligence processes, we
conduct community perception research in local
host communities for each of our operated assets
every two years. In FY2022, quantitative and
qualitative surveys at all operated assets provided
insights into the public’s general concerns and
priorities as well as perceptions of mining sector
and BHP performance. Globally, community
perceptions of our overall performance is positive,
being on par or above average when compared
to others in the sector in most markets. We tend
to be perceived as being safety driven, behaving
in a way that promotes diversity and inclusion,
having a positive relationship with the community,
and providing opportunities for local employment
and procurement. The areas where people
perceive room for improvement include exceeding
regulatory requirements, doing the right thing
by the environment, being a leader in water
management and taking a more active role in the
global response to climate change.
Our operated assets are also required to
maintain annual stakeholder engagement
plans and conduct regular engagement
activities, including one-on-one meetings,
multi-stakeholder roundtables, issue-based
consultation and written communications.
These engagements provide a valuable space
for more open and in-depth dialogues with
stakeholders on issues such as those raised in
our community perception research, exploring
mutually beneficial solutions and building trust.
Community events, complaints
and grievances
With no significant community events recorded as
resulting from BHP operated activities in FY2022,
our five-year target of no significant community
events between FY2018 and FY2022 has been
met.2 There were 50 community concerns and
106 complaints (five of which were classified
as grievances)3 received globally across our
operated assets through our local complaints
and grievance mechanisms. This represented a
total increase of 8 per cent from FY2021 figures.
The increase is attributable in large part to an
overall rise in the level of community reporting,
which we consider to be a positive sign that
provides earlier opportunities to seek to address
issues and understand sentiment to avoid or
reduce the adverse impact and risk of escalation.
These concerns, complaints and
grievances included:
– The two most common themes across BHP
operated assets were concerns regarding:
(i) the continued impacts of the COVID-19
pandemic and associated recovery initiatives;
and (ii) local employment.
– In Chile, community concerns focused
on environmental impacts and the overall
sustainability of the mining industry, the
development of local communities and the
impacts of automation. Complaints about
contractor behaviour included claims that
certain commitments were not honoured and
some local Indigenous community stakeholders
raised concerns about water resources in the
high Andean wetlands and greater employment
opportunities at Escondida.
– In Canada, community concerns and
complaints related to the increase in activity
at the Jansen Potash Project, including routes
of haul trucks and greater community support
and local procurement opportunities.
– In Australia, key community issues centred
on local employment and associated skills
and labour shortages, the impact on local
procurement from supply chain delays, and our
COVID-19 vaccination mandate with particular
mental health and wellbeing concerns raised
by Traditional Owners. Community complaints
also related to operational impacts, largely
lighting, dust, noise, odour, emissions, blasting
overpressure and vibration.
– Following the announcement of the divestment
of our interest in BMC, some local stakeholders
focused on whether community support would
continue under new ownership and the local
Traditional Owners sought assurance that the
Indigenous Land Use Agreement would be
honoured by the new owners.
– The announcement that BHP would retain New
South Wales Energy Coal and intends to proceed
with a managed process to cease mining at
the asset by the end of FY2030 was received
in a neutral to positive manner overall, with
community stakeholders generally expressing
support for BHP retaining the asset to a managed
closure rather than selling to new owners.
1
‘Carbon neutral’ is not intended to imply certification under any standard or application of a particular methodology and includes all those greenhouse gas emissions as
defined for BHP reporting purposes.
2 A significant event resulting from BHP operated activities is one with an actual severity rating of four or above, based on our internal severity rating scale (tiered from one
to five by increasing severity) as defined in our mandatory minimum performance requirements for risk management.
3 An event or community complaint relating to an adverse impact/event that has escalated to the point where a third-party intervention or adjudication is required to resolve it.
BHP
Annual Report 2022
53
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
While we have collected information and sought
to understand community issues for some time,
in FY2022 we identified opportunities to enhance
the visibility and representation of community
issues across BHP, including:
– broadening our community data sets to create
a more integrated and multidimensional
understanding of community issues, including
the incorporation of inputs received via
Indigenous-specific engagement channels
– greater data triangulation and the overlay
of regional, national, global and industry
emerging trends analysis with local insights
– implementing an enterprise-wide stakeholder
management system with linkages to
our local community complaint and
grievance mechanisms
– enhancing internal understanding of reporting
processes, systems and requirements
More information on community is
available at bhp.com/community.
Stakeholder concerns by region1
7.11 Human rights
Governance and capability
The basis for BHP’s human rights approach is
an ongoing commitment to operate in a manner
consistent with the UN Guiding Principles on
Business and Human Rights (UNGPs) and the
10 UN Global Compact Principles.
Our Human Rights Policy Statement (HRPS)
details our commitment, including the additional
issue-specific frameworks we adhere to as well
as the standards and processes set out for our
people, business partners and other relevant
parties. Updates to the HRPS commenced
in FY2022 to more clearly articulate how our
human rights governance and due diligence
approach is organised.
Our Code of Conduct (Our Code), which applies
to everyone who works for us, with us, or on
our behalf, includes a section on human rights.
Annual training on Our Code is mandatory
and we provide an additional introductory
human rights training video on our internal
learning system and our website. Teams within
Corporate Affairs and Commercial who lead
our operational and supply chain human rights
practices completed further human rights training
with an external expert to better support their
capabilities to identify and manage human rights
risks and potential impacts. Our Directors also
participated in human rights training, led by an
external expert.
Due diligence
In FY2022, we used human rights impact
assessments completed in FY2021 to conduct
a gap analysis of each operated assets’ material
risk profile (as recorded in our enterprise
risk management system) and identified
opportunities for improvement, including:
– better representing the human rights context
and potential impacts to human rights for
existing material risks, including labour
conditions (such as sexual harassment and
mental health) and environment (such as
climate change, water and biodiversity)
– improving representation of specific human
rights risks in our risk profile, such as risks
in local procurement programs that operate
– Environmental performance and sustainability of
the industry
– Local employment
– Automation
– Air quality (Spence)
– Contractor behaviours (Spence)
– Road and traffic impacts due to enhanced
operations
– Legitimacy of Community Perception Survey
– Contractor behaviour and performance
– Lack of small business opportunities
– Emissions – dust and noise
– Crime and anti-social behaviour
– Traditional Owner engagement
– Lack of access to health services
– Heritage protection
Chile
Canada
Western Australia
New South Wales
– Operational impacts including lighting, blasting
overpressure and vibration
– Divestment uncertainty
– Thermal coal export markets
– COVID-19 impacts and recovery
Queensland
– Local employment including skills and labour shortages
– Local procurement and supply chain delays for goods and
services
– COVID-19 including workforce vaccination mandates, Traditional
Owner engagement, labour and supply chain shortages, and
mental health impacts
– Cost of living, housing affordability and availability
– Regional childcare availability
– Divestment of BMC asset and continuity of community
commitments
South Australia
– Lack of childcare availability
– Availability and affordability of
community flights
– Youth mental health
– Smelter maintenance campaign
1 Data includes BMC up to the date of completion of the sale (3 May 2022).
54
BHP
Annual Report 2022
Human rights signpost
Priority area
FY2022 update
Health and safety
Given the scope, scale and nature of our business, our workforce health and safety conditions
are an important focus area for human rights considerations.
OFR 7.4 – Safety details the ongoing work to eliminate the risk of fatalities and injuries, create
workplaces safe from sexual harassment, as well as improve our workplace culture through
field leadership and contractor relationships.
OFR 7.6 – Health details the ongoing work to prevent or mitigate occupational exposures and
illnesses, address COVID-19 and support mental health.
Our Code brings our values to life. It includes an emphasis on respecting human rights and is
reviewed annually.
Ethics and business
conduct
OFR 7.7 – Ethics and business conduct describes how we apply Our Code and provides an
update on progress related to transparency, accountability and anti-corruption.
OFR 6 – People and culture describes our approach to inclusion and diversity, gender balance
and employee relations.
There are many human rights potentially relevant to the communities where we operate,
including rights related to freedom of expression and self-determination as well as economic,
social and cultural rights, such as health and wellbeing, work, adequate housing and water
and sanitation.
Community
OFR 7.10 – Community details our work to build and maintain respectful, mutually beneficial
relationships with the communities where we operate.
OFR 7.14 – Social investment describes how we seek to support key community
priorities across our operational footprint through our voluntary investment to social and
environmental initiatives.
Indigenous peoples
We recognise our approach must be founded on a deep respect for the distinct rights, cultures,
perspectives, aspirations and needs of Indigenous peoples.
OFR 7.13 – Indigenous peoples provides an update on our Global Indigenous
Peoples Framework.
Climate
change
Environment,
water, biodiversity
and land
Tailings storage
facilities
We recognise climate change is a human rights issue, with potential risks to the fundamental
rights to life, health, food and an adequate standard of living. We continue to progress our
climate targets, goals and strategies and implement our Adaptation Strategy, which includes
a focus on building the safety, productivity and climate resilience of our operated assets,
investments, portfolio, supply chain, communities and ecosystems by adapting to the physical
risks of climate change.
OFR 7.8 – Climate change details our ongoing work in this space.
We acknowledge the nature of our operations can have significant environmental impacts and
those impacts can affect people and their human rights.
OFR 7.15 – Environment details our overall approach to environmental management,
including seeking to avoid, minimise and mitigate our adverse impacts and contribute to the
resilience of the natural environment.
OFR 7.16 – Water provides an update on our Water Stewardship Position Statement,
which emphasises working with communities on shared water challenges, including water
infrastructure, access, sanitation and hygiene.
OFR 7.17 – Biodiversity and land provides an update on our work to develop a marine and
terrestrial biodiversity framework for BHP and the revision and formalisation of our global-level
biodiversity strategy.
We recognise the failure of a tailings storage facility could result in adverse health and safety
outcomes and environmental damage, potentially infringing on the rights to health, property,
an adequate standard of living and at worst, the right to life.
OFR 7.18 – Tailings storage facilities provides an update on our ongoing commitment to
the Global Industry Standard on Tailings Management and our aspiration to achieve zero harm
from tailings.
BHP
Annual Report 2022
55
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
independently of our global procurement
process, the risk of violating consultation
and consent frameworks that respect the
rights of Indigenous peoples, the risk of
lacking accessible and effective complaints
and grievance mechanisms, and analysis
regarding potential impacts specific to
vulnerable groups (such as Indigenous
peoples, women and LGBT+ community)
We are reflecting these learnings in our internal
governance standards and processes, which are
planned to be updated in FY2023.
In FY2023, relevant risk owners and regional
teams will work with our human rights subject
matter experts to progress these opportunities
for improvement. We intend to also pursue
opportunities to improve our overall due
diligence process, such as enhancing our
external human rights research, better
highlighting stakeholder voices throughout our
due diligence and better integrating human rights
analysis into business planning cycles and our
Risk Framework.
Our Modern Slavery Statement 2022, prepared
under the Australian Modern Slavery Act
(2018) and UK Modern Slavery Act (2015),
provides additional information regarding the
management of modern slavery risks for our
operations and global supply network and will be
available in September 2022 at bhp.com.
Response and remedy
In FY2022, we continued to evaluate feedback
from our stakeholders, external experts and
internal teams on how to make our complaints
and grievance mechanisms more accessible and
our internal culture and processes more effective
in identifying concerns that have a human rights
connection. We plan to embed this feedback in
our approach by the end of FY2023.
We recognise our business activities create
human rights risks and potential impacts across
several different areas. In FY2023, we will
continue to integrate a human rights perspective
when designing, implementing and evaluating
our ways of working related to these issues.
The human rights signpost table highlights the
priority areas identified by our human rights
impact assessments and where key updates
may be found in this Report.
Reporting and disclosure
During FY2023, we intend to develop a
refreshed human rights reporting framework
that will:
– better align to the UNGP Reporting
Framework Index
– include quantitative metrics for our operations
and our supply chain, as well as qualitative
commentary and the voices of rights holders
– focus on mid- to long-term outcomes in
addition to short-term outputs
7.12 Security services
Security risk management
Identifying, understanding and managing
physical security risks is critical to the protection
of BHP’s people, assets and reputation.
56
BHP
Annual Report 2022
The security risks we face are complex,
constantly evolving and differ across the
jurisdictions where we operate. We seek to
understand the physical security threats we face,
to inform the development of security programs
that protect our people within a dynamic and
constantly changing external environment.
We use security controls and mandatory
minimum performance requirements to reduce
the likelihood of security risks materialising and
mitigate their impact if they do. We support this
with external environment monitoring, including
through our enterprise emerging risk process,
to identify changes in the external environment
that could shift our exposure to security threats
across the jurisdictions where we operate.
BHP is committed to aligning with the Voluntary
Principles on Security and Human Rights
and sets mandatory minimum performance
requirements for our operated assets, to support
implementation of these principles.
Responding to a rapidly changing
external environment
We are operating in an increasingly volatile,
uncertain world, where the physical security
risks we face are evolving from local criminal
activity and asset protection risks to more
complex transnational threats, which transcend
traditional asset and jurisdictional boundaries.
Key emerging themes include social activism,
international criminal enterprise, global terrorism
and war. We are also seeing the increasingly
integrated nature of physical security with other
risk areas, including the physical security threats
that stem from cybersecurity risks or climate-
related risks. These threats are developing
against a backdrop of increasing anti-
government sentiment, inequality and political
polarisation across the globe; challenges that
have been exacerbated by COVID-19.
To respond to this shifting external landscape,
in FY2022 we established a new Group Security
function, to provide additional expertise and
support to the business and conduct assurance
over security risk management globally.
Priorities for the function include revising our
security framework, to refresh BHP’s mandatory
minimum global security requirements
and developing a consistent taxonomy for
defining and categorising security threats.
This is designed to support robust security
risk identification across our operated assets
and functions. The team will also build upon
its existing network of intelligence sources in
FY2023, by establishing an integrated approach
to threat intelligence. This will provide decision-
makers with a tailored and consolidated
view of security insights and support risk-
informed decisions.
We are also enhancing BHP’s understanding
of the key intersecting security risks that
could impact us to provide an integrated
view of potential vulnerabilities. This will be
complemented by the implementation of a
structured global assurance program.
7.13 Indigenous
peoples
We respect the distinct identities and
perspectives of Indigenous peoples and
recognise the rights, cultures, insights,
aspirations and needs that result from those
identities and perspectives. We also recognise
our responsibility to develop partnerships based
on respect and to pursue mutually beneficial
outcomes. These responsibilities are central to
BHP’s Global Indigenous Peoples Framework.
The Global Indigenous Peoples Framework
consists of three key elements:
1 BHP Indigenous Peoples Policy Statement
2
BHP Indigenous Peoples Strategy and Good
Practice Guidance
3 Regional Indigenous Peoples Plans
First adopted in FY2015, this Framework has
played a key part in guiding BHP towards being
an organisation that engages meaningfully and
respectfully with Indigenous peoples. However,
it has been several years since it was developed
and during this time the external environment
and BHP’s own purpose, strategy and operating
footprint have significantly evolved. Accordingly,
BHP has undertaken a review of the Framework,
informed by an extensive process of internal and
external research and consultation, including
extensive engagement with Traditional Owners
and First Nations representative organisations,
leading external experts, BHP employees and
leaders, and several investors.
This review has identified a number of
opportunities for BHP to further strengthen
the Framework, so that it continues to be
aligned with our purpose, advances across
our mandatory minimum requirements for
community and human rights, and our social
value framework and new 2030 goals.
BHP agreement-making processes are built
on the core principles of good faith negotiation
aimed at achieving consent, with a focus on
understanding the historical, legal, social,
cultural and political contexts relevant to
Indigenous peoples in the areas where we
operate or seek to operate; and how our
activities might impact the rights of potentially
affected Indigenous peoples.
The newly established Global Indigenous
Engagement and Community team continues to
progress immediate opportunities for alignment
and improvement initiatives across our operated
assets and functions, globally. New senior
Indigenous leaders have been appointed and
are actively working with the regional teams
to support our approach to cultural heritage
management, agreement-making, procurement,
employment and social investment – all of which
are core components of our Global Indigenous
Peoples Framework.
Global Indigenous Peoples Framework
BHP Indigenous Peoples Policy Statement
BHP aims to be a partner of choice for Indigenous peoples through which our relationships
contribute to their economic empowerment, social development needs and cultural wellbeing.
BHP Indigenous Peoples Strategy
Governance
Indigenous peoples should derive
significant and sustainable benefit
from BHP operations through
the effective governance and
management of land access,
cultural heritage management,
agreement-making and benefit
distribution processes.
Economic
empowerment
BHP seeks to contribute to the
economic empowerment of
Indigenous peoples through
investment which provides
opportunities for employment,
training, procurement and Indigenous
enterprise support.
Outcomes
Social and
cultural support
BHP will seek to contribute to
improved quality of life for Indigenous
peoples through voluntary social
investment, support for reinforcement
and promotion of Indigenous culture
and building the Indigenous cultural
awareness of our workforce.
Public
engagement
BHP will seek to contribute to specific
initiatives, programs and public
policy processes which advance
the interests of Indigenous peoples
consistent with the BHP Indigenous
Peoples Policy Statement.
Regional Indigenous Peoples Plans
BHP Good Practice Guidance
Minerals Australia
Indigenous cultural heritage protections are
a key component of our relationships with
Indigenous peoples and our ability to operate
sustainably. We seek to ensure our standards
are best practice and forward looking.
On 18 October 2021, the Commonwealth Joint
Standing Committee on Northern Australia
handed down its report into the destruction of
Indigenous heritage sites at Juukan Gorge.
While there were no adverse findings or
recommendations made specifically in relation
to BHP, we are committed to understanding
the lessons available from this extensive body
of work.
Significantly, the finalisation of the Committee’s
Report has coincided with important law reform
in Western Australia. The Aboriginal Cultural
Heritage Act 2021 (WA) provides a revised
framework for the recognition, protection,
conservation and preservation of Western
Australian Aboriginal cultural heritage. The new
Act repeals the outdated Aboriginal Heritage Act
1972 (WA) and removes the former section 18
approvals process.
In advance of this law reform, in FY2021, BHP
confirmed to Traditional Owners that we would
not act on existing section 18 approvals from
the Western Australian Government without
further extensive consultation with the Traditional
Owners. In the case of the South Flank project,
BHP and the Banjima people established
a Heritage Advisory Council. In the period
since, the Heritage Advisory Council has met
many times to consider appropriate heritage
management practices in the Central Pilbara and
to record this common understanding in the form
of Cultural Heritage Management Plans that will
guide BHP’s operations at those locations.
We are committed to the making of land use
agreements to formalise relationships in a
manner that is responsive to the aspirations
of Traditional Owners and in compliance
with the law. These agreements create
partnerships designed to realise mutually
beneficial outcomes.
Further to the Indigenous Land Use Agreement
reached between BMC and the Barada Barna
people in FY2021, in April 2022, BMC and the
Widi people entered into a native title project
agreement for shared country where both the
Barada Barna and Widi peoples hold determined
native title rights in the vicinity of BMC’s South
Walker Creek Mine. In assuming majority
ownership and operational control of BMC,
Stanmore Resources will be subject to this
agreement and its commitments.
With our existing Reconciliation Action
Plan (RAP) having concluded in FY2022,
we commenced the development of a new
FY2023–FY2027 RAP. In a commitment to
moving beyond consultation, BHP has been co-
developing this new RAP with our stakeholders
including, Traditional Owners, Aboriginal and
Torres Strait Islander organisations, community
partners and our employees across Australia.
This process has involved nine separate RAP
forums held across Australia. The new RAP will
also align to and embed the principles of our
Global Indigenous Peoples Framework.
BHP’s spend with Indigenous businesses has
steadily increased over the past four years.
In FY2022, Minerals Australia saw an 75 per
cent increase, to US$149.9 million, in our direct
spend with Indigenous businesses across our
operated assets compared to FY2021 levels.
Compared to FY2021 levels, we also increased
the number of Indigenous businesses we directly
procure from by 53 per cent.
In May 2022, we announced that WAIO intends
to more than double its spend with Indigenous
vendors to more than US$300 million by the
end of FY2024, as it looks to create more
opportunities for Indigenous businesses.
We also achieved a significant milestone in
FY2022 by reaching our Australian Indigenous
employment target of 8 per cent, three years
ahead of schedule.
In FY2022, in support of efforts to ensure
COVID-19 vaccination was accessible
to Indigenous Australians, BHP provided
A$2 million to Aboriginal Community Controlled
Health Organisations (ACCHOs) across
Australia. These funds enabled Queensland,
Western Australian, New South Wales and South
Australian ACCHOs each to receive A$500,000
to distribute to their local Aboriginal Medical
Service members or to collective programs
that help local medical services accommodate
demand. This contribution builds on a donation
of A$3.9 million in FY2021, which laid the
foundation for partnerships between BHP and
organisations in the Indigenous-led health sector
as COVID-19 emerged.
Minerals Americas
In line with our Indigenous Peoples Plan for
South America, we seek to work closely with
the communities where we operate to make a
positive contribution, including through reaching
agreements with local communities.
In FY2022:
– We created and resourced a new Minerals
Americas Indigenous Engagement team
to centralise accountability for Indigenous
engagement. This promotes alignment across
our regions of operation and enables us to
share standards and processes designed to
support Indigenous communities affected by
our existing operations.
– We delivered against our commitment to
strengthen our cultural heritage practices
BHP
Annual Report 2022
57
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
within the Americas. Commencing with a
particular emphasis on our operations in
Chile, we:
– established new critical controls and
procedures to manage cultural heritage
values within and around our operations
– introduced new information systems and
geospatial tools to track and protect cultural
heritage sites
– created a dedicated team within our HSE
function to administer cultural heritage
management activities at the asset level
– reinforced the consideration of cultural
heritage management dimensions within
our agreement-making practices
– engaged independent experts to analyse
existing practice against the emerging
Indigenous policy landscape
At Escondida, we continued to advance the
implementation of the agreement concerning
the environmental sustainability of the Salar
de Punta Negra, signed at the end of FY2021
between Escondida, the Chilean Attorney
General’s Office, the Peine Atacameño
Indigenous community and the Council
of Atacameño Peoples. Key governance
mechanisms have been established and the
terms of reference for the conduct of technical
studies are currently under development.
At Cerro Colorado, as part of the Indigenous
consultation process for operational continuity
of this asset, we reached agreement with the
San Isidro de Quipisca Indigenous agricultural
association. Within the framework provided by
the Opportunity Agreement Development Plans,
FY2022 saw BHP support the advancement
of electrical infrastructure that benefits
approximately 80 rural families within the
Parca Aymara Indigenous community.
Across our Chilean assets, FY2022 delivered
steady increases in our levels of Indigenous
workforce participation – with representation
reaching 8.7 per cent at year-end. In total, BHP’s
regional annual spend with Indigenous business
for the period was US$9.2 million.
In Canada, following the approval of our Jansen
Potash Project in Saskatchewan, we continued
our commitment to strengthening our Indigenous
relationships and engagement practices with
those Indigenous communities impacted by the
project. There are six primary First Nations in the
vicinity of the Jansen Potash Project. BHP has
entered into Opportunity Agreements with all
six. Two of these agreements were targeted for
refresh in FY2022. In the period, we finalised
the review of our Opportunity Agreement with
the Fishing Lake First Nation and reached an
agreement in principle with regards to refreshing
our Opportunity Agreement with the Beardy’s
& Okemasis’ Cree Nation. The Opportunity
Agreements we have entered with our
Indigenous partners continue to provide a
governance framework and a platform to enable
economic participation.
In support of the Canadian Government
Truth and Reconciliation Commission’s calls
to advance the process of reconciliation in
Canada, we plan to develop our first RAP for
Canada in FY2023. The RAP will be designed to
enable BHP to address the needs and interests
of Indigenous communities within our direct
area of influence. The RAP is expected to be
co-developed with the stakeholders we seek
relationships with, using similar principles to the
process undertaken in Australia.
Resolution Copper
Resolution Copper Mining is owned by Rio
Tinto (55 per cent) and BHP (45 per cent) and
managed by Rio Tinto.
We acknowledge the Resolution Copper
project area includes areas of cultural
significance for Native American Tribes and
their members. Development of the project
continues to be studied and remains subject
to regulatory reviews by federal, state and
local governments. Resolution Copper Mining
continues to cooperatively engage in these
regulatory processes and has publicly stated its
commitment to deepening ongoing engagement
with, Native American Tribes and other
stakeholders to understand and seek to mitigate
potential negative impacts. We are monitoring
and supporting Resolution Copper Mining’s
engagement processes.
7.14 Social investment
Social investment is a further tool to create
social value and contribute to the resilience
of communities and the environment, in line
with our broader business priorities. Our long-
standing commitment is to invest not less than 1
per cent of pre-tax profits1 in voluntary social and
environmental initiatives. For FY2023–FY2030,
our social investment will be assessed as a total
over the seven-year goals period to FY2030,
rather than calculated as an average of the
previous three years’ pre-tax profit. Our social
Indigenous community investment1
RAP target deliverable or
metric2
Indigenous spend3
Indigenous community
investment4
Performance
FY2018
FY2019
FY2020
FY2021
FY2022
US$42.8m
US$57.5m
US$67.4m
US$85.5m
US$149.9m
US$11.1m
US$8.2m
US$16.6m
US$12.5m
US$29m
1 Data includes BMC up to the date of completion of the sale (3 May 2022), operated assets in our Petroleum
business up to the date of the merger with Woodside (1 June 2022) and Onshore US assets up to the date of
completion of the sale (31 October 2018), as applicable.
2 These RAP targets concluded 31 December 2021.
3 RAP target – The identification of specific opportunities for business development and engagement for Aboriginal
and Torres Strait Islander communities in Local Procurement Plans and associated targets.
4 RAP target – Australian operations engage and consult with Aboriginal and Torres Strait Islander Peoples in
social research that is conducted to understand local and regional contexts, that then informs social investment
planning and outcomes.
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BHP
Annual Report 2022
investment performance in the last five years
saw BHP fund US$681.4 million in projects with
a continued focus on good governance, human
capability, social inclusion and environment.
For more information on our performance
against these and other targets refer to OFR 7.3.
In FY2022, our voluntary social investment
totalled US$186.4 million, an increase of 7 per
cent compared with FY2021. This investment
consisted of US$99.4 million in direct community
development and environmental projects and
donations, US$14.5 million equity share to
non-operated joint venture social investment
programs, a US$52.4 million donation to the
BHP Foundation and US$1.5 million under the
Matched Giving Program. Administrative costs2
to facilitate direct social investment activities
totalled US$16.1 million and US$2.5 million
supported the operations of the BHP Foundation.
More information on social investment,
including case studies and other
initiatives to support communities where
we operate is available at bhp.com.
With our most recent five-year sustainability
targets completing in FY2022, BHP developed
new 2030 goals to further lift our ambitions
as we look to the end of the decade.
They represent a shift towards partnership,
listening and co-creation, and recognise that
addressing challenges like community and
environment resilience requires close community
and stakeholder collaboration.
For more information on our 2030 goals
refer to OFR 2.2.
The 2030 goals are intended to be
complemented by a continued commitment to
social investment of at least 1 per cent of pre-
tax profit³ in addition to our direct operational
decision-making and financial contributions.
We intend to continue to report annually
our contribution to social value through our
social investment.
The BHP Foundation
The BHP Foundation is a charitable organisation
established and funded by BHP that blends
ambition, transformational partnerships and
business acumen to catalyse new solutions to
some of the world’s most complex social and
environmental challenges. The BHP Foundation
partners with NGOs and international
institutions with the goal of driving systemic
change. Globally the Foundation focuses
on the governance of natural resources,
environmental resilience and education equity.
These global programs are complemented by
the Foundation’s country programs in Australia,
Canada, Chile and the United States which
work towards improving long-term, economic,
social and environmental sustainability at a
national level.
1 To date, our voluntary social investment has been
calculated as 1 per cent of the average of the
previous three years’ pre-tax profit.
2 The direct costs associated with implementing
social investment activities, including labour, travel,
research and development, communications
and costs to facilitate the operation of the
BHP Foundation.
3 For FY2023–FY2030, our social investment will be
assessed as a total over the seven-year goal period
to FY2030, rather than calculated as an average of
the previous three-years’ pre-tax profit.
Social investment framework
Theme
Aim
FY2022
Future of work
We aim to enhance human
capability and social inclusion
through education and vocational
training and skills development.
Future of
environment
Future of
communities
We aim to contribute to
environmental resilience through
biodiversity conservation,
ecosystem restoration, water
stewardship and climate change
mitigation and adaptation.
We aim to contribute to the
understanding, development and
sustainable use of resources to
support communities to be more
adaptive and resilient.
The Foundation’s focus is complementary
to the social investment work of BHP.
Its partnerships include:
– Healthy environment: the Great Barrier Reef
Foundation’s Resilient Reefs Initiative has
been recognised by UNESCO as a model
for successful resilience-based coral reef
management and will be promoted as a
global model for the management of all
World Heritage listed reefs.
– Safe inclusive, and future-ready
workforce: UN Women’s Second Chance
Education project is providing more than
90,000 marginalised women access to
quality learning, entrepreneurship and
employment opportunities.
– Thriving, empowered communities:
Open Contracting Partnership works with
governments and key stakeholders to ensure
money flowing from natural resource wealth
is converted into better outcomes for citizens,
for example, the implementation of open
contracting in Chile has reduced the cost of
some medicines.
– Indigenous partnerships: Reconciliation
Australia’s Narragunnawali: Reconciliation
in Education program has resources and
tools for schools and early learning services
to contribute to the reconciliation movement.
Approximately 10,000 Australian schools
and early learning services registered to
develop a Reconciliation Action Plan on the
Narragunnawali platform.
– Through our support, 22,401 people completed
education or training courses in digital,
technology, leadership and/or problem-solving
initiatives. Over 10,469 of these participants were
Indigenous people and 7,583 were women.
– 426 education institutions aligned course content
to business needs to better prepare participants
for future work readiness.
– 1,249 participants found paid employment
following completion of their training.
– We made 131 investments in nature-
based solutions.
– We contributed to improved management of
approximately 8 million hectares.
– 77 scientific or thought leadership papers
or specific knowledge sharing events
were supported.
– Through our support, 940 organisations
enhanced their internal capability to be able to
support and deliver solutions that contribute to
building efficient and sustainable communities.
– 1,168 organisations planned or delivered
initiatives that increase/improve infrastructure,
use technology and/or use resources that
enhance community resilience, including 171
initiatives specific to Indigenous peoples.
7.15 Environment
We are committed to preventing or minimising
our adverse environmental impacts and
contributing to the resilience of the natural
environment. Our operations and growth
strategy depend on obtaining and maintaining
the right to access environmental resources.
However, with growing pressure on and
competition for these resources, and with climate
change amplifying certain sensitivities of our
natural systems, our environmental performance
and management of our environmental impacts
on the communities where we operate is critical
to creating social value. This is recognised in
our social value framework where the objective
under our healthy environment goal is to create
nature-positive outcomes by having at least
30 per cent of the land and water we steward
under conservation, restoration or regenerative
practices by 2030.
At every stage in the life cycle of our operated
assets, we seek to avoid, minimise and mitigate
our adverse environmental impacts in line with
our defined risk appetite.
We recognise our activities have an
environmental footprint and commit to making
voluntary contributions to support environmental
resilience across the regions where we operate.
Our Group-wide approach to environmental
management is set out in the Our Requirements
for Environment and Climate Change standard
and our mandatory minimum performance
requirements for risk management.
These standards have been designed
taking account of the ISO management
system requirements, including ISO14001
for Environmental Management Systems,
and set the basis for how we manage risk,
including realising opportunities, to achieve
our environmental objectives.
The Our Requirements for Environment and
Climate Change standard requires us to take an
integrated, risk-based approach to managing
any actual or reasonably foreseeable adverse
and positive impacts (direct, indirect and
cumulative) on biodiversity, land, water and air.
This includes establishing and implementing
environmental risk monitoring and reviewing
practices throughout our business planning
and project evaluation cycles. In addition to
the broader environment-specific components,
the standard includes climate change related
requirements for our operated assets.
To support continuous improvement, each of
our operated assets is required to have an
Environmental Management System (EMS) that
aligns with ISO14001 standards and set target
environmental outcomes for biodiversity, land,
air and water resources that are consistent
with the assessed risks and potential impacts.
Target environmental outcomes are included
in the life-of-asset plan and approved by the
relevant Asset President or equivalent. We verify
our EMS by ISO14001 certification (for sites
currently holding ISO14001 certification) or
through our internal assurance processes.
In FY2022, no significant environmental events
resulting from BHP operated activities were
recorded, resulting in our five-year public target
of no significant environmental events between
FY2018 and FY2022 being met.
During FY2022, we successfully delivered
the full suite of five-year environment-related
sustainability targets. We also continued work to:
– develop a more integrated nature-positive
approach and healthy environment goal as
part of our 2030 goals
– refresh our Water Stewardship Strategy and
formalise our biodiversity strategy
– invest in voluntary conservation projects as
part of BHP’s contribution to environmental
resilience more broadly
BHP joined the Taskforce for Nature-related
Financial Disclosure (TNFD) Forum (a group
of organisations that support the TNFD
Member Group) in recognition of the increasing
awareness and understanding needed on
nature-related risk and the implications for the
resilience of economies and society.
More information on our environmental
approach, the Our Requirements for
Environment and Climate Change standard, and
our environmental management and governance
processes is available at bhp.com/sustainability.
Contributing to a
resilient environment
Biodiversity is essential to maintain healthy
ecosystems and the clean air, water and
productive landscapes and seascapes we all
need to survive and thrive. We are seeing an
increasing societal focus on the urgent need to
reverse current trends in biodiversity loss and
protect vital ecosystems that are the foundation
of the world’s economic security. As a global
resources company, we acknowledge we have
a role to play in contributing to environmental
resilience both inside and outside our footprint.
We do this through our Group-wide water
stewardship and biodiversity strategies, our
BHP
Annual Report 2022
59
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
social investment strategy and our work with
strategic partners and communities. In June
2022, we expressed our aspiration via our
2030 healthy environment goal (described
above) to create nature-positive outcomes.
‘Nature positive’ is a high-level goal and a
concept describing a future state of nature (e.g.
biodiversity, ecosystem services and natural
capital) which is greater than the current state.
This definition comes from the TNFD.
Our collaborative work with strategic partners,
including Conservation International, and
local communities is focused on contributing
to enduring environmental and social benefits
through biodiversity conservation and
ecosystem restoration, water stewardship and
climate change mitigation and adaptation.
Our preference is to invest our voluntary social
investment funds in projects that contribute to
cultural, economic and community benefits in
addition to environmental resilience.
Since FY2011, we have invested more than
US$95 million of our social investment funds
in voluntary environmental resilience initiatives
outside our operational area. This funding is
in addition to our investment in day-to-day
environmental management activities relating
to our operations.
More information on the environment and
our environmental projects is available at
bhp.com/environment.
Our focus on environmental resilience is
complementary to the work of the BHP
Foundation under its Environmental Resilience
Global Program.
More information is available at
bhp.com/foundation.
7.16 Water
Access to safe, clean water is a basic human
right and essential to maintaining healthy
ecosystems. Water is also integral to what we
do and we cannot operate without it. In FY2017,
we adopted a Water Stewardship Strategy to
improve our management of water, increase
transparency and contribute to the resolution
of shared water challenges. Our Water
Stewardship Position Statement was developed
in FY2019 and outlines our 2030 vision.
In FY2022, we made minor updates to our Water
Stewardship Position Statement and Strategy
1 Where ‘withdrawal’ is defined as water withdrawn
and intended for use (in accordance with ‘Water
Reporting, Good Practice Guide (2nd Ed), ICMM
(2021)). ‘Fresh water’ is defined as waters other
than seawater, wastewater from third parties and
hypersaline groundwater. Freshwater withdrawal
also excludes entrained water that would not be
available for other uses. These exclusions have
been made to align with the target’s intent to reduce
the use of freshwater sources of potential value to
other users or the environment.
2 The FY2017 baseline data has been adjusted to
account for: the materiality of the strike affecting
water withdrawals at Escondida in FY2017 and
improvements to water balance methodologies
at WAIO and BMA, and exclusion of hypersaline,
wastewater, entrainment, supplies from desalination
and Discontinued operations (Onshore US assets
and Petroleum) and the divestment of BMC.
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BHP
Annual Report 2022
to align with the ambitions of our business and
society, and developed our new 2030 healthy
environment goal.
More information is available at
bhp.com/water.
We recognise our responsibility to effectively
manage our interactions with and prevent
or minimise our adverse impacts on water
resources. Effective water stewardship begins
within our operations. We use water in many
ways, including but not limited to:
– extracting it for ore processing and to
access ore
– dust suppression
– processing mine tailings
– providing drinking water and
sanitation facilities
– using marine water for desalination
We work to reduce stress on water resources
from our operations and to collaborate with
others on challenges and opportunities like water
scarcity or high variability in water supply.
We have achieved our public sustainability target
to reduce FY2022 freshwater withdrawal1 by 15
per cent from FY2017 levels2 across our operated
assets. Our FY2022 result demonstrated a 29 per
cent reduction on our adjusted FY2017 baseline.
Achievement of the target is primarily due to the
gradual replacement of groundwater sources with
desalinated water for our Escondida operations.
This resulted in the cessation of groundwater
withdrawal for operational water consumption from
the Salar de Punta Negra aquifer in 2017 and from
the Monturaqui aquifers in FY2020. This cessation
was 10 years ahead of schedule and involved an
investment of around US$4 billion in large-scale
desalination capability. For more information refer
to bhp.com/news/case-studies/2020/09/breaking-
the-water-energy-nexus.
Our global freshwater withdrawals from FY2017
to FY2022 are shown in the chart below.
While minimisation of freshwater withdrawal will
remain important for us, in some of the regions
where we operate it may not be the key water-
related risk. In recognition of the variation of
challenges and opportunities across the regions
where we operate, we committed in our Water
Stewardship Position Statement to developing
context-based water targets (CBWTs).
These CBWTs are intended to contribute more
effectively to addressing the shared water
challenges in our operating regions.
During FY2022, we engaged third parties to
review publicly available information and engage
with stakeholders to identify shared water
challenges through Water Resource Situation
Analyses (WRSAs). We also began development
of CBWTs for each of our operated assets, which
are informed by BHP’s view of water-related
risks in the catchments and by the shared water
challenges identified in the WRSAs. The WRSAs
are expected to be made publicly available
to support continued collaboration between
stakeholders in the shared water resources of
our operating regions.
During FY2023, we intend to publicly release
CBWTs for our operated assets and from
FY2023 we will report publicly on progress
against the CBWTs.
More information on the WRSAs is
available at bhp.com/water.
Water accounting and reporting
We report on water metrics and on the
management of water-related risks on our
water webpage, in line with the ICMM’s Water
Reporting, Good Practice Guide (2nd Ed) (ICMM
guidance) and the Minerals Council of Australia’s
Water Accounting Framework (WAF).
Generally, these reporting frameworks align with
the reporting requirements of the GRI Standards
and the CEO Water Mandate.
More information on water accounting
and reporting of metrics required by the
ICMM guidance is available at bhp.com/
water and in our BHP ESG Standards
and Databook available at bhp.com/
sustainability.
Performance against freshwater withdrawal reduction target1
Megalitres
200,000
150,000
100,000
50,000
0
FY2017
FY2018
FY2019
FY2020
FY2021
FY2022
Freshwater withdrawal FY2022 15% reduction target
1 The freshwater withdrawal data includes data from all operated assets under BHP ownership at the end
of FY2022. In FY2022, we merged our Petroleum business with Woodside and divested our interest in
BMC. Data for the Petroleum business and BMC has been excluded from the FY2017 baseline and annual
performance data for our FY2018–FY2022 public sustainability targets for our withdrawal of freshwater (together
with our occupational exposures and GHG emissions) to ensure ongoing comparability of performance.
the aim of catalysing actions to improve water
governance, increase recognition of water’s
diverse values and advance sustainable
solutions. We continue to collaborate with
the CEO Water Mandate1 to support the
development of catchment-scale resilience
as part of our commitment to strengthen
transparency and collaboration across all
sectors for improved water governance. We also
continue our collaboration with the University
of Notre Dame (United States of America) to
develop an approach to water management that
considers the human rights to access water.
As reported in our Annual Report 2021, in
August 2021 an individual commenced an
environmental damage action against Cerro
Colorado alleging that Cerro Colorado’s water
extraction from the Lagunillas aquifer has
damaged the aquifer and a nearby lagoon and
wetlands. Following a series of injunctions in
February 2022, new orders were received that
permit water extraction, subject to ongoing
monitoring of aquifer water levels. If the
conditions are complied with, the orders permit
four staged and gradual increases through to
the expiry of the current environment licence
in FY2024. The hearing for the environmental
damage action was held in April 2022 with the
outcomes still pending.
In March 2022, the Chilean Environmental
Regulator (SMA) sanctioned Escondida,
concluding it had breached its environmental
permit from 2005 until 2019, causing
irreparable environmental damage due to its
water extraction from the Monturaqui aquifer.
Escondida’s infraction was classified as ‘very
serious’, and the SMA imposed a fine of
approximately US$8.3 million. Escondida has
lodged a reconsideration motion before the
SMA. A decision on the reconsideration motion
before the SMA is expected in the second half of
2022. Appeal rights remain an option following
the decision.
An environmental damage claim was lodged
by the Attorney General’s Office (AGO) against
Escondida, Albemarle and Compañía Minera
Zaldívar (the latter two being other companies
that extract water (or previously extracted)
from the Monturaqui aquifer) before the First
Environmental Court of Antofagasta during
FY2022. The AGO alleges the defendants’
extraction of water from the Monturaqui aquifer
has caused environmental damage. The Peine
Community (an Indigenous community) has
lodged a claim against Escondida based on the
same facts. Both claims have been consolidated
into a single proceeding. Escondida filed its
answer to the claims on 15 June 2022.
More information on our approach to water
stewardship, progress against our Water
Stewardship Strategy, water performance
in FY2022 and case studies on activities we
are undertaking to progress towards meeting
our water stewardship vision is available at
bhp.com/water.
In FY2022, we continued to report on water
volumes for those operated assets classed by
the World Wildlife Fund Water Risk Filter as
being located in areas of high or extremely high
water stress. The disclosure of water data in
high-stress areas is required by several reporting
frameworks, including the ICMM guidance.
In FY2022, freshwater withdrawal from those
operating assets in high or extremely high water
stress areas made up approximately 15 per cent
of our total freshwater withdrawals.
During FY2021, BHP contributed to improving
mining sector water reporting through
participation in the ICMM Water Working Group
to strengthen the ICMM guidance and align it
with the GRI requirements. The most significant
change for BHP of applying the 2021 update
of the ICMM guidance was that the guidance
recommends (non-mandatory) reporting of
the annual change in water storage volumes.
We have taken the first step to implement this
recommendation by including changes in water
storage volumes in our asset water accounts
for those operated assets where water storage
changes are considered material. In FY2022,
we assessed which sites may have changes in
water storage volumes that were material to their
water management; our coal operated assets
(where changes in water storage are the most
material within BHP) were a particular focus.
In line with our commitment for continuous
improvement of our water accounts and data, we
continued to review assumptions for accounting
for water storage, and other metrics, in asset
water models and water balances, recognising
that water modelling and balances contains a
degree of uncertainty which must be understood.
We have now included reporting of material
water storage changes across BHP, but note
the accuracy of this metric (as for other metrics
that we reported for many years) is expected to
continue to improve in the forthcoming years as
our knowledge and understanding grows.
We continue to seek to minimise our withdrawal
of high-quality water. In FY2022, seawater
continued to be our largest source of water
withdrawal, representing 61 per cent of total
withdrawals, predominantly for desalination at
Escondida. Groundwater remained our most
significant non-sea water source in FY2022,
at close to one-fifth of total water withdrawals.
In FY2022, approximately 75 per cent of our
water withdrawals consisted of water classified
as low quality. The definitions for water quality
types is available in section 2.2.4 of the WAF.
Stakeholder engagement and
legal matters
Beyond our operational activities, we have
committed to engaging across communities,
government, business and civil society with
1 The CEO Water Mandate is a UN Global Compact
initiative that mobilizes business leaders on water,
sanitation and the Sustainable Development
Goals. Endorsers of the CEO Water Mandate
commit to continuous progress against six
core elements of stewardship and in so doing
understand and manage their own water risks.
Companies that endorse the Mandate agree to
continuous improvement in six core areas of their
water stewardship practice: Direct Operations,
Supply Chain & Watershed Management, Collective
Action, Public Policy, Community Engagement
and Transparency. BHP is an active signatory of
the Mandate.
7.17 Biodiversity
and land
The nature of our activities means we have a
significant responsibility for biodiversity and land
management. As at 30 June 2022, we owned
or managed more than 8 million hectares of
land and sea; however, just under 2 per cent is
disturbed (physical or chemical alteration that
substantially disrupts the pre-existing habitats
and land cover) for our operational activities.
The area we own or manage has decreased
by 8 per cent from FY2021, predominantly
due to the merger of our Petroleum business
with Woodside.
At each of our operated assets, we look to
manage threats and opportunities to achieve
our environmental objectives. We apply the
mitigation hierarchy (avoid, mitigate, rehabilitate
and, where appropriate, apply compensatory
measures) to any potential or residual adverse
impacts on marine or terrestrial ecosystems.
We respect legally designated protected areas
and commit to avoiding areas or activities where
we consider the environmental risk is outside our
risk appetite. As part of our commitments:
– We do not explore or extract resources
within the boundaries of World Heritage
listed properties.
– We do not explore or extract resources
adjacent to World Heritage listed properties,
unless the proposed activity is compatible with
the outstanding universal values for which the
World Heritage property is listed.
– We do not explore or extract resources
within or adjacent to the boundaries of the
International Union for Conservation of Nature
(IUCN) Protected Areas Categories I to IV,
unless a plan is implemented that meets
regulatory requirements, takes into account
stakeholder expectations and contributes
to the values for which the protected area
is listed.
– We do not operate where there is a risk of
direct impacts to ecosystems that could
result in the extinction of an IUCN Red List
Threatened Species in the wild.
– We do not dispose of mined waste rock or
tailings into a river or marine environment.
Our operated assets are required to have plans
and processes that reflect local biodiversity risks
and regulatory requirements. We revised and
formalised a global-level biodiversity strategy in
FY2022 that outlines our purpose and strategic
priorities, and is designed to inform operational
decision-making across the full life cycle of
mining operations at our operated assets.
The global-level strategy provides a clear
direction that aligns asset-level biodiversity and
land objectives and supports delivery of the new
2030 healthy environment goal.
For more information on our 2030 goals
refer to OFR 2.2 and 7.1.
In FY2022, we delivered our most recent
five-year sustainability target related to
biodiversity. This was to improve marine and
terrestrial biodiversity outcomes by developing
a framework to evaluate and verify the benefits
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Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7 Sustainability continued
of our actions, in collaboration with others,
which has been tested at all our operated
assets, and contribute to the management of
areas of national or international conservation
significance exceeding our disturbed land
footprint, also known as the ‘area conserved’
target. The application of the biodiversity
framework is intended to enable us to monitor
the impacts of our activities and the effect of
our management responses on biodiversity in a
consistent way across BHP’s operated assets.
The biodiversity framework was developed with
the support of Conservation International and
Proteus, a cross-sector partnership between
the UN Environment Programme World
Conservation Monitoring Centre (UNEP WCMC)
and business.
For our ‘area conserved’ target, the total land
set aside for conservation on land where
we operate and other land we steward was
65,870 hectares in FY2022. In addition to these
conservation areas, we made several voluntary
investments over the target period, including to
the Terrebonne Biodiversity Resilience Project (a
coastal restoration project in Louisiana) and the
Martu Living Desert Project in Australia (support
for management and conservation activities
on Martu Country). Under the Conservation
International and BHP alliance, Conservation
International supported an assessment of
whether these projects could contribute towards
achievement of this target and found that the
area that could reasonably be claimed was
4,465,260 hectares. Given BHP’s FY2022 total
disturbed land footprint was 149,312 hectares,
our ‘area conserved’ target has been achieved
by our operational and voluntary conservation
investments over the target period.
In addition, we signed a grant agreement in
FY2022 with Conservation International to pilot
a framework to improve marine and coastal
protections and enhance resilience (known as
the ‘Seascape Approach’) in Fiji, with the aim
of enhancing resilience of coastal Indigenous
communities and Lau’s marine and coastal
ecosystems. This is expected to be a significant
investment in marine biodiversity conservation
in Fiji’s eastern islands of the Lau Province and
its surrounding waters. The agreement is aligned
with the longer-term goal released in FY2018
of supporting actions aligned with the UN
Sustainable Development Goals 14 and 15.
More information on our approach to
biodiversity and land management and
current performance is available at
bhp.com/biodiversity.
7.18 Tailings storage
facilities
Ensuring the integrity of our tailings storage
facilities (TSFs) is a primary focus across our
business. Our aspiration is to achieve zero harm
from tailings and we will continue to work with
others and share our progress in an effort to
make this a reality.
In 2015, after the tragic failure of the Fundão
dam at Samarco, BHP initiated a Dam
Risk Review to assess the management of
major TSFs. The catastrophic failure of the
Brumadinho dam at Vale’s operation in Brazil in
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Annual Report 2022
January 2019 further strengthened our resolve to
reduce TSF failure risk.
For information about the Samarco
tragedy and our progress with the
response refer to OFR 8.
Governance and the Global
Industry Standard on Tailings
Management
We are committed to the 2020 Global Industry
Standard on Tailings Management (GISTM)
and are working to implement the requirements
in line with the timelines outlined by the ICMM.
Our Tailings Storage Facility Policy Statement
has been published on our website, outlining
our commitment to the safe management
of TSFs, emergency preparedness and
response, recovery in the event of a failure
and transparency.
Delivery of the GISTM implementation plans
was a priority in FY2022 and we made notable
progress across our operated assets, which
was tracked and reported to the Sustainability
Committee. As part of our commitment to
GISTM and continuous improvement in
tailings management, we conducted a mid-
implementation review that confirmed we are
on track to achieve conformance in line with
the ICMM timelines. We also implemented
our Accountable Executive (AE) model,
whereby AEs are direct reports of the BHP
Chief Executive Officer and answerable to
the Sustainability Committee as stipulated in
GISTM’s requirements. The AEs cover both
direct operational accountability for BHP’s TSFs
as well as an AE accountable for oversight of
BHP’s TSF governance framework. AEs are
accountable for the safety, environmental and
social impacts of TSFs. Front line employees
are the first line (under our three lines risk
management model) and manage the day-to-day
operations and safety at site, while connected
via regular communication to the relevant AE.
We continued to progress work on TSF failure
risk management in FY2022 with a focus
on the delivery of the risk remediation plans
completed in FY2021. These plans are in
addition to the range of ongoing governance
activities we have in place to ensure effective
management of TSF failure risk, including Dam
Safety Reviews, Independent Tailings Review
Boards and project-specific Independent Peer
Reviews. Key risk indicators (KRIs) set by
management help to monitor performance of our
TSFs in dam integrity and design, overtopping/
flood management and emergency response
planning. These KRIs have been updated to
align to the GISTM.
For more information on BHP’s
approach to risk management including
KRIs refer to OFR 9.
Strategy
Our short-term strategy continues to focus
on improving KRI performance in line with
defined targets. We are completing studies
at our operated assets focused on reducing
and mitigating potential downstream impacts
particularly to populations at risk (PAR).
The studies resulted in a diverse range of
options to reduce PAR exposure at our TSFs or
mitigate TSF failure risk. With this information
our assets optimised the design and execution
of their risk remediation plans, which collectively
are intended to materially reduce PAR across
the portfolio in the short to medium term.
Our medium- and long-term strategies focus
on the development of technologies to improve
tailings management and storage, which we
believe are important in our aspiration of zero
harm from tailings. Asset-specific strategies
have been developed for all our operated assets
(including legacy assets) and seek long-term
alternative tailings solutions. In addition, while
our non-operated joint ventures (NOJVs)
are independently controlled and have their
own operating and management standards,
we encourage NOJVs to consider long-term
alternative tailings solutions as an option in
asset planning.
Industry collaboration
As part of our commitment to achieving
zero harm from tailings, we are accelerating
transformative approaches and technologies
through a wide range of initiatives in
collaboration with external industry partners.
In FY2022, Future Tails (which is an initiative
focused on training, education, research and
best-practice guides in the tailings management
space that is supported by BHP, Rio Tinto and
the University of Western Australia) established
training programs tailored to executives,
operators and technical tailings engineers.
These have been positively received by
the industry.
A consortium of industry peers was formed in
FY2022, to jointly conduct focused research on
tailings innovation solutions and share results
and learnings. Expansion of the program
is planned for the coming years to bring in
additional industry partners and represents a
significant opportunity for industry knowledge
and capability uplift.
As part of this program, we have created
partnerships with Rio Tinto and the University
of Melbourne designed to both develop novel
tailings dewatering technologies and mitigate
the risk involved in the large-scale application
of known tailings dewatering technologies.
Dewatering is a sustainable approach to tailings
processing that supports our public commitment
to reduce water usage. The BHP Tailings
Challenge received over 150 applications from
19 countries in FY2022 and following a rigorous
assessment process, two finalists were selected
to progress solutions for repurposing tailings into
fertiliser and construction material. The program
will continue through FY2023 culminating in an
on-site pilot ahead of full solution development.
Transparency
We fully support the GISTM and are working
towards implementation at our sites. We have
prioritised and actioned a phased disclosure
approach towards conformance, starting with
an update to our previously published Church
of England Disclosure1. We have contributed to
improvements in tailings storage management
across the mining industry, including through
the ICMM Tailings Working Group. We are
participants in other tailings working groups
globally, including those associated with the
Canadian Dam Association, Australian National
Committee on Large Dams, Australasian
Institute of Mining and Metallurgy, Minerals
Council of Australia, Mining Association of
Canada, Society for Mining, Metallurgy and
Exploration, and Fundación Chile.
We have continued to participate in the Investor
Mining and Tailings Safety Initiative, an investor-
led engagement convening institutional investors
active in extractive industries, including major
asset owners and asset managers.
We continued our work to fulfil our commitment
to provide detailed, transparent and integrated
disclosure of TSF management in FY2022.
In addition to our work with industry partners
to support the development of credible and
meaningful disclosure standards, we have
sought to enable the consistent application
of these in our own business through the
development and rollout of our Sustainability
Standards Portal. The portal is a data platform
to integrate multiple ESG standards, simplify
data management for our assets and further
strengthen the process, data quality and
governance improvements achieved to date.
Operated and non-operated
tailings portfolio
The classifications described in this Report
align to the Canadian Dam Association (CDA)
classification system. The TSF classification is
one element of TSF risk management, but does
not represent risk itself. It reflects the modelled,
hypothetical, most significant possible failure
and consequences without controls. It does
not reflect the current physical stability of the
TSF and it is possible for TSF classifications
to change over time, for example, following
changes to the operating context of a dam.
The TSF classification informs the design,
surveillance and review components of risk
management. Therefore, TSFs with a higher-level
classification will have more rigorous requirements
than TSFs that have a lower level of classification.
As at 30 June 2022, there were 71 TSFs2 at our
operated assets, 28 of which are of upstream
design. Of the 71 operated facilities, none
are extreme and a further 20 are classified
as very high. The three facilities classified as
extreme in FY2021 have been reclassified to a
lower-consequence classification following the
completion of risk mitigation works this year.
In FY2022, two TSFs were removed from the
operated TSF portfolio following the divestment
of our interest in BMC and one new active TSF,
a low-consequence, upstream facility at Olympic
Dam, has been added. A substantial portion of
our inactive portfolio (56) at our assets is due
largely to the number of historic tailings facilities
associated with our North American legacy
assets portfolio.
More information on the risk reduction
work underway for high-consequence
classification facilities is provided earlier
in the Governance and Strategy sections
and online, including in our case studies.
There are 10 TSFs at our NOJVs, which are
all located in the Americas. The three active
TSFs are located at Antamina in Peru, which
is of downstream construction, and two TSFs
at Samarco in Brazil, Alegria Sul TSF, which is
co-mingled dry stack, and Alegria Sul Pit, an
in-pit TSF. In addition, there are seven inactive
facilities. These include two upstream facilities
at Samarco (Germano) in Brazil (that are being
decommissioned following the February 2019
rulings by the Brazilian Government on upstream
dams); three upstream inactive facilities and
one inactive modified centreline facility at
Resolution Copper in the United States; and
one downstream inactive facility at Bullmoose in
Canada. In FY2022, two NOJV TSFs at Cerrejón
in Colombia were removed from our TSF
portfolio following the sale of the asset.
1
In April 2019, the Church of England Pensions Board
and the Council on Ethics Swedish National Pension
Funds wrote to approximately 700 mining firms to
request specific disclosures of their tailings facilities.
2 The number of tailings storage facilities (TSFs)
is based on the definition agreed to by the ICMM
Tailings Advisory Group at the original time of
submission and expanded to align with the TSF
definition established in the Global Industry
Standard for Tailings Management (GISTM).
We keep this definition under review. In FY2022,
four TSFs were removed from the BHP TSF portfolio
following the sale of our interests in two assets: two
TSFs at Cerrejón (NOJV) in January 2022 and two
TSFs at BMC (operated joint venture) in May 2022.
One new, active TSF, TSF 6 at Olympic Dam, has
been included.
Classification of operated tailings
storage facilities1,2,3,4
Types of operated tailings
storage facilities5
Operational status of operated
tailings storage facilities6
Extreme
Very high
High
Significant
Low
N/A
Centreline
Downstream
Upstream
Other
0
20
15
15
18
3
Active
Inactive
8
18
28
17
15
56
1 The following classifications aligned to the CDA classification system. It is important to note that the classification is based on the modelled, hypothetical, most significant
failure mode and consequences possible without controls, and not on the current physical stability of the dam.
2 For the purposes of this chart, ANCOLD and other classifications have been converted to their CDA equivalent.
3 Hamburgo TSF at Escondida is an inactive facility where tailings were deposited into a natural depression. Hamburgo TSF is not considered a dam and is, therefore, not
subject to CDA classification.
4 SP1/2 and SP3 TSF at New South Wales Energy Coal are inactive facilities which have been assessed to have no credible failure modes and are therefore shown as not
having a CDA classification.
‘Other’ includes dams with a raising method that combines upstream, downstream and centreline or are of in-pit design.
‘Inactive’ includes facilities not in operational use, under reclamation, reclaimed, closed and/or in post-closure care and maintenance.
5
6
BHP
Annual Report 2022
63
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 7.19 Independent Assurance Report to the Management
and Directors of BHP Group Limited (BHP)
What we assured
Ernst & Young (EY) was engaged by BHP to provide limited assurance over certain sustainability data and disclosures in
BHP’s Annual Report and ESG Standards and Databook and online for the year ended 30 June 2022 in accordance with
the noted Criteria, as defined in the following table:
What we assured (Limited Assurance Subject Matter) What we assured it against (Criteria)
BHP’s qualitative disclosures in sections 6 and 7 of the
Operating and Financial Review within BHP’s Annual
Report 2022
BHP’s sustainability policies and standards as
disclosed in the ICMM tab in BHP’s ESG Standards
and Databook at bhp.com/sustainability
BHP’s identification and reporting of its material
sustainability issues, risks and opportunities described
within the BHP Annual Report 2022 and online at bhp.
com/sustainability/approach
BHP’s implementation of systems and approaches
to manage its material sustainability risks and
opportunities
BHP’s reported performance of its material
sustainability issues, risks and opportunities in sections
6 and 7 of the Operating and Financial Review within
BHP’s Annual Report 2022 and ESG Standards and
Databook, referenced above.
Water stewardship reporting, at an operated asset
level, in the BHP Annual Report 2022, ESG Standards
and Databook, referenced above, and supporting
disclosures included online at bhp.com/sustainability/
environment/water
– Management’s own publicly disclosed criteria
– International Council on Mining and Metals (ICMM)
Mining Principles and relevant Performance
Expectations (PE) (2020) and mandatory Position
Statements (Subject Matter 1)
– ICMM Subject Matter 2
– Global Reporting Initiative (GRI) Principles for defining
report content
– ICMM Subject Matter 3
– ICMM Subject Matter 4
– Management’s own publicly disclosed criteria including
GRI Topic Specific Standards and Sustainability
Accounting Standards Board (SASB) Mining and
Metals Standard
– World Resource Institute/World Business Council for
Sustainable Development (WRI/WBCSD) Greenhouse
Gas Protocol Corporate Value Chain (Scope 3)
Standard
– BHP Scope 1, 2, and 3 GHG emissions calculation
methodology 2022
– ICMM guidance and minimum disclosure Standards:
Water Reporting: Good practice guide (2nd edition),
2021
In addition, we were engaged by BHP to provide reasonable assurance over the following information (Reasonable
Assurance Subject Matter) in accordance with the noted criteria:
What we assured (Reasonable Assurance Subject Matter) What we assured it against (Criteria)
Scope 1 and Scope 2 greenhouse gas emissions as
reported in section 7 of the Operating and Financial
Review within BHP’s Annual Report 2022 and ESG
Standards and Databook, referenced above.
– World Resource Institute/World Business Council for
Sustainable Development (WRI/WBCSD) Greenhouse
Gas Protocol
– BHP’s Scope 1, 2 and 3 GHG emissions calculation
methodology 2022
Our Conclusions
– Limited Assurance
Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention
that suggests the Limited Assurance Subject Matter has not been prepared, in all material respects, in accordance with
the Criteria defined above.
– Reasonable Assurance
In our opinion, the Reasonable Assurance Subject Matter is prepared, in all material respects, in accordance with the
Criteria defined above.
Emphasis of Matter
We draw attention to section 7 of the Operating and
Financial Review within BHP’s Annual Report 2022 and
related disclosures online at bhp.com/water in which BHP
describes the uncertainty associated with water modelling
techniques, and consequent process improvements that
have been undertaken throughout the reporting period and
are proposed going forward. Our conclusion is not modified
in respect of this matter.
Key responsibilities
EY’s responsibility and independence
Our responsibility was to express limited and reasonable
assurance conclusions on the noted subject matter as
defined in the ‘what we assured’ column in the tables above
(Subject Matter).
We were also responsible for maintaining our
independence and confirm that we have met the
requirements of the APES 110 Code of Ethics for
Professional Accountants (including Independence
Standards) and have the required competencies and
experience to conduct this assurance engagement.
BHP’s responsibility
BHP’s management was responsible for selecting the
Criteria and ensuring the Subject Matter was appropriately
prepared to present its content fairly, in all material respects
in accordance with that Criteria. This responsibility includes
establishing and maintaining internal controls, adequate
records and making estimates that are reasonable in
the circumstances.
Our approach to conducting the Review
We conducted our procedures in accordance with
Assurance Engagements Other Than Audits or Reviews of
Historical Financial Information (ISAE 3000), the Standard
for Assurance on Greenhouse Gas Statements (ISAE
3410) and the terms of reference for this engagement as
agreed with BHP on 27 January 2022.
We adapted our approach to undertaking our procedures
in response to COVID-19 travel restrictions and social
distancing requirements. ‘Site visits’ were undertaken
virtually by video-conference. The performance of the year
end corporate review procedures at head office was also
conducted remotely and was supported through the use
of collaboration platforms for discussions and delivery of
requested evidence.
The procedures we performed were based on our professional
judgement and included, but were not limited to:
– Interviewing select corporate and site personnel to
understand the reporting process at group, business,
asset and site level, including management’s processes
to identify BHP’s material issues
– Reviewing BHP policies and management standards
to determine alignment with the ICMM’s 10 Sustainable
Development principles and position statements
– Checking BHP’s Annual Report 2022 to understand how
BHP’s identified material issues, risks and opportunities
are reflected within the qualitative disclosures
– Evaluating whether the information disclosed in the
Subject Matter is consistent with our understanding of
sustainability management and performance at BHP
64
BHP
Annual Report 2022
– Evaluating the suitability and application of the Criteria
and that the Criteria have been applied appropriately to
the Subject Matter
– Conducting virtual site procedures at seven BHP
locations to evidence site level data collection and
reporting to Group as well as to identify completeness of
reported water and greenhouse gas emission sources
– Undertaking analytical procedures of the quantitative
disclosures in the Subject Matter
– Reviewing data, information or explanation about the
sustainability performance data and statements included
in the Subject Matter
– Reviewing other information within the BHP Annual
Report 2022 for consistency and alignment with the
Subject Matter
– On a judgemental sample basis, re-performing
calculations to check accuracy of claims in the
Subject Matter
– Checking the water balance for each operated asset
and judgementally selecting a sample of water streams
for further testing
– On a sample basis, based on our professional
judgement, agreeing claims and underlying data to
source information to check accuracy and completeness
of claims, which included invoices, incident reports,
meter calibration records, and meter data
– For our reasonable assurance of Scope 1 and Scope
2 greenhouse gas emissions, selecting key items and
representative sampling based on statistical audit
sampling tables and agreeing to source information to
check accuracy and completeness of performance data,
which included invoices, metre calibration records and
metre data.
We believe that the evidence obtained is sufficient and
appropriate to provide a basis for our reasonable and
limited assurance conclusions.
Other Matters
We have not performed assurance procedures in respect of
any information relating to prior reporting periods, including
those presented in the Subject Matter. Our report does
not extend to any disclosures or assertions made by BHP
relating to future performance plans and/or strategies
disclosed in BHP’s Annual Report 2022, ESG Standards
and Databook, and supporting disclosures online.
While we considered the effectiveness of management’s
internal controls when determining the nature and extent
of our procedures, our assurance engagement was
not designed to provide assurance on internal controls.
Our procedures did not include testing controls or
performing procedures relating to checking aggregation or
calculation of data within IT systems.
Limited and Reasonable Assurance
Procedures performed in a limited assurance engagement
vary in nature and timing from, and are less in extent than
for, a reasonable assurance engagement. Consequently,
the level of assurance obtained in a limited assurance
engagement is substantially lower than the assurance that
would have been obtained had a reasonable assurance
engagement been performed.
While our procedures performed for our reasonable
assurance engagement are of a higher level of assurance,
due to the use of sampling techniques, it is not a guarantee
that it will always detect material misstatements.
Use of our Assurance Statement
We disclaim any assumption of responsibility for any
reliance on this assurance report to any persons other than
management and the directors of BHP, or for any purpose
other than that for which it was prepared.
Ernst & Young
Melbourne, Australia
2 September 2022
Mathew Nelson
Partner
they suffered, such as cart drivers, sand
miners, artisanal miners and street vendors.
More than 166,000 people have applied to
join the Novel system to 30 June 2022.
Updates on the progress of Fundação
Renova’s compensation program
are available at fundacaorenova.
org/en/repair-data/indemnities-and-
productive-resumption
Some families have chosen not to join the
resettlement of their previous community and
instead resettle elsewhere. For these families,
88 houses and plots have been purchased, built
and/or renovated, and 13 are under construction
or renovation as at 30 June 2022. Other families
have opted for a cash payment in lieu of any
of the other resettlement solutions offered by
Fundação Renova.
Resettlement
One of Fundação Renova’s priorities is the
resettlement of the communities of Bento
Rodrigues, Paracatu de Baixo and Gesteira.
This involves ongoing engagement and
consultation with a large number of stakeholders,
including the affected community members, their
technical advisers, state prosecutors, municipal
leaders, regulators and other interested parties.
The resettlement process for Bento Rodrigues
and Paracatu de Baixo involves designing new
towns on land chosen by the communities, to
be as close as possible to the previous layout,
attending to the wishes and needs of the
families and communities, while also meeting
permitting requirements.
Mandated COVID-19 workforce restrictions
and suspensions of works on-site, increases
to the technical scope for resettlement of
the communities and permitting delays
have impacted the timeline for completion.
Ongoing efforts to accelerate completions
continued throughout FY2022.
A total of 48 houses have been completed and
158 are under construction and mobilisation at
Bento Rodrigues and Paracatu de Baixo as at
30 June 2022. Plans for families to move into
their completed houses are progressing.
Infrastructure at Bento Rodrigues is complete,
including roads, power, water and sewer
networks. Public services are also complete,
including the health and services centres, a
municipal school and sewage treatment station.
Infrastructure at Paracatu de Baixo is complete,
including roads, power, treated water pipeline,
storm water and sewer networks. Public services
are under construction, including an elementary
school, kindergarten, health centre, water
treatment station and sewage treatment station.
At Gesteira, Fundação Renova offered the
families a payment solution in which they would
be able to purchase property through a ‘letter of
credit’. Most families of Gesteira have chosen
this option, and the 12th Federal Court has
ratified their agreements.
Updates on the progress of Fundação
Renova’s resettlement program are
available at fundacaorenova.org/
en/repair-data/resettlement-and-
infrastructure
Other socio-economic programs
Fundação Renova continues to implement a
wide range of socio-economic programs in
addition to the compensation and resettlement
programs. These programs cover health and
infrastructure projects in the Rio Doce basin,
promotion of economic development in the
impacted communities and sewage treatment
facilities to improve the water quality in the
Rio Doce.
Environmental remediation
Since December 2019, the riverbanks and
floodplains have been vegetated, river margins
stabilised and in general, water quality and
sediment qualities have returned to historic
levels. Long-term remediation work is continuing
to re-establish agriculture and native vegetation.
A ban on fishing activities along the coast of
Espírito Santo and a precautionary conservation
restriction preventing fishing for native fish
species in the Rio Doce in Minas Gerais remain
in place. Fundação Renova continues to support
the recovery of habitats and aquatic ecology and
engage with the authorities with the goal of lifting
the restrictions.
Updates on the progress of
Fundação Renova’s environmental
remediation programs are available
at fundacaorenova.org/en/repair-data/
socio-environmental-repairs
Legal proceedings
BHP Group Limited, BHP Group (UK) Ltd
(formerly BHP Group Plc) and BHP Brasil are
involved in legal proceedings relating to the
Samarco dam failure.
For more information on the significant
legal proceedings involving BHP refer
to Additional information.
8 Samarco
The Fundão dam failure
On 5 November 2015, the Fundão tailings dam
operated by Samarco Mineração S.A. (Samarco)
failed. Samarco is a non-operated joint venture
(NOJV) owned by BHP Billiton Brasil Ltda (BHP
Brasil) and Vale S.A. (Vale), with each having a
50 per cent shareholding.
A significant volume of tailings (39.2 million cubic
metres) resulting from the iron ore beneficiation
process was released. Tragically, 19 people
died – five community members and 14 people
who were working on the dam. The communities
of Bento Rodrigues, Paracatu de Baixo and
Gesteira were flooded and other communities
and the environment downstream in the Rio
Doce basin were also affected.
Samarco restarted its operations at a reduced
production level in December 2020.
For information on Samarco’s
operations refer to OFR 5.2.
Our response and support for
Fundação Renova
BHP Brasil has been and remains fully
committed to supporting the extensive ongoing
remediation and compensation efforts of
Fundação Renova in Brasil.
The Framework Agreement entered into
between Samarco, Vale and BHP Brasil and
the relevant Brasilian authorities in March 2016
established Fundação Renova, a not-for-
profit, private foundation that is implementing
42 remediation and compensatory programs.
BHP Brasil provides support to Fundação
Renova, including through representation on the
foundation’s governance structures.
To 30 June 2022, BHP Brasil has provided
US$1.8 billion to fund Framework Agreement
programs when Samarco has been unable to
do so.
Fundação Renova
Compensation and financial assistance
Fundação Renova continues to provide fair
compensation to people impacted by the
dam failure.
Compensation and financial assistance of
approximately R$11.2 billion (approximately
US$2.3 billion)¹ has been paid to support
approximately 388,000 people affected by the
dam failure up until 30 June 2022. This includes:
– More than 22,000 general damages claims
(including loss of life, injury, property damage,
business impacts, loss of income and moral
damages) have been resolved, and more
than 290,000 people have been paid a total of
approximately R$305 million (approximately
US$69 million)1 for temporary water
interruption as at 30 June 2022.
– Approximately R$7.1 billion (approximately
US$1.4 billion)¹ has been paid to more than
66,000 people under the court-mandated
simplified indemnity system (known as
the ‘Novel’ system) as at 30 June 2022.
The Novel system is designed to provide
compensation for informal workers who
have had difficulty proving the damages
1 USD amount is calculated based on actual transactional (historical) exchange rates related to Renova funding.
BHP
Annual Report 2022
65
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information
9 How we manage risk
Risk management helps us to protect and create
value, and is central to achieving our purpose
and strategic objectives.
Our Risk Framework has
four pillars: risk strategy, risk
governance, risk process and
risk intelligence.
Risk strategy
Risk classification
We classify all risks to which BHP is exposed
using our Group Risk Architecture. This is a tool
designed to identify, analyse, monitor and report
risk, which provides a platform to understand
and manage risks. Similar risks are considered
together in groups and categories. This gives
the Board and management visibility over the
aggregate exposure to risks on a Group-wide
basis and supports performance monitoring and
reporting against BHP’s risk appetite.
Risk appetite
BHP’s Risk Appetite Statement is approved
by the Board and is a foundational element of
our Risk Framework. It provides guidance to
management on the amount and type of risk
we seek to take in pursuing our objectives.
Key risk indicators
Key risk indicators (KRIs) are set by
management to help monitor performance
against our risk appetite. They also support
decision-making by providing management with
information about financial and non-financial
risk exposure at a Group level. Each KRI has a
target, or optimal level of risk we seek to take, as
well as upper and lower limits. Where either limit
is exceeded, management will review potential
causes to understand if BHP may be taking too
little or too much risk and to identify whether
further action is required.
Risk culture
Our risk management approach is underpinned
by a risk culture that supports decision-making
in accordance with BHP’s values, objectives
and risk appetite. We use a common foundation
across BHP to build the tools and capabilities
required to enable us to understand, monitor
and manage our risk culture. These include
tailored second-line cultural reviews, Group-wide
risk culture dashboards and the inclusion of
risk-culture assessments as part of our internal
audit plan.
Strategic business decisions
Strategic business decisions and the pursuit
of our strategic objectives can inform, create
or affect risks to which BHP is exposed.
These risks may represent opportunities as well
as threats. Our Risk Appetite Statement and
KRIs assist in determining whether a proposed
course of action is within BHP’s risk appetite.
Our focus when managing risks associated with
strategic business decisions is to enable the
pursuit of high-reward strategies.
66
BHP
Annual Report 2022
Therefore, as well as having controls designed to
protect BHP from threats, we seek to implement
controls to enable and/ or enhance opportunities.
Risk governance
Three lines model
BHP uses the ‘three lines model’ to define the
role of different teams across the organisation
in managing risk. This approach sets clear
accountabilities for risk management and
provides appropriate ‘checks and balances’ to
support us in protecting and growing value.
The first line is provided by our frontline
staff, operational management and people in
functional roles – anyone who makes decisions,
deploys resources or contributes to an outcome
is responsible for identifying and managing the
associated risks.
The Risk team and other second-line teams are
responsible for providing expertise, support,
monitoring and challenge on risk-related
matters, including by defining Group-wide
minimum standards.
The third line, our Internal Audit team, is
responsible for providing independent
and objective assurance over the control
environment (governance, risk management and
internal controls) to the Board and Executive
Leadership Team. Additional assurance may
also be provided by external providers, such as
our External Auditor.
As of 1 August 2022, the Risk team and Internal
Audit team were combined to form a Risk and
Internal Audit sub-function, led by a Chief Risk
and Audit Officer. This reflects the maturity of our
Risk Framework and risk management capability
across the first and second lines. The integration
of these areas in one sub-function is designed
to improve overall effectiveness of both teams,
including through further alignment of second
and third line assurance activities across BHP.
The Risk team and Internal Audit team will
continue to operate in the second and third
lines respectively.
BHP Board and Committees
The Board reviews and monitors the
effectiveness of the Group’s systems of financial
and non-financial risk management and internal
control. The broad range of skills, experience
and knowledge of the Board assists in providing
a diverse view on risk management. The Risk
and Audit Committee (RAC) and Sustainability
Committee assist the Board by reviewing and
considering BHP’s material risk profile (covering
operational, strategic and emerging risks) on a
biannual basis.
Performance against risk appetite is monitored
and reported to the RAC, as well as the
Sustainability Committee for HSEC matters,
supporting the Board to challenge and hold
management to account.
Second line risk-based reviews are undertaken
to provide greater oversight and enhance our
understanding and management of the Group’s
most significant risks, with outcomes reported
to management, the RAC and the Sustainability
Committee. These outcomes may be used to
develop remediation plans, adjust BHP’s Risk
Appetite Statement or KRIs, enhance our Risk
Framework or inform strategic decisions.
For information on other Board Committee
activities that support risk governance at BHP
refer to Corporate Governance Statement 5.
Risk process
Our Risk Framework requires identification
and management of risks (both threats and
opportunities) to be embedded in business
activities through the following process:
– Risk identification – threats and opportunities
are identified and each is assigned an owner
or accountable individual.
– Risk assessments – risks are assessed using
appropriate and internationally recognised
techniques to determine their potential
impacts and likelihood, prioritise them and
inform risk treatment options.
– Risk treatment – controls are implemented to
prevent, minimise and/or mitigate threats, and
enable and/or enhance opportunities.
– Monitoring and review – risks and controls
are reviewed periodically and on an ad hoc
basis (including where there are high-
potential events or changes in the external
environment) to evaluate performance.
– Communication – relevant information is
recorded in our enterprise risk management
system to support continuous improvement
and share risk intelligence across the Group.
Our Risk Framework includes requirements and
guidance on the tools and process to manage
current and emerging risks.
Current risks
Current risks are risks that could impact BHP
today or in the near future and comprise current
operational risks (risks that have their origin
inside BHP or occur as a result of our activities)
and current strategic risks (risks that may
enhance or impede the achievement of our
strategic objectives).
Current risks include material and non-material
risks (as defined by our Risk Framework).
The materiality of a current risk is determined
by estimating the maximum foreseeable loss
(MFL) if that risk was to materialise. The MFL
is the estimated impact to BHP in a worst-case
scenario without regard to probability and
assuming all risk controls, including insurance
and hedging contracts, are ineffective.
Our risk factors are described
in OFR 9.1.
Our focus for current risks is to prevent their
occurrence or minimise their impact should they
occur, but we also consider how to maximise
possible benefits that might be associated with
strategic risks (as described in the ‘Risk strategy’
section). Current material risks are required
to be evaluated once a year at a minimum to
determine whether our exposure to the risk is
within our risk appetite.
Emerging risks
Emerging risks are newly developing or
changing risks that are highly uncertain and
difficult to quantify. They are generally driven
by external influences and often cannot
be prevented.
BHP maintains a ‘watch list’ of emerging
themes and monitors associated signals to
interpret external events and trends, providing
an evolving view of the changing external
environment and how it might impact our
business. We use the watch list and signal
monitoring to support the identification and
management of emerging risks, as well as to
inform and test our corporate strategy.
Once identified, our focus for emerging risks
is on structured monitoring of the external
environment, advocacy efforts to reduce
the likelihood of the threats manifesting and
identifying options to increase our resilience to
these threats.
Risk intelligence
The Risk team provides the RAC, Sustainability
Committee and senior management with insights
on risk management across BHP. Risk reports
may include trends and aggregate exposure for
our most significant risks, performance against
risk appetite, updates on the Risk Framework
and risk management priorities, an overview of
(and material changes in) BHP’s material risk
profile and updates on emerging risk themes and
signals, and risk culture. In FY2022, risk reports
were supported by an opinion from the Chief
Risk Officer.
We maintain a risk insights dashboard designed
to provide current, data-driven and actionable
risk intelligence to our people at all levels
of the business to support decision-making.
This tool empowers the business to manage
risks more effectively, with increased accuracy
and transparency.
The Board, RAC and Sustainability Committee
also receive reports from other teams to
support the Board to review and monitor the
effectiveness of BHP’s systems of financial and
non-financial risk management. These include
internal audit reports, ethics and investigations
reports, compliance reports and the Chief
Executive Officer’s report.
Our risk factors are described
in OFR 9.1.
9.1 Risk factors
Our risk factors are described
below and may occur as a
result of our activities globally,
including in connection with
our operated and non-operated
assets, third parties engaged by
BHP or through our value chain.
These risks, individually or collectively, could
threaten our viability, strategy, business model,
future performance, solvency or liquidity
and reputation. They could also materially
and adversely affect the health and safety
of our people or members of the public, the
environment, the communities where we or our
third-party partners operate, or the interests of
our stakeholders, which could in each case,
lead to litigation, regulatory investigation or
enforcement action (including class actions or
actions arising from contractual, legacy or other
liabilities associated with divested assets), or a
loss of stakeholder and/or investor confidence.
References to ‘financial performance’ include
our financial condition and liquidity, including
due to decreased profitability or increased
operating costs, capital spend, remediation costs
or contingent liabilities. BHP is also exposed to
other risks that are not described in this section.
Each risk factor may present opportunities as
well as threats. We take certain risks for strategic
reward in the pursuit of our strategy and
purpose, including to grow our asset portfolio
and develop the right capabilities for the future of
our business. Potential threats and opportunities
associated with each of our risk factors are
described below, along with the key controls to
manage them. These controls are not exhaustive
and many Group-wide controls (such as Our
Code of Conduct, Risk Framework, mandatory
minimum performance requirements for risk
management, health, safety and other matters,
dedicated non-operated joint venture teams and
our Contractor Management Framework) help
to support effective and efficient management of
all risks in line with our risk appetite. While we
implement preventative and/or mitigating
controls designed to reduce the likelihood of a
threat from occurring and minimise the impacts if
it does, these may not be effective.
Operational events
Risks associated with operational events in
connection with our activities globally, resulting
in significant adverse impacts on our people,
communities, the environment or our business.
Why is this important to BHP?
We engage in activities that have the potential
to cause harm to our people and assets,
communities, other stakeholders and/or the
environment, including serious injuries, illness
and fatalities, loss of infrastructure, amenities
and livelihood and damage to sites of cultural
significance. An operational event at our
operated or non-operated assets or through
our value chain could also cause damage or
disruptions to our assets and operations, impact
our financial performance, result in litigation or
class actions and cause long-term damage to
our licence to operate and reputation.
The potential physical impacts of climate
change could increase the likelihood and/or
severity of risks associated with operational
events. Impacts of operational events may also
be amplified if we fail to respond in a way that
is consistent with our corporate values and
stakeholder expectations.
Examples of potential threats
– Failure of a water or tailings storage facility,
such as the tragic failure of the Fundão dam
at Samarco in 2015 or a failure at one of our
facilities in Australia, Chile, Peru, the United
States, Canada or Brazil.
– Unplanned fire events or explosions (on the
surface and underground).
– Geotechnical instability events (such as failure
of underground excavations, unexpected
large wall instabilities in our open pit mines,
or potential interaction between our mining
activities and community infrastructure
or natural systems), including at our
underground or open pit mines in Australia,
Chile, Peru, the United States, Canada
or Brazil.
– Air, land (road and rail) and marine
transportation events (such as aircraft
crashes or vessel collisions, groundings
or hydrocarbon release) that occur while
transporting people, supplies or products to
exploration, operation or customer locations,
which include remote and environmentally
sensitive areas in Australia, South America,
Asia, the United States and Canada.
– Critical infrastructure or hazardous
materials containment failures, other
occupational or process safety events, or
workplace exposures.
– Operational events experienced by third
parties, which may also result in unavailability
of shared critical infrastructure (such as
railway lines or ports) or transportation
routes (such as the Port Hedland channel in
Western Australia).
Examples of potential
opportunities
– Our focus on safety and the wellbeing of our
people, communities and the environment
may increase operational resilience and
stakeholder confidence, enhancing our ability
to attract and retain talent and access (or
lower the cost of) capital.
– Collaborating with industry peers and relevant
organisations on minimum standards (such
as the internationally recognised Flight
Safety Foundation’s Basic Aviation Risk
Standard, Global Industry Standard on
Tailings Management, Large Open Pit Project
guidelines on open-pit mining design and
management, and the Cave Mining 2040
Consortium on deep mining design and
management) supports improvements to
wider industry management of operational
risks and may also identify opportunities to
improve our own practices.
BHP
Annual Report 2022
67
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 9 How we manage risk continued
Key management actions
– Planning, designing, constructing, operating,
maintaining and monitoring surface and
underground mines, water and tailings
storage facilities, and other infrastructure and
equipment in a manner designed to maintain
structural integrity, prevent incidents and
protect our people, assets, communities, the
environment and other stakeholders.
– Specifying minimum requirements and
technical specifications, such as for
transportation (including high-occupancy
vehicles, aircraft and their operators) and
geotechnical (including characterisation,
design, ground control and monitoring), and
compliance with operating specifications,
industry codes and other relevant standards,
including BHP’s mandatory minimum
performance requirements.
– Defining key governance roles, such as a
dam owner (an internal BHP individual who
is accountable for maintaining effective
governance and integrity of each tailings
storage facility) and providing training and
qualifications for our people.
– Inspections, technical reviews, audits
and other assurance activities, such as
independent dam safety reviews and
geotechnical review boards.
– Maintaining evacuation routes, supporting
equipment, crisis and emergency response
plans and business continuity plans.
– Incorporating future climate projections into
risks associated with operational events
through ongoing assessment of potential
physical climate change risks.
FY2022 insights
Our exposure to risks associated with operational
events decreased in FY2022 as the divestment of
our interests in Cerrejón and BMC and the merger
of our Petroleum business with Woodside removed
associated risks (including the risk of an offshore
well blow out) from BHP’s risk profile. Otherwise,
our exposure to risks associated with operational
events remained relatively unchanged.
For more information refer to:
• OFR 7.4 – Safety
• OFR 7.18 – Tailings storage facilities
• OFR 8 – Samarco
• bhp.com/sustainability
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Accessing key markets
Risks associated with market concentration
and our ability to sell and deliver products into
existing and future key markets, impacting our
economic efficiency.
Why is this important to BHP?
We rely on the sale and delivery of the
commodities we produce to customers around
the world. Changes to laws, international trade
arrangements, contractual terms or other
requirements and/or geopolitical developments
could result in physical, logistical or other
disruptions to our operations in, or the sale or
delivery of our commodities to, key markets.
These disruptions could affect sales volumes
or prices obtained for our products, adversely
impacting our financial performance, results of
operations and growth prospects.
Examples of potential threats
– Government actions, including economic
sanctions, tariffs or other trade restrictions,
imposed by or on countries where we
operate or into which we sell or deliver our
products may prevent BHP from trading
or make it more difficult for BHP to trade
in key markets. For example, the Ukraine
conflict and corresponding implementation
of economic sanctions, export controls and
other restrictive measures by the United
States, United Kingdom, European Union
and other jurisdictions against Russia
contributed to increased volatility for some
of the commodities we sell and some of
the key supplies we buy (including diesel
and ammonia).
– Physical disruptions to the delivery of our
products to customers in key markets,
including due to the disruption of shipping
routes, closure or blockage of ports or land
logistics (road or rail) or military conflict.
In some cases, physical disruptions may
be driven or intensified by weather, climate
variability or other manifestations of
climate change.
– Legal or regulatory changes (such as
royalties or taxes, port or import restrictions
or customs requirements, shipping/
maritime regulatory changes, restrictions on
movements or imposition of quarantines,
or changing environmental restrictions or
regulations, including measures with respect
to carbon-intensive industries or imports)
and commercial changes (such as changes
to the standards and requirements of
customers) may adversely impact our ability
to sell, deliver or realise full market value for
our products.
– Failure to maintain strong relationships with
customers, or changes to customer demands
for our products may reduce our market share
or adversely impact our financial performance.
– Increasing geopolitical tensions (such as the
escalation of events relating to the Ukraine
conflict) may adversely affect our strategic
and business planning decisions and/or
increase the time it takes us to manage our
access to key markets, particularly if we
fail to detect or anticipate deviations in the
geopolitical environment in a timely manner.
Examples of potential opportunities
– Monitoring macroeconomic, societal,
geopolitical and policy developments
and trends may reveal new markets or
commodities, or identify opportunities
to strengthen secondary markets for
existing products.
– Developing strategic partnerships and strong,
mutually beneficial relationships with our
customers may enable us to create value.
– Building a deep understanding of geopolitical
threats and opportunities and their potential
impacts on global trade flows and our
business could enhance our strategy,
business planning and response, providing
a potential competitive advantage.
– Identifying the potential for weather, climate
variability or climate change to disrupt delivery
of products and implementing management
measures may increase the resilience of our
operations and value chain.
– Signal monitoring and building relationships
with and understanding the perspectives
of influential stakeholders may improve our
ability to understand and provide input to
policy development, and to respond to and
manage any impacts from policy changes
(such as trade policies).
Key management actions
– Monitoring and assessing our ability to
access key markets, and maintaining sales
plans, product placement and business
resilience strategies and relationships with
relevant stakeholders.
– Maintaining response plans for various
scenarios (including physical disruptions of
logistics) to mitigate disruptions to our ability
to access key markets.
– Monitoring geopolitical and macroeconomic
developments and trends, including through
signal monitoring and our enterprise-level
watch list of emerging themes, to provide an
early indication of events that could impact
our ability to access key markets.
– Identifying weather and/or climate-related
vulnerabilities and implementing controls to
mitigate disruptions to our ability to physically
access key markets.
– Diversifying our asset and commodity
portfolio, such as our ongoing investment
in potash through the Jansen Potash
Project, to reduce exposure to market
concentration risks.
FY2022 insights
Exposure to risks associated with our access
to key markets increased in FY2022 due to
changes in our external environment, over which
we have limited influence. The Ukraine conflict
and the corresponding international response
has significantly increased volatility and
uncertainty in the international trading, business
and financial environment. Escalation or
expansion of the conflict or the international
response could cause greater disruption of
global supply chains and affect macroeconomic
conditions and our ability to sell to particular
customers or markets. In addition, strategic
competition between the United States and
China continued.
Optimising growth and
portfolio returns
Risks associated with our ability to position our
asset portfolio to generate returns and value for
shareholders, including through acquisitions,
mergers and divestments.
Why is this important to BHP?
We make decisions and take actions in pursuit of
our strategy to optimise our asset portfolio and to
secure and create growth options in future facing
commodities (such as copper, nickel and potash).
These may include active portfolio changes
(such as divestment of our interests in BMC and
Cerrejón, and merger of our Petroleum business
with Woodside), as well as maturing organic
growth options across our existing portfolio.
A strategy that does not support BHP’s objectives
and/or ill-timed execution of our strategy
(including as a result of not having sector-leading
talent and capabilities) or other circumstances
may lead to a loss of value that impacts our
ability to deliver returns to shareholders and fund
our investment and expansion opportunities.
It may also result in our asset portfolio being
less resilient to movements in commodity prices,
which are determined by or linked to prices
in world markets. In the short term, this may
reduce our cash flow, ability to access capital
and our dividends. A failure to optimise our asset
portfolio for structural movements in commodity
prices over the long term may result in asset
impairments and could adversely affect the
results of our operations, financial performance
and returns to investors.
Examples of potential threats
– Failure to optimise our portfolio through
effective and efficient acquisitions, exploration,
large project delivery, mergers, divestments
or expansion of existing assets (including
due to sub-optimal capital prioritisation)
may adversely impact returns to investors.
For example, a scarcity of growth options that
align with our strategy could require us to mine
deeper, lower-grade deposits, which may lead
to higher operating and capital costs.
– Failure to identify potential changes in
commodity attractiveness and missed entry
or commodity exit opportunities may result
in decreased return on capital spend for, or
overpayment to acquire or invest in, new
assets or projects, stranded assets or reduced
divestment proceeds.
– Failure to achieve expected commercial
objectives from assets or investments,
such as cost savings, sales revenues or
operational performance (including as a result
of inaccurate commodity price assumptions or
resources and reserves estimates), may result
in returns that are lower than anticipated and
loss of value. Impacts could be exacerbated
by effects of the COVID-19 pandemic and
Ukraine conflict, including supply chain
disruptions (for example, disruption in
the energy sector impacting our end-user
markets), labour shortages, inflationary
pressures on raw materials and unfavourable
exchange rates, creating operational
headwinds and challenging on-time and on-
budget project delivery.
– Renegotiation or nullification of permits,
inability to secure new permits or approvals,
increased royalties, expropriation or
nationalisation of our assets, or other
legal, regulatory, political, judicial or fiscal
or monetary policy instability or changes
(for example, legislation, regulations
or government policies implemented in
Australia by the new federal government,
which may include new rules governing the
pay of contractors) may increase our costs
or adversely impact our ability to achieve
expected commercial objectives from
assets or investments, access reserves,
develop, maintain or operate our assets,
enter new jurisdictions, or otherwise optimise
our portfolio.
– Inability to predict long-term trends in the
supply, demand and price of commodities
and optimise our asset portfolio accordingly
may restrict our ability to generate long-term
returns from the portfolio. For example,
slowing economic growth in China due to
factors such as the COVID-19 pandemic,
political and trade tensions or the market
volatility and uncertainty resulting from the
Ukraine conflict may result in lower demand
and prices for our products, which would
adversely impact our portfolio returns.
– Commodity prices have historically been
and may continue to be subject to significant
volatility, including due to global economic
and geopolitical factors, industrial activity,
commodity supply and demand (including
inventory levels), technological change,
product substitution, tariffs, interest rate
movements and exchange rate fluctuations.
Our usual policy and practice is to sell our
products at prevailing market prices and, as
such, movements in commodity prices may
affect our financial performance. Long-term
price volatility or sustained low prices may
adversely impact our financial performance as
we do not generally have the ability to offset
costs through price increases.
Examples of potential opportunities
– Acquisition of new resources or acceleration
of organic growth options in future facing
commodities may strengthen and diversify our
portfolio and protect and grow value over the
long term.
– Ability to predict long-term commodity
demand, supply and price trends may lead
to BHP being able to identify and acquire
new future facing commodities and assets
ahead of our competitors or exit from
declining commodities in a timely manner,
strengthening our portfolio and leading to
long-term, higher portfolio returns.
– BHP may be perceived as a welcome
and valued or preferred partner for the
development of new resource opportunities,
enabling us to secure new assets or
exploration opportunities to create long-term
optionality in the portfolio.
Key management actions
– Strategies, processes and frameworks
to grow and protect our portfolio and to
assist in delivering ongoing returns to
shareholders include:
– our exploration and business development
programs, which focus on replenishing our
resource base and enhancing our portfolio
(including creating and securing more
options in future facing commodities)
– our long-term strategic outlook and ongoing
strategic processes to assess our competitive
advantage and enable the identification of
threats to, or opportunities for, our portfolio
through forecasting and scenario modelling
– monitoring signals to interpret external
events and trends, and designing
commodity strategies and price protocols
that are reviewed by management and
the Board
– our Capital Allocation Framework, corporate
planning processes, investment approval
processes and annual reviews (including
resilience testing) of portfolio valuations
– our balance sheet and liquidity framework,
which is designed to maintain a robust
balance sheet with sufficient liquidity and
access to diverse sources of funding
– Pursuing a considered approach to new
country entry, including development
of capability to operate in higher-
risk jurisdictions, in order to support
portfolio opportunities.
– Further developing BHP’s social value
proposition to position BHP as a preferred
partner for the development of resource
opportunities in line with the expectations of
local communities, host governments and
other global stakeholders.
– Managing commodity price exposure through
the diversity of commodities, markets,
geographies and currencies provided by
our portfolio, as well as our financial risk
management practices in relation to our
commercial activities.
FY2022 insights
Our exposure to risks associated with optimising
growth and portfolio returns increased in FY2022
as a result of volatility and uncertainty across
global economies, fiscal regimes and industrial
relations, licencing-regulatory uncertainty
and escalating social value expectations.
The ongoing conflict in Ukraine has contributed
to inflationary pressures for key inputs across
our value chain (such as diesel, acid, ammonia
and explosives). In FY2022, we completed the
divestment of our interests in BMC and Cerrejón,
and the merger of our Petroleum business with
Woodside which are intended to optimise and
consolidate our portfolio to align with BHP’s
long-term strategy.
For more Information refer to:
• OFR 3 – Positioning for the future
• OFR 10 – Performance by commodity
• Financial Statements note 23
‘Financial risk management’
BHP
Annual Report 2022
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Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information – Conducting regular research and impact
assessments for operated assets to better
understand the social, environmental, human
rights and economic context. This supports
us to identify and analyse stakeholder,
community and human rights impacts, including
modern slavery risks and emerging issues.
We also complete due diligence screening on
suppliers through our Ethical Supply Chain and
Transparency program.
– Integrating closure into our planning, decision-
making and other activities through the life
cycle of our operated assets, as set out in our
mandatory minimum performance requirements
for closure.
FY2022 insights
Our exposure to risks with potentially significant
social or environmental impacts increased in
FY2022 due to environmental, political and
regulatory developments, and increasing societal
expectations, including of regulators and other
stakeholders on Indigenous peoples’ rights,
climate change and the potential impacts of our
operations throughout the asset life cycle.
We have continued to focus on improving
engagement with Indigenous peoples, including
the protection of cultural heritage. The economic
importance of biodiversity is increasingly at the
forefront of investor considerations (particularly
following the Dasgupta Review in the United
Kingdom in FY2021) and is expected to be
strengthened through the development of
institutional frameworks, including the Taskforce
on Nature-related Financial Disclosures.
The opportunity for BHP in measuring
and ascribing value to natural assets is to
gain a better understanding of the value of
environmental impacts and dependencies,
and the risks they may pose to delivery of our
strategy, purpose and public targets, goals
and commitments.
For more Information refer to:
• OFR 6 – People and culture
• OFR 7.8 – Climate change
• OFR 7.10 – Community
• OFR 7.11 – Human rights
• OFR 7.13 – Indigenous peoples
• OFR 7.14 – Social investment
• OFR 7.15 – Environment
• OFR 7.16 – Water
• OFR 7.17 – Biodiversity and land
• bhp.com/sustainability
9 How we manage risk continued
Significant social or
environmental impacts
Risks associated with significant impacts of our
operations on and contributions to communities
and environments throughout the life cycle of our
assets and across our value chain.
Why is this important to BHP?
The long-term viability of our business is closely
connected to the wellbeing of the communities
and environments where we have a presence.
At any stage of the asset life cycle, our activities
and operations may have or be seen to have
significant adverse impacts on communities and
environments. In these circumstances, we may
fail to meet the evolving expectations of our
stakeholders (including investors, governments,
employees, suppliers, customers and Indigenous
peoples and other community members)
whose support is needed to realise our strategy
and purpose.
This could lead to loss of stakeholder support
or regulatory approvals, increased taxes and
regulation, enforcement action, litigation or
class actions, or otherwise impact our licence
to operate and adversely affect our reputation,
ability to attract and retain talent, ability to
access capital, operational continuity and
financial performance.
Examples of potential threats
– Engaging in or being associated with activities
(including through non-operated joint ventures
and our value chain) that have or are perceived
to have individual or cumulative adverse
impacts on the environment, biodiversity
and land management, water access and
management, human rights or cultural heritage.
– Failing to meet stakeholder expectations
in connection with our legal and regulatory
obligations, relationships with Indigenous
peoples, community wellbeing and the way
we invest in communities or our approach
to environment, climate change, biodiversity
and land management, water access and
management, human rights or cultural
heritage priorities.
– Political, regulatory and judicial developments
(such as constitutional reform in Chile that
could lead to adjustments to water and other
resource rights) could increase uncertainty
in relation to our operating environment,
requiring us to adjust our business plans or
strategy. For example, changes to regulations
may require us to modify mine plans, limit
our access to reserves and resources, delay
the timing or increase costs associated with
closure and rehabilitation of assets, or expose
BHP to unanticipated environmental or other
legacy liabilities.
– Failing to identify and manage potential
physical climate change risks to communities,
biodiversity and ecosystems. For example,
changes to species habitat or distribution as a
result of sustained higher temperatures could
result in land access restrictions or litigation, or
limit our access to new opportunities.
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Examples of potential opportunities
– Our support for responsible stewardship of
natural resources may enhance the resilience
of environments and communities to potential
threats (including the potential physical impacts
of climate change). For example, BHP has
commenced a pilot study on developing a
Natural Capital Account at a restored mine site
to understand how we can better incorporate
nature-related threats and opportunities into our
strategic planning, risk management and asset
allocation decisions.
– Strong social performance, including
sustainable mining and a focus on the wellbeing
of communities, could generate competitive
advantage in the jurisdictions where we
operate. For example, BHP was recognised
for our contribution to the development of
female leaders in the Chilean mining sector
(Inspirational Women in Mining Awards), which
may enhance our attractiveness as a place to
work and support talent retention.
– Our global social value strategy may improve
stakeholder relations, enhance community trust
and increase investor confidence and demand
for our commodities.
– Greater clarity, transparency and standards
associated with regulatory regimes that support
and protect communities and the environment
may increase requirements across our
sector, generating competitive advantage for
companies that have already invested in social
and environmental performance.
– Building our reputation for sustainable and
responsible operating practices (such as
through the Copper Mark, which was awarded
to three of our copper assets in FY2022) may
increase demand for some of our commodities
and improve our access to talent and capital.
Key management actions
– The Our Requirements for Community and Our
Requirements for Environment and Climate
Change standards provide requirements and
practices that are designed to strengthen
our social, human rights and environmental
performance. Our Human Rights Policy
Statement, Water Stewardship Position
Statement, Climate Transition Action Plan 2021
and Indigenous Peoples Policy Statement set
out our targets, goals, commitments and/or
approach to these matters.
– Engaging in regular, open and transparent
dialogue with stakeholders to better understand
their expectations, concerns and interests,
and undertaking research to better understand
stakeholder perceptions.
– Building social value into our decision-making
process, along with financial considerations,
including through our new social value
framework and 2030 People, Planet and
Prosperity goals.
– Building stakeholder trust and contributing
to environmental and community resilience,
including through collaborating on shared
challenges (such as climate change and
water stewardship), enhanced external
reporting of our operated assets’ potential
impacts on biodiversity and maximising the
value of social investments through our social
investment strategy.
Inadequate business resilience
Risks associated with unanticipated or
unforeseeable adverse events and a failure
of planning and preparedness to respond to,
manage and recover from adverse events
(including potential physical impacts of
climate change).
Why is this important to BHP?
In addition to the threats described in our other
risk factors, our business could experience
unanticipated, unforeseeable or other adverse
events (internal or external) that could harm our
people, disrupt our operations or value chain,
or damage our assets or corporate offices,
including our non-operated assets in which BHP
has a non-controlling interest. A failure to identify
or understand exposure, adequately prepare for
these events (including maintaining business
continuity plans) or build wider organisational
resilience may inhibit our (or our third-party
partners’) ability to respond and recover in an
effective and efficient manner. This could cause
material adverse impacts on our business,
such as reduced ability to access resources,
markets and the operational or other inputs
required by our business, reduced production or
sales of commodities, or increased regulation,
which could adversely impact our financial
performance, share price or reputation, and
could lead to litigation (including class actions).
Examples of potential threats
– Geopolitical, global economic, regional or
local developments or adverse events, such
as social unrest, strikes, work stoppages,
labour disruptions, social activism, terrorism,
bomb threats, economic slowdown, acts
of war or other significant disruptions in
areas where we operate or have interests.
For example, production at Escondida
in FY2022 was impacted by public road
blockades associated with social unrest.
– Natural events, including earthquakes,
tsunamis, hurricanes, cyclones, fires, solar
flares and pandemics. For example, continued
COVID-19 related absences contributed to a fall
in production volumes in the March 2022 quarter
for copper, iron ore, nickel and energy coal.
– Potential physical impacts of climate change,
such as acute risks that are event-driven
(including increased frequency and severity
of extreme weather events) and chronic risks
resulting from longer-term changes in climate
patterns. Hazards and impacts may include
changes in precipitation patterns, water
shortages, rising sea levels, increased storm
intensity, prolonged extreme temperatures
and increased drought, fire and tidal flooding.
– Failure by suppliers, contractors or joint
venture partners to perform existing contracts
or obligations (including due to insolvency),
such as construction of large projects or supply
of key inputs to our business (for example,
consumables for our mining equipment).
– Failure of our risk management or other
– Sourcing quality, centralised climate data
processes (including controls) to prepare for
or manage any of the risks discussed in this
‘Risk factors’ section may inhibit our (or our
third-party partners’) ability to manage any
resulting adverse events and may disrupt our
operations or adversely impact our financial
performance or reputation.
Examples of potential opportunities
– Risk identification and management supports
proactive, focused and prioritised deployment
of resources to reduce exposure to adverse
events. It may be used to inform priorities
and strategies across BHP, supporting a
proportionate and cost-effective response,
which could provide a competitive advantage
at a regional or global level.
– Building wider organisational resilience
may enable us to maintain dividends to
shareholders amid adverse external events
and make growth-generating, counter-cyclical
investments, as well as to help us mitigate
the impacts of unforeseeable adverse events.
For example, we have developed new agile
and remote ways of working in response to the
COVID-19 pandemic, which may also increase
our resilience to other adverse events.
– Adapting to climate change across our
operations and value chain could enhance the
safety, productivity and climate resilience of our
operated assets, position BHP as a supplier
of choice and provide competitive advantage
(for example, by fulfilling our commitment
to security of supply). Support for climate
vulnerable communities and ecosystems may
also improve our social value proposition.
Key management actions
– Implementing Group-wide controls to enhance
business resilience, including BHP’s mandatory
minimum performance requirements for
security, crisis and emergency management
and business continuity plans, and seeking to
maintain an investment grade credit rating.
– Monitoring our current state of readiness
(preparedness, redundancy and resilience),
including through scenario analysis and
business resilience exercises, supporting
organisational capability in our operations,
functions and senior management to effectively
and efficiently respond to and recover from
adverse events should they materialise.
– Monitoring the external environment, including
political and economic factors through signal
monitoring, our geopolitical monitoring and
public policy frameworks and our enterprise-
level watch list of emerging themes, to
support early identification of policy changes
or adverse events for which we may need to
increase preparedness.
– Identifying security threats that could directly
or indirectly impact our operations and people
in countries of interest to BHP.
– Implementing our Adaptation Strategy with
respect to the physical risks of climate
change, including requiring operated assets
and functions to identify and progressively
assess potential physical climate change
risks (including to our value chain) and build
climate change adaptation into their plans,
activities and investments.
covering each of our operating locations so
that our operated assets and functions have
access to appropriate data to support climate
studies that will inform investment decisions
around enhancing our operational resilience.
FY2022 insights
Our exposure to risks associated with inadequate
business resilience continued to grow in FY2022,
with the external environment becoming increasingly
volatile. Key emerging themes (including social
activism, international criminal enterprise, global
terrorism, cyber threats and war) signal heightened
levels of global uncertainty and an increased
likelihood of unexpected shocks or disruptions.
At the same time, crisis events are increasing in
frequency and scale. Some of these events directly
impacted our business during FY2022, including the
emergence of new COVID-19 variants and flooding
in eastern and southern Australia (which flooded
the road to Olympic Dam and impacted inbound
critical consumables). In addition to continuing
to build organisational resilience to such threats,
adaptation of our business to the potential physical
impacts of climate change continues to be at the
forefront of our thinking, with the Intergovernmental
Panel on Climate Change 6th Assessment Report
noting the increased frequency and magnitude of
climatic events.
For more information refer to:
• BHP Climate Change Report 2020
• BHP Climate Transition Action Plan 2021
• OFR 7.8 – Climate change
• OFR 7.12 – Security services
• bhp.com/sustainability/safety-health/safety
Low-carbon transition
Risks associated with the transition to a low-
carbon economy.
Why is this important to BHP?
Transition risks arise from policy, regulatory,
legal, technological, market and other societal
responses to the challenges posed by climate
change and the transition to a low-carbon
economy. As a world-leading resources
company, BHP is exposed to a range of
transition risks that could affect the execution
of our strategy or our operational efficiency,
asset values and growth options, resulting
in a material adverse impact on our financial
performance, share price or reputation, including
litigation. The complex and pervasive nature
of climate change means transition risks are
interconnected with and may amplify our
other risk factors. Additionally, the inherent
uncertainty of potential societal responses to
climate change may create a systemic risk to the
global economy.
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Annual Report 2022
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Examples of potential threats
– Introduction or improvement of low-carbon
technologies or changes in customer
preference for products that support the
transition to a low-carbon economy may
decrease demand for some of our products
(which may be abrupt or unanticipated),
increase our costs or decrease the availability
of key inputs to production. For example:
– ‘Green steel’ technologies may reduce
demand for our metallurgical coal or
iron ore.
– Increased scrap-based steel production
may reduce demand for our metallurgical
coal and iron ore by limiting production that
is required globally.
– New battery technologies that use less
nickel could enter the market and reduce
demand for our nickel products.
– Failure to address investor concerns on the
potential impact of climate change on and
from BHP’s portfolio and operations may
result in reduced investor confidence.
– Social concerns around climate change may
result in investors divesting our securities
or pressure on financial institutions not to
provide financing for our fossil fuel assets,
which could limit our ability to access capital
markets and potentially result in reduced
access to financing or increased financing
costs, or otherwise adversely impact our
ability to optimise our portfolio.
– Perceived or actual misalignment of
BHP’s climate actions (goals, targets and
performance) with societal and investor
expectations, or a failure to deliver our
climate actions, may result in damage to our
reputation, climate-related litigation (including
class actions) or give rise to other adverse
regulatory, legal or market responses.
– Sub-optimal selection, implementation or
effectiveness of technology that is intended to
contribute towards the delivery of our climate
targets, goals and strategies, or unavailability
of that technology (including due to a failure of
external equipment manufacturers to deliver
on schedule or competition for limited supply)
could delay or increase costs in achieving our
plans for operational decarbonisation.
– Changes in laws, regulations, policies,
obligations, government actions, and our
ability to anticipate and respond to such
changes, including GHG emission targets,
restrictive licencing, carbon taxes, carbon
offset regulations, border adjustments or the
addition or removal of subsidies, may give
rise to adverse regulatory, legal or market
responses. For example, the implementation
of regulations intended to reduce GHG
emissions in the steel industry in China could
adversely impact demand for our metallurgical
coal and/or iron ore.
Examples of potential opportunities
– Our copper, nickel, iron ore and metallurgical
coal provide essential building blocks for
renewable power generation and electric
vehicles, and can play an important part in the
transition to a low-carbon economy.
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– Our potash fertiliser options can promote
more efficient and profitable agriculture
and alleviate the increased competition for
arable land.
– Increased collaboration with customers,
suppliers and original equipment
manufacturers, such as BHP’s partnerships
with HBIS Group, China Baowu, JFE, POSCO
and Tata Steel to explore technologies to
reduce GHG emissions across the steel
value chain, can provide opportunities for the
development of new products and markets.
Key management actions
– Establishing public positions on, and
mandatory minimum performance
requirements for managing, climate change
threats and opportunities, which are set out in
our Climate Change Report 2020, our Climate
Transition Action Plan 2021 and the Our
Requirements for Environment and Climate
Change standard.
– Using climate-related scenarios (including
our Paris-aligned 1.5°C scenario), themes
and signposts (such as monitoring policy,
regulatory, legal, technological, market and
other societal developments) to evaluate
the resilience of our portfolio and inform
our strategy.
– Considering transition risks (including carbon
prices) when making capital expenditure
decisions or allocating capital through our
Capital Allocation Framework, supporting
the prioritisation of capital and investment
approval processes.
– Seeking to mitigate our exposure to risks
arising from policy and regulation in our
operating jurisdictions and markets by
reducing our operational GHG emissions and
taking a product stewardship approach to
GHG emissions in our value chain.
– Advocating for the introduction of an effective,
long-term policy framework that can deliver a
measured transition to a low-carbon economy.
FY2022 insights
Our exposure to transition risks decreased
in FY2022 due to portfolio changes involving
the merger of our Petroleum business with
Woodside and divestment of our interests in
BMC and Cerrejón. However, societal pressure
for change continued to increase with many
governments and organisations making
commitments to achieve GHG emissions
targets within specified timeframes, including
commitments at the United Nations Climate
Change Conference (COP 26) in November
2021. Investor and other stakeholder interest
in understanding how climate change might
impact our strategy and portfolio continued to
grow in FY2022, and stakeholder expectations
of BHP regarding disclosure of climate-related
information have increased accordingly.
For more information refer to:
• BHP Climate Change Report 2020
• BHP Climate Transition Action
Plan 2021
• OFR 3 – Positioning for the future
• OFR 7.8 – Climate change
• bhp.com/sustainability/climate-change
Adopting technologies and
maintaining digital security
Risks associated with adopting and
implementing new technologies, and maintaining
the effectiveness of our existing digital
landscape (including cyber defences) across
our value chain.
Why is this important to BHP?
Our business and operational processes across
our value chain are increasingly dependent
on the effective application and adoption of
technology, which we use as a lever to deliver
on our current and future operational, financial
and social objectives. This exposes BHP to
risks originating from adopting or implementing
new technologies, or failing to take appropriate
action to position BHP for the digital future,
which may impact the capabilities we require,
the effectiveness and efficiency of our operations
and our ability to compete effectively. We may
also fail to maintain the effectiveness of our
existing and future digital landscape, including
cyber defences, exposing us to technology
availability, reliability and cybersecurity risks.
These could lead to operational events,
commercial disruption (such as an inability
to process or ship our products), corruption
or loss of system data, misappropriation or
loss of funds, unintended loss or disclosure
of commercial or personal information,
enforcement action or litigation. An inability
to adequately maintain existing technology
or implement critical new technology, or any
sustained disruption to our existing technology
may also adversely affect our licence to
operate, reputation, results of operations
and financial performance.
Examples of potential threats
– Failure to invest in appropriate technologies, or
to keep pace with advancements in technology,
that support the pursuit of our objectives may
adversely impact the effectiveness or efficiency
of our business and erode our competitive
advantage. For example, a failure to implement
appropriate technologies that support our
assets to produce higher-grade commodities
or less waste from existing resources could
limit our ability to sell our commodities or
reduce costs.
– Failing to identify, access and secure
necessary infrastructure and key inputs
(including electricity, internet bandwidth, data,
software, licences or other rights in intellectual
property, hardware and talent) to support
new technology innovations and advanced
technologies may adversely affect our ability
to adopt, operate or retain access to those
technologies. This includes artificial intelligence
and machine learning, process automation,
robotics, data analytics, cloud computing,
smart devices and remote working solutions.
For example, adopting new technology to
reduce GHG emissions through the use of
alternative energy sources may require new
infrastructure, while effective implementation
of new digital technologies may be heavily
dependent on access to relevant data.
– Failure or outage of our information or
operational technology systems.
– Cyber events or attacks on our information or
operational technology systems, including on
third-party partners and suppliers (such as our
cloud service providers). For example, a cyber
attack could result in a failure of business-
critical technology systems at one or more
of our assets, which may reduce operational
productivity and/or adversely impact safety.
Examples of potential opportunities
– Applying digital solutions across our
operations and value chain may unlock
greater productivity and safety performance.
For example, using predictive analytics to
enable operations to identify asset condition
and efficiencies may improve safety,
production and equipment availability, and
reduce maintenance and other costs.
– Technology solutions to reduce GHG
emissions may support BHP, our suppliers
and customers in achieving climate action
targets. For example, BHP has become a
founding partner of Komatsu’s GHG Alliance
in the ongoing development of zero GHG
emissions haul trucks.
– Developing and applying artificial intelligence
in mine planning, remote operation and
advanced robotic technologies may identify
or provide access to previously unknown or
inaccessible deposits and development of
end-to-end autonomous mining systems.
– Using digital simulations and predictive trend
modelling may enable us to optimise the
deployment of new technologies, such as
automation and electrification, support early
identification of process variances and faults,
and support the marketing of our products
to customers.
Key management actions
– Our assets, functions and projects are
responsible for managing localised or project-
specific exposure to technology and cyber risks,
including risks associated with business- critical
technology systems. Enterprise-level risks that
are specific to technology, such as those that
pose a greater threat to our wider business and
strategic opportunities, are generally managed
by our global Technology team and other
relevant stakeholders to support delivery of our
technology strategy.
– We collaborate with industry and research
partners to develop technological solutions.
– Our Technology Risk Committee oversees
the management and improvement of
technology risks and controls, and supports the
embedment of a sustainable risk culture in our
Technology team.
– We employ a number of measures designed
to protect against, detect and respond to cyber
events or attacks, including BHP’s mandatory
minimum performance requirements for
technology and cybersecurity, cybersecurity
performance requirements for suppliers,
cybersecurity resilience programs, an
enterprise security framework and cybersecurity
standards, cybersecurity risk and control
guidance, security awareness programs and
training to build capability, security assessments
and continuous monitoring, restricted
physical access to hardware and crisis
management plans.
Examples of potential threats
– Failing to prevent breaches of international
standards, laws, regulations or other legal,
regulatory, ethical, environmental, governance
or compliance obligations, such as external
misstatements, inaccurate financial or
operational reporting or a breach of our
continuous disclosure obligations.
– Corruption (for example, due to the acquisition
of early-stage options in non-OECD
countries), market conduct or anti-competitive
behaviour, including in relation to our joint
venture operations.
– Failing to comply with trade or financial
sanctions (which are complex and subject
to rapid change and may potentially result
in conflicting obligations), health, safety
and environmental laws and regulations,
native title and other land right or tax or
royalty obligations.
– Failing to protect our people from harm
(including to mental and physical health) due
to misconduct that takes place in connection
with their work, such as discrimination or
sexual harassment.
Examples of potential
opportunities
– Our capability to manage ethical misconduct
risks may expand portfolio growth options by
providing greater assurance that we can operate
legally and ethically in high-risk jurisdictions.
– Managing ethical misconduct risks in line
with societal and stakeholder expectations
may distinguish BHP from competitors and
enhance our ability to raise capital, attract
and retain talent, engage with governments
and communities in new jurisdictions, obtain
permits, partner with external organisations
or suppliers, or market our products
to customers.
– Playing a leading role in the management
of ethical misconduct risks, such as sexual
harassment risks, may help BHP to increase
ethical and behavioural standards across the
resources industry.
FY2022 insights
As we continued to leverage technology
and enable digital transformation in FY2022,
our exposure to associated risks increased.
In particular, a continued increase in the
frequency and sophistication of cyber attacks
against companies, as well as on supply chains
and critical infrastructure (for example, cyber
attacks affecting South Africa Transfer Port
Terminals and the Toronto Transit Commission)
highlighted the importance of our ongoing focus
to strengthen management of cybersecurity
risk across the Group. We continued to
adopt digital technologies where appropriate,
including through the use of greater automation
at our operations.
For more information refer to OFR 2.2.
Ethical misconduct
Risks associated with actual or alleged
deviation from societal or business expectations
of ethical behaviour (including breaches of
laws or regulations) and wider or cumulative
organisational cultural failings, resulting in
significant reputational impacts.
Why is this important to BHP?
Actual or alleged conduct of BHP or our people
or third-party partners that deviates from the
standard of ethical behaviour expected of us
could result in reputational damage or a breach of
law or regulations. Such conduct includes fraud,
corruption, anti-competitive behaviour, money
laundering, breaching trade or financial sanctions,
market manipulation, privacy breaches, ethical
misconduct and wider organisational cultural
failings. A failure to act ethically or legally may
result in negative publicity, investigations, public
inquiries, regulatory enforcement action, litigation
or other civil or criminal proceedings, or increased
regulation. It could also threaten the validity of
our tenements or permits, or adversely impact
our reputation, results of operations, financial
performance or share price. Impacts may be
amplified if our senior leaders fail to uphold BHP’s
values or address actual or alleged misconduct
in a way that is consistent with societal and
stakeholder expectations. Our workplace culture
may also be eroded, adversely affecting our
ability to attract and retain talent. Risks and
impacts are also heightened by the complex
and continuously evolving legal and regulatory
frameworks that apply to the jurisdictions where
we operate and potentially conflicting obligations
under different national laws.
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Key management actions
– Setting the ‘tone from the top’ through Our
Charter, which is central to our business and
describes our purpose, values and how we
measure success.
– Implementing internal policies, standards,
systems and processes for governance and
compliance to support an appropriate culture
and prioritise respectful behaviours at BHP,
including:
– Our Code of Conduct and BHP’s mandatory
minimum performance requirements for
business conduct, market disclosure and
other matters
– training on Our Code of Conduct and in
relation to anti-corruption, market conduct
and competition
– ring fencing protocols to separate potentially
competing businesses within BHP
– governance and compliance processes,
including classification of sensitive
transactions, as well as accounting,
procurement and other internal controls, and
tailored monitoring of control effectiveness
– oversight and engagement with high-risk
areas by our Ethics and Investigations,
Compliance and Internal Audit teams, and
the Disclosure Committee
– review and endorsement by our Compliance
team of the highest-risk transactions, such
as gifts and hospitality, engagement of
third parties, community donations and
sponsorships above defined thresholds
– automated counterparty and transaction
screening against lists of entities subject to
trade sanctions
– our EthicsPoint anonymous reporting
service, supported by an ethics and
investigations framework and central
investigations team
– our ‘Together we can stop sexual
harassment’ campaign, launched across
all our offices and sites in Australia, and
‘Stop for Safety’ sessions held globally
by our leaders to set expectations around
racism, sexual harassment and other
disrespectful behaviours
– Continuing to enforce Our Code of Conduct
via appropriate investigations and responses
including disciplinary action, in addition to
deployment of appropriate safety controls to
prevent harm.
– Requiring anti-corruption and human rights
risks to be considered as part of our new
country entry approval process.
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FY2022 insights
Our exposure to ethical misconduct risks
increased in FY2022, including due to continued
exploration of, and investment in, potential
growth options in high-risk or less economically
developed jurisdictions. Societal expectations
regarding respectful behaviours in the workplace
continued to grow. We continued to implement
and improve controls designed to create a safe
and respectful workplace and prevent sexual
harassment from occurring. The ongoing conflict
in Ukraine triggered the introduction of trade
and financial sanctions by the United States,
United Kingdom, European Union and other
jurisdictions against Russia, underscoring
the importance of continued management of
associated risks across our global operations.
For more information refer to:
• Our Charter and Our Code of Conduct
• OFR 7.5 – Sexual harassment
• OFR 7.7 – Ethics and business conduct
• Corporate Governance Statement
10 Performance
by commodity
Management believes the following information
presented by commodity provides a meaningful
indication of the underlying financial and
operating performance of the assets, including
equity accounted investments, of each
reportable segment.
Information relating to assets that are accounted
for as equity accounted investments is shown
to reflect BHP’s share, unless otherwise noted,
to provide insight into the drivers of these assets.
For more information as to the
statutory determination of our
reportable segments, refer to Financial
Statements note 1 ‘Segment reporting’.
Unit costs is one of our non-IFRS financial
measures used to monitor the performance
of our individual assets and is included in the
analysis of each reportable segment.
For the definition and method of
calculation of our non-IFRS financial
measures, including Underlying
EBITDA and Unit costs, refer to OFR 11.
10.1 Copper
Detailed below is financial and operating
information for our Copper assets comparing
FY2022 to FY2021.
Year ended 30 June
US$M
Revenue
Underlying EBITDA
Net operating assets
Capital expenditure
Total copper production (kt)
Average realised prices
Copper (US$/lb)
2022
16,849
8,565
27,420
2,528
1,574
2021
15,726
8,489
26,928
2,180
1,636
4.16
3.81
Key drivers of Copper’s
financial results
Price overview
Our average realised sales price for FY2022
was US$4.16 per pound (FY2021: US$3.81 per
pound). Copper prices spent much of FY2022
trading around historic highs, buoyed by
robust demand, low visible inventories, delays
to new copper projects and Russian supply
risks. However, prices fell in two stages in the
June quarter. The first decline was due to the
demand impact of China’s COVID-19 lockdowns.
The second was due to recession speculation in
advanced economies. We believe mine supply
and scrap collection will grow in the coming
few years, covering near-term demand growth.
Longer term, traditional end-use demand is
expected to be solid, while broad exposure to the
electrification megatrend offers attractive upside.
Production
Total Copper production for FY2022 decreased
by 4 per cent to 1,574 kt.
Escondida copper production decreased by 6
per cent to 1,004 kt primarily due to concentrator
feed grade decline of 4 per cent, public road
blockades affecting access to site for both
workers and supplies, and the impact of a
reduced operational workforce from COVID-19.
Despite these challenges, Escondida achieved
record material mined for FY2022 and near
record concentrator throughput of 367 ktpd.
Pampa Norte copper production increased by
29 per cent to 281 kt reflecting the ramp up of
the Spence Growth Option (SGO), partially offset
by the impact of lower cathode production as a
result of a 14 per cent decline in Pampa Norte
stacking feed grade.
Olympic Dam copper production decreased by
33 per cent to 138 kt as a result of the major
smelter maintenance campaign (SCM21)
completed in January 2022 which was delayed
due to COVID-19 impacts on the availability of
the workforce. Near record production in the
June 2022 quarter followed the successful ramp
up of the smelter to full capacity in April 2022.
Average copper grade of 2.14 per cent was
achieved in FY2022 as the majority of material
mined is from the Southern Mine Area.
Antamina copper production increased by 4 per
cent to 150 kt, reflecting higher copper head
grades. Zinc production decreased by 15 per
cent to 123 kt reflecting lower zinc head grades.
Financial results
Copper revenue increased by US$1.1 billion
to US$16.8 billion in FY2022 due to higher
average realised Copper prices offset by
lower production.
Underlying EBITDA for Copper increased
by US$76 million to US$8.6 billion.
Price impacts, net of price-linked costs,
increased Underlying EBITDA by US$1.0 billion.
Lower volumes decreased Underlying EBITDA
by US$652 million.
Outlook
Total Copper production of between 1,635
and 1,825 kt is expected in FY2023.
Escondida production of between 1,080 and
1,180 kt is expected in FY2023, reflecting an
expected increase in concentrator feed grade
compared to FY2022. Production at Pampa
Norte is expected to be between 240 and
290 kt in FY2023, reflecting a forecast decline
in stacking feed grade at Pampa Norte, the
commencement of plant design modifications
at SGO and the continued transition towards
the planned closure of Cerro Colorado at the
end of CY2023. At Olympic Dam, production
is expected to be between 195 and 215 kt
in FY2023.
Antamina Copper production is expected
between 120 and 140 kt in FY2023.
Escondida unit costs in FY2023 are expected to
be between US$1.25 and US$1.45 per pound
(based on an exchange rate of USD/CLP 830).
This largely reflects inflationary pressures,
including expected further price increases for
consumables, and planned higher costs to
study the potential to increase optionality at
Escondida longer term. In the medium term, unit
cost guidance for Escondida has been revised
to less than US$1.15 per pound from less than
US$1.10 per pound (based on an exchange rate
of USD/CLP 830), reflecting inflation, the impact
of higher power consumption and increased
water costs.
Medium-term production guidance for Escondida
of 1.2 Mtpa on average over the next five years
remains unchanged.
10.2 Iron Ore
Detailed below is financial and operating
information for our Iron Ore assets comparing
FY2022 to FY2021.
Year ended 30 June
US$M
Revenue
Underlying EBITDA
Net operating assets
Capital expenditure
Total iron ore production (Mt)
Average realised prices
Iron ore (US$/wmt, FOB)
2022
30,767
21,707
16,823
1,848
253
2021
34,475
26,278
18,663
2,188
254
113.10
130.56
Controllable cash costs increased by
US$107 million, due to higher costs at Escondida
in line with record material mined and workforce
bonus payments for renewal of a collective
bargaining agreement, and also at Spence from
a ramp up of concentrate volumes. In addition,
controllable costs increased at both Escondida
and Pampa Norte due to costs associated with
the implementation of COVID-19 preventative
measures (reported as an exceptional item in the
prior year). This was partially offset by favourable
inventory movements at Escondida and Spence
as well as lower costs at Olympic Dam reflecting
favourable inventory movements due to reduced
operational activity during the major smelter
maintenance campaign. In the prior year, costs
benefited from a one-off gain from cancelled
power contracts at Escondida and Spence.
Inflation and higher input prices for diesel,
acid and consumables negatively impacted
Underlying EBITDA by US$408 million and
US$295 million respectively, partially offset by
favourable foreign exchange rate movements
of US$497 million. Equity accounted investment
profits attributable to Antamina increased by
US$97 million due to higher realised prices for
both copper and zinc.
Escondida unit costs increased by 20 per cent
to US$1.20 per pound at realised exchange
rates. This reflected strong cost discipline
despite higher prices for consumables,
workforce bonus payments following renewal
of a new collective bargaining agreement
and a one-off gain recorded in the prior year
due to cancelled power contracts as part of
Escondida’s transition to renewable electricity.
Costs associated with a planned material
mined increase of approximately 20 per cent,
incremental costs associated with COVID-19
preventative measures and lower by-product
credits also contributed to higher unit costs.
These increases were partially offset by lower
power prices achieved by Escondida’s transition
towards 100 per cent renewable electricity.
The calculation of Escondida unit costs is set out
in the table below.
Escondida unit costs
(US$M)
Revenue
Underlying EBITDA
Gross costs
Less: by-product credits
Less: freight
Net costs
Sales (kt)
Sales (Mlb)
Cost per pound (US$)1,2,3
FY2022
FY2021
9,500
6,198
3,302
430
230
2,642
1,001
2,206
1.20
9,470
6,483
2,987
478
162
2,347
1,066
2,350
1.00
1 FY2022 based on average exchange rates of USD/
CLP 811.
2 FY2022 includes COVID-19 related costs of
US$0.02 per pound, which was reported as an
exceptional item in FY2021 (FY2021: US$0.03
per pound).
3 FY2021 includes a one off gain from the optimised
outcome from renegotiation of cancelled power
contracts of US$0.04 per pound.
Key drivers of Iron Ore’s
financial results
Price overview
Iron Ore’s average realised sales price for
FY2022 was US$113.10 per wet metric tonne
(wmt) (FY2021: US$130.56 per wmt). The iron
ore market was firm for much of the second
half of FY2022, supported by resilient demand,
constrained supply of competing scrap in China,
and lower than expected seaborne supply
from some low cost and swing suppliers. As a
result, Chinese port stocks declined steadily for
much of the period. Near the close of the year,
weakening sentiment within the steel value
chain fed back into lower prices for iron ore.
Looking ahead, the key near-term uncertainties
are the pace of steel end-use sector recovery
in China, how the Chinese authorities will
administer steel production cuts in the remainder
of the CY2022, and the performance of
seaborne supply. In the medium term, China’s
demand for iron ore is expected to be lower than
it is today as crude steel production plateaus,
and the scrap-to-steel ratio rises. In the long
term, prices are expected to be determined by
high-cost production, on a value-in-use adjusted
basis, from Australia or Brazil. It is imperative
that we continue to compete on both quality and
operational effectiveness.
Production
Total Iron Ore production was in line with the
prior period.
WAIO production of 249 Mt (283 Mt on a
100 per cent basis) was in line with the prior
period, reflecting continued strong supply chain
performance and favourable weather compared to
the prior period, offset by the impacts of temporary
labour constraints relating to COVID-19, planned
major maintenance including the Jimblebar train
load out and car dumper one. Our preventative
maintenance programs continue to underpin the
strength of the WAIO supply chain, delivering
increased car dumper, reclaimer and ship loader
availability year on year and enabling record sales
volumes of 284 Mt (100 per cent basis).
South Flank ramp up to full production capacity
of 80 Mtpa (100 per cent basis) is ahead of
schedule with an average rate of 67Mtpa
achieved in the June 2022 quarter contributing
to record production from the Mining Area C hub
and record lump sales.
Samarco production of 4.1 Mt (BHP share)
reflected the ramp up of production to capacity,
following the recommencement of iron ore
pellet production at one concentrator in
December 2020.
Financial results
Total Iron Ore revenue decreased by
US$3.7 billion to US$30.8 billion in FY2022
reflecting lower average realised prices.
BHP
Annual Report 2022
75
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 10 Performance by commodity continued
Underlying EBITDA for Iron Ore decreased by
US$4.6 billion to US$21.7 billion primarily due to
lower average realised prices, net of price linked
costs, of US$4.0 billion and higher operating
cash costs of US$431 million. The higher cash
costs are primarily a result of South Flank
operational ramp up spend, increased rail
maintenance, incremental costs associated with
COVID-19 (mainly higher demurrage costs due
to delays, reported as an exceptional item in the
prior year) and inventory movements to support
the supply chain. Other items such as inflation
and higher fuel and energy costs negatively
impacted Underlying EBITDA by US$392 million.
This was partially offset by favourable foreign
exchange rate impacts of US$332 million.
WAIO unit costs increased by 13 per cent to
US$16.81 per tonne at realised exchange
rates. The increase in unit cost was mainly
due to higher diesel prices, costs associated
with the ramp up of South Flank, higher rail
track maintenance costs, and costs associated
with COVID-19 of approximately US$0.50 per
tonne, which has been taken to unit costs in this
period but reported as an exceptional item in
the prior period. The cost increase was partially
offset by the impact of favourable exchange
rate movements.
The calculation of WAIO unit costs is set out in
the table below.
WAIO unit costs
(US$M)
Revenue
Underlying EBITDA
Gross costs
Less: freight1
Less: royalties
Net costs
Sales (kt, equity share)
Cost per tonne (US$)2,3
FY2022
FY2021
30,632
21,788
8,844
2,497
2,134
4,213
250,688
16.81
34,337
26,270
8,067
1,755
2,577
3,735
252,052
14.82
1 Year on year increase of freight costs driven by
higher diesel prices and vessel demand increases
from global supply chain pressures relating to
COVID-19.
2 FY2022 based on an average realised exchange
rate of AUD/USD 0.73.
3 FY2022 includes COVID-19 related costs of
US$0.50 per tonne (including US$0.22 per tonne
relating to operations and US$0.28 per tonne
relating to demurrage). FY2021 excluded COVID-19
related costs of US$0.51 per tonne (including
US$0.25 per tonne relating to operations and
US$0.26 per tonne relating to demurrage) that
was reported as an exceptional item. In FY2021
an additional US$0.12 per tonne relating to capital
projects was also reported as an exceptional item.
Outlook
WAIO production for FY2023 is expected to
increase to between 246 and 256 Mt (278 and
290 Mt on a 100 per cent basis) reflecting the
tie-in of the port debottlenecking project (PDP1)
and the continued ramp up of South Flank.
Samarco production of between 3 and 4 Mt
(BHP share) is expected in FY2023.
Unit costs in FY2023 are expected to be
between US$18 and US$19 per tonne (based
on an exchange rate of AUD/USD 0.72).
In the medium term, unit costs have been
revised to less than US$17 per tonne reflecting
updated guidance exchange rates (based
on an exchange rate of AUD/USD 0.72) and
inflationary pressures, and our plan to creep
production to greater than 300 Mtpa.
10.3 Coal
Detailed below is financial and operating
information for our Coal assets comparing
FY2022 to FY2021.
Year ended 30 June
US$M
Revenue
Underlying EBITDA
Net operating assets
Capital expenditure
Total metallurgical coal
production (Mt)
Total energy coal production (Mt)
Average realised prices
Metallurgical coal (US$/t)
Hard coking coal (HCC)(US$/t)
Weak coking coal (WCC)(US$/t)
Thermal coal (US$/t)
2022
15,549
9,504
7,650
621
2021
5,154
288
7,512
579
37
18
41
19
347.10
366.82
296.51
216.78
106.64
112.72
89.62
58.42
Key drivers of Coal’s
financial results
Price overview
Metallurgical coal
Our average realised sales price for FY2022 was
US$366.82 per tonne for hard coking coal (HCC)
(FY2021: US$112.72 per tonne) and US$296.51
per tonne for weak coking coal (WCC) (FY2021:
US$89.62 per tonne). Metallurgical coal
prices surged to record highs in the second
half of FY2022 on firm rest of world demand,
uncertainty over Russia and multi-regional, multi-
causal supply disruptions. The deterioration
in rest of world steelmaking profitability late in
the June quarter saw prices descend from their
extreme highs. The industry faces a difficult
and uncertain period ahead. Natural trade flows
are impaired, including uncertainty around
China’s import policy and Russian coal supply.
The regulatory environment has also become
less conducive to long-life capital investment.
Long term, we believe that a wholesale shift
away from blast furnace steelmaking is still
decades in the future. That assessment is based
on our bottom-up analysis of likely regional steel
decarbonisation pathways, as discussed in our
Climate Transition Action Plan. Demand for
seaborne Hard Coking Coals (HCC) is expected
to expand alongside the growth of the steel
industry in HCC importing countries such
as India.
Energy coal
Our average realised sales price for FY2022
was US$216.78 per tonne (FY2021: US$58.42
per tonne). The Newcastle 6,000 kcal/kg price
reached a record high in May 2022 due to
very strong demand and constrained supply.
Trade flow redirection from Asia to Europe due
to the Russian invasion of Ukraine, gas-to-
coal switching as LNG prices spiked upwards,
and hot weather in major importing regions,
all contributed to the swift run-up in pricing.
Longer term, total primary energy derived
from coal (power and non-power) is expected
to be challenged, particularly under deep
decarbonisation scenarios, where demand is
expected to decline in absolute terms.
Production
Metallurgical coal
Metallurgical coal production consisted of BMA
production and BMC production up to 3 May
2022 when the divestment of our interest in
BMC completed.
BMA production decreased by 9 per cent
to 29 Mt (58 Mt on a 100 per cent basis).
Record production at the Broadmeadow mine
was more than offset by significant wet weather
impacts across most BMA operations and
labour constraints, including COVID-19 related
absenteeism which impacted stripping and
mine productivity.
BMC production decreased by 9 per cent to 8 Mt
due to the divestment of our 80 per cent interest
in BMC to Stanmore Resources Limited on
3 May 2022.
Energy coal
Energy coal production consisted of NSWEC
production and Cerrejón production up to
11 January 2022 when the divestment of our
interest in Cerrejón completed.
NSWEC production decreased by 4 per cent
to 14 Mt, reflecting lower volumes due to an
increased proportion of washed coal to capitalise
on higher margins for higher-quality coals,
COVID-19 related labour constraints which
impacted stripping performance and mine
productivity, and wet weather. Higher-quality
coals made up almost 90 per cent of sales
compared to approximately 60 per cent of sales
in the prior year.
Cerrejón production decreased by 15 per cent
to 4 Mt due to the divestment of our interest on
11 January 2022.
Financial results
Coal revenue increased by US$10.4 billion to
US$15.5 billion in FY2022 mainly due to higher
average realised prices.
Underlying EBITDA for Coal increased by
US$9.2 billion to US$9.5 billion. Price impacts,
net of price-linked costs, increased Underlying
EBITDA by US$8.1 billion combined with the
higher contribution of BMC of US$1.4 billion,
mainly due to higher realised prices, prior to
the divestment of our 80 per cent interest.
76
BHP
Annual Report 2022
Lower volumes decreased Underlying EBITDA
by US$341 million and other items such
as inflation and fuel and energy costs also
negatively impacted Underlying EBITDA by
US$279 million. This was partially offset by
favourable foreign exchange rate impacts of
US$268 million.
BMA unit costs1 increased by 8 per cent to
US$89 per tonne primarily due to lower volumes
following significant wet weather impacts across
most BMA operations and labour constraints,
including COVID-19 related absenteeism which
impacted stripping and mine productivity, and
higher diesel and electricity prices. This was
partially offset by cost reduction initiatives and
favourable exchange rate movements.
NSWEC unit costs increased by 10 per cent to
US$71 per tonne reflecting lower volumes due
to an increased proportion of washed coal to
capitalise on higher margins for higher-quality
coals and COVID-19 related labour constraints
which impacted stripping performance and mine
productivity combined with higher diesel and
electricity prices. This was partially offset by cost
reduction initiatives and favourable exchange
rate movements.
Outlook
BMA coal production for FY2023 is expected to
be between 29 and 32 Mt (58 and 64 Mt on a
100 per cent basis).
NSWEC production for FY2023 is expected to
be between 13 and 15 Mt reflecting a continued
focus on higher-quality coals.
BMA unit costs in FY2023 are expected to be
between US$90 and US$100 per tonne (based
on an exchange rate of AUD/USD 0.72) as a
result of continued higher diesel and electricity
prices. We remain focused on cost reduction
and productivity initiatives, however given the
ongoing uncertainty regarding restrictions on
coal imports into China and the announcement
of the change to the Queensland royalty regime,
we are unable to provide medium-term volume
and unit cost guidance. We are seeking to
preserve low-cost incremental growth optionality
in our portfolio with a focus on higher-quality
coking coals.
NSWEC unit costs in FY2023 are expected to be
between US$76 and US$86 per tonne (based on
an exchange rate of AUD/USD 0.72) reflecting
inflationary pressures, higher port toll charges at
the NCIG coal export terminal and a continued
focus on higher-quality coals, offset by mine plan
optimisation, productivity improvements and cost
reduction initiatives.
10.4 Other assets
Detailed below is an analysis of Other assets’
financial and operating performance comparing
FY2022 to FY2021.
Nickel West
Key drivers of Nickel West’s
financial results
Price overview
Our average realised sales price for FY2022
was US$23,275 per tonne (FY2021: US$16,250
per tonne). The nickel market was in deficit
across the 2021 calendar year and early 2022.
Visible inventories were drawn down steeply,
putting upward pressure on prices. These tight
fundamentals emerged due to a combination
of strong demand from conventional end-use
sectors, rapid growth in the electric vehicle value
chain, uncertainty over the actual and potential
loss of supply from Russia, and constrained
Class-1 supply in the 2021 calendar year.
These forces culminated in a dramatic spike in
LME prices in March 2022. Prices have since
fallen back to levels before the Russian invasion
of Ukraine due to recession fears, alongside
other exchange-traded metals. Longer term,
we believe nickel will be a core beneficiary of
the electrification mega-trend and that nickel
sulphides will be particularly attractive.
Production
Nickel West production in FY2022 decreased by
14 per cent to 77 kt due to the significant impacts
of COVID-19 related labour absenteeism and
workforce shortages, and unplanned downtime
at the oxygen plant leading to a 15-day smelter
outage in the June 2022 quarter.
Financial results
Higher average realised sales prices resulted
in revenue increasing by US$381 million to
US$1.9 billion in FY2022.
Nickel West’s Underlying EBITDA increased from
US$259 million in FY2021 to US$420 million
in FY2022, reflecting higher average realised
prices and favourable exchange rate movements.
This was partially offset by lower volumes mainly
due to the significant impacts of COVID-19
related labour absenteeism and workforce
shortages, unplanned downtime at the oxygen
plant leading to a 15-day smelter outage in the
June 2022 quarter, and the adverse impacts
of the stronger nickel price on third-party
concentrate purchase costs.
Outlook
Nickel West production for FY2023 is expected
to be between 80 and 90 kt, weighted to the
second half of the year due to planned smelter
maintenance in the first half.
Potash
Potash recorded an Underlying EBITDA loss
of US$147 million in FY2022, and a loss of
US$167 million in FY2021.
10.5 Impact of changes
to commodity prices
The prices we obtain for our products are a key
driver of value for BHP. Fluctuations in these
commodity prices affect our results, including
cash flows and asset values. The estimated
impact of changes in commodity prices in FY2022
on our key financial measures is set out below.
Impact on profit
after taxation from
Continuing operations
(US$M)
Impact on
Underlying
EBITDA
(US$M)
US¢1/lb on copper price
US$1/t on iron ore price
US$1/t on metallurgical coal price
US$1/t on energy coal price
US¢1/lb on nickel price
22
160
16
9
1
31
228
23
13
1
The calculation of BMA and NSWEC unit costs is set out in the table below:
US$M
Revenue
Underlying EBITDA
Gross costs
Less: freight
Less: royalties
Net costs
Sales (kt, equity share)
Cost per tonne (US$)2,3
BMA unit costs1
NSWEC unit costs
FY2022
10,254
6,335
3,919
50
1,282
2,587
29,049
89.06
FY2021
3,537
567
2,970
54
275
2,641
31,958
82.64
FY2022
3,034
1,807
1,227
−
227
1,000
14,124
70.80
FY2021
839
(169)
1,008
−
66
942
14,626
64.41
1 Queensland Coal unit costs no longer reported as the divestment of BHP’s 80 per cent interest in BMC
to Stanmore Resources Limited was completed on 3 May 2022.
2 FY2022 based on an average realised exchange rate of AUD/USD 0.73.
3 FY2022 includes COVID-19 related costs of US$0.24 per tonne and US$0.57 per tonne, which was
reported as an exceptional item in FY2021 (FY2021: US$0.98 and US$0.40 per tonne) relating to BMA
and NSWEC respectively.
BHP
Annual Report 2022
77
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 11 Non-IFRS financial information
We use various non-IFRS financial information
to reflect our underlying financial performance.
Non-IFRS financial information is not defined
or specified under the requirements of IFRS,
but is derived from the Group’s Consolidated
Financial Statements prepared in accordance
with IFRS. The non-IFRS financial information
and the below reconciliations included in
this document are unaudited. The non-IFRS
financial information presented is consistent
with how management review financial
performance of the Group with the Board and
the investment community.
Sections 1.1 and 1.2 outline why we believe
non-IFRS financial information is useful and the
calculation methodology. We believe non-IFRS
financial information provides useful information,
however should not be considered as an
indication of, or as a substitute for, statutory
measures as an indicator of actual operating
performance (such as profit or net operating
cash flow) or any other measure of financial
performance or position presented in accordance
with IFRS, or as a measure of a company’s
profitability, liquidity or financial position.
Comparative periods have been adjusted for the
effects of applying IFRS 5 ‘Non-current Assets
Held for Sale and Discontinued Operations’ and
discloses them on the same basis as the current
period figures.
The following tables provide reconciliations
between non-IFRS financial information and their
nearest respective IFRS measure.
Exceptional items
To improve the comparability of underlying
financial performance between reporting periods,
some of our non-IFRS financial information
adjusts the relevant IFRS measures for
exceptional items.
For more information on exceptional
items refer to Financial Statements
note 3 ‘Exceptional items’.
Exceptional items are those gains or losses
where their nature, including the expected
frequency of the events giving rise to them,
and impact is considered material to the
Group’s Consolidated Financial Statements.
The exceptional items included within the
Group’s profit from Continuing and Discontinued
operations for the financial years are
detailed below.
Year ended 30 June
Continuing operations
Revenue
Other income
Expenses excluding net finance costs, depreciation, amortisation and impairments
Depreciation and amortisation
Net impairments
Loss from equity accounted investments, related impairments and expenses
Profit/(loss) from operations
Financial expenses
Financial income
Net finance costs
Profit/(loss) before taxation
Income tax (expense)/benefit
Royalty-related taxation (net of income tax benefit)
Total taxation (expense)/benefit
Profit/(loss) after taxation from Continuing operations
Discontinued operations
Profit/(loss) after taxation from Discontinued operations
Profit/(loss) after taxation from Continuing and Discontinued operations
Total exceptional items attributable to non-controlling interests
Total exceptional items attributable to BHP shareholders
Exceptional items attributable to BHP shareholders per share (US cents)
Weighted basic average number of shares (Million)
78
BHP
Annual Report 2022
2022
US$M
2021
US$M
Restated
2020
US$M
Restated
–
840
(494)
−
−
(676)
(330)
(290)
−
(290)
(620)
(454)
−
(454)
(1,074)
8,159
7,085
−
7,085
140.0
5,061
−
34
(545)
−
(2,371)
(1,456)
(4,338)
(85)
−
(85)
−
489
(1,019)
−
(409)
(508)
(1,447)
(93)
−
(93)
(4,423)
(1,540)
(1,057)
−
(1,057)
(5,480)
(317)
(5,797)
(24)
(5,773)
(114.2)
5,057
239
−
239
(1,301)
(4)
(1,305)
(201)
(1,104)
(21.9)
5,057
Non-IFRS financial information derived from Consolidated Income Statement
Underlying attributable profit
Year ended 30 June
Profit after taxation from Continuing and Discontinued operations attributable to BHP shareholders
Total exceptional items attributable to BHP shareholders1
Underlying attributable profit
1 For more information refer to Financial Statements note 3 ‘Exceptional items’.
Underlying basic earnings per share
Year ended 30 June
Basic earnings per ordinary share
Exceptional items attributable to BHP shareholders per share1
Underlying basic earnings per ordinary share
1 For more information refer to Financial Statements note 3 ‘Exceptional items’.
Underlying attributable profit – Continuing operations
Year ended 30 June
Profit after taxation from Continuing and Discontinued operations attributable to BHP shareholders
(Profit)/loss after taxation from Discontinued operations attributable to members of BHP
Total exceptional items attributable to BHP shareholders1
Total exceptional items attributable to BHP shareholders for Discontinued operations2
Underlying attributable profit – Continuing operations
1 For more information refer to Financial Statements note 3 ‘Exceptional items’.
2 For more information refer to Financial Statements note 27 ‘Discontinued operations’.
Underlying basic earnings per share – Continuing operations
Year ended 30 June
Underlying attributable profit – Continuing operations
Weighted basic average number of shares (Million)
Underlying attributable earnings per ordinary share – Continuing operations (US cents)
Underlying EBITDA
Year ended 30 June
Profit from operations
Exceptional items included in profit from operations1
Underlying EBIT
Depreciation and amortisation expense
Net impairments
Exceptional item included in Depreciation, amortisation and impairments1
Underlying EBITDA
1 For more information refer to Financial Statements note 3 ‘Exceptional items’.
Underlying EBITDA – Segment
Year ended 30 June 2022
US$M
Profit from operations
Exceptional items included in profit from operations1
Depreciation and amortisation expense
Net impairments
Underlying EBITDA
Copper
Iron Ore
6,249
81
1,765
470
8,565
18,823
648
2,203
33
21,707
Group and
unallocated
items/
eliminations2
(548)
450
953
3
858
Coal
9,582
(849)
762
9
9,504
2022
US$M
30,900
(7,085)
23,815
2021
US$M
11,304
5,773
17,077
2020
US$M
7,956
1,104
9,060
2022
US cents
2021
US cents
2020
US cents
610.6
(140.0)
470.6
223.5
114.2
337.7
157.3
21.9
179.2
2022
US$M
30,900
(10,655)
(7,085)
8,159
21,319
2022
US$M
21,319
5,061
421.2
2022
US$M
34,106
330
34,436
5,683
515
–
40,634
2021
US$M
Restated
11,304
225
5,773
(317)
16,985
2021
US$M
Restated
16,985
5,057
335.9
2021
US$M
Restated
25,515
4,338
29,853
5,084
2,507
(2,371)
35,073
2020
US$M
Restated
7,956
(108)
1,104
(4)
8,948
2020
US$M
Restated
8,948
5,057
176.9
2020
US$M
Restated
13,683
1,447
15,130
4,667
482
(409)
19,870
Total
Group
34,106
330
5,683
515
40,634
BHP
Annual Report 2022
79
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 11 Non-IFRS financial information continued
Year ended 30 June 2021
US$M
Restated
Profit from operations
Exceptional items included in profit from operations1
Depreciation and amortisation expense
Net impairments
Exceptional item included in Depreciation, amortisation and impairments1
Underlying EBITDA
Year ended 30 June 2020
US$M
Restated
Profit from operations
Exceptional items included in profit from operations1
Depreciation and amortisation expense
Net impairments
Exceptional item included in Depreciation, amortisation and impairments1
Underlying EBITDA
Copper
Iron Ore
6,665
144
1,608
72
−
8,489
22,975
1,319
1,971
13
−
26,278
Copper
Iron Ore
1,362
1,228
1,740
426
(409)
4,347
12,310
614
1,608
22
−
14,554
Group and
unallocated
items/
eliminations2
(1,981)
1,308
660
1,345
(1,314)
18
Group and
unallocated
items/
eliminations2
(782)
(413)
512
20
−
(663)
Coal
(2,144)
1,567
845
1,077
(1,057)
288
Coal
793
18
807
14
−
1,632
Total
Group
25,515
4,338
5,084
2,507
(2,371)
35,073
Total
Group
13,683
1,447
4,667
482
(409)
19,870
1 For more information refer to Financial Statements note 3 ‘Exceptional items’.
2 Group and unallocated items includes functions, other unallocated operations, including Potash, Nickel West, legacy assets, and consolidation adjustments.
Year ended 30 June 2022
US$M
Potash
Nickel West
Corporate, legacy assets and eliminations
Total
Year ended 30 June 2021
US$M
Restated
Potash
Nickel West
Corporate, legacy assets and eliminations
Total
Year ended 30 June 2020
US$M
Restated
Potash
Nickel West
Corporate, legacy assets and eliminations
Total
Exceptional
items included
in profit from
operations1
Profit from
operations
(149)
327
(726)
(548)
–
–
450
450
Depreciation and
amortisation
Net
impairments
2
91
860
953
–
2
1
3
Exceptional
items included
in Depreciation,
amortisation and
impairments1
–
–
–
–
Underlying
EBITDA
(147)
420
585
858
Exceptional
items included
in profit from
operations1
1,320
3
(15)
1,308
Profit from
operations
(1,489)
146
(638)
(1,981)
Depreciation
and amortisation
Net
impairments
2
79
579
660
1,314
31
−
1,345
Exceptional
items included
in profit from
operations1
−
5
(418)
(413)
Profit from
operations
(130)
(113)
(539)
(782)
Depreciation
and amortisation
Net
impairments
3
68
441
512
−
3
17
20
Exceptional
items included
in Depreciation,
amortisation and
impairments1
(1,314)
−
−
(1,314)
Exceptional
items included
in Depreciation,
amortisation and
impairments1
−
−
−
−
Underlying
EBITDA
(167)
259
(74)
18
Underlying
EBITDA
(127)
(37)
(499)
(663)
1 For more information refer to Financial Statements note 3 ‘Exceptional items’.
80
BHP
Annual Report 2022
Underlying EBITDA margin
Year ended 30 June 2022
US$M
Revenue – Group production
Revenue – Third-party products
Revenue
Underlying EBITDA – Group production
Underlying EBITDA – Third-party products
Underlying EBITDA2
Segment contribution to the Group's Underlying EBITDA3
Underlying EBITDA margin4
Year ended 30 June 2021
US$M
Restated
Revenue – Group production
Revenue – Third-party products
Revenue
Underlying EBITDA – Group production
Underlying EBITDA – Third-party products
Underlying EBITDA2
Segment contribution to the Group's Underlying EBITDA3
Underlying EBITDA margin4
Year ended 30 June 2020
US$M
Restated
Revenue – Group production
Revenue – Third-party products
Revenue
Underlying EBITDA – Group production
Underlying EBITDA – Third-party products
Underlying EBITDA2
Segment contribution to the Group's Underlying EBITDA3
Underlying EBITDA margin4
Copper
Iron Ore
13,946
2,903
16,849
8,529
36
8,565
22%
61%
Copper
13,482
2,244
15,726
8,425
64
8,489
24%
62%
Copper
9,577
1,089
10,666
4,306
41
4,347
21%
45%
30,748
19
30,767
21,707
−
21,707
54%
71%
Iron Ore
34,457
18
34,475
26,277
1
26,278
75%
76%
Iron Ore
20,782
15
20,797
14,561
(7)
14,554
71%
70%
Group and
unallocated
items/
eliminations1
1,860
73
1,933
858
−
858
Group and
unallocated
items/
eliminations1
1,543
23
1,566
18
−
18
Group and
unallocated
items/
eliminations1
1,191
28
1,219
(663)
−
(663)
Coal
15,549
−
15,549
9,504
−
9,504
24%
61%
Coal
5,154
−
5,154
288
−
288
1%
6%
Coal
6,242
−
6,242
1,632
−
1,632
8%
26%
Total
Group
62,103
2,995
65,098
40,598
36
40,634
100%
65%
Total
Group
54,636
2,285
56,921
35,008
65
35,073
100%
64%
Total
Group
37,792
1,132
38,924
19,836
34
19,870
100%
52%
1 Group and unallocated items includes functions, other unallocated operations, including Potash, Nickel West, legacy assets, and consolidation adjustments. Revenue not
attributable to reportable segments comprises the sale of freight and fuel to third parties. Exploration and technology activities are recognised within relevant segments.
2 We differentiate sales of our production from sales of third-party products to better measure the operational profitability of our operations as a percentage of revenue.
These tables show the breakdown between our production and third-party products, which is necessary for the calculation of the Underlying EBITDA margin and margin on
third-party products.
We engage in third-party trading for the following reasons:
– Production variability and occasional shortfalls from our assets means that we sometimes source third-party materials to ensure a steady supply of product to our customers.
– To optimise our supply chain outcomes, we may buy physical product from third parties.
– To support the development of liquid markets, we will sometimes source third-party physical products and manage risk through both the physical and financial markets.
3 Percentage contribution to Group Underlying EBITDA, excluding Group and unallocated items.
4 Underlying EBITDA margin excludes third-party products.
Effective tax rate
Year ended 30 June
Statutory effective tax rate
Adjusted for:
Exchange rate movements
Exceptional items1
Adjusted effective tax rate
2022
2021
Restated
2020
Restated
Profit before
taxation
US$M
Income
tax expense
US$M
Profit before
taxation
US$M
Income
tax expense
US$M
%
Profit before
taxation
US$M
Income
tax expense
US$M
%
%
33,137
(10,737)
32.4
24,292
(10,616)
43.7
12,825
(4,197)
32.7
−
620
33,757
(233)
454
(10,516)
31.2
−
4,423
28,715
(33)
1,057
(9,592)
33.4
−
1,540
14,365
41
(239)
(4,395)
30.6
1 For more information refer to Financial Statements note 3 ‘Exceptional items’.
BHP
Annual Report 2022
81
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 2021
US$M
Restated
2020
US$M
Restated
11 Non-IFRS financial information continued
Non-IFRS financial information derived from Consolidated Cash Flow Statement
Capital and exploration expenditure
Year ended 30 June
Capital expenditure (purchases of property, plant and equipment)
Add: Exploration expenditure
Capital and exploration expenditure (cash basis) – Continuing operations
Capital expenditure (purchases of property, plant and equipment) – Discontinued operations
Add: Exploration expenditure – Discontinued operations
Capital and exploration expenditure (cash basis) – Discontinued operations
Capital and exploration expenditure (cash basis) – Total operations
Free cash flow
Year ended 30 June
Net operating cash flows from Continuing operations
Net investing cash flows from Continuing operations
Free cash flow – Continuing operations
Net operating cash flows from Discontinued operations
Net investing cash flows from Discontinued operations
Net cash completion payment on merger of Petroleum with Woodside
Cash and cash equivalents disposed on merger of Petroleum with Woodside
Free cash flow – Discontinued operations
Free cash flow – Total operations
Non-IFRS financial information derived from Consolidated Balance Sheet
Net debt and gearing ratio
Year ended 30 June
Interest bearing liabilities – Current
Interest bearing liabilities – Non current
Total interest bearing liabilities
Comprising:
Borrowing
Lease liabilities
Less: Lease liability associated with index-linked freight contracts
Less: Cash and cash equivalents
Less: Net debt management related instruments1
Less: Net cash management related instruments2
Less: Total derivatives included in net debt
Net debt
Net assets
Gearing
2022
US$M
5,855
256
6,111
1,050
384
1,434
7,545
2022
US$M
29,285
(4,973)
24,312
2,889
(904)
(683)
(399)
903
25,215
2022
US$M
2,622
13,806
16,428
13,852
2,576
274
17,236
(1,688)
273
(1,415)
333
48,766
0.7%
5,612
192
5,804
994
322
1,316
7,120
2021
US$M
Restated
25,883
(6,325)
19,558
1,351
(1,520)
−
−
(169)
19,389
2021
US$M
2,628
18,355
20,983
17,087
3,896
1,025
15,246
557
34
591
4,121
55,605
6.9%
1 Represents the net cross currency and interest rate swaps included within current and non-current other financial assets and liabilities.
2 Represents the net forward exchange contracts related to cash management included within current and non-current other financial assets and liabilities.
Net debt waterfall
Year ended 30 June
Net debt at the beginning of the period
Net operating cash flows
Net investing cash flows
Net financing cash flows
Net increase in cash and cash equivalents from Continuing and Discontinued operations
Carrying value of interest bearing liability net repayments
Carrying value of debt related instruments settlements/(proceeds)
Carrying value of cash management related instruments (proceeds)/settlements
Fair value adjustment on debt (including debt related instruments)
Foreign exchange impacts on cash (including cash management related instruments)
Lease additions
Divestment and demerger of subsidiaries and operations
Other
Non-cash movements
Net debt at the end of the period
82
BHP
Annual Report 2022
2022
US$M
(4,121)
32,174
(6,959)
(22,767)
2,448
2,227
−
(247)
5
27
(736)
492
(428)
(640)
(333)
5,991
176
6,167
909
564
1,473
7,640
2020
US$M
Restated
14,685
(6,583)
8,102
1,021
(1,033)
−
−
(12)
8,090
2020
US$M
5,012
22,036
27,048
23,605
3,443
1,160
13,426
433
(15)
418
12,044
52,175
18.8%
2021
US$M
(12,044)
27,234
(7,845)
(17,922)
1,467
7,433
(167)
403
58
(1)
(1,079)
−
(191)
(1,213)
(4,121)
Net operating assets
The following table reconciles Net operating assets for the Group to Net assets on the Consolidated Balance Sheet.
Year ended 30 June
Net assets
Less: Non-operating assets
Cash and cash equivalents
Trade and other receivables1
Other financial assets2
Current tax assets
Deferred tax assets
Assets held for sale
Petroleum Discontinued operations operating assets3
Add: Non-operating liabilities
Trade and other payables4
Interest bearing liabilities
Other financial liabilities5
Current tax payable
Non-current tax payable
Deferred tax liabilities
Liabilities directly associated with the assets held for sale
Petroleum Discontinued operations operating liabilities3
Net operating assets
Net operating assets
Copper
Iron Ore
Coal
Group and unallocated items6
Total
2022
US$M
48,766
(17,236)
(72)
(1,363)
(263)
(56)
−
−
201
16,428
1,851
3,032
87
3,063
−
−
54,438
27,420
16,823
7,650
2,545
54,438
2021
US$M
Restated
55,605
(15,246)
(280)
(1,516)
(279)
(1,912)
(324)
(13,757)
227
20,983
588
2,800
120
3,314
17
5,684
56,024
26,928
18,663
7,512
2,921
56,024
1 Represents loans to associates, external finance receivable and accrued interest receivable included within other receivables.
2 Represents cross currency and interest rate swaps, forward exchange contracts related to cash management and investment in shares, other investments and
receivables contingent on outcome of future events relating to mining and regulatory approvals.
3 Represents the Petroleum operating assets and operating liabilities as at 30 June 2021 that were merged with Woodside on 1 June 2022.
4 Represents accrued interest payable included within other payables.
5 Represents cross currency and interest rate swaps and forward exchange contracts related to cash management.
6 Group and unallocated items include functions, other unallocated operations including Potash, Nickel West, legacy assets, and consolidation adjustments.
BHP
Annual Report 2022
83
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 11 Non-IFRS financial information continued
Other non-IFRS financial information
Principal factors that affect Revenue, Profit from operations and Underlying EBITDA
The following table describes the impact of the principal factors that affected Revenue, Profit from operations and Underlying EBITDA for FY2022 and
relates them back to our Consolidated Income Statement. For information on the method of calculation of the principal factors that affect Revenue,
Profit from operations and Underlying EBITDA refer to OFR 11.2.
Revenue
US$M
56,921
7,267
−
7,267
(1,235)
−
−
−
(3)
−
−
−
−
(3)
−
1,482
666
−
−
65,098
Year ended 30 June 2021 (Restated)
Revenue
Other income
Expenses excluding net finance costs
Loss from equity accounted investments, related impairments and expenses
Total other income, expenses excluding net finance costs and Loss from equity
accounted investments, related impairments and expenses
Profit from operations
Depreciation, amortisation and impairments1
Exceptional item included in Depreciation, amortisation and impairments
Exceptional items
Underlying EBITDA
Change in sales prices
Price-linked costs
Net price impact
Change in volumes
Operating cash costs
Exploration and business development
Change in controllable cash costs2
Exchange rates
Inflation on costs
Fuel, energy, and consumable price movements
Non-cash
One-off items
Change in other costs
Asset sales
Ceased and sold operations
Other
Depreciation, amortisation and impairments
Exceptional items
Year ended 30 June 2022
Revenue
Other income
Expenses excluding net finance costs
Loss from equity accounted investments, related impairments and expenses
Total other income, expenses excluding net finance costs and Loss from equity
accounted investments, related impairments and expenses
Profit from operations
Depreciation, amortisation and impairments1
Exceptional item included in Depreciation, amortisation and impairments
Exceptional items
Underlying EBITDA
Total expenses,
Other income
and Loss from
equity
accounted
investments
US$M
Depreciation,
amortisation
and
impairments
and
Exceptional
Items
US$M
Profit from
operations
US$M
Underlying
EBITDA
US$M
380
(30,871)
(915)
(31,406)
(673)
(1,047)
(1,720)
23
(473)
(67)
(540)
1,183
(867)
(660)
(3)
−
(347)
2
186
(220)
(978)
4,008
1,398
(32,371)
(19)
(30,992)
25,515
6,594
(1,047)
5,547
(1,212)
(473)
(67)
(540)
1,180
(867)
(660)
(3)
−
(350)
2
1,668
446
(978)
4,008
34,106
7,591
(2,371)
4,338
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
−
978
(4,008)
6,198
−
330
35,073
6,594
(1,047)
5,547
(1,212)
(473)
(67)
(540)
1,180
(867)
(660)
(3)
−
(350)
2
1,668
446
−
−
40,634
1 Depreciation and impairments that we classify as exceptional items are excluded from depreciation, amortisation and impairments. Depreciation, amortisation and
impairments includes non-exceptional impairments of US$515 million (FY2021: US$136 million).
2 Collectively, we refer to the change in operating cash costs and change in exploration and business development as Change in controllable cash costs. Operating cash costs
by definition do not include non-cash costs. The change in operating cash costs also excludes the impact of exchange rates and inflation, changes in fuel, energy costs
and consumable costs, changes in exploration and business development costs and one-off items. These items are excluded so as to provide a consistent measurement
of changes in costs across all segments, based on the factors that are within the control and responsibility of the segment.
84
BHP
Annual Report 2022
Underlying return on capital employed (ROCE)
Year ended 30 June
Profit after taxation from Continuing and Discontinued operations
Exceptional items1
Subtotal
Adjusted for:
Net finance costs
Exceptional items included within net finance costs1
Income tax expense on net finance costs
Profit after taxation excluding net finance costs and exceptional items
Net assets at the beginning of the period
Net debt at the beginning of the period
Capital employed at the beginning of the period
Net assets at the end of the period
Net debt at the end of the period
Capital employed at the end of the period
Average capital employed
2022
US$M
33,055
(7,085)
25,970
1,128
(290)
(287)
26,521
55,605
4,121
59,726
48,766
333
49,099
54,413
2021
US$M
13,451
5,797
19,248
1,305
(85)
(337)
20,131
52,175
12,044
64,219
55,605
4,121
59,726
61,973
2020
US$M
8,736
1,305
10,041
911
(93)
(267)
10,592
51,753
9,446
61,199
52,175
12,044
64,219
62,709
Underlying return on capital employed
48.7%
32.5%
16.9%
1 For more information refer to Financial Statements note 3 ‘Exceptional items’.
Underlying return on capital employed (ROCE) by segment
Year ended 30 June 2022
US$M
Profit after taxation excluding net finance costs and
exceptional items
Average capital employed
Underlying return on capital employed
Year ended 30 June 2021
US$M
Restated
Profit after taxation excluding net finance costs and
exceptional items
Average capital employed
Underlying return on capital employed
Copper
Iron Ore
Coal
Group and
unallocated
items/
eliminations1
Total
Continuing
Petroleum
Discontinued
operations
3,981
24,310
16%
13,896
15,275
91%
6,293
6,893
91%
(256)
3,196
−
23,914
49,674
48.1%
2,607
4,739
−
Copper
Iron Ore
Coal
Group and
unallocated
items/
eliminations1
Total
Continuing
Petroleum
Discontinued
operations
4,191
23,710
18%
16,640
16,042
104%
(454)
8,262
(5%)
(395)
4,470
–
19,982
52,484
38.1%
149
9,489
1.6%
Total
Group
26,521
54,413
48.7%
Total
Group
20,131
61,973
32.5%
1 Group and unallocated items includes functions, other unallocated operations including Potash, Nickel West, legacy assets and consolidation adjustments.
Underlying return on capital employed (ROCE) by asset
Year ended 30 June 2022
US$M
Profit after taxation
excluding net finance costs
and exceptional items
Average capital employed
Underlying return on
capital employed
Western
Australia
Iron Ore
BHP
Mitsubishi
Nickel
Alliance Antamina
West Escondida
Pampa
Norte
New
South
Wales
Energy
Olympic
Dam Potash
Coal1 Other
Total
Continuing
Petroleum
Discontinued
operations
Total
Group
14,051
18,783
4,153
6,725
684
1,284
250
650
3,346
9,891
81
4,380
(9)
8,660
(123)
3,321
1,309
(413)
172
(3,607)
23,914
49,674
2,607 26,521
4,739 54,413
75%
62%
53% 38%
34%
2%
(0)%
(4)%
−
−
48.1%
−
48.7%
Year ended 30 June 2021
US$M
Restated
Western
Australia
Iron Ore
BHP
Mitsubishi
Alliance Antamina
Nickel
West Escondida
Pampa
Norte
New
South
Wales
Energy
Olympic
Dam Potash
Coal Other
Total
Continuing
Petroleum
Discontinued
operations
Total
Group
Profit after taxation
excluding net finance costs
and exceptional items
Average capital employed
Underlying return on
capital employed
16,665
18,661
(13)
6,796
593
1,353
136
295
3,281
10,353
302
3,760
214
8,021
5
3,710
(203)
269
(998)
(734)
19,982
52,484
149 20,131
9,489 61,973
89%
(0%)
44%
46%
32%
8%
3%
0%
(75%)
−
38.1%
1.6% 32.5%
1 NSWEC has not been shown as ROCE is distorted by negative capital employed due to the rehabilitation provision being the primary balance remaining on Balance Sheet
following previous impairments.
BHP
Annual Report 2022
85
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 11.1 Definition and calculation of non-IFRS financial information
Non-IFRS financial
information
Underlying attributable
profit
Reasons why we believe the non-IFRS financial information
are useful
Allows the comparability of underlying financial performance
by excluding the impacts of exceptional items.
Underlying attributable
profit – Continuing
operations
Underlying basic earnings
per share
Underlying basic earnings
per share – Continuing
operations
Underlying EBITDA
Allows the comparability of underlying financial performance
by excluding the impacts of exceptional items and the
contribution of Discontinued operations and is also the basis
on which our dividend payout ratio policy is applied.
On a per share basis, allows the comparability of underlying
financial performance by excluding the impacts of
exceptional items.
On a per share basis, allows the comparability of underlying
financial performance by excluding the impacts of exceptional
items and the contribution of Discontinued operations.
Used to help assess current operational profitability excluding
the impacts of sunk costs (i.e. depreciation from initial
investment). Each is a measure that management uses
internally to assess the performance of the Group’s segments
and make decisions on the allocation of resources.
Underlying EBITDA
margin
Underlying EBIT
Profit from operations
Capital and exploration
expenditure
Capital and exploration
expenditure – Continuing
operations
Free cash flow
Free cash flow –
Continuing operations
Net debt
Gearing ratio
Net operating assets
Used to help assess current operational profitability excluding
net finance costs and taxation expense (each of which
are managed at the Group level) as well as Discontinued
operations and any exceptional items.
Used as part of our Capital Allocation Framework to assess
efficient deployment of capital. Represents the total outflows
of our operational investing expenditure.
Represents the total outflows of our operational investing
expenditure excluding the contribution of Discontinued
operations.
It is a key measure used as part of our Capital Allocation
Framework. Reflects our operational cash performance
inclusive of investment expenditure, which helps to highlight
how much cash was generated in the period to be available
for the servicing of debt and distribution to shareholders.
Reflects our operational cash performance inclusive of
investment expenditure, but excluding the contribution of
Discontinued operations.
Net debt shows the position of gross debt less index-linked
freight contracts offset by cash immediately available to
pay debt if required and any associated derivative financial
instruments. Liability associated with index-linked freight
contracts, which are required to be remeasured to the
prevailing freight index at each reporting date, are excluded
from the net debt calculation due to the short-term volatility
of the index they relate to not aligning with how the Group
uses net debt for decision making in relation to the Capital
Allocation Framework. Net debt includes the fair value of
derivative financial instruments used to hedge cash and
borrowings to reflect the Group’s risk management strategy
of reducing the volatility of net debt caused by fluctuations in
foreign exchange and interest rates.
Net debt, along with the gearing ratio, is used to monitor the
Group’s capital management by relating net debt relative to
equity from shareholders.
Enables a clearer view of the assets deployed to generate
earnings by highlighting the net operating assets of the
business separate from the financing and tax balances.
This measure helps provide an indicator of the underlying
performance of our assets and enhances comparability
between them.
86
BHP
Annual Report 2022
Calculation methodology
Profit after taxation from Continuing and Discontinued
operations attributable to BHP shareholders excluding any
exceptional items attributable to BHP shareholders.
Underlying attributable profit from Continuing operations also
excludes the contribution of Discontinued operations from the
above metrics.
Underlying attributable profit divided by the weighted basic
average number of shares.
Underlying attributable profit – Continuing operations divided by
the weighted basic average number of shares.
Earnings before net finance costs, depreciation, amortisation
and impairments, taxation expense, Discontinued operations
and exceptional items. Underlying EBITDA includes BHP’s
share of profit/(loss) from investments accounted for using
the equity method including net finance costs, depreciation,
amortisation and impairments and taxation expense/(benefit).
Underlying EBITDA excluding third-party product EBITDA,
divided by revenue excluding third-party product revenue.
Earnings before net finance costs, taxation expense,
Discontinued operations and any exceptional items. Underlying
EBIT includes BHP’s share of profit/(loss) from investments
accounted for using the equity method including net finance
costs and taxation expense/(benefit).
Earnings before net finance costs, taxation expense and
Discontinued operations. Profit from operations includes
Revenue, Other income, Expenses excluding net finance costs
and BHP’s share of profit/(loss) from investments accounted for
using the equity method including net finance costs and taxation
expense/(benefit).
Purchases of property, plant and equipment and exploration
expenditure including the contribution of Discontinued
operations.
Purchases of property, plant and equipment and exploration
expenditure.
Net operating cash flows less net investing cash flows.
Net operating cash flows from Continuing operations less net
investing cash flows from Continuing operations.
Interest bearing liabilities less liability associated with index-
linked freight contracts less cash and cash equivalents
less net cross currency and interest rate swaps less net
cash management related instruments for the Group at the
reporting date.
Ratio of Net debt to Net debt plus Net assets.
Operating assets net of operating liabilities, including
the carrying value of equity accounted investments and
predominantly excludes cash balances, loans to associates,
interest bearing liabilities, derivatives hedging our net debt,
assets held for sale, liabilities directly associated with assets
held for sale and tax balances.
Non-IFRS financial
information
Reasons why we believe the non-IFRS financial information
are useful
Calculation methodology
Underlying return on
capital employed (ROCE)
Indicator of the Group’s capital efficiency and is provided
on an underlying basis to allow comparability of underlying
financial performance by excluding the impacts of
exceptional items.
Adjusted effective tax rate Provides an underlying tax basis to allow comparability
of underlying financial performance by excluding the impacts
of exceptional items.
Unit cost
Used to assess the controllable financial performance of the
Group’s assets for each unit of production. Unit costs are
adjusted for site specific non controllable factors to enhance
comparability between the Group’s assets.
Profit after taxation excluding exceptional items and net finance
costs (after taxation) divided by average capital employed.
Profit after taxation excluding exceptional items and net finance
costs (after taxation) is profit after taxation from Continuing
and Discontinued operations excluding exceptional items, net
finance costs and the estimated taxation impact of net finance
costs. These are annualised for a half year end reporting period.
The estimated tax impact is calculated using a prima facie
taxation rate on net finance costs (excluding any foreign
exchange impact).
Average capital employed is calculated as the average of net
assets less net debt for the last two reporting periods.
Total taxation expense/(benefit) excluding exceptional items
and exchange rate movements included in taxation expense/
(benefit) divided by Profit before taxation from Continuing
operations excluding exceptional items.
Ratio of net costs of the assets to the equity share of sales
tonnage. Net costs is defined as revenue less Underlying
EBITDA and excludes freight and other costs, depending on the
nature of each asset. Freight is excluded as the Group believes
it provides a similar basis of comparison to our peer group.
Escondida unit costs exclude:
– by-product credits being the favourable impact of by-products
(such as gold or silver) to determine the directly attributable
costs of copper production.
WAIO, BMA and NSWEC unit costs exclude:
– royalties as these are costs that are not deemed to be
under the Group’s control, and the Group believes exclusion
provides a similar basis of comparison to our peer group.
11.2 Definition and calculation of principal factors
The method of calculation of the principal factors that affect the period on period movements of Revenue, Profit from operations and Underlying EBITDA
are as follows:
Principal factor
Change in sales prices
Price-linked costs
Change in volumes
Controllable cash costs
Operating cash costs
Exploration and business
development
Exchange rates
Inflation on costs
Fuel, energy, and consumable
price movements
Non-cash
One-off items
Asset sales
Ceased and sold operations
Share of profit/(loss) from equity
accounted investments
Other
Method of calculation
Change in average realised price for each operation from the prior period to the current period, multiplied by current
period sales volumes.
Change in price-linked costs (mainly royalties) for each operation from the prior period to the current period, multiplied
by current period sales volumes.
Change in sales volumes for each operation multiplied by the prior year average realised price less variable unit cost.
Total of operating cash costs and exploration and business development costs.
Change in total costs, other than price-linked costs, exchange rates, inflation on costs, fuel, energy, and consumable
price movements, non-cash costs and one-off items as defined below for each operation from the prior period to the
current period.
Exploration and business development expense in the current period minus exploration and business development
expense in the prior period.
Change in exchange rate multiplied by current period local currency revenue and expenses.
Change in inflation rate applied to expenses with contractual links to inflation indexes, other than depreciation and
amortisation, price-linked costs, exploration and business development expenses, expenses in ceased and sold
operations and expenses in new and acquired operations.
Fuel and energy expense and price differences above inflation on consumables in the current period minus fuel and
energy expense in the prior period.
Change in net impact of capitalisation and depletion of deferred stripping from the prior period to the current period.
Change in costs exceeding a pre-determined threshold associated with an unexpected event that had not occurred in
the last two years and is not reasonably likely to occur within the next two years.
Profit/(loss) on the sale of assets or operations in the current period minus profit/(loss) on sale of assets or operations
in the prior period.
Underlying EBITDA for operations that ceased or were sold in the current period minus Underlying EBITDA for
operations that ceased or were sold in the prior period.
Share of profit/(loss) from equity accounted investments for the current period minus share of profit/(loss) from equity
accounted investments in the prior period.
Variances not explained by the above factors.
BHP
Annual Report 2022
87
Operating and Financial ReviewGovernanceFinancial StatementsAdditional Information 12 Other information
12.1 Company details
BHP Group Limited’s registered office and
global headquarters are at 171 Collins Street,
Melbourne, Victoria 3000, Australia. ‘BHP’,
the ‘Company’, the ‘Group’, ‘our business’,
‘organisation’, ‘we’, ‘us’, ‘our’ and ‘ourselves’
refer to BHP Group Limited, and except
where the context otherwise requires, our
subsidiaries. Refer to Financial Statements
note 28 ‘Subsidiaries’ for a list of our significant
subsidiaries. Those terms do not include non-
operated assets.
This Report covers functions and assets
(including those under exploration, projects
in development or execution phases, sites
and closed operations) that have been wholly
owned and/or operated by BHP or that have
been owned as a BHP-operated joint venture1
operated by BHP (referred to in this Report
as ‘operated assets’ or ‘operations’) from
1 July 2021 to 30 June 2022. BHP also holds
interests in assets that are owned as a joint
venture but not operated by BHP (referred to
in this Report as ‘non-operated joint ventures’
or ‘non-operated assets’). Notwithstanding that
this Report 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.
On 31 January 2022, we unified our company
structure under BHP Group Limited, with a
primary listing on the Australian Securities
Exchange. BHP holds a standard listing on the
London Stock Exchange, a secondary listing on
the Johannesburg Stock Exchange and an ADR
program listed on the New York Stock Exchange.
12.2 Forward looking statements
This Report contains forward-looking
statements, including: statements regarding
trends in commodity prices and currency
exchange rates; demand for commodities;
reserves and resources and production
forecasts; expectations, plans, strategies and
objectives of management; climate scenarios;
approval of certain projects and consummation
of certain transactions; closure or divestment of
certain assets, operations or facilities (including
associated costs); anticipated production or
construction commencement dates; capital costs
and scheduling; operating costs and supply of
materials and skilled employees; anticipated
productive lives of projects, mines and facilities;
provisions and contingent liabilities; and tax and
regulatory developments.
Forward-looking statements may be identified by
the use of terminology including, but not limited
to, ‘intend’, ‘aim’, ‘ambition’, ‘aspiration’, ‘goal’,
‘target’, ‘project’, ‘see’, ‘anticipate’, ‘estimate’,
‘plan’, ‘objective’, ‘believe’, ‘expect’, ‘commit’,
‘may’, ‘should’, ‘need’, ‘must’, ‘will’, ‘would’,
‘continue’, ‘forecast’, ‘guidance’, ‘trend’ or
similar words. These statements discuss future
expectations concerning the results of assets or
financial conditions, or provide other forward-
looking information.
Examples of forward-looking statements
contained in this Report include, without limitation,
statements describing (i) our strategy, our
values and how we define our success; (ii) our
expectations regarding future demand for certain
commodities, in particular copper, nickel, iron
ore, metallurgical coal, steel and potash, and our
intentions, commitments or expectations with
respect to our supply of certain commodities,
including copper, nickel, iron ore and potash; (iii)
our future exploration and partnership plans and
perceived benefits and opportunities, including
our focus to grow our copper and nickel assets;
(iv) the structure of our organisation and portfolio
and perceived benefits and opportunities; (v)
our outlook for long-term economic growth
and other macroeconomic and industry trends;
(vi) our projected and expected production
and performance levels and development
projects; (vii) our expectations regarding our
investments, including in potential growth options
and technology and innovation, and perceived
benefits and opportunities; (viii) our reserves and
resources; (ix) our plans for our major projects and
related budget allocations; (x) our expectations,
commitments and objectives with respect to
sustainability, decarbonisation, natural resource
management, climate change and portfolio
resilience and timelines and plans to seek to
achieve or implement such objectives, including
our new 2030 ‘People, Planet and Prosperity’
goals, our approach to equitable change and
transitions, our Climate Transition Action Plan,
Climate Change Adaptation Strategy and goals,
targets and strategies to seek to reduce or support
the reduction of greenhouse gas emissions,
and related perceived costs, benefits and
opportunities for BHP; (xi) the assumptions, beliefs
and conclusions in our climate change related
statements and strategies, including in our Climate
Change Report 2020, for example, in respect of
future temperatures, energy consumption and
greenhouse gas emissions, and climate-related
impacts; (xii) our commitment to social value;
(xiii) our commitments to sustainability reporting,
frameworks, standards and initiatives; (xiv) our
commitments to improve or maintain safe tailings
storage management; (xv) our commitments to
achieve certain inclusion and diversity targets,
aspirations and outcomes; (xvi) our commitments
to achieve certain targets and outcomes
with respect to Indigenous peoples and the
communities in which we operate; and (xvii) our
commitments to achieve certain health and safety
targets and outcomes.
Forward-looking statements are based on
management’s current expectations and reflect
judgments, assumptions, estimates and other
information available as at the date of this Report
and/or the date of BHP’s planning or scenario
analysis processes. These statements do not
represent guarantees or predictions of future
financial or operational performance and involve
known and unknown risks, uncertainties and other
factors, many of which are beyond our control and
which may cause actual results to differ materially
1 References in this Annual Report to a ‘joint venture’ are used for convenience to collectively describe assets that
are not wholly owned by BHP. Such references are not intended to characterise the legal relationship between
the owners of the asset.
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BHP
Annual Report 2022
from those expressed in the statements contained
in this Report. BHP cautions against reliance
on any forward-looking statements or guidance,
including in light of the current economic climate
and the significant volatility, uncertainty and
disruption arising in connection with the Ukrainian
conflict and COVID-19. For example, our future
revenues from our assets, projects or mines
described in this Report will be based, in part,
on the market price of the minerals or metals
produced, which may vary significantly from
current levels. These variations, if materially
adverse, may affect the timing or the feasibility
of the development of a particular project, the
expansion of certain facilities or mines, or the
continuation of existing assets.
Other factors that may affect the actual
construction or production commencement
dates, revenues, costs or production output and
anticipated lives of assets, mines or facilities
include: (i) our ability to profitably produce and
transport the minerals and/or metals extracted
to applicable markets; (ii) the impact of foreign
currency exchange rates on the market prices of
the minerals or metals we produce; (iii) activities
of government authorities in the countries where
we sell our products and in the countries where
we are exploring or developing projects, facilities
or mines, including increases in taxes; (iv) changes
in environmental and other regulations; (v) the
duration and severity of the COVID-19 pandemic
and its impact on our business; (vi) political or
geopolitical uncertainty; (viii) labour unrest; and
(viii) other factors identified in the risk factors set
out in Operating and Financial Review 9.1.
Except as required by applicable regulations or by
law, BHP does not undertake to publicly update or
review any forward-looking statements, whether
as a result of new information or future events.
Past performance cannot be relied on as a guide
to future performance.
Emissions and energy
consumption data
Due to the inherent uncertainty and limitations
in measuring greenhouse gas (GHG) emissions
and operational energy consumption under
the calculation methodologies used in the
preparation of such data, all GHG emissions
and operational energy consumption data or
references to GHG emissions and operational
energy consumption volumes (including ratios
or percentages) in this Report are estimates.
There may also be differences in the manner
that third parties calculate or report GHG
emissions or operational energy consumption
data compared to BHP, which means that third-
party data may not be comparable to our data.
For information on how we calculate our GHG
emissions and operational energy consumption
data, see our Methodology tab in our ESG
Standards and Databook.
This Report is made in accordance with
a resolution of the Board.
Ken MacKenzie
Chair
16 August 2022
Governance
Corporate Governance Statement
Corporate governance at BHP
1
FY2022 corporate governance highlights
2
BHP’s governance structure
3
Board of Directors
4
Overview of the Board
4.1
Director independence
4.2
Board appointments and succession planning
4.3
Director induction, training and development
4.4
Director skills, experience and attributes
4.5
Board evaluation
4.6
5
5.1
5.2
5.3
5.4
Board Committees
Nomination and Governance Committee
Risk and Audit Committee
Sustainability Committee
Remuneration Committee
Directors’ Report
1
Review of operations, principal activities
and state of affairs
Directors
Biographical details
Director attendances at meetings
2
2.1
2.2
3
4
5
6
7
8
9
10
11
12
13
14
Share capital and buy-back programs
Share interests
Secretaries
Indemnities and insurance
Dividends
Auditors
Non-audit services
Exploration, research and development
ASIC Instrument 2016/191
Proceedings on behalf of BHP Group Limited
Performance in relation to environmental regulation
Additional information
Operating
and Financial
Review
Governance
Financial
Statements
Additional
Information
6
6.1
6.2
6.3
7
7.1
7.2
8
8.1
8.2
8.3
8.4
9
10
11
Management
Executive Leadership Team
Senior management succession
Performance evaluation of executives
Risk management and assurance
Risk management governance structure
External audit and financial reporting
Culture and conduct
Our Code of Conduct and Our Charter
Culture
BHP’s EthicsPoint
Diversity
Shareholder and stakeholder engagement
Market disclosure
US requirements
Remuneration Report
Remuneration Committee Chair letter to shareholders
1
2
3
4
5
Remuneration governance
Remuneration framework
Remuneration for the CEO and other Executive KMP
Remuneration for Non-executive Directors
Statutory KMP remuneration and other disclosures
96
96
97
97
97
97
97
98
98
99
99
99
99
100
100
107
109
110
113
119
121
90
90
90
91
91
92
92
92
93
93
94
94
94
95
95
101
101
101
103
103
104
104
104
104
104
104
105
105
105
105
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BHP
Annual Report 2022
89
Corporate Governance Statement
1. Corporate
governance at BHP
Good corporate governance underpins the way
we conduct business.
We are committed to the highest level of
governance and strive to foster a culture that values
and rewards exemplary ethical standards, personal
and corporate integrity and respect for others.
This Corporate Governance Statement sets out
the corporate governance framework currently
in place for the Group, including the key policies
and practices.
These arrangements are consistent with:
– the fourth edition of the ASX Corporate
Governance Council’s Principles and
Recommendations (ASX Fourth Edition); and
– the governance requirements that apply
to us as a result of our London Stock
Exchange and New York Stock Exchange
(NYSE) listings and our registration with the
Securities Exchange Commission (SEC) in
the United States.
The ASX Fourth Edition (available at asx.com.au)
requires the Board to consider the application of
the relevant corporate governance principles, while
recognising departures from those principles are
appropriate in some circumstances.
The Board considers that during FY2022, it
complied with the ASX Fourth Edition, with
no exceptions.
This Corporate Governance Statement is current
as at 2 September 2022 and has been approved
by the Board.
More information about our corporate governance
framework and practices can be accessed on our
website at bhp.com/governance, which includes
links to our Appendix 4G and each of the publicly
available documents referenced in this Corporate
Governance Statement.
2. FY2022 corporate governance highlights
Key highlights
Board composition and succession
We continued to apply a robust approach to Board renewal and focus on
succession planning. As part of this process, we are delighted to have
appointed Michelle Hinchliffe and Catherine Tanna to our Board during FY2022.
Malcolm Broomhead and John Mogford have announced their retirement at
the conclusion of the 2022 Annual General Meeting (AGM) and we thank both
Malcolm and John for their commitment to our ongoing success.
Unification
We unified our Dual Listed Company structure to make us more agile and efficient.
Following unification, we have reviewed and updated key corporate governance
policies including the Board Governance Document and Committee Terms
of Reference, Independence of Directors Policy, Market Disclosure and
Communications Policy and Securities Dealing Policy to reflect our new corporate
structure and current best governance practice.
Diversity
Our aspiration is to achieve gender balance (which we define as a minimum 40
per cent women and 40 per cent men in line with the definition used by entities
such as the International Labour Organization) on our Board. Currently 33 per
cent of our Directors are female and following Malcolm Broomhead and John
Mogford’s retirement from the Board after the 2022 AGM, this will be 40 per cent.
We continue to consider other aspects of diversity as part of our ongoing
Board succession planning.
Update of Board skills matrix
We refreshed our Board skills matrix to reflect our current purpose and strategy.
An external expert completed an assessment of each Director against the
updated matrix.
3. BHP’s governance
structure
The Board has ultimate responsibility for
overseeing BHP’s governance. The role of the
Board, as set out in the Board Governance
Document, is to represent shareholders and
promote and protect the interests of BHP in the
short and long term. The Board considers the
interests of the Group’s shareholders as a whole
and the interests of other relevant stakeholders
where appropriate.
The Chair is responsible for leading the Board
and ensuring it operates to high governance
standards. In particular, the Chair facilitates
constructive Board relations and the effective
contribution of all Non-executive Directors.
Governance structure
The Group Company Secretary is accountable
to the Board and advises the Chair, the Board
and individual Directors on all matters of
governance process.
The Board has established Committees to
assist it in exercising its authority, including
monitoring the performance of BHP to gain
assurance that progress is being made towards
our purpose within the limits imposed by the
Board. These Committees include the Nomination
and Governance Committee, Risk and Audit
Committee, Sustainability Committee and
the Remuneration Committee. Each of these
permanent Committees has a Terms of Reference
under which authority is delegated by the Board.
These are available at bhp.com/governance.
The Board has extensive access to members of
senior management who frequently attend Board
and Committee meetings. Management make
presentations and engage in discussions with
Directors, answer questions and provide input
and perspective on their areas of responsibility.
The Chief Executive Officer (CEO) is
accountable to the Board for the authority that is
delegated to the CEO and for the performance
of the Group. The CEO works in a constructive
partnership with the Board and is required to
report regularly to the Board on progress.
The Board also holds discussions in the absence
of management at each Board meeting.
The diagram below illustrates BHP’s
governance structure.
Shareholders
Board
Nomination and
Governance Committee
Risk and
Audit Committee
Sustainability
Committee
Remuneration
Committee
CEO
Executive Leadership Team
90
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Annual Report 2022
4. Board of Directors
4.1 Overview of the Board
NG
RA
NG
Ken MacKenzie
BEng, FIEA, FAICD
Independent Non-executive Director since
22 September 2016.
Chair since 1 September 2017.
Mike Henry
BSc (Chemistry)
Terry Bowen
BAcct, FCPA, MAICD
Non-independent Director and
Chief Executive Officer since 1 January 2020.
Independent Non-executive Director
since 1 October 2017.
RA
RA
S
Malcolm Broomhead
AO, MBA, BE, FAICD
Independent Non-executive Director
since 31 March 2010.
Xiaoqun Clever
Diploma in Computer Science and International
Marketing, MBA
Independent Non-executive Director
since 1 October 2020.
Ian Cockerill
MSc (Mining and Mineral Engineering), BSc (Hons.)
(Geology), AMP – Oxford Templeton College
Independent Non-executive Director since 1 April 2019.
NG S
RA
S
Gary Goldberg
BS (Mining Engineering), MBA
Independent Non-executive Director
since 1 February 2020.
Senior Independent Director since 21 December 2020.
Michelle Hinchliffe
BCom, FCA, ACA
Independent Non-executive Director
since 1 March 2022.
John Mogford
BEng
Independent Non-executive Director
since 1 October 2017.
R
RA
NG
R
S
R
S
Christine O’Reilly
BBus
Independent Non-executive Director
since 12 October 2020.
Catherine Tanna
LLB, Honorary Doctor of Business
Independent Non-executive Director
since 4 April 2022.
Dion Weisler
BASc (Computing), Honorary Doctor of Laws
Independent Non-executive Director
since 1 June 2020.
Key to Committee membership
Committee Chair
Committee member
RA
Risk and Audit
NG
Nomination and Governance
R
S
Remuneration
Sustainability
Stefanie Wilkinson
BA, LLB (Hons), LLM, FGIA
Group Company Secretary since 1 March 2021.
BHP
Annual Report 2022
91
Financial StatementsAdditional InformationGovernanceOperating and Financial Review Corporate Governance Statement continued
The Board currently has 12 members. At the end
of BHP’s 2022 Annual General Meeting (AGM),
Malcolm Broomhead and John Mogford will be
stepping down from the Board.
The Directors’ qualifications, experience and
special responsibilities are listed in Directors’
Report 2.1.
The Board Governance Document outlines the
processes relating to the Board’s tasks and
activities, the matters specifically reserved for
Board decision-making, the authority delegated
to the CEO and the accountability of the CEO
for that authority, guidance on the management
of the relationship between the Board and the
CEO, and the boundaries on CEO action.
The matters reserved for the Board include:
– CEO appointment and determination of the
terms of the appointment
– approval of the appointment of Executive
Leadership Team (ELT) members, and
material changes to the organisational
structure involving direct reports to the CEO
– strategy, annual budgets, balance sheet
management and funding strategy
– determination of commitments, capital
and non-capital items, acquisitions and
divestments above specified limits
– performance assessment of the CEO and
the Group
– approving the Group’s values, Our Code of
Conduct, purpose and risk appetite
– management of Board composition,
processes and performance
– determination and adoption of documents
(including the publication of reports and
statements to shareholders) that are required
by the Group’s constitutional documents,
statute or by other external regulation
The Board Governance Document is
available at bhp.com/governance.
4.2 Director
independence
The Board is committed to ensuring that a
majority of Directors are independent.
The Board has adopted a policy that it uses to
determine the independence of its Directors.
During FY2022, as part of the unification of
our Dual Listed Company structure, the Board
amended the policy for changes arising from
unification that were in line with the ASX Fourth
Edition and current best governance practice.
The Independence of Directors Policy
is available at bhp.com/governance.
Determination of Director
independence
The Board confirms that it considers all of the
current Non-executive Directors, including the
Chair, to be independent of management and
any business, interest or other relationship that
could or could be perceived to materially interfere
with the exercise of objective, unfettered or
independent judgement by the Director or the
Director’s ability to act in the best interests of the
BHP Group rather than an individual shareholder
or other group.
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A determination of independence is carried
out upon a Director’s appointment, annually
and at any other time where the change
in circumstances of a Director warrant
reconsideration. Some Directors hold, or have
previously held, positions in companies with which
BHP has commercial relationships. The Board
has assessed the relationships between BHP and
the companies in which Directors hold or held
positions and has concluded that the relationships
do not interfere with the Directors’ exercise of
objective, unfettered or independent judgement,
or their ability to act in the best interests of BHP.
For example, the Chair, Mr Ken MacKenzie, is a
Strategic Advisor at Barrenjoey Capital Partners.
Barrenjoey was established as a financial services
firm in September 2020 and provides strategic
advisory and corporate finance services.
In 2020, the Board considered Mr MacKenzie’s
proposed appointment and it was approved on
the basis that Barrenjoey would not advise BHP
and that Mr MacKenzie himself would not advise
on transactions or advise BHP competitors or
our significant customers or suppliers.
During FY2022, at the request of the CEO, the
Board reconsidered these conditions without
Mr MacKenzie present. The Board considered
that there may be circumstances where it
would be in the best interests of shareholders
to permit Barrenjoey to advise the Group.
For example, where other advisers were
conflicted or where Barrenjoey had specifically
relevant expertise. The Board approved, without
Mr MacKenzie present, the removal of the
restriction on Barrenjoey advising BHP, subject
to the requirement that the CEO and the Senior
Independent Director consult on any engagement
on a case by case basis and where appropriate
they will seek approval from the independent
directors of the engagement and the arrangements
to manage conflicts of interest. The other condition
will continue and Mr MacKenzie himself will not
advise on transactions or advise BHP competitors
or our significant customers or suppliers.
Accordingly, the Board is satisfied that Mr
MacKenzie is able to continue to apply objective,
unfettered and independent judgement and to
act in the best interests of BHP. The Board does
not consider that Mr MacKenzie’s involvement
with Barrenjoey to adversely impact his role or
commitment to BHP. In particular, Mr MacKenzie
has committed to the Board that BHP would
remain his priority.
Mr Broomhead is and was throughout FY2022,
a Director and the Chair of Orica Limited (a
company BHP has commercial dealings with).
The BHP Board assessed the relationship
between BHP and Orica and remains satisfied
that Mr Broomhead was and remained during
FY2022 able to apply objective, unfettered and
independent judgement and to act in the best
interests of BHP.
Conflicts of interest
In accordance with Australian law, if a situation
arises for consideration where a Director has a
material personal interest, the affected Director
takes no part in decision making unless approval
is provided by the non-interested Directors.
Provisions for Directors’ interests are set out in
the Constitution of BHP Group Limited.
4.3 Board appointments
and succession
planning
BHP adopts a structured and rigorous approach
to Board succession planning to guard against
unforeseen departures and facilitate the
orderly replacement of current Directors, and
oversees the development of a diverse pipeline.
This process is continuous, allowing the Board
to ensure there is a right balance on the Board
between experience and fresh perspectives, and
the Board continues to be fit for purpose.
As part of this process, we are delighted
to have appointed Michelle Hinchliffe and
Catherine Tanna to our Board during FY2022.
Malcolm Broomhead and John Mogford will
retire at the conclusion of the 2022 AGM, and
we thank both Malcolm and John for their
commitment to our ongoing success.
Before the Board formally appoints a person or
puts a person forward for election, the Board,
with the assistance of external consultants, will
conduct appropriate background and reference
checks as to that person’s character, experience,
education, criminal and bankruptcy history.
The Board has adopted a letter of appointment
that contains the terms on which Non-executive
Directors will be appointed, including the basis
upon which they will be indemnified by the
Group. The letter of appointment defines the
role of Directors, including the expectations
in terms of independence, participation, time
commitment and continuous improvement.
Written agreements are in place for all Non-
executive Directors.
4.4 Director
induction, training
and development
Upon appointment, each new Non-executive
Director undertakes an induction program
tailored to their needs.
Following the induction program, Non-executive
Directors participate in continuous improvement
activities through a training and development
program, which is overseen by the Nomination
and Governance Committee to help ensure
that Directors, individually and collectively
develop and maintain the skills and knowledge
to assist them in performing their role effectively.
The training and development program is
periodically reviewed to maximise effectiveness
and to ensure it is tailored to Directors’ needs
and the Board’s areas of focus.
Throughout the year, the Chair discusses
development areas with each Director.
Board Committees review and agree their needs for
more briefings. The benefit of this approach is that
induction and learning opportunities can be tailored
to Directors’ Committee memberships, as well as
the Board’s specific areas of focus. This approach
is also intended to ensure a coordinated process on
succession planning, Board renewal, training and
development and Committee composition. In turn,
these processes are relevant to the Nomination
and Governance Committee’s role in identifying
appropriate Non-executive Director candidates.
Examples of activities in the training and
development program include:
– briefings and development sessions to provide
each Director with a deeper understanding
of the activities, environment, key issues and
direction of the assets, along with broader
sustainability and geopolitical considerations
– site visits to provide insights into key issues
at the site and to provide an opportunity for
direct engagement with stakeholders
– engagement with the Forum on Corporate
Responsibility (FCR), which comprises
civil society leaders in various fields of
sustainability, to discuss FCR members’
views on current and emerging trends and risks
4.5 Director skills,
experience and attributes
Overarching statement of
Board requirements
At BHP, we know that inclusive and diverse
teams are safer and more productive. This is
because people in these teams feel safe to
speak up, share their ideas and different points
of view, and work together to solve problems and
make better decisions.
The BHP Board is no different and believes that
its membership should comprise Directors with
a broad range of skills and diversity in order for
the Board to:
– provide the breadth and depth of
understanding necessary to effectively create
long-term shareholder value
– protect and promote the interests of BHP and
the creation of social value
– ensure the talent, capability and culture of BHP
to support the long-term delivery of our strategy
Attributes and commitment
to role
All Directors are expected to comply with Our
Code of Conduct, act with integrity, lead by
example and promote the desired culture.
The Board believes each Non-executive Director
has demonstrated the attributes of sufficient
time to undertake the responsibilities of the
role, honesty and integrity, and a preparedness
to question, challenge and critique throughout
the year through their participation in Board
meetings, and the other activities that they have
undertaken in their roles.
Skills matrix
The Board, supported by the Nomination and
Governance Committee, reviews the skills and
diversity represented by the Directors on the
Board and determines whether the composition
and mix of those skills remains appropriate to
achieve BHP’s purpose and strategy.
The Board maintains a skills matrix which identifies
the skills and experience the Board needs for the
next period of BHP’s development, considering
BHP’s circumstances and the changing
external environment.
The Board has redesigned its Board skills matrix to
identify the future facing skills that the Board intends
to build, acquire and retain over the medium term in
anticipation of its needs as it pursues its strategy of
securing growth options in future facing commodities. The new Board skills matrix not only indicates the skills
that the Board currently possesses, but also provides an illustration of the new skills that the Board intends to
acquire, and indicates the preferred manner in which it intends to acquire them.
The Board collectively possesses all the skills and experience set out in the skills matrix,
and each Director satisfies the Board requirements and attributes discussed above.
Skills and attributes
Mining
Senior executive who has deep operating or technical mining experience with a large company operating
in multiple countries; successfully optimised and led a suite of large, global, complex operating assets that
have delivered consistent and sustaining levels of high performance (related to cost, returns and throughput);
successfully led exploration projects with proven results and performance; delivered large capital projects that
have been successful in terms of performance and returns; and a proven record in terms of health, safety
and environmental performance and results.
Global experience
Global experience gained from working, managing business units and residing in multiple geographies over
an extended period of time, including a deep understanding of and experience with global markets, and
macro-political and economic environment.
Strategy
Senior executive who has had accountability for enterprise-wide strategy development and implementation in
industries with long cycles, and developing and leading business transformation strategies.
Commodity value chain and customers
End-to-end value or commodity chain experience – understanding of consumers and customers, marketing
demand drivers (including specific geographic markets) and other aspects of commodity chain development.
Financial acumen
Extensive experience and the capability to evaluate financial statements and understand key financial drivers
of the business, bringing a deep understanding of corporate finance and internal financial controls.
Operating risk
Extensive experience with the development and oversight of complex frameworks focused on the
identification, assessment and assurance of operational workplace, health, safety and environmental risks.
Technology
Recent experience and expertise with the development, selection and implementation of leading and
business transforming technology and innovation, and responding to digital disruption.
Capital allocation and cost efficiency
Extensive direct experience gained through a senior executive role in capital allocation discipline,
cost efficiency and cash flow, with proven long-term performance.
Social value, community and stakeholder engagement
Extensive track record of positive external stakeholder engagement including in relation to community issues
and social responsibility. In depth understanding of public policy, government relations and the intersection
between value generation and corporate reputation.
Number of
Directors
4
10
12
10
12
11
6
10
8
4.6 Board evaluation
The Board has adopted a policy under which all
Non-executive Directors seek re-election annually.
The Board is committed to transparency in
assessing the performance of Directors. The Board
conducts regular evaluations of its performance,
the performance of its Committees, the Group
Chair, Directors and the governance processes
that support the Board’s work.
The evaluation considers the balance of skills,
experience, independence and knowledge of
the Group and the Board, its diversity, including
gender diversity, and how the Board works
together as a unit.
Internal evaluations of the Board, its Committees
and Directors were conducted in FY2022.
An external board review is conducted
approximately every three years and was
not conducted in FY2022 and is scheduled
for CY2023.
Review of individual Director
performance
In FY2022, an assessment was conducted of
each Director’s performance with the assistance
of external service provider, Lintstock.
Lintstock does not have any other connection
with the Group or individual Directors.
The assessment of Directors focused on the
contribution of each Director to the work of the
Board and its Committees, and the expectations
of Directors as set out in BHP’s governance
framework. In addition, the assessment focused
on how each Director contributes to Board
cohesion and effective relationships with fellow
Directors, commits the time required to fulfil their
role and effectively performs their responsibilities.
Directors were asked to comment on areas where
their fellow Directors contribute the greatest value
and on potential areas for development.
Lintstock provided feedback received to the
Chair, which was then discussed with Directors.
Feedback relating to the Chair was discussed
with the Chair by the Senior Independent
Director. As a result of these outcomes, the
review supported the Board’s decision to
endorse those Directors standing for re-election.
Committee assessments
Following an assessment of its work, each
Committee concluded that it had met the
requirements under its Terms of Reference
in FY2022.
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5. Board Committees
For Committee attendance and members during FY2022 refer to Directors’ Report 2.2.
5.1 Nomination and Governance Committee
Members
Ken MacKenzie (Chair), Terry Bowen, Gary Goldberg, Christine O’Reilly
Role and focus
The Nomination and Governance Committee oversees and monitors renewal and succession planning, Board and Director performance evaluation,
Director training and development, and advises and makes recommendations on the Group’s governance practices.
More information on the role and responsibilities of the Nomination and Governance Committee can be found in its Terms of Reference,
which is available at bhp.com/governance.
Committee activities in FY2022 included:
Succession planning processes
– Review of skills and experience matrix
Evaluation and training
– Board evaluation and Director development
Corporate governance practices
– Independence of Non-executive Directors
– Identification of suitable Non-executive
– 2022 training and development program
– Authorisation of situations of actual or
Director candidates
– Board and Committee succession
– Partnering with search firms regarding
candidate searches
– Director induction
potential conflict
– Crisis management
5.2 Risk and Audit Committee
Members
Terry Bowen (Chair), Xiaoqun Clever, Ian Cockerill, Michelle Hinchliffe, Christine O’Reilly
Role and focus
The Risk and Audit Committee (RAC) oversees and monitors financial reporting, other periodic reporting, external and internal audit, capital management,
and risk (including effectiveness of the systems of risk management and internal control).
More information on the role and responsibilities of the RAC can be found in its Terms of Reference,
which is available at bhp.com/governance.
US committee membership requirements
The Board is satisfied that Terry Bowen meets the audit committee financial expert requirements under the US Securities and Exchange Commission
(SEC) Rules. In addition, he is the Board’s nominated ‘audit committee financial expert’ for the purposes of the SEC Rules.
The Board is also satisfied that the Committee meets the independence criteria under Rule 10A-3 of the Exchange Act.
Committee activities in FY2022 included:
Integrity of Financial Statements and
funding matters
– Accounting matters for consideration, materiality
limits, half-year and full-year results
– Sarbanes-Oxley Act of 2002 (SOX) compliance
External Auditor and integrity of the
audit process
– Status and results of the external audit
– Management and External Auditor closed sessions
– Audit plan and review of the External
– Financial governance procedures
Auditor’s performance
– Funding loan and guarantee updates
– External Auditor independence and non-
– Samarco dam failure provision, including related
provisions and contingent liabilities
– Carrying value of other long-term assets
– Climate change in financial reporting
– Closure and rehabilitation provisions
– Disputes and litigation updates
audit services
Effectiveness of systems of internal
control and risk management
– Material risk reports including updates on BHP’s
Risk Framework, our most significant risks,
performance against risk appetite, emerging risks
and signals, and risk culture
– Internal audit reports, annual internal audit
plan and review of performance of the Internal
Audit team
– Compliance, Ethics and Investigations reports
including on sexual harassment, regulatory
compliance reports, and grievance and
investigation processes
– Reserves and resources updates
The RAC assists the Remuneration Committee with reviewing the audited parts of the Remuneration Report.
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5.3 Sustainability Committee
Members
Gary Goldberg (Chair), Ian Cockerill, John Mogford, Catherine Tanna, Dion Weisler
Role and focus
The Sustainability Committee oversees and monitors material health, safety, environment and community (HSEC) matters, including the adequacy of the
Group’s HSEC Framework and HSEC Management Systems, and the Group’s HSEC reporting and performance. This includes consideration of existing
HSEC issues, such as climate, safety and Indigenous and human rights, as well as emerging areas of HSEC risk for the Group.
More information on the role and responsibilities of the Sustainability Committee can be found in its Terms of Reference,
which is available at bhp.com/governance.
Committee activities in FY2022 included:
Assurance and adequacy of the HSEC
Framework and HSEC Management
Systems
– Review of key HSEC risks
– Site visits and asset deep dives that include
updates on key HSEC matters and HSEC
performance and an opportunity to engage directly
with the workforce
– Review of internal audit reports and approval of
the HSEC components of the internal audit plan
– Review of the HSE function and Group
HSE Officer
Compliance and reporting
– Review of sustainability reporting, including
consideration of processes for preparation and
assurance provided by EY
– Review of BHP’s Modern Slavery Statement
Performance
– Review of BHP’s performance on HSEC matters,
including cultural heritage, community relations,
greenhouse gas emissions targets and goals,
closure and rehabilitation, biodiversity and
human rights
– Monitoring against the FY2018–FY2022
HSEC targets
– Approving and recommending to the Board, the
Group’s 2030 goals which form part of the new
social value framework
– Review of performance outcomes under the
FY2022 HSEC performance metrics and
considering HSEC performance metrics
for FY2023
For information on sustainability matters
refer to OFR 7
5.4 Remuneration Committee
Members
Christine O’Reilly (Chair), Catherine Tanna, Dion Weisler
Role and focus
The Remuneration Committee oversees and monitors the remuneration framework and practices (including the adoption of incentive plans and levels
of reward for the CEO and other ELT members), compliance with applicable requirements associated with remuneration matters and the review,
at least annually, of remuneration by gender.
More information on the role and responsibilities of the Remuneration Committee can be found in its Terms of Reference,
which is available at bhp.com/governance.
Other remuneration matters
– Remuneration by gender
– Annual Remuneration Report
– Shareholder engagement
– Shareplus enrolment update
Other
– Induction, training and development program
– Board Committee procedures,
including closed sessions
Committee activities in FY2022 included:
Remuneration of the ELT and the Board
– Remuneration of the CEO, other ELT
members and the Group Company Secretary
– Remuneration arrangements for ELT
members upon appointment
– The impact of the COVID-19 pandemic
on remuneration
– Considering remuneration implications of
unification and the merger of Petroleum and
Woodside Energy Group Limited
– Performance measures, performance levels
and incentive award outcomes
– Long-Term Incentive Plan sector peer
group review
– Chair fees
The Sustainability Committee and the RAC assist the Remuneration Committee in determining appropriate HSEC and financial metrics, respectively, to
be included in senior executive scorecards and in assessing performance against those measures.
For more information on the Remuneration Committee’s work refer to the 2022 Remuneration Report.
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6. Management
Below the level of the Board, key management decisions are made by the CEO, the ELT, management committees and members of management
in accordance with their delegated authority.
6.1. Executive Leadership Team
Edgar Basto
President Minerals Australia
BSc, Metallurgy
Caroline Cox
Chief Legal, Governance and External Affairs Officer
BA (Hons), MA, LLB, BCL
David Lamont
Chief Financial Officer
BComm, CA
Mr Basto joined BHP in 1989. He has been the President
Minerals Australia since July 2020, and has been
appointed Chief Operating Officer effective 1 October
2022. In his new role as Chief Operating Officer, Edgar
will be responsible for the BHP Operating System (BOS),
Performance and Improvement and global Health, Safety
and Environment teams. Edgar has previously held senior
roles including Asset President of Western Australia Iron
Ore and Asset President Escondida (Chile).
Ms Cox joined BHP in 2014 and was appointed Chief
Legal, Governance and External Affairs Officer in
November 2020. Caroline is responsible for Legal,
Governance, Ethics and Investigations, Compliance,
Communications, Corporate and Government Affairs
and Sustainability and Climate Change. Caroline has
previously held senior roles at BHP, including as Vice
President Legal, Group General Counsel, and Group
General Counsel & Company Secretary. Prior to joining
BHP, Caroline was a Partner at Herbert Smith Freehills, a
firm she was with for 11 years, specialising in cross-border
transactions, disputes and regulatory investigations.
Mr Lamont re-joined BHP and was appointed Chief
Financial Officer in December 2020. David is responsible
for overseeing the Group’s Reporting, Tax, Treasury,
Investor Relations, Risk and Internal Audit teams.
David had previously held senior roles at BHP between
2001 and 2006, including as Chief Financial Officer of
its Carbon Steel Materials and Energy Coal businesses.
Prior to re-joining BHP, David was the Chief Financial
Officer of ASX-listed global biotech company CSL Limited,
and had also served in similar roles at Minerals and Metals
Group, OZ Minerals Limited, PaperlinX Limited and Incitec
Pivot Limited.
Vandita Pant
Chief Commercial Officer
BCom (Hons), MBA, Business Administration
Ms Pant joined BHP in 2016 and was appointed Chief
Commercial Officer in July 2019. Vandita is responsible
for Sales and Marketing, Procurement, Maritime and for
developing BHP’s views on global commodities markets
and macro trends. Vandita has previously held senior
roles at BHP, including as Group Treasurer and Head
of Europe. Prior to joining BHP, Vandita held a wide
range of executive roles with ABN Amro and Royal Bank
of Scotland.
Geraldine Slattery
Senior Executive Officer
Laura Tyler
Chief Technical Officer
BSc, Physics, MSc, International Management
(Oil & Gas).
BSc (Geology (Hons)),
MSc (Mining Engineering)
Ms Slattery joined BHP in 1994 and was appointed
President Petroleum from March 2019 to 31 May 2022.
Following the merger of BHP’s Petroleum business with
Woodside on 1 June 2022, Geraldine was appointed
Senior Executive Officer. From 1 October 2022, Geraldine
has been appointed President Australia. In her new role
as President Australia Geraldine will be responsible for
BHP’s Australian operations. Geraldine has more than
25 years’ of experience with BHP, including as Asset
President Conventional and prior to that in several senior
operational and business leadership roles across the
Petroleum business in the United Kingdom, Australia and
the United States.
Ms Tyler joined BHP in 2004 and was appointed Chief
Technical Officer in September 2020. Laura is responsible
for Minerals Exploration, Health, Safety and Environment,
Centres of Excellence, Technology and Performance and
Improvement portfolios. From 1 October 2022, Laura will
also be responsible for Innovation; and Health, Safety,
Environment and Performance and Improvement will move
to the Chief Operating Officer role. Laura has previously held
senior roles at BHP, including as Chief Geoscientist and Asset
President of Olympic Dam. Prior to joining BHP, Laura worked
for Western Mining Corporation, Newcrest Mining and Mount
Isa Mines in various technical and operational roles.
Ragnar Udd
President Americas
BAppSc (Mining Engineering), MEng, MBA
Mr Udd joined BHP in 1997 and was appointed President
Americas in November 2020. Ragnar is responsible for
BHP’s copper operations in Chile and potash operations in
Canada. Ragnar has previously held senior roles at BHP
in operations, logistics, projects and technology, including
most recently as Acting Chief Technology Officer and Asset
President of BHP Mitsubishi Alliance.
Johan van Jaarsveld
Chief Development Officer
BEng (Chem), MCom, Applied Finance,
PhD (Eng), Extractive Metallurgy
Mr van Jaarsveld joined BHP in 2016 and was appointed
Chief Development Officer in September 2020. Johan is
responsible for strategy, acquisitions and divestments,
securing early-stage growth options in future facing
commodities, ventures and innovation. Innovation will
move into the Chief Technical Officer’s portfolio from
1 October 2022. Prior to joining BHP, Johan held
executive positions in resources and finance, including
at Barrick Gold Corporation, Goldman Sachs and The
Blackstone Group.
Jad Vodopija
Chief People Officer
BA, PGDip (Industrial Relations and Human Resource
Management), MComm
Ms Vodopija re-joined BHP in 2019 and was appointed
Chief People Officer in July 2022. Jad is responsible for
organisational strategy, talent and resource management,
leadership development and workforce performance.
Jad has previously held senior roles at BHP, including as
Vice President, Human Resources. Prior to re-joining BHP,
Jad was Vice President Human Resources at Orica from
2016, before which she had built her career at BHP and
earlier on at Ford Motor Company.
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6.2 Senior management
succession
A senior management succession process is
conducted to support pipeline stability for critical
roles. A talent deep dive is conducted by the
Board at least once a year to evaluate these
pipelines, including the diversity of the pipeline.
Senior management succession is viewed
from a five-year perspective that considers
the readiness of successors across time
horizons, contexts and future capability
demands. Select Board members are involved
in the interview process for executive-level
appointments one level below the CEO and
occasionally for roles two levels below the CEO.
Appropriate checks are undertaken before
appointing a member of the ELT. BHP has a
written agreement with each ELT member setting
out the terms of their appointment.
In May 2022, the Board approved the appointment
of Jad Vodopija as the Chief People Officer,
effective 1 July 2022 and replacing Athalie Williams.
6.3 Performance
evaluation of executives
The performance of executives and other senior
employees is reviewed on an annual basis.
The annual performance review process considers
the performance of executives against criteria
designed to capture ‘what’ is achieved and ‘how’
it is achieved. All performance assessments of
executives include how effective they have been in
undertaking their role and what they have achieved
against their specified key performance indicators.
A performance evaluation was conducted for
all members of the ELT during FY2022. For the
CEO, the performance evaluation was led by
the Chair of the Board on behalf of all the Non-
executive Directors and was discussed with the
Remuneration Committee.
7. Risk management
and assurance
7.1 Risk management
governance structure
Risk governance
The RAC assists the Board with the oversight
of risk management and the Board retains
accountability for BHP’s risk profile. The Board
requires the CEO to implement a system
of control for identifying and managing risk.
The Risk team is accountable for this system,
known as BHP’s Risk Framework, and
also supports, challenges and verifies risk
management activities to give assurance to
management and the Board. The Directors,
through the RAC, monitor our Risk Framework
and review it at least annually to satisfy
themselves that the Risk Framework continues
to be sound and that BHP is operating with
regard to the risk appetite set by the Board.
For more information
refer to OFR 9
Internal Audit
The Internal Audit team provides assurance
to the Board, CEO and Executive Leadership
Team on whether risk management, internal
control and governance processes are adequate
and functioning. The Internal Audit team is
independent of the External Auditor. The RAC
evaluates and, if thought fit, approves the Terms
of Reference of the Internal Audit team and
the annual internal audit plan and monitors the
effectiveness of the internal audit activities.
As of 1 August 2022, the Risk team and Internal
Audit team were combined to form a Risk and
Internal Audit sub-function, led by a Chief Risk
and Audit Officer. The Risk team and Internal
Audit team will continue to operate in the second
and third lines respectively. Refer to OFR 9 for
more information.
The RAC approves the appointment and
dismissal of the Chief Audit Officer and assesses
their performance, independence and objectivity.
During FY2022, the Group Audit Officer reported
directly to the RAC and functional oversight of
the Internal Audit team was provided by the
Chief Legal, Governance and External Affairs
Officer. As of 1 August 2022, functional oversight
of the Risk and Internal Audit sub-function is
provided by the Chief Financial Officer.
Effectiveness of systems
of internal control and risk
management
In delegating authority to the CEO, the Board
has established CEO limits, outlined in the
Board Governance Document and these require
the CEO to ensure there is a system of control
in place for identifying and managing risk in
BHP. Through the RAC, the Directors regularly
review these systems for their effectiveness.
These reviews include assessing whether
processes continue to meet evolving external
governance requirements.
The RAC oversees and reviews the internal
controls and risk management systems
(including procedures, processes and systems
for, among other things, budgeting and
forecasting, provisions, financial controls,
financial reporting and reporting of reserves and
resources, compliance, preventing fraud and
serious breaches of business conduct, speak-up
procedures and protecting information and data
systems). Any material breaches of Our Code
of Conduct, including breaches of our anti-
bribery and corruption requirements and any
material incidents reported under our speak-up
procedures are reported quarterly to the RAC
by the Chief Compliance Officer. These reports
are then communicated to the Board through the
report-out process.
During FY2022, management presented an
assessment of the material risks facing BHP and
the effectiveness of the Group’s systems of risk
management. The reviews were overseen by
the RAC, with findings and recommendations
reported to the Board. In addition to considering
key risks facing BHP, the Board assessed
the effectiveness of internal controls over
key risks identified through the work of the
Board Committees.
Having carried out a review during FY2022, the
Board is satisfied with the effectiveness of BHP’s
risk management and internal control systems.
Environmental and social risks
BHP’s risk factors (including material exposure
to environmental and social risks) and how we
manage these risks are described in OFR 9
and 9.1.
7.2 External audit and
financial reporting
Integrity of Financial Statements
The RAC assists the Board in assuring the
integrity of the Financial Statements. The RAC
evaluates and makes recommendations to the
Board about the appropriateness of accounting
policies and practices, areas of judgement,
compliance with accounting standards, stock
exchange and legal requirements and the results
of the external audit.
CEO and CFO assurance
For the FY2022 full year and half year, the
CEO and CFO have certified that in their
opinion, BHP’s financial records have been
properly maintained and the FY2022 Financial
Statements present a true and fair view of our
financial condition and operating results and are
in accordance with accounting standards and
applicable regulatory requirements.
The CEO and CFO have also certified to the
Board that this opinion was formed on the basis
of a sound system of risk management and
internal control and the system is operating
efficiently and effectively. The RAC considered
these certifications when recommending the
Financial Statements to the Board for approval.
External Auditor
The RAC manages the relationship with
the External Auditor on behalf of the
Board. It considers the independence and
reappointment of the External Auditor each
year, as well as remuneration and other terms of
engagement and makes a recommendation to
the Board.
Evaluation of External Auditor
and external audit process
The RAC evaluates the objectivity and
independence of the External Auditor and the
quality and effectiveness of the external audit
arrangements, including through:
– reviewing the terms of engagement of the
External Auditor
– considering the external audit plan, in
particular to gain assurance that it is tailored
to reflect changes in circumstances from the
prior year
– meeting with the audit partners,
particularly the lead audit engagement
partners, throughout the year and without
management present
– discussing with the audit engagement
partners the skills and experience of the
broader audit team
– considering the quality of the External
Auditor’s performance following the
completion of the audit
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Fees paid to BHP’s External Auditor during
FY2022 for audit and other services were
US$20.3 million, of which 51 per cent comprised
audit fees (including in relation to SOX matters),
10 per cent for audit-related fees and 39 per
cent for all other fees. No fees were paid in
relation to tax services. Details of the fees paid
are set out in Financial Statements note 34
‘Auditor’s remuneration’.
Our policy on Provision of Audit and
Other Services by the External Auditor is
available at bhp.com/governance.
Management’s assessment of
internal control over financial
reporting
Management is responsible for establishing
and maintaining adequate internal control over
financial reporting (as defined in Rule 13a-15(f)
and Rule 15d-15(f) under the Exchange Act).
Because of its inherent limitations, internal
control over financial reporting may not prevent
or detect misstatements and, even when
determined to be effective, can only provide
reasonable assurance with respect to financial
statement preparation and presentation.
Projections of any evaluation of effectiveness to
future periods are subject to the risk that controls
may become inadequate because of changes in
conditions, or the degree of compliance with the
policies or procedures may deteriorate.
Under the supervision and with the participation
of our management, including our CEO and
CFO, the effectiveness of BHP’s internal control
over financial reporting was evaluated based
on the framework and criteria established in
Internal Controls – Integrated Framework (2013),
issued by the Committee of the Sponsoring
Organizations of the Treadway Commission.
Based on this evaluation, management
concluded that internal control over financial
reporting was effective as at 30 June 2022.
There were no material weaknesses in BHP’s
internal controls over financial reporting
identified by management as at 30 June 2022.
BHP has engaged our independent registered
public accounting firm, EY, to issue an audit
report on our internal control over financial
reporting for inclusion in the Financial
Statements of the Annual Report and the Annual
Report on Form 20-F as filed with the SEC.
There were no changes in our internal control
over financial reporting during FY2022 that
materially affected or were reasonably likely
to materially affect our internal control over
financial reporting.
During FY2022, the RAC reviewed our
compliance with the obligations imposed by
SOX, including evaluating and documenting
internal controls as required by section 404
of SOX.
Management’s assessment
of disclosure controls and
procedures
Management, with the participation of our
CEO and CFO, performed an evaluation of
the effectiveness of the design and operation
of our disclosure controls and procedures
as at 30 June 2022. Disclosure controls and
procedures are designed to provide reasonable
assurance that the material financial and non-
financial information required to be disclosed
by BHP, including in the reports it files or
submits under the Exchange Act, is recorded,
processed, summarised and reported on a timely
basis. This information is accumulated and
communicated to BHP’s management, including
our CEO and CFO, as appropriate, to allow
timely decisions regarding required disclosure.
Based on the evaluation, management
(including the CEO and CFO) concluded that,
as at 30 June 2022, our disclosure controls
and procedures are effective in providing that
reasonable assurance.
There are inherent limitations to the
effectiveness of any system of disclosure
controls and procedures, including the possibility
of human error and the circumvention or
overriding of the controls and procedures.
Even effective disclosure controls and
procedures can only provide reasonable
assurance of achieving their control objectives.
In the design and evaluation of our disclosure
controls and procedures, management was
required to apply its judgement in evaluating
the cost-benefit relationship of possible controls
and procedures.
8. Culture and conduct
Successful delivery of our strategy relies on
workforce capability and a strong culture, and
the Board, together with management plays a
critical role in setting the culture of the Group.
Supporting our people’s wellbeing, creating and
promoting an inclusive and diverse environment
for our people to work, and keeping them safe in
the workplace are critically important and core to
our values.
8.1 Our Code of Conduct
and Our Charter
Our Code of Conduct (Our Code) is approved by
the Board and is based on Our Charter values.
Our Code includes our policies on speaking
up and anti-bribery and corruption, sets out
standards of behaviour for our people and is an
important statement of the culture at BHP.
During FY2022, we began work to refresh Our
Code to align it with global best practice and to
provide an effective basis for standard setting
and enforcement. We expect to launch the
refreshed version of Our Code in FY2023.
Our Code and Our Charter are accessible
at bhp.com.
In addition, the RAC reviews the integrity,
independence and objectivity of the External
Auditor and assesses whether there is any
element of the relationship that impairs or
appears to impair the External Auditor’s
judgement or independence. The External
Auditor also certifies its independence to
the RAC.
Non-audit services
Although the External Auditor provides some
non-audit services to the Group, the objectivity
and independence of the External Auditor are
safeguarded through restrictions on the provision
of these services with some services prohibited
from being undertaken.
Pre-approved services
The RAC has adopted a policy entitled Provision
of Audit and Other Services by the External
Auditor covering the RAC’s pre-approval policies
and procedures to maintain the independence of
the External Auditor.
The categories of ‘pre-approved’ services are:
– Audit services – work that constitutes the
agreed scope of the statutory audit and
includes the statutory audits of BHP and its
entities (including interim reviews). The RAC
monitors the audit services engagements
and if necessary, approves any changes in
terms and conditions resulting from changes
in audit scope, Group structure or other
relevant events.
– Audit-related and other assurance services –
work that is outside the scope of the statutory
audit but is consistent with the role of the
external statutory auditor. This category
includes work that is reasonably related to the
performance of an audit or review and is a
logical extension of the audit or review scope,
is of an assurance or compliance nature and
is work that the external auditors must or are
best placed to undertake and is permissible
under the relevant applicable standard.
Activities outside the scope of the above
categories are not ‘pre-approved’ and must be
approved by the RAC prior to engagement,
regardless of the dollar value involved.
In addition, any engagement for other services
with a value over US$250,000, even if listed as
a ‘pre-approved’ service, requires the approval
of the RAC.
All engagements for non-audit services, whether
‘pre-approved’ or not and regardless of the dollar
value involved, are reported quarterly to the
RAC. While not prohibited by BHP’s policy, any
proposed engagement of the External Auditor
that contains an internal control element requires
specific prior approval from the RAC. In addition,
while the categories of ‘pre-approved’ services
include a list of certain pre-approved services,
the use of the External Auditor to perform these
services will always be subject to our overriding
governance practices as articulated in the policy.
In addition, the RAC did not approve any
services during the year ended 30 June 2022
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
SEC Regulation S-X (provision of services other
than audit).
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Annual Report 2022
aspiration is to achieve gender balance (which
we define as a minimum 40 per cent women
and 40 per cent men, in line with the definition
used by entities such as the International Labour
Organization) on our Board, among our senior
executives and across our workforce by FY2025.
Currently 33 per cent of Directors are female
and we therefore satisfy the guidance of having
at least 30 per cent of Directors of each gender
in accordance with the ASX Fourth Edition.
When Mr Broomhead and Mr Mogford retire from
the Board at the conclusion of the 2022 AGM,
40 per cent of Directors will be female. We also
continue to seek additional ethnic diversity on
our Board and throughout BHP.
Part of the Board’s role continues to be to
consider and approve BHP’s measurable
objectives for diversity on its Board, among its
senior executives and general workforce each
financial year and to oversee our progress
in achieving those objectives. For more
information, including our progress against
our FY2022 measurable objectives and our
employee profile more generally, refer to OFR 6.
The diagram below illustrates the diversity that is
currently represented on the Board.
Board tenure and diversity
Gender diversity
Female
Male
33%
67%
8.2 Culture
The Board, supported by the Committees,
considers a range of qualitative and quantitative
information in relation to culture at BHP and
monitors and assesses culture on an ongoing
basis for alignment with our strategy, purpose
and values. Board and Committee papers
include workforce planning in the context
of COVID-19, Employee Perception Survey
results, updates on sexual harassment
controls, inclusion and diversity updates, RAC
report-outs on Our Code investigations, the
culture and capability required to execute our
strategy, and culture as a part of asset reviews.
Recognising our culture cannot be measured
using a single number or index, a culture
dashboard is used to provide the Board with
a tool to monitor our culture. The dashboard
includes simple measures to provide key
signposts on the health of our culture. This data,
combined with the Employee Perception Survey
results, provides the Board with insight on safety,
engagement and enablement.
Directors also gain insights into culture through
direct engagement with a cross-section of
the workforce where they can gain direct
feedback on a range of issues, including sexual
harassment, ongoing COVID-19 impacts,
diversity, HSEC topics and social value.
8.3 BHP’s EthicsPoint
We have mechanisms in place for anyone to
raise a query about Our Code or make a report if
they feel Our Code has been breached.
EthicsPoint is our 24-hour confidential reporting
tool for reporting misconduct and can be
used by employees, contractors and external
stakeholders, including members of the public to
raise concerns about misconduct that has either
happened to them or they have witnessed.
All reports received in EthicsPoint are
reviewed and categorised by the Ethics team.
Once categorised, reports are assigned in
accordance with internal policy and processes to
an investigator, line leader or appropriate team
for resolution.
Region of nationality
Australia
58%
Europe/UK 25%
North
America
17%
Tenure
0 > 3 years 58%
3 > 6 years 33%
6 > 9 years 0%
8%
9+ years
All significant Our Code matters and key trends
from investigations are reported to the RAC.
These are then reported to the Board as part of
its report-out process.
8.4 Diversity
The Board and management believe diversity
is required to meet our purpose and strategy.
Diversity is key to supporting the Board and
its Committees to have the right blend of
perspectives so that the Board oversees BHP
effectively for shareholders.
We have adopted an Inclusion and Diversity
Position Statement, which sets out our
diversity policy in relation to the Board, senior
management and our workforce, and our
priorities to accelerate the development of a
more inclusive work environment and enhanced
overall workplace diversity. BHP’s Inclusion
and Diversity Position Statement is available
at bhp.com/careers/inclusion-diversity and is
summarised in OFR 6. As described in our
Inclusion and Diversity Position Statement, our
9. Shareholder
and stakeholder
engagement
Shareholder engagement
Part of the Board’s commitment to high-quality
governance is expressed through the approach
BHP takes to engaging and communicating
with our shareholders. As part of our investor
relations program to facilitate effective two-way
communication with investors, the Board uses
formal and informal communication channels to
understand and take into account the views of
shareholders. BHP provides information about
itself and its governance to investors via its
website at bhp.com.
We encourage shareholders to make their views
known to us. Shareholders can contact us at any
time through our Investor Relations team, with
contact details available at bhp.com. In addition,
shareholders can communicate with us and our
registrar electronically.
We facilitate and encourage shareholder
participation at our AGM. The AGM provides an
update for shareholders on our performance
and offers an opportunity for shareholders to ask
questions and vote. The External Auditor will also
be available to answer questions at the AGM.
Information on our AGM is available at
bhp.com/meetings.
Before the AGM, shareholders are provided with
all material information in BHP’s possession
relevant to their decision on whether or not
to elect or re-elect a Director. Copies of the
speeches delivered by the Chair and CEO at
the AGM are released to the relevant stock
exchanges and posted on our website.
Proceedings at shareholder meetings
are webcast live from our website.
Substantive resolutions at general meetings
are decided by a poll rather than by a show
of hands.
A summary of proceedings and the outcome of
voting on the items of business are released to
the relevant stock exchanges and posted on our
website as soon as they are available.
During FY2022, key shareholder engagement
initiatives included:
– discussions with major institutional investors
and proxy advisers in relation to the Climate
Transition Action Plan 2021, and obtaining
shareholder approval at the 2021 AGMs
– presentations and briefings provided
to investors about the merger of BHP’s
Petroleum business with Woodside
– communications to investors about the
unification of our Dual Listed Company
structure, including General Meetings in
Australia and London for investors to directly
engage with the Board on this topic
– live webcasts and Q&A sessions with senior
leaders for shareholders to directly ask
questions of management
– an investor briefing on social value which
included the launch of our 2030 social
value goals
BHP
Annual Report 2022
99
Financial StatementsAdditional InformationGovernanceOperating and Financial Review Copies of announcements to the stock
exchanges on which BHP is listed, investor
briefings, Financial Statements, the Annual
Report and other relevant information can be
found at bhp.com. To receive email alerts of
news releases, subscribe at bhp.com.
11. US requirements
BHP Group Limited is a registrant with the SEC
in the United States. It is classified as a foreign
private issuer and has American Depositary
Shares listed on the NYSE.
We have reviewed the governance requirements
applicable to foreign private issuers under SOX,
including the rules promulgated by the SEC and
the rules of the NYSE, and are satisfied that we
comply with those requirements.
Under NYSE rules, foreign private issuers such
as BHP are required to disclose any significant
ways our corporate governance practices differ
from those followed by US companies under
the NYSE corporate governance standards.
After a comparison of our corporate governance
practices with the requirements of Section 303A
of the NYSE-Listed Company Manual followed
by US companies, a significant difference
was identified:
– Rule 10A-3 of the Exchange Act requires
NYSE-listed companies to ensure their
audit committees are directly responsible for
the appointment, compensation, retention
and oversight of the work of the External
Auditor unless the company’s governing law
or documents or other home country legal
requirements require or permit shareholders
to ultimately vote on or approve these
matters. Prior to unification, the ultimate
responsibility for the appointment and
retention of the External Auditor rested with
our shareholders in accordance with UK law
(and our constitutional documents reflected
this legal requirement). The RAC was then
directly responsible for the compensation
and oversight of the work of the External
Auditor throughout the year. Following the
unification of our corporate structure, BHP is
no longer subject to the UK requirement to
re-appoint the External Auditor by shareholder
vote annually and our constitution has
been amended to remove this requirement.
From January 2022 our shareholders remain
ultimately responsible for the appointment
and retention of the External Auditor and are
required to vote on the appointment of the
External Auditor from time to time (as required
under Australian law), and the RAC remains
directly responsible for the compensation and
oversight of the work of the External Auditor.
Corporate Governance Statement continued
Shareholder engagement practices
Chair investor meetings
The Chair regularly meets with investors to discuss Board priorities and
seek shareholder feedback.
Presentations and briefings
We hold a number of presentations and briefings relating to climate, strategy and
other key topics.
Materials from all presentations are available on our website at bhp.com.
Direct engagement
We engage directly with key investors to enable our Board and Committees to be
up to date on investor expectations and to continuously improve the governance
processes of BHP.
Live webcasts and Q&A sessions
We provide webcasts and Q&A sessions as forums to update shareholders on
results or other key announcements (including annual and half-year reports).
AGMs
Our AGMs provide an opportunity to all investors to question and engage
with the Board.
Stakeholder engagement
The Board considers effective stakeholder
engagement a key element of its governance
and oversight role.
There are multiple ways the views of
stakeholders, beyond shareholders, are brought
to the Board and its Committees. For example,
site visits (physical and virtual where necessary)
involving engagement with the workforce,
community members and government,
Employee Perception Survey findings, gender
pay gap reports, updates from the CEO and
Chief People Officer and engagement with the
Forum on Corporate Responsibility. In addition,
the RAC and Sustainability Committee receive
reports on engagement with regulators.
They also receive reports on material litigation
and disputes with third parties and complaints
raised through the speak-up hotline, EthicsPoint,
which allows our workforce to raise concerns
in confidence.
The strategic framework, focus on social value,
our purpose and Risk Appetite Statement reflect
the significance of external stakeholders in
decision making.
10. Market disclosure
We have disclosure controls in place for periodic
disclosures, including the Operational Review,
our results announcements, debt investor
documents (such as the prospectus for the Euro
or Australian Medium Term Notes) and Annual
Report documents, which must comply with
relevant regulatory requirements.
More information about these verification
processes can be found in the Periodic
Disclosure – Disclosure Controls document
available at bhp.com/governance.
To safeguard the effective dissemination of
information, we have developed mandatory
minimum performance requirements for market
disclosure, which outline how we identify and
distribute information to shareholders and
market participants and sets out the role of the
Disclosure Committee in managing compliance
with market disclosure obligations. In addition,
where an announcement is determined to be
material by the Disclosure Committee, the
Board receives a copy promptly after it has been
made. Where BHP gives a new and substantive
investor or analyst presentation, it releases a
copy of the presentation materials on the ASX
Market Announcements Platform ahead of
the presentation.
A copy of the Market Disclosure and
Communications Policy is available at
bhp.com/governance.
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BHP
Annual Report 2022
Directors’ Report
The information presented by the Directors in
this Directors’ Report relates to BHP Group
Limited and its subsidiaries. The Operating and
Financial Review (OFR), the Remuneration
Report, and the ‘Lead Auditor’s Independence
Declaration’ are incorporated by reference into,
and form part of, this Directors’ Report.
1. Review of
operations, principal
activities and state
of affairs
A review of the operations of BHP during
FY2022, the results of those operations during
FY2022 and the expected results of those
operations in future financial years are set out
in the OFR. Information on the development
of BHP and likely developments in future
years also appears in this section. We have
excluded certain information from the OFR, to
the extent permitted by Australian law, on the
basis that such information relates to impending
developments or matters in the course of
negotiation and disclosure would be seriously
prejudicial to the interests of BHP. This is
because such disclosure could be misleading
due to the fact it is premature or preliminary
in nature, relates to commercially sensitive
contracts, would undermine confidentiality
between BHP and our suppliers and clients,
or would otherwise unreasonably damage BHP.
The categories of information omitted include
forward-looking estimates and projections
prepared for internal management purposes,
information regarding BHP’s assets and projects,
which is developing and susceptible to change,
and information relating to commercial contracts
and pricing modules.
Our principal activities, including significant
changes in the nature of BHP’s principal
activities during FY2022, are disclosed in
the OFR.
There were no significant changes in BHP’s
state of affairs that occurred during FY2022 and
no significant post balance date events other
than as disclosed in the OFR and Financial
Statements note 33 ‘Subsequent events’.
No other matter or circumstance has arisen
since the end of FY2022 that has significantly
affected or is expected to significantly affect the
operations, the results of operations or state of
affairs of BHP in future years.
2. Directors
The Directors who served at any time during
FY2022 or up until the date of this Directors’
Report are listed in the Board and Board
Committee attendance table in Directors’ Report
2.2. Information on the current Directors is set
out in Directors’ Report 2.1.
2.1 Biographical details
Key to Committee membership
Committee Chair
Committee member
RA
Risk and Audit
NG
Nomination and Governance
R
S
Remuneration
Sustainability
NG
Ken MacKenzie
BEng, FIEA, FAICD
Independent Non-executive Director since
September 2016
Chair since 1 September 2017
Mr MacKenzie has extensive global and executive
experience and a deeply strategic approach, with a focus
on operational excellence, capital discipline and the
creation of long-term shareholder value.
Ken was the Managing Director and Chief Executive
Officer of Amcor Limited, a global packaging company
with operations in over 40 countries, from 2005 until
2015. During his 23-year career with Amcor, Ken gained
extensive experience across all of Amcor’s major
business segments in developed and emerging markets
in the Americas, Australia, Asia and Europe.
Ken currently sits on the Advisory Board of American
Securities Capital Partners LLC (since January 2016) and
is a part-time adviser at Barrenjoey (since April 2021).
Mike Henry
BSc (Chemistry)
Non-independent Director since January 2020
Chief Executive Officer since 1 January 2020
Mr Henry has over 30 years’ experience in the global
mining and petroleum industry, spanning operational,
commercial, safety, technology and marketing roles.
Prior to joining BHP, Mike worked in the resources
industry in Canada, Japan and Australia. Mike joined
BHP in 2003, initially in business development and
then in marketing and trading of a range of mineral and
petroleum commodities based in The Hague, where he
was also accountable for BHP’s ocean freight operations.
He went on to hold various positions in BHP, including
President Operations Minerals Australia, President
Coal, President HSE, Marketing and Technology, and
Chief Marketing Officer. Mike has been a member of the
Executive Leadership Team since 2011.
RA
NG
Terry Bowen
BAcct, FCPA, MAICD
Malcolm Broomhead
AO, MBA, BE, FAICD
Independent Non-executive Director since October 2017
Independent Non-executive Director since March 2010
Mr Bowen has significant executive experience across a
range of diversified industries, deep financial expertise,
and extensive experience in capital allocation discipline,
commodity value chains and strategy.
Terry was formerly Managing Partner and Head of
Operations at BGH Capital and an Executive Director
and Finance Director of Wesfarmers Limited. Prior to
this, Terry held various senior executive roles within
Wesfarmers, including as Finance Director of Coles,
Managing Director of Industrial and Safety and Finance
Director of Wesfarmers Landmark. Terry is also a former
Director of Gresham Partners and past President of the
National Executive of the Group of 100 Inc.
Terry is currently Chair of the Operations Group at
BGH Capital (since January 2020), and a Director of
Transurban Group (since February 2020), Navitas Pty
Limited (since July 2019) and the West Coast Eagles
Football Club (since May 2017).
Mr Broomhead has extensive experience at large
global industrial and mining companies, bringing a
broad strategic perspective and understanding of the
long-term cyclical nature of the resources industry and
commodity value chains, with proven health, safety and
environment, and capital allocation performance.
Malcolm was Managing Director and Chief Executive
Officer of Orica Limited from 2001 until 2005. Prior to
joining Orica, he held a number of senior positions
at North Limited, including Managing Director and
Chief Executive Officer and, prior to that, held senior
management positions with Halcrow (UK), MIM Holdings,
Peko Wallsend and Industrial Equity.
Malcolm is currently Chair of Orica Limited (since
January 2016, having served on the board since
December 2015). He is also a Director of the Walter and
Eliza Hall Institute of Medical Research (since July 2014).
BHP
Annual Report 2022
101
Financial StatementsAdditional InformationGovernanceOperating and Financial Review RA
RA
S
NG S
Xiaoqun Clever
Diploma in Computer Science and
International Marketing, MBA
Ian Cockerill
MSc (Mining and Mineral Engineering), BSc (Hons.)
(Geology), AMP – Oxford Templeton College
Independent Non-executive Director since October 2020
Independent Non-executive Director since April 2019
Ms Clever has over 20 years’ experience in technology
with a focus on software engineering, data and analytics,
cybersecurity and digitalisation.
Mr Cockerill has extensive global mining operational,
project and executive experience, having initially trained
as a geologist.
Xiaoqun was formerly Chief Technology Officer of Ringier
AG and ProSiebenSat.1 Media SE. Xiaoqun previously
held various roles with SAP SE from 1997 to 2013,
including Chief Operating Officer of Technology and
Innovation. Xiaoqun was formerly a member of the
Supervisory Board of Allianz Elementar Versicherungs and
Lebensversicherungs AG (from 2015 to 2020).
Xiaoqun is currently a Non-executive Director of
Capgemini SE (since May 2019) and Amadeus IT Group
SA (since June 2020) and on the Supervisory Board
of Infineon Technologies AG (since February 2020).
Xiaoqun is also the Co-Founder and Chief Executive
Officer of LuxNova Suisse GmbH (since April 2018).
Ian previously served as Chair of both Polymetal
International plc and BlackRock World Mining Trust plc,
Lead Independent Director of Ivanhoe Mines Ltd, and a
Non-executive Director of Orica Limited (from July 2010
to August 2019) and Endeavour Mining Corporation (from
September 2013 to March 2019). Ian also formerly held
chief executive roles at Anglo American Coal and Gold
Fields Limited, and senior executive roles at AngloGold
Ashanti and Anglo American Group.
Ian is currently Senior Independent Director of Endeavour
Mining Corporation (since May 2022), the Chair of Cornish
Lithium Ltd (since April 2022) and a Non-executive
Director of I-Pulse Inc (since September 2010). Ian is also
a Director of the Leadership for Conservation in Africa.
Gary Goldberg
BS (Mining Engineering), MBA
Independent Non-executive Director since February 2020.
Senior Independent Director since 21 December 2020
Mr Goldberg has over 35 years’ of global executive
experience, including deep experience in mining, strategy,
risk, commodity value chain, capital allocation discipline
and public policy.
Gary served as the Chief Executive Officer of Newmont
Corporation from 2013 to 2019, and prior to that, had
been President and Chief Executive Officer of Rio Tinto
Minerals. Gary has also previously been a non-executive
director of Port Waratah Coal Services Limited and Rio
Tinto Zimbabwe, and served as Vice Chair of the World
Gold Council, Treasurer of the International Council on
Mining and Metals, and Chair of the National Mining
Association in the United States.
RA
S
R
RA
NG
Michelle Hinchliffe
BCom, FCA, ACA
John Mogford
BEng
Christine O’Reilly
BBus
Independent Non-executive Director since March 2022
Independent Non-executive Director since October 2017
Independent Non-executive Director since October 2020
Ms Hinchliffe has over 20 years’ experience as a partner in
KPMG’s financial services division.
Michelle served as a member of KPMG’s UK Board and
as the UK Chair of Audit between 2019 and 2022. Prior to
this, she was a member of the KPMG UK Executive
Committee in her role as Head of Audit from 2017 to
2019. Michelle led KPMG’s financial services practice in
Australia between 2008 and 2013 and was a member of
the KPMG Australia Board.
Michelle is currently a Non-executive Director of
Macquarie Group Limited and Macquarie Bank Limited
(since March 2022).
Mr Mogford has significant global executive
experience, including in oil and gas, capital allocation
discipline, commodity value chains and health, safety
and environment.
John has held various leadership, technical and
operational roles at BP Plc. He was the Managing Director
and an Operating Partner of First Reserve, a global
energy-focused private equity firm, from 2009 until 2015,
during which he served on the boards of its investee
companies. He also served as a Non-executive Director
of ERM Worldwide Group Limited (from 2015 to 2021),
Weir Group Plc (from 2008 to 2018), Network Rail Limited
(from 2016 to 2018), and one of First Reserve’s portfolio
companies, DOF Subsea AS (from 2009 to 2018).
Ms O’Reilly has over 30 years’ experience in the financial
and infrastructure sectors, with deep financial and public
policy expertise and experience in large-scale capital
projects and transformational strategy.
Christine served as Chief Executive Officer of the
GasNet Australia Group and Co-Head of Unlisted
Infrastructure Investments at Colonial First State Global
Asset Management. Christine has also served as a
Non-executive Director of Medibank Private Limited (from
March 2014 to November 2021), Transurban Group (from
April 2012 to October 2020), CSL Limited (from February
2011 to October 2020) and Energy Australia Holdings
Limited (from September 2012 to August 2018).
Christine is currently a Non-executive Director of Australia
and New Zealand Banking Group (since November 2021),
Stockland Limited (since August 2018), and the Baker
Heart and Diabetes Institute (since June 2013).
R
S
R
S
Catherine Tanna
Dion Weisler
Stefanie Wilkinson
LLB, Honorary Doctor of Business
BASc (Computing), Honorary Doctor of Laws
BA, LLB (Hons), LLM, FGIA
Independent Non-executive Director since April 2022
Independent Non-executive Director since June 2020
Group Company Secretary since March 2021
Ms Wilkinson was appointed Group Company Secretary
effective March 2021. Prior to joining BHP, Stefanie was
a Partner at Herbert Smith Freehills, a firm she was with
for 15 years, specialising in corporate law and governance
for listed companies. Earlier in her career, Stefanie was a
solicitor at Allen & Overy in the Middle East. Stefanie is a
fellow of the Governance Institute of Australia.
Ms Tanna has more than 30 years’ experience in
the resources, oil and gas, power generation and
retailing sectors.
Catherine served as Managing Director of Energy
Australia between 2014 and 2021. Prior to this, she held
senior executive roles with Shell and BG Group with
responsibility for international operations. Catherine was
also a member of the Board of the Reserve Bank of
Australia from 2011 to 2021 and a Director of the Business
Council of Australia from 2016 to 2021.
Catherine is currently a Senior Advisor at McKinsey &
Company Inc (since April 2022) and a member of the
Advisory Board of Fujitsu Australia (since February 2022).
Mr Weisler has extensive global executive experience,
including transformation and commercial experience in
the global information technology sector, with a focus on
capital discipline, as well as perspectives on current and
emerging ESG issues.
Dion served as a Director and the President and Chief
Executive Officer of HP Inc. from 2015 to 2019, and
continued as a Director and Senior Executive Adviser
until May 2020. Dion previously held a number of senior
executive roles at Lenovo Group Limited. Prior to this, Dion
was General Manager Conferencing and Collaboration
at Telstra Corporation, and held various positions at Acer
Inc., including as Managing Director, Acer UK.
Dion is currently a Non-executive Director of Intel
Corporation (since June 2020), a Non-executive Director
of Thermo Fisher Scientific Inc. (since March 2017)
and a Non-executive Director of Sapia & Co Ltd (since
January 2022).
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Annual Report 2022
2.2 Director attendances
at meetings
The Board meets as often as required.
During FY2022, the Board met 15 times.
Members of the Executive Leadership Team and
other members of senior management attend
meetings of the Board by invitation. Each Board
Committee provides a standing invitation for
any Non-executive Director to attend Committee
meetings (rather than just limiting attendance to
Committee members). Committee agendas and
papers are provided to all Directors to ensure
they are aware of matters to be considered.
Board and Board Committee attendance in FY2022
Terry Bowen
Malcolm Broomhead
Xiaoqun Clever
Ian Cockerill
Anita Frew2
Gary Goldberg3
Mike Henry
Michelle Hinchliffe4
Susan Kilsby5
Ken MacKenzie
John Mogford6
Christine O’Reilly
Catherine Tanna7
Dion Weisler
Board
15/15
15/15
15/15
15/15
7/7
15/15
15/15
4/4
7/7
15/15
15/15
15/15
3/3
15/15
Risk and Audit
Committee
Nomination and Governance
Committee
Remuneration
Committee
Sustainability
Committee
11/11
–
11/11
11/11
5/5
–
–
2/2
–
–
–
11/11
–
–
5/5
2/21
–
–
–
5/5
–
–
–
5/5
5/5
5/5
–
–
–
–
–
–
2/2
5/5
–
–
2/25
–
–
5/5
2/2
5/5
–
2/21
–
5/5
–
5/5
–
–
–
–
5/5
–
2/2
3/38
1 Malcolm Broomhead ceased being a member of the Nomination and Governance Committee and Sustainability Committee on 11 November 2021.
2 Anita Frew served as a Non-executive Director from 15 September 2015 until her retirement as a member of the Board, Risk and Audit Committee and Remuneration Committee on
11 November 2021.
3 Gary Goldberg ceased being a member of the Remuneration Committee on 17 June 2022. He became Chair of the Sustainability Committee on 18 June 2022.
4 Michelle Hinchliffe became a member of the Board and the Risk and Audit Committee on 1 March 2022.
5 Susan Kilsby served as a Non-executive Director from 1 April 2019 until her retirement as a member of the Board and the Remuneration Committee on 11 November 2021.
6 John Mogford ceased being a member of the Nomination and Governance Committee on 17 June 2022. He ceased being the Chair of the Sustainability Committee on 17 June 2022,
but remains a member of this Committee.
7 Catherine Tanna became a member of the Board, Remuneration Committee and Sustainability Committee on 4 April 2022.
8 Dion Weisler became a member of the Sustainability Committee on 12 November 2021.
3. Share capital and
buy-back programs
At the Annual General Meetings held in 2019, 2020
and 2021, shareholders authorised BHP Group Plc
to make on-market purchases of up to 211,207,180
of its ordinary shares, representing 10 per cent of
BHP Group Plc’s issued share capital at that time.
During FY2022, we did not make any on-market
or off-market purchases of BHP Group Limited or
BHP Group Plc ordinary shares under any share
buy-back program. As at the date of this Directors’
Report, there were no current on-market buy-backs.
BHP Group Plc (now BHP Group (UK) Limited)
is no longer able to make on-market purchases
of its ordinary shares as a result of its delisting in
connection with the unification transaction with
BHP Group Limited and as such it can no longer
utilise the shareholder authorisation in relation
to on-market purchases obtained at the Annual
General Meeting in 2021.
Some of our executives receive rights over BHP
shares as part of their remuneration arrangements.
Entitlements may be satisfied by the transfer of
existing shares, which are acquired on-market
by the Employee Share Ownership Plan (ESOP)
Trusts or, in respect of some entitlements, by the
issue of shares.
The number of shares referred to in column A below
were purchased to satisfy awards made under
the various BHP Group employee share schemes
during FY2022.
A
Total number of shares
purchased and transferred
to employees to satisfy
employee awards
B
Average price
paid per share1
US$
C
Total number of shares
purchased as part of
publicly announced
plans or programs
Maximum number of shares
that may yet be purchased under
the plans or programs
D
Period
1 Jul 2021 to 31 Jul 2021
1 Aug 2021 to 31 Aug 2021
1 Sep 2021 to 30 Sep 2021
1 Oct 2021 to 31 Oct 2021
1 Nov 2021 to 30 Nov 2021
1 Dec 2021 to 31 Dec 2021
1 Jan 2022 to 31 Jan 2022
1 Feb 2022 to 28 Feb 2022
1 Mar 2022 to 31 Mar 2022
1 Apr 2022 to 30 Apr 2022
1 May 2022 to 31 May 2022
1 Jun 2022 to 30 Jun 2022
Total
–
63,567
–
–
–
–
–
–
3,354,850
–
–
949,819
4,368,236
–
32.08
–
–
–
–
–
–
35.95
–
–
28.37
34.24
BHP Group Limited2
–
–
–
–
–
–
–
–
–
–
–
–
–
BHP Group Plc (now BHP
Group (UK) Limited)
211,207,1803
211,207,1803
211,207,1803
211,207,1803
211,207,1803
211,207,1803
211,207,1803,4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 The shares were purchased in the currency of the stock exchange on which the purchase took place and the sale price has been converted into US dollars using the average weekly
exchange rate of the week that such purchases took place for purchases on the ASX, and the average monthly exchange rate of the month that such purchases took place for purchases
on the LSE.
2 BHP Group Limited is able to buy-back and cancel BHP Group Limited shares within the ‘10/12 limit’ without shareholder approval in accordance with section 257B of the Australian
Corporations Act 2001. Any future on-market share buy-back program would be conducted in accordance with the Australian Corporations Act 2001 and with the ASX Listing Rules.
3 At the Annual General Meetings held during 2019, 2020 and 2021, shareholders authorised BHP Group Plc to make on-market purchases of up to 211,207,180 of its ordinary shares,
representing 10 per cent of BHP Group Plc’s issued capital at the time.
4 BHP Group Plc (now BHP Group (UK) Limited) is no longer able to make on-market purchases of its ordinary shares as a result of its delisting in connection with the unification
transaction with BHP Group Limited and as such it can no longer utilise the shareholder authorisation in relation to on-market purchases obtained at the Annual General Meeting in 2021.
BHP
Annual Report 2022
103
Financial StatementsAdditional InformationGovernanceOperating and Financial Review
Directors’ Report continued
As at the date of this Directors’ Report, there
were 15,846,572 unvested equity awards
outstanding in relation to BHP Group Limited
ordinary shares held by 20,790 holders.
The expiry dates of these unvested equity
awards range between August 2022 and
August 2026 and there is no exercise price.
4,400,000 fully paid ordinary shares in BHP
Group Limited were issued as a result of the
exercise of rights over unissued shares during
or since the end of FY2022. No options over
unissued shares or unissued interests in BHP
have been granted during or since the end of
FY2022 and no shares or interests were issued
as a result of the exercise of an option over
unissued shares or interests during or since the
end of FY2022. For more information refer to
Financial Statements note 25 ‘Employee share
ownership plans’.
For information on movements in share
capital during and since the end of FY2022
refer to Financial Statements note 16
‘Share capital’.
4. Share interests
Directors
‘Ordinary shareholdings and transactions’ in the
Remuneration Report 5.4 sets out the relevant
interests in shares in BHP Group Limited of
the Directors who held office during FY2022,
at the beginning and end of FY2022. No rights
or options over shares in BHP Group Limited
are held by any of the Non-executive Directors.
Interests held by the Executive Director under
employee equity plans as at 30 June 2022
are set out in the tables showing interests in
incentive plans contained in ‘Equity awards’ in
the Remuneration Report 5.2. Except for Mike
Henry, as at the date of this Directors’ Report,
the information pertaining to shares in BHP
Group Limited and held directly, indirectly or
beneficially by Directors is the same as set
out in the table in ‘Ordinary shareholdings
and transactions’ in the Remuneration Report
5.4. Where applicable, the information
includes shares held in the name of a spouse,
superannuation fund, nominee and/or other
controlled entities.
All Directors have met the minimum
shareholding requirement under their Terms
of Appointment.
As at the date of this Directors’ Report,
Mike Henry held:
– (either directly, indirectly or beneficially)
521,592 shares in BHP Group Limited
– rights and options over 978,790 shares
in BHP Group Limited
Where applicable, the above information
includes shares held in the name of a spouse,
superannuation fund, nominee and/or other
controlled entities.
We have not made available to any Directors
any interest in a registered scheme.
Executive Key
Management Personnel
Interests held by members of the Executive KMP
under employee equity plans as at 30 June 2022
104
BHP
Annual Report 2022
are set out in the tables contained in the ‘Equity
awards’ section in the Remuneration Report 5.2.
The table below sets out the relevant interests
in shares in BHP Group Limited held directly,
indirectly or beneficially, as at the date of this
Directors’ Report by those senior executives
who were Executive Key Management
Personnel (KMP) (other than the Executive
Director) on that date. Where applicable,
the information also includes shares held in
the name of a spouse, superannuation fund,
nominee and/or other controlled entities.
Executive
KMP member
Edgar Basto
David Lamont
Geraldine Slattery
Ragnar Udd
As at date
of Directors’ Report
130,038
6,345
127,232
118,955
5. Secretaries
Stefanie Wilkinson is the Group Company
Secretary. For details of her qualifications and
experience refer to the Biographical details in
Directors’ Report 2.1. The following people also
acted during FY2022 as Company Secretaries of
BHP Group Limited: Geof Stapledon, BEc, LLB
(Hons), DPhil, FCIS, until 7 July 2021, Prakash
Kakkad, LLB, LPC, from 7 July 2021, John-Paul
Santamaria, BEng (Civil) (Hons), LLB, from
7 July 2021.
Each individual has experience in a company
secretariat role or other relevant fields arising
from time spent in roles within BHP, other large
listed companies or other relevant entities.
6. Indemnities
and insurance
Rule 146 of the BHP Group Limited Constitution
requires the company to indemnify, to the extent
permitted by law, each Officer of BHP Group
Limited against liability incurred in, or arising
out of, the conduct of the business of BHP
or the discharge of the duties of the Officer.
The Directors named in 2.1 of the Directors’
Report, the Company Secretaries and other
Officers of BHP Group Limited have the benefit
of this requirement, as do individuals who
formerly held one of those positions.
In accordance with this requirement, BHP Group
Limited has entered into Deeds of Indemnity,
Access and Insurance (Deeds of Indemnity)
with its Directors.
We have a policy that BHP will, as a general
rule, support and hold harmless an employee,
including an employee appointed as a Director
of a subsidiary who, while acting in good faith,
incurs personal liability to others as a result of
working for BHP.
In addition, as part of the arrangements to
effect the demerger of South32, we agreed to
indemnify certain former Officers of BHP who
transitioned to South32 from certain claims and
liabilities incurred in their capacity as Directors or
Officers of South32.
The terms of engagement for certain services
include that we must compensate and reimburse
EY for, and protect EY against, any loss,
damage, expense, or liability incurred by EY
in respect of third-party claims arising from
a breach by BHP of any obligation under the
engagement terms.
We have insured against amounts that we
may be liable to pay to Directors, Company
Secretaries or certain employees (including
former Officers) pursuant to Rule 146 of the
Constitution of BHP Group Limited or that we
otherwise agree to pay by way of indemnity.
The insurance policy also insures Directors,
Company Secretaries and some employees
(including former Officers) against certain
liabilities (including legal costs) they may incur
in carrying out their duties. For this Directors’
and Officers’ insurance, we paid premiums of
US$21,772,900 excluding taxes during FY2022.
No indemnity in favour of a current or former
officer of BHP Group Limited, or in favour of the
External Auditor, was called on during FY2022.
7. Dividends
A final dividend of 175 US cents per share will
be paid on 22 September 2022, resulting in total
cash dividends determined in respect of FY2022
of 325 US cents per share.
The merger of BHP’s oil and gas portfolio
with Woodside Energy was completed on
1 June 2022 and BHP paid a fully franked
in specie dividend of US$3.86 per share or
US$19.6 billion.
For information on the dividends paid refer
to Financial Statements note 16 ‘Share
capital’ and note 18 ‘Dividends’.
8. Auditors
A copy of the declaration given by our External
Auditor to the Directors in relation to the auditors’
compliance with the independence requirements
of the Australian Corporations Act 2001 and
the Professional Code of Conduct for External
Auditors is set out in Financial Statements 3.
No current officer of BHP has held the role
of director or partner of the Group’s current
external auditor.
9. Non-audit services
For information on the non-audit services
undertaken by BHP’s External Auditor, including
the amounts paid for non-audit services, refer
to Financial Statements note 34 ‘Auditor’s
remuneration’. All non-audit services were
approved in accordance with the process set
out in the Policy on Provision of Audit and Other
Services by the External Auditor. No non-audit
services were carried out that were specifically
excluded by the Policy on Provision of Audit
and Other Services by the External Auditor.
Based on advice provided by the Risk and
Audit Committee, the Directors have formed
the view that the provision of non-audit services
is compatible with the general standard of
independence for auditors, and that the nature
of non-audit services means that auditor
independence was not compromised.
The reason for this view is that the objectivity
and independence of the External Auditor are
safeguarded through restrictions on the provision
of these services with some services prohibited
from being undertaken.
For more information about our policy
in relation to the provision of non-audit
services by the external auditor refer to
7.2 ‘External audit and financial reporting’
of our Corporate Governance Statement.
10. Exploration, research
and development
Companies within the Group carry out
exploration and research and development
necessary to support their activities.
Details are provided in OFR 5 ‘Our assets’, OFR
10 ‘Performance by commodity’ and Resources
and Reserves in the Annual Report.
11. ASIC Instrument
2016/191
BHP Group Limited is an entity to which
Australian Securities and Investments
Commission (ASIC) Corporations (Rounding
in Financial/Directors’ Reports) Instrument
2016/191 dated 24 March 2016 applies.
Amounts in this Directors’ Report and the
Financial Statements, except estimates of future
expenditure or where otherwise indicated, have
been rounded to the nearest million dollars in
accordance with ASIC Instrument 2016/191.
12. Proceedings on
behalf of BHP Group
Limited
No proceedings have been brought on behalf
of BHP Group Limited, nor has any application
been made, under section 237 of the Australian
Corporations Act 2001.
13. Performance in
relation to environmental
regulation
BHP seeks to be compliant with all applicable
environmental laws and regulations relevant
to its operations. We monitor compliance on a
regular basis, including through external and
internal means, to minimise the risk of non-
compliance.
For more information on BHP’s
performance in relation to health,
safety and the environment refer
to OFR 7.4, 7.6 and 7.15.
For the purposes of section 299 (1)(f) of the
Australian Corporations Act 2001, in FY2022
BHP was levied four fines in relation to
environmental laws and regulations at our
operated assets, the total amount payable
being US$22,514.
14. Additional information
BHP Group Limited has a branch registered in
the United Kingdom. The Group, through various
subsidiaries, has also established branches in a
number of other countries.
The Directors’ Report is approved in accordance
with a resolution of the Board.
Ken MacKenzie
Chair
16 August 2022
Mike Henry
Chief Executive Officer
BHP
Annual Report 2022
105
Financial StatementsAdditional InformationGovernanceOperating and Financial Review In this section:
Remuneration Committee Chair letter to shareholders
1
2
2.1
2.2
2.3
3
3.1
3.2
3.3
3.4
3.5
3.6
3.7
Remuneration governance
Remuneration framework
How the remuneration framework is set
Remuneration framework operation
Potential remuneration outcomes
Remuneration for the CEO and other Executive KMP
FY2022 remuneration received by the CEO
FY2022 CDP performance outcomes
FY2022 LTIP performance outcomes
Overarching discretion and vesting underpin
Sign-on performance shares
LTIP allocated during FY2022
FY2023 remuneration for the CEO and other
Executive KMP
4
4.1
4.2
5
5.1
5.2
5.3
5.4
5.5
5.6
5.7
107
109
110
110
110
112
113
113
114
117
117
118
118
118
Remuneration for Non-executive Directors
Remuneration framework
Non-executive Directors’ remuneration in FY2023
Statutory KMP remuneration and other disclosures
KMP remuneration table
Equity awards
Estimated value range of equity awards
Ordinary share holdings and transactions
Prohibition on hedging of BHP shares and
equity instruments
Share ownership guidelines and the MSR
Transactions with KMP
119
119
120
121
121
122
123
123
124
124
124
Abbreviation
AGM
CDP
CEO
DEP
ELT
GHG
HSEC
IFRS
Item
Annual General Meeting
Cash and Deferred Plan
Chief Executive Officer
Dividend Equivalent Payment
Executive Leadership Team
Greenhouse gas
Health, safety, environment and community
International Financial Reporting Standards
Abbreviation
KMP
LTIP
MAP
MSR
ROCE
STIP
TSR
Item
Key Management Personnel
Long-Term Incentive Plan
Management Award Plan
Minimum shareholding requirement
Return on Capital Employed
Short-Term Incentive Plan
Total Shareholder Return
106
BHP
Annual Report 2022
Remuneration Report
Remuneration Committee Chair Letter to Shareholders
Christine O’Reilly
Chair, Remuneration Committee
Dear Shareholders,
I am pleased to introduce BHP’s Remuneration
Report for the financial year to 30 June 2022.
During FY2022, the Remuneration Committee
(Committee) continued its focus on achieving
remuneration outcomes that fairly reflect the
performance of BHP and the contribution
of our employees, and which are aligned
to the interests of shareholders and other
key stakeholders.
Our approach and framework
Our Charter sets out our values upon
which the Committee places great weight
in the determination of performance-based
remuneration outcomes for BHP executives.
Our Charter places health and safety at the
forefront of our values while setting out our
purpose, our strategy and how we measure
success. The Committee aims to support our
executives to take a long-term approach to
decision-making in order to build a sustainable
and value-adding business.
The Committee is focused on a remuneration
framework and approach that supports the
Group’s strategy and enables us to attract,
retain and motivate our executives located in
different geographies. This is critical to delivering
the best outcomes for all BHP stakeholders.
As BHP is a global organisation, the Committee
is also mindful of navigating the priorities and
expectations of multiple jurisdictions.
At the 2021 AGMs, we received strong support
for our remuneration framework and outcomes,
with over 97 per cent voting in favour of the
Remuneration Report. This means that over
the past five years we have received an
average of approximately 96 per cent support.
The Committee and the Board continue to
incorporate shareholder feedback into their
approach to remuneration.
FY2022 represents the third year of operation
of our revised remuneration framework and
we believe the framework is continuing to
serve stakeholders well. The key changes to
variable remuneration that took effect from
1 July 2019 for the CEO were to significantly
reduce the LTIP grant size from 400 per cent of
base salary (on a face value basis) to 200 per
cent, and a rebalancing to a CDP award with a
long-term focus. The CDP outcome is delivered
one-third as a cash award, with two-thirds
delivered in equity that is deferred equally for
two-year and five-year periods. This structure
aligns participants’ incentive remuneration
with performance over the short, medium and
long term.
competitive to attract, motivate and retain key
talented executives and is consistent with the
global market.
The majority of the CEO’s remuneration
package continues to be delivered in BHP
equity, not in cash, and the CEO’s remuneration
is deliberately tied to the performance of the
business. In addition, the CEO is required to
meet a MSR of five times pre-tax base salary
and this applies for two years post-retirement.
This ensures that the CEO’s remuneration is
aligned to the experience of BHP’s shareholders.
As at the date of this Report, the CEO’s BHP
shareholding is in excess of his MSR.
Business performance
I am pleased to say BHP’s performance
for FY2022 has been underpinned by safe,
reliable operations and firm demand for our
commodities. We completed another year
fatality free and we are unwavering in our effort
to improve safety, including the elimination of
sexual harassment, racism and bullying.
We delivered reliable operational performance
at Western Australia Iron Ore, with record sales
for a third consecutive year and the South Flank
project ramp up ahead of schedule. In copper,
Escondida in Chile achieved record material
mined and near-record concentrator throughput,
while Olympic Dam in South Australia performed
strongly in the fourth quarter after planned
smelter maintenance. Queensland metallurgical
coal ended the year with strong underlying
performance in the face of significant
wet weather.
We have made strong progress on actions
required to meet our commitments to reduce
operational GHG emissions, which are down
by 15 per cent since FY2017. We have further
progressed our emission reduction partnerships
with three major steelmakers in China and Japan
and we also entered a new partnership with a
fourth steelmaker in South Korea. The combined
output of these four steelmakers equates to
around 12 per cent of global steel production.
Our US$5.7 billion Jansen potash project in
Canada is tracking to plan and opportunities to
bring forward first potash production at Jansen
continue to be assessed. In addition, during
FY2022, we merged our Petroleum business
with Woodside, completed the sales of our
interests in BMC and Cerrejón, and following a
strategic review decided to retain New South
Wales Energy Coal. As a consequence, we will
seek approvals to continue mining until 2030.
We also unified our corporate structure, and
added to our global options in copper and nickel.
We continue to benchmark the CEO and other
executives’ remuneration against CEO and
executive roles in other global companies of
similar complexity, size, reach and industry.
This detailed benchmarking ensures BHP’s
executive remuneration framework remains
COVID-19 continued to impact in FY2022,
particularly in the areas of labour and supply
chain constraints. We remain vigilant with
continued social distancing and hygiene
practices, and other additional protocols as
appropriate to protect our workforce and
communities. Despite the challenges that the
COVID-19 pandemic continues to present, in
FY2022 BHP continued its approach to not
furlough any employees, did not seek any
government assistance, and did not raise
additional equity. In addition, BHP’s safe and
reliable operational performance through this
year, together with strong profitability, enabled
the Board to announce record dividends for
FY2022. This continues the delivery of strong
and consistent returns to shareholders.
FY2022 CDP
The CDP scorecard used to assess Mike
Henry’s annual performance comprises
stretching performance measures, including
HSEC, financial and individual performance
elements. For FY2022, the Committee
has assessed the CEO’s performance and
determined a CDP outcome of 96 per cent
against a target of 100 per cent (and 64 per cent
of the maximum).
For the HSEC element, the outcome took into
account BHP’s strong HSEC performance
during the year, with no fatalities recorded, the
strong progress against our Fatality Elimination
Program and delivery of our cultural heritage
commitments. This year we have also made
progress on the implementation of controls for
sexual harassment, although there remains
more to be done. We also saw strong progress
against our climate change targets, and our
progress in the management of priority tailings
storage facilities was pleasing. The CDP
outcome for the HSEC measures was 31 per
cent out of a target of 25 per cent.
Our financial performance was strong,
and during FY2022 shareholders have
again benefitted through record dividends.
However, after fully eliminating the positive
impacts of commodity prices during the year,
operating performance at our assets was
below the challenging internal targets set at
the commencement of the year. This is in part
due to higher than expected unplanned costs
and other impacts of the COVID-19 pandemic,
which flowed through into CDP outcomes
without moderation for FY2022. This is a
similar approach that was applied in FY2021
and FY2020 and has the effect of reducing the
remuneration outcomes for executives. The CDP
outcomes for the financial measure was 40 per
cent out of a target of 50 per cent.
Finally, from a personal performance
perspective, the Committee considered Mike
Henry’s performance against his individual
measures. These included projects and
initiatives in respect of social value (long
term growth in value and returns for all
stakeholders), people (right people, right skills,
coming together in the right way to support
exceptional performance), performance (material
improvement in the system that supports
exceptional performance) and portfolio (material
BHP
Annual Report 2022
107
Financial StatementsAdditional InformationGovernanceOperating and Financial Review Remuneration Report continued
progress on our strategic objectives to create
a portfolio that will set BHP up for the next
20 years). The Committee considered Mike’s
performance against his individual objectives
met expectations and warranted an outcome
aligned with the target of 25 per cent.
The CDP scorecard outcomes for other
Executive KMP and the short-term incentive pool
applicable to the majority of BHP employees
below the ELT level, were, like the CEO, slightly
below the 100 per cent target.
2017 LTIP award
The vesting outcome for the 2017 LTIP award
was 100 per cent. The LTIP performance
condition is relative TSR and BHP outperformed
both the sector peer group and the MSCI
World Index. This level of vesting is aligned
with the projected vesting outcome that
was communicated to shareholders in the
Remuneration Report at the time the changes to
our remuneration framework were approved by
shareholders at the 2019 AGMs.
The table below outlines the level of vesting
each year from 2009 to 2022, together with the
vesting outcomes projected in 2019.
As shareholders will recall, one of the key
elements of our revised remuneration framework
was to reduce the weighting of future LTIP
grants in the overall CEO remuneration
package from FY2020. Pre-existing grants
remained on foot and their vesting would be
determined on the basis of existing service and
performance conditions.
More information on the 2017 LTIP vesting
outcome, including the five-year holistic
business review covering HSEC performance,
profitability, cash flow, balance sheet health,
returns to shareholders, corporate governance
and conduct, is included in 3.3 LTIP performance
outcomes and 3.4 Overarching discretion and
vesting underpin.
The value of the vested 2017 LTIP award is
higher than the value of the award at the time it
was granted due to the increase in share price
during the five-year vesting period and strong
dividends. In terms of value realised, 44 per cent
is due to the value at the time the awards were
granted and 56 per cent is due to share price
appreciation and dividends. This reflects the
experience of shareholders over the period.
Consistent with its normal practice, in
considering vesting, the Board and Committee
have also conducted a holistic review of
business performance over the five years since
the award was granted to ensure this level of
vesting was appropriate.
More information on the overall remuneration
outcomes for the CEO for the year, and how
the outcomes are aligned to performance
during FY2022, is provided in 3.1 FY2022
Remuneration received by the CEO.
Having considered the overall remuneration
outcomes for the CEO carefully, as set out
above and in 3.1, the Committee concluded
it was a fair reflection of performance and the
experience of shareholders, and the application
of any downwards discretion was not warranted.
FY2023 remuneration
For FY2023, the Committee determined that
the CEO’s base salary would increase by 3 per
cent, effective 1 September 2022. This was
assessed as appropriate having conducted
updated benchmarking and considered the
external market demand for senior executive
talent. The Committee considers the increase
modest in this context, as well as being below
the median salary increase applied for other
BHP employees of approximately 4 per cent.
Other components of the CEO’s total target
remuneration (pension contributions, benefits,
CDP and LTIP) remain unchanged and, where
relevant, as percentages of base salary.
A summary of the CEO’s arrangements for
FY2023 is set out below.
Fixed remuneration
CDP
LTIP
– Base salary US$1.750 million per annum, an
– Target cash award of 80% of base salary
– The LTIP grant is based on a face value of 200%
increase of 3% from 1 September 2022.
(maximum 120%).
of base salary.
– Pension contribution 10% of base salary.
– Plus two awards of deferred shares each of
– Our LTIP awards have rigorous relative TSR
equivalent value to the cash award, vesting in
two and five years, respectively.
– Three performance categories:
– HSEC – 25%
– Financial – 50%
– Individual – 25%
performance hurdles measured over five years.
108
BHP
Annual Report 2022
LTIP vesting100%90%80%70%60%50%40%30%20%10%020092010201120122013201420152016201720182019202020212022Actual vesting Discretion used Projected vesting 100%0%0%0%0%0%100%100%100%–35%65%58%48%70%100%100%100%100%Vesting year The Committee has also reviewed the base
salaries and total target remuneration packages
for other Executive KMP. The Committee
determined they would also increase by 3 per
cent, effective 1 September 2022. An additional
increase has been determined for Ragnar Udd
reflecting his performance and development
in role (for more information regarding base
salaries for FY2023 refer to 3.7 FY2023
remuneration for the CEO and other Executive
KMP). Other aspects of other Executive KMP
remuneration arrangements remain unchanged.
Remuneration outcomes for
the Chair and Non-executive
Directors
Fees for the Chair and Non-executive Directors
are reviewed annually and are benchmarked
against peer companies. No changes to the
Chair’s fee will be made for FY2023. The Chair
fee has remained unchanged since 1 July 2017.
In 2017, a decision was made to reduce the
Chair’s annual fee by approximately 8 per cent
from US$0.960 million to US$0.880 million with
effect from 1 July 2017. This followed an earlier
reduction on 1 July 2015 of approximately 13 per
cent from US$1.100 million to US$0.960 million.
Base fee levels for Non-executive Directors
will also remain unchanged. The fees of
Non-executive Directors were also reduced
on 1 July 2015 by approximately 6 per cent,
from US$0.170 million to US$0.160 million
per annum.
In FY2022, BHP undertook a series of major
transactions. As a consequence, modest fees
were paid to certain Non-executive Directors for
additional or extra services performed in FY2022
in connection with major transactions undertaken
by the Group.
Summary
This year the COVID-19 pandemic continued
to impact not only BHP, but our customers,
suppliers, governments, employees, families
and communities across the world. On behalf
of the Committee, I would like to recognise the
continued hard work, dedication and sacrifices
of our employees. Through their steadfast
commitment, they have enabled BHP to
generate strong results for all stakeholders and
continued to support their communities.
We deliberately align our executive remuneration
with performance, with a significant component
of possible remuneration structured as variable
pay. We are confident that the outcomes this
year are consistent with our long held approach
of remuneration outcomes reflecting the
performance of BHP and the experience of our
shareholders. Given our critical need to attract,
motivate and retain our executives in order to
progress our strategic objectives and deliver the
best outcomes for all BHP stakeholders, this is a
pleasing result for all concerned.
We look forward to ongoing dialogue with and
the support of BHP’s shareholders. As always,
we welcome your feedback and comments on
any aspect of this Report.
Christine O’Reilly
Chair, Remuneration Committee
16 August 2022
1 Remuneration governance
Board oversight
The Board is responsible for ensuring the Group’s remuneration arrangements are equitable and aligned with the long-term interests of BHP and its
shareholders. In performing this function, it is critical the Board is independent of management when making decisions affecting remuneration of the CEO,
other Executive KMP and the Group’s employees.
The Board has established the Committee to assist it in making such decisions. The Committee is comprised solely of Non-executive Directors, all of
whom are independent. The Committee has extensive access to members of senior management and regularly invites them to attend meetings to provide
reports and updates. However, members of management are not present when decisions are considered or taken concerning their own remuneration.
The Committee can also draw on services from a range of external sources, including independent remuneration advisers.
Remuneration Committee
The activities of the Committee are governed by its Terms of Reference which is available at bhp.com. The current members of the Committee are:
Christine O’Reilly (Chair), Catherine Tanna (member from 4 April 2022) and Dion Weisler. The following present and former Non-executive Directors
served as members of the Committee during the year: Gary Goldberg (member to 17 June 2022), Anita Frew (member to 11 November 2021) and Susan
Kilsby (member to 11 November 2021). The role and focus of the Committee and details of meeting attendances can be found in 2.2 Directors’ Report.
Key decisions and activities of the Committee during FY2022 included:
– considering and approving remuneration for members of the ELT
– setting targets for and reviewing outcomes against performance measures and conditions of relevant incentive plans, including the Committee
considering its discretion over FY2022 plan outcomes
– reviewing the fee for the BHP Chair, which remains unchanged
– considering remuneration and remuneration reporting implications of unification and the merger of the Petroleum business and Woodside
– reviewing and adopting changes and improvements flowing from regulatory requirements and guidance, which in turn helps us improve our processes
and approaches
– engaging with shareholders and other key stakeholders
– undertaking reviews of remuneration by gender and the annual Shareplus enrolment
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Engagement of independent remuneration advisers
The Committee seeks and considers advice from independent remuneration advisers where appropriate. Remuneration consultants are engaged by
and report directly to the Committee. Potential conflicts of interest are taken into account when remuneration consultants are selected and their terms of
engagement regulate their level of access to, and require their independence from, BHP’s management.
PwC has been appointed to act as an independent remuneration adviser and is currently the only remuneration adviser appointed by the Committee.
In that capacity, they may provide remuneration recommendations in relation to KMP, however, they did not provide any remuneration recommendations
in FY2022.
KMP for FY2022
This Remuneration Report describes the remuneration policies, practices, outcomes and governance for the KMP of BHP. At BHP, KMP consists of
our Board (including the CEO), as well as certain members of our ELT who have authority and responsibility for planning, directing and controlling the
activities of the Group directly or indirectly. After due consideration, the Committee determined the KMP for FY2022 comprised all Non-executive Directors
and the following Executive KMP: the CEO, the Chief Financial Officer, the President Minerals Australia, the President Minerals Americas and the Senior
Executive Officer (i.e. the President Petroleum until 31 May 2022).
The following individuals have held their positions and were KMP for the whole of FY2022, unless stated otherwise:
– Mike Henry, CEO and Executive Director
– Edgar Basto, President Minerals Australia
– David Lamont, Chief Financial Officer
– Geraldine Slattery, President Petroleum from 1 July 2021 to 31 May 2022 and Senior Executive Officer from 1 June to 30 June 2022
– Ragnar Udd, President Minerals Americas
– Non-executive Directors – for details of Non-executive Directors, including dates of appointment or cessation (where relevant), refer to
2.2 Directors’ Report.
2 Remuneration framework
BHP has an overarching remuneration framework that guides the Committee’s decisions and is designed to support our strategy and reinforce our culture
and values.
2.1 How the remuneration framework is set
The Committee sets the remuneration framework for the Executive KMP, including the CEO. The Committee is briefed on and considers prevailing
market conditions, the competitive environment and the positioning and relativities of pay and employment conditions across the wider BHP workforce.
The Committee takes into account the annual base salary increases for our employee population when determining any change in the Executive KMP’s
base salary. The salary increases in locations where our Executive KMP are based are particularly relevant when reviewing their remuneration to ensure
that their remuneration also reflects the local economic conditions.
The principles that underpin the remuneration framework for Executives are the same as those that apply to other employees, however Executive KMP
arrangements have a greater emphasis on and a higher proportion of remuneration that is at risk as performance-related variable pay. The performance
measures used to determine variable pay outcomes for the Executive KMP and all other employees are linked to the delivery of our strategy and
behaviours that are aligned to Our Charter values.
As part of the Board’s commitment to good governance, the Committee considers shareholder views and those of the wider community when setting the
remuneration framework for the Executive KMP. We are committed to engaging and communicating with shareholders regularly and, as our shareholders
are spread across the globe, we are proactive with our engagement on remuneration and governance matters with institutional shareholders and investor
representative organisations. Feedback from shareholders and investors is used as input into decision-making by the Board and the Committee in relation
to our remuneration framework and its application. The Committee considers that this approach provides a robust mechanism to ensure Directors are
aware of matters raised, have a deep understanding of current shareholder views and can formulate frameworks and make decisions as appropriate.
We encourage shareholders to make their views known to us by directly contacting our Investor Relations team (contact details available at bhp.com).
2.2 Remuneration framework operation
Our approved remuneration policy was adopted by shareholders in 2019 for a three-year period in accordance with UK requirements and following the
unification of our corporate structure in early 2022 BHP is no longer required to have our policy approved by shareholders every three years. However,
the following table shows the current components of our remuneration framework, which is consistent with the prior approved remuneration policy.
Fixed remuneration
CDP
LTIP
Purpose and
link to strategy
Market competitive fixed remuneration
is paid in order to attract, motivate and
retain high-quality and experienced
executives, and provide appropriate
remuneration for these important roles
in the Group.
The purpose of the LTIP is to focus
executive’s efforts on the achievement of
sustainable long-term value creation and
success of the Group (including appropriate
management of business risks).
The CDP encourages and focuses
executives’ efforts for the relevant
financial year on the delivery of the
Group’s strategic priorities, balancing
financial and non-financial performance,
to deliver short, medium and long-
term success aligned to our purpose
and Our Charter, and to motivate
executives to strive to achieve stretch
performance objectives.
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Fixed remuneration
CDP
LTIP
Remuneration
components
and link
to performance
Fixed remuneration comprises
base salary, pension contributions
and benefits.
Competitive fixed remuneration is
aligned to global complexity, size,
reach and industry, and reflects
executives’ responsibilities, location,
skills, performance, qualifications
and experience.
Annual variable pay opportunity linked
to execution of business strategy.
A balanced scorecard of short, medium
and long-term elements including
HSEC (25% weighting), financial (50%
weighting) and individual performance
measures (25% weighting) are chosen
on the basis that they are expected to
have a significant short, medium and
long-term impact on the success of
the Group, with appropriate targets for
each measure which will appropriately
motivate Executive KMP to achieve
outperformance that contributes to the
long-term sustainability of the Group and
shareholder wealth creation.
Annual long-term variable pay opportunity
based on grants of five-year performance
rights designed to align executives’
reward with sustained shareholder wealth
creation in excess of relevant comparator
group(s), through the relative TSR
performance condition.
Relative TSR has been chosen as an
appropriate measure as it enables an
objective external assessment over a
sustained period on a basis that is familiar
to shareholders.
Assessment
of performance
CDP
LTIP
Achievement against each scorecard measure is assessed by
the Committee and the Board, with guidance provided by other
relevant Board Committees in respect of HSEC, financial and
other measures, and a CDP award determined.
If performance is below the threshold level for any measure,
no CDP award will be provided in respect of that portion of the
CDP award opportunity.
Vesting of the LTIP award is dependent on BHP’s TSR relative
to the TSR of relevant comparator group(s) over a five-year
performance period.
25% of the award will vest where BHP’s TSR is equal to the
median TSR of the relevant comparator group(s), as measured
over the performance period. Where TSR is below the median,
awards will not vest.
In the event the Committee does not consider the outcomes
that would otherwise apply to be a true reflection of the
performance of the Group or should it consider that
individual performance or other circumstances makes this an
inappropriate outcome, it retains the discretion to not provide
all or a part of any CDP award. This is an important mitigation
against the risk of unintended award outcomes.
Delivery
and vesting
CDP awards are provided as cash and two awards of deferred
shares, each of equivalent value to the cash award, vesting in
two and five years respectively.
Awards of deferred shares comprise rights to receive ordinary
BHP shares in the future at the end of the deferral periods.
Before the awards vest (or are exercised), these rights are
not ordinary shares and do not carry entitlements to ordinary
dividends or other shareholder rights; however, a DEP is
provided on vested awards. The Committee has a discretion
to settle CDP awards in cash.
Vesting of five-year deferred shares under the CDP is
underpinned by a holistic review of performance at the end
of the five-year vesting period, including a review of HSEC
performance, profitability, cash flow, balance sheet health,
returns to shareholders, corporate governance and conduct
over the five-year period.
Vesting occurs on a sliding scale between the median TSR of
the relevant comparator group(s) up to a nominated level of
TSR outperformance over the relevant comparator group(s),
as determined by the Committee, above which 100% of the
award will vest.
Where the TSR performance condition is not met, there is no
retesting and awards will lapse. The Committee also retains
discretion to lapse any portion or all of the award where it
considers the vesting outcome is not appropriate given Group
or individual performance. This is an important mitigation against
the risk of unintended outcomes.
LTIP awards consist of rights to receive ordinary BHP shares
in the future if the performance and service conditions are met.
Before vesting (or exercise), these rights are not ordinary shares
and do not carry entitlements to ordinary dividends or other
shareholder rights; however, a DEP is provided on vested awards.
The Committee has a discretion to settle LTIP awards in cash.
Vesting of five-year performance rights under the LTIP is
underpinned by a holistic review of performance at the end of
the five-year performance period, including a review of HSEC
performance, profitability, cash flow, balance sheet health,
returns to shareholders, corporate governance and conduct
over the five-year period.
Cessation
of employment
On cessation of employment, a ‘good leaver’1 may receive
a pro-rated cash award based on performance for that year.
For a ‘good leaver’, their unvested CDP deferred awards
generally remain on foot (wholly or in part) unless the
Committee determine otherwise. If the executive is not a ‘good
leaver’, all unvested CDP deferred awards will lapse.
On cessation of employment, for a ‘good leaver’1 their unvested
LTIP awards generally remain on foot on termination and are pro-
rated for the portion of the vesting period served. These awards
are eligible for vesting in the ordinary course, subject to any
applicable performance conditions. If the executive is not a ‘good
leaver’, all unvested LTIP awards will lapse.
Malus and
clawback
CDP awards (including cash and deferred share awards) and LTIP awards are subject to the Group’s malus and clawback policy
(see below).
1
‘Good leaver’ treatment may apply where the reason for the cessation of employment with BHP is due to forced early retirement, retrenchment or redundancy, termination
by mutual agreement or retirement with the agreement of the Group, or such other circumstances that do not constitute resignation or termination for cause.
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Malus and clawback
As has been set out in prior Remuneration Reports, for many years we have had malus and clawback provisions in place. During FY2022, we enhanced
our malus and clawback policy covering awards made from 2021 under the CDP and LTIP. This enhanced policy further clarified the circumstances in
which the Committee is able to reduce or clawback awards, which include:
– an error in the Group’s Financial Statements that requires a material downward restatement
– performance of a participant, or of the business or of the Group does not justify vesting or where the participant’s conduct or performance has been in
breach of their employment contract, any laws, rules, codes of conduct or policies applicable to them or the standards reasonably expected of a person
in their position
– misstatement or misrepresentation of the performance of the company
– where any team, business area, member of the Group or profit centre in which the participant works or worked has been found guilty in connection
with any regulatory investigation or has been in breach of any laws, rules, codes of conduct or policies applicable to it or the standards reasonably expected of it
– an event that has had, or may have a material adverse effect on the value or reputation of any member of the Group
– where the Committee determines there has been material damage to the Group’s social licence to operate
– a catastrophic health, safety, environment or community event or events occurring in any part of the Group
– an act, omission or event occurs which constitutes a material failure of risk management or of other operational systems and controls
– a participant is found to have contributed to circumstances that give rise to a material loss for any Group Company
These malus and clawback provisions apply whether or not awards are made in the form of cash or equity, whether or not the equity has vested,
and whether or not employment is ongoing.
Service contracts
The terms of employment for the CEO and Executive KMP are formalised in their employment contracts. The current contracts of the CEO and Executive
KMP are not fixed term. BHP may choose to terminate a contract on up to 12 months’ notice. BHP can require an executive to work through the notice
period or may terminate the individual’s contract immediately by paying base salary plus pension contributions in lieu of the notice period. The CEO and
Executive KMP must provide up to 12 months’ notice for voluntary resignation.
Approach to recruitment and promotion
For external candidates that are appointed Executive KMP, the Committee may determine that it is appropriate to provide additional cash and/or equity
components to replace any remuneration forfeited or not received from a former employer. It is anticipated any foregone equity awards would be replaced
by equity. The value of the replacement remuneration would not be any greater than the fair value of the awards foregone or not received (as determined
by the Committee’s independent adviser). The Committee would determine appropriate service conditions and performance conditions within BHP’s
remuneration framework, taking into account the conditions attached to the foregone awards. The Committee is mindful of limiting such payments and not
providing any more compensation than is necessary. For any internal Executive KMP appointment, any entitlements provided under former arrangements
will be honoured and remain on foot according to their existing terms.
2.3 Potential remuneration outcomes
The Committee recognises market forces influence remuneration practices and it strongly believes the fundamental driver of remuneration outcomes
should be performance. It also believes that overall remuneration should be fair to the individual, and remuneration levels should accurately reflect
the CEO’s and other Executive KMP’s responsibilities and contributions, while aligning with the expectations of our shareholders and considering the
positioning and relativities of pay and employment conditions across the wider BHP workforce.
The amount of remuneration actually received each year depends on the achievement of business and individual performance that generate sustained
shareholder value. Before deciding on the final incentive outcomes for the CEO and other Executive KMP, the Committee first considers the achievement
of pre-determined performance conditions. The Committee then applies its overarching discretion to determine what it considers to be a fair and
commensurate remuneration level in order to decide if the outcome should be reduced. In this way, the Committee believes it can set a remuneration
level for the CEO and other Executive KMP that is sufficient to incentivise and is also fair and commensurate with shareholder expectations and prevailing
market conditions.
The diagram below provides the scenarios for the potential total remuneration of the CEO and other Executive KMP at different levels of performance.
Remuneration mix for the CEO and other Executive KMP
Minimum CEO and
other Executive KMP
100%
Target CEO
27%
Target other
Executive KMP
28%
18%
19%
36%
38%
Maximum CEO
17%
17%
34%
19%
15%
32%
28%
Maximum other
Executive KMP
4
1
1
0%
18%
18%
36%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Fixed remuneration
CDP (cash)
CDP (deferred shares)
LTIP
% of total remuneration
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Minimum: consists of fixed remuneration, which comprises base salary, pension contributions (10 per cent of base salary) and other benefits (notional
10 per cent of base salary), details of which are set out in 5.1 KMP remuneration table.
Target: consists of fixed remuneration, target CDP (a cash award of 80 per cent of base salary plus two awards of deferred shares each of equivalent
value to the cash award, vesting in two and five years, respectively) and target LTIP. The LTIP target value in the chart above is based on the fair value
of the award, which is 41 per cent of the face value of 200 per cent of base salary for the CEO and 175 per cent for other Executive KMP. The potential
impact of future share price movements is not included in the value of deferred CDP awards or LTIP awards.
Maximum: consists of fixed remuneration, maximum CDP (a cash award of 120 per cent of base salary plus two awards of deferred shares each
of equivalent value to the cash award, vesting in two and five years respectively), and maximum LTIP (in the chart above based on the face value of
200 per cent of base salary for the CEO and 175 per cent for other Executive KMP). The potential impact of future share price movements is not included
in the value of deferred CDP awards or LTIP awards.
The maximum opportunity represented above is the most that could potentially be paid for each remuneration component. It does not reflect any intention
by the Group to award that amount. In determining the maximum remuneration opportunity, the Committee reviews relevant benchmarking data and
industry practices and believes the maximum remuneration opportunity is appropriate.
3 Remuneration for the CEO and other Executive KMP
3.1 FY2022 remuneration received by the CEO
The table below is a voluntary non-statutory disclosure of the remuneration received by the CEO during FY2022 and FY2021. This table is unaudited and
differs from the audited remuneration calculated in accordance with the Australian Accounting Standards (refer to 5.1 KMP remuneration table and in Financial
Statements note 25 Employee share ownership plans).
The difference between the disclosure in the table below and remuneration calculated in accordance with Australian Accounting Standards relates to the CDP
and LTIP. The remuneration calculated in accordance with Australian Accounting Standards require the fair value of the CDP and LTIP to be calculated at the
time of grant and to be amortised over the relevant vesting periods regardless of the performance outcome. This may not reflect what the executive receives.
In the table below, the CDP and LTIP values relate to the performance outcomes and actual amount received each year under the CDP (i.e. against the CDP
scorecard) and the LTIP (i.e. the LTIP vesting outcome).
This table is designed to provide greater transparency for shareholders on the remuneration for the CEO during FY2022 and FY2021 as it has a stronger link
to performance, with the CDP and LTIP included below representing those amounts that have been received as a consequence of satisfying performance
conditions in the relevant financial year.
Details of the components of remuneration are contained in 2.2 Remuneration framework operation and the values in the table are explained further in the notes below.
US$(’000)
Mike Henry
FY2022
FY2021
Base salary
Benefits1
Pension2
1,700
1,700
168
120
170
170
CDP3
3,917
4,692
LTIP4
8,712
7,939
Total
14,667
14,621
1 Benefits are non-pensionable and include net movements in leave balances, private family health insurance, spouse business-related travel, car parking, fringe benefits tax
and personal tax return preparation in required countries.
2 Mike Henry’s FY2022 and FY2021 pension contributions were provided based on 10 per cent of base salary.
3 The values shown are the full CDP value (cash and deferred equity) earned as a consequence of performance during FY2022 and FY2021. The FY2022 CDP award will be
provided one-third in cash in September 2022 and two-thirds in deferred equity, with one-third due to vest in FY2025 and one-third due to vest in FY2027 (on the terms of the
CDP). The FY2021 CDP award was provided one-third in cash in September 2021 and two-thirds in deferred equity, with one-third due to vest in FY2024 and one-third due to
vest in FY2026 (on the terms of the CDP).
4 Mike Henry’s LTIP award values for FY2022 and FY2021 (refer below) are based on the full awards he received in 2017 and 2016 respectively when he was President
Operations, Minerals Australia (prior to becoming and with no proration applied for time as CEO), and 100 per cent of the awards vesting. For FY2022 the LTIP award value
is calculated on the average share price for the month of July 2022 (which will be updated for the actual share price on the vesting date in the 2023 Remuneration Report);
whereas the LTIP award value for FY2021 was calculated on the actual share price on the vesting date.
A revised remuneration framework took effect from 1 July 2019 and significantly reduced the LTIP grant size for the CEO from 400 per cent of base salary
(on a face value basis) to 200 per cent and a rebalancing to a CDP award with a long-term focus. As a result, the remuneration for Mike Henry reported
above reflects the transition to this structure and includes the full amounts of the CDP award earned during FY2022 and FY2021 (i.e. irrespective that
some elements of the CDP award are deferred) together with the full amounts of the pre-existing LTIP awards vesting at the end of FY2022 and FY2021
which were granted in 2017 and 2016, respectively (i.e. when the LTIP award size was double the current grant size).
Had the current remuneration framework been in place when Mike’s 2017 and 2016 LTIP awards were granted and a reduced size awarded, the reported
LTIP values would have been US$4.356 million for FY2022 and US$3.970 million for FY2021 (instead of US$8.712 million and US$7.939 million in the
table above). The reported total remuneration would have therefore been US$10.311 million for FY2022 and US$10.652 million for FY2021 (instead of
US$14.667 million and US$14.621 million in the table above).
CEO pay ratio
The FY2022 CEO pay ratio, calculated using the reported total fixed and variable remuneration above for the CEO, and compared to the median
remuneration for all of our employees worldwide, was 123:1 (FY2021 – 130:1). The remuneration calculation for all employees is based on actual
earnings for the 12 months to 31 March 2022, including annual incentive payments for employees calculated using the Group performance outcome, and
vested equity received if applicable. Pension contributions are calculated as the total cost of contributions made by the Group over the 12-month period.
Employees on international assignments have been excluded from the analysis as their remuneration structures are generally not consistent with the
remuneration received by the CEO as noted in the table above.
The FY2022 ratio of 123:1 at the median compared to the FY2021 ratio of 130:1 reflects the proportion of the CEO’s pay being more heavily weighted
to variable pay, including share-based long-term incentives, than for other employees. The change from FY2021 to FY2022 is driven by a lower FY2022
CDP outcome of 96 per cent (FY2021: 115 per cent) for the CEO, a higher value of the CEO’s vested LTIP award in FY2022 compared to FY2021 and an
increase in the median remuneration for all of our employees worldwide.
The Group believes the median pay ratio reflects the diversity of our global business footprint and employee population. BHP’s remuneration policies and
practices are based on a high degree of alignment and consistency, with total remuneration at all levels providing a competitive package that enables the
attraction and retention of talent while also providing at-risk remuneration based on performance.
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3.2 FY2022 CDP performance outcomes
The Board and the Committee assessed the Executive KMP’s CDP outcomes in light of the Group’s performance in FY2022 and took into account
performance against the measures in each Executive KMP’s CDP scorecard. For the CEO, the Board and the Committee determined a CDP outcome
for FY2022 at 96 per cent against the target of 100 per cent (which represents an outcome of 64 per cent against maximum). The Board and Committee
believe this outcome is appropriately aligned with the shareholder experience and the interests of the Group’s other stakeholders.
The CEO’s CDP scorecard outcome for FY2022 is summarised in the following tables, including a narrative description of each performance measure and
the CEO’s level of achievement, as determined by the Committee and approved by the Board. The level of performance for each measure is determined
based on a range of threshold (the minimum necessary to qualify for any reward outcome), target (where the performance requirements are met), and
maximum (where the performance requirements are significantly exceeded).
Summary of outcomes for the CEO
Performance measure
HSEC
Financial
Individual
Total
HSEC
Weighting
for FY2022
25%
50%
25%
100%
Threshold
Target
Maximum
Mike Henry
Percentage outcome
31%
40%
25%
96%
The HSEC targets for the CEO are aligned to the Group’s 2030 public sustainability goals. As it has done for several years, when assessing HSEC performance
against the scorecard targets, the Committee seeks guidance from the Sustainability Committee. The Committee has taken a holistic view of Group performance
in critical areas, including considering any additional matters outside the scorecard targets that the Sustainability Committee has provided and considers relevant.
The performance commentary below is provided against the HSEC scorecard targets, which were set on the basis of operated assets only.
HSEC measures
Scorecard targets
Performance against scorecard targets
Significant events
No significant (actual level 4)
health, safety (including fatalities),
environment or community events
during the year.
– There were no fatalities or other significant HSEC events during
FY2022 at operated assets.
– In addition, for a maximum outcome to be awarded, strong progress was
required on the development and implementation of controls in relation
to the Fatality Elimination Program, sexual harassment and cultural
heritage, and this was achieved in relation to the Fatality Elimination
Program and cultural heritage for FY2022. While we continued to make
progress on the implementation of our actions to eliminate sexual
harassment during FY2022, we have more to do in FY2023.
Measure outcome
Between target
and maximum.
Climate change
Reported GHG emissions
in FY2022 are below the
FY2017 level.
A majority of planned
decarbonisation projects are
presented for tollgates and
all asset adaptation plans
are updated.
Work undertaken as planned
under partnerships with
strategic customers in the
steel sector established in
FY2021, one more partnership
formalised, and a review of
Scope 3 goals and estimation
methodologies completed.
– For FY2022, we improved on our operational GHG emissions
target of 14.6Mt, with an outcome of 12.5Mt1, which was greater
than 10% below the target (i.e. required for maximum).
Between target
and maximum.
– Each region presented 90% of GHG reduction projects schedules
and adaptation plans, updated for material changes, which were
incorporated in the planning process. The completion of early stage
development studies that contributed to the Group’s medium term
target and financial and economic evaluation of physical climate
change risks and adaptation measures (i.e. both required for
maximum) was largely completed, with work continuing into FY2023.
– During the year, we commenced Phase 1 work for each of the three
strategic Memorandum of Understandings (MOUs) signed with steel
customers in FY2021 (China Baowu (China), JFE Steel Corporation
(Japan) and HBIS Limited (China)), including the commencement
and delivery of work plans for each partnership. An additional
steelmaking partnership MOU was signed with POSCO (South
Korea) in October 2021, a new customer partnership was signed
focussed on plant trials with Zenith Steel (China), and a review of
BHP Scope 3 goals and methodology was completed. An industrial
scale sinter plant emission reduction trial (i.e. required for
maximum) was commenced with Zenith Steel in May 2022 relating
to the optimisation stage of steel decarbonisation.
Management of
priority tailings
storage facilities
(TSFs)
All priority TSFs are assessed
based on key risk indicator data,
and are either within appetite
or continued operation outside
appetite is approved with
remediation progressing to plan.
– All priority TSFs are within appetite based on key risk indicator
data or continued operation outside appetite is approved with
remediation progressing to plan.
Target.
– We have continued improving our key risk indicator performance
with 85% of all key risk indicators for priority TSFs rated either on
target or less risk being taken than target, against a target of 85%
and 90% required for maximum.
The outcome against the HSEC measure for FY2022 was 31 per cent out of the target of 25 per cent.
1 As reported to the Sustainability Committee and Remuneration Committee meetings in early August 2022 and considered for the purposes of determining FY2022 CDP
outcomes. The GHG emissions for FY2022 are subject to third-party verification.
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Financial
ROCE is underlying profit after taxation (excluding after-taxation finance costs and exceptional items) divided by average capital employed. ROCE is
the key financial measure against which CDP outcomes for our senior executives are measured and is, in our view, a relevant measure to assess the
financial performance of the Group for this purpose. While ROCE excludes exceptional items, the Committee reviews each exceptional item to assess
if it should be included in the result when determining the ROCE CDP outcome.
When we are assessing management’s performance, we make adjustments to the ROCE result to allow for changes in commodity prices, foreign
exchange movements and other material items (from the levels assumed in setting the targets) to ensure the assessment appropriately measures
outcomes that are within the control and influence of the Group and its executives. Of these, changes in commodity prices have historically been the most
material due to volatility in prices and the impact on Group revenue and ROCE. As it has done for several years, the Committee seeks guidance each
year from the Risk and Audit Committee when assessing financial performance against scorecard targets.
Financial
measure
ROCE
Scorecard targets
For FY2022, the target for ROCE was 38.1%, with a
threshold of 33.5% and a maximum of 42.0%.
Achievement of the ROCE target will result in a target
CDP outcome. The ROCE target considers the upside
opportunities and downside risks inherent in BHP’s
businesses, and is an outcome that the Committee
believes would be a level of performance that shareholders
would view positively. The maximum and threshold are
an appropriate range of ROCE outcomes, given the
upside opportunities and downside risks, that represent
an upper limit of stretch outperformance that would
represent the maximum CDP award, and a lower limit of
underperformance below which no CDP award should
be made.
The performance range around target is subject to a greater
level of downside risk than there is upside opportunity,
mainly due to physical and regulatory asset constraints.
Accordingly, the range between threshold and target is
somewhat greater than that between target and maximum.
For maximum, the Committee takes care not to create
leveraged incentives that encourage executives to push for
short-term performance that goes beyond our risk appetite
and current operational capacity.
The Committee retains, and has a track record of applying,
downward discretion (but not upwards discretion) to ensure
the CDP outcome is appropriately aligned with the overall
performance of the Group for the year, and is fair and
equitable to management and shareholders.
Measure
outcome
Below
target.
Performance against scorecard targets
ROCE of 48.7% was reported by BHP for FY2022.
Adjusted for the factors outlined below, ROCE is 36.3%,
which is below target. The following adjustments were
made to ensure the outcomes appropriately reflect the
performance of management for the year:
– The full elimination of the impacts of positive movements
in commodities prices and exchange rates decreased
ROCE by 6.9 percentage points.
– Adjustments for other material items made to ensure
the outcomes reflect the performance of management
for the year decreased ROCE by 5.5 percentage points.
This was mainly due to the elimination of the positive
effect on reported ROCE outcomes of lower depreciation
and lower asset values in the closing balance sheet due
to the merger of the Petroleum business with Woodside
and the sale of our interest in BMC. This downwards
adjustment was necessary to ensure the basis of the
ROCE outcome for CDP purposes was the same as the
basis upon which Petroleum and our interest in BMC
were included in the ROCE target for FY2022.
– Having reviewed the FY2022 exceptional items (as
described in Financial Statements note 3 Exceptional
items), the Committee determined these should not be
considered for the purposes of determining the FY2022
ROCE CDP outcome and that no further action was
required in respect of exceptional items.
The key drivers of the FY2022 ROCE outcome of 36.3%
being below the target for FY2022 of 38.1% set at the
commencement of the year were:
– In Minerals Australia, production volumes were lower than
expected mainly driven by labour and supply constraints
across most assets associated with COVID-19, delays
in the ramp up of South Flank at Western Australian
Iron Ore, labour availability issues and interrupted
autonomous haulage rollout at BMA, and the longer than
planned duration of the smelter maintenance campaign at
Olympic Dam. In addition, input prices were higher across
all assets.
– In Minerals Americas, in addition to unplanned
maintenance and higher input prices at all assets,
production volumes were impacted by lower than
expected recoveries at Pampa Norte due to plant
design issues related to the Spence Growth Option and
higher clay content, and lower than expected copper
concentrator feed grade at Escondida.
– In Petroleum, despite achieving planned production, sales
volumes were lower than expected due to unfavourable
timing, partly offset by better than expected cost performance.
The outcome against the ROCE measure for FY2022 was 40 per cent out of the target of 50 per cent.
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Individual measures for the CEO
Individual measures for the CEO are determined at the commencement of the financial year. The application of personal measures remains an important
element of effective performance management. These measures seek to provide a balance between the financial and non-financial performance
requirements that maintain our position as a leader in our industry. The CEO’s individual measures for FY2022 included contribution to BHP’s overall
performance and the management team, and the delivery of projects and initiatives within the scope of the CEO role as specified by the Board, as set out
in the table below.
Individual
measures
Individual scorecard targets
Performance against scorecard targets
Measure
outcome
Social value Deliver a successful Say on Climate outcome at the
– The Climate Transition Action Plan / Say on Climate
Target.
2021 AGMs.
Deliver an external update on BHP’s embedment and
measurement of Social Value.
People
Increase in female participation by three percentage points.
Engagement and Perception Survey (EPS) improvement
survey on survey over the year and substantively improve
lower performing teams.
was successfully approved at the 2021 AGMs with 85%
of votes in favour.
– A Social Value Framework (SVF) was developed
and approved by the Board in October 2021 and
subsequently deployed across BHP. In June 2022,
the SVF was presented to our workforce as well as
externally via an investor roundtable, and both internal
and external engagements were received positively.
– Female participation increased in FY2022 by 2.5
percentage points to 32.3% at 30 June 2022,
compared to 29.8% at 30 June 2021.
– While most of our people continue to feel safe,
engaged and enabled, our EPS results declined
marginally in FY2022. The EPS results of lower
performing teams were, on average, similar in FY2022
compared to the prior year, even though a number of
lower performing teams did show improvement.
Performance >90% of BHP Operating System (BOS) deployments on
– 94% of BOS deployments are on track according
track, Operational Excellence Indicator (OEI) > 40 at 75%
of sites at end of deployment, and > 75% improving OEI
improving assessment-on-assessment for other sites.
Enable the data strategy and associated value creation
through transforming data accuracy, consistency
and access.
Portfolio
Progress the strategic review activities with respect to
Petroleum, our interest in BMC and New South Wales
Energy Coal as approved by the Board.
Additional nickel and copper search spaces captured.
Continued maturation of the innovation and venture
business units.
to plan. 88% of BOS sites at the end of deployment
achieved an OEI score above the target of 40 (with
an average OEI score of 43). 91% of sites already in
deployment recorded an assessment-on-assessment
improvement over FY2022.
– The data strategy has been reinforced to enable value
creation through transformation of data accuracy,
consistency and cloud-native access. We have also
established a data analytics operating model which
retains capabilities in the assets and functions whilst
enabling standards and tool replication across the
Group to remove duplication, and migrated 1SAP and
an additional 78 applications to the cloud to unlock
enhanced performance and enhance cybersecurity.
– We made strong progress on strategic review activities
as approved by the Board, including the merger of our
Petroleum business with Woodside (completed in June
2022), and the divestments of our interests in Cerrejón
(completed in January 2022) and BMC (completed in
May 2022). In June 2022, we announced that we will
retain New South Wales Energy Coal and will seek
approval to continue mining through to cessation of
operations in FY2030.
– While we secured additional investments in nickel
and copper projects, the public offer made for Noront
Resources (nickel) was unsuccessful.
– Our pursuit of innovation has progressed, with 60
innovation concepts generated for evaluation in
FY2022. Strong progress also continues across
ventures, with 9 investments executed during FY2022,
while ventures also supported market intelligence in our
strategic evaluations of new products and processes.
Below
target.
Slightly
above
target.
Slightly
above
target.
Overall, it was considered the performance of the CEO against the individual measures for FY2022 had met expectations and warranted an outcome
aligned to the target of 25 per cent.
The CDP performance measures for other Executive KMP for FY2022 are similar to those of the CEO outlined above. However, for the other Executive
KMP, the weighting of each performance measure will vary to reflect the focus required from each Executive KMP role. As with the CEO, individual
performance measures are determined at the start of the financial year. These include the other Executive KMP’s contribution to the delivery of projects
and initiatives within the scope of their role and the overall performance of the Group. Individual performance of other Executive KMP was reviewed
against these measures by the Committee and, on average, were considered to have met expectations and warranted an outcome aligned with target.
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The diagram below represents the FY2022 CDP weightings and outcomes against the original scorecard for other Executive KMP.
Performance categories
HSEC
Financial
Individual
Group
Region
Group
Region
Other Executive
KMP with region
responsibility
Other Executive
KMP without region
responsibility
Threshold
Target
Maximum
12.5%
12.5%
25%
25%
25%
25%
0%
50%
0%
25%
BHP
Minerals Australia
Minerals America
Petroleum
3.3 FY2022 LTIP performance outcomes
The five-year performance period for the 2017 LTIP award for relevant Executive KMP ended on 30 June 2022. Vesting is subject to achievement of the
relative TSR performance conditions and any discretion applied by the Committee (refer to 3.4 Overarching discretion and vesting underpin).
For the 2017 LTIP award to vest in full, BHP’s TSR over the performance period from 1 July 2017 to 30 June 2022 must be at or exceed the 80th
percentile of the Sector Group TSR and the World TSR. TSR includes returns to BHP shareholders in the form of share price movements along with
dividends paid and reinvested in BHP (including cash and in-specie dividends).
BHP’s TSR performance was positive 181.7 per cent over the five-year period from 1 July 2017 to 30 June 2022. This is above the 80th percentile of the
Sector Group TSR of positive 168.7 per cent and above the 80th percentile of the World TSR of positive 128.8 per cent over the same period. This level
of performance results in 100 per cent vesting for the 2017 LTIP award. The value of the CEO’s vested 2017 LTIP award has been reported in 3.1 FY2022
remuneration received by the CEO.
The graph below shows BHP’s performance relative to comparator groups.
BHP vs. Sector Group and MSCI World TSR over 2017 LTIP cycle
TSR since 1 July 2017 (%)
200%
150%
100%
50%
0%
–50%
2017
2018
2019
2020
2021
2022
Years ended 30 June
BHP TSR
Sector Group 50th percentile TSR
Sector Group 80th percentile TSR
World (MSCI) 50th percentile TSR
World (MSCI) 80th percentile TSR
The value of the vested 2017 LTIP award is higher than the value of the award at the time it was granted. With the share price having risen appreciably
during the five-year period and strong dividends, 44 per cent of the value realised is due to the value at the time the awards were granted and 56 per cent
is due to share price appreciation and dividends. This value increment due to share price appreciation and dividends is consistent with the experience of
shareholders over the period.
3.4 Overarching discretion and vesting underpin
The rules of the CDP and LTIP and the terms and conditions of the awards provide the Committee with an overarching discretion to reduce the number
of awards that will vest, notwithstanding that the performance condition or the relevant service conditions have been met.
This overarching discretion is a holistic, qualitative judgement and is applied as an underpin test before final vesting is confirmed. It is an important
risk management tool to ensure vesting is not simply driven by a formula or the passage of time that may give unexpected or unintended
remuneration outcomes.
The Committee considers its discretion carefully each year ahead of the scheduled vesting of CDP and LTIP equity awards in August. It considers
performance holistically over the five-year period, including a five-year ‘look back’ on HSEC performance, profitability, cash flow, balance sheet health,
returns to shareholders, corporate governance and conduct. For the five years from FY2018 to FY2022, the Committee noted BHP’s continued
improvement in HSEC outcomes, strong operational performance with improving production and cost performance, and significant returns to
shareholders, together with no governance or conduct issues of note.
Firstly, in respect of the vesting of CDP two-year deferred shares (granted in November 2020 in respect of performance in FY2020), the Committee chose
not to exercise its discretion and allowed the CDP awards to vest in full.
Secondly, in respect of the vesting of the 2017 LTIP five-year performance shares, the formulaic outcome of the 2017 LTIP was 100 per cent vesting.
Having undertaken the ‘look back’ review described above, the Committee concluded the vesting outcome was appropriate given Group and individual
performance, and chose not to exercise its discretion and allowed 100 per cent of the LTIP awards to vest. There is no upwards discretion available to the
Committee in respect of the LTIP and the overarching discretion may only reduce the number of awards that may vest.
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3.5 Sign-on performance shares
David Lamont joined BHP as Chief Financial Officer on 1 December 2020. David left his former employer, CSL Limited (CSL), a major Australian company
listed on the Australian Stock Exchange, on 30 October 2020. As a consequence of his resignation, certain CSL incentive awards, which were expected
to have been paid or vested in 2021 and beyond, were foregone. Replacement BHP awards were provided in accordance with BHP’s remuneration
framework. In accordance with that policy, remuneration that David forfeited or did not receive as a consequence of leaving CSL to join BHP was partly
replaced with 86,279 performance shares (i.e. 77,000 awards granted plus 9,279 additional uplift awards allocated as part of the merger of the Petroleum
business with Woodside) and the Committee determined appropriate service and performance conditions.
The performance conditions were a holistic assessment of underlying financial performance of BHP and personal performance of David during the vesting
period. At the time of grant, the target was 80 per cent vesting of awards, with a maximum of 100 per cent and a minimum of zero.
The service condition was satisfied and the Committee assessed the performance condition over the relevant performance period (1 December 2020 to
30 June 2022). The Committee considered BHP’s TSR, the CDP finance measure outcomes and David’s personal performance (with guidance on this
assessment from the CEO).
In particular, the Committee considered the following information over the relevant period:
– BHP’s relative TSR performance was slightly above the weighted median of BHP’s sector peers
– BHP’s financial performance, as measured by the CDP finance measure outcomes, was slightly below target
– the CEO’s view that David had performed in line with expectations in his role
The Committee exercised its discretion and determined to vest 80 per cent or 69,023 of the performance shares. The awards which will not vest will
instead lapse. A holding lock will apply to the vested shares until August 2023, at which time they will be released to David. Should David voluntarily
resign or retire during the holding lock period, or be terminated for cause, the shares subject to the holding lock will be forfeited.
3.6 LTIP allocated during FY2022
Following shareholder approval at the 2021 AGMs, 107,183 LTIP awards (in the form of performance rights) were granted to the CEO on 23 November
2021. The face value of the CEO’s award was 200 per cent of his base salary of US$1.700 million at the time of grant. The fair value of the awards
is ordinarily calculated by multiplying the face value of the award by the fair value factor of 41 per cent (for the current plan design, as determined by
the independent adviser to the Committee). The 107,183 LTIP awards for the CEO was determined based on the US$ face value of the LTIP awards
of US$3.400 million and calculated using the average share price and US$/A$ exchange rate over the 12 months up to and including 30 June 2021.
LTIP awards granted to other Executive KMP during FY2022 were calculated on the same basis as described above for the CEO, except that awards for
other Executive KMP had a face value of 175 per cent of base salary.
In addition to the LTIP terms set out in 2.2 Remuneration framework operation, the Committee has determined the following terms for the 2021 LTIP:
Performance period
– 1 July 2021 to 30 June 2026
Performance conditions
– An averaging period of six months will be used in the TSR calculations.
– BHP’s TSR relative to the weighted median TSR of sector peer companies selected by the Committee (Sector Group
TSR) and the MSCI World Index (World TSR) will determine the vesting of 67% and 33% of the award, respectively.
– Each company in the sector peer group is weighted by market capitalisation. The maximum weighting for any one
company is 25% and the minimum is set at 0.4% to reduce sensitivity to any single sector peer company.
– For the whole of either portion of the award to vest, BHP’s TSR must be at or exceed the weighted 80th percentile of
the Sector Group TSR or the World TSR (as applicable). Threshold vesting (25% of each portion of the award) occurs
where BHP’s TSR equals the weighted 50th percentile (i.e. the median) of the Sector Group TSR or the World TSR
(as applicable). Vesting occurs on a sliding scale between the weighted 50th and 80th percentiles.
– Resources (85%): Anglo American, Fortescue Metals, Freeport-McMoRan, Glencore, Rio Tinto, Southern Copper,
Teck Resources, Vale.
– Oil and gas (15%): Apache, BP, Canadian Natural Res., Chevron, ConocoPhillips, Devon Energy, EOG Resources,
ExxonMobil, Occidental Petroleum, Shell, Woodside.
Sector peer group
companies1
1 From November 2018, CONSOL Energy was removed from the sector comparator group, as due to its internal restructuring it had become a less comparable peer.
3.7 FY2023 remuneration for the CEO and other Executive KMP
The remuneration for the CEO and other Executive KMP in FY2023 will be in accordance with 2.2 Remuneration framework operation.
Base salary review
Base salaries are reviewed annually and increases are applicable from 1 September. The CEO commenced in the role on 1 January 2020 and did not
receive a base salary increase in FY2021 or FY2022. The Board and the Committee have assessed the CEO and other Executive KMP’s performance
and determined that, as of 1 September 2022:
– The CEO’s and other Executive KMP’s base salaries will increase by 3 per cent following a review by the Committee of the external market demand for
senior executive talent and updated benchmarking. The Committee considers the increases modest in this context, as well as being below the median
salary increase applied for other BHP employees of approximately 4 per cent.
– In addition, having reviewed Ragnar Udd’s performance and development in role since appointment in November 2020, including the dynamic context
and growing importance of the Americas region to the Group, the Committee provided an additional increase of 6 per cent increase in base salary
(i.e. 9 per cent in total).
The CEO’s and other Executive KMP’s base salaries will be kept under review in future years to ensure they remain competitive.
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FY2023 CDP performance measures
For FY2023, the Board and the Committee have set the following CDP scorecard performance measures for the CEO. The weighting of each
performance measure and specific individual performance measures will vary for other Executive KMP to reflect the focus required from each of them
in their role:
Performance
categories
Safety and
Sustainability
Weighting
Target measures
25%
The following Safety and Sustainability (previously HSEC) performance measures are designed to incentivise achievement of the
Group’s public goals.
Financial
50%
Individual
25%
Significant events (10%): No significant (actual level 4) health, safety (including fatalities), environment or community events
during the year. Achievement of sexual harassment and Fatality Implementation Program FY2023 deliverables.
Climate change (10%): FY2023 GHG emissions targets met, aligned with progress towards the 2030 medium term target. A
majority of planned decarbonisation projects are presented for tollgates or milestones as scheduled. Progress Memorandum of
Understanding commitments with steel customers.
Indigenous partnerships (5%): Achieve uplift in Indigenous, Traditional Owner and First Nations vendor procurement. Planned
progress on Indigenous employment / participation targets. Release revised Global Indigenous Peoples Strategy.
ROCE is underlying profit after taxation (excluding after-taxation finance costs and exceptional items) divided by average capital
employed. When assessing management’s performance, adjustments are made to the ROCE result to allow for changes in
commodity prices, foreign exchange movements and other material items to ensure the assessment appropriately measures
outcomes that are within the control and influence of the Group and its executives. For reasons of commercial sensitivity, the
target for ROCE is not disclosed in advance.
The CEO’s individual measures for FY2023 comprise the contribution to BHP’s overall performance and the management team
and the delivery of projects and initiatives within the scope of the CEO role as set out by the Board. These include projects and
initiatives in respect of social value, people, performance and portfolio.
These performance measures are aligned with medium and long-term strategy aspirations that are intended to drive long-term
value for shareholders and other stakeholders and the Board considers a 25% weighting in the CDP to be appropriate for these
important elements.
Individual performance measures for other Executive KMP similarly contribute to the delivery of projects and initiatives within the
scope of their role and BHP’s overall performance.
FY2023 LTIP award
The maximum face value of the CEO’s FY2023 LTIP award under the remuneration framework is US$3.500 million, being 200 per cent of the CEO’s
base salary at the time of grant. The number of LTIP awards in FY2023 has been determined using the share price and US$/A$ exchange rate over the
12 months up to and including 30 June 2022 (adjusted to eliminate the value of the in-specie dividend distributed in connection with the merger of BHP’s
Petroleum business with Woodside from the daily BHP Group Limited share prices between 1 July 2021 to 31 May 2022). Based on this, a FY2023
grant of 118,853 LTIP awards is proposed and approval for this LTIP grant will be sought from shareholders at the 2022 AGM. If approved, the award
will be granted following the AGM (i.e. in or around November 2022, subject to securities dealing considerations). The FY2023 LTIP award will use the
same performance and service conditions as the FY2022 LTIP award, except that the MSCI World Metals and Mining Index will replace the sector group
companies comparator group, due to the merger of the Petroleum business with Woodside. Accordingly, the FY2023 LTIP award will use the following
comparator groups: the new MSCI World Metals and Mining Index and the existing MSCI World Index, which will determine the vesting of 67 per cent and
33 per cent of the award, respectively.
LTIP awards granted to other Executive KMP during FY2023 will be calculated on the same basis as described above for the CEO, except that awards for
other Executive KMP will have a maximum face value of 175 per cent of base salary.
4 Remuneration for Non-executive Directors
Our remuneration framework for Non-executive Directors aligns with the Australian Securities Exchange Corporate Governance Council’s Principles
and Recommendations (4th Edition).
4.1 Remuneration framework
The following table shows the components for Non-executive Directors’ remuneration. Non-executive Directors are not eligible to participate in any
CDP or LTIP awards.
Fees
Benefits
Purpose and link
to strategy
Competitive fees are paid in order to attract and retain high-
quality individuals, and to provide appropriate remuneration for
the role undertaken. Fees are set at a competitive level based
on benchmarks and advice provided by external advisers.
Competitive benefits are paid in order to attract and
retain high-quality individuals and adequately remunerate
them for the role undertaken, including the considerable
travel burden.
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Remuneration components
Fees
Benefits
The Chair is paid a single fee for all responsibilities.
Non-executive Directors are paid a base fee and relevant
committee membership fees. Committee Chairs and the Senior
Independent Director are paid an additional fee to reflect their
extra responsibilities.
All fee levels are reviewed annually and any changes are
ordinarily effective from 1 July.
Fee levels reflect the size and complexity of the Group and
the geographies in which the Group operates. The economic
environment and the financial performance of the Group are
taken into account. Consideration is also given to salary reviews
across the rest of the Group.
Where the payment of pension contributions is required by law,
these contributions are deducted from the Director’s overall
fee entitlements.
Travel allowances are paid on a per-trip basis reflecting
the considerable travel burden imposed on members of
the Board as a consequence of the global nature of the
organisation and apply when a Director needs to travel
internationally to attend a Board meeting or site visits at
our multiple geographic locations.
As a consequence of our prior dual listed company
structure, Non-executive Directors are required to prepare
personal tax returns in Australia and the UK, regardless of
whether they reside in one or neither of those countries.
They are accordingly reimbursed for the costs of personal
tax return preparation in whichever of the UK and/or
Australia is not their place of residence (including payment
of the tax cost associated with the provision of the benefit).
Letters of appointment
The Board has adopted a letter of appointment that contains the terms on which Non-executive Directors will be appointed, including the basis upon
which they will be indemnified by the Group. The Board has adopted a policy under which all Non-executive Directors must seek re-election at the AGM
each year. As a result of requiring re-election each year, Non-executive Directors do not have a fixed term in their letter of appointment.
The maximum aggregate fees payable to Non-executive Directors (including the Chair) were approved by shareholders at the 2008 AGMs at
US$3.800 million per annum. This sum includes base fees, Committee fees and pension contributions. Travel allowances and non-monetary benefits are
not included in this limit.
Payments on early termination or loss of office
There are no provisions in any of the Non-executive Directors’ appointment arrangements for compensation payable on early termination of their
directorship. A Non-executive Director may resign on reasonable notice. No payments are made to Non-executive Directors on loss of office.
4.2 Non-executive Directors’ remuneration in FY2023
In FY2023, the remuneration for the Non-executive Directors will be paid in accordance with the remuneration framework set out above. Fee levels for
the Non-executive Directors and the Chair are reviewed annually. The review includes benchmarking against peer companies, with the assistance of
external advisers.
From 1 July 2017, the Chair’s annual fee was reduced by approximately 8 per cent from US$0.960 million to US$0.880 million and will remain at that level
for FY2023. This fee reduction was in addition to the reduction of approximately 13 per cent from US$1.100 million to US$0.960 million effective 1 July
2015. Base fee levels for Non-executive Directors will remain at the reduced levels that took effect from 1 July 2015, at which time they were reduced by
approximately 6 per cent from US$0.170 million to US$0.160 million per annum.
The below table sets out the annualised total remuneration and total fixed fees for FY2023, which are unchanged from FY2022.
Levels of fees and travel allowances for Non-executive Directors (in US$)
Base annual fee
Plus additional fees for:
Senior Independent Director
Committee Chair:
Risk and Audit
Remuneration
Sustainability
Nomination and Governance
Committee membership:
Risk and Audit
Remuneration
Sustainability
Nomination and Governance
Travel allowance:1
Greater than 3 but less than 10 hours
10 hours or more
Chair’s fee
From 1 July 2022
160,000
48,000
60,000
45,000
45,000
No additional fee
32,500
27,500
27,500
18,000
7,000
15,000
880,000
1
In relation to travel for Board business, the time thresholds relate to the flight time to travel to the meeting location (i.e. one way flight time). Only one travel allowance is paid
per round trip.
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5 Statutory KMP remuneration and other disclosures
5.1 KMP remuneration table
The table below has been prepared in accordance with relevant accounting standards. Remuneration data for KMP are for the periods of FY2021 and FY2022
that they were KMP. More information on the framework and operation of each element of remuneration is provided earlier in this Report.
Share-based payments
The figures included in the shaded columns of the statutory table below for share-based payments were not actually provided to the Executive KMP
including the CEO during FY2022 or FY2021. These amounts are calculated in accordance with accounting standards and are the amortised IFRS fair
values at grant date of equity and equity-related instruments that have been granted to the executives. For information on awards that were allocated
and vested during FY2022 and FY2021, refer to 5.2 Equity awards.
Short-term benefits
Post-
employment
benefits
Share-based payments
US$(‘000)
Executive Director
Mike Henry
Other Executive KMP
Edgar Basto
Peter Beaven7
David Lamont
Daniel Malchuk7
Geraldine Slattery
Ragnar Udd
Non-Executive Directors
Terry Bowen
Malcolm Broomhead
Ian Cockerill
Xiaoqun Clever8
Anita Frew9
Gary Goldberg
Michelle Hinchliffe8
Susan Kilsby9
Ken MacKenzie
Lindsay Maxsted9
John Mogford
Christine O’Reilly8
Catherine Tanna8
Shriti Vadera9
Dion Weisler
Financial
year
Base salary/
Fees1
Annual cash
incentive2
Non-monetary
benefits3
Other
benefits4
Retirement
benefits5
Value of CDP/
STIP awards2,6
FY2022
FY2021
FY2022
FY2021
FY2021
FY2022
FY2021
FY2021
FY2022
FY2021
FY2022
FY2021
FY2022
FY2021
FY2022
FY2021
FY2022
FY2021
FY2022
FY2021
FY2022
FY2021
FY2022
FY2021
FY2022
FY2022
FY2021
FY2022
FY2021
FY2021
FY2022
FY2021
FY2022
FY2021
FY2022
FY2021
FY2022
FY2021
1,700
1,700
1,306
1,564
950
950
417
950
554
333
850
800
850
567
248
219
165
195
233
220
193
144
81
220
301
246
64
69
220
863
864
33
234
215
276
162
49
74
191
178
646
866
400
730
510
307
700
800
653
521
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
168
120
45
60
39
37
42
23
–
25
32
49
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
300
–
–
695
–
–
420
32
4
31
3
61
–
18
–
2
2
71
2
30
16
1
32
4
3
17
2
32
–
30
1
32
1
170
170
95
95
83
95
55
67
128
160
85
57
15
12
12
10
–
–
–
–
–
–
–
–
–
–
–
17
16
2
–
–
–
9
4
–
14
9
1,890
1,487
698
432
876
615
167
765
1,019
777
576
190
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Value
of LTIP
awards6
2,297
2,315
786
839
787
1,754
935
620
856
930
676
483
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
7,531
7,356
3,220
3,242
2,602
4,481
2,263
2,115
4,248
3,492
2,872
2,287
295
235
208
208
294
220
211
144
83
222
372
248
94
85
221
912
884
38
251
217
308
171
83
75
237
188
1 Base salaries and fees shown in this table reflect the amounts paid over the 12-month period from 1 July 2021 to 30 June 2022 for each Executive KMP and Non-Executive
Director. There were no changes to Executive KMP base salaries during FY2022. The following Non-Executive Directors have received special exertion fees for additional
or extra services they performed in FY2022 in connection with major transactions undertaken by the Group: in connection with the unification of BHP’s dual listed structure
– Gary Goldberg received an additional fee of US$20,000 as Chair of the Transaction Committee and Ian Cockerill and Terry Bowen received US$12,500 each as members
of the Transaction Committee; and in connection with the merger of the Petroleum business with Woodside – Christine O’Reilly received an additional fee of US$20,000 as
Chair of the Transaction Committee and Terry Bowen and John Mogford received US$12,500 each as members of the Transaction Committee.
2 Annual cash incentive in this table is the cash portion of CDP awards earned in respect of performance during each financial year for each executive. CDP is provided one-
third in cash and two-thirds in deferred equity (which are included in the Share-based payments columns of the table). The cash portion of CDP awards is paid to Executive
KMP in September of the year following the relevant financial year. The minimum possible value awarded to each individual is nil and the maximum is 360 per cent of base
salary (120 per cent in cash and 240 per cent in deferred equity). For FY2022, Executive KMP earned the following CDP awards as a percentage of the maximum (the
remaining portion has been forfeited): Mike Henry 64 per cent, Edgar Basto 57 per cent, David Lamont 64 per cent, Geraldine Slattery 69 per cent, and Ragnar Udd 64 per
cent. Peter Beaven’s and Daniel Malchuk’s FY2021 CDP was paid in cash and prorated to reflect the period served until they ceased to be KMP on 30 November 2020 and
31 October 2020 respectively.
3 Non-monetary benefits are non-pensionable and include items such as net leave accruals, private family health insurance, spouse business-related travel, car parking, fringe
benefits tax and personal tax return preparation in required countries.
4 Other benefits are non-pensionable and for FY2022 include a sign-on cash award on commencement of employment for David Lamont representing compensation for
remuneration that David forfeited or did not receive as a consequence of leaving CSL to join BHP in 2020; an encashment of annual leave entitlements under the US
BHP
Annual Report 2022
121
Financial StatementsAdditional InformationGovernanceOperating and Financial Review Remuneration Report continued
Annual Leave policy for Geraldine Slattery, together with a retention award for Geraldine to ensure her services were retained by BHP after the August 2021 announcement
of the merger of the Petroleum business with Woodside; and in FY2021, a one-off relocation allowance (with no trailing entitlements) provided to Ragnar Udd relating to
his international relocation from Australia to Chile. The majority of the amounts disclosed for benefits for Non-executive Directors are usually travel allowances (amounts
of between US$ nil and US$70,000 for FY2022) however, the COVID-19 pandemic restricted Non-executive Director travel during FY2021 and FY2022. For FY2022,
amounts of between US$ nil and US$4,000 are included in respect of tax return preparation; and amounts of between US$ nil and US$1,500 are included in respect of the
reimbursement of the tax cost associated with the provision of taxable benefits.
5 Retirement benefits for each Executive KMP in FY2021 and FY2022 were 10 per cent of base salary as per the remuneration framework, with the exception of the retirement
benefits reported for Geraldine Slattery of 15 per cent of base salary for FY2022 and the retirement benefits reported for Peter Beaven, Daniel Malchuk and Geraldine
Slattery of 20 per cent of base salary for FY2021 in accordance with prior remuneration framework. Non-Executive Director fees are inclusive of minimum superannuation
contributions of up to 10 per cent of remuneration for FY2022 in accordance with Australian superannuation legislation. No other pension contributions were paid.
6 The IFRS fair value of CDP and LTIP awards is estimated at grant date. Refer to Financial Statements note 25 Employee share ownership plans.
7 The remuneration reported for Peter Beaven and Daniel Malchuk reflects service as Executive KMP up to 30 November 2020 and 31 October 2020, respectively.
8 The FY2021 remuneration for Xiaoqun Clever and Christine O’Reilly relates to part of the year only, as they joined the Board on 1 October 2020 and 12 October 2020 respectively.
The FY2022 remuneration for Michelle Hinchliffe and Catherine Tanna relates to part of the year only, as they joined the Board on 1 March 2022 and 4 April 2022 respectively.
9 The FY2022 remuneration for Anita Frew and Susan Kilsby relates to part of the year only, as they retired from the Board on 11 November 2021. The FY2021 remuneration
for Lindsay Maxsted and Shriti Vadera relates to part of the year only, as they retired from the Board on 4 September 2020 and 15 October 2020 respectively.
5.2 Equity awards
The interests held by Executive KMP under the Group’s employee equity plans are set out in the table below. Each equity award is a right to acquire
one ordinary share in BHP Group Limited upon satisfaction of the vesting conditions. Our mandatory minimum performance requirements for securities
dealing governs and restricts dealing arrangements and the provision of shares on vesting or exercise of awards. No interests under the Group’s
employee equity plans are held by related parties of Executive KMP.
Approval from BHP’s shareholders for the issue of equity awards to the CEO under the CDP and LTIP was obtained under ASX Listing Rule 10.14
at the 2021 AGM.
DEP applies to awards provided to Executive KMP under the CDP and LTIP as detailed in 2.2 Remuneration framework operation. No DEP is payable
on MAP awards previously provided to Executive KMP.
Executive KMP received or will receive awards under the CDP, STIP and LTIP. The terms and conditions of CDP and LTIP awards, including the
performance conditions, are described in 2.2 Remuneration framework operation.
BHP senior management who are not KMP receive awards under the MAP. While no MAP awards were granted to Executive KMP after becoming KMP,
Edgar Basto, Geraldine Slattery and Ragnar Udd still hold MAP awards that were allocated to them prior to commencing their Executive KMP service.
Award type
Mike Henry
CDP
CDP
CDP
CDP
STIP
LTIP
LTIP
LTIP
LTIP
LTIP
LTIP
Edgar Basto
CDP
CDP
LTIP
LTIP
MAP
MAP
MAP
MAP
David Lamont
Performance
shares
CDP
CDP
LTIP
LTIP
Geraldine Slattery
CDP
CDP
CDP
CDP
STIP
LTIP
LTIP
LTIP
MAP
MAP
MAP
Date
of grant
At 1 July
2021
Granted
Uplift1
Vested
Lapsed
At 30
June
2022
Award
vesting
date2
Market price on date of:
Grant3
Vesting4
Gain on
awards
(‘000)5
DEP on
awards
(‘000)
23-Nov-21
23-Nov-21
20-Oct-20
20-Oct-20
20-Nov-19
23-Nov-21
20-Oct-20
20-Nov-19
18-Dec-18
24-Nov-17
9-Dec-16
23-Nov-21
23-Nov-21
23-Nov-21
20-Oct-20
19-May-20
19-May-20
25-Sep-19
24-Sep-18
1-Dec-20
23-Nov-21
23-Nov-21
23-Nov-21
1-Dec-20
23-Nov-21
23-Nov-21
20-Oct-20
20-Oct-20
20-Nov-19
23-Nov-21
20-Oct-20
20-Nov-19
21-Feb-19
21-Feb-19
24-Sep-18
–
–
44,348
44,348
17,420
–
140,239
153,631
172,413
218,020
192,360
–
–
–
68,572
28,245
28,245
28,245
27,651
77,000
–
–
–
68,572
–
–
25,490
25,490
6,628
–
54,136
104,748
28,527
28,527
28,527
49,304
49,304
–
–
–
107,183
–
–
–
–
–
27,312
27,312
52,409
–
–
–
–
–
–
16,072
16,072
52,409
–
25,219
25,219
–
–
–
46,892
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,292
3,292
6,316
8,263
3,404
3,404
3,404
–
9,279
1,937
1,937
6,316
8,263
–
–
–
–
17,420
–
–
–
–
–
192,360
–
–
–
–
–
–
–
27,651
–
–
–
–
–
3,039
3,039
3,072
3,072
–
5,651
6,524
12,623
3,438
3,438
–
–
–
–
–
6,628
–
–
–
–
–
28,527
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
49,304
49,304
44,348
44,348
107,183
140,239
153,631
172,413
218,020
Aug 26
Aug 23
Aug 25
Aug 22
– 18 Aug 21
Aug 26
Aug 25
Aug 24
Aug 23
Aug 22
– 18 Aug 21
30,604
30,604
58,725
76,835
31,649
31,649
31,649
Aug 26
Aug 23
Aug 26
Aug 25
Aug 24
Aug 23
Aug 22
– 18 Aug 21
86,279
18,009
18,009
58,725
76,835
Aug 22
Aug 26
Aug 23
Aug 26
Aug 25
28,258
28,258
28,562
28,562
52,543
60,660
117,371
31,965
31,965
Aug 26
Aug 23
Aug 25
Aug 22
– 18 Aug 21
Aug 26
Aug 25
Aug 24
Aug 23
Aug 22
– 18 Aug 21
A$38.05
A$38.05
A$35.90
A$35.90
A$37.24
A$38.05
A$35.90
A$37.24
A$33.50
A$27.97
A$25.98
A$38.05
A$38.05
A$38.05
A$35.90
A$35.05
A$35.05
A$36.53
A$33.83
A$38.56
A$38.05
A$38.05
A$38.05
A$38.56
A$38.05
A$38.05
A$35.90
A$35.90
A$37.24
A$38.05
A$35.90
A$37.24
A$34.83
A$34.83
A$33.83
–
–
–
–
A$47.70
–
–
–
–
–
A$47.70
–
–
–
–
–
–
–
A$47.70
–
–
–
–
A$831
–
–
–
–
–
A$9,176
–
–
–
–
–
–
–
A$1,319
–
–
–
–
–
–
–
–
–
–
–
–
–
–
A$47.70
–
–
–
–
–
A$316
–
–
–
–
–
A$47.70 A$1,361
–
–
–
–
–
–
–
–
A$66
–
–
–
–
–
A$1,634
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
A$25
–
–
–
–
–
–
122
BHP
Annual Report 2022
Award type
Ragnar Udd
CDP
CDP
LTIP
LTIP
MAP
MAP
MAP
MAP
Date
of grant
At 1 July
2021
Granted
Uplift1
Vested
Lapsed
At 30
June
2022
Award
vesting
date2
Market price on date of:
Grant3
Vesting4
Gain on
awards
(‘000)5
DEP on
awards
(‘000)
23-Nov-21
23-Nov-21
23-Nov-21
2-Nov-20
21-Aug-20
21-Aug-20
25-Sep-19
24-Sep-18
–
–
–
61,354
21,231
21,231
21,231
25,565
16,434
16,434
46,892
–
–
–
–
–
1,981
1,981
5,651
7,394
2,559
2,559
2,559
–
–
–
–
–
–
–
–
25,565
–
–
–
–
–
–
–
–
18,415
18,415
52,543
68,748
23,790
23,790
23,790
Aug 26
Aug 23
Aug 26
Aug 25
Aug 24
Aug 23
Aug 22
– 18 Aug 21
A$38.05
A$38.05
A$38.05
A$33.81
A$38.36
A$38.36
A$36.53
A$33.83
–
–
–
–
–
–
–
A$47.70
–
–
–
–
–
–
–
A$1,219
–
–
–
–
–
–
–
–
1 Uplift awards granted as a consequence of the merger of the Petroleum business with Woodside. For the CEO shareholder approval for these awards will be sought at the
2022 AGM and following approval these would be granted in or around November 2022. Uplift awards for other Executive KMP were granted on 17 June 2022.
2 Where the vesting date is not yet known, the estimated vesting month is shown. Where awards lapse, the lapse date is shown. If the vesting conditions are met, awards will
vest on or as soon as practicable after the first non-prohibited period date occurring after 30 June of the preceding year of vest. The year of vesting is the second (STIP and
CDP two-year awards), third (MAP), fourth (MAP) or fifth (MAP, CDP five-year awards and LTIP) financial year after grant. All awards are conditional awards and have no
exercise period, exercise price or expiry date; instead ordinary fully paid shares are automatically delivered upon the vesting conditions being met. Where vesting conditions
are not met, the conditional awards will immediately lapse.
3 The market price shown is the closing price of BHP shares on the relevant date of grant. No price is payable by the individual to receive a grant of awards. The IFRS fair
value of the CDP and LTIP awards granted in FY2022 at the grant date of 23 November 2021 are as follows: CDP – A$38.05 and LTIP – A$18.92.
4 The market price shown is the closing price of BHP shares on the relevant date of vest.
5 The gain on awards is calculated using the market price on date of vesting or exercise (as applicable) less any exercise price payable. The amounts that vested and were
lapsed for the awards during FY2022 are as follows: CDP – 100 per cent vested; LTIP – 100 per cent vested; MAP – 100 per cent vested.
5.3 Estimated value range of equity awards
The current face value (and estimate of the maximum possible total value) of equity awards allocated during FY2022 and yet to vest are the awards as
set out in the previous table multiplied by the current share price of BHP Group Limited. The minimum possible total value of the awards is nil. The actual
value that may be received by participants in the future cannot be determined as it is dependent on and therefore fluctuates with the share prices of BHP
Group Limited at the date that any particular award vests or is exercised.
Five-year share price, dividend and earnings history
The table below provides the five-year share price history for BHP Group Limited, history of dividends paid and the Group’s earnings.
BHP Group Limited
Share price at beginning of year
Share price at end of year
Dividends paid
Attributable profit (US$ million, as reported)
FY2022
A$48.22
A$41.25
A$10.181
30,900
FY2021
A$35.82
A$48.57
A$2.07
11,304
FY2020
A$41.68
A$35.82
A$2.13
7,956
FY2019
A$33.60
A$41.16
A$3.082
8,306
FY2018
A$23.23
A$33.91
A$1.24
3,705
1 The FY2022 dividends paid includes A$5.38 in respect of the in-specie dividend associated with the merger of the Petroleum business with Woodside.
2 The FY2019 dividends paid includes A$1.41 in respect of the special dividend associated with the divestment of Onshore US.
The highest and lowest closing share price during FY2022 were A$54.06 and A$35.56 respectively.
5.4 Ordinary share holdings and transactions
The number of ordinary shares in BHP Group Limited held directly, indirectly or beneficially, by each individual (including shares held in the name of all
close members of the Director’s or Executive KMP’s family and entities over which either the Director or Executive KMP or the family member has, directly
or indirectly, control, joint control or significant influence) are shown below. No shares are held nominally by any KMP or their related parties. These are
ordinary shares held without performance conditions or restrictions and are included in MSR calculations for each individual.
Mike Henry
Edgar Basto
David Lamont
Geraldine Slattery3,4
Ragnar Udd3
Terry Bowen
Malcolm Broomhead
Xiaoqun Clever
Ian Cockerill3
Anita Frew6
Gary Goldberg4
Michelle Hinchliffe5
Susan Kilsby6
Ken MacKenzie
John Mogford
Christine O’Reilly3
Catherine Tanna5
Dion Weisler
Held at 1 July 20211
Purchased
Received as
remuneration2
395,241
134,889
6,345
100,917
105,816
11,000
19,000
7,000
13,188
15,000
10,000
–
6,900
52,351
13,938
7,420
10,400
1,544
–
–
–
–
–
–
–
1,000
1,111
–
2,000
8,508
–
–
–
2,000
–
6,000
245,423
27,651
–
35,681
25,565
–
–
–
–
–
–
–
–
–
–
–
–
–
Sold
119,072
32,502
–
9,366
12,426
–
–
–
–
–
–
–
–
–
–
–
–
–
Held at
30 June 2022
521,592
130,038
6,345
127,232
118,955
11,000
19,000
8,000
14,299
15,000
12,000
8,508
6,900
52,351
13,938
9,420
10,400
7,544
1
2
Includes shares in BHP Group Plc held directly, indirectly or beneficially, by each individual (including shares held in the name of all close members of the Director’s or
Executive KMP’s family and entities over which either the Director or Executive KMP or the family member has, directly or indirectly, control, joint control or significant
influence) prior to unification.
Includes DEP in the form of shares on equity awards vesting, where applicable, as disclosed in 5.2 Equity awards.
BHP
Annual Report 2022
123
Financial StatementsAdditional InformationGovernanceOperating and Financial Review Remuneration Report continued
3 The opening balances for Ian Cockerill, Christine O’Reilly, Geraldine Slattery and Ragnar Udd have been adjusted to include an additional 929 shares, 420 shares, 3,592 shares
and 398 shares, respectively.
4 The following BHP Group Limited shares were held in the form of American Depositary Shares: 1,892 for Geraldine Slattery and 6,000 for Gary Goldberg.
5 The opening balances for Michelle Hinchliffe and Catherine Tanna reflect their shareholdings on the date that each became Non-executive Directors being 1 March 2022
and 4 April 2022, respectively.
6 Shares shown as held by Anita Frew and Susan Kilsby at 30 June 2022 are their balances at the date of their retirement from the Board on 11 November 2021.
5.5 Prohibition on hedging of BHP shares and equity instruments
The Executive KMP may not use unvested BHP equity awards as collateral or protect the value of any unvested BHP equity awards or the value of shares
and securities held as part of meeting the MSR.
Any securities that have vested and are no longer subject to restrictions, or not held as part of meeting the MSR, may be subject to hedging arrangements
or used as collateral, provided that prior consent is obtained.
5.6 Share ownership guidelines and the MSR
The share ownership guidelines and the MSR help to ensure the interests of Directors, executives and shareholders remain aligned.
The CEO and other Executive KMP are expected to grow their holdings to the MSR from the scheduled vesting of their employee awards over time.
The MSR is tested at the time that shares are to be sold. Shares may be sold to satisfy tax obligations arising from the granting, holding, vesting, exercise
or sale of the employee awards or the underlying shares whether the MSR is satisfied at that time or not.
For FY2022:
– The MSR for the CEO was five times annual pre-tax base salary. At the end of FY2022, the CEO met the MSR.
– The MSR for other Executive KMP was three times annual pre-tax base salary. At the end of FY2022, the other Executive KMP met the MSR, except
for David Lamont, as he was appointed as Executive KMP on 1 December 2020.
– No Executive KMP sold or purchased shares during FY2022, other than sales to satisfy taxation obligations, apart from Edgar Basto, who sold shares
in order to fund the purchase of a residential dwelling.
Effective 1 July 2020, a two-year post-retirement shareholding requirement for the CEO applies from the date of retirement, which will be the lower of the
CEO’s MSR or the CEO’s actual shareholding at the date of retirement.
Subject to securities dealing constraints, Non-executive Directors have agreed to apply at least 25 per cent of their remuneration (base fees plus
Committee fees) to the purchase of BHP shares until they achieve an MSR equivalent in value to one year of remuneration (base fees plus Committee
fees). Thereafter, they must maintain at least that level of shareholding throughout their tenure. At the end of FY2022, each Non-executive Director met
the MSR.
5.7 Transactions with KMP
During the financial year, there were no transactions between the Group and its subsidiaries and KMP (including their related parties) (2021: US$ nil;
2020: US$ nil). There were no amounts payable by or loans with KMP (including their related parties) at 30 June 2022 (2021: US$ nil).
A number of KMP hold or have held positions in other companies (i.e. personally related entities) where it is considered they control or significantly
influence the financial or operating policies of those entities. There have been no transactions with those entities and no amounts were owed by the
Group to personally related entities or any other related parties (2021: US$ nil; 2020: US$ nil).
This Remuneration Report was approved by the Board on 16 August 2022 and signed on its behalf by:
Christine O’Reilly
Chair, Remuneration Committee
16 August 2022
124
BHP
Annual Report 2022
Financial Statements
In this section:
1
Consolidated Financial Statements
1.1
1.2
1.3
1.4
1.5
1.6
2
3
4
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Directors’ declaration
Lead Auditor’s Independence Declaration under
Section 307C of the Australian Corporations Act 2001
Independent Auditors’ reports
Notes to the Financial Statements
Performance
1
2
3
4
5
6
7
Segment reporting
Revenue
Exceptional items
Significant events – Samarco dam failure
Expenses and other income
Income tax expense
Earnings per share
Working capital
8
9
10
Trade and other receivables
Trade and other payables
Inventories
Resource assets
11
12
13
14
15
Property, plant and equipment
Intangible assets
Impairment of non-current assets
Deferred tax balances
Closure and rehabilitation provisions
Capital Structure
16
17
18
19
Share capital
Other equity
Dividends
Provisions for dividends and other liabilities
Financial Management
20
21
22
23
Net debt
Leases
Net finance costs
Financial risk management
Operating
and Financial
Review
Governance
Financial
Statements
Additional
Information
126
126
126
127
128
129
134
187
188
189
134
136
137
139
145
146
148
149
149
149
150
152
153
156
157
160
161
162
162
163
165
167
167
Employee matters
24
25
26
Key management personnel
Employee share ownership plans
Employee benefits, restructuring and
post-retirement employee benefits provisions
Group and related party information
27
28
29
30
31
Discontinued operations
Subsidiaries
Investments accounted for using the equity method
Interests in joint operations
Related party transactions
Unrecognised items and uncertain events
32
33
Contingent liabilities
Subsequent events
Other items
34
35
36
37
Auditor’s remuneration
BHP Group Limited
Deed of Cross Guarantee
New and amended accounting standards and
interpretations and changes to accounting policies
173
173
176
177
179
180
182
182
183
183
184
184
185
186
About these Financial Statements
Reporting entity
BHP Group Limited, an incorporated Australian-listed company, and BHP Group
Plc, an incorporated UK-listed company, formed a Dual Listed Company (DLC)
until 31 January 2022. Under the DLC structure BHP Group Limited, BHP Group
Plc and their subsidiaries operated together as a single for-profit economic
entity with a common Board of Directors, unified management structure and
joint objectives. On 31 January 2022, BHP unified its corporate structure under
BHP Group Limited, and subsequently BHP Group Plc changed its name to BHP
Group (UK) Ltd. Throughout the Consolidated Financial Statements (the Financial
Statements), the collective contributions of the aforementioned entities are referred
to as ‘BHP’ or ‘the Group’, regardless of the DLC or unified corporate structure.
Group and related party information is presented in note 31 ‘Related party
transactions’ to the Financial Statements. This details transactions between
the Group’s subsidiaries, associates, joint arrangements and other related
parties. The nature of the operations and principal activities of the Group are
described in the segment information (refer to note 1 ‘Segment reporting’ to the
Financial Statements).
Presentation of the Consolidated Financial Statements
Directors of BHP have included information in this report they deem to be material
and relevant to the understanding of the Financial Statements. Disclosure may be
considered material and relevant if the dollar amount is significant due to its size or
nature, or the information is important to understand the:
– Group’s current year results
– impact of significant changes in the Group’s business or
– aspects of the Group’s operations that are important to future performance
On 22 November 2021, the Group and Woodside Energy Group Limited
(‘Woodside’) signed a binding Share Sale Agreement (‘SSA’) for the merger of the
Group’s oil and gas portfolio with Woodside. While the merger had an economic
effective date of 1 July 2021, the Group continued to control the Petroleum assets
and carry on business in the normal course for 11 months until 1 June 2022
(Completion Date). As such, the Group recognises its share of revenue, expenses,
net finance costs and associated income tax expense related to the Discontinued
operation until the Completion Date. Comparative periods have been adjusted
for the effects of applying IFRS 5/AASB 5 ‘Non-current Assets Held for Sale and
Discontinued Operations’ to disclose the Group’s Petroleum business on the same
basis as the current period.
These Financial Statements were approved by the Board of Directors on
16 August 2022.
BHP
Annual Report 2022
125
1 Consolidated Financial Statements
1.1 Consolidated Income Statement
for the year ended 30 June 2022
Continuing operations
Revenue
Other income
Expenses excluding net finance costs
Loss from equity accounted investments, related impairments and expenses
Profit from operations
Financial expenses
Financial income
Net finance costs
Profit before taxation
Income tax expense
Royalty-related taxation (net of income tax benefit)
Total taxation expense
Profit after taxation from Continuing operations
Discontinued operations
Profit/(loss) after taxation from Discontinued operations
Profit after taxation from Continuing and Discontinued operations
Attributable to non-controlling interests
Attributable to BHP shareholders
Basic earnings per ordinary share (cents)
Diluted earnings per ordinary share (cents)
Basic earnings from Continuing operations per ordinary share (cents)
Diluted earnings from Continuing operations per ordinary share (cents)
The accompanying notes form part of these Financial Statements.
Notes
2
5
5
29
22
6
27
7
7
7
7
2022
US$M
65,098
1,398
(32,371)
(19)
34,106
(1,050)
81
(969)
33,137
(10,430)
(307)
(10,737)
22,400
10,655
33,055
2,155
30,900
610.6
609.3
400.0
399.2
2021
US$M
Restated
2020
US$M
Restated
56,921
380
(30,871)
(915)
25,515
(1,290)
67
(1,223)
24,292
(10,376)
(240)
(10,616)
13,676
(225)
13,451
2,147
11,304
223.5
223.0
228.0
227.5
38,924
720
(25,453)
(508)
13,683
(1,192)
334
(858)
12,825
(4,216)
19
(4,197)
8,628
108
8,736
780
7,956
157.3
157.0
155.2
154.8
1.2 Consolidated Statement of Comprehensive Income
for the year ended 30 June 2022
Profit after taxation from Continuing and Discontinued operations
Other comprehensive income
Items that may be reclassified subsequently to the income statement:
Hedges:
(Losses)/gains taken to equity
Losses/(gains) transferred to the income statement
Exchange fluctuations on translation of foreign operations taken to equity
Exchange fluctuations on translation of foreign operations transferred to income statement
Tax recognised within other comprehensive income
Total items that may be reclassified subsequently to the income statement
Items that will not be reclassified to the income statement:
Re-measurement gains/(losses) on pension and medical schemes
Equity investments held at fair value
Tax recognised within other comprehensive income
Total items that will not be reclassified to the income statement
Total other comprehensive (loss)/income
Total comprehensive income
Attributable to non-controlling interests
Attributable to BHP shareholders
The accompanying notes form part of these Financial Statements.
Notes
2022
US$M
33,055
2021
US$M
13,451
2020
US$M
8,736
6
6
(914)
881
(5)
(54)
10
(82)
24
(8)
(9)
7
(75)
32,980
2,160
30,820
863
(837)
5
−
(8)
23
58
(2)
(20)
36
59
13,510
2,158
11,352
(315)
297
1
−
5
(12)
(81)
(2)
26
(57)
(69)
8,667
769
7,898
126
BHP
Annual Report 2022
1.3 Consolidated Balance Sheet
as at 30 June 2022
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Assets held for sale
Current tax assets
Other
Total current assets
Non-current assets
Trade and other receivables
Other financial assets
Inventories
Property, plant and equipment
Intangible assets
Investments accounted for using the equity method
Deferred tax assets
Other
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Interest bearing liabilities
Liabilities directly associated with the assets held for sale
Other financial liabilities
Current tax payable
Provisions
Deferred income
Total current liabilities
Non-current liabilities
Interest bearing liabilities
Other financial liabilities
Non-current tax payable
Deferred tax liabilities
Provisions
Deferred income
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital – BHP Group Limited
Share capital – BHP Group Plc
Treasury shares
Reserves
Retained earnings
Total equity attributable to BHP shareholders
Non-controlling interests
Total equity
Notes
2022
US$M
2021
US$M
20
8
23
10
8
23
10
11
12
29
14
9
20
23
4,15,19,26
20
23
14
4,15,19,26
17
17
17,236
5,426
629
4,935
−
263
175
28,664
153
802
1,315
61,295
1,369
1,420
56
92
66,502
95,166
6,687
2,622
−
579
3,032
3,965
34
16,919
13,806
1,997
87
3,063
10,478
50
29,481
46,400
48,766
4,638
−
(31)
12
40,338
44,957
3,809
48,766
15,246
6,059
230
4,426
324
279
129
26,693
337
1,610
1,358
73,813
1,437
1,742
1,912
25
82,234
108,927
7,027
2,628
17
130
2,800
3,696
105
16,403
18,355
1,146
120
3,314
13,799
185
36,919
53,322
55,605
1,111
1,057
(33)
2,350
46,779
51,264
4,341
55,605
The accompanying notes form part of these Financial Statements.
The Financial Statements were approved by the Board of Directors on 16 August 2022 and signed on its behalf by:
Ken MacKenzie
Chair
Mike Henry
Chief Executive Officer
BHP
Annual Report 2022
127
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review
1.4 Consolidated Cash Flow Statement
for the year ended 30 June 2022
Operating activities
Profit before taxation from Continuing operations
Adjustments for:
Depreciation and amortisation expense
Impairments of property, plant and equipment, financial assets and intangibles
Net finance costs
Loss from equity accounted investments, related impairments and expenses
Other
Changes in assets and liabilities:
Trade and other receivables
Inventories
Trade and other payables
Provisions and other assets and liabilities
Cash generated from operations
Dividends received
Interest received
Interest paid
Proceeds/(settlements) of cash management related instruments
Net income tax and royalty-related taxation refunded
Net income tax and royalty-related taxation paid
Net operating cash flows from Continuing operations
Net operating cash flows from Discontinued operations
Net operating cash flows
Investing activities
Purchases of property, plant and equipment
Exploration expenditure
Exploration expenditure expensed and included in operating cash flows
Net investment and funding of equity accounted investments
Proceeds from sale of assets
Proceeds/(settlements) from sale of subsidiaries, operations and joint operations net of their cash
Other investing
Net investing cash flows from Continuing operations
Net investing cash flows from Discontinued operations
Net cash completion payment on merger of Petroleum with Woodside
Cash and cash equivalents disposed on merger of Petroleum with Woodside
Net investing cash flows
Financing activities
Proceeds from interest bearing liabilities
Proceeds/(settlements) of debt related instruments
Repayment of interest bearing liabilities
Purchase of shares by Employee Share Ownership Plan (ESOP) Trusts
Dividends paid
Dividends paid to non-controlling interests
Net financing cash flows from Continuing operations
Net financing cash flows from Discontinued operations
Net financing cash flows
Net increase/(decrease) in cash and cash equivalents from Continuing operations
Net increase/(decrease) in cash and cash equivalents from Discontinued operations
Net cash completion payment on merger of Petroleum with Woodside
Cash and cash equivalents disposed on merger of Petroleum with Woodside
Cash and cash equivalents, net of overdrafts, at the beginning of the financial year
Foreign currency exchange rate changes on cash and cash equivalents
Cash and cash equivalents, net of overdrafts, at the end of the financial year
The accompanying notes form part of these Financial Statements.
Notes
2022
US$M
2021
US$M
Restated
2020
US$M
Restated
33,137
24,292
12,825
5,683
515
969
19
(350)
(703)
(865)
727
(248)
38,884
1,018
58
(657)
378
105
(10,501)
29,285
2,889
32,174
(5,855)
(256)
199
(266)
221
1,255
(271)
(4,973)
(904)
(683)
(399)
(6,959)
1,164
−
(3,358)
(149)
(17,851)
(2,540)
(22,734)
(33)
(22,767)
1,578
1,952
(683)
(399)
15,246
(458)
17,236
5,084
2,507
1,223
915
573
(2,389)
(405)
1,149
486
33,435
728
97
(766)
(401)
222
(7,432)
25,883
1,351
27,234
(5,612)
(192)
134
(553)
158
(3)
(257)
(6,325)
(1,520)
−
−
(7,845)
568
167
(8,357)
(234)
(7,901)
(2,127)
(17,884)
(38)
(17,922)
1,674
(207)
−
−
13,426
353
15,246
4,667
482
858
508
896
128
(714)
(589)
1,350
20,411
117
368
(1,213)
85
47
(5,130)
14,685
1,021
15,706
(5,991)
(176)
123
(596)
187
−
(130)
(6,583)
(1,033)
−
−
(7,616)
514
(157)
(2,008)
(143)
(6,876)
(1,043)
(9,713)
(39)
(9,752)
(1,611)
(51)
−
−
15,593
(505)
13,426
27
27
27
27
27
20
128
BHP
Annual Report 2022
1.5 Consolidated Statement of Changes in Equity
for the year ended 30 June 2022
Attributable to BHP shareholders
Share capital
Treasury shares
BHP
Group
Limited
BHP
Group
Plc Reserves
Retained
earnings
Total equity
attributable
to BHP
shareholders
Non-
controlling
interests
US$M
Balance as at 1 July 2021
Total comprehensive income
Transactions with owners:
BHP Group Limited shares issued
Purchase of shares by ESOP Trusts
Employee share awards exercised net of employee
contributions net of tax
Vested employee share awards that have lapsed,
been cancelled or forfeited
Accrued employee entitlement for unexercised
awards net of tax
Corporate structure unification
Dividends
In specie dividend on merger of Petroleum
with Woodside
Divestment of subsidiaries, operations and joint
operations
Transfers within equity on divestment of
subsidiaries, operations and joint operations
Equity contributed net of tax
Balance as at 30 June 2022
Balance as at 1 July 2020
Total comprehensive income
Transactions with owners:
Purchase of shares by ESOP Trusts
Employee share awards exercised net of employee
contributions net of tax
Vested employee share awards that have lapsed,
been cancelled or forfeited
Accrued employee entitlement for unexercised
awards net of tax
Dividends
Balance as at 30 June 2021
Balance as at 1 July 2019
Total comprehensive income
Transactions with owners:
Purchase of shares by ESOP Trusts
Employee share awards exercised net of
employee contributions net of tax
Vested employee share awards that have lapsed,
been cancelled or forfeited
Accrued employee entitlement for unexercised
awards net of tax
Dividends
Balance as at 30 June 2020
BHP
Group
Limited
1,111
−
BHP
Group
Plc
1,057
−
172
−
−
−
−
−
−
−
−
3,355
−
−
(1,057)
−
−
−
−
−
4,638
1,111
−
−
−
−
−
−
1,111
1,111
−
−
−
−
−
−
−
−
−
1,057
−
−
−
−
−
−
1,057
1,057
−
−
−
−
−
−
1,111
−
−
1,057
The accompanying notes form part of these Financial Statements.
(32)
−
(172)
(148)
321
−
−
−
−
−
−
−
−
(31)
(5)
−
(229)
202
−
−
−
(32)
(32)
−
(139)
166
−
−
−
(5)
(1)
−
−
(1)
2
−
−
−
−
−
−
−
−
−
−
−
(5)
4
−
−
−
(1)
−
−
(4)
4
−
−
−
−
2,350
(90)
46,779
30,910
51,264
30,820
4,341
2,160
−
−
−
−
(207)
(116)
(30)
30
−
(149)
−
−
−
−
−
−
Total
equity
55,605
32,980
−
(149)
−
−
143
(2,298)
−
−
−
(17,720)
143
−
(17,720)
−
−
(2,540)
143
−
(20,260)
−
−
(19,559)
(19,559)
−
(19,559)
−
−
(157)
(157)
(14)
158
12
14
−
40,338
2,306
22
43,396
11,330
−
158
44,957
47,865
11,352
−
−
(234)
(149)
(57)
(4)
4
175
−
2,350
−
(7,894)
46,779
2,285
(12)
42,748
7,910
−
(132)
(10)
−
(38)
10
−
−
175
(7,894)
51,264
47,169
7,898
(143)
−
−
−
5
3,809
4,310
2,158
−
−
−
−
163
48,766
52,175
13,510
(234)
−
−
−
(2,127)
4,341
175
(10,021)
55,605
4,584
769
51,753
8,667
−
−
−
(143)
−
−
175
−
2,306
−
(7,234)
43,396
175
(7,234)
47,865
−
(1,043)
4,310
175
(8,277)
52,175
BHP
Annual Report 2022
129
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review Basis of preparation
Principles of consolidation
The Group’s Financial Statements as at and for the year ended
30 June 2022:
In preparing the Financial Statements, the effects of all intragroup balances
and transactions have been eliminated.
– are a consolidated general purpose financial report
– have been prepared in accordance with the requirements of:
– the Australian Corporations Act 2001 (Corporations Act 2001)
– Australian Accounting Standards and other authoritative
pronouncements of the Australian Accounting Standards Board
(AASB) and International Financial Reporting Standards as issued
by the International Accounting Standards Board (IASB) (collectively
referred to as IFRS)
– are prepared on a going concern basis as the Directors:
– have made an assessment of the Group’s ability to continue as a
going concern for the 12 months from the date of this report
A list of significant entities in the Group, including subsidiaries, joint
arrangements and associates at year-end is contained in note 28
‘Subsidiaries’, note 29 ‘Investments accounted for using the equity method’
and note 30 ‘Interests in joint operations’.
Subsidiaries: The Financial Statements of the Group include the
consolidation of BHP Group Limited (the Company or parent entity) and
its subsidiaries, being the entities controlled by the parent entity during the
year and BHP Group Plc and its subsidiaries whilst the DLC was in effect.
Control exists where the Group:
– has power over the investee
– is exposed to, or has rights to, variable returns from its involvement with
the entity
– consider it appropriate to adopt the going concern basis of accounting
– has the ability to affect those returns through its power to direct the
in preparing the Group’s Financial Statements
activities of the entity
– measure items on the basis of historical cost principles, except for the
following items:
– derivative financial instruments and certain other financial assets and
liabilities, which are carried at fair value
– non-current assets or disposal groups that are classified as held-
for-sale or held-for-distribution, which are measured at the lower of
carrying amount and fair value less costs to sell
– include significant accounting policies in the notes to the Financial
Statements that summarise the recognition and measurement basis
used and are relevant to an understanding of the Financial Statements
– apply a presentation currency of US dollars, consistent with the
predominant functional currency of the Group’s operations. Amounts are
rounded to the nearest million dollars, unless otherwise stated, in
accordance with ASIC (Rounding in Financial/Directors’ Reports)
Instrument 2016/191
– present reclassified comparative information where required for
consistency with the current year’s presentation
– adopt all new and amended standards and interpretations under IFRS,
that are mandatory for application in periods beginning on 1 July 2021.
None had a significant impact on the Financial Statements. Refer note
37 ‘New and amended accounting standards and interpretations and
changes to accounting policies’ for details
– have not early adopted any standards and interpretations that have
been issued or amended but are not yet effective. Refer note 37 ‘New
and amended accounting standards and interpretations and changes to
accounting policies’ for details
The accounting policies are consistently applied by all entities included in
the Financial Statements.
Following unification of the Group’s corporate structure under BHP Group
Limited, which was completed in January 2022, the Group Financial
Statements are no longer required to be prepared in accordance with:
– the UK Companies Act 2006
– International Accounting Standards in conformity with the requirements
of the UK Companies Act 2006 and International Financial Reporting
Standards adopted pursuant to Regulation (EC) No. 1606/2002 as it
applies in the European Union (EU)
– International Accounting Standards adopted for use within the UK
In assessing the appropriateness of the going concern assumption over
the going concern period, management have stress tested BHP’s most
recent financial projections to incorporate a range of potential future
outcomes by considering BHP’s principal risks. The Group’s financial
forecasts, including downside commodity price and production scenarios,
demonstrate that the Group believes that it has sufficient financial
resources to meet its obligations as they fall due throughout the going
concern period. As such, the Financial Statements continue to be prepared
on the going concern basis.
The ability to approve the operating and capital budget of a subsidiary
and the ability to appoint key management personnel are decisions that
demonstrate that the Group has the existing rights to direct the relevant
activities of a subsidiary.
Consolidation of a subsidiary begins when the Company obtains control
over the subsidiary and ceases when the Company loses control of the
subsidiary. Specifically, the results of subsidiaries acquired or disposed of
during the year are included in profit or loss from the date the Company
gains control until the date when the Company ceases to control
the subsidiary.
Where the Group’s interest is less than 100 per cent, the interest
attributable to outside shareholders is reflected in non-controlling interests.
Changes in the Group’s interests in subsidiaries that do not result in a
loss of control are accounted for as equity transactions. The carrying
amount of the Group’s interests and the non-controlling interests are
adjusted to reflect the changes in their relative interests in the subsidiaries.
Any difference between the amount by which the non-controlling interests
are adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to the owners of the Company.
When the Group loses control of a subsidiary, the gain or loss on disposal
is recognised in profit or loss.
The Financial Statements of subsidiaries are prepared for the same
reporting period as the Group. The acquisition method of accounting is
used to account for the Group’s business combinations.
Joint arrangements: The Group undertakes a number of business activities
through joint arrangements, which exist when two or more parties have
joint control. Joint arrangements are classified as either joint operations or
joint ventures, based on the contractual rights and obligations between the
parties to the arrangement:
– Joint operations: A joint operation is an arrangement in which the Group
shares joint control, primarily via contractual arrangements with other
parties. In a joint operation, the Group has rights to the underlying
assets and obligations for the liabilities relating to the arrangement.
This includes situations where the parties benefit from the joint activity
through a share of the output, rather than by receiving a share of the
results of trading. In relation to the Group’s interest in a joint operation,
the Group recognises: its assets and liabilities, including its share of
any assets and liabilities held or incurred jointly; revenue from the sale
of its share of the output and its share of any revenue generated from
the sale of the output by the joint operation; and its expenses including
its share of expenses incurred jointly. All such amounts are allocated
in accordance with the terms of the arrangement, which is usually in
proportion to the Group’s interest in the joint operation.
The Group accounts for the assets, liabilities, revenue and expenses
relating to its interest in a joint operation in accordance with the IFRS
Standards applicable to the particular assets, liabilities, revenue
and expenses.
130
BHP
Annual Report 2022
– Joint ventures: A joint venture is a joint arrangement in which the parties
that share joint control have rights to the net assets of the arrangement.
A separate vehicle, not the parties, will have the rights to the assets and
obligations for the liabilities relating to the arrangement. More than an
insignificant share of output from a joint venture is sold to third parties,
which indicates the joint venture is not dependent on the parties to the
arrangement for funding, nor do the parties have an obligation for the
liabilities of the arrangement. Joint ventures are accounted for using the
equity method as outlined below.
Associates: The Group accounts for investments in associates using the
equity method as outlined below. An entity is considered an associate
where the Group is deemed to have significant influence but not control or
joint control. Significant influence is presumed to exist where the Group:
Foreign currencies
Transactions related to the Group’s worldwide operations are conducted
in a number of foreign currencies. The majority of the subsidiaries, joint
arrangements and associates within each of the operations have assessed
US dollars as the functional currency, however, some subsidiaries, joint
arrangements and associates have functional currencies other than
US dollars.
Transactions and monetary items denominated in foreign currencies are
translated into US dollars as follows:
Foreign currency item
Applicable exchange rate
Transactions
Monetary assets and liabilities
Date of underlying transaction
Period-end rate
– has over 20 per cent but less than 50 per cent of the voting rights of an
entity, unless it can be clearly demonstrated that this is not the case or
– holds less than 20 per cent of the voting rights of an entity; however, has
the power to participate in the financial and operating policy decisions
affecting the entity
Foreign exchange gains and losses resulting from translation are
recognised in the income statement, except for qualifying cash flow hedges
(which are deferred to equity) and foreign exchange gains or losses on
foreign currency provisions for site closure and rehabilitation costs (which
are capitalised in property, plant and equipment for operating sites).
The Group uses the term ‘equity accounted investments’ to refer to joint
ventures and associates collectively.
Under the equity method, an investment in an associate or a joint venture
is recognised initially at cost and adjusted thereafter to recognise the
Group’s share of the profit or loss and other comprehensive income of
the associate or joint venture. When the Group’s share of losses of an
associate or a joint venture exceeds the Group’s interest in that associate
or joint venture, the Group discontinues recognising its share of further
losses. Additional losses are recognised only to the extent that the Group
has incurred legal or constructive obligations or made payments on behalf
of the associate or joint venture.
On consolidation, the assets, liabilities, income and expenses of foreign
operations with non-US dollar functional currencies are translated into US
dollars using the following applicable exchange rates:
Foreign currency amount
Applicable exchange rate
Income and expenses
Assets and liabilities
Equity
Reserves
Date of underlying transaction
Period-end rate
Historical rate
Historical rate
Foreign exchange differences resulting from translation are initially
recognised in the foreign currency translation reserve and subsequently
transferred to the income statement on disposal of a foreign operation.
Significant accounting policies, judgements and estimates
The Group’s accounting policies require the use of judgement, estimates
and assumptions. All judgements, estimates and assumptions are based
on the most current facts and circumstances and are reassessed on an
ongoing basis. Actual results in future reporting periods may differ for
these estimates under different assumptions and conditions.
Further information regarding the Group’s significant judgements and key
estimates and assumptions, being those where changes may materially
affect financial results and the carrying amount of assets and liabilities
to be reported in the next reporting period, are embedded within the
following notes:
Note
4
6
11
11
13
15
21
Significant events – Samarco dam failure
Taxation
Overburden removal costs
Depreciation of property, plant and equipment
Impairments of non-current assets
Closure and rehabilitation provisions
Leases
Additional information including sensitivity analysis, where appropriate,
has been provided in the relevant notes to enhance an understanding
of the impact of key estimates and assumptions on the Group’s financial
position and performance.
Reserve estimates
Reserves are estimates of the amount of product that can be
demonstrated to be able to be economically and legally extracted from
the Group’s properties. In order to estimate reserves, assumptions are
required about a range of technical and economic factors, including
quantities, qualities, production techniques, recovery efficiency,
production and transport costs, commodity supply and demand,
commodity and carbon prices and exchange rates.
Estimating the quantity and/or quality of reserves requires the size,
shape and depth of ore bodies to be determined by analysing geological
data, such as drilling samples and geophysical survey interpretations.
Economic assumptions used to estimate reserves change from period-
to-period as additional technical and operational data is generated.
This process may require complex and difficult geological judgements to
interpret the data.
Reserve impact on financial reporting
Estimates of reserves may change from period-to-period as the economic
assumptions used to estimate reserves change and additional geological
data is generated during the course of operations. Changes in reserves
may affect the Group’s financial results and financial position in a number
of ways, including:
– asset carrying values may be affected due to changes in estimated
future production levels
– depreciation, depletion and amortisation charged to the income
statement may change where such charges are determined on the
units of production basis, or where the useful economic lives of
assets change
– overburden removal costs recorded on the balance sheet or charged
to the income statement may change due to changes in stripping ratios
or the units of production basis of depreciation
– closure and rehabilitation provisions may change where changes in
estimated reserves affect expectations about the timing or cost of
these activities
– the carrying amount of deferred tax assets may change due to
changes in estimates of the likely recovery of the tax benefits
BHP
Annual Report 2022
131
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review Climate change
Global transition signposts
The Group continues to develop its assessment of the potential
impacts of climate change and the transition to a low carbon economy.
The Group’s current climate change strategy focuses on reducing
operational greenhouse gas (GHG) emissions, investing in low emissions
technologies, supporting emissions reductions in our value chain and
promoting product stewardship, managing climate-related risk and
opportunity, and working with others to enhance the global policy and
market response. Future changes to the Group’s climate change strategy
or global decarbonisation signposts may impact the Group’s significant
judgements and key estimates and result in material changes to financial
results and the carrying values of certain assets and liabilities in future
reporting periods.
During FY2022, the Group completed the merger of the Group’s Petroleum
business with Woodside and the divestments of the Group’s interests in
BHP Mitsui Coal Pty Ltd (BMC) and the Cerrejón non-operated energy coal
joint venture. In addition, the Group announced that it will retain New South
Wales Energy Coal (NSWEC) in its portfolio, seek approvals to continue
mining at NSWEC beyond its current mining consent that expires in 2026,
and intends to proceed with a managed process to cease mining at the
asset by the end of FY2030. While climate change and the transition to a
low carbon economy remain key considerations in the Group’s significant
judgements and estimates, the portfolio updates during FY2022 have
reduced the Group’s exposure to fossil fuels. Following the updates, the
potential risk to the carrying value of the Group’s assets and liabilities from
long-term price estimates for oil, gas and energy coal is largely limited to
the impact of those commodities on the Group’s supply chain.
The Group’s current climate change strategy is reflected in the Group’s
significant judgements and key estimates, and therefore the Financial
Statements, as follows:
Transition risks
The Group’s targets and goals
As part of its response to the Paris Agreement goals, the Group has set
a target to reduce its operational GHG emissions (Scope 1 and Scope
2 from our operated assets) by at least 30 per cent from FY2020 levels
by FY2030 and a goal to achieve net zero operational GHG emissions
by 2050. For the FY2030 target, the FY2020 baseline has been adjusted
to reflect the divestment of the Group’s Petroleum and BMC operations
and will be adjusted for any material future acquisitions and divestments.
Approved emissions reduction projects aimed at contributing to the
achievement of the Group’s operational GHG emissions target and goal
have been incorporated into the forecast cash flows of the Group’s assets.
The use of carbon offsets will be governed by the Group’s approach to
carbon offsetting, with the Group’s offset strategy currently being managed
at a consolidated Group level and therefore not currently incorporated into
the forecast cash flows of individual assets. Any change to the Group’s
climate change strategy could impact these forecasts and the Group’s
significant judgements and key estimates.
The Group continues to invest, including in partnership with others, in
emissions reduction projects and technology innovation and development
in its value chain to support reductions to its total reported Scope 3 GHG
emissions inventory, with a particular focus on steelmaking and maritime
emissions. However, while we seek to influence, Scope 3 emissions occur
outside of our direct control. Reduction pathways are dependent on the
development, and upstream or downstream deployment of solutions and/
or supportive policy. Where possible, the financial impact of the Group’s
activities in support of Scope 3 reduction pathways is reflected in the
financial statements, for example the Group’s chartering of LNG-fuelled
vessels. It is however currently not possible to reliably estimate or measure
the full potential financial statement impacts of the Group’s pursuit of its
Scope 3 goals and targets.
The Climate Investment Program (CIP), as announced by the Group in
July 2019, aims to invest at least US$400 million over the CIP’s five-year
life in emissions reduction projects across the Group’s operated assets and
value chain. Spend under the CIP, along with capital expenditure in support
of operational decarbonisation at our operated assets, is recognised in the
relevant year of spend.
132
BHP
Annual Report 2022
In addition to the Group’s targets and goals, significant judgements and
key estimates are also impacted by the Group’s current assessment of
the range of economic and climate related conditions that could exist in
transitioning to a low carbon economy, considering the current trajectory of
society and the global economy as a whole. Signposts do not yet indicate
that the appropriate measures are in place to drive decarbonisation at
the pace or scale required for the Group to assess achieving the aims
of the Paris Agreement as the most likely future outcome. However,
as governments, institutions, companies and society increasingly
focus on addressing climate change, the potential for a non-linear and/
or more rapid transition and the subsequent impact on threats and
opportunities increases.
The BHP Climate Transition Action Plan 2021 references the Group’s
divergent climate scenarios across a range of temperature outcomes.
The Group currently uses two of those scenarios, being the Central
Energy View and Lower Carbon View1 as inputs to the Group’s operational
planning cases. The use of these two scenarios reflects the Group’s
current estimates of the most likely range of future states for the global
economy and associated sub-systems. These operational planning cases
inform updates to the Group’s supply, demand and price outlooks, capital
allocation and portfolio decisions.
Given the complexity of climate modelling, these scenarios are reviewed
periodically to reflect new information, with developments in the periods
between scenario updates being reflected in updated internal long-term
price outlooks.
Investment decisions and asset valuations also incorporate carbon price
assumptions for major Group operational, competitor and customer
countries. In determining the Group’s forecast, factors such as a country’s
current and announced climate policies and targets and societal factors
such as public acceptance and demographics are considered, with the
Group forecasting the global range of regional carbon prices to reach
between US$0-175/tCO2-e in FY2030 and US$10-250/tCO2-e in FY2050,
and US$10-175/tCO2-e in FY2030 and US$100-250/tCO2-e in FY2050 in
BHP’s current major operational and market countries.
The operational planning cases, price outlooks and cost of carbon
assumptions, impact certain significant judgements and key estimates,
including the determination of the valuation of assets and potential
impairment charges (notes 11 ‘Property, plant and equipment’ and 13
‘Impairment of non-current assets’), the estimation of the remaining useful
economic life of assets for depreciation purposes (note 11 ‘Property, plant
and equipment’) and the timing of closure and rehabilitation activities (note
15 ‘Closure and rehabilitation provisions’).
In addition to the operational planning cases, the Group utilises a range
of scenarios, including its 1.5°C Paris-aligned scenario2, when testing
the resilience of its portfolio, forming strategy and making investment
decisions. While a 1.5ºC Paris-aligned scenario does not currently
represent one of the inputs to the Group’s operational planning cases, the
Group has, during FY2022, systematically integrated the Group’s 1.5ºC
Paris-aligned scenario into the Group’s strategy and capital allocation
process to test the extent to which its capital allocation is aligned with a
rapidly decarbonising global economy. Specifically, the Group applies the
Group’s 1.5°C Paris-aligned scenario to assess whether future demand
for the Group’s products under that scenario supports ongoing capital
investment. The internal allocation of capital under the Group’s Capital
Allocation Framework and all major investment decisions now require
an assessment of investment viability under the Group’s 1.5°C Paris-
aligned scenario.
1 Central Energy View reflects, and is periodically updated to respond to, existing
policy trends and commitments. Lower Carbon View accelerates decarbonisation
trends and policies, particularly in easier-to-abate sectors such as power
generation and light duty vehicles. BHP’s Climate Change Report 2020 describes
these scenarios in more detail.
2 This scenario aligns with the aims of the Paris Agreement and requires steep
global annual emissions reduction, sustained for decades, to stay within a 1.5°C
carbon budget. 1.5°C is above pre-industrial levels. BHP’s Climate Change Report
2020 describes this scenario, including its assumptions, outputs and limitations, in
more detail.
The Group continues to monitor global decarbonisation signposts and
update its operational planning cases, price outlooks, and cost of carbon
assumptions and assessments relating to strategy and capital allocation
accordingly. Where such signposts indicate the appropriate measures are
in place for achievement of a 1.5ºC Paris-aligned scenario, this will be
reflected in the Group’s operational planning cases.
Sensitivity to demand for the Group’s commodities
The Group acknowledges that there are a range of possible energy
transition scenarios, including those that are aligned with the aims of
the Paris Agreement, that may indicate different outcomes for individual
commodities. The resilience of the Group’s portfolio to a 1.5°C Paris-
aligned scenario (the Group’s 1.5°C Paris-aligned scenario) continues
to be considered, including the impact of Paris-aligned commodity price
estimates under that scenario on the Group’s latest asset plans.
There are inherent limitations with scenario analysis and it is difficult to
predict which, if any, of the scenarios might eventuate and none of the
scenarios considered constitutes a definitive outcome for the Group.
However, the long-term commodity price estimates under the Group’s
1.5°C Paris-aligned scenario reflect the world needing around twice
as much steel, copper and potash and four times as much nickel in
the next 30 years as in the last 30. In addition, the Group’s portfolio
is transitioning towards higher quality iron ore and metallurgical coal
that enable steelmakers to be more efficient and operate with a lower
emissions intensity.
As such, although all potential financial reporting consequences under the
Group’s 1.5°C Paris-aligned scenario are currently impracticable to fully
assess, the long-term commodity price outlooks under this scenario for
iron ore, copper, metallurgical coal, nickel and potash are either largely
consistent with or favourable to the price outlooks in the Group’s current
operational planning cases.
Given the positive long-term price outlooks for these commodities, the
Group currently considers that a material adverse change is not expected
to the valuation, and remaining useful life, of assets and discounting
of closure and rehabilitation provisions for assets relating to these
commodities under its 1.5°C Paris-aligned scenario.
While energy coal long-term commodity price outlooks under the Group’s
1.5°C Paris-aligned scenario are unfavourable when compared to the
price outlooks in the Group’s current operational planning cases, following
impairments recognised in FY2021, the carrying value of assets at the
Group’s remaining energy coal operations at NSWEC is no longer material.
Further, the Group’s closure provision for NSWEC reflects the
announcement in FY2022 of the Group’s plans to seek approvals to
continue mining at NSWEC beyond its current mining consent that expires
in 2026 and intention to proceed with a managed process to cease
mining at NSWEC by the end of FY2030. While the closure provision
remains subject to estimation and assumptions, the timing of closure is
no longer considered materially susceptible to the long-term impacts of
climate change.
Physical risks
The Group is progressing work to assess the potential impact of physical
risks of climate change in line with the Group’s Risk Management
Framework. In FY2022, the Group conducted a physical risk identification
process that prioritised key potential climate hazards for more detailed
analysis including, for example, risks associated with higher sea levels
disrupting port operations and extreme rainfall impacting the stability of
tailings storage facilities. Given the ongoing nature of the Group’s physical
risk assessment process, inclusion of adaptation risk in the Group’s
operating plans, and associated asset valuations, is currently limited.
As the Group progresses its adaptation strategy, including risk evaluations
planned for FY2023, the identification of additional risks or the detailed
development of the Group’s response may result in material changes to
financial results and the carrying values of assets and liabilities in future
reporting periods.
BHP
Annual Report 2022
133
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 1.6 Notes to the Financial Statements
Performance
1 Segment reporting
Reportable segments
The Group operated three reportable segments during FY2022, which are aligned with the commodities that are extracted and marketed and reflect the
structure used by the Group’s management to assess the performance of the Group.
Reportable segment
Copper
Iron Ore
Coal
Principal activities
Mining of copper, silver, zinc, molybdenum, uranium and gold
Mining of iron ore
Mining of metallurgical coal and energy coal
On 22 November 2021, the Group signed a binding SSA for the merger of the Group’s oil and gas portfolio with Woodside. Following that announcement, the
Group’s Petroleum business no longer meets the reporting segment recognition criteria as outlined in IFRS 8/AASB 8 ‘Operating segments’ and therefore
does not form part of the reportable segments. Comparative periods have been adjusted for the effects of applying IFRS 5/AASB 5 ‘Non-current Assets Held
for Sale and Discontinued Operations’ to disclose the Group’s Petroleum business on the same basis as the current period.
Group and unallocated items includes functions, other unallocated operations including Potash, Nickel West and legacy assets, and consolidation
adjustments. Revenue not attributable to reportable segments comprises the sale of freight and fuel to third parties, as well as revenues from unallocated
operations. Exploration and technology activities are recognised within relevant segments.
Year ended 30 June 2022
US$M
Revenue
Inter-segment revenue
Total revenue
Underlying EBITDA
Depreciation and amortisation
Impairment losses1
Underlying EBIT
Exceptional items2
Net finance costs
Profit before taxation
Copper
16,849
−
16,849
8,565
(1,765)
(470)
6,330
(81)
Iron Ore
30,767
−
30,767
21,707
(2,203)
(33)
19,471
(648)
Coal
15,549
−
15,549
9,504
(762)
(9)
8,733
849
Group and
unallocated
items/
eliminations
Group total
1,933
−
1,933
858
(953)
(3)
(98)
(450)
65,098
−
65,098
40,634
(5,683)
(515)
34,436
(330)
(969)
33,137
Capital expenditure (cash basis)
Profit/(loss) from equity accounted investments, related impairments
and expenses
Investments accounted for using the equity method
Total assets3
Total liabilities3
2,528
1,848
621
858
5,855
577
1,415
32,762
5,342
(595)
−
24,613
7,790
−
−
11,524
3,874
(1)
5
26,267
29,394
(19)
1,420
95,166
46,400
Year ended 30 June 2021
US$M
Restated
Revenue
Inter-segment revenue
Total revenue
Underlying EBITDA
Depreciation and amortisation
Impairment losses1
Underlying EBIT
Exceptional items2
Net finance costs
Profit before taxation
Copper
15,726
−
15,726
8,489
(1,608)
(72)
6,809
(144)
Iron Ore
34,475
−
34,475
26,278
(1,971)
(13)
24,294
(1,319)
Coal
5,154
−
5,154
288
(845)
(20)
(577)
(1,567)
Group and
unallocated
items/
eliminations
Group total
1,566
−
1,566
18
(660)
(31)
(673)
(1,308)
56,921
−
56,921
35,073
(5,084)
(136)
29,853
(4,338)
(1,223)
24,292
Capital expenditure (cash basis)
Profit/(loss) from equity accounted investments, related impairments
and expenses
Investments accounted for using the equity method
Total assets3
Total liabilities3
2,180
2,188
579
665
5,612
692
1,482
31,517
4,589
(1,126)
−
26,171
7,508
(480)
−
11,030
3,518
(1)
260
40,209
37,707
(915)
1,742
108,927
53,322
134
BHP
Annual Report 2022
1 Segment reporting continued
Year ended 30 June 2020
US$M
Restated
Revenue
Inter-segment revenue
Total revenue
Underlying EBITDA
Depreciation and amortisation
Impairment losses1
Underlying EBIT
Exceptional items2
Net finance costs
Profit before taxation
Copper
10,666
−
10,666
4,347
(1,740)
(17)
2,590
(1,228)
Iron Ore
20,797
−
20,797
14,554
(1,608)
(22)
12,924
(614)
Coal
6,241
1
6,242
1,632
(807)
(14)
811
(18)
Group and
unallocated
items/
eliminations
Group total
1,220
(1)
1,219
(663)
(512)
(20)
(1,195)
413
38,924
−
38,924
19,870
(4,667)
(73)
15,130
(1,447)
(858)
12,825
Capital expenditure (cash basis)
Profit/(loss) from equity accounted investments, related impairments
and expenses
Investments accounted for using the equity method
Total assets3
Total liabilities3
2,434
2,328
603
626
5,991
67
1,558
28,892
3,535
(508)
−
23,841
5,441
(68)
776
12,110
2,601
1
251
40,890
41,981
(508)
2,585
105,733
53,558
Impairment losses exclude exceptional items of US$ nil (2021: US$2,371 million; 2020: US$409 million).
1
2 Exceptional items reported in Group and unallocated include Samarco dam failure costs of US$(13) million (2021: US$(14) million; 2020: US$(32) million) and Samarco
related other income of US$ nil (2021: US$34 million; 2020: US$489 million). Refer to note 3 ‘Exceptional items’ for further information.
3 Group and unallocated comparative periods total assets and total liabilities include Petroleum assets and liabilities that were previously disclosed as part of the
Petroleum segment.
Geographical information
Australia
Europe
China
Japan
India
South Korea
Rest of Asia
North America
South America
Rest of world
Australia
North America
South America
Rest of world
Unallocated assets1
Revenue by location of customer
2022
US$M
1,649
2,129
36,618
8,401
5,215
4,786
4,303
1,282
715
−
65,098
2021
US$M
Restated
2020
US$M
Restated
1,871
886
39,653
4,387
2,189
3,420
2,934
1,147
426
8
56,921
1,212
963
26,503
3,314
1,475
2,666
1,730
719
315
27
38,924
Non-current assets by location of assets
2022
US$M
43,250
3,964
18,280
150
858
66,502
2021
US$M
48,612
9,701
18,548
1,851
3,522
82,234
2020
US$M
48,236
9,682
18,179
1,955
6,210
84,262
1 Unallocated assets comprise deferred tax assets and other financial assets.
Underlying EBITDA
Underlying EBITDA is earnings before net finance costs, depreciation, amortisation and impairments, taxation expense, Discontinued operations and any
exceptional items. Underlying EBITDA includes BHP’s share of profit/(loss) from investments accounted for using the equity method including net finance
costs, depreciation, amortisation and impairments and taxation expense/(benefit).
Exceptional items are excluded from Underlying EBITDA in order to enhance the comparability of such measures from period-to-period and provide
investors with further clarity in order to assess the performance of the Group’s operations. Management monitors exceptional items separately. Refer to
note 3 ‘Exceptional items’ for additional detail.
Segment assets and liabilities
Total segment assets and liabilities of reportable segments represents operating assets and operating liabilities, including the carrying amount of
equity accounted investments and predominantly excludes cash balances, loans to associates, interest bearing liabilities and deferred tax balances.
The carrying value of investments accounted for using the equity method represents the balance of the Group’s investment in equity accounted
investments, with no adjustment for any cash balances, interest bearing liabilities or deferred tax balances of the equity accounted investment.
BHP
Annual Report 2022
135
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 2 Revenue
Revenue by segment and asset
Escondida
Pampa Norte
Olympic Dam
Third-party products
Total Copper1
Western Australia Iron Ore
Third-party products
Other
Total Iron Ore
BHP Mitsubishi Alliance
New South Wales Energy Coal
Other2
Total Coal3
Group and unallocated items4
Inter-segment adjustment
Total revenue
2022
US$M
9,500
2,670
1,776
2,903
16,849
30,632
19
116
30,767
10,254
3,035
2,260
15,549
1,933
−
65,098
2021
US$M
Restated
2020
US$M
Restated
9,470
1,801
2,211
2,244
15,726
34,337
18
120
34,475
3,537
839
778
5,154
1,566
−
56,921
6,719
1,395
1,463
1,089
10,666
20,663
15
119
20,797
4,422
885
935
6,242
1,220
(1)
38,924
1 Total Copper revenue includes: copper US$15,992 million (2021: US$14,812 million; 2020: US$10,044 million) and other US$857 million (2021: US$914 million; 2020:
US$622 million). Other consists of silver, zinc, molybdenum, uranium and gold.
Includes revenue related to BHP Mitsui Coal (BMC) divested in May 2022.
2
3 Total Coal revenue includes: metallurgical coal US$11,990 million (2021: US$4,260 million; 2020: US$5,311 million) and energy coal US$3,559 million (2021: US$894 million;
2020: US$931 million).
4 Group and unallocated items revenue includes: Nickel West US$1,926 million (2021: US$1,545 million; 2020: US$1,189 million) and other revenue US$7 million (2021:
US$21 million; 2020: US$31 million).
Revenue consists of revenue from contracts with customers of US$65,504 million (2021: US$55,562 million; 2020: US$38,917 million) and other revenue
predominantly relating to provisionally priced sales of US$(406) million (2021: US$1,359 million; 2020: US$7 million).
Recognition and measurement
The Group generates revenue from the production and sale of commodities. Revenue is recognised when or as control of the promised goods or services
passes to the customer. In most instances, control passes when the goods are delivered to a destination specified by the customer, typically on board
the customer’s appointed vessel. Revenue from the provision of services is recognised over time as the services are provided, but does not represent a
significant proportion of total revenue and is aggregated with the respective asset and product revenue for disclosure purposes.
The amount of revenue recognised reflects the consideration to which the Group expects to be entitled in exchange for transferring goods or services.
Where the Group’s sales are provisionally priced, the final price depends on future index prices. The amount of revenue initially recognised is based on
the relevant forward market price. Adjustments between the provisional and final price are accounted for under IFRS 9/AASB 9 ‘Financial Instruments’
(IFRS 9), separately recorded as other revenue and presented as part of the total revenue of each asset. The period between provisional pricing and final
invoicing is typically between 60 and 120 days.
Revenue from the sale of significant by-products is included within revenue. Where a by-product is not significant, revenue is credited against costs.
The Group applies the practical expedient to not adjust the expected consideration for the effects of the time value of money if the period between the
delivery and when the customer pays for the promised good or service is one year or less.
The Group applies the practical expedient not to disclose information relating to unfulfilled performance obligations, either due to the expected duration
of the contract term being one year or less, or for longer term contracts, because the entity has a right to consideration (and can recognise revenue) for
goods delivered.
136
BHP
Annual Report 2022
3 Exceptional items
Exceptional items are those gains or losses where their nature, including the expected frequency of the events giving rise to them, and impact is
considered material to the Financial Statements. Such items included within the Group’s profit from Continuing operations for the year are detailed below.
Exceptional items attributable to Discontinued operations are detailed in note 27 ‘Discontinued operations’.
Year ended 30 June 2022
Exceptional items by category
Samarco dam failure
Impairment of US deferred tax assets
Corporate structure unification costs
BHP Mitsui Coal (BMC) gain on disposal
Total
Attributable to non-controlling interests
Attributable to BHP shareholders
Samarco Mineração S.A. (Samarco) dam failure
Gross
US$M
(1,032)
−
(428)
840
(620)
−
(620)
Tax
US$M
(31)
(423)
−
−
(454)
−
(454)
The FY2022 exceptional loss of US$1,063 million (after tax) related to the Samarco dam failure in November 2015 comprises the following:
Year ended 30 June 2022
Other income
Expenses excluding net finance costs:
Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure
Loss from equity accounted investments, related impairments and expenses:
Samarco impairment expense
Samarco Germano dam decommissioning
Samarco dam failure provision
Fair value change on forward exchange derivatives
Net finance costs
Income tax expense
Total1
1 Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.
Impairment of US deferred tax assets
Net
US$M
(1,063)
(423)
(428)
840
(1,074)
−
(1,074)
US$M
−
(66)
−
68
(663)
(81)
(290)
(31)
(1,063)
The Group recognised an impairment charge of US$423 million (after tax) in relation to deferred tax assets where the recoverability has historically been
reliant on Petroleum earnings in the same tax group. While these tax assets remained with the Group following the merger of the Group’s oil and gas
portfolio with Woodside, the impairment charge reflects the extent of other currently forecast future earnings against which the assets can be recovered.
Corporate structure unification costs
The Group incurred transaction costs associated with the unification of the Group corporate structure under its existing Australian parent company, BHP
Group Limited, which was completed on 31 January 2022. Refer note 16 ‘Share capital’ for further information.
BHP Mitsui Coal (BMC) gain on disposal
On 3 May 2022 the Group sold its 80 per cent interest in BHP Mitsui Coal Pty Ltd (BMC) to Stanmore SMC Holdings Pty Ltd, a wholly owned subsidiary of
Stanmore Resources Limited (Stanmore Resources).
Stanmore Resources paid US$1.1 billion cash consideration at completion plus a preliminary completion adjustment of US$218 million for working
capital. US$100 million in cash remains payable in six months on 3 November 2022 with potential for an additional amount of up to US$150 million
(US$122 million discounted) in a price-linked earnout payable in the 2024 calendar year.
BHP
Annual Report 2022
137
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 3 Exceptional items continued
Details of the gain on disposal is as follows:
Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Property, plant and equipment
Total assets
Liabilities
Trade and other payables
Interest bearing liabilities
Tax payables
Provisions
Deferred tax liabilities
Total liabilities
Net assets disposed
Less non-controlling interest share of net assets disposed
BHP share of net assets disposed
Gross consideration
Transaction and other directly applicable costs
Income tax expense
Deferred consideration
Gain on disposal
The exceptional items relating to the year ended 30 June 2021 and the year ended 30 June 2020 are detailed below.
30 June 2021
Year ended 30 June 2021
Restated
Exceptional items by category
Samarco dam failure
COVID-19 related costs
Impairment of Energy coal assets
Impairment of Potash assets
Total
Attributable to non-controlling interests
Attributable to BHP shareholders
Gross
US$M
(1,087)
(499)
(1,523)
(1,314)
(4,423)
(34)
(4,389)
Tax
US$M
(71)
138
(651)
(473)
(1,057)
10
(1,067)
Samarco Mineração S.A. (Samarco) dam failure
The FY2021 exceptional loss of US$1,158 million related to the Samarco dam failure in November 2015 comprises the following:
Year ended 30 June 2021
Other income
Expenses excluding net finance costs:
Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure
Loss from equity accounted investments, related impairments and expenses:
Samarco impairment expense
Samarco Germano dam decommissioning
Samarco dam failure provision
Fair value change on forward exchange derivatives
Net finance costs
Income tax expense
Total1
1 Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.
COVID-19 related costs
US$M
63
360
26
92
1,214
1,755
253
249
9
425
31
967
788
157
631
1,318
(69)
−
222
840
Net
US$M
(1,158)
(361)
(2,174)
(1,787)
(5,480)
(24)
(5,456)
US$M
34
(46)
(111)
(15)
(1,000)
136
(85)
(71)
(1,158)
The exceptional item reflects the directly attributable COVID-19 pandemic related additional costs for the Group for FY2021, including costs associated
with the increased provision of health and hygiene services, the impacts of maintaining social distancing requirements and demurrage and other standby
charges related to delays caused by COVID-19. At the time, COVID-19 was considered a single protracted globally pervasive event.
However, as the pandemic has continued to evolve, certain impacts that were initially considered to be potentially short-term in nature are now expected
to continue over a number of reporting periods. These activities are now considered to be part of business as usual operations and, as such, for FY2022,
the incremental costs have not been classified as an exceptional item.
Impairment of Energy coal assets
The Group recognised an impairment charge of US$1,704 million (after tax) in relation to New South Wales Energy Coal (NSWEC) reflecting the status of
the divestment process and current market conditions for thermal coal, the strengthening Australian dollar and changes to the mine plan. In addition, the
Group recognised an impairment charge of US$470 million (after tax) for Cerrejón, reflecting the expected net sales proceeds.
138
BHP
Annual Report 2022
3 Exceptional items continued
Impairment of Potash assets
The Group recognised an impairment charge of US$1,787 million (after tax) in relation to Potash. The impairment charge reflected an analysis of market
perspectives and the value that we expected a market participant to attribute to our investments to date.
30 June 2020
Year ended 30 June 2020
Restated
Exceptional items by category
Samarco dam failure
Cancellation of power contracts
COVID-19 related costs
Cerro Colorado impairment
Total
Attributable to non-controlling interests
Attributable to BHP shareholders
Gross
US$M
(176)
(778)
(177)
(409)
(1,540)
(291)
(1,249)
Tax
US$M
−
271
51
(83)
239
90
149
Samarco Mineração S.A. (Samarco) dam failure
The FY2020 exceptional loss of US$176 million related to the Samarco dam failure in November 2015 comprises the following:
Year ended 30 June 2020
Other income
Expenses excluding net finance costs:
Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure
Loss from equity accounted investments, related impairments and expenses:
Samarco impairment expense
Samarco Germano dam decommissioning
Samarco dam failure provision
Net finance costs
Total1
1 Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.
Cancellation of power contracts
Net
US$M
(176)
(507)
(126)
(492)
(1,301)
(201)
(1,100)
US$M
489
(64)
(95)
46
(459)
(93)
(176)
Reflects an onerous contract provision in relation to the cancellation of power contracts at the Group’s Escondida and Spence operations, as part of the
shift towards 100 per cent renewable energy supply contracts.
COVID-19 related costs
The exceptional item reflects the directly attributable COVID-19 pandemic related additional costs for the Group for FY2020, including costs associated
with the increased provision of health and hygiene services, the impacts of maintaining social distancing requirements and other standby charges related
to delays caused by COVID-19. At the time, COVID-19 was considered a single protracted globally pervasive event.
However, as the pandemic has continued to evolve, certain impacts that were initially considered to be potentially short-term in nature are now expected
to continue over a number of reporting periods. These activities are now considered to be part of business as usual operations and, as such, for FY2022,
the incremental costs have not been classified as an exceptional item.
Cerro Colorado impairment
The Group recognised an impairment charge of US$492 million (after tax) in relation to Cerro Colorado. This reflects the decision taken by the Group to
reduce Cerro Colorado’s throughput for the remaining period of its current environmental licence, which expires at the end of CY2023.
4 Significant events – Samarco dam failure
On 5 November 2015, the Samarco Mineração S.A. (Samarco) iron ore operation in Minas Gerais, Brazil, experienced a tailings dam failure that resulted
in a release of mine tailings, flooding the communities of Bento Rodrigues, Gesteira and Paracatu and impacting other communities downstream (the
Samarco dam failure). Refer to section on ‘Samarco’ in the Operating and Financial Review.
Samarco is jointly owned by BHP Billiton Brasil Ltda (BHP Brasil) and Vale S.A. (Vale). BHP Brasil’s 50 per cent interest is accounted for as an equity
accounted joint venture investment. BHP Brasil does not separately recognise its share of the underlying assets and liabilities of Samarco, but instead
records the investment as one line on the balance sheet. Each period, BHP Brasil recognised its 50 per cent share of Samarco’s profit or loss and
adjusted the carrying value of the investment in Samarco accordingly. Such adjustment continued until the investment carrying value was reduced to
US$ nil, with any additional share of Samarco losses only recognised to the extent that BHP Brasil has an obligation to fund the losses. After applying
equity accounting, any remaining carrying value of the investment is tested for impairment.
Any charges relating to the Samarco dam failure incurred directly by BHP Brasil or other BHP entities are recognised 100 per cent in the Group’s results.
BHP
Annual Report 2022
139
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 4 Significant events – Samarco dam failure continued
The financial impacts of the Samarco dam failure on the Group’s income statement, balance sheet and cash flow statement for the year ended 30 June
2022 are shown in the tables below and have been treated as an exceptional item.
Financial impacts of Samarco dam failure
Income statement
Other income1
Expenses excluding net finance costs:
Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure2
Loss from equity accounted investments, related impairments and expenses:
Samarco impairment expense3
Samarco Germano dam decommissioning4
Samarco dam failure provision5
Fair value change on forward exchange derivatives6
Loss from operations
Net finance costs7
Loss before taxation
Income tax expense8
Loss after taxation
Balance sheet movement
Trade and other payables
Derivatives
Tax liabilities
Provisions
Net liabilities
Cash flow statement
Loss before taxation
Adjustments for:
Samarco impairment expense3
Samarco Germano dam decommissioning4
Samarco dam failure provision5
Fair value change on forward exchange derivatives6
Proceeds of cash management related instruments
Net finance costs7
Changes in assets and liabilities:
Trade and other payables
Net operating cash flows
Net investment and funding of equity accounted investments9
Net investing cash flows
Net decrease in cash and cash equivalents
−
(68)
663
81
79
290
1
2022
US$M
(1,032)
14
(256)
(256)
(242)
111
15
1,000
(136)
−
85
5
2022
US$M
2021
US$M
2020
US$M
34
(46)
(111)
(15)
(1,000)
136
(1,002)
(85)
(1,087)
(71)
(1,158)
(5)
136
(71)
(741)
(681)
95
(46)
459
−
−
93
5
−
(66)
−
68
(663)
(81)
(742)
(290)
(1,032)
(31)
(1,063)
(1)
(160)
(31)
(629)
(821)
2021
US$M
(1,087)
(7)
(470)
(470)
(477)
489
(64)
(95)
46
(459)
−
(83)
(93)
(176)
−
(176)
(5)
−
−
(137)
(142)
2020
US$M
(176)
430
(464)
(464)
(34)
Includes legal and advisor costs incurred.
Impairment expense from working capital funding provided during the period.
1 Proceeds from insurance settlements.
2
3
4 US$(56) million (2021: US$(6) million; 2020: US$37 million) change in estimate and US$(12) million (2021: US$21 million; 2020: US$(83) million) exchange translation.
5 US$747 million (2021: US$842 million; 2020: US$916 million) change in estimate and US$(84) million (2021: US$158 million; 2020: US$(457) million) exchange translation.
6 During the period the Group entered into forward exchange contracts to limit the Brazilian reais exposure on the dam failure provisions. While not applying hedge accounting,
the fair value changes in the forward exchange instruments are recorded within Loss from equity accounted investments, related impairments and expenses in the
Income Statement.
7 Amortisation of discounting of provision.
8
9
Includes tax on forward exchange derivatives and other taxes incurred during the period.
Includes US$ nil (2021: US$(111) million; 2020: US$(95) million) funding provided during the period, US$(256) million (2021: US$(351) million; 2020: US$(365) million)
utilisation of the Samarco dam failure provision, and US$ nil (2021: US$(8) million; 2020: US$(4) million) utilisation of the Samarco Germano decommissioning provision.
Equity accounted investment in Samarco
BHP Brasil’s investment in Samarco remains at US$ nil. No dividends have been received by BHP Brasil from Samarco during the period and Samarco
currently does not have profits available for distribution.
140
BHP
Annual Report 2022
4 Significant events – Samarco dam failure continued
Provisions related to the Samarco dam failure
At the beginning of the financial year
Movement in provisions
Comprising:
Utilised
Adjustments charged to the income statement:
Change in estimate – Samarco dam failure provision
Change in estimate – Samarco Germano dam decommissioning
Amortisation of discounting impacting net finance costs
Exchange translation
At the end of the financial year
Comprising:
Current
Non-current
At the end of the financial year
Comprising:
Samarco dam failure provision
Samarco Germano dam decommissioning provision
Samarco dam failure provisions and contingencies
(256)
747
(56)
290
(96)
2022
US$M
2,792
629
3,421
1,815
1,606
3,421
3,237
184
(359)
842
(6)
85
179
2021
US$M
2,051
741
2,792
1,206
1,586
2,792
2,560
232
As at 30 June 2022, BHP Brasil has identified provisions and contingent liabilities arising as a consequence of the Samarco dam failure as follows:
Provisions
Provision for Samarco dam failure
On 2 March 2016, BHP Brasil, Samarco and Vale, entered into a Framework Agreement with the Federal Government of Brazil, the states of Espírito
Santo and Minas Gerais and certain other public authorities to establish a foundation (Fundação Renova) that is developing and executing environmental
and socio-economic programs (Programs) to remediate and provide compensation for damage caused by the Samarco dam failure (the Framework
Agreement). Key Programs include those for financial assistance and compensation of impacted persons, including fisherfolk impacted by the dam
failure, and those for remediation of impacted areas and resettlement of impacted communities. A committee (Interfederative Committee) comprising
representatives from the Brazilian Federal and State Governments, local municipalities, environmental agencies, impacted communities and Public
Defence Office oversees the activities of the Fundação Renova in order to monitor, guide and assess the progress of actions agreed in the Framework
Agreement. In addition, the 12th Federal Court is supervising the work of the Fundação Renova and the Court’s decisions, including decisions relating
to the scope of individuals eligible for compensation and the amount of damages to which they are entitled, have been considered in the Samarco dam
failure provision change in estimate. Any future decisions will be analysed for impacts on the provision at the time of any decision and the provision may
be impacted in future reporting periods as a result of appeals and motions for clarification on certain Court decisions that remain outstanding.
The term of the Framework Agreement is 15 years, renewable for periods of one year successively until all obligations under the Framework Agreement have been
performed. Under the Framework Agreement, Samarco has primary responsibility for funding Fundação Renova’s annual calendar year budget for the duration of
the Framework Agreement. The funding amounts for each calendar year will be dependent on the remediation and compensation projects to be undertaken in a
particular year. Annual contributions may be reviewed under the Framework Agreement. To the extent that Samarco does not meet its funding obligations, each of
BHP Brasil and Vale have secondary funding obligations under the Framework Agreement in proportion to their 50 per cent shareholding in Samarco.
Samarco began to gradually recommence operations in December 2020, however, there remains significant uncertainty regarding Samarco’s long-term
cash flow generation and the outcome of the Judicial Reorganisation (outlined below). In light of these uncertainties and based on currently available
information, BHP Brasil’s provision for its obligations under the Framework Agreement Programs is US$3.2 billion before tax and after discounting at
30 June 2022 (30 June 2021: US$2.6 billion). The dam failure provision at 30 June 2022 reflects only the Group’s estimate of the costs to be incurred
in completing those Programs, as the Group is unable to provide a range of possible outcomes or a reliable estimate of other existing or potential future
claims (refer to contingent liabilities below).
Under a Governance Agreement ratified on 8 August 2018, BHP Brasil, Samarco and Vale were to establish a process to renegotiate the Programs
over two years to progress settlement of the R$155 billion (approximately US$30 billion) Federal Public Prosecution Office claim (described below).
Pre-requisites established in the Governance Agreement, for re-negotiation of the Framework Agreement, were not implemented during the two year
period and on 30 September 2020, Brazilian Federal and State prosecutors and public defenders filed a request for the immediate resumption of the
R$155 billion (approximately US$30 billion) claim, which was suspended from the date of ratification of the Governance Agreement. Formal suspension of
the claim ceased on 10 December 2021, however no further rulings have been made.
BHP Brasil, Samarco, Vale and Federal and State prosecutors have been engaging in negotiations to seek a definitive and substantive settlement of the obligations
under the Framework Agreement and the R$155 billion (approximately US$30 billion) Federal Public Prosecution Office claim. The negotiations are overseen by the
President of the National Council of Justice, as the Chief Justice of the Supreme Court in Brazil and are expected to continue until at least the expected end of the
term of the current President on 31 August 2022. Outcomes of the negotiations are highly uncertain and, until any revisions to the Programs are agreed, Fundação
Renova will continue to implement the Programs in accordance with the terms of the Framework Agreement and the Governance Agreement.
BHP Brasil, Samarco and Vale are required to maintain security of an amount equal to the Fundação Renova’s annual budget up to a limit of R$2.2 billion
(approximately US$420 million). The security currently comprises R$1.3 billion (approximately US$250 million) in insurance bonds and a charge of
R$800 million (approximately US$150 million) over Samarco’s assets. A further R$100 million (approximately US$20 million) in liquid assets previously
maintained as security was released for COVID-19 related response efforts in Brazil.
Samarco Germano dam decommissioning
Samarco is currently progressing plans for the accelerated decommissioning of its upstream tailings dams (the Germano dam complex). Given the
uncertainties surrounding Samarco’s long-term cash flow generation, BHP Brasil’s provision for a 50 per cent share of the expected Germano
decommissioning costs is US$184 million (30 June 2021: US$232 million). The decommissioning is progressing, however further engineering work and
required validation by Brazilian authorities could lead to changes to estimates in future reporting periods.
BHP
Annual Report 2022
141
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 4 Significant events – Samarco dam failure continued
Key judgements and estimates
Judgements: The outcomes of litigation are inherently difficult to
predict and significant judgement has been applied in assessing the
likely outcome of legal claims and determining which legal claims
require recognition of a provision or disclosure of a contingent liability.
The facts and circumstances relating to these cases are regularly
evaluated in determining whether a provision for any specific claim
is required.
Management has determined that a provision can only be recognised
for obligations under the Framework Agreement and Samarco Germano
dam decommissioning as at 30 June 2022. It is not yet possible to
provide a range of possible outcomes or a reliable estimate of potential
future exposures to BHP in connection to the contingent liabilities noted
below, given their status.
Estimates: The provision for the Samarco dam failure currently only
reflects the Group’s estimate of the remaining costs to complete
Programs under the Framework Agreement and requires the use of
significant judgements, estimates and assumptions. Based on current
estimates, it is expected that approximately 95 per cent of remaining
costs for Programs under the Framework Agreement will be incurred by
December 2024.
While the provision has been measured based on the latest information
available, changes in facts and circumstances are likely in future
reporting periods and may lead to material revisions to these estimates.
However, it is currently not possible to determine what facts and
circumstances may change, therefore revisions in future reporting
periods due to the key estimates and factors outlined below cannot be
reliably measured.
The key estimates that may have a material impact on the provision in
the next and future reporting periods include the:
– number of people eligible for financial assistance and compensation
and the corresponding amount of expected compensation
– costs to complete key infrastructure programs
The provision may also be affected by factors including but not
limited to:
– potential changes in scope of work and funding amounts required
under the Framework Agreement including the impact of the
decisions of the Interfederative Committee along with further
technical analysis, community participation required under the
Governance Agreement and rulings made by the 12th Federal Court
Contingent liabilities
The following matters are disclosed as contingent liabilities and given the
status of these matters it is not possible to provide a range of possible
outcomes or a reliable estimate of potential future exposures for BHP,
unless otherwise stated. A number of the claims below have not specified
the amount of damages sought and, where this is specified, amounts could
change as the matter progresses. Ultimately, all the legal matters disclosed as
contingent liabilities could have a material adverse impact on BHP’s business,
competitive position, cash flows, prospects, liquidity and shareholder returns.
Federal Public Prosecution Office claim
BHP Brasil is among the defendants named in a claim brought by the
Federal Public Prosecution Office on 3 May 2016, seeking R$155 billion
(approximately US$30 billion) for reparation, compensation and moral
damages in relation to the Samarco dam failure.
The 12th Federal Court previously suspended the Federal Public
Prosecution Office claim, including a R$7.7 billion (approximately
US$1.5 billion) injunction request. On 30 September 2020, Brazilian
Federal and State prosecutors and public defenders filed a request
for the immediate resumption of the R$155 billion (approximately
US$30 billion) claim, which was suspended since the date of ratification
of the Governance Agreement. Formal suspension of the claim ceased
on 10 December 2021, however no further rulings have been made.
BHP Brasil, Samarco, Vale and Federal and State prosecutors have been
engaging in negotiations to seek a definitive and substantive settlement
of the obligations under the Framework Agreement and the R$155 billion
(approximately US$30 billion) Federal Public Prosecution Office claim.
The negotiations are overseen by the President of the National Council
of Justice, as the Chief Justice of the Supreme Court in Brazil and are
expected to continue until at least the expected end of the term of the
current President on 31 August 2022. Outcomes of the negotiations
are highly uncertain and it is therefore not possible to provide a reliable
estimate of potential outcomes and there is a risk that a negotiated
outcome may be materially higher than amounts currently reflected
in the Samarco dam failure provision.
Australian class action complaint
BHP Group Ltd is named as a defendant in a shareholder class action filed
in the Federal Court of Australia on behalf of persons who acquired shares
in BHP Group Ltd on the Australian Securities Exchange or shares in
BHP Group Plc on the London Stock Exchange and Johannesburg Stock
Exchange in periods prior to the Samarco dam failure. The amount of
damages sought is unspecified.
– the outcome of ongoing negotiations with State and Federal
United Kingdom group action complaint
Prosecutors, including review of Fundação Renova’s Programs as
provided in the Governance Agreement
– actual costs incurred
– resolution of uncertainty in respect of the nature and extent of
Samarco’s long-term cash generation
– updates to discount and foreign exchange rates
– the outcomes of Samarco’s judicial reorganisation
In addition, the provision may be impacted by decisions in, or resolution
of, existing and potential legal claims in Brazil and other jurisdictions,
including the outcome of the United Kingdom group action complaint
and the negotiations seeking a definitive and substantive settlement of
the obligations under the Framework Agreement and the R$155 billion
(approximately US$30 billion) Federal Public Prosecution Office claim.
Outcomes of the negotiations are highly uncertain and it is therefore not
possible to provide a reliable estimate of potential outcomes.
Given these factors, future actual cash outflows may differ from the
amounts currently provided and changes to any of the key assumptions
and estimates outlined above could result in a material impact to the
provision in the next and future reporting periods.
BHP Group Plc and BHP Group Ltd were named as defendants in group
action claims for damages filed in the courts of England. These claims
were filed on behalf of certain individuals, governments, businesses and
communities in Brazil allegedly impacted by the Samarco dam failure.
The amount of damages sought in these claims is unspecified. In August
2019, the BHP parties filed a preliminary application to strike out or stay
this action on jurisdictional and other procedural grounds. That application
was successful before the High Court and the action was dismissed.
However, on 8 July 2022, the Court of Appeal reversed the dismissal
decision and allowed the action to proceed in England. BHP Group Ltd
and BHP Group (UK) Ltd (formerly BHP Group Plc) will seek permission to
appeal to the Supreme Court of the United Kingdom.
Criminal charges
The Federal Prosecutors’ Office has filed criminal charges against BHP
Brasil, Samarco and Vale and certain employees and former employees
of BHP Brasil (Affected Individuals) in the Federal Court of Ponte Nova,
Minas Gerais. On 3 March 2017, BHP Brasil filed its preliminary defences.
The Federal Court terminated the charges against eight of the Affected
Individuals. The Federal Prosecutors’ Office has appealed seven of those
decisions with hearings of the appeals still pending. BHP Brasil rejects
outright the charges against the company and the Affected Individuals
and is defending itself from all charges while fully supporting each of the
Affected Individuals in their defence of the charges.
142
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Annual Report 2022
4 Significant events – Samarco dam failure continued
Civil public action commenced by Associations concerning the use of Tanfloc for
water treatment
The Vila Lenira Residents Association, State of Espírito Santo Rural
Producers and Artisans Association, Colatina Velha Neighborhood
Residents Association, and United for the Progress of Palmeiras
Neighborhood Association have filed a lawsuit against Samarco, BHP
Brasil and Vale and others, including the State of Minas Gerais, the State
of Espirito Santo and the Federal Government. The plaintiffs allege that
the defendants carried out a clandestine study on the citizens of the
locations affected by the Fundão’s Dam Failure, using TANFLOC – a
tannin-based flocculant/coagulant – that is currently used for wastewater
treatment applications. The plaintiffs claim that this product allegedly put
the population at risk due to its alleged experimental qualities.
The plaintiffs are seeking multiple kinds of relief – material damage, moral
damages, loss of profits – and that the defendants should pay for water
supply in all locations where there is no water source other than the
Doce River.
On 25 July 2022, Samarco, BHP Brasil and Vale presented their defences
individually, as well as the State of Minas Gerais, the State of Espírito
Santo and the Federal Government. The Court’s decision is still pending.
Other claims
BHP Brasil is among the companies named as defendants in a number of
legal proceedings initiated by individuals, non-governmental organisations,
corporations and governmental entities in Brazilian Federal and State
courts following the Samarco dam failure. The other defendants include
Vale, Samarco and Fundação Renova. The lawsuits include claims
for compensation, environmental reparation and violations of Brazilian
environmental and other laws, among other matters. The lawsuits seek
various remedies including reparation costs, compensation to injured
individuals and families of the deceased, recovery of personal and property
losses, moral damages and injunctive relief. In addition, government
inquiries and investigations relating to the Samarco dam failure have
been commenced by numerous agencies of the Brazilian government and
are ongoing.
Additional lawsuits and government investigations relating to the Samarco
dam failure could be brought against BHP Brasil and possibly other BHP
entities in Brazil or other jurisdictions.
BHP insurance
BHP has various third party general liability and directors and officers
insurances for claims related to the Samarco dam failure made directly
against BHP Brasil or other BHP entities, their directors and officers,
including class actions. External insurers have been notified of the
Samarco dam failure along with the third party claims and class actions
referred to above. In the period since the dam failure, the Group has
recognised US$573 million other income from general liability insurance
proceeds related to the dam failure. Recoveries related to general liability
insurance are now considered complete.
As at 30 June 2022, an insurance receivable has not been recognised for
any potential recoveries in respect of ongoing matters.
Commitments
Under the terms of the Samarco joint venture agreement, BHP Brasil does
not have an existing obligation to fund Samarco.
BHP has agreed to fund a total of up to US$1,350 million for the Fundação
Renova programs and Samarco’s working capital during calendar year
2022. Samarco’s cash flow generation in the period was sufficient to
fund its working capital and the Fundação Renova programs, as such no
funding was provided by the Group in the six months to 30 June 2022.
Any additional requests for funding or future investment provided would be
subject to a future decision by BHP, accounted for at that time.
Samarco judicial reorganisation
Samarco filed for Judicial Reorganisation (JR) in April 2021, with
the Commercial Courts of Belo Horizonte, State of Minas Gerais,
Brazil (JR Court), after multiple enforcement actions taken by certain
financial creditors of Samarco which threatened Samarco’s operations.
The JR Court granted a stay of the enforcement actions in Brazil until
15 October 2022.
The JR is an insolvency proceeding that provides a means for Samarco to
seek to restructure its financial debts and establish a sustainable financial
position that allows Samarco to, among other things, continue to rebuild
its operations and strengthen its ability to meet its Fundação Renova
funding obligations. Samarco’s operations have continued during the
JR proceeding.
According to the list of creditors filed with the JR Court by the Judicial
Administrators (who are in charge of a first review of the list of creditors
filed by Samarco), Fundação Renova’s funding obligations undertaken
by Samarco are not subject to the JR, although some financial creditors
of Samarco have objected to this position. Some such creditors filed
challenges to the list of creditors filed by the Judicial Administrators, in
order to, among other things, prevent Samarco from funding Fundação
Renova. In December 2021, the 12th Federal Court granted BHP Brasil’s
request that Samarco be able to fund Fundação Renova obligations,
overturning a temporary injunction against such funding previously
granted by the State Court in October 2021. BHP Brasil also obtained a
preliminary injunction from the Superior Court supporting the jurisdiction of
the 12th Federal Court, and not the State Court, in this matter. An appeal
against this ruling by certain financial creditors is still to be ruled upon.
Samarco has, with the support of BHP Brasil and Vale, continued to meet
its Fundação Renova funding obligations.
In April 2022, Samarco presented a restructure proposal for voting at a
meeting of its creditors under the JR proceeding, which was rejected by
certain of the Samarco financial creditors. Certain Samarco creditors,
including a group of financial creditors and Samarco’s employee unions
then proposed alternative restructure proposals. Samarco, BHP Brasil and
Vale subsequently each filed objections with the JR Court to both the voting
process regarding the rejection of the Samarco proposal and the restructure
proposal filed by a group of financial creditors. These legal disputes, and
others in the JR process, have yet to be ruled on by the JR Court.
It is expected that there will be continuing litigation from creditors against
Samarco and its shareholders over the course of the JR proceeding,
including with respect to the treatment of Samarco’s Fundação Renova-
related obligations and attempts to pierce Samarco’s corporate veil to hold
BHP Brasil and Vale liable for Samarco’s debts. The duration and outcome
of the JR remains uncertain with the potential for protracted litigation and
appeals because, among other things, the Samarco JR is occurring under
new and untested Brazilian bankruptcy legislation.
While the JR is not expected to affect Samarco’s obligation or commitment
to make full redress for the 2015 Fundão dam failure, and is not expected
to impact Fundação Renova’s ability to undertake that remediation and
compensation, it is not possible to determine the outcomes of the JR or
reliably estimate any impact that the reorganisation may have for BHP
Brasil, including its share of the Samarco dam failure provisions.
BHP
Annual Report 2022
143
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 4 Significant events – Samarco dam failure continued
The following section includes disclosure required by IFRS of Samarco’s provisions, contingencies and other matters arising from the dam failure for matters in
addition to the above-mentioned claims to which Samarco is a party.
Samarco
Dam failure related provisions and contingencies
In addition to its obligations under the Framework Agreement as at 30 June
2022, Samarco has recognised provisions of US$0.3 billion (30 June 2021:
US$0.2 billion), based on currently available information. The magnitude,
scope and timing of these additional costs are subject to a high degree
of uncertainty and Samarco has indicated that it anticipates that it will
incur future costs beyond those provided. These uncertainties are likely
to continue for a significant period and changes to key assumptions could
result in a material change to the amount of the provision in future reporting
periods. Any such unrecognised obligations are therefore contingent
liabilities and, at present, it is not practicable to estimate their magnitude or
possible timing of payment. Accordingly, it is also not possible to provide a
range of possible outcomes or a reliable estimate of total potential future
exposures at this time.
Samarco is also named as a defendant in a number of other legal
proceedings initiated by individuals, non-governmental organisations,
corporations and governmental entities in Brazilian Federal and State
courts following the Samarco dam failure. The lawsuits include claims
for compensation, environmental rehabilitation and violations of Brazilian
environmental and other laws, among other matters. The lawsuits seek
various remedies including rehabilitation costs, compensation to injured
individuals and families of the deceased, recovery of personal and property
losses, moral damages and injunctive relief. In addition, government
inquiries and investigations relating to the Samarco dam failure have been
commenced by numerous agencies of the Brazilian government and are
ongoing. Given the status of proceedings it is not possible to provide a range
of possible outcomes or a reliable estimate of total potential future exposures
to Samarco.
Additional lawsuits and government investigations relating to the Samarco
dam failure could be brought against Samarco.
Samarco insurance
Samarco has standalone insurance policies in place with Brazilian
and global insurers. Insurers’ loss adjusters or claims representatives
continue to investigate and assist with the claims process for matters not
yet settled. As at 30 June 2022, an insurance receivable has not been
recognised by Samarco in respect of ongoing matters.
Samarco commitments
At 30 June 2022, Samarco has commitments of US$0.7 billion (30 June
2021: US$0.7 billion). Following the dam failure Samarco invoked force
majeure clauses in a number of long-term contracts with suppliers and
service providers to suspend contractual obligations.
Samarco non-dam failure related contingent liabilities
The following non-dam failure related contingent liabilities pre-date
and are unrelated to the Samarco dam failure. Samarco is currently
contesting both of these matters in the Brazilian courts. Given the status
of these tax matters, the timing of resolution and potential economic
outflow for Samarco is uncertain.
Brazilian Social Contribution Levy
Samarco has received tax assessments for the alleged non-payment
of Brazilian Social Contribution Levy for the calendar years 2007-2014
totalling approximately R$6.2 billion (approximately US$1.2 billion).
Brazilian corporate income tax rate
Samarco has received tax assessments for alleged incorrect calculation
of Corporate Income Tax (IRPJ) in respect of the 2000-2003 and 2007-
2014 income years totalling approximately R$4.8 billion (approximately
US$0.9 billion).
144
BHP
Annual Report 2022
5 Expenses and other income
Employee benefits expense:
Wages, salaries and redundancies
Employee share awards
Social security costs
Pension and other post-retirement obligations
Less employee benefits expense classified as exploration and evaluation expenditure
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Freight and transportation
External services
Third-party commodity purchases
Net foreign exchange (gains)/losses
Fair value change on derivatives1
Government royalties paid and payable
Exploration and evaluation expenditure incurred and expensed in the current period
Depreciation and amortisation expense
Net impairments:
Property, plant and equipment
Goodwill and other intangible assets
All other operating expenses
Total expenses
Insurance recoveries2
(Gain)/loss on disposal of subsidiaries and operations3
Dividend income4
Other income5
Total other income
2022
US$M
4,197
109
4
338
(30)
(774)
5,991
2,319
4,525
2,959
(326)
(29)
4,014
199
5,683
515
−
2,677
32,371
(4)
(840)
(241)
(313)
(1,398)
2021
US$M
Restated
2020
US$M
Restated
4,018
88
3
274
(26)
(321)
4,899
1,900
4,640
2,220
293
87
3,080
134
5,084
2,474
33
1,991
30,871
(46)
2
(2)
(334)
(380)
3,318
90
2
246
(15)
(348)
5,472
1,838
3,899
1,098
(617)
393
2,171
123
4,667
482
−
2,634
25,453
(489)
−
(2)
(229)
(720)
1 Fair value change on derivatives is principally related to commodity price contracts, foreign exchange contracts and embedded derivatives used in the ordinary course of
business as well as derivatives used as part of the funding of dividends.
Insurance recoveries is principally related to claims received from Samarco dam failure. Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.
2
3 Mainly relates to the divestment of BMC in FY2022. Refer to note 3 ‘Exceptional items’ for further information.
4 During FY2022, the Group received dividends of US$238 million from Cerrejón, which reduced completion proceeds net of transaction costs to US$50 million. Refer to note
29 ‘Investments accounted for using the equity method’ for details.
5 Other income is generally income earned from transactions outside the course of the Group’s ordinary activities and may include certain management fees from non-
controlling interests and joint arrangements, royalties and commission income.
Recognition and measurement
Other income is recognised when it is probable that the economic benefits associated with a transaction will flow to the Group and can be reliably
measured. Dividend income is recognised upon declaration.
BHP
Annual Report 2022
145
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 6 Income tax expense
Total taxation expense comprises:
Current tax expense
Deferred tax expense/(benefit)
Factors affecting income tax expense for the year
Income tax expense differs to the standard rate of corporation tax as follows:
Profit before taxation
Tax on profit at Australian prima facie tax rate of 30 per cent
Non-tax effected operating losses and capital gains1
Tax on remitted and unremitted foreign earnings
Investment and development allowance
Tax rate changes
Recognition of previously unrecognised tax assets
Tax effect of loss from equity accounted investments, related impairments and expenses2
Amounts (over)/under provided in prior years
Foreign exchange adjustments
Impact of tax rates applicable outside of Australia
Other
Income tax expense
Royalty-related taxation (net of income tax benefit)
Total taxation expense
2022
US$M
10,673
64
10,737
2021
US$M
Restated
2020
US$M
Restated
9,018
1,598
10,616
4,285
(88)
4,197
2022
US$M
2021
US$M
Restated
2020
US$M
Restated
33,137
9,941
1,087
441
−
−
(3)
(19)
(80)
(233)
(801)
97
10,430
307
10,737
24,292
7,288
2,640
485
−
(1)
(28)
315
(57)
(33)
(669)
436
10,376
240
10,616
12,825
3,847
409
225
(99)
(8)
(7)
153
13
41
(272)
(86)
4,216
(19)
4,197
1
Includes the tax impacts related to the exceptional impairments of US deferred tax assets in the year ended 30 June 2022, NSWEC and Potash in the year ended 30 June
2021 and Cerro Colorado in the year ended 30 June 2020, as presented in note 3 ‘Exceptional items’.
2 The loss from equity accounted investments, related impairments and expenses is net of income tax, with the exception of the Samarco forward exchange derivatives
described in note 4 ‘Significant events – Samarco dam failure’. This item removes the prima facie tax effect on such loss, related impairments and expenses, excluding the
impact of the Samarco forward exchange derivatives which are taxable.
Income tax recognised in other comprehensive income is as follows:
Income tax effect of:
Items that may be reclassified subsequently to the income statement:
Hedges:
Gains/(losses) taken to equity
(Gains)/losses transferred to the income statement
Others
Income tax credit/(charge) relating to items that may be reclassified subsequently to the income statement
Items that will not be reclassified to the income statement:
Remeasurement gains/(losses) on pension and medical schemes
Others
Income tax (charge)/credit relating to items that will not be reclassified to the income statement
Total income tax credit/(charge) relating to components of other comprehensive income1
2022
US$M
2021
US$M
2020
US$M
274
(264)
−
10
(9)
−
(9)
1
(259)
252
(1)
(8)
(21)
1
(20)
(28)
94
(89)
−
5
25
1
26
31
1
Included within total income tax relating to components of other comprehensive income is US$1 million relating to deferred taxes and US$ nil relating to current taxes (2021:
US$(28) million and US$ nil; 2020: US$31 million and US$ nil).
146
BHP
Annual Report 2022
6 Income tax expense continued
Recognition and measurement
Taxation on the profit/(loss) for the year comprises current and deferred tax. Taxation is recognised in the income statement except to the extent
that it relates to items recognised directly in equity or other comprehensive income, in which case the tax effect is also recognised in equity or other
comprehensive income.
Current tax
Current tax is the
expected tax on the
taxable income for the
year, using tax rates
and laws enacted or
substantively enacted
at the reporting
date, and any
adjustments to tax
payable in respect of
previous years.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the
carrying amounts of assets and liabilities in the financial statements and the corresponding
tax bases used in the computation of taxable profit, and is accounted for in accordance
with IAS 12.
Deferred tax is generally provided on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the Financial Statements.
Deferred tax assets are recognised to the extent that it is probable that future taxable
profits will be available against which the temporary differences can be utilised.
Deferred tax is not recognised for temporary differences relating to:
– initial recognition of goodwill
– initial recognition of assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit
– investment in subsidiaries, associates and jointly controlled entities where the Group is able
to control the timing of the reversal of the temporary difference and it is probable that they will
not reverse in the foreseeable future
Deferred tax is measured at the tax rates that are expected to be applied when the
asset is realised or the liability is settled, based on the laws that have been enacted or
substantively enacted at the reporting date.
Current and deferred tax assets and liabilities are offset when the Group has a legally
enforceable right to offset and when the tax balances are related to taxes levied by the
same tax authority and the Group intends to settle on a net basis, or realise the asset and
settle the liability simultaneously.
The carrying amount of deferred tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Royalty-related taxation
Royalties are treated as taxation
arrangements (impacting
income tax expense/(benefit))
when they are imposed under
government authority and the
amount payable is calculated
by reference to revenue derived
(net of any allowable deductions)
after adjustment for temporary
differences. Obligations arising
from royalty arrangements that
do not satisfy these criteria are
recognised as current liabilities
and included in expenses.
Uncertain tax and royalty matters
The Group operates across many tax jurisdictions. Application of tax law can be complex and requires judgement to assess risk and estimate outcomes,
particularly in relation to the Group’s cross-border operations and transactions. These judgements are subject to risk and uncertainty, hence there is a
possibility that changes in circumstances will alter expectations, which may impact the amount of tax assets and tax liabilities, including deferred tax,
recognised on the balance sheet and the amount of other tax losses and temporary differences not yet recognised. The evaluation of tax risks considers
both amended assessments received and potential sources of challenge from tax authorities. The status of proceedings for these matters will impact the
ability to determine the potential exposure and in some cases, it may not be possible to determine a range of possible outcomes or a reliable estimate of
the potential exposure.
The Group has unresolved tax and royalty matters for which the timing of resolution and potential economic outflow are uncertain. Tax and royalty
matters with uncertain outcomes arise in the normal course of business and occur due to changes in tax law, changes in interpretation of tax law, periodic
challenges and disagreements with tax authorities and legal proceedings.
Tax and royalty obligations assessed as having probable future economic outflows capable of reliable measurement are provided for as at 30 June
2022. Matters with a possible economic outflow and/or presently incapable of being measured reliably are contingent liabilities and disclosed in note 32
‘Contingent liabilities’. Details of uncertain tax and royalty matters relating to Samarco are disclosed in note 4 ‘Significant events – Samarco dam failure’.
Key judgements and estimates
Income tax classification
Judgements: The Group’s accounting policy for taxation, including royalty-related taxation, requires management’s judgement as to the types of
arrangements considered to be a tax on income in contrast to an operating cost.
Deferred tax
Judgements: Judgement is required to determine the amount of deferred tax assets that are recognised based on the likely timing and the level of
future taxable profits. Judgement is applied in recognising deferred tax liabilities arising from temporary differences in investments. These deferred
tax liabilities caused principally by retained earnings held in foreign tax jurisdictions are recognised unless repatriation of retained earnings can be
controlled and is not expected to occur in the foreseeable future.
Estimates: The Group assesses the recoverability of recognised and unrecognised deferred taxes, including losses in Australia, the United States and
Canada on a consistent basis. Estimates and assumptions relating to projected earnings and cash flows as applied in the Group impairment process
are used for operating assets.
BHP
Annual Report 2022
147
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 2021
Restated
2020
Restated
7 Earnings per share
Earnings attributable to BHP shareholders (US$M)
– Continuing operations
– Total
Weighted average number of shares (Million)
– Basic
– Diluted
Basic earnings per ordinary share (US cents)
– Continuing operations
– Total
Diluted earnings per ordinary share (US cents)
– Continuing operations
– Total
Headline earnings per ordinary share (US cents)
– Basic
– Diluted
2022
20,245
30,900
5,061
5,071
400.0
610.6
399.2
609.3
439.0
438.1
11,529
11,304
5,057
5,068
228.0
223.5
227.5
223.0
284.8
284.2
Refer to note 27 ‘Discontinued operations’ for basic earnings per share and diluted earnings per share for Discontinued operations.
Earnings on American Depositary Shares represent twice the earnings for BHP Group Limited ordinary shares.
Headline earnings is a Johannesburg Stock Exchange defined performance measure and is reconciled from earnings attributable to ordinary
shareholders as follows:
Earnings attributable to BHP shareholders
Adjusted for:
(Gain)/loss on sales of PP&E, Investments and Operations1
Impairments of property, plant and equipment, financial assets and intangibles
Samarco impairment expense
Cerrejόn impairment expense
Gain on disposal of BHP Mitsui Coal
Gain on merger of Petroleum
Other2
Tax effect of above adjustments
Subtotal of adjustments
Headline earnings
Diluted headline earnings
2022
US$M
30,900
(95)
515
−
−
(840)
(8,167)
−
(97)
(8,684)
22,216
22,216
2021
US$M
11,304
(50)
2,633
111
466
−
−
−
(60)
3,100
14,404
14,404
7,848
7,956
5,057
5,069
155.2
157.3
154.8
157.0
171.1
170.7
2020
US$M
7,956
4
494
95
−
−
−
48
54
695
8,651
8,651
Included in other income.
1
2 Mainly represent BHP share of impairment embedded in the statutory income statement of the Group’s equity accounted investments.
Recognition and measurement
Diluted earnings attributable to BHP shareholders are equal to the earnings attributable to BHP shareholders.
Prior to Group’s corporate structure unification, the calculation of the number of ordinary shares used in the computation of basic earnings per share
was the aggregate of the weighted average number of ordinary shares of BHP Group Limited and BHP Group Plc outstanding during the period
after deduction of the number of shares held by the Billiton Employee Share Ownership Trust and the BHP Billiton Limited Employee Equity Trust.
Effective from 31 January 2022, the aggregate of the weighted average number of ordinary shares of only BHP Group Limited is considered in the
computation of basic earnings per share. Refer to note 16 ‘Share capital’ for details on unification.
For the purposes of calculating diluted earnings per share, the effect of 10 million dilutive shares has been taken into account for the year ended 30 June
2022 (2021: 11 million shares; 2020: 12 million shares). The Group’s only potential dilutive ordinary shares are share awards granted under the employee
share ownership plans for which terms and conditions are described in note 25 ‘Employee share ownership plans’. Diluted earnings per share calculation
excludes instruments which are considered antidilutive.
At 30 June 2022, there are no instruments which are considered antidilutive (2021: nil; 2020: nil).
148
BHP
Annual Report 2022
Working capital
8 Trade and other receivables
Trade receivables
Other receivables1
Total
Comprising:
Current
Non-current
2022
US$M
4,411
1,168
5,579
5,426
153
2021
US$M
4,450
1,946
6,396
6,059
337
1 Other receivables mainly relate to indirect tax refunds and receivables from joint venture partners.
Recognition and measurement
Trade receivables are recognised initially at their transaction price or, for those receivables containing a significant financing component, at fair value.
Trade receivables are subsequently measured at amortised cost using the effective interest method, less an allowance for impairment, except for
provisionally priced receivables which are subsequently measured at fair value through profit or loss under IFRS 9.
The collectability of trade and other receivables is assessed continuously. At the reporting date, specific allowances are made for any expected credit
losses based on a review of all outstanding amounts at reporting period-end. Individual receivables are written off when management deems them
unrecoverable. The net carrying amount of trade and other receivables approximates their fair values.
Credit risk
Trade receivables generally have terms of less than 30 days. The Group has no material concentration of credit risk with any single counterparty and is
not dominantly exposed to any individual industry.
Credit risk can arise from the non-performance by counterparties of their contractual financial obligations towards the Group. To manage credit risk, the
Group maintains Group-wide procedures covering the application for credit approvals, granting and renewal of counterparty limits, proactive monitoring
of exposures against these limits and requirements triggering secured payment terms. As part of these processes, the credit exposures with all
counterparties are regularly monitored and assessed on a timely basis. The credit quality of the Group’s customers is reviewed and the solvency of each
debtor and their ability to pay the receivable is considered in assessing receivables for impairment.
The 10 largest customers represented 34 per cent (2021: 31 per cent) of total credit risk exposures managed by the Group.
Receivables are deemed to be past due or impaired in accordance with the Group’s terms and conditions. These terms and conditions are determined on
a case-by-case basis with reference to the customer’s credit quality, payment performance and prevailing market conditions. As at 30 June 2022, trade
receivables of US$103 million (2021: US$68 million) were past due but not impaired. The majority of these receivables were less than 30 days overdue.
At 30 June 2022, trade receivables are stated net of provisions for expected credit losses of US$3 million (2021: US$3 million).
9 Trade and other payables
Trade payables
Other payables
Total
Comprising:
Current
Non-current
10 Inventories
Raw materials and consumables
Work in progress
Finished goods
Total1
Comprising:
Current
Non-current
2022
US$M
5,360
1,327
6,687
6,687
−
2021
US$M
5,079
1,948
7,027
7,027
−
2022
US$M
1,713
3,827
710
6,250
4,935
1,315
2021
US$M
1,904
3,046
834
5,784
4,426
1,358
Definitions
Spares, consumables and other supplies yet to be utilised in the production process or
in the rendering of services.
Commodities currently in the production process that require further processing by the
Group to a saleable form.
Commodities ready-for-sale and not requiring further processing by the Group.
Inventories classified as non-current are not expected to be utilised or sold within 12
months after the reporting date or within the operating cycle of the business.
1
Inventory write-downs of US$163 million were recognised during the year (2021: US$58 million; 2020: US$37 million). Inventory write-downs of US$23 million made in
previous periods were reversed during the year (2021: US$26 million; 2020: US$8 million).
BHP
Annual Report 2022
149
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 10 Inventories continued
Recognition and measurement
Regardless of the type of inventory and its stage in the production process, inventories are valued at the lower of cost and net realisable value. Cost is
determined primarily on the basis of average costs and involves estimates of expected metal recoveries and work in progress volumes, calculated using
available industry, engineering and scientific data. These estimates are periodically reassessed by the Group taking into account technical analysis and
historical performance.
For processed inventories, cost is derived on an absorption costing basis. Cost comprises costs of purchasing raw materials and costs of production,
including attributable mining and manufacturing overheads taking into consideration normal operating capacity.
Inventory quantities are assessed primarily through surveys and assays.
Resource assets
11 Property, plant and equipment
Net book value – 30 June 2022
At the beginning of the financial year
Additions1
Remeasurements of index-linked freight contracts2
Depreciation for the year
Impairments for the year3
Disposals
Divestment and demerger of subsidiaries and operations4
Transfers and other movements
At the end of the financial year5
– Cost
– Accumulated depreciation and impairments
Net book value – 30 June 2021
At the beginning of the financial year
Additions1
Acquisition of subsidiaries & operations6
Remeasurements of index-linked freight contracts2
Depreciation for the year
Impairments for the year3
Disposals
Divestment and demerger of subsidiaries and operations
Transfers and other movements
At the end of the financial year5
– Cost
– Accumulated depreciation and impairments
Land and
buildings
US$M
Plant and
equipment
US$M
Other mineral
assets
US$M
Assets under
construction
US$M
Exploration
and evaluation
US$M
8,072
41
−
(663)
(14)
(3)
(448)
1,094
8,079
14,823
(6,744)
8,387
25
−
−
(694)
(208)
(18)
−
580
8,072
14,545
(6,473)
44,682
1,935
(369)
(5,564)
(499)
(22)
(8,007)
3,344
35,500
81,218
(45,718)
39,429
3,841
151
(59)
(5,748)
(877)
(9)
(14)
7,968
44,682
108,049
(63,367)
8,941
792
−
(276)
(2)
−
(545)
(416)
8,494
14,353
(5,859)
8,652
797
491
−
(310)
(687)
−
−
(2)
8,941
15,059
(6,118)
10,432
5,872
−
−
−
−
(3,549)
(3,724)
9,031
9,755
(724)
13,774
5,961
−
−
−
(745)
−
(2)
(8,556)
10,432
11,177
(745)
1,686
137
−
−
−
−
(842)
(790)
191
981
(790)
2,120
93
−
−
−
(66)
−
−
(461)
1,686
2,531
(845)
Total
US$M
73,813
8,777
(369)
(6,503)
(515)
(25)
(13,391)
(492)
61,295
121,130
(59,835)
72,362
10,717
642
(59)
(6,752)
(2,583)
(27)
(16)
(471)
73,813
151,361
(77,548)
1
Includes change in estimates and net foreign exchange gains/(losses) related to the closure and rehabilitation provisions for operating sites. Refer to note 15 ‘Closure and
rehabilitation provisions’.
2 Relates to remeasurements of index-linked freight contracts including continuous voyage charters (CVCs). Refer to note 21 ‘Leases’.
3 Refer to note 13 ‘Impairment of non-current assets’ for information on impairments.
4 BMC and Petroleum were disposed in May 2022 and June 2022 respectively. Refer to notes 3 ‘Exceptional items’ and 27 ‘Discontinued operations’ for more information.
5
Includes the carrying value of the Group’s right-of-use assets relating to land and buildings and plant and equipment of US$2,361 million (2021: US$3,350 million). Refer to
note 21 ‘Leases’ for the movement of the right-of-use assets.
6 Relates to the acquisition of an additional 28 per cent working interest in Shenzi.
Recognition and measurement
Property, plant and equipment
Property, plant and equipment is recorded at cost less accumulated depreciation and impairment charges. Cost is the fair value of consideration given
to acquire the asset at the time of its acquisition or construction and includes the direct costs of bringing the asset to the location and the condition
necessary for operation and the estimated future costs of closure and rehabilitation of the facility.
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease
liabilities. Refer to note 21 ‘Leases’ for further details. Right-of-use assets are presented within the category of property, plant and equipment according
to the nature of the underlying asset leased.
Exploration and evaluation
Exploration costs are incurred to discover mineral resources. Evaluation costs are incurred to assess the technical feasibility and commercial viability
of resources found.
Exploration and evaluation expenditure is charged to the income statement as incurred, except in the following circumstances in which case the
expenditure may be capitalised:
– the exploration and evaluation activity is within an area of interest that was previously acquired as an asset acquisition or in a business combination
and measured at fair value on acquisition or
– the existence of a commercially viable mineral deposit has been established
150
BHP
Annual Report 2022
11 Property, plant and equipment continued
A regular review of each area of interest is undertaken to determine the appropriateness of continuing to carry forward costs in relation to that area.
Capitalised costs are only carried forward to the extent that they are expected to be recovered through the successful exploitation of the area of interest
or alternatively by its sale. To the extent that capitalised expenditure is no longer expected to be recovered, it is charged to the income statement.
Development expenditure
When proven mineral reserves are determined and development is sanctioned, capitalised exploration and evaluation expenditure is reclassified as
assets under construction within property, plant and equipment. All subsequent development expenditure is capitalised and classified as assets under
construction, provided commercial viability conditions continue to be satisfied.
The Group may use funds sourced from external parties to finance the acquisition and development of assets and operations. Finance costs are
expensed as incurred, except where they relate to the financing of construction or development of qualifying assets. Borrowing costs directly attributable
to acquiring or constructing a qualifying asset are capitalised during the development phase. Development expenditure is net of proceeds from the
saleable material extracted during the development phase. On completion of development, all assets included in assets under construction are
reclassified as either plant and equipment or other mineral assets and depreciation commences.
Other mineral assets
Other mineral assets comprise:
– capitalised exploration, evaluation and development expenditure for assets in production
– mineral rights acquired
– capitalised development and production stripping costs
Overburden removal costs
The process of removing overburden and other waste materials to access mineral deposits is referred to as stripping. Stripping is necessary to obtain
access to mineral deposits and occurs throughout the life of an open-pit mine. Development and production stripping costs are classified as other mineral
assets in property, plant and equipment.
Stripping costs are accounted for separately for individual components of an ore body. The determination of components is dependent on the mine plan
and other factors, including the size, shape and geotechnical aspects of an ore body. The Group accounts for stripping activities as follows:
Development stripping costs
These are initial overburden removal costs incurred to obtain access to mineral deposits that will be commercially produced. These costs are capitalised
when it is probable that future economic benefits (access to mineral ores) will flow to the Group and costs can be measured reliably.
Once the production phase begins, capitalised development stripping costs are depreciated using the units of production method based on the proven
and probable reserves of the relevant identified component of the ore body which the initial stripping activity benefits.
Production stripping costs
These are post initial overburden removal costs incurred during the normal course of production activity, which commences after the first saleable
minerals have been extracted from the component. Production stripping costs can give rise to two benefits, the accounting for which is outlined below:
Production stripping activity
Benefits of stripping activity
Period benefited
Recognition and
measurement criteria
Extraction of ore (inventory) in current period.
Current period
When the benefits of stripping activities are realised in
the form of inventory produced; the associated costs
are recorded in accordance with the Group’s inventory
accounting policy.
Improved access to future ore extraction.
Future period(s)
When the benefits of stripping activities are improved access
to future ore; production costs are capitalised when all the
following criteria are met:
– the production stripping activity improves access to a specific
component of the ore body and it is probable that economic
benefits arising from the improved access to future ore
production will be realised
– the component of the ore body for which access has been
improved can be identified
– costs associated with that component can be measured reliably
Allocation of costs
Asset recognised from
stripping activity
Depreciation basis
Production stripping costs are allocated between the inventory produced and the production stripping asset using a life-of-
component waste-to-ore (or mineral contained) strip ratio. When the current strip ratio is greater than the estimated life-of-
component ratio a portion of the stripping costs is capitalised to the production stripping asset.
Inventory
Other mineral assets within property, plant and equipment.
Not applicable
On a component-by-component basis using the units of
production method based on proven and probable reserves.
Key judgements and estimates
Judgements: Judgement is applied by management in determining the components of an ore body.
Estimates: Estimates are used in the determination of stripping ratios and mineral reserves by component. Changes to estimates related to life-
of-component waste-to-ore (or mineral contained) strip ratios and the expected ore production from identified components are accounted for
prospectively and may affect depreciation rates and asset carrying values.
BHP
Annual Report 2022
151
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 11 Property, plant and equipment continued
Depreciation
Depreciation of assets, other than land, assets under construction and capitalised exploration and evaluation that are not depreciated, is calculated
using either the straight-line (SL) method or units of production (UoP) method, net of residual values, over the estimated useful lives of specific assets.
The depreciation method and rates applied to specific assets reflect the pattern in which the asset’s benefits are expected to be used by the Group.
The Group’s proved reserves for petroleum assets and proved and probable reserves for minerals assets are used to determine UoP depreciation unless
doing so results in depreciation charges that do not reflect the asset’s useful life. Where this occurs, alternative approaches to determining reserves
are applied, such as using management’s expectations of future oil and gas prices rather than yearly average prices, to provide a phasing of periodic
depreciation charges that better reflects the asset’s expected useful life.
Where assets are dedicated to a mine or petroleum lease, the useful lives below are subject to the lesser of the asset category’s useful life and the life
of the mine or petroleum lease, unless those assets are readily transferable to another productive mine or lease.
Assets classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell and therefore not depreciated.
BMC and Petroleum were classified as held for sale since November 2021 and December 2021 respectively.
Key estimates
The determination of useful lives, residual values and depreciation methods involves estimates and assumptions and is reviewed annually.
Any changes to useful lives or any other estimates or assumptions, including the expected impact of climate change and the transition to a lower
carbon economy, may affect prospective depreciation rates and asset carrying values. The table below summarises the principal depreciation methods
and rates applied to major asset categories by the Group.
Category
Typical depreciation methodology
Depreciation rate
Commitments
Buildings
SL
25-50 years
Plant and
equipment
SL
3-30 years
Mineral rights and
petroleum interests
Capitalised exploration, evaluation and
development expenditure
UoP
Based on the rate of
depletion of reserves
UoP
Based on the rate of
depletion of reserves
The Group’s commitments for capital expenditure were US$2,820 million as at 30 June 2022 (2021: US$2,469 million). The Group’s commitments related
to leases are included in note 21 ‘Leases’.
12 Intangible assets
Net book value
At the beginning of the financial year
Additions
Amortisation for the year
Impairments for the year1
Disposals
Divestment and demerger of subsidiaries and operations2
Transfers and other movements
At the end of the financial year
– Cost
– Accumulated amortisation and impairments
2022
Other
intangibles
US$M
Goodwill
US$M
Total
US$M
Goodwill
US$M
1,197
−
−
−
−
−
−
1,197
1,197
−
240
36
(60)
−
(16)
(66)
38
172
1,363
(1,191)
1,437
36
(60)
−
(16)
(66)
38
1,369
2,560
(1,191)
1,197
−
−
−
−
−
−
1,197
1,197
−
2021
Other
intangibles
US$M
377
23
(93)
(52)
−
−
(15)
240
1,506
(1,266)
Total
US$M
1,574
23
(93)
(52)
−
−
(15)
1,437
2,703
(1,266)
1 Refer to note 13 ‘Impairment of non-current assets’ for information on impairments.
2 Relates to the merger of Petroleum with Woodside. Refer to note 27 ‘Discontinued operations’ for more information.
Recognition and measurement
Goodwill
Where the fair value of the consideration paid for a business acquisition exceeds the fair value of the identifiable assets, liabilities and contingent liabilities
acquired, the difference is treated as goodwill. Where consideration is less than the fair value of acquired net assets, the difference is recognised
immediately in the income statement. Goodwill is not amortised and is measured at cost less any impairment losses.
Other intangibles
The Group capitalises amounts paid for the acquisition of identifiable intangible assets, such as software, licences and initial payments for the acquisition
of mineral lease assets, where it is considered that they will contribute to future periods through revenue generation or reductions in cost. These assets,
classified as finite life intangible assets, are carried in the balance sheet at the fair value of consideration paid (cost) less accumulated amortisation and
impairment charges. Intangible assets with finite useful lives are amortised on a straight-line basis over their useful lives. The estimated useful lives are
generally no greater than eight years.
Initial payments for the acquisition of intangible mineral lease assets are capitalised and amortised over the term of the permit. A regular review is
undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area. Capitalised costs are
only carried forward to the extent that they are expected to be recovered through the successful exploitation of the area of interest or alternatively by its
sale. To the extent that capitalised expenditure is no longer expected to be recovered, it is charged to the income statement.
Assets classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell and therefore not amortised.
152
BHP
Annual Report 2022
13 Impairment of non-current assets
Cash generating unit
Cerro Colorado
Other
Total impairment of non-current assets
Reversal of impairment
Net impairment of non-current assets – Continuing operations
Net impairment of non-current assets – Discontinued operations
Net impairment of non-current assets
Segment
Copper
Various
Cash generating unit
New South Wales Energy Coal
Cerrejόn
Potash
Other
Total impairment of non-current assets
Reversal of impairment
Net impairment of non-current assets – Continuing operations
Net impairment of non-current assets – Discontinued operations
Net impairment of non-current assets
Segment
Coal
Coal
G&U
Various
Recognition and measurement
2022
Property, plant
and equipment
US$M
Goodwill
and other
intangibles
US$M
Equity-
accounted
investment
US$M
455
60
515
−
515
−
515
−
−
−
−
−
−
−
−
−
−
−
−
−
−
Property, plant
and equipment
US$M
2021 Restated
Goodwill
and other
intangibles
US$M
Equity-
accounted
investment
US$M
1,025
−
1,314
135
2,474
−
2,474
109
2,583
32
−
−
1
33
−
33
19
52
−
466
−
−
466
−
466
−
466
Total
US$M
455
60
515
−
515
−
515
Total
US$M
1,057
466
1,314
136
2,973
−
2,973
128
3,101
Impairment tests for all non-financial assets (excluding goodwill) are performed when there is an indication of impairment. Goodwill is tested for impairment
at least annually. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount
of the cash generating unit (CGU) to which the asset belongs, being the smallest identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of assets. If the carrying amount of the asset or CGU exceeds its recoverable amount, the
asset or CGU is impaired and an impairment loss is charged to the income statement so as to reduce the carrying amount in the balance sheet to its
recoverable amount.
Previously impaired assets (excluding goodwill as impairment losses are not reversed in subsequent periods) are reviewed for possible reversal of previous
impairment at each reporting date. Impairment reversal cannot exceed the carrying amount that would have been determined (net of depreciation) had no
impairment loss been recognised for the asset or CGU. Such reversal is recognised in the income statement. There were no reversals of impairment in the
current or prior year.
How recoverable amount is calculated
The recoverable amount is the higher of an asset’s or CGU’s fair value less cost of disposal (FVLCD) and its value in use (VIU).
Fair value less cost of disposal
FVLCD is an estimate of the amount that a market participant would pay for an asset or CGU, less the cost of disposal. FVLCD for mineral assets is
generally determined using independent market assumptions to calculate the present value of the estimated future post-tax cash flows expected to arise
from the continued use of the asset, including the anticipated cash flow effects of any capital expenditure to enhance production or reduce cost, and its
eventual disposal where a market participant may take a consistent view. Cash flows are discounted using an appropriate post-tax market discount rate
to arrive at a net present value of the asset, which is compared against the asset’s carrying value. FVLCD may also take into consideration other market-
based indicators of fair value. FVLCD are based primarily on Level 3 inputs as defined in note 23 ‘Financial risk management’ unless otherwise noted.
Value in use
VIU is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and
its eventual disposal or closure. VIU is determined by applying assumptions specific to the Group’s continued use and cannot take into account future
development. These assumptions are different to those used in calculating FVLCD and consequently the VIU calculation is likely to give a different result
(usually lower) to a FVLCD calculation.
BHP
Annual Report 2022
153
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 13 Impairment of non-current assets continued
Impairment of non-current assets (excluding goodwill)
Impairment of non-current assets relating to the year ended 30 June 2022 are detailed below.
Impairment of Cerro Colorado
The Group recognised a pre-tax impairment charge of US$455 million. The impairment charge primarily relates to an increase in closure and rehabilitation
provision at Cerro Colorado due to additional work required to re-profile waste dumps for closure and an increase in scope for the closure activities.
Impairments of non-current assets relating to the year ended 30 June 2021 are detailed below.
Impairment of New South Wales Energy Coal
The Group recognised pre-tax impairment charges of US$1,057 million. The recoverable amount of negative US$300 million as at 30 June 2021 was
determined using VIU methodology, applying discounted cash flow (DCF) techniques. The valuation for NSWEC was most sensitive to changes in energy
coal prices, estimated future production volumes and discount rates. The valuation applied a post-tax real discount rate of 6.5 per cent.
Impairment of Cerrejόn
The Group recognised a pre-tax impairment charge of US$466 million. The recoverable amount of US$284 million as at 30 June 2021 represented
a FVLCD based on the expected net sale proceeds.
Impairment of Potash assets
The Group recognised a pre-tax impairment charge of US$1,314 million. The recoverable amount of US$3.3 billion as at 30 June 2021 was determined
using FVLCD methodology, applying DCF techniques. The valuation was most sensitive to changes in the long-term potash price outlook and the risking
applied to the future development phases of the potash resource. The valuation applied a post-tax real discount rate of 6.5 per cent.
Impairment test for goodwill
The carrying amount of goodwill has been allocated to the CGUs, or groups of CGUs, as follows:
Cash generating unit
Olympic Dam
Other
Total goodwill
2022
US$M
1,010
187
1,197
2021
US$M
1,010
187
1,197
For the purpose of impairment testing, goodwill has been allocated to CGUs or groups of CGUs, that are expected to benefit from the synergies of previous
business combinations, which represent the level at which management will monitor and manage goodwill.
Olympic Dam goodwill
Impairment test conclusion
How did the goodwill arise?
Segment
How were the
valuations calculated?
Significant assumptions
and sensitivities
The Group performed an impairment test of the Olympic Dam CGU, including goodwill, as at 31 December 2021
and an impairment charge was not required. A goodwill impairment test was not required at 30 June 2022 as there
were no indicators of impairment.
Goodwill arose on the acquisition of WMC Resources Ltd in June 2005.
Olympic Dam is part of the Copper reportable segment.
FVLCD methodology using DCF techniques has been applied in determining the recoverable amount of
Olympic Dam.
The current valuation of Olympic Dam exceeds its carrying amount by approximately US$2.4 billion (2021:
US$1.8 billion) and is most sensitive to changes in copper and gold commodity prices, production volumes,
operating costs and discount rates. The valuation applied a post-tax real discount rate of 6.5 per cent
(2021: 6 per cent).
Management consider that there are no reasonably possible changes in copper and gold price forecasts, operating
cost estimates or the discount rate that would, in isolation, result in the estimated recoverable amount being equal
to the carrying amount.
A production volume decrease of 6 per cent (2021: 4.8 per cent) across all commodities (copper, gold, silver
and uranium) would, in isolation, result in the estimated recoverable amount being equal to the carrying amount.
Typically, changes in any one of the aforementioned assumptions (including operating performance) would be
accompanied by a change in another assumption which may have an offsetting impact. Action is usually taken to
respond to adverse changes in assumptions to mitigate the impact of any such change.
Key judgements and estimates that have been applied in the FVLCD valuation are disclosed further below.
Other goodwill
Goodwill held by other CGUs is US$187 million (2021: US$187 million). This represents less than one per cent of net assets at 30 June 2022
(2021: less than one per cent). There was no impairment of other goodwill in the year to 30 June 2022 (2021: US$ nil).
154
BHP
Annual Report 2022
13 Impairment of non-current assets continued
Key judgements and estimates
Judgements: Assessment of indicators of impairment or impairment
reversal and the determination of CGUs for impairment purposes require
significant management judgement.
Indicators of impairment may include changes in the Group’s operating
and economic assumptions, including those arising from changes in
reserves or mine planning, updates to the Group’s commodity supply,
demand and price forecasts, or the possible additional impacts from
emerging risks including those related to climate change and the
transition to a low carbon economy.
Climate change
Impacts related to climate change and the transition to a low carbon
economy may include:
All estimates require management judgements and assumptions and
are subject to risk and uncertainty that may be beyond the control of
the Group; hence, there is a possibility that changes in circumstances
will materially alter projections, which may impact the recoverable
amount of assets/CGUs at each reporting date. While no indicators of
impairment, or impairment reversal, were identified across the Group’s
CGUs at 30 June 2022, with the exception of the Cerro Colorado CGU,
the carrying value of the Spence CGU is the most susceptible to changes
in the significant estimates outlined below in the next reporting period.
The significant estimates impacting the Group’s recoverable amount
determinations are:
– demand for the Group’s commodities decreasing, due to policy,
Commodity prices
regulatory (including carbon pricing mechanisms), legal, technological,
market or societal responses to climate change, resulting in a
proportion of a CGU’s reserves becoming incapable of extraction in an
economically viable fashion
– physical impacts related to acute risks resulting from increased
frequency or severity of extreme weather events, and those related to
chronic risks resulting from longer-term changes in climate patterns
The Group’s assessment of the potential impacts of climate change and
the transition to a low carbon economy continues to mature. As outlined
in the Basis of Preparation, where sufficiently developed, the potential
financial impacts on the Group of climate change and the transition to
a low carbon economy have been considered in the assessment of
indicators of impairment, including:
– the Group’s current assumptions relating to demand for commodities
and carbon pricing, including their impact on the Group’s long-term
price forecasts
– the Group’s operational emissions reduction strategy
Estimates: The Group performs a recoverable amount determination
for an asset or CGU when there is an indication of impairment or
impairment reversal.
When the recoverable amount is measured by reference to FVLCD,
in the absence of quoted market prices or binding sale agreement,
estimates are made regarding the present value of future post-tax cash
flows. These estimates are made from the perspective of a market
participant and include prices, future production volumes, operating
costs, capital expenditure, closure and rehabilitation costs, taxes, risking
factors applied to cash flows and discount rates. The cash flow forecasts
may include net cash flows expected from the extraction, processing
and sale of material that does not currently qualify for inclusion in ore
reserves. Reserves and resources are included in the assessment
of FVLCD to the extent that it is considered probable that a market
participant would attribute value to them.
When recoverable amount is measured using VIU, estimates are made
regarding the present value of future cash flows based on internal
budgets and forecasts and life of asset plans. Key estimates are similar
to those identified for FVLCD, although some assumptions and values
may differ as they reflect the perspective of management rather than a
market participant.
Commodity prices were based on latest internal forecasts which assume
short-term market prices will revert to the Group’s assessment of
long-term price. These price forecasts reflect management’s long-term
views of global supply and demand, built upon past experience of the
commodity markets and are benchmarked with external sources of
information such as analyst forecasts. Prices are adjusted based upon
premiums or discounts applied to global price markers to reflect the
location, nature and quality of the Group’s production, or to take into
account contracted prices.
Future production volumes
Estimated production volumes were based on detailed data and took
into account development plans established by management as part
of the Group’s long-term planning process. When estimating FVLCD,
assumptions reflect all reserves and resources that a market participant
would consider when valuing the respective CGU, which in some cases
are broader in scope than the reserves that would be used in a VIU
test. In determining FVLCD, risk factors may be applied to reserves and
resources which do not meet the criteria to be treated as proved.
Cash outflows (including operating costs, capital expenditure, closure and
rehabilitation costs and taxes)
Cash outflows are based on internal budgets and forecasts and life of
asset plans. Cost assumptions reflect management experience and
expectations. Tax assumptions reflect existing tax and royalty regimes
and rates applicable in the jurisdiction of the CGU. In the case of FVLCD,
cash flow projections include the anticipated cash flow effects of any
capital expenditure to enhance production or reduce cost where a market
participant may take a consistent view. VIU does not take into account
future development.
Discount rates
The Group uses real post-tax discount rates applied to real post-tax cash
flows. The discount rates are derived using the weighted average cost of
capital methodology. Adjustments to the rates are made for any risks that
are not reflected in the underlying cash flows, including country risk.
BHP
Annual Report 2022
155
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 14 Deferred tax balances
The movement for the year in the Group’s net deferred tax position is as follows:
Net deferred tax (liability)/asset
At the beginning of the financial year
Income tax (charge)/credit recorded in the income statement1
Income tax (charge)/credit recorded directly in equity
Divestment and demerger of subsidiaries and operations2
Other movements
At the end of the financial year
2022
US$M
(1,402)
(125)
(42)
(1,439)
1
(3,007)
2021
US$M
(91)
(1,325)
42
−
(28)
(1,402)
2020
US$M
(491)
335
34
−
31
(91)
Includes Discontinued operations income tax (charge)/credit to the income statement of US$(61) million (2021: US$273 million; 2020: US$247 million).
1
2 Relates to the divestment of BMC and merger of Petroleum with Woodside. Refer to notes 3 ‘Exceptional items’ and 27 ‘Discontinued operations’ for more information.
For recognition and measurement refer to note 6 ‘Income tax expense’.
The composition of the Group’s net deferred tax assets and liabilities recognised in the balance sheet and the deferred tax expense charged/(credited) to
the income statement is as follows:
Type of temporary difference
Depreciation1
Exploration expenditure
Employee benefits
Closure and rehabilitation
Resource rent tax
Other provisions
Deferred income
Deferred charges
Investments, including foreign tax credits
Foreign exchange gains and losses
Tax losses
Lease liability1
Other
Total
Deferred tax assets
Deferred tax liabilities
Charged/(credited) to the income statement
2022
US$M
(526)
9
21
104
−
70
51
(57)
139
(13)
225
17
16
56
2021
US$M
(1,349)
51
94
638
122
108
11
(36)
147
(3)
1,999
68
62
1,912
2022
US$M
4,844
−
(322)
(1,448)
−
(192)
(1)
584
365
154
(307)
(594)
(20)
3,063
2021
US$M
4,716
−
(333)
(2,086)
368
(227)
(16)
602
671
133
(82)
(658)
226
3,314
2022
US$M
2021
US$M
2020
US$M
554
13
20
24
(129)
49
(31)
7
(298)
33
28
(10)
(135)
125
488
347
(68)
(515)
(309)
77
(31)
68
414
63
678
67
46
1,325
1,394
51
(38)
(334)
(119)
(268)
33
(132)
(77)
(18)
(148)
(793)
114
(335)
1
Includes deferred tax associated with the recognition of right-of-use assets and lease liabilities on adoption of IFRS 16. Refer to note 21 ‘Leases’.
The amount of deferred tax assets dependent on future taxable profits not arising from the reversal of existing deferred tax liabilities, and which relate to
tax jurisdictions where the taxable entity has suffered a loss in the current or preceding year, was US$18 million at 30 June 2022 (2021: US$1,675 million).
The decrease from FY2021 is primarily attributable to the disposal of assets giving rise to these deferred tax assets as part of the merger of Petroleum with
Woodside. For operating assets, the group assesses the recoverability of these deferred tax assets using estimates and assumptions relating to projected
earnings and cash flows as applied in the Group impairment process for associated operations. Further information on the key judgements and estimates
relating to the recognition of deferred tax assets is provided in note 6 ‘Income tax expense’.
156
BHP
Annual Report 2022
14 Deferred tax balances continued
The composition of the Group’s unrecognised deferred tax assets and liabilities is as follows:
Unrecognised deferred tax assets
Tax losses and tax credits1
Investments in subsidiaries2
Deductible temporary differences relating to PRRT3
Mineral rights4
Other deductible temporary differences5
Total unrecognised deferred tax assets
Unrecognised deferred tax liabilities
Investments in subsidiaries2
Future taxable temporary differences relating to unrecognised deferred tax asset for PRRT3
Total unrecognised deferred tax liabilities
2022
US$M
2021
US$M
8,462
1,597
−
2,781
1,777
14,617
2,099
−
2,099
5,944
1,712
2,402
3,359
1,630
15,047
2,203
720
2,923
1 At 30 June 2022, the Group had income and capital tax losses with a tax benefit of US$5,777 million (2021: US$3,569 million) and tax credits of US$2,685 million (2021:
US$2,375 million), which are not recognised as deferred tax assets, because it is not probable that future taxable profits or capital gains will be available against which the
Group can utilise the benefits.
The gross amount of tax losses carried forward that have not been recognised is as follows:
Year of expiry
Income tax losses
Not later than one year
Later than one year and not later than two years
Later than two years and not later than five years
Later than five years and not later than 10 years
Later than 10 years and not later than 20 years
Unlimited
Capital tax losses
Not later than one year
Later than two years and not later than five years
Unlimited
Gross amount of tax losses not recognised
Tax effect of total losses not recognised
2022
US$M
−
−
43
248
1,290
4,157
5,738
−
−
14,173
19,911
5,777
2021
US$M
13
5
105
1,449
3,347
4,799
9,718
−
−
4,238
13,956
3,569
Of the US$2,685 million of tax credits, US$2,129 million expires not later than 10 years and US$556 million expires later than 10 years and not later than 20 years.
2 The Group had deferred tax assets and deferred tax liabilities associated with undistributed earnings of subsidiaries that have not been recognised because the Group is
able to control the timing of the reversal of the temporary differences and it is not probable that these differences will reverse in the foreseeable future. Where the Group has
undistributed earnings held by associates and joint interests, the deferred tax liability will be recognised as there is no ability to control the timing of the potential distributions.
3 The Group had unrecognised deferred tax assets relating to Australian Petroleum Resource Rent Tax (PRRT) in FY2021. The assets giving rise to these deferred tax assets
were disposed as part of the merger of Petroleum with Woodside. Refer to note 27 ‘Discontinued operations’ for more information.
4 The Group had deductible temporary differences relating to mineral rights for which deferred tax assets had not been recognised because it is not probable that future capital
gains will be available against which the Group can utilise the benefits. The deductible temporary differences do not expire under current tax legislation.
5 The Group had other deductible temporary differences for which deferred tax assets had not been recognised because it is not probable that future taxable profits will be
available against which the Group can utilise the benefits. The deductible temporary differences do not expire under current tax legislation.
15 Closure and rehabilitation provisions
At the beginning of the financial year
Capitalised amounts for operating sites:
Change in estimate
Exchange translation
Adjustments charged/(credited) to the income statement:
Increases to existing and new provisions
Exchange translation
Released during the year
Other adjustments to the provision:
Amortisation of discounting impacting net finance costs
Acquisition of subsidiaries and operations
Divestment and demerger of subsidiaries and operations
Expenditure on closure and rehabilitations activities
Exchange variations impacting foreign currency translation reserve
Other movements
At the end of the financial year
Comprising:
Current
Non-current
Operating sites
Closed sites
2022
US$M
11,910
1,579
(694)
174
(58)
(42)
554
−
(4,477)
(316)
(3)
62
8,689
475
8,214
6,198
2,491
2021
US$M
8,810
1,974
483
564
76
(157)
380
179
(81)
(321)
3
−
11,910
591
11,319
9,279
2,631
BHP
Annual Report 2022
157
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review
15 Closure and rehabilitation provisions continued
The Group is required to close and rehabilitate sites and associated facilities at the end of or, in some cases, during the course of production to a
condition acceptable to the relevant authorities, as specified in licence requirements and the Group’s closure performance requirements as set out within
Our Charter.
The key components of closure and rehabilitation activities are:
– the removal of all unwanted infrastructure associated with an operation
– the return of disturbed areas to a safe, stable and self-sustaining condition, consistent with the agreed post-closure land use
Recognition and measurement
Provisions for closure and rehabilitation are recognised by the Group when:
– it has a present legal or constructive obligation as a result of past events
– it is more likely than not that an outflow of resources will be required to settle the obligation
– the amount can be reliably estimated
Initial recognition and measurement
Closure and rehabilitation provisions are
initially recognised when an environmental
disturbance first occurs. The individual site
provisions are an estimate of the expected
value of future cash flows required to close
the relevant site using current standards
and techniques and taking into account
risks and uncertainties. Individual site
provisions are discounted to their present
value using currency specific discount
rates aligned to the estimated timing of
cash outflows.
When provisions for closure and
rehabilitation are initially recognised, the
corresponding cost is capitalised as an
asset, representing part of the cost of
acquiring the future economic benefits of
the operation.
Subsequent measurement
The closure and rehabilitation asset, recognised within property, plant and equipment, is depreciated over
the life of the operations. The value of the provision is progressively increased over time as the effect of
discounting unwinds, resulting in an expense recognised in net finance costs.
The closure and rehabilitation provision is reviewed at each reporting date to assess if the estimate
continues to reflect the best estimate of the obligation. If necessary, the provision is remeasured to account
for factors such as:
– additional disturbance during the period
– revisions to estimated reserves, resources and lives of operations including any changes to expected
operating lives arising from the Group’s latest assessment of the potential impacts of climate change
and the transition to a low carbon economy
– developments in technology
– changes to regulatory requirements and environmental management strategies
– changes in the estimated extent and costs of anticipated activities, including the effects of inflation and
movements in foreign exchange rates
– movements in interest rates affecting the discount rate applied
Changes to the closure and rehabilitation estimate for operating sites are added to, or deducted from,
the related asset and amortised on a prospective basis over the remaining life of the operation, generally
applying the units of production method.
Costs arising from unforeseen circumstances, such as the contamination caused by unplanned
discharges, are recognised as an expense and liability when the event gives rise to an obligation that is
probable and capable of reliable estimation.
Closed sites
Where future economic benefits are no longer expected to be derived through operation, changes to the associated closure and remediation costs are
charged to the income statement in the period identified. This amounted to US$74 million in the year ended 30 June 2022 (2021: US$483 million; 2020:
US$669 million).
158
BHP
Annual Report 2022
15 Closure and rehabilitation provisions continued
Key estimates
Closure cost estimates are generally based on conceptual level studies
early in the operating life of an asset with more detailed studies and
planning performed as closure risks (including those related to climate
change) are identified and/or as an asset, or parts thereof, near closure.
As such, the recognition and measurement of closure and rehabilitation
provisions requires the use of significant estimates and assumptions,
including, but not limited to:
– the extent (due to legal or constructive obligations) of potential
activities required for the removal of infrastructure, decharacterisation
of tailings storage facilities and rehabilitation activities
– costs associated with future closure activities
– the extent and period of post-closure monitoring and maintenance,
including water management
– applicable discount rates
– the timing of cash flows and ultimate closure of operations
The extent, cost and timing of future closure activities may also be
impacted by the potential physical impacts of climate change.
In estimating the potential cost of closure activities, the Group considers
factors such as long-term weather outlooks, for example forecast
changes in rainfall patterns. Closure cost estimates also consider the
impact of the Group’s energy transition strategy on the costs and timing
of performing closure activities and the impact of new technology when
appropriately developed and tested. For example, closure cost estimates
largely continue to reflect the use of existing fuel sources for the Group’s
equipment while the Group continues to invest in the development of
alternative fuel sources and fleet electrification.
Estimates for post-closure monitoring and maintenance reflect the
Group’s strategies for individual sites, which may include possible
relinquishment. The period of monitoring and maintenance included in
the provision requires judgement and considers regulatory and licencing
requirements, the outcomes of studies and management’s current
assessment of stakeholder expectations. As post-closure monitoring
and maintenance may be required for significant periods beyond the
completion of other closure activities, it is exposed to the potential long-
term impacts of climate change, particularly changes in rainfall patterns.
While reflecting management’s current best estimate, the cost of post-
closure monitoring and maintenance may change in future reporting
periods as the understanding of, and potential long-term impacts from,
climate change continue to evolve.
While progressive closure is performed across a number of operations,
significant activities are generally undertaken at the end of the production
life at the individual sites, the estimated timing of which is informed by
the Group’s current assumptions relating to demand for commodities and
carbon pricing, and their impact on the Group’s long-term price forecasts.
Remaining production lives range from 2-104 years (2021: 3-91 years).
Given the generally shorter remaining operational lives of the Group’s
previously held Petroleum assets, the average remaining production
life for all operating sites, weighted by current closure provision, has
increased to approximately 29 years (2021: 27 years). The discount
rates applied to the Group’s closure and rehabilitation provisions are
determined by reference to the currency of the closure cash flows, the
period over which the cash flows will be incurred and prevailing market
interest rates (where available). The Group continues to monitor current
market conditions with no change made to the Group’s discount rates in
the current year.
The increase in closure and rehabilitation provisions relating to continuing
operating sites reflects updates to the expected cost and timing of
closure activities across the Group’s portfolio, with the most significant
increases in the year ended 30 June 2022 being at BHP Mitsubishi
Alliance (BMA) and Cerro Colorado.
For BMA, the increase largely reflects a preliminary assessment of the
potential impacts on BMA mine lives resulting from:
– the significant increase in coal royalties applicable in Queensland from
1 July 2022
– consideration of the Group’s long-term outlook for metallurgical coal
commodity prices, which reflects a range of drivers of commodity
demand and supply, for example, the latest climate-related
announcements from key market countries
These factors have resulted in the Group recognising that the end of
operations at BMA sites may be earlier than previously anticipated.
The best estimate of the impact on the estimated closure cash flows and
their timing, and therefore the discounting of the provision, contributed
to an increase in the provision, and associated rehabilitation asset, of
approximately US$750 million. Given the timing of the announcement of
the change to the Queensland coal royalty regime and the preliminary
nature of the assessment, further changes to the provision may arise in
future reporting periods.
At Cerro Colorado, additional work required to re-profile waste dumps
for closure and an increase in scope for other closure activities have
contributed to an increase in the closure provision of approximately
US$400 million. As operations are ongoing at Cerro Colorado the
increase has initially been capitalised. However, given the proximity
to closure and the estimated future cash flows of Cerro Colorado the
resulting rehabilitation asset has been impaired as outlined in note 13
‘Impairment of non-current assets’.
While the closure and rehabilitation provisions reflect management’s best
estimates based on current knowledge and information, further studies,
trials and detailed analysis of relevant knowledge and resultant closure
activities for individual assets continue to be performed throughout the
life of asset. Such studies and analysis can impact the estimated costs
of closure activities. Estimates can also be impacted by the emergence
of new closure and rehabilitation techniques, changes in regulatory
requirements and stakeholder expectations for closure (including costs
associated with equitable transition), development of new technologies,
risks relating to climate change and the transition to a low carbon
economy, and experience at other operations. These uncertainties may
result in future actual expenditure differing from the amounts currently
provided for in the balance sheet.
Sensitivity
A 0.5 per cent increase in the discount rates applied at 30 June 2022
would result in a decrease to the closure and rehabilitation provision
of approximately US$675 million, a decrease in property, plant and
equipment of approximately US$490 million in relation to operating
sites and an income statement credit of approximately US$185 million
in respect of closed sites. In addition, the change would result in a
decrease of approximately US$70 million to depreciation expense and
a US$25 million increment in net finance costs for the year ending
30 June 2023.
Given the long-lived nature of the majority of the Group’s assets, the
majority of final closure activities are generally not expected to occur for
a significant period of time.
However, a one-year acceleration in forecast cash flows of the Group’s
closure and rehabilitation provisions, in isolation, would result in an
increase to the provision of approximately US$185 million, an increase in
property, plant and equipment of US$125 million in relation to operating
sites and an income statement charge of US$60 million in respect of
closed sites.
BHP
Annual Report 2022
159
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review Capital structure
16 Share capital
Share capital issued
Opening number of shares
Issue of shares
Corporate structure unification
Purchase of shares by ESOP Trusts
Employee share awards exercised following vesting
Movement in treasury shares under Employee Share Plans
Closing number of shares
Comprising:
Shares held by the public
Treasury shares
Other share classes
5.5% Preference shares of £1 each
Special Voting share of no par value
Special Voting share of US$0.50 par value
DLC Dividend share
BHP Group Limited
BHP Group Plc
2022
shares
2021
shares
2020
shares
2022
shares
2021
shares
2020
shares
2,945,851,394 2,945,851,394 2,945,851,394
−
−
(5,975,189)
6,893,113
(917,924)
5,062,323,190 2,945,851,394 2,945,851,394
4,400,000
2,112,071,796
(8,704,669)
8,522,684
181,985
−
−
(7,587,353)
6,948,683
638,670
−
(2,112,071,796)
(63,567)
77,748
(14,181)
2,112,071,796 2,112,071,796 2,112,071,796
−
−
(185,297)
222,245
(36,948)
− 2,112,071,796 2,112,071,796
−
−
(185,054)
173,644
11,410
5,061,272,144 2,944,982,333 2,945,621,003
230,391
869,061
1,051,046
− 2,112,057,615 2,112,069,025
2,771
−
14,181
−
−
−
−
−
1
−
1
−
1
−
1
−
−
−
−
50,000
−
1
−
50,000
−
1
−
During August 2021, BHP Group Limited issued 4,400,000 fully paid ordinary shares to the BHP Billiton Limited Employee Equity Trust at A$52.99 per share,
to satisfy the vesting of employee share awards and related dividend equivalent entitlements under those employee share plans.
On 3 September 2021, BHP Group Plc acquired by way of gift from J.P. Morgan Limited the 50,000 issued 5.5 per cent cumulative preference shares of
£1.00, in the capital of BHP Group Plc. These preference shares held by BHP Group Plc were cancelled on 31 January 2022.
On 31 January 2022, 2,112,071,796 fully paid ordinary shares in BHP Group Limited were issued to BHP Group Plc shareholders in a one for one exchange
of their BHP Group Plc ordinary shares, resulting in BHP Group Limited becoming the sole parent company of the Group with a single set of shareholders.
BHP Group Plc had one Special Voting share on issue and BHP Group Limited had one Special Voting share and one DLC dividend share on issue to
facilitate operation of the Group’s dual listed structure. These shares were bought back for nominal value in January 2022 and subsequently cancelled.
Share capital of BHP Group Limited at 30 June 2022 is composed of the following classes of shares:
Ordinary shares fully paid
Treasury shares
Each fully paid ordinary share of BHP Group
Limited carries the right to one vote at a meeting
of the Company.
Treasury shares are shares of BHP Group Limited that are held by the ESOP Trusts for the purpose of
issuing shares to employees under the Group’s Employee Share Plans. Treasury shares are recognised at
cost and deducted from equity, net of any income tax effects. When the treasury shares are subsequently
sold or reissued, any consideration received, net of any directly attributable costs and income tax effects,
is recognised as an increase in equity. Any difference between the carrying amount and the consideration,
if reissued, is recognised in retained earnings.
The following classes of shares existed prior to the Group’s unification on 31 January 2022:
Special Voting shares
Preference shares
DLC Dividend share
Each of BHP Group Limited and BHP Group Plc
issued one Special Voting share to facilitate joint
voting by shareholders of BHP Group Limited and
BHP Group Plc on Joint Electorate Actions.
Preference shares have the right to repayment of
the amount paid up on the nominal value and any
unpaid dividends in priority to the holders of any
other class of shares in BHP Group Plc on a return
of capital or winding up. The holders of preference
shares have limited voting rights if payment of
the preference dividends are six months or more
in arrears or a resolution is passed changing the
rights of the preference shareholders.
The DLC Dividend share supported the Dual Listed
Company (DLC) equalisation principles in place since
the merger in 2001, including the requirement that
ordinary shareholders of BHP Group Plc and BHP
Group Limited are paid equal cash dividends per
share. This share enabled efficient and flexible capital
management across the DLC and was issued on
23 February 2016 at par value of US$10.
160
BHP
Annual Report 2022
17 Other equity
Share premium account
Capital redemption reserve
2022
US$M
−
−
2021
US$M
518
2020
US$M
518
177
177
Common control reserves
(1,603)
−
−
Employee share awards reserve
174
268
246
Cash flow hedge reserve
41
100
50
Cost of hedging reserve
(19)
(54)
(23)
Foreign currency translation
reserve
Equity investments reserve
(14)
(8)
43
15
39
16
Non-controlling interest
contribution reserve
1,441
1,283
1,283
Total reserves
12
2,350
2,306
Recognition and measurement
The share premium account represented the premium paid on the issue of BHP
Group Plc shares recognised in accordance with the UK Companies Act 2006. It was
transferred to the common control reserve as part of the unification of the Group’s
corporate structure.
The capital redemption reserve represented the par value of BHP Group Plc shares
that were purchased and subsequently cancelled. It was transferred to the common
control reserve as part of unification of the Group’s corporate structure.
The common control reserve arose on unification of the Group’s corporate structure
and represents the residual on consolidation between BHP Group Ltd’s investment
in BHP Group Plc’s and BHP Group Plc’s share capital, share premium and capital
redemption reserve at the time of unification.
The employee share awards reserve represents the accrued employee entitlements to
share awards that have been charged to the income statement and have not yet been
exercised.
Once exercised, the difference between the accumulated fair value of the awards and
their historical on-market purchase price is recognised in retained earnings.
The cash flow hedge reserve represents hedging gains and losses recognised on
the effective portion of cash flow hedges. The cumulative deferred gain or loss on the
hedge is recognised in the income statement when the hedged transaction impacts
the income statement, or is recognised as an adjustment to the cost of non-financial
hedged items. The hedging reserve records the portion of the gain or loss on a
hedging instrument in a cash flow hedge that is determined to be an effective hedge
relationship.
The cost of hedging reserve represents the recognition of certain costs of hedging for
example, basis adjustments, which have been excluded from the hedging relationship
and deferred in other comprehensive income until the hedged transaction impacts the
income statement.
The foreign currency translation reserve represents exchange differences arising from
the translation of non-US dollar functional currency operations within the Group into
US dollars.
The equity investment reserve represents the revaluation of investments in shares
recognised through other comprehensive income. Where a revalued financial asset
is sold, the relevant portion of the reserve is transferred to retained earnings.
The non-controlling interest contribution reserve represents the excess of
consideration received over the book value of net assets attributable to equity
instruments when acquired by non-controlling interests.
Summarised financial information relating to each of the Group’s subsidiaries with non-controlling interests (NCI) that are material to the Group before any
intra-group eliminations is shown below:
US$M
Group share (per cent)
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Net assets attributable to NCI
Revenue
Profit after taxation
Other comprehensive income
Total comprehensive income
Profit after taxation attributable to NCI
Other comprehensive income attributable to NCI
Net operating cash flow
Net investing cash flow
Net financing cash flow
Dividends paid to NCI
2022
Other individually
immaterial
subsidiaries
(incl. intra-group
eliminations)
Minera
Escondida
Limitada
2021
Other individually
immaterial
subsidiaries
(incl. intra-group
eliminations)
Total
Minera
Escondida
Limitada
Total
57.5
2,929
11,636
(2,192)
(4,762)
7,611
3,235
9,500
3,522
11
3,533
1,497
5
4,519
(860)
(4,029)
1,760
57.5
2,996
11,867
(1,912)
(4,733)
8,218
3,493
9,470
3,605
27
3,632
1,532
11
5,007
(655)
(4,001)
1,590
574
3,809
658
−
2,155
5
780
2,540
848
4,341
615
−
2,147
11
537
2,127
While the Group controls Minera Escondida Limitada, the non-controlling interests hold certain protective rights that restrict the Group’s ability to sell
assets held by Minera Escondida Limitada, or use the assets in other subsidiaries and operations owned by the Group. Minera Escondida Limitada is also
restricted from paying dividends without the approval of the non-controlling interests.
BHP
Annual Report 2022
161
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 18 Dividends
Dividends paid during the period1
Prior year final dividend
Interim dividend
Year ended 30 June 2022
Year ended 30 June 2021
Year ended 30 June 2020
Per share
US cents
Total
US$M
Per share
US cents
Total
US$M
Per share
US cents
200
150
350
10,119
7,601
17,720
55
101
156
2,779
5,115
7,894
78
65
143
Total
US$M
3,946
3,288
7,234
1 5.5 per cent dividend on 50,000 preference shares of £1 each determined and paid for financial years 2021 and 2020. No dividend paid for the financial year 2022.
These preference shares were cancelled on 31 January 2022.
Dividends paid during the period differs from the amount of dividends paid in the Consolidated Cash Flow Statement as a result of foreign exchange gains
and losses relating to the timing of equity distributions between the record date and the payment date. Additional derivative proceeds of US$127 million
were received as part of the funding of the interim dividend and is disclosed in Proceeds/(settlements) of cash management related instruments in the
Consolidated Cash Flow Statement.
Prior to the corporate structure unification, the Dual Listed Company merger terms required that ordinary shareholders of BHP Group Limited and BHP
Group Plc were paid equal cash dividends on a per share basis.
Each American Depositary Share (ADS) represents two ordinary shares of BHP Group Limited. Dividends determined on each ADS represent twice the
dividend determined on BHP Group Limited ordinary share.
Dividends are determined after period-end and announced with the results for the period. Interim dividends are determined in February and paid in March.
Final dividends are determined in August and paid in September. Dividends determined are not recorded as a liability at the end of the period to which
they relate. Subsequent to year-end, on 16 August 2022, BHP Group Limited determined a final dividend of 175 US cents per share (US$8,857 million),
which will be paid on 22 September 2022 (30 June 2021: final dividend of 200 US cents per share – US$10,114 million; 30 June 2020: final dividend of
55 US cents per share – US$2,782 million).
BHP Group Limited dividends for all periods presented are, or will be, fully franked based on a tax rate of 30 per cent.
Franking credits as at 30 June
Franking credits arising from the payment of current tax
Total franking credits available1
2022
US$M
7,007
2,043
9,050
2021
US$M
14,302
1,799
16,101
2020
US$M
10,980
471
11,451
1 The payment of the final 2022 dividend determined after 30 June 2022 will reduce the franking account balance by US$3,796 million.
In addition to dividends paid, the Group made an in specie dividend to eligible BHP shareholders during the period by distributing the 914,768,948
Woodside shares it received as consideration for the sale of BHP Petroleum. The closing price of Woodside shares on ASX on 31 May 2022 was
A$29.76. The implied value of the in specie dividend was therefore A$27.2 billion (US$19.6 billion). At this valuation, the in specie dividend was
approximately A$5.38 (US$3.86), with A$2.30 (US$1.66) of franking credits being distributed, per BHP share. Further detail are detailed in note 27
‘Discontinued operations’.
19 Provisions for dividends and other liabilities
The disclosure below excludes closure and rehabilitation provisions (refer to note 15 ‘Closure and rehabilitation provisions’), employee benefits, restructuring
and post-retirement employee benefits provisions (refer to note 26 ‘Employee benefits, restructuring and post-retirement employee benefits provisions’) and
provisions related to the Samarco dam failure (refer to note 4 ‘Significant events – Samarco dam failure’).
Movement in provision for dividends and other liabilities
At the beginning of the financial year
Dividends determined
Charge/(credit) for the year:
Underlying
Discounting
Exchange variations
Released during the year
Utilisation
Dividends paid
Divestment and demerger of subsidiaries and operations
Transfers and other movements
At the end of the financial year
Comprising:
Current
Non-current
162
BHP
Annual Report 2022
2022
US$M
581
17,720
493
1
122
(48)
(96)
(17,851)
(146)
(102)
674
356
318
2021
US$M
1,240
7,894
260
2
20
(43)
(267)
(7,901)
−
(624)
581
293
288
Financial management
20 Net debt
The Group seeks to maintain a strong balance sheet and deploys its capital with reference to the Capital Allocation Framework.
The Group monitors capital using the net debt balance and the gearing ratio, being the ratio of net debt to net debt plus net assets.
The net debt definition includes the fair value of derivative financial instruments used to hedge cash and borrowings which reflects the Group’s risk
management strategy of reducing the volatility of net debt caused by fluctuations in foreign exchange and interest rates.
Under IFRS 16/AASB16 ‘Leases’, vessel lease contracts are required to be remeasured at each reporting date to the prevailing freight index. While these
liabilities are included in the Group interest bearing liabilities, they are excluded from the net debt calculation as they do not align with how the Group
assesses net debt for decision making in relation to the Capital Allocation Framework. In addition, the freight index has historically been volatile which
creates significant short-term fluctuation in these liabilities.
US$M
Interest bearing liabilities
Bank loans
Notes and debentures
Lease liabilities
Bank overdraft and short-term borrowings
Other
Total interest bearing liabilities
Less: Lease liability associated with index-linked freight contracts
Less: Cash and cash equivalents
Cash
Short-term deposits
Less: Total cash and cash equivalents
Less: Derivatives included in net debt
Net debt management related instruments1
Net cash management related instruments2
Less: Total derivatives included in net debt
Net debt
Net assets
Gearing
2022
2021
Current
Non-current
Current
Non-current
397
1,690
519
−
16
2,622
113
5,728
11,508
17,236
(358)
273
(85)
437
1,244
889
−
58
2,628
346
4,408
10,838
15,246
20
34
54
2,075
9,673
2,057
−
1
13,806
161
−
−
−
(1,330)
−
(1,330)
333
48,766
0.7%
1,823
13,525
3,007
−
−
18,355
679
−
−
−
537
−
537
4,121
55,605
6.9%
1 Represents the net cross currency and interest rate swaps designated as effective hedging instruments included within current and non-current other financial assets
and liabilities.
2 Represents the net forward exchange contracts included within current and non-current other financial assets and liabilities.
Cash and short-term deposits are disclosed in the cash flow statement net of bank overdrafts and interest bearing liabilities at call.
Total cash and cash equivalents
Bank overdrafts and short-term borrowings
Total cash and cash equivalents, net of overdrafts
2022
US$M
17,236
−
17,236
2021
US$M
15,246
−
15,246
2020
US$M
13,426
−
13,426
Cash and cash equivalents includes US$127 million (2021: US$159 million) restricted by legal or contractual arrangements.
Recognition and measurement
Cash and short-term deposits in the balance sheet comprise cash at bank and on hand and highly liquid cash deposits with short-term maturities that
are readily convertible to known amounts of cash with insignificant risk of change in value. The Group considers that the carrying value of cash and
cash equivalents approximate fair value due to their short-term to maturity. Refer to note 21 ‘Leases’ and note 23 ‘Financial risk management’ for the
recognition and measurement principles for lease liabilities and other financial liabilities.
Interest bearing liabilities and cash and cash equivalents include balances denominated in the following currencies:
USD
EUR
GBP
AUD
CAD
Other
Total
Interest bearing liabilities
Cash and cash equivalents
2022
US$M
8,813
3,463
2,621
783
584
164
16,428
2021
US$M
11,146
4,505
3,415
1,053
635
229
20,983
2022
US$M
7,654
2,656
30
3,360
3,437
99
17,236
2021
US$M
12,003
4
32
573
2,455
179
15,246
The Group enters into derivative transactions to convert the majority of its exposures above into US dollars. Further information on the Group’s risk
management activities relating to these balances is provided in note 23 ‘Financial risk management’.
Liquidity risk
The Group’s liquidity risk arises from the possibility that it may not be able to settle or meet its obligations as they fall due and is managed as part of the
portfolio risk management strategy. Operational, capital and regulatory requirements are considered in the management of liquidity risk, in conjunction
with short-term and long-term forecast information.
BHP
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163
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 20 Net debt continued
Recognising the cyclical volatility of operating cash flows, the Group has defined minimum target cash and liquidity buffers to be maintained to mitigate
liquidity risk and support operations through the cycle.
The Group’s strong credit profile, diversified funding sources, its minimum cash buffer and its committed credit facilities ensure that sufficient liquid funds
are maintained to meet its daily cash requirements.
The Group’s Moody’s credit rating has remained at A2/P-1 outlook stable (long-term/short-term) throughout FY2022 and Moody’s affirmed its credit rating
on 2 June 2022. The Group’s Standard & Poor’s rating changed from A/A-1 outlook stable (long-term/short-term) to A/A-1 CreditWatch negative (long-
term/short-term) on 23 August 2021 following the announcement of the proposed merger of our petroleum business with Woodside. Upon completion of
the merger, on 1 June 2022 Standard & Poor’s lowered the Group’s long-term credit rating by one notch, removed the credit rating from CreditWatch, and
confirmed a credit rating of A-/A-1 outlook stable (long-term/short-term).
There were no defaults on the Group’s liabilities during the period.
Counterparty risk
The Group is exposed to credit risk from its financing activities, including short-term cash investments such as deposits with banks and derivative
contracts. This risk is managed by Group Treasury in line with the counterparty risk framework, which aims to minimise the exposure to a counterparty
and mitigate the risk of financial loss through counterparty failure.
Exposure to counterparties is monitored at a Group level across all products and includes exposure with derivatives and cash investments.
Investments and derivatives are only transacted with approved counterparties who have been assigned specific limits based on a quantitative credit risk
model. These limits are updated at least bi-annually. Additionally, derivatives are subject to tenor limits and investments are subject to concentration limits
by rating.
Derivative fair values are inclusive of valuation adjustments that take into account both the counterparty and the Group’s risk of default.
Standby arrangements and unused credit facilities
The Group’s committed revolving credit facility operates as a back-stop to the Group’s uncommitted commercial paper program. The combined amount
drawn under the facility or as commercial paper will not exceed US$5.5 billion. As at 30 June 2022, US$ nil commercial paper was drawn (2021: US$ nil).
The facility was amended in November 2021 for IBOR transition and is due to mature on 10 October 2026. A commitment fee is payable on the undrawn
balance and interest is payable on any drawn balance comprising a reference rate plus a margin. The agreed margins are typical for a credit facility
extended to a company with the Group’s credit rating.
Maturity profile of financial liabilities
The maturity profile of the Group’s financial liabilities based on the undiscounted contractual amounts, taking into account the derivatives related to debt,
is as follows:
2022
US$M
Due for payment:
In one year or less or on demand
In more than one year but not more than two years
In more than two years but not more than five years
In more than five years
Total
Carrying amount
2021
US$M
Due for payment:
In one year or less or on demand
In more than one year but not more than two years
In more than two years but not more than five years
In more than five years
Total
Carrying amount
Bank loans,
debentures and
other loans
Expected
future interest
payments
Derivatives
related to
debentures
Other
derivatives
Obligations
under lease
liabilities
Trade
and other
payables1
2,109
1,634
2,609
7,550
13,902
13,852
492
427
1,032
3,705
5,656
−
525
300
492
1,467
2,784
1,824
221
112
246
245
824
752
579
443
936
1,470
3,428
2,576
6,608
−
−
−
6,608
6,608
Bank loans,
debentures and
other loans
Expected
future interest
payments
Derivatives
related to
debentures
Other
derivatives
Obligations
under lease
liabilities
Trade
and other
payables1
1,722
2,278
4,062
7,801
15,863
17,087
729
661
1,492
4,136
7,018
−
61
267
256
585
1,169
586
149
80
240
317
786
690
980
680
1,397
1,842
4,899
3,896
6,851
−
−
−
6,851
6,851
Total
10,534
2,916
5,315
14,437
33,202
25,612
Total
10,492
3,966
7,447
14,681
36,586
29,110
1 Excludes input taxes of US$79 million (2021: US$176 million) included in other payables. Refer to note 9 ‘Trade and other payables’.
164
BHP
Annual Report 2022
21 Leases
Movements in the Group’s lease liabilities during the year are as follows:
At the beginning of the financial year
Additions
Remeasurements of index-linked freight contracts
Lease payments1
Foreign exchange movement
Amortisation of discounting
Divestment and demerger of subsidiaries and operations2
Transfers and other movements
At the end of the financial year
Comprising:
Current liabilities
Non-current liabilities
2022
US$M
3,896
866
(369)
(1,288)
(126)
125
(492)
(36)
2,576
519
2,057
2021
US$M
3,443
1,223
(59)
(879)
115
109
−
(56)
3,896
889
3,007
Includes US$39 million (2021: US$45 million) related to Discontinued operations.
1
2 Relates to the divestment of BMC and merger of Petroleum with Woodside. Refer to notes 3 ‘Exceptional items’ and 27 ‘Discontinued operations’ for more information.
A significant proportion by value of the Group’s lease contracts relate to plant facilities, office buildings and vessels. Lease terms for plant facilities and
office buildings typically run for over 10 years and vessels for four to 10 years. Other leases include port facilities, various equipment and vehicles.
The lease contracts contain a wide range of different terms and conditions including extension and termination options and variable lease payments.
The Group’s lease obligations are included in the Group’s Interest bearing liabilities and, with the exception of vessel lease contracts that are priced with
reference to a freight index, form part of the Group’s net debt.
The maturity profile of lease liabilities based on the undiscounted contractual amounts is as follows:
Lease liability
Due for payment:
In one year or less or on demand
In more than one year but not more than two years
In more than two years but not more than five years
In more than five years1
Total
Carrying amount
2022
US$M
2021
US$M
579
443
936
1,470
3,428
2,576
980
680
1,397
1,842
4,899
3,896
1
Includes US$707 million (2021: US$878 million) due for payment in more than ten years.
At 30 June 2022, commitments for leases not yet commenced based on undiscounted contractual amounts were US$928 million (2021: US$457 million).
Movements in the Group’s right-of-use assets during the year are as follows:
Net book value
At the beginning of the financial year
Additions
Remeasurements of index-linked freight contracts
Depreciation expensed during the period
Depreciation classified as exploration
Impairments for the year
Divestment and demerger of subsidiaries and operations1
Transfers and other movements
At the end of the financial year
– Cost
– Accumulated depreciation and impairments
Land and
buildings
US$M
2022
Plant and
equipment
US$M
638
41
−
(103)
−
(7)
(116)
(1)
452
745
(293)
2,712
825
(369)
(872)
(3)
−
(313)
(71)
1,909
4,307
(2,398)
Land and
buildings
US$M
2021
Plant and
equipment
US$M
689
25
−
(111)
−
(30)
−
65
638
897
(259)
2,358
1,227
(59)
(670)
(19)
(2)
−
(123)
2,712
4,393
(1,681)
Total
US$M
3,350
866
(369)
(975)
(3)
(7)
(429)
(72)
2,361
5,052
(2,691)
Total
US$M
3,047
1,252
(59)
(781)
(19)
(32)
−
(58)
3,350
5,290
(1,940)
1 Relates to the divestment of BMC and merger of Petroleum with Woodside. Refer to notes 3 ‘Exceptional items’ and 27 ‘Discontinued operations’ for more information.
Right-of-use assets are included within the underlying asset classes in Property, plant and equipment. Refer to note 11 ‘Property, plant and equipment’.
BHP
Annual Report 2022
165
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 21 Leases continued
Amounts recorded in the income statement and the cash flow statement for the year were:
Income statement
Depreciation of right-of-use assets
Short-term, low-value and variable lease costs1
Interest on lease liabilities
Cash flow statement
Principal lease payments
Lease interest payments
2022
US$M
964
847
119
1,130
119
2021
US$M
Restated
2020
US$M
Restated
753
834
102
732
102
623
637
82
632
82
Included within
Profit from operations
Profit from operations
Financial expenses
Cash flows from financing activities
Cash flows from operating activities
1 Relates to US$585 million of variable lease costs (2021: US$510 million; 2020: US$415 million), US$222 million of short-term lease costs (2021: US$294 million; 2020:
US$201 million) and US$40 million of low-value lease costs (2021: US$30 million; 2020: US$21 million). Variable lease costs include contracts for hire of mining service
equipment, drill rigs and transportation services. These contracts contain variable lease payments based on usage and asset performance.
Recognition and measurement
All leases with the exception of short-term (under 12 months) and low-value leases are recognised on the balance sheet, as a right-of-use asset
and a corresponding interest bearing liability. Lease liabilities are initially measured at the present value of the future lease payments from the lease
commencement date and are subsequently adjusted to reflect the interest on lease liabilities, lease payments and any remeasurements due to, for
example, lease modifications or a change to future lease payments linked to an index or rate. Lease payments are discounted using the interest rate
implicit in the lease, where this is readily determinable. Where the implicit interest rate is not readily determinable, the interest payments are discounted
at the Group’s incremental borrowing rate, adjusted to reflect factors specific to the lease, including where relevant the currency, tenor and location of
the lease.
In addition to containing a lease, the Group’s contractual arrangements may include non-lease components. For example, certain mining services
arrangements involve the provision of additional services, including maintenance, drilling activities and the supply of personnel. The Group has elected to
separate these non-lease components from the lease components in measuring lease liabilities. Non-lease components are accounted for in accordance
with the accounting policies applied to each underlying good or service received.
Low-value and short-term leases continue to be expensed to the income statement. Variable lease payments not dependent on an index or rate are
excluded from lease liabilities, and expensed to the income statement.
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease
liabilities. The cost will initially correspond to the lease liability, adjusted for initial direct costs, lease payments made prior to lease commencement,
capitalised provisions for closure and rehabilitation and any lease incentives received.
The lease asset and liability associated with all index-linked freight contracts, including continuous voyage charters (CVCs), are measured at each
reporting date based on the prevailing freight index (generally the Baltic C5 index).
Lease costs are recognised in the income statement over the lease term in the form of depreciation on the right-of-use asset and the unwinding of finance
charges on the lease liability.
Where the Group is the operator of an unincorporated joint operation and all investors are parties to a lease, the Group recognises its proportionate share
of the lease liability and associated right-of-use asset. In the event the Group is the sole signatory to a lease, and therefore has the sole legal obligation to
make lease payments, the lease liability is recognised in full. Where the associated right-of-use asset is sub-leased (under a finance sub-lease) to a joint
operation, for instance where it is dedicated to a single operation and the joint operation has the right to direct the use of the asset, the Group (as lessor)
recognises its proportionate share of the right-of-use asset and a net investment in the lease, representing amounts to be recovered from the other parties
to the joint operation. If the Group is not party to the head lease contract but sub-leases the associated right-of-use asset (as lessee), it recognises its
proportionate share of the right-of-use asset and a lease liability which is payable to the operator.
Key judgements and estimates
Judgements: Certain contractual arrangements not in the form of a
lease require the Group to apply significant judgement in evaluating
whether the Group controls the right to direct the use of assets and
therefore whether the contract contains a lease. Management considers
all facts and circumstances in determining whether the Group or the
supplier has the rights to direct how, and for what purpose, the underlying
assets are used in certain mining contracts and other arrangements,
including outsourcing and shipping arrangements. Judgement is used to
assess which decision-making rights mostly affect the benefits of use of
the assets for each arrangement.
Where a contract includes the provision of non-lease services, judgement
is required to identify the lease and non-lease components.
Estimates: Where the Group cannot readily determine the interest rate
implicit in the lease, estimation is involved in the determination of the
weighted average incremental borrowing rate to measure lease liabilities.
The incremental borrowing rate reflects the rates of interest a lessee
would have to pay to borrow over a similar term, with similar security, the
funds necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment. Under the Group’s portfolio
approach to debt management, the Group does not specifically borrow for
asset purchases. Therefore, the incremental borrowing rate is estimated
referencing the Group’s corporate borrowing portfolio and other similar
rated entities, adjusted to reflect the terms and conditions of the lease
(including the impact of currency, credit rating of subsidiary entering
into the lease and the term of the lease), at the inception of the lease
arrangement or the time of lease modification.
The Group estimates stand-alone prices, where such prices are not readily
observable, in order to allocate the contractual payments between lease
and non-lease components.
166
BHP
Annual Report 2022
22 Net finance costs
Financial expenses
Interest expense using the effective interest rate method:
Interest on bank loans, overdrafts and all other borrowings
Interest capitalised at 2.90% (2021: 2.83%; 2020: 4.14%)1
Interest on lease liabilities
Discounting on provisions and other liabilities
Other gains and losses:
Fair value change on hedged loans
Fair value change on hedging derivatives
Loss on bond repurchase2
Exchange variations on net debt
Other
Total financial expenses
Financial income
Interest income
Net finance costs
2022
US$M
491
(113)
119
645
(1,286)
1,277
−
(99)
16
1,050
(81)
969
2021
US$M
Restated
2020
US$M
Restated
607
(204)
102
353
(779)
704
395
99
13
1,290
(67)
1,223
1,093
(265)
82
343
721
(788)
−
(18)
24
1,192
(334)
858
1
Interest has been capitalised at the rate of interest applicable to the specific borrowings financing the assets under construction or, where financed through general
borrowings, at a capitalisation rate representing the average interest rate on such borrowings. Tax relief for capitalised interest is approximately US$34 million (2021:
US$61 million; 2020: US$80 million).
2 Relates to the additional cost on settlement of two multi-currency hybrid debt repurchase programs and the unwind of the associated hedges, included in a total cash
payment of US$3,402 million disclosed in repayment of interest bearing liabilities in the Consolidated Cash Flow Statement.
Recognition and measurement
Interest income is accrued using the effective interest rate method. Finance costs are expensed as incurred, except where they relate to the financing
of construction or development of qualifying assets.
23 Financial risk management
23.1 Financial risks
Financial and capital risk management strategy
The financial risks arising from the Group’s operations comprise market, liquidity and credit risk. These risks arise in the normal course of business and
the Group manages its exposure to them in accordance with the Group’s portfolio risk management strategy. The objective of the strategy is to support
the delivery of the Group’s financial targets, while protecting its future financial security and flexibility by taking advantage of the natural diversification
provided by the scale, diversity and flexibility of the Group’s operations and activities.
As part of the risk management strategy, the Group monitors target gearing levels and credit rating metrics under a range of different stress test scenarios
incorporating operational and macroeconomic factors.
Market risk management
The Group’s activities expose it to market risks associated with movements in interest rates, foreign currencies and commodity prices. Under the strategy
outlined above, the Group seeks to achieve financing costs, currency impacts, input costs and commodity prices on a floating or index basis.
In executing the strategy, financial instruments are potentially employed in three distinct but related activities. The following table summarises these
activities and the key risk management processes:
Activity
1 Risk mitigation
On an exception basis, hedging for the purposes of mitigating risk related to specific and significant
expenditure on investments or capital projects will be executed if necessary to support the Group’s
strategic objectives.
2 Economic hedging of commodity sales, operating costs, short-term cash deposits,
other monetary items and debt instruments
Where Group commodity production is sold to customers on pricing terms that deviate from the
relevant index target and where a relevant derivatives market exists, financial instruments may
be executed as an economic hedge to align the revenue price exposure with the index target and
US dollars.
Key risk management processes
Execution of transactions within
approved mandates.
Measuring and reporting the exposure in
customer commodity contracts and issued
debt instruments.
Where debt is issued in a currency other than the US dollar and/or at a fixed interest rate, fair value
and cash flow hedges may be executed to align the debt exposure with the Group’s functional
currency of US dollars and/or to swap to a floating interest rate.
Executing hedging derivatives to align the
total group exposure to the index target.
Where short-term cash deposits and other monetary items are denominated in a currency other than
US dollars, derivative financial instruments may be executed to align the foreign exchange exposure to
the Group’s functional currency of US dollars.
3 Strategic financial transactions
Opportunistic transactions may be executed with financial instruments to capture value from perceived
market over/under valuations.
Execution of transactions within
approved mandates.
Execution of transactions within
approved mandates.
Primary responsibility for the identification and control of financial risks, including authorising and monitoring the use of financial instruments for the above
activities and stipulating policy thereon, rests with the Financial Risk Management Committee under authority delegated by the Chief Executive Officer.
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167
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review
23 Financial risk management continued
Interest rate risk
The Group is exposed to interest rate risk on its outstanding borrowings and short-term cash deposits from the possibility that changes in interest
rates will affect future cash flows or the fair value of fixed interest rate financial instruments. Interest rate risk is managed as part of the portfolio risk
management strategy.
The majority of the Group’s debt is issued at fixed interest rates. The Group has entered into interest rate swaps and cross currency interest rate swaps
to convert most of its fixed interest rate exposure to floating US dollar interest rate exposure. As at 30 June 2022, 80 per cent of the Group’s borrowings
were exposed to floating interest rates inclusive of the effect of swaps (2021: 82 per cent).
The fair value of interest rate swaps and cross currency interest rate swaps in hedge relationships used to hedge both interest rate and foreign currency
risks are shown in the valuation hierarchy in section 23.4 ‘Derivatives and hedge accounting’.
Based on the net debt position as at 30 June 2022, taking into account interest rate swaps and cross currency interest rate swaps, it is estimated that a
one percentage point increase in the US LIBOR interest rate will increase the Group’s equity and profit after taxation by US$29 million (2021: increase of
US$7 million). This assumes the change in interest rates is effective from the beginning of the financial year and the fixed/floating mix and balances are
constant over the year.
Interest Rate Benchmark Reform
The London Interbank Offered Rate (LIBOR) and other benchmark interest rates are being replaced by alternative risk-free rates (ARR) as part of inter-
bank offer rate (IBOR) reform. Sterling LIBOR ceased to be published on 1 January 2022 and USD LIBOR will no longer be published after 30 June
2023. The Group has assessed the implication of IBOR reform and has updated various policies, systems and processes including the adoption
of the International Swaps and Derivatives Association (ISDA) IBOR Fallbacks Protocol. In November 2021, the Group amended its US$5.5 billion
revolving credit facility to reference ARRs. Furthermore, in March 2022 Escondida executed the Group’s first Secured Overnight Financing Rate (SOFR)
linked loans.
The amendments to IFRS 9/AASB 9 ‘Financial Instruments’, IFRS 7/AASB 7 ‘Financial Instruments (IFRS 7): Disclosures’ and IFRS 16/AASB 16 ‘Leases’
in relation to IBOR reform early adopted by the Group in previous periods impact the Group’s cross currency and interest rate swaps, which reference US
LIBOR, and the associated hedge accounting. Refer to section 23.4 ‘Derivatives and hedge accounting’ for further information.
Currency risk
The US dollar is the predominant functional currency within the Group and as a result, currency exposures arise from transactions and balances
in currencies other than the US dollar. The Group’s potential currency exposures comprise:
– translational exposure in respect of non-functional currency monetary items
– transactional exposure in respect of non-functional currency expenditure and revenues
The Group’s foreign currency risk is managed as part of the portfolio risk management strategy.
Translational exposure in respect of non-functional currency monetary items
Monetary items, including financial assets and liabilities, denominated in currencies other than the functional currency of an operation are restated at the
end of each reporting period to US dollar equivalents and the associated gain or loss is taken to the income statement. The exception is foreign exchange
gains or losses on foreign currency denominated provisions for closure and rehabilitation at operating sites, which are capitalised in property, plant
and equipment.
The Group has entered into cross currency interest rate swaps and foreign exchange forwards to convert its significant foreign currency exposures in
respect of monetary items into US dollars. Fluctuations in foreign exchange rates are therefore not expected to have a significant impact on equity and
profit after tax.
The following table shows the carrying values of financial assets and liabilities at the end of the reporting period denominated in currencies other than the
US dollar that are exposed to foreign currency risk:
Net financial (liabilities)/assets – by currency of denomination
AUD
CLP
GBP
EUR
Other
Total
2022
US$M
(3,649)
(602)
388
280
187
(3,396)
2021
US$M
(4,421)
(649)
535
366
128
(4,041)
The principal non-functional currencies to which the Group is exposed are the Australian dollar, the Chilean peso, the Pound sterling and the Euro. Based on
the Group’s net financial assets and liabilities as at 30 June 2022, a weakening of the US dollar against these currencies (one cent strengthening in
Australian dollar, 10 pesos strengthening in Chilean peso, one penny strengthening in Pound sterling and one cent strengthening in Euro), with all other
variables held constant, would decrease the Group’s equity and profit after taxation by US$16 million (2021: decrease of US$21 million).
Transactional exposure in respect of non-functional currency expenditure and revenues
Certain operating and capital expenditure is incurred in currencies other than an operation’s functional currency. To a lesser extent, certain sales revenue
is earned in currencies other than the functional currency of operations and certain exchange control restrictions may require that funds be maintained
in currencies other than the functional currency of the operation. These currency risks are managed as part of the portfolio risk management strategy.
The Group may enter into forward exchange contracts when required under this strategy.
Commodity price risk
The risk associated with commodity prices is managed as part of the portfolio risk management strategy. Substantially all of the Group’s commodity
production is sold on market-based index pricing terms, with derivatives used from time to time to achieve a specific outcome.
Financial instruments with commodity price risk comprise forward commodity and other derivative contracts with net liabilities at fair value of
US$56 million (2021: net assets of US$138 million).
168
BHP
Annual Report 2022
23 Financial risk management continued
Provisionally priced commodity sales and purchases contracts
Provisionally priced sales or purchases volumes are those for which price finalisation, referenced to the relevant index, is outstanding at the reporting
date. Provisional pricing mechanisms within these sales and purchases arrangements have the character of a commodity derivative. Trade receivables
or payables under these contracts are carried at fair value through profit or loss using Level 2 valuation inputs based on forecast selling prices in
the quotation period. The Group’s exposure at 30 June 2022 to the impact of movements in commodity prices upon provisionally invoiced sales and
purchases volumes was predominately around copper.
The Group had 289 thousand tonnes of copper exposure as at 30 June 2022 (2021: 254 thousand tonnes) that was provisionally priced. The final price
of these sales and purchases volumes will be determined during the first half of FY2023. A 10 per cent change in the price of copper realised on the
provisionally priced sales, with all other factors held constant, would increase or decrease profit after taxation by US$162 million (2021: US$166 million).
The relationship between commodity prices and foreign currencies is complex and movements in foreign exchange rates can impact commodity prices.
Liquidity risk
Refer to note 20 ‘Net debt’ for details on the Group’s liquidity risk.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.
The Group is exposed to credit risk from its operating activities (primarily from customer receivables) and from its financing activities, including deposits
with banks and financial institutions, other short-term investments, interest rate and currency derivative contracts and other financial instruments.
Refer to note 8 ‘Trade and other receivables’ and note 20 ‘Net debt’ for details on the Group credit risk.
23.2 Recognition and measurement
All financial assets and liabilities, other than derivatives and trade receivables, are initially recognised at the fair value of consideration paid or received,
net of transaction costs as appropriate. Financial assets are initially recognised on their trade date.
Financial assets are subsequently carried at fair value or amortised cost based on:
– the Group’s purpose, or business model, for holding the financial asset
– whether the financial asset’s contractual terms give rise to cash flows that are solely payments of principal and interest
The resulting Financial Statements classifications of financial assets can be summarised as follows:
Contractual cash flows
Business model
Category
Solely principal and interest
Solely principal and interest
Solely principal and interest
Other
Hold in order to collect contractual cash flows
Hold in order to collect contractual cash flows and sell
Hold in order to sell
Any of those mentioned above
Amortised cost
Fair value through other comprehensive income
Fair value through profit or loss
Fair value through profit or loss
Solely principal and interest refers to the Group receiving returns only for the time value of money and the credit risk of the counterparty for financial
assets held. The main exceptions for the Group are provisionally priced receivables and derivatives which are measured at fair value through profit or loss
under IFRS 9.
The Group has the intention of collecting payment directly from its customers in most cases, however the Group also participates in receivables
financing programs in respect of selected customers. Receivables in these portfolios which are classified as ‘hold in order to sell’, are provisionally priced
receivables and are therefore held at fair value through profit or loss prior to sale to the financial institution.
With the exception of derivative contracts and provisionally priced trade payables which are carried at fair value through profit or loss, the Group’s
financial liabilities are classified as subsequently measured at amortised cost.
The Group may in addition elect to designate certain financial assets or liabilities at fair value through profit or loss or to apply hedge accounting where
they are not mandatorily held at fair value through profit or loss.
Fair value measurement
The carrying amount of financial assets and liabilities measured at fair value is principally calculated based on inputs other than quoted prices that are
observable for these financial assets or liabilities, either directly (i.e. as unquoted prices) or indirectly (i.e. derived from prices). Where no price information
is available from a quoted market source, alternative market mechanisms or recent comparable transactions, fair value is estimated based on the Group’s
views on relevant future prices, net of valuation allowances to accommodate liquidity, modelling and other risks implicit in such estimates.
The inputs used in fair value calculations are determined by the relevant segment or function. The functions support the assets and operate under
a defined set of accountabilities authorised by the Executive Leadership Team. Movements in the fair value of financial assets and liabilities may be
recognised through the income statement or in other comprehensive income according to the designation of the underlying instrument.
For financial assets and liabilities carried at fair value, the Group uses the following to categorise the inputs to the valuation method used based on the
lowest level input that is significant to the fair value measurement as a whole:
IFRS 13 Fair value hierarchy
Level 1
Level 2
Level 3
Valuation inputs
Based on quoted prices (unadjusted)
in active markets for identical
financial assets and liabilities.
Based on inputs other than quoted prices
included within Level 1 that are observable
for the financial asset or liability, either
directly (i.e. as unquoted prices) or
indirectly (i.e. derived from prices).
Based on inputs not observable in the market
using appropriate valuation models, including
discounted cash flow modelling.
BHP
Annual Report 2022
169
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 23 Financial risk management continued
23.3 Financial assets and liabilities
The financial assets and liabilities are presented by class in the table below at their carrying amounts.
Current cross currency and interest rate swaps2
Current other derivative contracts3
Current other financial assets
Current other investments5
Non-current cross currency and interest rate swaps2
Non-current other derivative contracts3
Non-current other financial assets4
Non-current investment in shares
Non-current other investments5
Total other financial assets
Cash and cash equivalents
Trade and other receivables6
Provisionally priced trade receivables
Total financial assets
Non-financial assets
Total assets
Current cross currency and interest rate swaps2
Current other derivative contracts3
Current other financial liabilities7
Non-current cross currency and interest rate swaps2
Non-current other derivative contracts3
Non-current other financial liabilities7
Total other financial liabilities
Trade and other payables8
Provisionally priced trade payables
Bank loans9
Notes and debentures9
Lease liabilities
Other9
Total financial liabilities
Non-financial liabilities
Total liabilities
IFRS 13
Fair value hierarchy
Level1
2
2,3
1,2
2
2,3
3
1,3
1,2
2
2
2,3
2
2,3
2
IFRS 9 Classification
Fair value through profit or loss
Fair value through profit or loss
Amortised cost
Fair value through profit or loss
Fair value through profit or loss
Fair value through profit or loss
Fair value through profit or loss
Fair value through other
comprehensive income
Fair value through profit or loss
Amortised cost
Amortised cost
Fair value through profit or loss
Fair value through profit or loss
Fair value through profit or loss
Amortised cost
Fair value through profit or loss
Fair value through profit or loss
Amortised cost
Amortised cost
Fair value through profit or loss
Amortised cost
Amortised cost
Amortised cost
2022
US$M
−
326
100
203
136
16
273
138
239
1,431
17,236
1,674
3,478
23,819
71,347
95,166
358
118
103
1,466
31
500
2,576
5,223
1,385
2,472
11,363
2,576
17
25,612
20,788
46,400
2021
US$M
20
207
−
3
1,123
152
−
31
304
1,840
15,246
2,363
3,547
22,996
85,931
108,927
−
52
78
586
−
560
1,276
6,277
574
2,260
14,769
3,896
58
29,110
24,212
53,322
1 All of the Group’s financial assets and financial liabilities recognised at fair value were valued using market observable inputs categorised as Level 2 unless specified
otherwise in the following footnotes.
2 Cross currency and interest rate swaps are valued using market data including interest rate curves (which include the base LIBOR rate and swap rates) and foreign exchange
3
4
5
rates. A discounted cash flow approach is used to derive the fair value of cross currency and interest rate swaps at the reporting date.
Includes other derivative contracts of US$ nil (2021: US$121 million) categorised as Level 3. Significant items in FY2021 were derivatives embedded in physical commodity
purchase and sales contracts of gas in Trinidad and Tobago which were disposed as part of the merger of the Petroleum business during the period.
Includes receivables contingent on outcome of future events relating to mining, and regulatory approvals of US$233 million (2021: US$ nil).
Includes investments held by BHP Billiton Foundation which are restricted and not available for general use by the Group of US$252 million (2021: US$260 million) of which
other investment (mainly US Treasury Notes) of US$119 million categorised as Level 1 (2021: US$72 million).
Includes the discounted settlement liability in relation to the cancellation of power contracts at the Group’s Escondida operations.
6 Excludes input taxes of US$427 million (2021: US$486 million) included in other receivables.
7
8 Excludes input taxes of US$79 million (2021: US$176 million) included in other payables.
9 All interest bearing liabilities, excluding lease liabilities, are unsecured.
The carrying amounts in the table above generally approximate to fair value. In the case of US$3,018 million (2021: US$3,018 million) of fixed
rate debt not swapped to floating rate, the fair value at 30 June 2022 was US$3,126 million (2021: US$4,052 million). The fair value is determined
using a method that can be categorised as Level 2 and uses inputs based on benchmark interest rates, alternative market mechanisms or recent
comparable transactions.
For financial instruments that are carried at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the
hierarchy by reassessing categorisation at the end of each reporting period. There were no transfers between categories during the period.
Offsetting financial assets and liabilities
The Group enters into money market deposits and derivative transactions under International Swaps and Derivatives Association master netting
agreements that do not meet the criteria in IAS 32 ‘Financial Instruments: Presentation’ for offsetting, but allow for the related amounts to be set-off in
certain circumstances. The amounts set out as cross currency and interest rate swaps in the table above represent the derivative financial assets and
liabilities of the Group that may be subject to the above arrangements and are presented on a gross basis.
23.4 Derivatives and hedge accounting
The Group uses derivatives to hedge its exposure to certain market risks and may elect to apply hedge accounting.
Hedge accounting
Derivatives are included within financial assets or liabilities at fair value through profit or loss unless they are designated as effective hedging instruments.
Financial instruments in this category are classified as current if they are due or expected to be settled within 12 months otherwise they are classified as
non-current.
170
BHP
Annual Report 2022
23 Financial risk management continued
Where hedge accounting is applied, at the start of the transaction, the Group documents the type of hedge, the relationship between the hedging
instrument and hedged items and its risk management objective and strategy for undertaking various hedge transactions. The documentation also
demonstrates that the hedge is expected to be effective.
The Group applies the following types of hedge accounting to its derivatives hedging the interest rate and currency risks of its notes and debentures:
– Fair value hedges – the fair value gain or loss on interest rate and cross currency swaps relating to interest rate risk, together with the change in the
fair value of the hedged fixed rate borrowings attributable to interest rate risk are recognised immediately in the income statement. If the hedge no
longer meets the criteria for hedge accounting, the fair value adjustment on the note or debenture is amortised to the income statement over the period
to maturity using a recalculated effective interest rate.
– Cash flow hedges – changes in the fair value of cross currency interest rate swaps which hedge foreign currency cash flows on the notes and
debentures are recognised directly in other comprehensive income and accumulated in the cash flow hedging reserve. To the extent a hedge is
ineffective, changes in fair value are recognised immediately in the income statement.
When a hedging instrument expires, or is sold, terminated or exercised, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is amortised to the income statement over the period to the hedged
item’s maturity.
When hedged, the Group hedges the full notional value of notes or debentures. However, certain components of the fair value of derivatives are not
permitted under IFRS 9 to be included in the hedge accounting above. Certain costs of hedging are permitted to be recognised in other comprehensive
income. Any change in the fair value of a derivative that does not qualify for hedge accounting, or is ineffective in hedging the designated risk due to
contractual differences between the hedged item and hedging instrument, is recognised immediately in the income statement.
The table below shows the carrying amounts of the Group’s notes and debentures by currency and the derivatives which hedge them:
– The carrying amount of the notes and debentures includes foreign exchange remeasurement to period-end rates and fair value adjustments when
included in a fair value hedge.
– The breakdown of the hedging derivatives includes remeasurement of foreign currency notional values at period-end rates, fair value movements
due to interest rate risk, foreign currency cash flows designated into cash flow hedges, costs of hedging recognised in other comprehensive income,
ineffectiveness recognised in the income statement and accruals or prepayments.
– The hedged value of notes and debentures includes their carrying amounts adjusted for the offsetting derivative fair value movements due to foreign
currency and interest rate risk remeasurement.
Carrying
amount of
notes and
debentures
Foreign
exchange
notional at
spot rates
Recognised
in cash flow
hedging
reserve
Recognised
in cost of
hedging
reserve
Recognised in
the income
statement1
Interest
rate risk
Accrued
cash flows
Fair value of derivatives
A
4,740
2,599
3,449
575
11,363
B
−
796
585
167
1,548
Carrying
amount of
notes and
debentures
Foreign
exchange
notional at
spot rates
A
6,270
3,387
4,486
626
14,769
B
−
435
73
142
650
C
(16)
(115)
112
5
(14)
Interest
rate risk
C
(318)
(544)
(418)
(21)
(1,301)
D
−
(35)
(16)
(8)
(59)
E
−
13
8
6
27
F
(7)
26
(4)
(3)
12
G
86
42
45
1
174
Fair value of derivatives
Recognised
in cash flow
hedging
reserve
Recognised
in cost of
hedging
reserve
Recognised in
the income
statement1
Accrued
cash flows
D
−
(81)
(33)
(28)
(142)
E
−
25
27
25
77
F
11
(34)
7
(2)
(18)
G
77
53
49
(2)
177
Hedged value
of notes and
debentures2
A + B + C
4,724
3,280
4,146
747
12,897
Total
B to G
63
727
730
168
1,688
Hedged value
of notes and
debentures2
A + B + C
5,952
3,278
4,141
747
14,118
Total
B to G
(230)
(146)
(295)
114
(557)
2022
US$M
USD
GBP
EUR
CAD
Total
2021
US$M
USD
GBP
EUR
CAD
Total
1 Predominantly related to ineffectiveness.
2
Includes US$3,018 million (2021: US$3,018 million) of fixed rate debt not swapped to floating rate that is not in a hedging relationship.
The weighted average interest rate payable is USD LIBOR + 1.74 per cent (2021: USD LIBOR + 2.18 per cent). Refer to note 22 ‘Net finance costs’ for
details of net finance costs for the year.
Interest Rate Benchmark Reform
IBOR reform impacts the Group’s cross currency and interest rate swaps, which reference 3-month US LIBOR, and the associated hedge accounting.
At 30 June 2022, the notional value of hedging instruments that reference 3-month US LIBOR is US$ 15.6 billion (2021: US$16.8 billion). The SOFR
benchmark rate is being widely adopted by market participants as the replacement for US LIBOR in new contracts. However, a number of US LIBOR
settings, including 3-month US LIBOR, will continue to be published until 30 June 2023. Accordingly, absent of any agreement with counterparties to
transition to an alternative risk-free rate before this date, the Group’s existing cross currency and interest rate swaps with maturity dates beyond 30 June
2023 will only transition to ARR once US LIBOR publication ceases. As at 30 June 2022, the Group has not transitioned any of its existing cross currency
and interest rate swaps to alternative risk-free rates, however it is expecting to commence active transition of the existing cross currency and interest rate
swaps portfolio to alternative benchmark rates during FY2023.
BHP
Annual Report 2022
171
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 23 Financial risk management continued
The following table shows the notional value of the Group’s hedging instruments that are expected to expire before 30 June 2023.
Hedging instrument
Interest rate swaps
Cross-currency interest rate swaps
Notional value
to mature before
LIBOR expires
FY2023
US$M
748
404
923
2,075
Notional
value
US$M
10,719
3,187
1,673
15,579
Notional
currency
USD
EUR
GBP
Total
In addition, the Group has other arrangements which reference 3-month US LIBOR benchmarks and extend beyond 2022. These include USD bank loans
of US$1.6 billion (2021: US$2.3 billion). Refer to note 20 ‘Net debt’.
The Group has previously adopted amendments to IFRS 9 and IFRS 7 in relation to IBOR Reform. These amendments provide reliefs from applying
specific hedge accounting requirements to hedging arrangements directly impacted by these reforms. In particular, where changes to the Group’s
instruments arise solely as a result of IBOR reform and do not change the economic substance of the Group’s arrangements, the Group is able to
maintain its existing hedge relationships and accounting. The Group has continued to apply these reliefs, resulting in no impact on the Group’s hedge
accounting. Upon transition to alternative risk-free rates, the Group will seek to apply further reliefs in IFRS 9 and continue to apply hedge accounting to
its hedging arrangements.
Movements in reserves relating to hedge accounting
The following table shows a reconciliation of the components of equity and an analysis of the movements in reserves for all hedges. For a description of
these reserves, refer to note 17 ‘Other equity’.
2022
US$M
At the beginning of the financial year
Add: Change in fair value of hedging
instrument recognised in OCI
Less: Reclassified from reserves to interest
expense – recognised through OCI
At the end of the financial year
Cash flow hedging reserve
Cost of hedging reserve
Gross
142
(914)
831
59
Tax
(42)
274
(250)
(18)
Net
100
(640)
581
41
Gross
(77)
−
50
(27)
Tax
23
−
(15)
8
Cash flow hedging reserve
Cost of hedging reserve
2021
US$M
At the beginning of the financial year
Add: Change in fair value of hedging
instrument recognised in OCI
Less: Reclassified from reserves to interest
expense – recognised through OCI
At the end of the financial year
Gross
71
863
(792)
142
Tax
(21)
(259)
238
(42)
Net
50
604
(554)
100
Gross
(32)
−
(45)
(77)
Changes in interest bearing liabilities and related derivatives resulting from financing activities
The movement in the year in the Group’s interest bearing liabilities and related derivatives are as follows:
2022
US$M
At the beginning of the financial year
Proceeds from interest bearing liabilities
Settlements of debt related instruments
Repayment of interest bearing liabilities1
Change from Net financing cash flows
Other movements:
Divestment and demerger of subsidiaries and operations
Interest rate impacts
Foreign exchange impacts
Lease additions
Remeasurement of index-linked freight contracts
Other interest bearing liabilities/derivative related changes
At the end of the financial year
Bank
loans
2,260
1,150
−
(941)
209
−
−
3
−
−
−
2,472
Interest bearing liabilities
Notes and
debentures
Lease
liabilities
Bank
overdraft and
short-term
borrowings
14,769
−
−
(1,232)
(1,232)
−
(1,286)
(894)
−
−
6
11,363
3,896
−
−
(1,163)
(1,163)
(492)
−
(126)
866
(369)
(36)
2,576
−
−
−
−
−
−
−
−
−
−
−
−
172
BHP
Annual Report 2022
Total
46
(640)
616
22
Total
27
604
(585)
46
Total
1,164
−
(3,391)
(2,227)
Net
(54)
−
35
(19)
Net
(23)
−
(31)
(54)
Derivatives
(assets)/
liabilities
Cross
currency and
interest rate
swaps
(557)
−
−
−
−
−
1,277
898
−
−
70
1,688
Tax
9
−
14
23
Other
58
14
−
(55)
(41)
−
−
(2)
−
−
2
17
23 Financial risk management continued
2021
US$M
At the beginning of the financial year
Proceeds from interest bearing liabilities
Settlements of debt related instruments
Repayment of interest bearing liabilities1
Change from Net financing cash flows
Other movements:
Loss on bond repurchase
Interest rate impacts
Foreign exchange impacts
Lease additions
Remeasurement of index-linked freight contracts
Other interest bearing liabilities/derivative related changes
At the end of the financial year
Interest bearing liabilities
Bank loans
Notes and
debentures
Lease
liabilities
Bank overdraft
and short-term
borrowings
Other
2,492
504
−
(737)
(233)
−
−
(1)
−
−
2
2,260
21,045
−
−
(6,888)
(6,888)
579
(764)
798
−
−
(1)
14,769
3,443
−
−
(770)
(770)
−
−
115
1,223
(59)
(56)
3,896
−
−
−
−
−
−
−
−
−
−
−
−
68
64
−
−
64
−
−
(14)
−
−
(60)
58
Derivatives
(assets)/
liabilities
Cross
currency and
interest rate
swaps
(433)
−
167
−
167
(184)
704
(796)
−
−
(15)
(557)
Total
568
167
(8,395)
(7,660)
1
Includes US$33 million (2021: US$38 million) of Discontinued operations cash flows.
Employee matters
24 Key management personnel
Key management personnel compensation comprises:
Short-term employee benefits
Post-employment benefits
Share-based payments
Total
2022
US$
2021
US$
2020
US$
13,979,139
634,363
11,165,439
25,778,941
14,081,625
744,951
11,601,866
26,428,442
12,564,637
1,172,727
13,514,588
27,251,952
Key Management Personnel (KMP) includes the roles which have the authority and responsibility for planning, directing and controlling the activities of
BHP. These are Non-executive Directors, the CEO, the Chief Financial Officer, the President Minerals Australia, the President Minerals Americas and the
Senior Executive Officer (i.e. President Petroleum until 31 May 2022).
Transactions and outstanding loans/amounts with key management personnel
There were no purchases by key management personnel from the Group during FY2022 (2021: US$ nil; 2020: US$ nil).
There were no amounts payable by key management personnel at 30 June 2022 (2021: US$ nil; 2020: US$ nil).
There were no loans receivable from or payable to key management personnel at 30 June 2022 (2021: US$ nil; 2020: US$ nil).
Transactions with personally related entities
A number of Directors of the Group hold or have held positions in other companies (personally related entities) where it is considered they control or
significantly influence the financial or operating policies of those entities. There were no reportable transactions with those entities and no amounts were
owed by the Group to personally related entities at 30 June 2022 (2021: US$ nil; 2020: US$ nil).
For more information on remuneration and transactions with key management personnel, refer to the Remuneration Report under Governance.
25 Employee share ownership plans
Awards, in the form of the right to receive ordinary shares in BHP Group Limited have been granted under the following employee share ownership plans:
Cash and Deferred Plan (CDP), Short-Term Incentive Plan (STIP), Long-Term Incentive Plan (LTIP), Management Award Plan (MAP), Transitional and
Commencement KMP awards and the all-employee share plan, Shareplus. Following unification of our dual listed company structure in January 2022,
employees holding unvested BHP Group Plc awards received one BHP Group Limited award per BHP Group Plc award held at the time of unification.
Vesting of awards will stay on the original timeframes. Employees holding BHP Group Plc acquired shares under Shareplus received one BHP Group
Limited share for each BHP Group Plc share owned.
Some awards are eligible to receive a cash payment, or the equivalent value in shares, equal to the dividend amount that would have been earned on the
underlying shares awarded to those participants (the Dividend Equivalent Payment, or DEP). The DEP is provided to the participants once the underlying
shares are allocated or transferred to them. Awards under the plans do not confer any rights to participate in a share issue; however, there is discretion
under each of the plans to adjust the awards in response to a variation in the share capital of BHP Group Limited.
On completion of the merger between BHP Petroleum and Woodside on 1 June 2022, adjustments were made to unvested awards held under the
above mentioned employee share ownership plans to ensure participants continue to be appropriately treated. The number of ‘Uplift’ awards granted of
1,574,034 shares was calculated based on the number of unvested awards held prior to the merger multiplied by 1.1205 being the USD value of the in
specie dividend divided by the closing BHP Group Limited share price on 31 May 2022 (converted into USD on the same date) plus one.
BHP
Annual Report 2022
173
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 25 Employee share ownership plans continued
The table below provides a description of each of the plans.
Plan
Type
CDP and STIP
Short-term incentive
LTIP and MAP
Long-term incentive
The LTIP is a plan for Executive KMP and
members of the Executive Leadership Team
who are not Executive KMP, and awards are
granted annually.
The MAP is a plan for BHP senior
management who are not KMP. The number
of share rights awarded is determined by a
participant’s role and grade.
Transitional and
Commencement
KMP awards
Long-term incentive
Awards may be granted
to new Executive KMP
recruited into or within
the Group to bridge
the time-based gap
between the vesting of
awards either granted
in their non-KMP roles
or to replace awards
foregone from a
previous company.
Shareplus
All-employee share
purchase plan
Employees may
contribute up to
US$5,000 to acquire
shares in any plan
year. On the third
anniversary of
the start of a plan
year, the Group will
match the number of
acquired shares.
Overview
Vesting
conditions
The CDP was implemented
in FY2020 as a replacement
for the STIP, both of which are
generally plans for Executive KMP
and members of the Executive
Leadership Team who are not
Executive KMP.
Under the CDP, two thirds of the
value of a participant’s short-term
incentive amount is awarded
as rights to receive BHP Group
Limited shares at the end of the
vesting period (and the remaining
one third is delivered in cash).
Two awards of deferred shares are
granted, each of the equivalent
value to the cash award, vesting in
two and five years respectively.
Under STIP, half of the value of a
participant’s short-term incentive
amount is awarded as rights
to receive BHP Group Limited
shares at the end of the two-year
vesting period.
CDP: Service conditions only for
the two-year award. Vesting of
the five-year award is subject to
service conditions and also to
holistic review of performance at
the end of the five-year vesting
period, including a five-year view
on HSEC performance, profitability,
cash flow, balance sheet health,
returns to shareholders, corporate
governance and conduct.
STIP: Service conditions only.
LTIP: Service and performance conditions.
BHP’s Total Shareholder Return¹ (TSR)
performance relative to the Peer Group
TSR over a five-year performance period
determines the vesting of 67 per cent of the
awards, while performance relative to the
Index TSR (being the index value where
the comparator group is a market index)
determines the vesting of 33 per cent of
the awards.
For awards granted from December 2017
onwards, 25 per cent of the award will vest
where BHP’s TSR is equal to the median
TSR of the relevant comparator group(s),
as measured over the performance period.
Where TSR is below the median, awards
will not vest. Vesting occurs on a sliding
scale when BHP’s TSR measured over the
performance period is between the median
TSR of the relevant comparator group(s) up
to a nominated level of TSR outperformance
over the relevant comparator group(s), as
determined by the Committee, above which
100 per cent of the award will vest.
MAP: Service conditions only.
LTIP – 5 years
MAP – 1 to 5 years
LTIP – Yes
MAP – Varies
Service conditions only.
Service and
performance conditions.
The Remuneration
Committee has absolute
discretion to determine
if the performance
condition has been
met and whether any,
all or part of the award
will vest (or otherwise
lapse), having regard to
personal performance
and the underlying
financial performance
of the Group during the
performance period.
To the extent the
performance condition
is not achieved,
awards will lapse.
There is no retesting
of the performance
condition.
Vested awards may be
subject to a holding lock.
2 years
Yes
3 years
No
CDP – 2 and 5 years
STIP – 2 years
CDP – Yes
STIP – Yes
Vesting
period
Dividend
Equivalent
Payment
Exercise
period
None
None
None
None
1 For LTIP awards granted prior to unification and where the five-year performance period ends after unification, the TSR at the start of the performance period is based on the
weighted average of the TSRs of BHP Group Limited and BHP Group Plc and the TSR at the end of the performance period is based on the TSR of BHP Group Limited.
174
BHP
Annual Report 2022
25 Employee share ownership plans continued
Employee share awards
Number of
awards at the
beginning
of the
financial year
Number of
awards issued
during the
year
Number of
awards
vested and
exercised
Number of
awards
lapsed
Number of
BHP Group
Plc awards
transferred to
BHP Group
Limited on
unification1
Number of
awards at the
end of the
financial year
Weighted
average
remaining
contractual life
(years)
Weighted
average
share price at
exercise date
216,340
200,785
3,543,220
9,953,517
491,654
9,014
714,781
3,915,785
−
125,989
1,114,524
4,615,318
77,000
4,539,194
9,279
3,091,639
−
2,465,378
176,049
232,767
72,412
63,209
70,657
2,174
−
−
−
2,321,453
−
531,479
16,162
13,308
−
−
−
161,642
−
280,494
161,642
280,494
707,994
83,810
3,143,477
7,094,173
86,279
4,914,470
−
−
2.2
0.2
1.8
1.2
0.2
1.3
n/a
n/a
n/a
A$47.70
A$47.70
A$46.62
n/a
A$50.54
£22.18
£22.11
2022
BHP Group Limited
CDP awards
STIP awards
LTIP awards
MAP awards2
Transitional and
Commencement KMP awards
Shareplus
BHP Group Plc
MAP awards
Shareplus
1
On unification of the Group’s corporate structure on 31 January 2022 (refer note 16 ‘Share capital’ for details) 161,642 of unvested awards over BHP Group Plc shares lapsed
and were replaced by equivalent awards over BHP Group Limited on the terms of the MAP awards. Under the rules of the Shareplus, on unification, holders of acquired BHP
Group Plc shares, exchanged them for BHP Group Limited shares on the same terms of other BHP Group Plc shareholders. As participants were not eligible for matching
shares in BHP Group Plc, BHP Group Limited made an equivalent offer of rights to match 280,494 unvested awards, which will vest based on their original timeline and will
be satisfied with the delivery of BHP Group Limited shares. Given the unification had no impact on the vesting timelines or the terms and conditions of the MAP awards and
Shareplus, the changes did not represent a modification that changed the fair value of the awards.
2 There were 2,761 number of awards vested and exercisable at the end of the financial year.
Fair value and assumptions in the calculation of fair value for awards issued
2022
BHP Group Limited
CDP awards
LTIP awards
MAP awards1
Shareplus
BHP Group Plc
MAP awards
Shareplus
Weighted
average fair
value of awards
granted during
the year US$
27.46
13.66
22.10
22.80
20.85
14.53
Risk-free
interest rate
Estimated life
of awards
Share price at
grant date
Estimated
volatility of
share price
Dividend yield
n/a 2 and 5 years
5 years
1.36%
n/a
0.12%
1-5 years
3 years
A$38.05
A$38.05
A$51.33/A$36.39/A$46.55/
A$50.58/A$42.52
A$45.66
n/a
30.0%
n/a
n/a
n/a
n/a
5.0% up to 30 June 2022 and
7.5% per annum thereafter
5.51%
n/a
3 years
0.15%
3 years
£18.62
£20.68
n/a 5.0% up to 30 June 2022 and
7.5% per annum thereafter
6.60%
n/a
1
Includes MAP awards granted on 17 August 2021, 29 September 2021, 1 March 2022, 30 March 2022 and 17 June 2022.
Recognition and measurement
The fair value at grant date of equity-settled share awards is charged to the income statement over the period for which the benefits of employee services
are expected to be derived. The fair values of awards granted were estimated using a Monte Carlo simulation methodology and Black-Scholes option
pricing technique and consider the following factors:
– exercise price
– expected life of the award
– current market price of the underlying shares
– expected volatility using an analysis of historic volatility over different rolling periods. For the LTIP, it is calculated for all sector comparators and the
published MSCI World index
– expected dividends
– risk-free interest rate, which is an applicable government bond rate
– market-based performance hurdles
– non-vesting conditions
Where awards are forfeited because non-market-based vesting conditions are not satisfied, the expense previously recognised is proportionately reversed.
The tax effect of awards granted is recognised in income tax expense, except to the extent that the total tax deductions are expected to exceed the
cumulative remuneration expense. In this situation, the excess of the associated current or deferred tax is recognised in equity and forms part of the
employee share awards reserve. The fair value of awards as presented in the tables above represents the fair value at grant date.
In respect of employee share awards, the Group utilises the BHP Billiton Limited Employee Equity Trust. The trustee of this trust is an independent
company, resident in Jersey. The trust uses funds provided by the Group to acquire ordinary shares to enable awards to be made or satisfied.
The ordinary shares may be acquired by purchase in the market or by subscription at not less than nominal value.
BHP
Annual Report 2022
175
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 26 Employee benefits, restructuring and post-retirement employee benefits provisions
Employee benefits1
Restructuring2
Post-retirement employee benefits3
Total provisions
Comprising:
Current
Non-current
2022
At the beginning of the financial year
Charge/(credit) for the year:
Underlying
Discounting
Net interest expense
Exchange variations
Released during the year
Remeasurement gains taken to retained earnings
Utilisation
Divestment and demerger of subsidiaries and operations
Transfers and other movements
At the end of the financial year
2022
US$M
1,351
27
281
1,659
1,319
340
Employee
benefits
US$M
1,624
1,424
−
−
(131)
(58)
−
(1,381)
(128)
1
1,351
Restructuring
US$M
Post-retirement
employee
benefits3
US$M
54
24
−
−
(1)
(2)
−
(43)
(6)
1
27
534
78
30
(9)
(51)
(2)
(24)
(58)
(217)
−
281
2021
US$M
1,624
54
534
2,212
1,606
606
Total
US$M
2,212
1,526
30
(9)
(183)
(62)
(24)
(1,482)
(351)
2
1,659
1 The expenditure associated with total employee benefits will occur in a pattern consistent with when employees choose to exercise their entitlement to benefits.
2 Total restructuring provisions include provisions for terminations and office closures.
3 The net liability recognised in the Consolidated Balance Sheet includes US$165 million present value of funded defined benefits pension obligation (2021: US$377 million)
offset by fair value of defined benefit scheme assets US$(169) million (2021: US$(398) million), US$85 million present value of unfunded defined pension and post-retirement
medical benefits obligation (2021: US$321 million) and US$200 million unfunded post-employment benefits obligation in Chile (2021: US$234 million).
Recognition and measurement
Provisions are recognised by the Group when:
– there is a present legal or constructive obligation as a result of past events
– it is more likely than not that a permanent outflow of resources will be required to settle the obligation
– the amount can be reliably estimated and measured at the present value of management’s best estimate of the cash outflow required to settle the
obligation at the reporting date
Provision
Employee
benefits
Description
Liabilities for benefits accruing to employees up until the reporting date in respect of wages and salaries, annual leave and any
accumulating sick leave are recognised in the period the related service is rendered.
Liabilities recognised in respect of short-term employee benefits expected to be settled within 12 months are measured at the
amounts expected to be paid when the liabilities are settled.
Liabilities for other long-term employee benefits, including long service leave are measured as the present value of estimated future
payments for the services provided by employees up to the reporting date.
Liabilities that are not expected to be settled within 12 months are discounted at the reporting date using market yields of high-quality
corporate bonds or government bonds for countries where there is no deep market for corporate bonds. The rates used reflect the
terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.
In relation to industry-based long service leave funds, the Group’s liability, including obligations for funding shortfalls, is determined
after deducting the fair value of dedicated assets of such funds.
Restructuring
Liabilities for short and long-term employee benefits (other than unpaid wages and salaries) are disclosed within employee benefits.
Liabilities for unpaid wages and salaries are recognised in other creditors.
Restructuring provisions are recognised when:
– the Group has developed a detailed formal plan identifying the business or part of the business concerned, the location and
approximate number of employees affected, a detailed estimate of the associated costs, and an appropriate timeline
– the restructuring has either commenced or been publicly announced and can no longer be withdrawn
Payments that are not expected to be settled within 12 months of the reporting date are measured at the present value of the
estimated future cash payments expected to be made by the Group.
176
BHP
Annual Report 2022
26 Employee benefits, restructuring and post-retirement employee benefits provisions continued
Post-retirement
employee
benefits
Defined contribution pension schemes and multi-employer pension schemes
For defined contribution schemes or schemes operated on an industry-wide basis where it is not possible to identify assets
attributable to the participation by the Group’s employees, the pension charge is calculated on the basis of contributions payable.
The Group contributed US$324 million during the financial year (2021: US$301 million; 2020: US$243 million) to defined contribution
plans and multi-employer defined contribution plans. These contributions are expensed as incurred.
Defined benefit pension and post-retirement medical schemes
The Group operates or participates in a number of defined benefit pension schemes throughout the world, all of which are closed to
new entrants. The funding of the schemes complies with local regulations. The assets of the schemes are generally held separately
from those of the Group and are administered by trustees or management boards. The Group also operates a number of unfunded
post-retirement medical schemes in the United States, Canada and Europe.
For defined benefit schemes, an asset or liability is recognised in the balance sheet based at the present value of defined benefit
obligations less, where funded, the fair value of plan assets, except that any such asset cannot exceed the present value of
expected refunds from and reductions in future contributions to the plan. Full actuarial valuations are prepared by local actuaries for
all schemes, using discount rates based on market yields at the reporting date on high-quality corporate bonds or by reference to
national government bonds if high-quality corporate bonds are not available.
Where funded, scheme assets are invested in a diversified range of asset classes, predominantly comprising bonds and equities.
Group and related party information
27 Discontinued operations
On 22 November 2021, the Group and Woodside signed a binding SSA for the merger of the Group’s oil and gas portfolio with Woodside. Woodside has
subsequently acquired the entire share capital of BHP Petroleum International Pty Ltd (‘BHP Petroleum’) in exchange for new Woodside ordinary shares.
While the merger had an economic effective date of 1 July 2021, the Group continued to control the Petroleum assets and carry on business in the
normal course for 11 months until 1 June 2022 (Completion Date). As such, the Group recognises its share of revenue, expenses, net finance costs and
associated income tax expense related to the Discontinued operation until the Completion Date.
As consideration for the sale of BHP Petroleum, the Group received 914,768,948 newly issued Woodside ordinary shares at Completion Date.
On the Completion Date, the Group paid a fully franked in specie dividend in the form of Woodside shares to eligible BHP shareholders. Eligible BHP
shareholders received one Woodside share for every 5.5340 BHP shares they held on the Group’s register at the record date of 26 May 2022.
As part of completion and in order to reflect the economic effective date, the Group made a net cash payment of US$0.7 billion to Woodside in addition to
US$0.4 billion in cash that was left in the BHP Petroleum bank accounts to fund ongoing operations. The total cash transfer of US$1.1 billion reflects the
net cash flows generated by BHP Petroleum between 1 July 2021 and Completion Date adjusted for dividends Woodside would have paid on the newly
issued Woodside ordinary shares, had the Merger completed on 1 July 2021. The net cash completion payment to Woodside is subject to a customary
post-completion review, which may result in an adjustment to the amount paid.
BHP Mitsui Coal Pty Ltd (BMC), while being divested on 3 May 2022, is not considered to meet the criteria for classification as a Discontinued operation
given its relative size to the Group and the Coal segment. For further information, refer to note 3 ‘Exceptional items’.
The contribution of Discontinued operations to the Group’s profit and cash flows is detailed below:
Income statement – Discontinued operations
Revenue
Other income
Expenses excluding net finance costs
Loss from equity accounted investments, related impairments and expenses
Profit from operations
Financial expenses
Financial income
Net finance costs
Profit before taxation
Income tax expense
Royalty-related taxation (net of income tax benefit)
Total taxation expense
Profit/(loss) after taxation from operating activities
Net gain on Petroleum merger with Woodside (after tax)
Profit/(loss) after taxation
Attributable to non-controlling interests
Attributable to BHP shareholders
Basic earnings/(loss) per ordinary share (cents)
Diluted earnings/(loss) per ordinary share (cents)
2022
US$M
6,404
170
(2,207)
(4)
4,363
(165)
6
(159)
4,204
(1,471)
(237)
(1,708)
2,496
8,159
10,655
−
10,655
210.5
210.1
2021
US$M
3,896
130
(3,629)
(6)
391
(88)
6
(82)
309
(545)
11
(534)
(225)
−
(225)
−
(225)
(4.5)
(4.5)
2020
US$M
4,007
57
(3,322)
(4)
738
(70)
17
(53)
685
(492)
(85)
(577)
108
−
108
−
108
2.1
2.1
The total comprehensive income attributable to BHP shareholders from Discontinued operations was a gain of US$10,596 million (30 June 2021: loss of
US$231 million; 30 June 2020: gain of US$118 million).
The conversion of options and share rights would decrease the loss per share for the year ended 30 June 2021, therefore its impact has been excluded
from the diluted earnings per share calculation.
BHP
Annual Report 2022
177
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 27 Discontinued operations continued
Cash flows from Discontinued operations
Net operating cash flows
Net investing cash flows1
Net financing cash flows2
Net increase/(decrease) in cash and cash equivalents from Discontinued operations
Net cash completion payment on merger of Petroleum with Woodside
Cash and cash equivalents disposed
Total cash impact
2022
US$M
2,889
(904)
(33)
1,952
(683)
(399)
870
2021
US$M
1,351
(1,520)
(38)
(207)
−
−
(207)
2020
US$M
1,021
(1,033)
(39)
(51)
−
−
(51)
1
Includes purchases of property, plant and equipment and capitalised exploration of US$1,144 million related to drilling and development expenditure (30 June 2021:
US$1,020 million; 30 June 2020: US$1,079 million), proceeds from sale of subsidiaries, operations and joint operations, net of cash of US$91 million (30 June 2021:
investment of US$480 million; 30 June 2020: US$ nil), proceeds from sale of assets of US$151 million (30 June 2021: US$39 million; 30 June 2020: US$78 million) and other
investing outflows of US$2 million (30 June 2021: outflow of US$59 million; 30 June 2020: outflow of US$32 million).
2 Represents net repayment of interest bearing liabilities of US$33 million (30 June 2021: US$38 million; 30 June 2020: US$39 million).
Exceptional items – Discontinued operations
Exceptional items are those gains or losses where their nature, including the expected frequency of the events giving rise to them, and impact is
considered material to the Financial Statements.
Items related to Discontinued operations included within the Group’s profits for the year ended 30 June 2022 are detailed below.
Year ended 30 June 2022
Exceptional items by category
Net gain on Petroleum merger with Woodside1
Total
Attributable to non-controlling interests
Attributable to BHP shareholders
Gross
US$M
Tax
US$M
Net
US$M
8,167
8,167
−
8,167
(8)
(8)
−
(8)
8,159
8,159
−
8,159
1 The tax expense associated with the exceptional item reflects the tax impact of transaction costs and other restructuring related activities undertaken pre-merger. There are
no further tax impacts arising on the net gain on merger of our Petroleum business with Woodside as generated tax losses were either offset with capital gains in other
entities in the Group, or not recognised on the basis that it is not probable that future capital gains will be available against which the Group can utilise the tax losses.
Net gain on disposal of Discontinued operations
Details of the net gain on Petroleum merger with Woodside is presented below:
Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Property, plant and equipment
Intangible assets
Investments accounted for using the equity method
Deferred tax assets
Other
Total assets
Liabilities
Trade and other payables
Interest bearing liabilities
Tax payables
Provisions
Deferred income
Total liabilities
Net assets
Fair value of Woodside shares1
Net cash completion payment on merger of Petroleum with Woodside2
Foreign currency translation reserve transferred to the income statement
Other provisions and related indemnities recognised at completion
Transaction and other directly attributable costs
Income tax expense
Net gain on Petroleum merger with Woodside
2022
US$M
399
1,560
91
295
12,055
66
240
1,470
18
16,194
913
243
300
4,518
48
6,022
10,172
19,566
(683)
54
(353)
(245)
(8)
8,159
1 Represents the consideration received being the fair value of 914,768,948 Woodside ordinary shares received using the closing ASX share price of A$29.76 on 31 May 2022
(US$21.39 equivalent based on an exchange rate of AUD/USD 0.7187).
2 Reflects the net cash flows generated by BHP Petroleum between 1 July 2021 and Completion Date adjusted for dividends Woodside would have paid on the newly issued
Woodside ordinary shares, had the Merger completed on 1 July 2021.
178
BHP
Annual Report 2022
27 Discontinued operations continued
The Exceptional items related to Discontinued operations included within the Group’s profit for the years ended 30 June 2021 and 30 June 2020 are
outlined below:
Year ended 30 June 2021
Exceptional items by category
Impairment of Potash assets1
COVID-19 related costs
Total
Attributable to non-controlling interests
Attributable to BHP shareholders
Gross
US$M
Tax
US$M
Net
US$M
−
(47)
(47)
−
(47)
(278)
8
(270)
−
(270)
(278)
(39)
(317)
−
(317)
1 The exceptional item reflects the impairment of tax losses originally expected to be recoverable against taxable profits from the Group’s Potash assets. The impairment is
included in Discontinued operations as the entity with the losses transferred to Woodside and therefore the losses are no longer available to the Group.
Year ended 30 June 2020
Exceptional items by category
COVID-19 related costs
Total
Attributable to non-controlling interests
Attributable to BHP shareholders
Gross
US$M
Tax
US$M
Net
US$M
(6)
(6)
−
(6)
2
2
−
2
(4)
(4)
−
(4)
28 Subsidiaries
Significant subsidiaries of the Group are those with the most significant contribution to the Group’s net profit or net assets. The Group’s interest in the
subsidiaries’ results are listed in the table below.
Significant subsidiaries
Coal
BHP Mitsui Coal Pty Ltd1
Hunter Valley Energy Coal Pty Ltd
Copper
BHP Olympic Dam Corporation Pty Ltd
Compañia Minera Cerro Colorado Limitada
Minera Escondida Ltda2
Minera Spence SA
Iron Ore
BHP Iron Ore (Jimblebar) Pty Ltd3
BHP Iron Ore Pty Ltd
BHP (Towage Service) Pty Ltd
Marketing
BHP Billiton Freight Singapore Pte Limited
BHP Billiton Marketing AG
BHP Billiton Marketing Asia Pte Ltd
Group and Unallocated
BHP Billiton Finance B.V.
BHP Billiton Finance Limited
BHP Billiton Finance (USA) Limited
BHP Canada Inc.
BHP Group Operations Pty Ltd
BHP Nickel West Pty Ltd
WMC Finance (USA) Limited
Country of
incorporation
Principal activity
Australia
Australia
Australia
Chile
Chile
Chile
Australia
Australia
Australia
Coal mining
Coal mining
Copper and uranium mining
Copper mining
Copper mining
Copper mining
Iron ore mining
Service company
Towing services
Singapore
Switzerland
Singapore
Freight services
Marketing and trading
Marketing support and other services
The Netherlands
Australia
Australia
Canada
Australia
Australia
Australia
Finance
Finance
Finance
Potash development
Administrative services
Nickel mining, smelting, refining and administrative services
Finance
Group’s interest
2022
%
2021
%
–
100
100
100
57.5
100
85
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
57.5
100
85
100
100
100
100
100
100
100
100
100
100
100
100
1 The divestment of BHP’s 80 per cent interest in BHP Mitsui Coal Pty Ltd (BMC) to Stanmore Resources Limited was completed on 3 May 2022. Refer to note 3 ‘Exceptional
items’ for further information.
2 As the Group has the ability to direct the relevant activities at Minera Escondida Ltda, it has control over the entity. The assessment of the most relevant activity in this
contractual arrangement is subject to judgement. The Group establishes the mine plan and the operating budget and has the ability to appoint the key management
personnel, demonstrating that the Group has the existing rights to direct the relevant activities of Minera Escondida Ltda.
3 The Group has an effective interest of 92.5 per cent in BHP Iron Ore (Jimblebar) Pty Ltd; however, by virtue of the shareholder agreement with ITOCHU Iron Ore Australia Pty
Ltd and Mitsui & Co. Iron Ore Exploration & Mining Pty Ltd, the Group’s interest in the Jimblebar mining operation is 85 per cent, which is consistent with the other respective
contractual arrangements at Western Australia Iron Ore.
BHP
Annual Report 2022
179
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review
29 Investments accounted for using the equity method
Significant interests in equity accounted investments of the Group are those with the most significant contribution to the Group’s net profit or net assets.
The Group’s ownership interest in equity accounted investments results are listed in the table below.
Significant associates
and joint ventures
Cerrejón1
Compañía Minera Antamina S.A.
(Antamina)
Samarco Mineração S.A.
(Samarco)
Country of incorporation/
principal place of business
Associate or
joint venture
Principal activity
Anguilla/Colombia/Ireland
Peru
Associate
Associate
Coal mining in Colombia
Copper and zinc mining
Reporting date
31 December
31 December
Brazil
Joint venture
Iron ore mining
31 December
Ownership interest
2022
%
–
33.75
50.00
2021
%
33.33
33.75
50.00
1 At 30 June 2021, the Group’s investment in Cerrejón was classified as ‘Assets held for sale’ and payables owed to Cerrejón was classified as ‘Liabilities directly associated with
the assets held for sale’. During FY2022 the Group received dividends of US$238 million from Cerrejón and on 11 January 2022, BHP completed the sale of its 33.33 per cent
interest in Cerrejón to Glencore. In accordance with the sale agreement, the final sale proceeds was adjusted for the dividends received to a final number of US$50 million.
Voting in relation to relevant activities in Antamina, determined to be the approval of the operating and capital budgets, does not require unanimous
consent of all participants to the arrangement, therefore joint control does not exist. Instead, because the Group has the power to participate in the
financial and operating policies of the investee, this investment is accounted for as an associate.
Samarco is jointly owned by BHP Billiton Brasil Ltda (BHP Brasil) and Vale S.A. (Vale). As the Samarco entity has the rights to the assets and obligations
to the liabilities relating to the joint arrangement and not its owners, this investment is accounted for as a joint venture.
The Group is restricted in its ability to make dividend payments from its investments in associates and joint ventures as any such payments require the
approval of all investors in the associates and joint ventures. The ownership interest at the Group’s and the associates’ or joint ventures’ reporting dates
are the same. When the annual financial reporting date is different to the Group’s, financial information is obtained as at 30 June in order to report on an
annual basis consistent with the Group’s reporting date.
The movement for the year in the Group’s investments accounted for using the equity method is as follows:
Year ended 30 June 2022
US$M
At the beginning of the financial year
Loss from equity accounted investments, related impairments and expenses1,2
Investment in equity accounted investments
Dividends received from equity accounted investments3
Divestment and demerger of equity accounted investments
Other
At the end of the financial year
Investment in
associates
Investment in
joint ventures
Total equity
accounted
investments
1,742
653
52
(787)
(240)
−
1,420
−
(676)
−
−
−
676
−
1,742
(23)
52
(787)
(240)
676
1,420
1 US$(676) million represents US$(663) million movement in the Samarco dam failure provision including US$(747) million change in estimate and US$84 million exchange
translation, US$68 million movement in provisions related to the Samarco Germano dam decommissioning provision including US$56 million change in estimate and US$12 million
exchange translation and US$(81) million fair value change on forward exchange derivatives. Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.
Includes share of operating losses of equity accounted investments from Discontinued operations of US$4 million (2021: US$6 million; 2020: US$4 million). Refer to note 27
‘Discontinued operations’.
Includes dividends received from equity accounted investments from Discontinued operations of US$10 million (2021: US$10 million; 2020: US$12 million).
2
3
The following table summarises the financial information relating to each of the Group’s significant equity accounted investments. BHP Brasil’s 50 per cent
portion of Samarco’s commitments, for which BHP Brasil has no funding obligation, is US$350 million (2021: US$350 million).
Associates
Joint ventures
2022
US$M
Antamina
Individually
immaterial1
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets/(liabilities) – 100%
Net assets/(liabilities) – Group share
Adjustments to net assets related to accounting policy adjustments
Investment in Samarco
Impairment of the carrying value of the investment in Samarco
Additional share of Samarco losses
Unrecognised losses
Carrying amount of investments accounted for using the equity method
Revenue – 100%
Profit/(loss) from Continuing operations – 100%
Share of profit/(loss) of equity accounted investments
Impairment of the carrying value of the investment in Samarco
Additional share of Samarco losses
Fair value change on forward exchange derivatives
Unrecognised losses
Profit/(loss) from equity accounted investments, related impairments and expenses
Comprehensive income – 100%
Share of comprehensive income/(loss) – Group share in equity
accounted investments
Dividends received from equity accounted investments
1,275
5,293
(847)
(1,851)
3,870
1,306
−
−
−
−
−
1,306
5,264
2,133
720
−
−
−
−
720
2,133
720
776
114
(63)
(63)
11
Samarco2
4993
5,717
(10,830)4
(7,873)
(12,487)
(6,244)
2685
5166
(1,041)7
5,3268
1,1759
−
1,670
(528)10
(276)11
−
290
(81)
(609)9
(676)
(528)
(676)
−
180
BHP
Annual Report 2022
Individually
immaterial
Total
−
1,420
−
−
−
(19)
(19)
787
29 Investments accounted for using the equity method continued
2021
US$M
Restated
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets/(liabilities) – 100%
Net assets/(liabilities) – Group share
Adjustments to net assets related to accounting policy adjustments
Investment in Samarco
Impairment of the carrying value of the investment in Samarco
Additional share of Samarco losses
Unrecognised losses
Carrying amount of investments accounted for using the equity method
Revenue – 100%
Profit/(loss) from Continuing operations – 100%
Share of profit/(loss) of equity accounted investments
Impairment of the carrying value of the investment in Cerrejón
Impairment of the carrying value of the investment in Samarco
Additional share of Samarco losses
Fair value change on forward exchange derivatives
Unrecognised losses
Profit/(loss) from equity accounted investments, related impairments
and expenses
Comprehensive income/(loss) – 100%
Share of comprehensive income/(loss) – Group share in equity
accounted investments
Dividends received from equity accounted investments
2020
US$M
Restated
Revenue – 100%
Profit/(loss) from Continuing operations – 100%
Share of profit/(loss) of equity accounted investments
Impairment of the carrying value of the investment in Samarco
Additional share of Samarco losses
Unrecognised losses
Profit/(loss) from equity accounted investments, related impairments
and expenses
Comprehensive income/(loss) – 100%
Share of comprehensive income/(loss) – Group share in equity
accounted investments
Dividends received from equity accounted investments
Associates
Joint ventures
Antamina
Cerrejón
Individually
immaterial1
1,499
4,885
(1,285)
(1,062)
4,037
1,362
−
−
−
−
−
1,362
4,822
1,847
623
−
−
−
−
−
623
1,847
623
714
−
−
−
−
−
−
−
−
−
−
−
−
844
(43)
(14)
(466)
−
−
−
−
(480)
(43)
(480)
13
380
(68)
(68)
10
Samarco2
5093
4,380
(9,222)4
(7,627)
(11,960)
(5,980)
2805
5166
(1,041)7
4,4428
1,7839
−
814
(2,202)10
(1,076)11
−
(111)7
85
136
(24)9
(990)
(2,202)
(990)
−
Individually
immaterial
Total
−
1,742
−
−
−
(915)
(915)
737
Associates
Joint ventures
Antamina
Cerrejón
Individually
immaterial
Samarco2
Individually
immaterial
Total
2,464
629
212
−
−
−
212
629
212
105
1,091
(182)
(68)
−
−
−
(68)
(182)
(68)
9
26
(3,617)10
(1,918)11
(95)7
93
1,4129
(508)
(3,617)
(508)
−
(144)
(144)
12
−
−
−
(508)
(508)
126
1 The unrecognised share of gain for the period was US$16 million (2021: unrecognised share of loss for the period was US$40 million), which decreased the cumulative
losses to US$217 million (2021: increase to US$233 million).
2 Refer to note 4 ‘Significant events – Samarco dam failure’ for further information regarding the financial impact of the Samarco dam failure in November 2015 on BHP Brasil’s
share of Samarco’s losses.
Includes cash and cash equivalents of US$106 million (2021: US$134 million).
Includes current financial liabilities (excluding trade and other payables and provisions) of US$6,837 million (2021: US$6,567 million).
3
4
5 Relates mainly to dividends declared by Samarco that remain unpaid at balance date and which, in accordance with the Group’s accounting policy, are recognised when
received not receivable.
6 Working capital funding provided to Samarco during the period is capitalised as part of the Group’s investments in joint ventures and disclosed as an impairment included
7
within the Samarco impairment expense line item.
In the year ended 30 June 2016 BHP Brasil adjusted its investment in Samarco to US$ nil (resulting from US$(655) million share of loss from Samarco and US$(525) million
impairment). Additional cumulative impairment losses relating to working capital funding of US$(516) million have also been recognised.
8 BHP Brasil has recognised accumulated additional share of Samarco losses of US$(5,326) million resulting from US$(4,539) million provisions relating to the Samarco dam
failure, including US$(787) million recognised as net finance costs.
9 Share of Samarco’s losses for which BHP Brasil does not have an obligation to fund.
10 Includes depreciation and amortisation of US$205 million (2021: US$154 million; 2020: US$84 million), interest income of US$19 million (2021: US$1 million; 2020:
US$16 million), interest expense of US$628 million (2021: US$492 million; 2020: US$588 million) and income tax (expense)/benefit of US$(7) million (2021: US$(303) million;
2020: US$(256) million).
11 Includes accounting policy adjustments mainly related to the removal of foreign exchange gains on excluded dividends payable.
BHP
Annual Report 2022
181
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 30 Interests in joint operations
Significant joint operations of the Group are those with the most significant contributions to the Group’s net profit or net assets. The Group’s interest in the
joint operations results are listed in the table below.
Significant joint operations
Mt Goldsworthy1
Mt Newman1
Yandi1
Central Queensland Coal Associates
Atlantis2
Bass Strait2
Macedon2
Mad Dog2
North West Shelf2
Pyrenees2
ROD Integrated Development2
Shenzi2
Trinidad/Tobago2
Country of operation
Principal activity
Australia
Australia
Australia
Australia
US
Australia
Australia
US
Australia
Australia
Algeria
US
Trinidad and Tobago
Iron ore mining
Iron ore mining
Iron ore mining
Coal mining
Hydrocarbons production
Hydrocarbons production
Hydrocarbons production
Hydrocarbons production
Hydrocarbons production
Hydrocarbons production
Hydrocarbons production
Hydrocarbons production
Hydrocarbons production
Group’s interest
2022
%
2021
%
85
85
85
50
–
–
–
–
–
–
–
–
–
85
85
85
50
44
50
71.43
23.9
12.5–16.67
40–71.43
28.85
72
45–68.46
1 These contractual arrangements are controlled by the Group and do not meet the definition of joint operations. However, as they are formed by contractual arrangement and
are not entities, the Group recognises its share of assets, liabilities, revenue and expenses arising from these arrangements.
2 These joint operations formed part of the Group’s oil and gas portfolio that merged with Woodside on 1 June 2022. Refer to note 27 ‘Discontinued operations’ for details.
Assets held in joint operations subject to significant restrictions are as follows:
Current assets
Non-current assets
Total assets1
Group’s share
2022
US$M
1,928
26,256
28,184
2021
US$M
2,260
38,725
40,985
1 While the Group is unrestricted in its ability to sell a share of its interest in these joint operations, it does not have the right to sell individual assets that are used in these joint
operations without the unanimous consent of the other participants. The assets in these joint operations are also restricted to the extent that they are only available to be used
by the joint operation itself and not by other operations of the Group.
31 Related party transactions
The Group’s related parties are predominantly subsidiaries, associates and joint ventures, and key management personnel of the Group.
Disclosures relating to key management personnel are set out in note 24 ‘Key management personnel’. Transactions between each parent company and
its subsidiaries are eliminated on consolidation and are not disclosed in this note.
– All transactions to/from related parties are made at arm’s length, i.e. at normal market prices and rates and on normal commercial terms.
– Outstanding balances at year-end are unsecured and settlement occurs in cash. Loan amounts owing from related parties represent secured loans
made to associates and joint ventures under co-funding arrangements. Such loans are made on an arm’s length basis.
– No guarantees are provided or received for any related party receivables or payables.
– No provision for expected credit losses has been recognised in relation to any outstanding balances and no expense has been recognised in respect of
expected credit losses due from related parties.
– There were no other related party transactions in the year ended 30 June 2022 (2021: US$ nil), other than those with post-employment benefit plans
for the benefit of Group employees. These are shown in note 26 ‘Employee benefits, restructuring and post-retirement employee benefits provisions’.
– Related party transactions with Samarco are described in note 4 ‘Significant events – Samarco dam failure’.
Further disclosures related to related party transactions are as follows:
Transactions with related parties
Sales of goods/services
Purchases of goods/services
Interest income
Interest expense
Dividends received
Net loans made to/(repayments from) related parties
Outstanding balances with related parties
Trade amounts owing to related parties
Loan amounts owing to related parties
Trade amounts owing from related parties
Loan amounts owing from related parties
182
BHP
Annual Report 2022
Joint ventures
Associates
2022
US$M
2021
US$M
−
−
−
−
−
−
−
−
−
−
−
−
2022
US$M
−
1,852.132
0.398
0.005
787.208
(23.554)
2021
US$M
−
1,564.073
2.241
−
737.250
(12.108)
Joint ventures
Associates
2022
US$M
2021
US$M
−
−
−
−
−
−
−
−
2022
US$M
351.607
−
6.855
−
2021
US$M
316.269
17.097
0.004
40.651
Unrecognised items and uncertain events
32 Contingent liabilities
Associates and joint ventures1
Subsidiaries and joint operations1
Total
2022
US$M
1,541
925
2,466
2021
US$M
1,532
1,615
3,147
1 There are a number of matters, for which it is not possible at this time to provide a range of possible outcomes or a reliable estimate of potential future exposures, and for
which no amounts have been included in the table above.
A contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by occurrence or non-occurrence of one
or more uncertain future events not wholly within the control of the Group. A contingent liability may also be a present obligation arising from past events
but is not recognised on the basis that an outflow of economic resources to settle the obligation is not viewed as probable, or the amount of the obligation
cannot be reliably measured.
When the Group has a present obligation, an outflow of economic resources is assessed as probable and the Group can reliably measure the obligation,
a provision is recognised.
The Group has entered into various counter-indemnities of bank and performance guarantees related to its own future performance, which are in the
normal course of business. The likelihood of these guarantees being called upon is considered remote.
The Group presently has tax matters, litigation and other claims, for which the timing of resolution and potential economic outflow are uncertain.
Obligations assessed as having probable future economic outflows capable of reliable measurement are provided at reporting date and matters
assessed as having possible future economic outflows capable of reliable measurement are included in the total amount of contingent liabilities above.
Individually significant matters, including narrative on potential future exposures incapable of reliable measurement, are disclosed below, to the extent that
disclosure does not prejudice the Group.
Uncertain tax and
royalty matters
Samarco
contingent liabilities
Divestments
and demergers
The Group is subject to a range of taxes and royalties across many jurisdictions, the application of which is uncertain
in some regards. Changes in tax law, changes in interpretation of tax law, periodic challenges and disagreements with
tax authorities, and legal proceedings result in uncertainty of the outcome of the application of taxes and royalties to the
Group’s business. Areas of uncertainty at reporting date include the application of taxes and royalties to the Group’s
cross-border operations and transactions.
To the extent uncertain tax and royalty matters give rise to a contingent liability, an estimate of the potential liability
is included within the table above, where it is capable of reliable measurement.
The table above includes contingent liabilities related to the Group’s equity accounted investment in Samarco to the extent
they are capable of reliable measurement. Details of contingent liabilities related to Samarco are disclosed in note 4
‘Significant events – Samarco dam failure’.
Where the Group divests or demerges entities, it is generally agreed to provide certain indemnities to the acquiring or
demerged entity. Such indemnities include those provided as part of the demerger of South 32 Ltd in May 2015, divestment
of Group’s Onshore US assets in September 2018 and October 2018 divestment of BMC in May 2022 and the merger
of the Group’s Petroleum business with Woodside in June 2022. No material claims have been made pursuant to these
indemnities as at 30 June 2022.
33 Subsequent events
Other than the matters outlined elsewhere in the Financial Statements, no matters or circumstances have arisen since the end of the financial
year that have significantly affected, or may significantly affect, the operations, results of operations or state of affairs of the Group in subsequent
accounting periods.
BHP
Annual Report 2022
183
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review
Other items
34 Auditor’s remuneration
Fees payable to the Group’s auditors for assurance services
Audit of the Group’s Annual Report
Audit of the accounts of subsidiaries, joint ventures and associates
Audit-related assurance services required by legislation to be provided by the auditor
Other assurance and agreed-upon procedures under legislation or contractual arrangements
Total assurance services
Fees payable to the Group’s auditors for non-assurance services
Other services
Total other services
Total fees
2022
US$M
2021
US$M
2020
US$M
9.816
0.605
1.933
7.938
20.292
−
−
20.292
10.642
1.234
1.770
1.867
15.513
−
−
15.513
11.196
1.262
1.815
2.003
16.276
0.400
0.400
16.676
All amounts were paid to EY or EY affiliated firms with fees determined, and predominantly billed, in US dollars.
Fees payable to the Group’s auditors for assurance services
Audit of the Group’s Annual Report comprises fees for auditing the statutory financial report of the Group and includes audit work in relation to compliance
with section 404 of the US Sarbanes-Oxley Act.
Audit-related assurance services required by legislation to be provided by the auditors mainly comprises review of half-year reports.
Other assurance services comprise assurance in respect of the Group’s sustainability reporting and economic contribution report, in addition to the
audits of the financial reports prepared in connection with the merger of BHP’s oil and gas portfolio with Woodside and the unification of BHP’s dual listed
corporate structure.
Fees payable to the Group’s auditors for other services
No amounts were payable for other services in FY2022 or FY2021. Amounts for other services in FY2020 comprised tax compliance services
(US$0.269 million) and tax advisory services (US$0.131 million).
35 BHP Group Limited
BHP Group Limited does not present unconsolidated parent company Financial Statements. Selected financial information of the BHP Group Limited
parent company is as follows:
Income statement information for the financial year
Profit after taxation for the year
Total comprehensive income
Balance sheet information as at the end of the financial year
Current assets
Total assets
Current liabilities
Total liabilities
Share capital1
Treasury shares
Reserves
Retained earnings
Total equity
2022
US$M
22,871
22,868
4,778
43,565
3,176
3,517
4,350
(31)
168
35,561
40,048
2021
US$M
3,106
3,108
7,126
49,957
2,819
3,097
823
(32)
236
45,833
46,860
1 The increase from FY2021 mainly relates to the Group’s unification transaction completed during the current period. Refer to note 16 ‘Share capital’.
Parent company guarantees
BHP Group Limited has guaranteed certain financing arrangements available to subsidiaries of US$6,980 million at 30 June 2022 (2021:
US$7,879 million).
The Deed Poll Guarantee where BHP Group Limited had guaranteed certain current and future liabilities of BHP Group (UK) Ltd (formerly BHP Group
Plc) was terminated during the year (guaranteed liabilities at 30 June 2021: US$10 million).
BHP Group Limited and its wholly owned subsidiary BHP Group (UK) Ltd have severally, fully and unconditionally guaranteed the payment of the principal
and premium, if any, and interest, including certain additional amounts that may be payable in respect of the notes issued by 100 per cent owned finance
subsidiary, BHP Billiton Finance (USA) Ltd. BHP Group Limited and BHP Group (UK) Ltd have guaranteed the payment of such amounts when they
become due and payable, whether on an interest payment date, at the stated maturity of the notes, by declaration or acceleration, call for redemption or
otherwise. The guaranteed liabilities at 30 June 2022 amounted to US$4,234 million (2021: US$5,466 million). In addition, BHP Group Limited and BHP
Group (UK) Ltd have severally guaranteed a Group Revolving Credit Facility of US$5,500 million (2021: US$5,500 million), which remains undrawn.
184
BHP
Annual Report 2022
36 Deed of Cross Guarantee
BHP Group Limited together with certain wholly owned subsidiaries set out below have entered into a Deed of Cross Guarantee (Deed) dated 6 June
2016 or have subsequently joined the deed by way of an Assumption Deed. The effect of the Deed is that BHP Group Limited has guaranteed to pay any
outstanding liabilities upon the winding up of any wholly owned subsidiary that is party to the Deed. Wholly owned subsidiaries that are party to the Deed
have also given a similar guarantee in the event that BHP Group Limited or another party to the Deed is wound up.
The wholly owned subsidiaries that are identified below are relieved from the requirements to prepare and lodge audited financial statements.
The following companies are parties to the Deed and members of the Closed Group as at 30 June 2022:
BHP (Towage Services) Pty Ltd1
BHP Direct Reduced Iron Pty Limited
BHP Iron Ore Pty Ltd1
BHP Minerals Pty Ltd1
BHP WAIO Pty Ltd1
Pilbara Gas Pty Limited
BHP Coal Pty Ltd1
BHP MetCoal Holdings Pty Ltd1
Broadmeadow Mine Services Pty Ltd
Central Queensland Services Pty Ltd
Hay Point Services Pty Limited
BHP Yakabindie Nickel Pty Ltd1,2
OS ACPM Pty Ltd1
OS MCAP Pty Ltd
UMAL Consolidated Pty Ltd1
BHP Freight Pty Ltd
BHP Group Operations Pty Ltd1
BHP Innovation Pty Ltd
BHP Lonsdale Investments Pty Ltd
BHP Minerals Holdings Proprietary Limited1
BHP Nickel West Pty Ltd1
BHP Olympic Dam Corporation Pty Ltd1
The Broken Hill Proprietary Company Pty Ltd1
1 These companies are parties to the Deed and are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and
Directors’ reports.
2 The company is eligible for relief from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and Directors’ reports as at 30 June
2022 and was not eligible for relief as at 30 June 2021.
3 Dampier Coal (Queensland) Proprietary Limited was removed from the Deed on 10 May 2022, as it is no longer wholly owned by BHP Group Limited following the completion
of the Group’s divestment of BMC.
A Consolidated Statement of Comprehensive Income and Retained Earnings and Consolidated Balance Sheet, comprising BHP Group Limited and the
wholly owned subsidiaries that are party to the Deed for the years ended 30 June 2022 and 30 June 2021 are as follows:
Consolidated Statement of Comprehensive Income and Retained Earnings
Revenue
Other income
Expenses excluding net finance costs
Net finance costs
Total taxation expense
Profit after taxation
Total other comprehensive income
Total comprehensive income
Retained earnings at the beginning of the financial year
Net effect on retained earnings of entities added to/removed from the Deed
Profit after taxation for the year
Transfers to and from reserves
Dividends
Retained earnings at the end of the financial year
2022
US$M
38,159
6,077
(15,293)
(172)
(5,651)
23,120
(3)
23,117
50,277
(62)
23,120
(84)
(33,055)
40,196
2021
US$M
37,568
4,751
(26,789)
(247)
(5,495)
9,788
1
9,789
48,666
−
9,788
(52)
(8,125)
50,277
BHP
Annual Report 2022
185
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review 36 Deed of Cross Guarantee continued
Consolidated Balance Sheet
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Loans to related parties
Other financial assets
Inventories
Other
Total current assets
Non-current assets
Trade and other receivables
Other financial assets
Inventories
Property, plant and equipment
Intangible assets
Investments in Group companies
Other
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Loans from related parties
Interest bearing liabilities
Other financial liabilities
Current tax payable
Provisions
Deferred income
Total current liabilities
Non-current liabilities
Trade and other payables
Loans from related parties
Interest bearing liabilities
Deferred tax liabilities
Provisions
Deferred income
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital – BHP Group Limited
Treasury shares
Reserves
Retained earnings
Total equity
2022
US$M
2021
US$M
13
1,527
8,697
284
2,582
75
13,178
43
234
456
36,199
1,120
26,800
−
64,852
78,030
3,919
9,966
213
26
1,783
1,611
8
17,526
−
10,014
586
874
3,896
5
15,375
32,901
45,129
4,638
(31)
326
40,196
45,129
2
1,906
7,158
−
2,101
96
11,263
60
−
491
35,457
1,143
31,838
20
69,009
80,272
3,898
4,828
283
−
1,777
1,459
8
12,253
4
11,472
690
998
3,236
8
16,408
28,661
51,611
1,111
(32)
255
50,277
51,611
37 New and amended accounting standards and interpretations and changes to accounting policies
New and amended accounting pronouncements adopted in the current year
The adoption of new and amended accounting pronouncements applicable from 1 July 2021 did not result in a significant impact on the Group’s Financial
Statements. This includes the Interest Rate Benchmark (IBOR) Reform – Phase 2 (Amendments to IFRS 9/AASB 9 ‘Financial Instruments’, IAS 39/
AASB139 ‘Financial Instruments: Recognition and Measurement’; IFRS 7/AASB 7 ‘Financial Instruments: Disclosures’; IFRS 4/AASB 4 ‘Insurance
Contracts’ and IFRS 16/AASB 16 ‘Leases’) early adopted in the prior year.
New and amended accounting pronouncements on issue but not yet effective
From 1 July 2022, the Group will adopt an amendment to IAS 16/AASB 116 ‘Property, Plant and Equipment’ that requires an entity to recognise the sales
proceeds from selling items produced while preparing property, plant and equipment for its intended use, and the related cost, in profit or loss, instead of
deducting the amounts received from the cost of the asset.
The amendment is applied retrospectively, but only to items of property, plant and equipment that became ready for its intended use on or after
1 July 2020.
The impact of the amendment on the Group is not expected to be significant and the Group has not identified any material amounts deducted from the
cost of assets since 1 July 2020.
A number of other accounting standards and interpretations have been issued and will be applicable in future periods. While these remain subject to
ongoing assessment, no significant impacts have been identified to date.
These pronouncements have not been applied in the preparation of these Financial Statements.
186
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Annual Report 2022
2 Directors’ declaration
In accordance with a resolution of the Directors of BHP Group Limited, the Directors declare that:
(a) in the Directors’ opinion the Financial Statements and notes are in accordance with the Australian Corporations Act 2001 (Cth), including:
(i) complying with the applicable Accounting Standards and the Australian Corporations Regulations 2001 (Cth); and
(ii) giving a true and fair view of the assets, liabilities, financial position and profit or loss of BHP Group Limited and the Group as at 30 June 2022 and
of their performance for the year ended 30 June 2022
(b) the Financial Statements also comply with International Financial Reporting Standards, as disclosed in the Basis of preparation to the
Financial Statements
(c) to the best of the Directors’ knowledge, the management report (comprising the Operating and Financial Review and Directors’ Report) includes a fair
review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and uncertainties that the Group faces
(d) in the Directors’ opinion there are reasonable grounds to believe that BHP Group Limited will be able to pay its debts as and when they become due
and payable
(e) as at the date of this declaration, there are reasonable grounds to believe that BHP Group Limited and each of the Closed Group entities identified
in note 36 to the Financial Statements will be able to meet any liabilities to which they are, or may become, subject because of the Deed of Cross
Guarantee between BHP Group Limited and those group entities pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785
(f) the Directors have been given the declarations required by Section 295A of the Australian Corporations Act 2001 (Cth) from the Chief Executive
Officer and Chief Financial Officer for the financial year ended 30 June 2022
Signed in accordance with a resolution of the Board of Directors.
Ken MacKenzie
Chair
Mike Henry
Chief Executive Officer
16 August 2022
BHP
Annual Report 2022
187
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review
3 Lead Auditor’s Independence Declaration under Section 307C of the
Australian Corporations Act 2001
Auditor’s independence declaration to the directors of BHP Group Limited
As lead auditor for the audit of the financial report of BHP Group Limited for the financial year ended 30 June 2022, I declare to the best of my
knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
(b) no contraventions of any applicable code of professional conduct in relation to the audit; and
(c) no non-audit services provided that contravene any applicable code of professional conduct in relation to the audit.
This declaration is in respect of BHP Group Limited and the entities it controlled during the financial year.
Ernst & Young
Rodney Piltz
Partner
Melbourne
16 August 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
188
BHP
Annual Report 2022
4 Independent auditor’s report to the members
of BHP Group Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of BHP Group Limited (the Company) and its subsidiaries (collectively the Group), which comprises the
consolidated balance sheet as at 30 June 2022, the consolidated income statement, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated cash flow statement for the year then ended, notes to the financial statements, including a summary
of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022 and of its consolidated financial performance
for the year ended on that date; and
b. Complying with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB), Australian
Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the
Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial
report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our consideration of climate change related risks
The Group continues to develop its assessment of the potential impacts of climate change, including considering divergent climate scenarios across
a range of temperature outcomes, with two scenarios; the Central Energy View and the Lower Carbon View, currently being used as inputs to the
Group’s operational planning cases as explained in the Climate change section within the financial report.
The financial impacts of climate change and the transition to a low carbon economy (climate change) on the Group were considered in our audit
where they have the potential to materially impact the basis of preparation, including the key judgements and estimates exercised by the Group
in the preparation of the financial report, particularly in relation to the assessment of the carrying value of property, plant and equipment and the
determination of closure and rehabilitation provisions.
The key judgements and estimates disclosed in the financial report, incorporate assumptions that are directly and/or indirectly impacted by climate
change, including Board approved climate related commitments and strategies, to the extent they can be reliably estimated, in accordance with
International Financial Reporting Standards as issued by the IASB and Australian Accounting Standards.
The key audit matters section of this report address how we have assessed the Group’s climate related assumptions to the extent they impact each
key audit matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current
year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do
not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in
that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report, including
in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying financial report.
A member firm of Ernst & Young Global Limited
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BHP
Annual Report 2022
189
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review Assessment of the carrying value of property, plant and equipment
Why significant
Refer to Note 3 ‘Exceptional items’, Note 11 ‘Property, plant and
equipment’ and Note 13 ‘Impairment of non-current assets’.
How our audit addressed the key audit matter
The primary audit procedures we performed, amongst others, included
the following:
Accounting standards require an assessment of indicators of
impairment and impairment reversal annually, or more frequently if
indicators of impairment exist, for each cash generating unit (CGU).
– We evaluated the design of, and tested the operating effectiveness
of, the internal controls over the Group’s processes of assessment for
indicators of impairment and impairment reversal.
– We performed an analysis for indicators of impairment and impairment
reversal, which included considering the performance of the assets
and external market conditions. Our procedures involved assessing the
key inputs such as commodity price forecasts, discount rates, reserve
estimation, operating expenditure and asset performance.
– We considered the impact of geo-political events and conflicts,
regulatory and legislative changes, macro-economic disruptions and
the COVID-19 pandemic as part of our evaluation of indicators of
impairment and impairment reversal.
– We assessed commodity price forecasts assumed by the Group against
comparable market data.
– We involved our valuation specialists to assist in evaluating, amongst
other things, the discount rates applied and commodity price forecasts.
The Group uses internal and external experts to provide geological,
metallurgical, mine planning, commodity price forecasts and technological
information to support key assumptions in the assessment of indicators of
impairment or impairment reversal.
With assistance from our mining reserves specialists, we examined the
information provided by the Group’s experts, including assessment of
the reserve estimation methodology against the relevant industry and
regulatory guidance. We also assessed the qualifications, competence
and objectivity of the internal and external experts.
With the assistance of our climate change and valuation specialists we
have evaluated how climate related considerations and judgements
such as those reflected through commodity price forecasts, carbon
price assumptions and the incorporation of climate related strategies
and commitments into the forecast cashflows have been reflected in
the consideration of asset carrying values, including the assessment of
indicators of impairment and indicators of impairment reversal.
We assessed the adequacy of the disclosures included in Notes 11 and
13 of the financial report.
The Group’s assessment of indicators of impairment and impairment
reversal included an evaluation of geo-political events and conflicts,
regulatory and legislative changes, macro-economic disruptions,
commodity price forecasts, reserves, operating expenditure, asset
performance and ongoing impact of the COVID-19 pandemic.
During the year, the Group determined that no indicators of impairment
or impairment reversal existed for the Group’s CGUs, with the
exception of Cerro Colorado. The Group recorded an impairment
expense of US$515 million primarily in relation to Cerro Colorado as
outlined in Note 13.
The assessment of the indicators of impairment and impairment
reversal for CGUs was considered to be a key audit matter as it
involved significant judgement. Assessing the existence of indicators
of impairment or impairment reversal for a CGU is complex and
subjective due to the use of forward-looking estimates, which are
inherently difficult to determine with precision. There is also a level
of judgement applied by the Group in determining the key inputs into
these forward-looking estimates.
The key estimates in the Group’s determination of indicators of
impairment or impairment reversal, which influence whether or not
an estimate of the recoverable amount of a CGU is required were
as follows:
– Commodity prices: assumptions in relation to commodity price
forecasts are inherently uncertain. There is a risk that the
assumptions are not reasonable and may not appropriately
reflect changes in supply and demand, including the impact of
climate change.
– Reserves: assessing the estimation of reserves is complex as there
is significant estimation uncertainty in assessing the quantities of
reserves, and the amount that will be economically recovered based
on future production estimates over the asset life.
– Discount rates: given the long life of the Group’s assets, CGU
recoverable amounts are sensitive to the discount rate applied.
Determining the appropriate discount rate to apply to a CGU
is judgemental.
The Group has continued to advance its evaluation of the potential
financial impacts of climate change incorporated into the assessment
of indicators of impairment and impairment reversal, the results of
which are disclosed in the Climate change section and Note 13 of the
financial report.
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190
BHP
Annual Report 2022
Closure and rehabilitation provisions
Why significant
Refer to Note 15 ‘Closure and rehabilitation provisions’.
The Group has closure and rehabilitation obligations to restore and
rehabilitate environmental disturbances created by its operations and
related sites.
These obligations arise from regulatory and legislative requirements
across multiple jurisdictions.
The key inputs used to determine the closure and rehabilitation
provisions are:
– Life of the operation or site;
How our audit addressed the key audit matter
The primary audit procedures we performed, amongst others, included
the following:
– We evaluated the design of, and tested the operating effectiveness
of, internal controls related to the Group’s closure and rehabilitation
provision estimates.
– We evaluated the Group’s legal and regulatory obligations for closure
and rehabilitation, life of operation, future rehabilitation costs, discount
rates and timing of future cashflows.
– We tested that the future rehabilitation costs were consistent with the
closure plans prepared by the Group’s internal experts.
– Estimated cost of future closure and rehabilitation activities;
– We tested the mathematical accuracy of the closure and rehabilitation
– Timing of the closure and rehabilitation activities;
provision calculations.
– Discount rates; and
– Current regulatory and legislative requirements.
As a result of these inputs and the evaluation of climate related
risks and strategies, closure and rehabilitation provisions have a
high degree of estimation uncertainty with a wide potential range of
reasonable outcomes.
Closure and rehabilitation provisions were considered to be a
key audit matter as the estimation of these provisions is complex,
involves a high degree of judgement and often requires specialist
expertise to estimate the costs required to satisfy closure and
rehabilitation obligations.
The Group has continued to advance its evaluation of the potential
financial impacts of climate change and incorporated the related
estimates, to the extent they can be reliably measured, in the
determination of the closure and rehabilitation provisions, the results of
which are disclosed in Notes 1 and 15 of the financial report.
– With the assistance of our rehabilitation subject matter specialists,
we evaluated a sample of closure and rehabilitation provisions for
operating and closed asset sites within the Group, including:
– Evaluation of the closure and rehabilitation plans with regard to
applicable regulatory and legislative requirements;
– Evaluation of the methodology used by the Group’s internal mine
closure engineers against industry practice and our understanding of
the business; and
– Assessment of the reasonableness of the timing of cash flows
and cost estimates against the closure and rehabilitation plan and
industry practice.
– The Group has used internal and external experts to support the
estimation of the mine closure and rehabilitation provisions. With the
assistance of our rehabilitation subject matter specialists, we assessed
the qualifications, competence and objectivity of the internal and
external experts and that the information provided by the Group’s
internal and external experts has been appropriately reflected in the
calculation of the closure and rehabilitation provisions.
– We assessed the discount rates adopted to calculate the closure
and rehabilitation provisions, including benchmarking to comparable
market data.
– With the assistance of our climate change and other subject matter
specialists, we evaluated how the Group’s response to climate change
had been considered in the determination of closure and rehabilitation
provision estimates, such as physical risks created by changes to long-
term weather outlooks, estimates related to post closure monitoring
and maintenance and the timing of closure activities impacted by mine
operating lives.
– We assessed the adequacy of the disclosures included in Note 15 of
the financial report.
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BHP
Annual Report 2022
191
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review Samarco dam failure provisions recognised, including the Germano dam decommissioning, and contingent liabilities disclosures
Why significant
Refer to Note 3 ‘Exceptional items’, Note 4 ‘Significant events –
Samarco dam failure’ and Note 32 ‘Contingent liabilities’.
How our audit addressed the key audit matter
The primary audit procedures we performed, amongst others, included
the following:
There were a number of significant judgements and disclosures made
by the Group in relation to the Samarco dam failure and the Germano
dam decommissioning, including:
– We assessed the design of, and tested the operating effectiveness
of, the internal controls over the Samarco dam failure accounting and
disclosure process. This included testing controls over:
– Determining the extent of the Group’s and BHP Billiton Brasil
– The determination of the provision for the remediation of the
Ltda’s legal obligation to continue to fund the costs associated
with the Samarco dam failure, and the quantification of the
continued obligation required by the Governance Agreement and
Framework Agreement;
Samarco dam failure, including significant assumptions such as the
cost estimate to remediate, the nature and extent of remediation
activities and compensation for the impacted peoples; and
– The Group’s assessment of the legal claims and determination of the
– Determining the costs of the decommissioning of the Germano
associated provision and related contingent liability disclosures.
dam complex;
– Determining the status, accounting treatment and quantification
(if applicable) of the legal claims against BHP Group Limited,
BHP Group (UK) Ltd, BHP Billiton Brasil Ltda and Samarco;
– Determining the status of any potential settlements; and
– Disclosures relating to the contingent liabilities from the various
legal claims and other circumstances that represent exposures to
the Group.
We identified the Samarco dam failure provisions recognised, and
contingent liabilities disclosures, as a key audit matter as auditing
these estimates is complex. There is a high degree of estimation
uncertainty, together with a wide range of reasonable outcomes.
Significant judgement was required in relation to assessing the
completeness and measurement of the estimated cash outflows
related to the provisions and contingent liabilities, including the
probability of the outflows. This is due to:
– The significant size of the potential claims, combined with the multi-
jurisdictional legal and regulatory locations;
– High degree of judgement and estimation around certain key
assumptions in the provision, including:
– Cost estimates of remediation and compensation requirements
for the Samarco dam failure;
– The number and compensation category of impacted people
entitled to compensation; and
– Nature and extent of remediation activities.
– We assessed the key assumptions used to determine the provision
recorded by the Group in relation to potential obligations by:
– Understanding the impact of any court decisions on the number and
compensation category of impacted peoples;
– Understanding the impact of any Brazilian court decisions on the
infrastructure remediation program relating to the resettling of
communities impacted by the dam failure;
– Inquiring with the Group’s subject matter experts for the various
remediation programs regarding the cost estimate to remediate the
environment, residents’ wellbeing and infrastructure damaged by the
dam failure;
– Evaluating the qualifications, competence and objectivity of the
Group’s subject matter experts, and the independent external
party that contribute to the determination of the cash flow
estimates by considering their qualifications, scope of work and
remuneration structure;
– Comparing the nature and extent of remediation activities described
in the Framework Agreement to the activities included in the cash
flow forecasts;
– Selecting a sample of cost estimates included in the provision and
considering the underlying supporting documentation, such as
court decisions;
– Assessing the period in which a provision change was recorded by
understanding when the event that caused the change occurred;
– Assessing the Germano dam decommissioning provision, with the
assistance of our rehabilitation subject matter specialists, as part
of our audit procedures reported in the Closure and Rehabilitation
Provisions key audit matter above;
– Determining whether or not it is possible to provide a range
of outcomes or a reliable estimate of any potential settlement
outcomes; and
– Evaluating the historical accuracy of prior year’s forecasted cash
flows with respect to the Group’s current year actual cash flows.
– We read the claims and assessed their status and considered whether
they now represented liabilities through:
– Inquiries with the Group’s external and internal legal advisors,
senior management, Group finance, and members of the Executive
Leadership Team, with respect to the ongoing proceedings;
– Inspection of correspondence with external legal advisors; and
– Independent confirmation letters received from external
legal advisors.
– We assessed the disclosures regarding the environmental and
legal contingent liabilities as included in Note 32, and the relevant
disclosures regarding the significant events relating to Samarco dam
failure as included in Note 4 against the disclosure requirements of the
relevant accounting standards.
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192
BHP
Annual Report 2022
Information other than the financial report and
auditor’s report thereon
The directors are responsible for the other information. The other
information comprises the information included in the Company’s
2022 annual report other than the financial report and our auditor’s
report thereon.
Our opinion on the financial report does not cover the other information
and we do not and will not express any form of assurance conclusion
thereon, with the exception of the Remuneration Report and our related
assurance opinion.
In connection with our audit of the financial report, our responsibility
is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial report,
or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed on the other information
obtained prior to the date of this auditor’s report, we conclude that there
is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the
financial report
The directors of the Company are responsible for the preparation of
the financial report that gives a true and fair view in accordance with
International Financial Reporting Standards as issued by the IASB,
Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable
the preparation of the financial report that gives a true and fair view and
is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for
assessing the Group’s ability to continue as a going concern, disclosing,
as applicable, matters relating to going concern and using the going
concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the
financial report
Our objectives are to obtain reasonable assurance about whether the
financial report as a whole is free from material misstatement, whether
due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards,
we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:
– Identify and assess the risks of material misstatement of the financial
report, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations or the
override of internal control.
– Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Group’s internal control.
– Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures
made by the directors.
– Conclude on the appropriateness of the directors’ use of the going
concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the
Group to cease to continue as a going concern.
– Evaluate the overall presentation, structure and content of the
financial report, including the disclosures, and whether the financial
report represents the underlying transactions and events in a manner
that achieves fair presentation.
– Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Group to
express an opinion on the financial report. We are responsible for the
direction, supervision and performance of the Group audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters,
the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied
with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where
applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those
matters that were of most significance in the audit of the financial report of
the current year and are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the Directors’
Report for the year ended 30 June 2022.
In our opinion, the Remuneration Report of BHP Group Limited for
the year ended 30 June 2022, complies with section 300A of the
Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section
300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Rodney Piltz
Partner
Melbourne
16 August 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
BHP
Annual Report 2022
193
GovernanceAdditional InformationFinancial StatementsOperating and Financial Review Additional information
1
2
3
4
5
6
7
8
Financial information summary
Information on mining operations
Financial information by commodity
Production
Mineral Resources and Ore Reserves
Major projects
People – performance data
Legal proceedings
195
196
206
208
209
226
226
227
9
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
10
Shareholder information
History and development
Markets
Organisational structure
Constitution
Share ownership
Dividends
American Depositary Receipts fees and charges
Government regulations
Glossary
229
229
229
230
230
231
233
234
234
236
194
BHP
Annual Report 2022
1 Financial information summary
We prepare our Consolidated Financial Statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International
Accounting Standards Board. We publish our Consolidated Financial Statements in US dollars. All Consolidated Income Statement, Consolidated Balance
Sheet and Consolidated Cash Flow Statement information below has been derived from audited Financial Statements. For more information refer to the
Financial Statements.
Some information in this section has been presented on a Continuing operations basis to exclude the contribution from Discontinued operations.
Details of the contribution of Discontinued operations to the Group’s results are disclosed in Financial Statements note 27 ‘Discontinued operations’.
Year ended 30 June
US$M
Consolidated Income Statement (Financial Statements 1.1)
Revenue1
Profit from operations1
Profit after taxation from Continuing operations1
Profit/(loss) after taxation from Discontinued operations1
Profit after taxation from Continuing and Discontinued operations attributable to
BHP shareholders (Attributable profit)
Profit after taxation from Continuing operations attributable to BHP shareholders1
Dividends per ordinary share – paid during the period (US cents)
Dividends per ordinary share – determined in respect of the period (US cents)
In specie dividend on merger of Petroleum with Woodside (US cents)
Basic earnings per ordinary share (US cents)2
Diluted earnings per ordinary share (US cents)2
Basic earnings from Continuing operations per ordinary share (US cents)1,2
Diluted earnings from Continuing operations per ordinary share (US cents)1,2
Number of ordinary shares (million)2
– At period end
– Weighted average
– Diluted
Consolidated Balance Sheet (Financial Statements 1.3)3
Total assets
Net assets
Share capital (including share premium)
Total equity attributable to BHP shareholders
Consolidated Cash Flow Statement (Financial Statements 1.4)
Net operating cash flows4
Capital and exploration expenditure5
Other financial information (OFR 11)
Net debt6
Underlying attributable profit6
Underlying attributable profit – Continuing operations1,6
Underlying EBITDA1,6
Underlying EBIT1,6
Underlying basic earnings per share (US cents)6
Underlying basic earnings per share – Continuing operations (US cents)1,6
Underlying return on capital employed (per cent)6
2022
2021
2020
2019
2018
65,098
34,106
22,400
10,655
30,900
20,245
350.0
325.0
386.4
610.6
609.3
400.0
399.2
5,062
5,061
5,071
95,166
48,766
4,638
44,957
32,174
7,545
333
23,815
21,319
40,634
34,436
470.6
421.2
48.7
56,921
25,515
13,676
(225)
11,304
11,529
156.0
301.0
−
223.5
223.0
228.0
227.5
5,058
5,057
5,068
108,927
55,605
2,686
51,264
27,234
7,120
4,121
17,077
16,985
35,073
29,853
337.7
335.9
32.5
38,924
13,683
8,628
108
7,956
7,848
143.0
120.0
−
157.3
157.0
155.2
154.8
5,058
5,057
5,069
105,733
52,175
2,686
47,865
15,706
7,640
12,044
9,060
8,948
19,870
15,130
179.2
176.9
16.9
38,446
13,629
8,528
657
8,306
7,656
220.0
235.0
−
160.3
159.9
147.8
147.4
5,058
5,180
5,193
101,811
51,753
2,686
47,169
17,871
7,566
9,446
9,124
8,431
19,093
14,581
176.1
162.8
16.0
37,817
14,437
8,559
(3,736)
3,705
7,467
98.0
118.0
−
69.6
69.4
140.3
139.9
5,324
5,323
5,337
112,943
60,599
2,761
55,521
18,461
6,753
11,605
8,933
10,393
19,829
15,003
167.8
195.2
14.2
1 Comparative periods have been adjusted for the effects of applying IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ and discloses them on the same
basis as the current period figures. For more information refer to Financial Statements note 27 ‘Discontinued operations’.
2 For more information on earnings per share refer to Financial Statements note 7 ‘Earnings per share’.
3 The Consolidated Balance Sheet for comparative periods includes the associated assets and liabilities in relation to Petroleum (merger with Woodside in FY2022), BMC and
Cerrejón (both disposed in FY2022) and Onshore US (disposed in FY2019) as IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ does not require the
Consolidated Balance Sheet to be restated for comparative periods.
4 Net operating cash flows are after dividends received, net interest paid, proceeds and settlements of cash management related instruments, net taxation paid and includes
Net operating cash flows from Discontinued operations.
5 Capital and exploration expenditure is presented on a cash basis and represents purchases of property, plant and equipment plus exploration expenditure from the
Consolidated Cash Flow Statement and includes purchases of property, plant and equipment plus exploration expenditure from Discontinued operations. For more
information refer to Financial Statements note 27 ‘Discontinued operations’. Exploration expenditure is capitalised in accordance with our accounting policies, as set out in
Financial Statements note 11 ‘Property, plant and equipment’.
6 We use non-IFRS financial information to reflect the underlying performance of the Group. Underlying attributable profit, Underlying basic earnings per share and Underlying
return on capital employed includes Continuing and Discontinued operations. Refer to OFR 11 for a reconciliation of non-IFRS financial information to their respective
IFRS measure. Refer to OFR 11.1 for the definition and method of calculation of non-IFRS financial information. Refer to Financial Statements note 20 ‘Net debt’ for the
composition of Net debt.
BHP
Annual Report 2022
195
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review 2 Information on mining operations
Minerals Australia
Copper mining operations
The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.1 and the production table
and reserves and resources tables in Additional information 4 and 5.
Mine & location
Olympic Dam
Means of access
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
History and stage of
property
Mine type & mineralisation
style
Power source
Processing plants and other
available facilities
Key permit conditions
560 km northwest of Adelaide, South Australia
Public road
Copper cathode trucked to ports
Uranium oxide transported by road to ports
Gold bullion transported by road and plane
BHP 100%
BHP
Mining lease granted by South Australian Government expires in 2036. Approximately 17,788 hectares
Right of extension for 50 years (subject to remaining mine life)
Production stage
Acquired in 2005 as part of Western Mining Corporation (WMC) acquisition
Copper production began in 1988
Nominal milling capacity raised to 9 Mtpa in 1999
Optimisation project completed in 2002
New copper solvent extraction plant commissioned in 2004
Major smelter maintenance campaigns completed in 2017 and 2022
Underground
Large poly-metallic deposit of iron oxide-copper-uranium-gold mineralisation
Electricity transmitted via (i) BHP’s 275 kV power line from Port Augusta and (ii) ElectraNet’s system upstream of Port Augusta
Energy purchased via Retail Agreement
Underground automated train and trucking network feeding crushing, storage and ore hoisting facilities
2 grinding circuits
Nominal milling capacity: 10.3 Mtpa
Flash furnace produces copper anodes, which are then refined to produce copper cathodes
Electrowon copper cathode and uranium oxide concentrate produced by leaching and solvent extracting flotation tailings
Gold cyanide leach circuit and gold room producing gold bullion
The Roxby Downs (Indenture Ratification) Act 1982 (Indenture Act) applies to Olympic Dam’s operations. It contains conditions from the
South Australian Government, including relating to the protection and management of the environment; water; closure and rehabilitation
considerations; local procurement and community plans/initiatives/project commitments; and payment of royalties. Olympic Dam also
holds other relevant approvals and tenements granted by the South Australian Government, including under the SA Mining Act.
Iron Ore mining operations
The following table contains additional details of our iron ore mining operations. This table should be read in conjunction with OFR 5.1 and the production
table and reserves and resources tables in Additional information 4 and 5.
Mine & location
WAIO
Pilbara region, Western Australia
Newman West (Mt Whaleback, Orebodies 29, 30, 31, 32 and 35)
Newman East (Orebodies 24, 25)
Mt Newman joint venture
Means of access
Private road
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
History and stage of
property
Mine type & mineralisation
style
Power source
Ore transported by Mt Newman JV-owned rail to Port Hedland (427 km)
BHP Minerals 85%
Mitsui-ITOCHU Iron 10%
ITOCHU Minerals and Energy of Australia 5%
BHP
Mineral lease granted and held under the Iron Ore (Mount Newman) Agreement Act 1964 expires in 2030 with right to successive
renewals of 21 years each. ML244SA – approximately 78,934 hectares
Production stage
Production began at Mt Whaleback in 1969
Production from Orebodies 24, 25, 29, 30, 31, 32 and 35 complements production from Mt Whaleback
Production from Orebodies 31 and 32 started in 2015 and 2017 respectively
Mining at Orebody 18 ceased in 2020 after depletion
Open-cut
Bedded ore types classified as per host Archaean or Proterozoic iron formation, which are Brockman and Marra Mamba; also present is
iron-rich detrital material
Power for all mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas-fired Yarnima power station
Processing plants and other
available facilities
Power consumed in port operations is supplied via a contract with Alinta
Newman Hub: primary crusher, ore handling plant, heavy media beneficiation plant, stockyard blending facility, single cell rotary car
dumper, train load out (nominal capacity 75 Mtpa)
Key permit conditions
Orebody 25 Ore processing plant (nominal capacity 12 Mtpa) ceased operation mid FY2022
State Agreement contains conditions set by the Western Australian Government, including requirements for future development
proposals; environmental compliance and reporting obligations; closure and rehabilitation considerations; local procurement and
community plans/initiatives/investment requirements; payment of rent, taxes and government royalties
Tenements granted by the Western Australian Government under the Mining Act. Key permit conditions include resource reporting,
environmental compliance and reporting, rehabilitation considerations and offset payments and payment of lease rentals, and royalties
Registered Indigenous Land Use Agreements with conditions, including appropriate native title compensation and opportunity sharing;
enshrine heritage protections and land access rights; and guarantee certain heritage, environment and consultation processes
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Mine & location
WAIO
Yandi joint venture
Means of access
Type and amount of
ownership
Pilbara region, Western Australia
Private road
Ore transported by Mt Newman JV-owned rail to Port Hedland (316 km)
Yandi JV’s railway spur links Yandi hub to Mt Newman JV main line
BHP Minerals 85%
ITOCHU Minerals and Energy of Australia 8%
Operator
Title, leases or options and
acreage involved
Mitsui Iron Ore Corporation 7%
BHP
Mining lease granted pursuant to the Iron Ore (Marillana Creek) Agreement Act 1991 expires in 2033 with 1 renewal right to a further 21
years to 2054
History and stage of
property
M270SA – approximately 30,344 hectares
Production stage
Production began at the Yandi mine in 1992
Mine type & mineralisation
style
Power source
Processing plants and other
available facilities
Key permit conditions
Capacity of Yandi hub expanded between 1994 and 2013
Yandi has commenced production ramp down activity in FY2022
Open-cut
Channel Iron Deposits are Cainozoic fluvial sediments
Power for all mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas-fired Yarnima power station
Power consumed in port operations is supplied via a contract with Alinta
4 primary crushers, 3 ore handling plants, stockyard blending facility and 2 train load outs (nominal capacity 80 Mtpa)
Decommissioning has commenced on 2 ore handling plants, as part of planned ramp down activities
State Agreement contains conditions set by the Western Australian Government, including requirements for future development
proposals; environmental compliance and reporting obligations; closure and rehabilitation considerations; local procurement and
community plans/initiatives/investment requirements; payment of rent, taxes and government royalties
Tenements granted by the Western Australian Government under the Mining Act. Key permit conditions include resource reporting,
environmental compliance and reporting, rehabilitation considerations and offset payments and payment of lease rentals, and royalties
Registered Indigenous Land Use Agreements with conditions, including appropriate native title compensation and opportunity sharing;
enshrine heritage protections and land access rights; and guarantee certain heritage, environment and consultation processes
Mine & location
WAIO
Pilbara region, Western Australia
Jimblebar
Bill’s Hill, Eastern Syncline and Mt Helen (jointly called Western Ridge deposits)
Jimblebar operation*
Means of access
Private road
Type and amount of
ownership
Jimblebar ore is transported via overland conveyor (12.4 km) and by Mt Newman JV-owned rail to Port Hedland (428 km)
The Western Ridge deposits are located close to Newman Operations and all production will be trucked and/or transported via overland
conveyor
BHP Minerals 85%
ITOCHU Minerals and Energy of Australia 8%
Mitsui & Co. Iron Ore Exploration & Mining 7%
*Jimblebar is an ‘incorporated’ venture, with the above companies holding A Class Shares with rights to certain parts of mining lease
266SA held by BHP Iron Ore (Jimblebar) Pty Ltd (BHPIOJ)
Operator
Title, leases or options and
acreage involved
BHPIOJ holds 100% of the B Class Shares, which has rights to all other Jimblebar assets
BHP
Mining lease granted pursuant to the Iron Ore (McCamey’s Monster) Agreement Authorisation Act 1972 expires in 2030 with rights to
successive renewals of 21 years each
History and stage of
property
M266SA – approximately 51,756 hectares
Production stage
Production began in March 1989
From 2004, production was transferred to Wheelarra JV as part of the Wheelarra sublease agreement
This sublease agreement expired in March 2018
Ore was first produced from the newly commissioned Jimblebar hub in late 2013
Jimblebar sells ore to the Newman JV proximate to the Jimblebar hub
Production at Western Ridge commenced in FY2022
Open-cut
Bedded ore types classified as per host Archaean or Proterozoic banded iron formation, which are Brockman and Marra Mamba; also
present is iron-rich detrital material
Power for all mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas-fired Yarnima power station
Mine type & mineralisation
style
Power source
Processing plants and other
available facilities
Power consumed in port operations is supplied via a contract with Alinta
3 primary crushers, ore handling plant, train loadout, stockyard blending facility and supporting mining hub infrastructure (nominal
capacity 71 Mtpa)
Key permit conditions
Production from the Western Ridge deposits will be processed through existing processing facility for Newman Operations
State Agreement contains conditions set by the Western Australian Government, including requirements for future development
proposals; environmental compliance and reporting obligations; closure and rehabilitation considerations; local procurement and
community plans/initiatives/investment requirements; payment of rent, taxes and government royalties
Tenements granted by the Western Australian Government under the Mining Act. Key permit conditions include resource reporting,
environmental compliance and reporting, rehabilitation considerations and offset payments and payment of lease rentals, and royalties
Registered Indigenous Land Use Agreement with conditions, including appropriate native title compensation and opportunity sharing;
enshrine heritage protections and land access rights; and guarantee certain heritage, environment and consultation processes
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Mine & location
WAIO
Pilbara region, Western Australia
Yarrie
Nimingarra
Mining Area C (includes South Flank)
Mt Goldsworthy joint venture
Means of access
Private road
Yarrie and Nimingarra iron ore transported by Mt Goldsworthy JV-owned rail to Port Hedland (218 km)
Mining Area C iron ore transported by Mt Newman JV-owned rail to Port Hedland (360 km)
South Flank iron ore transported by overland conveyors (8–16 km) to the Mining Area C processing hub
Mt Goldsworthy JV railway spur links Mining Area C and South Flank to Yandi railway spur
BHP Minerals 85%
Mitsui Iron Ore Corporation 7%
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
ITOCHU Minerals and Energy of Australia 8%
BHP
1 mineral lease and 1 mining lease both granted pursuant to the Iron Ore (Goldsworthy – Nimingarra) Agreement Act 1972, expire
2035, with rights to successive renewals of 21 years each. ML251SA and M263SA – approximately 15,623 hectares
A number of smaller mining leases granted under the Mining Act 1978 expire in 2026 with rights to successive renewals of 21 years.
5 leases – approximately 2,999 hectares
3 mineral leases granted under the Iron Ore (Mount Goldsworthy) Agreement Act 1964, which expire 2028, with rights to successive
renewals of 21 years each. ML235SA, ML249SA and ML281SA – approximately 91,124 hectares
Production stage
Operations commenced at Mt Goldsworthy in 1966 and at Shay Gap in 1973
History and stage of
property
Original Goldsworthy mine closed in 1982
Associated Shay Gap mine closed in 1993
Mining at Nimingarra mine ceased in 2007, then continued from adjacent Yarrie area
Production commenced at Mining Area C mine in 2003
Yarrie mine operations were suspended in February 2014
First ore at South Flank commenced in May 2021
Mining Area C, South Flank, Yarrie and Nimingarra are open-cut
Bedded ore types classified as per host Archaean or Proterozoic iron formation, which are Brockman, Marra Mamba and Nimingarra;
also present is iron-rich detrital material
Power for all remaining mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas-fired Yarnima power station
Power consumed in port operations is supplied via a contract with Alinta
Mining Area C: 2 primary crushers, 2 ore handling plants, stockyard blending facility and train load out (nominal capacity 60 Mtpa)
South Flank: 2 primary crushers, 1 ore handling plant, stockyard and blending facility and train load out (nominal capacity 80 Mtpa)
State Agreements contain conditions set by the Western Australian Government, including requirements for future development
proposals; environmental compliance and reporting obligations; closure and rehabilitation considerations; local procurement and
community plans/initiatives/investment requirements; payment of rent, taxes and government royalties
Tenements granted by the Western Australian Government under the Mining Act. Key permit conditions include resource reporting,
environmental compliance and reporting, rehabilitation considerations and offset payments and payment of lease rentals, and royalties
Registered Indigenous Land Use Agreements with conditions, including appropriate native title compensation and opportunity sharing;
enshrine heritage protections and land access rights; and guarantee certain heritage, environment and consultation processes
Pilbara region, Western Australia
Private road
POSMAC JV sells ore to Mt Goldsworthy JV at Mining Area C
Ore is transported via Mt Goldsworthy JV-owned rail and Mt Newman JV-owned rail to Port Hedland
BHP Minerals 65%
ITOCHU Minerals and Energy of Australia 8%
Mitsui Iron Ore Corporation 7%
POS-Ore 20%
BHP
Sublease over part of Mt Goldsworthy Mining Area C mineral lease that expires on the earlier of termination of the mineral lease or the
end of the POSMAC JV. ML281SA – approximately 56,335 hectares
Production stage
Production commenced in October 2003
POSMAC JV sells all ore to Mt Goldsworthy JV at Mining Area C
Open-cut
Bedded ore types classified as per host Archaean or Proterozoic iron formation, which is Marra Mamba
Power for all mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas-fired Yarnima power station
Power consumed in port operations is supplied via a contract with Alinta
POSMAC sells all ore to Mt Goldsworthy JV, which is then processed at Mining Area C
Key permit conditions of POSMAC joint venture are captured within the Mount Goldsworthy joint venture key permit conditions outlined
above
Mine type & mineralisation
style
Power source
Processing plants and other
available facilities
Key permit conditions
Mine & location
WAIO
POSMAC joint venture
Means of access
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
History and stage of
property
Mine type & mineralisation
style
Power source
Processing plants and other
available facilities
Key permit conditions
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Annual Report 2022
Coal mining operations
The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.1 and the production table
and reserves and resources tables in Additional information 4 and 5.
Mine & location
BHP Mitsubishi Alliance
Bowen Basin, Queensland, Australia
Goonyella Riverside
Broadmeadow
Daunia
Caval Ridge
Peak Downs
Saraji
Blackwater and Saraji South
Central Queensland Coal Associates joint venture
Means of access
Public road
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
History and stage of
property
Coal transported by rail to Hay Point, Gladstone, Dalrymple Bay and Abbot Point ports
Distances between the mines and port are between 160 km and 315 km
BHP 50%
Mitsubishi Development 50%
BMA
Mining leases, including undeveloped tenements, have expiry dates ranging up to 2043, renewable for further periods as Queensland
Government legislation allows. Approximately 125,100 hectares
Mining is permitted to continue under the legislation during the renewal application period
All required renewal applications were lodged and pending a decision from the Minister
Production stage
Goonyella mine commenced in 1971, merged with adjoining Riverside mine in 1989
Operates as Goonyella Riverside
Production commenced at:
Peak Downs in 1972
Saraji in 1974
Norwich Park in 1979
Blackwater in 1967
Broadmeadow (longwall operations) in 2005
Daunia in 2013 and
Caval Ridge in 2014
Mine type & mineralisation
style
Power source
Processing plants and other
available facilities
Key permit conditions
Production at Saraji South (formerly Norwich Park) ceased in May 2012; limited product is due to be sourced from Saraji South for
processing at Saraji scheduled from the December 2022 quarter and will be included under the Saraji mine
All open-cut except Broadmeadow (longwall underground)
Bituminous coal is mined from the Permian Moranbah and Rangal Coal measures
Products range from premium quality, low volatile, high vitrinite, hard coking coal to medium volatile hard coking coal, to weak coking
coal, some pulverised coal injection (PCI) coal and medium ash thermal coal as a secondary product
Queensland electricity grid connection is under long-term contracts and energy purchased via Retail Agreements
On-site beneficiation processing facilities
Combined nominal capacity: in excess of 67 Mtpa
Key permit conditions are contained in the various legislation set by the Queensland Government and include conditions relating to
carrying out works in accordance with the environmental authority and approved development plans, payment of rents, reporting and
payment of royalties. Mining leases granted under the Central Queensland Coal Associates Agreement Act 1968 place an extraction
cap of 1,860 Mt
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Mine & location
New South Wales Energy
Coal
Mt Arthur Coal
Means of access
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
Approximately 126 km northwest of Newcastle, New South Wales, Australia
Public road
Export coal transported by third-party rail to Newcastle port
BHP 100%
BHP
Current Development Consent expires in 2026
Mt Arthur Coal Mine (MAC) continues to work on obtaining new State and Commonwealth approvals to continue open-cut mining at
MAC beyond 30 June 2026
MAC holds 10 mining leases, 2 sub leases and 3 exploration licences
MAC’s primary mining lease (ML 1487) was granted for a further 21-year term from June 2022
History and stage of
property
Total mining leases approximately 8,750 hectares
Production stage
Production commenced in 2002
Mine type & mineralisation
style
Power source
Processing plants and other
available facilities
Key permit conditions
Approval to expand mining granted in 2010 with an additional area also granted by an approval modification in 2014
Domestic sales ceased during FY2020 with conveyor to Bayswater and Liddell Power Stations decommissioned
On 16 June 2022, BHP announced the decision to cease mining at the asset by the end of FY2030
Open-cut
Produces a medium rank bituminous thermal coal
NSW electricity grid connection under a deemed long-term contract and energy purchased via a Retail Agreement
Beneficiation facilities: coal handling, preparation, washing plants
Nominal capacity: in excess of 23 Mtpa
The project approval contains key conditions: (i) it requires MAC to be operated generally in accordance with the environmental
assessment; and (ii) permits extraction of up to 36 Mtpa of run of mine coal from underground and open-cut operations, with open-cut
extraction limited to 32 Mtpa
Nickel mining operations
The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.1 and the production table
and reserves and resources tables in Additional information 4 and 5.
Mine & location
Nickel West
450 km north of Kalgoorlie, Western Australia
Mt Keith Mine
Mt Keith Satellite Mine (Yakabindie)
Mt Keith mine and concentrator
Means of access
Private road
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
Nickel concentrate transported by road to Leinster for drying and on-shipping
BHP 100%
BHP
Mining leases granted by Western Australian Government
Key leases expire between 2029 and 2036
First renewal of 21 years is as a right. Further renewals at government discretion
History and stage of
property
Mt Keith mining leases approximately 9,240 hectares
Mt Keith satellite mining leases approximately 3,835 hectares
Production stage
Commissioned in 1995 by WMC
Acquired in 2005 as part of WMC acquisition
Mine type & mineralisation
style
Power source
Mt Keith Satellite Mine contains 2 open-pit mines: Six Mile Well in full production and Goliath currently being pre-stripped
Open-cut
Disseminated textured magmatic nickel-sulphide mineralisation associated with a metamorphosed ultramafic intrusion
On-site third-party gas-fired turbines with backup from diesel engine generation
Processing plants and other
available facilities
Key permit conditions
Contracts expire in December 2038
Natural gas sourced and transported under separate long-term contracts
Concentration plant with a nominal capacity of 11 Mtpa of ore
Use of the land for the purposes set out by the Western Australian Government under granted mining tenements and broadly
comprise of submission of detailed mining proposals; payment of royalties, annual rent to the State Government; rates to relevant
local governments; compliance with environmental regulations and mine closure requirements and other reporting obligations. Existing
mining operations are also subject to an Indigenous Land Use Agreement (ILUA), which includes commitments for payments made to
trust accounts; Indigenous employment and business opportunities; heritage and cultural protections
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Mine & location
Nickel West
375 km north of Kalgoorlie, Western Australia
Venus sub-level caving operation
B11 block caving operation
Camelot open-pit mine
Rocky’s Reward open-pit mine
Leinster mine complex and concentrator
Means of access
Public road
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
Nickel concentrate shipped by road and rail to Kalgoorlie Nickel Smelter
BHP 100%
BHP
Mining leases granted by Western Australian Government
Key leases expire between 2025 and 2040
Renewals of principal mineral lease in accordance with State Agreement ratified by the Nickel (Agnew) Agreement Act 1974
History and stage of
property
Leinster mining leases approximately 6,325 hectares
Camelot mining leases approximately 2,353 hectares
Production stage
Production commenced in 1979
Acquired in 2005 as part of WMC acquisition
Mine type & mineralisation
style
Power source
Processing plants and other
available facilities
Key permit conditions
Mine & location
Nickel West
Cliffs mine
Means of access
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
History and stage of
property
Mine type & mineralisation
style
Power source
Processing plants and other
available facilities
Key permit conditions
Leinster underground ceased operations in 2013 and recommenced operations in 2016 with Venus sub-level cave now in operation and
B11 block cave developing its undercut and draw points
Rocky’s Reward open-pit mine ceased mining in 2021
Open-cut and underground
Steeply dipping disseminated and massive textured nickel-sulphide mineralisation associated with metamorphosed ultramafic lava
flows and intrusions
On-site third-party gas-fired turbines with back up from diesel engine generation
Contracts expire in December 2038
Natural gas sourced and transported under separate long-term contracts
Concentration plant with a nominal capacity: 3 Mtpa of ore
Use of the land for the purposes set out by the Western Australian Government in the Nickel (Agnew) Agreement Act 1974 and other
Nickel West granted tenements broadly comprise of submission of detailed mining proposals; payment of royalties, annual rent to
Western Australian Government; rates to relevant local governments; compliance with environmental regulations and mine closure
requirements and other reporting obligations. Existing mining operations are also subject to an Indigenous Land Use Agreement (ILUA),
which includes commitments for payments made to trust accounts; Indigenous employment and business opportunities; heritage and
cultural protections
450 km north of Kalgoorlie, Western Australia
Private road
Nickel ore transported by road to Leinster or Mt Keith for further processing
BHP 100%
BHP
Mining leases granted by Western Australian Government
Key leases expire between 2025 and 2028
First renewal of 21 years is as of right. Further renewals at government discretion
Mining leases approximately 2,675 hectares
Production stage
Production commenced in 2008
Acquired in 2005 as part of WMC acquisition
Underground
Steeply dipping massive textured nickel-sulphide mineralisation associated with metamorphosed ultramafic lava flows
Supplied from Mt Keith
Mine site
Use of the land for the purposes set out by the Western Australian Government under granted mining tenements and broadly comprise
of submission of detailed mining proposals; payment of royalties, annual rent to the State Government; rates to relevant local
government; compliance with environmental regulations and mine closure requirements and other reporting obligations. Existing mining
operations are also subject to an Indigenous Land Use Agreement (ILUA), which includes commitments for payments made to trust
accounts; Indigenous employment and business opportunities; heritage and cultural protections
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Nickel smelters, refineries and processing plants
Smelter, refinery or
processing plant & location
56 km south of Kalgoorlie, Western Australia
Nickel West
Kambalda nickel concentrator
Ownership
BHP 100%
BHP
Mineral leases granted by Western Australian Government
Operator
Title, leases or options
Product
Power source
Nominal production
capacity
Key permit conditions
Smelter, refinery or
processing plant & location
Nickel West
Kalgoorlie nickel smelter
Ownership
Operator
Title, leases or options
Product
Power source
Nominal production
capacity
Smelter, refinery or
processing plant & location
Nickel West
Kwinana nickel refinery
Ownership
Operator
Title, leases or options
Product
Power source
Nominal production
capacity
Key leases expire in 2028
Mining leases approximately 242 hectares
Concentrate containing approximately 13% nickel
On-site third-party gas-fired turbines supplemented by access to grid power
Contracts expire in December 2038
Natural gas sourced and transported under separate long-term contracts
1.6 Mtpa ore
Nickel sourced through ore tolling and concentrate purchase arrangements with third parties in Kambalda and outer regions
Use of the land for the purposes set out by the Western Australian Government under granted mining tenements and broadly comprise
of submission of detailed mining proposals; payment of royalties, annual rent to the State Government; rates to relevant local
government; compliance with environmental regulations and mine closure requirements and other reporting obligations
Kalgoorlie, Western Australia
BHP 100%
BHP
Freehold title over the property
Matte containing approximately 65% nickel
On-site third-party gas-fired turbines supplemented by access to grid power
Contracts expire in December 2038
Natural gas sourced and transported under separate long-term contracts
110 ktpa nickel metal in matte
30 km south of Perth, Western Australia
BHP 100%
BHP
Freehold title over the property
London Metal Exchange grade nickel briquettes, nickel powder
Also intermediate products, including copper sulphide, cobalt-nickel-sulphide, ammonium-sulphate
Nickel sulphate containing approximately 22% nickel
Power is sourced from the local grid, which is supplied under a retail contract, supplemented by a Power Purchase Agreement with
Merredin Solar Farm for 50% of its output
82.5 ktpa nickel metal in powder, briquettes, and nickel sulphate (with approval to increase up to 90 ktpa)
99 kt–100 kt nickel sulphate (approximately 22 kt–24 kt nickel)
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Minerals Americas
Copper mining operations
The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.2 and the production table
and reserves and resources tables in Additional information 4 and 5.
Mine & location
Escondida
Means of access
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
History and stage of
property
Mine type & mineralisation
style
Power source
Processing plants and other
available facilities
Atacama Desert
170 km southeast of Antofagasta, Chile
Private road available for public use
Copper cathode transported by privately owned rail to ports at Antofagasta and Mejillones
Copper concentrate transported by Escondida-owned pipelines to its Coloso port facilities
BHP 57.5%
Rio Tinto 30%
JECO Corporation consortium comprising Mitsubishi, JX Nippon Mining and Metals 10%
JECO 2 Ltd 2.5%
BHP
Mining concession from Chilean Government valid indefinitely (subject to payment of annual fees)
Mining concessions (exploitation): approximately 380,000 hectares
Production stage
Original construction completed and production commenced in 1990
Start of operations of the third concentrator plant in 2015
Inauguration of Escondida Water Supply desalination plant (CY2018) and its extension (CY2019)
2 open-cut pits: Escondida and Escondida Norte
Escondida and Escondida Norte mineral deposits are adjacent but distinct supergene enriched porphyry copper deposits
Escondida-owned transmission lines connect to Chile’s northern power grid
Electricity sourced from external vendors and Tamakaya SpA (100% owned by BHP), which generates power from the Kelar gas-fired
power plant
Renewable power agreements signed in FY2020 with supply commenced in FY2022
Crushing facilities feed concentrator and leaching processes
3 concentrator plants produce copper concentrate from sulphide ore by flotation extraction process (by-products: gold and silver)
2 solvent extraction and electrowinning plants produce copper cathode
Nominal capacity: 422 ktpd (nominal milling capacity) and 350 ktpa copper cathode (nominal capacity of tank house)
2 x 168 km concentrate pipelines, 167 km water pipeline
Port facilities at Coloso, Antofagasta
Key permit conditions
Desalinated water plant (total water capacity of 3,800 litres per second)
Mining companies in Chile must comply with an Environmental Impact Assessment (EIA) approved by the Environmental Assessment
Service (SEA) in order to operate
Changes in the scope of the operation can trigger an Environmental Impact Declaration (DIA) or a full EIA
Mining companies must also pay a yearly mining concession
Mine & location
Pampa Norte Spence
Atacama Desert
Means of access
162 km northeast of Antofagasta, Chile
Public road
Copper cathode transported by rail to ports at Mejillones and Antofagasta
Copper concentrate transported by rail or trucks to port in Mejillones
Molybdenum concentrate is transported by trucks
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
History and stage of
property
BHP 100%
BHP
Mining concession from Chilean Government valid indefinitely (subject to payment of annual fees)
Mining concessions (exploitation): approximately 44,000 hectares
Production stage
First copper produced in 2006
Mine type & mineralisation
style
Power source
Spence Growth Option project (i.e. new 95 ktpd copper concentrator and molybdenum plants) produced first copper in December 2020
and first molybdenum in April 2022
Open-cut
Enriched and oxidised porphyry copper deposit containing in situ copper oxide mineralisation that overlies a near-horizontal sequence
of supergene sulphides, transitional sulphides, and finally primary (hypogene) sulphide mineralisation
Spence-owned transmission lines connect to Chile’s northern power grid
Processing plants and other
available facilities
Electricity purchased from external vendors
Renewable power agreements signed in FY2020 with supply commenced in FY2022
Crushing facilities feed concentrator and leaching processes
1 copper concentrator plant with 95 ktpd capacity (by-products: gold and silver), molybdenum plant and a 1,000 lps desalinated water
plant under a Build, Own, Operate, Transfer (BOOT) agreement
Dynamic leach pads, solvent extraction and electrowinning plant
Key permit conditions
Nominal capacity of tank house: 200 ktpa copper cathode
Mining companies in Chile must comply with an EIA approved by the SEA in order to operate
Changes in the scope of the operation can trigger a DIA or a full EIA
Mining companies must also pay a yearly mining concession
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Mine & location
Pampa Norte
Cerro Colorado
Means of access
Atacama Desert
120 km east of Iquique, Chile
Public road
Ownership
Operator
Title, leases or options
Copper cathode trucked to port at Iquique
BHP 100%
BHP
Mining concession from Chilean Government valid indefinitely (subject to payment of annual fees)
History
Mine type & mineralisation
style
Power source
Facilities, use & condition
Current environmental licence expires at the end of CY2023
Mining concessions (exploitation): approximately 34,000 hectares
Production stage
Commercial production commenced in 1994
Expansions in 1996 and 1998
Open-cut
Enriched and oxidised porphyry copper deposit containing in situ copper oxide mineralisation that overlies a near-horizontal sequence
of supergene sulphides, transitional sulphides and finally primary (hypogene) sulphide mineralisation
Electricity purchased from external vendors
Crushing facilities, dynamic leach pads, solvent extraction plant, electrowinning plant
Key permit conditions
Nominal capacity of tank house: 130 ktpa copper cathode
Mining companies in Chile must comply with an EIA approved by the SEA in order to operate
Changes in the scope of the operation can trigger a DIA or a full EIA
Mining companies must also pay a yearly mining concession
Mine & location
Antamina
Means of access
Andes mountain range
270 km northeast of Lima, Peru
Public road
Copper and zinc concentrates transported by Antamina-owned pipeline to its Punta Lobitos port
Ownership
Molybdenum and lead/bismuth concentrates transported by truck
BHP 33.75%
Glencore 33.75%
Teck 22.5%
Operator
Title, leases or options
Mitsubishi 10%
Compañía Minera Antamina S.A.
Mining rights from Peruvian Government held indefinitely, subject to payment of annual fees and supply of information on investment
and production
History
Mine type & mineralisation
style
Power source
Facilities, use & condition
Key permit conditions
Mine & location
Resolution
Means of access
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
History and stage of
property
Mine type & mineralisation
style
Power source
Facilities, use & Processing
plants and other available
facilities
Key permit conditions
Total acreage: approximately 6,600 hectares
Production stage
Commercial production commenced in 2001
Open-cut
Zoned porphyry and skarn deposit with central copper dominated ores and an outer band of copper-zinc dominated ores
Long-term contracts with individual power producers
Primary crusher, concentrator, copper and zinc flotation circuits, bismuth/moly cleaning circuit
Nominal milling capacity 145 ktpd
304 km concentrate pipeline
Port facilities at Huarmey
In April 2022 Antamina submitted to Peruvian authorities an Environmental Impact Study Modification (MEIA), which would enable
Antamina to extend its life from 2028 to 2036, maintaining annual production volumes within its current operational footprint
Superior, Arizona, Pinal County, US
Public road
BHP 45%
Rio Tinto 55% (operator)
Resolution Copper Mining LLC
Private land, patented and unpatented mining claims
Total acreage: approximately 46,000 acres
Exploration stage
The Resolution deposit is within the footprint and adjacent to the historical Magma Copper Mine. The Resolution Non-Operated Joint
Venture (NOJV) was formed in 2004 with Rio Tinto as operator
Underground
Porphyry copper and molybdenum deposit
115kV power lines to East and West Plant sites with supply contract with Salt River Project
Water treatment and reverse osmosis plant, two active underground shafts with associated support infrastructure including hoisting,
ventilation and cooling, and a rail corridor connecting the site to the national rail network
The Resolution Copper Project is subject to a federal permitting process pursuant to the National Environmental Policy Act (NEPA)and
other U.S. legislation, including requirements for consultation, coordination and collaboration with Native American Tribes. The NEPA
process is led by the U.S. Forest Service
The Resolution Copper Project is also required to obtain several state and local permits, including air quality and groundwater
protection permits
204
BHP
Annual Report 2022
Iron Ore mining operations
The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.2 and the production table
and reserves and resources tables in Additional information 4 and 5.
Mine & location
Samarco
Means of access
Southeast Brazil
Public road
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
History and stage of
property
Mine type & mineralisation
style
Power source
Facilities, use & Processing
plants and other available
facilities
Key permit conditions
Conveyor belts used to transport iron ore to beneficiation plant
Three slurry pipelines owned by Samarco used to transport concentrate to its pellet plants on coast
Iron ore pellets exported via port facilities
BHP Brasil 50%
Vale S.A. 50%
Samarco
Mining concessions granted by Brazilian Government subject to compliance with the mine plan
Samarco recommenced iron ore pellet production in December 2020, having met licensing requirements to restart operations at its
Germano complex in Minas Gerais and its Ubu complex in Espírito Santo
Mining rights for approximately 1,605 hectares
Production stage
Production began at Germano mine in 1977 and at Alegria complex in 1992
Second pellet plant built in 1997
Third pellet plant, second concentrator and second pipeline built in 2008
Fourth pellet plant, third concentrator and third pipeline built in 2014
Open-cut
Itabirites (metamorphic quartz-hematite rock) and friable hematite ores
Samarco holds interests in 2 hydroelectric power plants, which supply part of its electricity
Power supply contract with Cemig Geração e Transmissão expires in 2026
Samarco’s gradual restart of operations includes 1 concentrator and a new system of tailings disposal combining a confined pit and
filtration plant for dry stacking of sandy tailings
Beneficiation plants, pipelines, pellet plants and port facilities
Samarco has an operating licence (LOC – Corrective Operating License) obtained for the return of operations. For the continuity of
operations, it has a long-term licensing plan that includes expansion of the mining area and new structures for the disposal of waste
and tailings
Other mining operations
The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.2 and the production table
and reserves and resources tables in Additional information 4 and 5.
Mine & location
Jansen Stage 1
(under construction)
Means of access
Type and amount of
ownership
Operator
Title, leases or options and
acreage involved
History and stage of
property
Mine type & mineralisation
style
Power source
Facilities, use & Processing
plants and other available
facilities
Key permit conditions
Province of Saskatchewan
Approximately 150 km east of Saskatoon, Canada
Public road
Muriate of Potash (MOP) to be transported by rail to the port at Westshore Terminal in Delta, British Columbia, Canada
BHP 100%
BHP
The total area of the Jansen lease is approximately 1,156 square km
All surface lands have been acquired
Development stage
Stage 1 is currently under construction
Underground
The Lower Patience Lake (LPL) sub-member is the potash horizon targeted for Jansen. The LPL sub-member is composed of sylvite
(KCl), halite (NaCl) with variable amounts of disseminated insolubles and clay seams
Permanent power supply to be constructed
Mill, buildings, and other facilities and infrastructure are planned to be constructed
Construction of production and service shafts was completed during FY2022
An Environmental Assessment is required to be submitted to the regulatory authority in order to determine the potential environmental
and social impacts of a project during construction, operation and closure
Depending on the activity, permits from municipal, provincial and federal agencies may also be required
BHP
Annual Report 2022
205
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review 3 Financial information by commodity
Management believes the following financial information presented by commodity provides a meaningful indication of the underlying financial performance
of the assets, including equity accounted investments, of each reportable segment. Information relating to assets that are accounted for as equity
accounted investments is shown to reflect BHP’s share, unless otherwise noted, to provide insight into the drivers of these assets.
For the purposes of this financial information, segments are reported on a statutory basis in accordance with IFRS 8/AASB 8 ‘Operating Segments’. The tables
for each commodity include an ‘adjustment for equity accounted investments’ to reconcile the equity accounted results to the statutory segment results.
For a reconciliation of non-IFRS financial information to respective IFRS measures and an explanation as to the use of Underlying EBITDA
in assessing our performance refer to OFR 11.
For the definition and method of calculation of non-IFRS financial information refer to OFR 11.1.
For more information as to the statutory determination of our reportable segments refer to Financial Statements note 1 ‘Segment reporting’.
3.1 Copper
Detailed below is financial information for our Copper assets for FY2022 and FY2021.
Year ended
30 June 2022
US$M
Escondida1
Pampa Norte2
Antamina3
Olympic Dam
Other3,4
Total Copper from
Group production
Third-party products
Total Copper
Adjustment for equity
accounted investments5
Total Copper statutory result
Year ended
30 June 2021
US$M
Escondida1
Pampa Norte2
Antamina3
Olympic Dam
Other3,4
Total Copper from
Group production
Third-party products
Total Copper
Adjustment for equity
accounted investments5
Total Copper statutory result
Revenue
Underlying
EBITDA
9,500
2,670
1,777
1,776
−
15,723
2,903
18,626
(1,777)
16,849
6,198
1,363
1,289
409
(157)
9,102
36
9,138
(573)
8,565
Revenue
Underlying
EBITDA
9,470
1,801
1,627
2,211
−
15,109
2,244
17,353
(1,627)
15,726
6,483
954
1,158
598
(230)
8,963
64
9,027
(538)
8,489
D&A
907
893
146
421
16
2,383
−
2,383
(148)
2,235
D&A
969
390
142
313
10
1,824
−
1,824
(144)
1,680
Underlying
EBIT
Net operating
assets
Capital
expenditure
Exploration
gross
Exploration
to profit
5,291
470
1,143
(12)
(173)
6,719
36
6,755
(425)
6,330
11,703
4,543
1,306
9,877
(9)
27,420
−
27,420
−
27,420
860
673
323
966
29
2,851
−
2,851
(323)
2,528
96
(11)
85
92
(7)
85
Underlying
EBIT
Net operating
assets
Capital
expenditure
Exploration
gross
Exploration
to profit
5,514
564
1,016
285
(240)
7,139
64
7,203
(394)
6,809
11,926
4,510
1,362
9,045
85
26,928
−
26,928
−
26,928
666
678
237
830
7
2,418
−
2,418
(238)
2,180
62
(9)
53
58
(5)
53
1 Escondida is consolidated under IFRS 10 and reported on a 100 per cent basis.
2
3 Antamina, SolGold and Resolution are equity accounted investments and their financial information presented above with the exception of net operating assets reflects BHP
Includes Spence and Cerro Colorado.
Group’s share.
4 Predominantly comprises divisional activities, greenfield exploration and business development. Includes Resolution and SolGold.
5 Total Copper statutory result revenue excludes US$1,777 million (FY2021: US$1,627 million) revenue related to Antamina. Total Copper statutory result Underlying EBITDA
includes US$148 million (FY2021: US$144 million) D&A and US$425 million (FY2021: US$394 million) net finance costs and taxation expense related to Antamina,
Resolution and SolGold that are also included in Underlying EBIT. Total Copper Capital expenditure excludes US$323 million (FY2021: US$237 million) related to Antamina
and US$ nil (FY2021: US$1 million) related to SolGold. Exploration gross excludes US$11 million (FY2021: US$9 million) related to SolGold of which US$7 million (FY2021:
US$5 million) was expensed.
3.2 Iron Ore
Detailed below is financial information for our Iron Ore assets for FY2022 and FY2021.
Year ended
30 June 2022
US$M
Western Australia Iron Ore
Samarco2
Other3
Total Iron Ore from
Group production
Third-party products4
Total Iron Ore
Adjustment for equity
accounted investments
Total Iron Ore statutory result
206
BHP
Annual Report 2022
Revenue
30,632
−
116
30,748
19
30,767
−
30,767
Underlying
EBITDA
21,788
−
(81)
21,707
−
21,707
−
21,707
D&A
2,119
−
117
2,236
−
2,236
−
2,236
Underlying
EBIT
Net operating
assets
Capital
expenditure
Exploration
gross1
Exploration
to profit
19,669
−
(198)
19,471
−
19,471
−
19,471
20,376
(3,433)
(120)
16,823
−
16,823
−
16,823
1,847
−
1
1,848
−
1,848
−
1,848
95
−
95
54
−
54
Year ended
30 June 2021
US$M
Western Australia Iron Ore
Samarco2
Other3
Total Iron Ore from
Group production
Third-party products4
Total Iron Ore
Adjustment for equity
accounted investments
Total Iron Ore statutory result
Revenue
34,337
−
120
34,457
18
34,475
−
34,475
Underlying
EBITDA
26,270
−
7
26,277
1
26,278
−
26,278
D&A
1,959
−
25
1,984
−
1,984
−
1,984
Underlying
EBIT
Net operating
assets
Capital
expenditure
Exploration
gross1
Exploration
to profit
24,311
−
(18)
24,293
1
24,294
−
24,294
21,289
(2,794)
168
18,663
−
18,663
−
18,663
2,186
−
2
2,188
−
2,188
−
2,188
100
−
100
55
−
55
Includes US$41 million of capitalised exploration (FY2021: US$45 million).
1
2 Samarco is an equity accounted investment and its financial information presented above, with the exception of net operating assets, reflects BHP Billiton Brasil Ltda’s share.
All financial impacts following the Samarco dam failure have been reported as exceptional items in both reporting periods.
3 Predominantly comprises divisional activities, towage services, business development and ceased operations.
4
Includes inter-segment and external sales of contracted gas purchases.
3.3 Coal
Detailed below is financial information for our Coal assets for FY2022 and FY2021.
Year ended
30 June 2022
US$M
BHP Mitsubishi Alliance
New South Wales Energy Coal1
Colombia2
Other3,4
Total Coal from
Group production
Third-party products
Total Coal
Adjustment for equity
accounted investments5,6
Total Coal statutory result
Year ended
30 June 2021
US$M
BHP Mitsubishi Alliance
New South Wales Energy Coal1
Colombia2
Other3,4
Total Coal from
Group production
Third-party products
Total Coal
Adjustment for equity
accounted investments5,6
Total Coal statutory result
Revenue
Underlying
EBITDA
10,254
3,122
−
2,260
15,636
−
15,636
(87)
15,549
6,335
1,868
−
1,363
9,566
−
9,566
(62)
9,504
Revenue
Underlying
EBITDA
3,537
927
281
778
5,523
−
5,523
(369)
5,154
567
(87)
74
(96)
458
−
458
(170)
288
D&A
627
91
−
80
798
−
798
(27)
771
D&A
597
144
86
152
979
−
979
(114)
865
Underlying
EBIT
Net operating
assets
Capital
expenditure
Exploration
gross
Exploration
to profit
5,708
1,777
−
1,283
8,768
−
8,768
(35)
8,733
7,802
(121)
−
(31)
7,650
−
7,650
−
7,650
491
73
−
57
621
−
621
−
621
17
−
17
6
−
6
Underlying
EBIT
Net operating
assets
Capital
expenditure
Exploration
gross
Exploration
to profit
(30)
(231)
(12)
(248)
(521)
−
(521)
(56)
(577)
7,240
(289)
−
561
7,512
−
7,512
−
7,512
440
50
21
90
601
−
601
(22)
579
20
−
20
7
−
7
1 Newcastle Coal Infrastructure Group is an equity accounted investment and its financial information presented above with the exception of net operating assets reflects BHP
Group’s share.
2 On 11 January 2022, BHP completed the sale of its 33.33 per cent interest in Cerrejón to Glencore. The transaction was first announced on 28 June 2021 for a total cash
consideration of US$294 million with an effective economic date of 31 December 2020. During the year ended 30 June 2022, the Group received dividends of US$238 million
from Cerrejón, reducing completion proceeds, net of expected transaction costs at completion date. For more information refer to Financial Statements note 29 ‘Investments
accounted for using the equity method’.
3 On 3 May 2022, BHP completed the sale of its 80 per cent interest in BHP Mitsui Coal (BMC) to Stanmore SMC Holdings Pty Ltd, a wholly owned entity of Stanmore
Resources Limited (Stanmore Resources) resulting in a net after tax gain on disposal of US$840 million that has been recognised as an exceptional item. For more
information refer to Financial Statements note 3 ‘Exceptional items’. The Group’s share of BMC revenue, Underlying EBITDA, D&A, Underlying EBIT, Net operating assets
and Capital expenditure have been presented within ‘Other’.
4 Predominantly comprises BMC, divisional activities and ceased operations.
5 Total Coal statutory result revenue excludes US$ nil (FY2021: US$281 million) revenue related to Cerrejón. Total Coal statutory result Underlying EBITDA includes US$ nil
(FY2021: US$86 million) D&A and US$ nil (FY2021: US$2 million) net finance costs and taxation benefit related to Cerrejón, that are also included in Underlying EBIT.
Total Coal statutory result Capital expenditure excludes US$ nil (FY2021: US$21 million) related to Cerrejón.
6 Total Coal statutory result revenue excludes US$87 million (FY2021: US$88 million) revenue related to Newcastle Coal Infrastructure Group. Total Coal statutory result
excludes US$62 million (FY2021: US$82 million) Underlying EBITDA, US$27 million (FY2021: US$28 million) D&A and US$35 million (FY2021: US$54 million) Underlying
EBIT related to Newcastle Coal Infrastructure Group until future profits exceed accumulated losses. Total Coal Capital expenditure excludes US$ nil (FY2021: US$1 million)
related to Newcastle Coal Infrastructure Group.
BHP
Annual Report 2022
207
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review 3 Financial information by commodity continued
3.4 Other assets
Detailed below is financial information for our Other assets for FY2022 and FY2021.
Year ended
30 June 2022
US$M
Potash
Nickel West
Year ended
30 June 2021
US$M
Potash
Nickel West
Revenue
−
1,926
Underlying
EBITDA
(147)
420
Revenue
−
1,545
Underlying
EBITDA
(167)
259
D&A
2
93
D&A
2
110
Underlying
EBIT
Net operating
assets
Capital
expenditure
Exploration
gross
Exploration
to profit
(149)
327
3,570
721
376
362
−
42
−
37
Underlying
EBIT
Net operating
assets
Capital
expenditure
Exploration
gross
Exploration
to profit
(169)
149
3,073
300
268
286
−
17
−
17
4 Production
The table below details our mineral and derivative product production for all operations for the three years ended 30 June 2022, 2021 and 2020.
Unless otherwise stated, the production numbers represent our share of production and include BHP’s share of production from which profit is derived
from our equity accounted investments. Production information for equity accounted investments is included to provide insight into the operational
performance of these entities. For discussion of minerals pricing during the past three years refer to OFR 10.
BHP interest
%
BHP share of production1
Year ended 30 June
2022
2021
2020
Copper2
Payable metal in concentrate (‘000 tonnes)
Escondida, Chile3
Pampa Norte, Chile5
Antamina, Peru4
Total copper concentrate
Copper cathode (‘000 tonnes)
Escondida, Chile3
Pampa Norte, Chile5
Olympic Dam, Australia
Total copper cathode
Total copper concentrate and cathode
Lead
Payable metal in concentrate (‘000 tonnes)
Antamina, Peru4
Total lead
Zinc
Payable metal in concentrate (‘000 tonnes)
Antamina, Peru4
Total zinc
Gold
Payable metal in concentrate (‘000 ounces)
Escondida, Chile3
Pampa Norte, Chile5
Olympic Dam, Australia (refined gold)
Total gold
Silver
Payable metal in concentrate (‘000 ounces)
Escondida, Chile3
Antamina, Peru4
Pampa Norte, Chile5
Olympic Dam, Australia (refined silver)
Total silver
Uranium
Payable metal in concentrate (tonnes)
Olympic Dam, Australia
Total uranium
Molybdenum
Payable metal in concentrate (tonnes)
Antamina, Peru4
Pampa Norte, Chile5
Total molybdenum
208
BHP
Annual Report 2022
57.5
100
33.75
57.5
100
100
33.75
33.75
57.5
100
100
57.5
33.75
100
100
100
33.75
100
802.6
111.2
149.9
1,063.7
201.4
170.0
138.4
509.8
1,573.5
1.1
1.1
123.2
123.2
167.0
28.9
119.5
315.4
5,334
5,078
1,011
743
12,166
2,375
2,375
798
71
869
871.7
27.4
144.0
1,043.1
196.5
190.8
205.3
592.6
1,635.7
2.5
2.5
145.1
145.1
167.0
4.7
146.0
317.7
5,759
5,965
214
810
12,748
3,267
3,267
863
863
925.9
0
124.5
1,050.4
259.4
242.7
171.6
673.7
1,724.1
1.7
1.7
88.5
88.5
177.4
146.0
323.4
6,413
4,116
984
11,513
3,678
3,678
1,666
1,666
Iron ore
Western Australia Iron Ore
Production (‘000 tonnes)6
Newman, Australia
Area C Joint Venture, Australia
Yandi Joint Venture, Australia
Jimblebar, Australia7
Wheelarra, Australia
Total Western Australia Iron Ore
Samarco, Brazil4
Total iron ore
Coal
Metallurgical coal
Production (‘000 tonnes)8
Blackwater, Australia
Goonyella Riverside, Australia
Peak Downs, Australia
Saraji, Australia
Daunia, Australia
Caval Ridge, Australia
Total BHP Mitsubishi Alliance
South Walker Creek, Australia9
Poitrel, Australia9
Total BHP Mitsui Coal11
Total metallurgical coal
Energy coal
Production (‘000 tonnes)
New South Wales Energy Coal, Australia
Cerrejón, Colombia4
Total energy coal
Nickel
Saleable production (‘000 tonnes)
Nickel West, Australia10
Total nickel
BHP interest
%
BHP Group share of production1
Year ended 30 June
2022
2021
2020
85
85
85
85
85
50
50
50
50
50
50
50
80
80
100
33.3
100
57,041
94,431
38,922
58,782
0
249,176
4,071
253,247
5,834
8,360
4,944
4,614
1,491
3,899
29,142
4,941
2,981
7,922
37,064
13,701
4,236
17,937
63,221
52,386
68,596
67,393
0
251,596
1,938
253,534
6,224
9,448
5,892
4,489
1,928
3,903
31,884
4,887
3,854
8,741
40,625
14,326
4,964
19,290
65,641
51,499
69,262
61,754
3
248,159
–
248,159
5,545
8,765
5,783
4,963
2,170
4,349
31,575
5,415
4,128
9,543
41,118
16,052
7,115
23,167
76.8
76.8
89.0
89.0
80.1
80.1
1 BHP share of production includes the Group’s share of production for which profit is derived from our equity accounted investments, unless otherwise stated.
2 Metal production is reported on the basis of payable metal.
3 Shown on 100 per cent basis. BHP interest in saleable production is 57.5 per cent.
4 For statutory financial reporting purposes, this is an equity accounted investment. We have included production numbers from our equity accounted investments as the
level of production and operating performance from these operations impacts Underlying EBITDA of the Group. Our use of Underlying EBITDA is explained in OFR 4.3.
BHP completed the sale of its 33.3 per cent interest in Cerrejón on 11 January 2022. Production for Cerrejón reported until 31 December 2021.
Includes Cerro Colorado and Spence.
Iron ore production is reported on a wet tonnes basis.
5
6
7 Shown on 100 per cent basis. BHP interest in saleable production is 85 per cent.
8 Metallurgical coal production is reported on the basis of saleable product. Production figures include some thermal coal.
9 Shown on 100 per cent basis. BHP interest in saleable production is 80 per cent.
10 Nickel contained in matte and refined nickel metal, including briquette, powder, nickel sulphate and by-product streams.
11 BHP completed the sale of its 80 per cent interest in BHP Mitsui Coal (BMC) on 3 May 2022. Production reported until 30 April 2022.
5 Mineral Resources and Ore Reserves
Resources are the estimated quantities of material that can potentially be commercially recovered from BHP’s properties. Reserves are a subset of
resources that can be demonstrated to be able to be economically and legally extracted. In order to estimate reserves, assumptions are required about
a range of technical and economic factors, including quantities, qualities, production techniques, recovery efficiency, production and transport costs,
commodity supply and demand, commodity prices and exchange rates.
The statement of Mineral Resources and Ore Reserves presented in this Annual Report has been produced in accordance with the Australian Securities
Exchange (ASX) Listing Rules Chapter 5, December 2019 and the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves, December 2012 (JORC Code).
Predicted sales prices, based on supply and demand forecast and current and long-term historical average price trends, have been used. The Ore Reserves
tabulated are held within existing, permitted mining tenements. Mineral leases are of sufficient duration (or convey a legal right to renew for sufficient
duration) to enable all reserves on the leased properties to be mined in accordance with current production schedules. Ore Reserves may include areas
where some additional approvals remain outstanding, however it is anticipated such approvals will be obtained within the timeframe required by the current
life-of-mine schedule.
BHP
Annual Report 2022
209
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review
5 Mineral Resources and Ore Reserves continued
Declaration tables
– All Mineral Resources and Ore Reserves
presented are reported in 100 per cent terms
(unless otherwise stated) and represent
estimates as at 30 June 2022.
– Tonnes are reported as dry metric tonnes
(unless otherwise stated). All tonnes and grade/
quality information have been rounded, so small
differences may be present in the totals.
– The Measured and Indicated Mineral
Resources are inclusive of those Mineral
Resources modified to produce the
Ore Reserves.
Competent Persons
This statement is based on and fairly represents
information and supporting documentation
compiled by Competent Persons (as defined in
the JORC Code). All Competent Persons have, at
the time of reporting, sufficient experience relevant
to the style of mineralisation and type of deposit
under consideration and to the activity they are
undertaking to qualify as a Competent Person.
Each Competent Person listed is an employee
of BHP or a company in which BHP has a
controlling interest (unless otherwise stated)
and declares they have no issues that could be
perceived by investors as a material conflict of
interest in preparing the reported information.
All Competent Persons are a Member or Fellow
of the Australasian Institute of Mining and
Metallurgy (AusIMM) or the Australian Institute of
Geoscientists (AIG) or a Recognised Professional
Organisation. Each Competent Person consents
to the inclusion in this Annual Report of the
matters based on his or her information in the
form and context in which it appears.
Other reporting jurisdictions
The information contained in this document
is expected to differ from that reported to
the United States Securities and Exchange
Commission (SEC) in our annual report on
Form 20-F for the year ended 30 June 2022.
Historically, reserve reporting requirements for
SEC filings in the United States, such as those
on Form 20-F, were set forth in SEC Industry
Guide 7, with economic assumptions based
on current economic conditions that may differ
to the JORC Code’s reasonable investment
assumptions. On 31 October 2018, the SEC
amended the property disclosure requirements
for SEC-registered mining companies, such as
BHP, requiring such companies to comply with
the new rules for their first fiscal year beginning
on or after 1 January 2021. These amendments
replaced the previous requirements that were
included in Industry Guide 7.
Mineral resources and mineral reserves reporting
requirements for SEC filings in the United States
are set forth in S-K 1300. S-K 1300 requires
resources estimates to be reported exclusive of
reserves estimates and both reported only for
the portion attributable to our interest in such
resources or reserves. In addition, specific
disclosure requirements pertaining to economic
assumptions and interpretation of reasonable
prospects of economic extraction are expected
to result in further differences between the
resources and reserves estimates presented in
this document and those to be reported in in our
annual report on Form 20-F.
210
BHP
Annual Report 2022
A key difference in the estimation of our resources
and reserves pursuant to the ASX Listing
Rules and S-K 1300 are the economic inputs,
commodity prices and costs. Estimates we report
in accordance with the ASX Listing Rules and
JORC Code (2012) are based on cost forecasts
and internally generated projected long-term
commodity prices. S-K 1300 requires mineral
resources and mineral reserves estimates to be
based on a reasonable and justifiable commodity
price selected by a qualified person. Since S-K
1300 requires the disclosure of the prices used in
the estimation of mineral resources and mineral
reserves, due to commercial sensitivity regarding
the disclosure of BHP’s internally generated
projected long-term commodity prices used in
the estimation of our Mineral Resources and
Ore Reserves reported in accordance with the
ASX Listing Rules and JORC Code (2012),
the estimates reported in accordance with S-K
1300 are expected to be based on the historical
commodity prices over a timeframe relevant
for the commodity (generally three years).
In addition, the estimates reported in accordance
with S-K 1300 are expected to be based on the
historical average costs over a timeframe of
three years for production stage properties or, for
development stage properties, costs determined
from first principles.
Our resources and reserves estimates to be
reported in our annual report on Form 20-F
are therefore not directly comparable to those
presented in this document and should be
considered in relation to the differing reporting
and disclosure requirements of the jurisdiction
under which they are presented.
Assurance and verification
BHP has internal controls over our Mineral
Resources and Ore Reserves estimation efforts
that are designed to produce reasonable and
reliable estimates aligned with industry practice
and our regulatory reporting requirements.
The governance for our estimation efforts is
located at both the asset and the BHP Group
level within our Resource Centre of Excellence,
an internal assurance team independent of our
Competent Persons and BHP employees who are
responsible for the estimations. The assets provide
first-line assurance on estimates through peer
review and validation processes. The Resource
Centre of Excellence is responsible for assurance
over the processes implemented by the assets
as they relate to Mineral Resources and Ore
Reserves estimations and the compiling of the
estimates to be reported in accordance with the
ASX Listing Rules and JORC Code (2012).
Our internal controls utilise management
systems, including, but not limited to, formal
quality assurance and quality control processes,
standardised procedures, workflow processes,
data security covering record keeping, chain
of custody and data storage, supervision and
management approval, reconciliations, internal
and external reviews and audits.
Our internal requirements and standards provide
the basis for the governance over the estimation
and reporting of Mineral Resources and Ore
Reserves and provide technical guidance to all
reporting assets. These internal requirements
and standards are periodically reviewed and
updated for alignment with industry practice and
reporting regulations.
Our internal controls for exploration data, as they
relate to Mineral Resources and Ore Reserves
estimations, are managed by our operating
assets with assurance provided by the Resource
Centre of Excellence. These include procedures
and standards defining minimum requirements
of critical aspects to support exploration and
resource development programs, spatial quality
control checks on measurement points (e.g.
collar, downhole survey), quality control checks
on samples including laboratory data quality
checks, geological database audits and back-up
routines and technical peer review across the data
gathering, integration and estimation processes.
Our internal controls for Mineral Resources and
Ore Reserves estimations include, but are not
limited to:
– source data review from database extracts,
using exploratory data statistical analysis prior
to use in the estimation of mineral resources.
Identification of data to exclude, outliers and
visual checks against estimation domains
– peer reviews of the estimation inputs
based on statistical studies and estimation
parameters as applied in industry standard
estimation software
– visual and statistical validation of the
estimates against source data and where
available reconciliation to previous models,
operational models and production data
– peer review of the classification applied,
considering quantitative measures and
qualitative considerations
– peer review of assumptions applied that
convert resources to reserves
– independent audits or reviews for new or
materially changed Mineral Resources and
Ore Reserves
Operating assets manage internal risk
registers relating to uncertainties in the Mineral
Resources and Ore Reserves estimates to direct
future work programs or estimation updates.
These may include but are not limited to:
– areas of uncertainty in the estimates
impacting local interpretations
– bulk density assumptions, based on sample
test work or operational results
– metallurgical recovery assumptions, based on
test work or plant performance
– changes in commodity prices, costs and
exchange rate assumptions
– geotechnical and hydrogeological
considerations impacting on underground or
open-cut mining assumptions
– ore loss and dilution, mining selectivity and
production rate assumptions
– cut-off value changes to meet
product specifications
– changes in environmental, permitting and
social license to operate assumptions
Further to assurance activities by the assets
specifically relating to the estimation of
resources and reserves, the Resource Centre
of Excellence with subject matter experts
have developed standards and guidelines
across BHP for reviewing and documenting the
information supporting our Mineral Resources
and Ore Reserves estimates, describing the
methods used and verifying the reliability of such
estimates. These activities are supported by the
following controls:
– The reporting of Mineral Resources and
Ore Reserves estimates are required to
follow BHP’s standard procedures for
public reporting in accordance with current
regulatory requirements.
– Annual risk reviews are conducted with
Competent Persons and BHP employees
on all Mineral Resources and Ore Reserves
to be reported, including year on year
change impact assessment, reconciliation
performance metrics for the operating mines
and control assessment for the estimation
inputs. The information and supporting
documentation are prepared by the
Competent Persons relating to the estimates
and evaluated for compliance with BHP’s
internal controls. Based on these reviews,
recommendations of endorsement are
provided to our senior management for the
use and reporting of the Mineral Resources
and Ore Reserves.
– Periodic internal technical ‘deep dive’
assessments of Mineral Resources and Ore
Reserves are conducted on a frequency that
is informed by asset materiality and outcomes
of the annual risk reviews.
– Management and closure reviews of
actions assigned to Competent Persons
and BHP employees resulting from the
annual risk reviews and technical ‘deep dive’
assessments are conducted.
– Assurance is undertaken over the reporting
documentation provided by Competent
Persons for public release and management
and verification of inputs into BHP Resources
and Reserves reporting database.
The Resource Centre of Excellence also provides
an annual update on assurance activities and
changes relating to our resources and reserves
estimation efforts to the Risk and Audit Committee
(RAC) in connection with the RAC’s responsibility
over the effectiveness of systems of internal
control and risk management of BHP.
Inherent risks in the estimation
of Mineral Resources and
Ore Reserves
Estimated annual cash flows from our future
operations, estimated production schedules,
estimated capital expenditure and operating
costs, estimated site closure costs, estimated
royalty and tax costs, valuation assumptions and
interpretations of geologic data obtained from
drill holes and other exploration techniques, all of
which may not necessarily be indicative of future
results. The assumptions and interpretations
used to estimate our Mineral Resources and
Ore Reserves may change from period to
period, and, because additional geological data
generated during the course of our operations
may not be consistent with the data on which
we based our Mineral Resources and Ore
Reserves, such estimates may change from
period to period or may need to be revised.
No assurance can be given that our Mineral
Resources and Ore Reserves presented in this
Report will be recovered at the grade, quality or
quantities presented or at all.
There are numerous uncertainties inherent
in the estimation of Mineral Resources and
Ore Reserves. Areas of uncertainty that may
materially impact our Mineral Resources
and Ore Reserves estimates may include,
but are not limited to: (i) changes to long-
term commodity prices and costs, external
market factors, foreign exchange rates and
other economic assumptions; (ii) changes in
geological interpretations of mineral deposits
and geological modelling, including estimation
input parameters and techniques; (iii) changes to
metallurgical or process recovery assumptions
which adversely affect the volume, grade or
qualities of our commodities produced (for
example, processing that results in higher
deleterious elements that result in penalties) or
other changes to mining method assumptions;
(iv) changes to input assumptions used to derive
the potentially mineable shapes applicable to
the assumed underground or open-pit mining
methods used to constrain the estimates;
(v) changes to life of mine or production rate
assumptions; (vi) changes to dilution and
mining recovery assumptions; (vii) changes to
cut-off grades applied to the estimates; (viii)
changes to geotechnical (including seismicity),
structures, rock mass strength, stress regime,
hydrogeological, hydrothermal or geothermal
factors; (ix) changes to infrastructure supporting
the operations of or access to the applicable
mine site; (x) changes to mineral, surface, water
or other natural resources rights; (xi) changes
to royalty, taxes, environmental, permitting and
social license assumptions in the jurisdictions in
which we operate; and (xii) changes in capital or
operating costs.
Estimates of Mineral Resources are subject to
further exploration and evaluation of development
and operating costs, grades, recoveries and other
material factors, and, therefore, are subject to
uncertainty. Mineral resources do not meet the
threshold for Ore Reserve modifying factors, such
as engineering, legal or economic feasibility, that
would allow for the conversion to Ore Reserves.
Accordingly, no assurance can be given that our
Mineral Resources not included in Ore Reserves
will become recoverable Proved and Probable
Ore Reserves.
Competent Persons
Copper
Mineral Resources
Ore Reserves
Iron ore
Mineral Resources
Ore Reserves
Coal
Coal Resources
Coal Reserves
Escondida, Pampa Escondida, Pinta Verde and Chimborazo: R Maureira
(MAusIMM) employed by Minera Escondida Limitada
Cerro Colorado: H Matias (MAusIMM)
Spence: R Ferrer (MAusIMM)
Olympic Dam: D Clarke (MAusIMM)
Antamina: L Canchis (FAusIMM) employed by Compañía Minera Antamina S.A.
Escondida: F Barrera (MAusIMM) employed by Minera Escondida Limitada
Cerro Colorado: H Martinez (MAusIMM)
Spence: C Araya (MAusIMM)
Olympic Dam: D Tucker (MAusIMM)
Antamina: F Angeles (PEGBC) employed by Compañía Minera Antamina S.A.
WAIO: F Muller (MAusIMM)
Samarco: L Bonfioli (MAusIMM) employed by Samarco Mineração S.A.
WAIO: P K Chhajer (MAusIMM), A Greaves (MAusIMM), A McLean (MAusIMM),
C Burke (MAusIMM), A Balueva (MAusIMM)
Goonyella Complex, Red Hill, Goonyella Riverside, Broadmeadow, Nebo West,
Wards Well, Bee Creek, Poitrel and South Walker Creek: R Saha (MAusIMM)
Peak Downs, Norwich Park and Saraji South: C Williams (MAusIMM)
Caval Ridge, Blackwater and Togara South: M Godfrey (MAIG)
Daunia: B Wesley (MAusIMM)
Saraji Complex, Saraji and Saraji East: S Cutler (MAusIMM)
Mt Arthur Coal: J James (MAusIMM)
Cerrejón: D Lawrence (MAusIMM) employed by DJL Geological Consulting Limited
Goonyella Riverside, Goonyella Complex and Broadmeadow: V Grajdan
(MAusIMM) and G Sobey (MAusIMM)
Peak Downs: P Gupta (MAusIMM)
Caval Ridge: R Sharma (MAusIMM)
Saraji: N Mohtaj (MAusIMM)
Blackwater: R Campbell (MAusIMM)
Daunia: I Ferdowsi (MAusIMM)
Saraji South and Norwich Park: G Bustos (MAusIMM)
South Walker Creek and Poitrel: R Saha (MAusIMM)
Mt Arthur Coal: D Perkins (MAusIMM)
Cerrejón: D Lawrence (MAusIMM) employed by DJL Geological Consulting Limited
Potash
Mineral Resources
Ore Reserves
Nickel
Mineral Resources
Ore Reserves
Annual Report
compilation
Jansen: B Németh (MAusIMM), O Turkekul (APEGS)
Jansen: J Sondergaard (MAusIMM)
Leinster and Honeymoon Well: R Finch (MAusIMM), M Hope (MAusIMM)
Mt Keith, Cliffs, Yakabindie, Venus and Jericho: R Finch (MAusIMM)
West Jordan: M Hope (MAusIMM)
Leinster, Cliffs and Venus: C Barclay (MAusIMM)
Mt Keith and Yakabindie: C Barclay (MAusIMM), B Mullen (MAusIMM)
F Bodycoat (MAusIMM)
BHP
Annual Report 2022
211
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review Measured Resources
Indicated Resources
Inferred Resources
Total Resources
Mt
%TCu
%SCu
ppmMo
g/tAu
Mt
%TCu
%SCu
ppmMo
g/tAu
Mt %TCu
%SCu
ppmMo
g/tAu
Mt %TCu
%SCu
ppmMo
g/tAu
Mt %TCu
%SCu
ppmMo
g/tAu
90
64
5,080
68
48
78
–
18
–
92
15
700
294
109
–
–
Mt
3,300
800
Mt
205
83
–
–
0.59
0.51
0.59
0.61
0.59
0.45
–
0.65
–
0.56
0.59
0.46
0.53
0.60
–
–
%Cu
0.58
1.55
%Cu
0.83
0.82
–
–
–
–
–
0.42
0.11
–
–
0.37
–
0.10
–
–
–
–
–
–
kg/tU3O8
0.19
0.46
%Zn
0.14
1.71
–
–
–
–
–
–
–
–
–
–
–
–
90
160
–
–
–
–
g/tAu
0.32
0.61
g/tAg
7
17
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.07
–
–
–
g/tAg
1
3
ppmMo
280
80
–
–
30
51
3,750
113
97
105
–
1.6
–
8.1
0.5
746
1,150
64
23
138
Mt
3,220
750
Mt
399
213
–
–
0.54
0.47
0.51
0.62
0.58
0.41
–
0.65
–
0.40
0.48
0.44
0.55
0.53
0.50
0.50
%Cu
0.56
1.42
%Cu
0.82
0.99
–
–
–
–
–
0.44
0.12
–
–
0.42
–
0.09
–
–
–
–
–
–
kg/tU3O8
0.19
0.43
%Zn
0.14
1.80
–
–
–
–
–
–
–
–
–
–
–
–
50
130
–
–
–
–
g/tAu
0.24
0.53
g/tAg
8
17
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.10
–
–
–
g/tAg
1
3
ppmMo
260
80
–
–
Mineral Resources
Ore Reserves
As at 30 June 2021
Total Resources
0.2
0.42
0.09
897
0.39
80
2,340
10,100
6.0
25
5.6
22
29
–
–
–
1,690
5,450
3,070
15
37
82
Mt
180
Mt
607
239
256
158
0.69
0.48
0.53
0.58
0.64
0.42
0.36
–
–
–
0.44
0.54
0.45
0.59
%Cu
0.58
1.40
%Cu
0.82
1.05
1.25
1.16
0.39
0.13
–
–
–
–
–
–
–
–
–
–
–
–
–
0.20
0.39
%Zn
0.14
1.50
0.22
1.41
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
g/tAu
0.23
0.61
8
16
12
15
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
3
240
70
160
60
18,900
126
140
187
167
212
20
–
100
16
1,690
188
60
220
Mt
9,590
1,730
Mt
1,210
535
256
158
0.58
0.49
0.54
0.62
0.59
0.43
0.36
0.65
–
0.55
0.59
0.43
0.46
0.57
0.47
0.53
%Cu
0.57
1.48
%Cu
0.82
0.99
1.25
1.16
0.43
0.12
0.37
0.10
–
–
–
–
–
–
–
–
–
–
–
–
0.19
0.44
%Zn
0.14
1.65
0.22
1.41
–
–
–
–
–
–
–
–
–
–
–
–
–
–
90
120
g/tAu
0.26
0.58
8
17
12
15
0.04
6,890
0.06
BHP
interest
%
57.5
100
100
57.5
57.5
57.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
3
33.75
250
80
160
60
19,400
141
152
187
155
212
29
0.7
111
21
1,610
2,390
7,440
188
60
223
Mt
1,070
Mt
1,250
554
242
168
0.60
0.49
0.55
0.63
0.61
0.43
0.37
0.66
0.26
0.58
0.64
0.43
0.45
0.57
0.47
0.54
%Cu
0.62
1.67
%Cu
0.83
0.96
1.31
1.20
0.44
0.11
0.40
0.12
0.10
–
–
–
–
–
–
–
–
–
–
–
0.21
0.49
%Zn
0.13
1.67
0.22
1.41
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
120
g/tAu
0.28
0.64
8
16
12
17
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
3
0.05
230
70
110
50
kg/tU3O8
g/tAg
kg/tU3O8
g/tAg
kg/tU3O8
g/tAg
100
10,100
g/tAg
ppmMo
g/tAg
ppmMo
g/tAg
ppmMo
≥ 0.20%SCu
≥ 0.30%TCu
≥ 0.25%TCu or ≥0.30%TCu depending on processing
≥ 0.20%SCu
−
≥ 0.30%TCu and greater than variable cut-off (V_COG) of the
concentrator. Sulphide ore is processed in the concentrator
plants as a result of an optimised mine plan with consideration
of technical and economical parameters in order to maximise
net present value.
≥ 0.25%TCu and lower than V_COG and with >30% of copper
carried by more leachable copper minerals. Sulphide Leach
ore is processed by dump leaching as an alternative to the
concentrator process.
≥ 0.25%TCu
≥ 0.30%TCu
−
≥ 0.30%TCu
≥ 0.20%TCu or ≥ 0.30%TCu depending on processing
≥ 0.20%TCu
≥ 0.30%TCu
≥ 0.30%TCu
≥ 0.30%TCu
Variable between 0.10%Cu and 0.30%Cu
Variable between 0.60%Cu and 1.0%Cu
–
–
–
−
–
Variable between 1.0%Cu and 1.7%Cu
≥ 0.6%Cu
Copper
Mineral Resources
As at 30 June 2022
Commodity
deposit1
Copper operations
Escondida2
Cerro Colorado3
Spence4
Ore type
Oxide
Mixed
Sulphide
Oxide
Supergene Sulphide
Transitional Sulphide
Hypogene Sulphide
Oxide
Low-grade Oxide
Supergene Sulphide
Transitional Sulphide
Hypogene Sulphide
Copper projects
Pampa Escondida5
Pinta Verde
Sulphide
Oxide
Sulphide
Chimborazo
Sulphide
Copper uranium gold operation
Olympic Dam6
OC Sulphide
Copper zinc operation
Antamina7
UG Sulphide
Sulphide Cu only
Sulphide Cu-Zn
UG Suphide Cu only
UG Sulphide Cu-Zn
1 Cut-off criteria:
Deposit
Escondida
Ore type
Oxide
Mixed
Sulphide
≥ 0.25%TCu
≥ 0.20%TCu
≥ 0.20%TCu
≥ 0.20%TCu
≥ 0.20%TCu
≥ 0.20%TCu
Sulphide Leach
−
Cerro Colorado
Spence
Pampa Escondida
Pinta Verde
Chimborazo
Olympic Dam
Oxide & Supergene
Sulphide
Transitional Sulphide
Hypogene Sulphide
Oxide
Supergene Sulphide
Transitional Sulphide &
Hypogene Sulphide
Sulphide
Oxide & Sulphide
Sulphide
OC Sulphide
UG Sulphide
Low-grade
212
BHP
Annual Report 2022
Mineral Resources
As at 30 June 2022
Commodity
deposit1
Copper operations
Escondida2
Cerro Colorado3
Ore type
Oxide
Mixed
Sulphide
Oxide
Spence4
Oxide
Copper projects
Pampa Escondida5
Sulphide
Pinta Verde
Chimborazo
Oxide
Sulphide
Sulphide
Supergene Sulphide
Transitional Sulphide
Hypogene Sulphide
Low-grade Oxide
Supergene Sulphide
Transitional Sulphide
Hypogene Sulphide
Copper zinc operation
Antamina7
UG Sulphide
Sulphide Cu only
Sulphide Cu-Zn
UG Suphide Cu only
UG Sulphide Cu-Zn
5,080
90
64
68
48
78
18
–
–
92
15
700
294
109
–
–
Mt
800
Mt
205
83
–
–
0.59
0.51
0.59
0.61
0.59
0.45
0.65
–
–
0.56
0.59
0.46
0.53
0.60
–
–
%Cu
0.58
1.55
%Cu
0.83
0.82
–
–
0.42
0.11
0.37
0.10
–
–
–
–
–
–
–
–
–
–
–
–
0.19
0.46
%Zn
0.14
1.71
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
90
160
g/tAu
0.32
0.61
g/tAg
7
17
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
3
–
–
ppmMo
280
80
30
51
3,750
113
97
105
1.6
–
–
8.1
0.5
746
64
23
138
Mt
750
Mt
399
213
–
–
3,220
0.54
0.47
0.51
0.62
0.58
0.41
0.65
–
–
0.40
0.48
0.44
0.55
0.53
0.50
0.50
%Cu
0.56
1.42
%Cu
0.82
0.99
–
–
0.44
0.12
0.42
0.09
–
–
–
–
–
–
–
–
–
–
–
–
0.19
0.43
%Zn
0.14
1.80
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
50
130
g/tAu
0.24
0.53
g/tAg
8
17
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
3
–
–
ppmMo
260
80
0.07
1,150
0.10
Copper uranium gold operation
Olympic Dam6
OC Sulphide
3,300
kg/tU3O8
g/tAg
kg/tU3O8
g/tAg
Measured Resources
Indicated Resources
Inferred Resources
Total Resources
Mt
%TCu
%SCu
ppmMo
g/tAu
Mt
%TCu
%SCu
ppmMo
g/tAu
Mt %TCu
%SCu
ppmMo
g/tAu
Mt %TCu
%SCu
ppmMo
g/tAu
6.0
25
10,100
5.6
22
29
1,690
–
–
0.2
–
897
5,450
15
37
82
Mt
3,070
180
Mt
607
239
256
158
0.69
0.48
0.53
0.58
0.64
0.42
0.36
–
–
0.42
–
0.39
0.44
0.54
0.45
0.59
%Cu
0.58
1.40
%Cu
0.82
1.05
1.25
1.16
–
–
–
0.39
0.13
–
–
–
–
0.09
–
–
–
–
–
–
kg/tU3O8
0.20
0.39
%Zn
0.14
1.50
0.22
1.41
–
–
–
–
–
–
–
–
–
–
–
80
–
–
–
–
g/tAu
0.23
0.61
g/tAg
8
16
12
15
–
–
–
–
–
–
–
–
–
–
–
–
0.04
–
–
–
g/tAg
1
3
ppmMo
240
70
160
60
126
140
18,900
187
167
212
1,690
20
–
100
16
2,340
6,890
188
60
220
Mt
9,590
1,730
Mt
1,210
535
256
158
0.58
0.49
0.54
0.62
0.59
0.43
0.36
0.65
–
0.55
0.59
0.43
0.46
0.57
0.47
0.53
%Cu
0.57
1.48
%Cu
0.82
0.99
1.25
1.16
–
–
–
0.43
0.12
–
–
0.37
–
0.10
–
–
–
–
–
–
kg/tU3O8
0.19
0.44
%Zn
0.14
1.65
0.22
1.41
–
–
–
–
–
–
–
–
–
–
90
120
–
–
–
–
g/tAu
0.26
0.58
g/tAg
8
17
12
15
–
–
–
–
–
–
–
–
–
–
–
–
0.06
–
–
–
g/tAg
1
3
ppmMo
250
80
160
60
BHP
interest
%
57.5
100
100
57.5
57.5
57.5
100
33.75
As at 30 June 2021
Total Resources
Mt %TCu
%SCu
ppmMo
g/tAu
141
152
19,400
187
155
212
1,610
29
0.7
111
21
2,390
7,440
188
60
223
Mt
10,100
1,070
Mt
1,250
554
242
168
0.60
0.49
0.55
0.63
0.61
0.43
0.37
0.66
0.26
0.58
0.64
0.43
0.45
0.57
0.47
0.54
%Cu
0.62
1.67
%Cu
0.83
0.96
1.31
1.20
–
–
–
0.44
0.11
–
–
0.40
0.12
0.10
–
–
–
–
–
–
kg/tU3O8
0.21
0.49
%Zn
0.13
1.67
0.22
1.41
–
–
–
–
–
–
–
–
–
–
100
120
–
–
–
–
g/tAu
0.28
0.64
g/tAg
8
16
12
17
–
–
–
–
–
–
–
–
–
–
–
–
0.05
–
–
–
g/tAg
1
3
ppmMo
230
70
110
50
Deposit
Antamina
Ore type
Sulphide Cu only
Sulphide Cu-Zn
UG Sulphide Cu only
UG Sulphide Cu-Zn
Mineral Resources
Ore Reserves
Net value per concentrator hour (US$/h) incorporating
all material revenue and cost factors and includes
metallurgical recovery (see footnote 10 for averages).
Mineralisation at the US$0/hr limit is approximately
equivalent 0.16%Cu, 2.0g/tAg, 130ppmMo with 6,815t/hr
mill throughput.
Net value per concentrator hour (US$/h) incorporating
all material revenue and cost factors and includes
metallurgical recovery (see footnote 10 for averages).
Mineralisation at the US$0/hr limit is approximately
equivalent to 0.07%Cu, 0.74%Zn, 2.9g/tAg with 6,384t/hr
mill throughput.
Net smelter return (NSR) value incorporating all material
revenue and includes metallurgical recovery. Only sub-
level stoping mining method at US$53.8/t break-even
cut-off was applied, equivalent to 0.84%Cu, 9.2g/tAg and
130ppmMo. Predicted metallurgical recoveries of 93% for
Cu, 82% for Ag and 59% for Mo.
NSR value incorporating all material revenue and includes
metallurgical recovery. Only sub-level stoping mining
method at US$53.8/t break-even cut-off was applied,
equivalent to 0.78%Cu, 1.06%Zn and 12.3g/tAg. Predicted
metallurgical recoveries of 82% for Cu, 83% for Zn and
86% for Ag.
Net value per concentrator hour (US$/h) incorporating all
material revenue and cost factors and includes metallurgical
recovery (see footnote 10 for averages). Mineralisation at the
US$6,000/hr limit is approximately equivalent to 0.16%Cu,
2.0g/tAg, 160ppmMo with 6,815t/hr mill throughput.
Net value per concentrator hour (US$/h) incorporating all
material revenue and cost factors and includes metallurgical
recovery (see footnote 10 for averages). Mineralisation at the
US$6,000/hr limit is approximately equivalent to 0.07%Cu,
0.80%Zn, 2.9g/tAg with 6,384t/hr mill throughput.
−
−
2 Escondida – The decrease in Oxide and Mixed ore types was due to depletion partially offset by an update in the resource estimate supported by additional drilling.
3 Cerro Colorado – The increase in Supergene Sulphide ore type was mainly due to an updated resource estimate supported by additional drilling and a reduction in cut-off
grade. The increase in Hypogene Sulphide ore type was mainly due to an updated resource estimate supported by additional drilling.
4 Spence – Low-grade Oxide included with Oxide ore type. The decrease in Oxide, Supergene Sulphide and Transitional ore types was mainly due to depletion.
5 Pampa Escondida – The decrease in Mineral Resources is due to an update in economic assumptions.
6 Olympic Dam – The increase in UG Sulphide ore type and an associated decrease in OC Sulphide ore type was due to a reduction in UG Sulphide ore type cut-off grade.
7 Antamina – The increase in UG Sulphide Cu-only with an associated decrease in UG Sulphide Cu-Zn ore types was due to an update in the geological interpretation
supported by additional drilling.
BHP
Annual Report 2022
213
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review Ore type
Mt
%TCu
%SCu
ppmMo
Mt
%TCu
%SCu
ppmMo
Mt
%TCu
%SCu
ppmMo
Mt
%TCu
%SCu
ppmMo
Proved Reserves
Probable Reserves
Total Reserves
Copper continued
Ore Reserves
As at 30 June 2022
Commodity
deposit1,8,9,10
Copper operations
Escondida12
Cerro Colorado11,13
Spence11,14
Oxide
Sulphide
Sulphide Leach
Oxide
Supergene Sulphide
Transitional Sulphide
Oxide
Supergene Sulphide
Transitional Sulphide
Hypogene Sulphide
Copper uranium gold operation
Olympic Dam15
UG Sulphide
Low-grade
Copper zinc operation
Antamina16
Sulphide Cu only
Sulphide Cu-Zn
129
3,160
1,420
1.7
0.8
6.0
17
91
15
704
Mt
298
–
Mt
120
48
0.58
0.70
0.42
0.36
0.51
0.50
0.67
0.56
0.59
0.46
%Cu
1.95
–
%Cu
0.93
0.88
–
–
–
0.26
0.07
–
0.38
0.10
–
–
kg/tU3O8
0.58
–
%Zn
0.15
1.91
–
–
–
–
–
–
–
–
90
160
g/tAu
0.71
–
g/tAg
7
14
g/tAg
5
−
ppmMo
360
90
53
1,750
233
0.5
0.2
0.2
0.4
8.0
0.5
702
Mt
287
42
Mt
79
63
0.52
0.57
0.40
0.31
0.44
0.45
0.59
0.40
0.48
0.44
%Cu
1.69
0.81
%Cu
0.98
0.97
–
–
–
0.20
0.12
–
0.38
0.09
–
–
kg/tU3O8
0.53
0.27
%Zn
0.17
2.01
–
–
–
–
–
–
–
–
50
130
g/tAu
0.62
0.33
g/tAg
8
15
g/tAg
4
2
ppmMo
350
80
182
4,910
1,650
1,410
2.2
1.0
6.2
17
99
16
Mt
585
42
Mt
199
111
0.56
0.65
0.42
0.35
0.50
0.50
0.67
0.55
0.59
0.45
%Cu
1.82
0.81
%Cu
0.95
0.93
–
–
–
–
–
–
0.25
0.08
0.38
0.10
0.56
0.27
%Zn
0.16
1.97
kg/tU3O8
–
–
–
–
–
–
–
–
90
150
g/tAu
0.67
0.33
g/tAg
8
14
g/tAg
5
2
ppmMo
360
80
Reserve
BHP
life
interest
(years)
%
57
57.5
1.5
100
40
100
57
100
5.9
33.75
199
5,150
1,620
1,360
7.0
6.8
11
26
112
20
Mt
413
31
Mt
222
135
As at 30 June 2021
Total Reserves
0.56
0.64
0.41
0.46
0.53
0.50
0.67
0.58
0.64
0.45
%Cu
2.04
0.83
%Cu
0.95
0.84
–
–
–
–
–
–
0.32
0.12
0.41
0.10
0.61
0.27
%Zn
0.15
2.08
kg/tU3O8
–
–
–
–
–
–
–
–
100
150
g/tAu
0.70
0.34
g/tAg
7
13
Reserve
life
(years)
58
2.3
38
40
6.7
g/tAg
5
2
ppmMo
350
70
8 Approximate drill hole spacings used to classify the reserves were:
Deposit
Escondida
Cerro Colorado
Spence
Proved Reserves
Oxide: 30m × 30m
Sulphide: 50m × 50m
Sulphide Leach: 60m × 60m
40m to 50m
Oxide: 50m × 50m
Supergene Sulphide, Transitional Sulphide & Hypogene
Sulphide: 70m × 70m
Probable Reserves
Oxide: 45m × 45m
Sulphide: 90m × 90m
Sulphide Leach: 115m × 115m
100m
100m × 100m for all ore types
35m to 70m
40m to 80m
Olympic Dam
Antamina
20m to 35m
25m to 45m
9 Ore delivered to process plant.
10 Metallurgical recoveries for the operations were:
Deposit
Escondida
Cerro Colorado
Spence
Olympic Dam
Antamina
Metallurgical recovery
Oxide: 54%
Sulphide: 85%
Sulphide Leach: 42%
Oxide: 72%
Supergene Sulphide: 78%
Oxide: 80%
Supergene Sulphide: 81%
Cu 94%, U3O8 68%, Au 70%, Ag 63%
Sulphide Cu only: Cu 93%, Zn 0%, Ag 82%, Mo 59%
Sulphide Cu-Zn: Cu 82%, Zn 83%, Ag 86%, Mo 0%
11 Metallurgical recoveries based on testwork:
Deposit
Metallurgical recovery
Cerro Colorado
Spence
Transitional Sulphide: 65%
Transitional Sulphide and Hypogene Sulphide: Cu 87%,
Mo variable depending on mineralogy
12 Escondida – The decrease in Oxide and Sulphide ore types was mainly due to depletion. Oxide and Sulphide Leach ore types contribute 12 years and 29 years respectively
to the reported reserve life.
13 Cerro Colorado – The decrease in Ore Reserves was mainly due to depletion. Reserve life is constrained by mining permit expiry in 2023.
14 Spence – The decrease in Oxide and Transitional Sulphide ore types was mainly due to depletion. The increase in Hypogene Sulphide ore type was mainly due to an update
in the resource estimate supported by additional drilling, resulting with an increase in reserve life.
15 Olympic Dam – The increase in UG Sulphide and Low-grade ore types and reserve life were due to a reduction in cut-off grade supported by mine planning studies.
16 Antamina – The decrease in Ore Reserves and reduction in reserve life was mainly due to depletion.
214
BHP
Annual Report 2022
Ore Reserves
As at 30 June 2022
Commodity
deposit1,8,9,10
Copper operations
Escondida12
Cerro Colorado11,13
Oxide
Spence11,14
Oxide
Ore type
Oxide
Sulphide
Sulphide Leach
Supergene Sulphide
Transitional Sulphide
Supergene Sulphide
Transitional Sulphide
Hypogene Sulphide
Copper uranium gold operation
Olympic Dam15
UG Sulphide
Low-grade
Copper zinc operation
Antamina16
Sulphide Cu only
Sulphide Cu-Zn
Proved Reserves
Probable Reserves
Total Reserves
Mt
%TCu
%SCu
ppmMo
Mt
%TCu
%SCu
ppmMo
Mt
%TCu
%SCu
ppmMo
129
3,160
1,420
1.7
0.8
6.0
17
91
15
704
Mt
298
–
Mt
120
48
0.58
0.70
0.42
0.36
0.51
0.50
0.67
0.56
0.59
0.46
%Cu
1.95
–
%Cu
0.93
0.88
0.26
0.07
0.38
0.10
–
–
–
–
–
–
–
%Zn
0.15
1.91
kg/tU3O8
0.58
–
–
–
–
–
–
–
–
90
160
g/tAu
0.71
–
7
14
g/tAg
5
−
360
90
g/tAg
ppmMo
53
1,750
233
0.5
0.2
0.2
0.4
8.0
0.5
702
Mt
287
42
Mt
79
63
0.52
0.57
0.40
0.31
0.44
0.45
0.59
0.40
0.48
0.44
%Cu
1.69
0.81
%Cu
0.98
0.97
–
–
–
–
–
–
0.20
0.12
0.38
0.09
0.53
0.27
%Zn
0.17
2.01
kg/tU3O8
–
–
–
–
–
–
–
–
50
130
g/tAu
0.62
0.33
g/tAg
8
15
g/tAg
4
2
ppmMo
350
80
182
4,910
1,650
2.2
1.0
6.2
17
99
16
1,410
Mt
585
42
Mt
199
111
0.56
0.65
0.42
0.35
0.50
0.50
0.67
0.55
0.59
0.45
%Cu
1.82
0.81
%Cu
0.95
0.93
–
–
–
0.25
0.08
–
0.38
0.10
–
–
kg/tU3O8
0.56
0.27
%Zn
0.16
1.97
–
–
–
–
–
–
–
–
90
150
g/tAu
0.67
0.33
g/tAg
8
14
g/tAg
5
2
ppmMo
360
80
Reserve
life
(years)
BHP
interest
%
57
57.5
1.5
100
40
100
57
100
5.9
33.75
As at 30 June 2021
Total Reserves
Mt
%TCu
%SCu
ppmMo
Reserve
life
(years)
199
5,150
1,620
7.0
6.8
11
26
112
20
1,360
Mt
413
31
Mt
222
135
0.56
0.64
0.41
0.46
0.53
0.50
0.67
0.58
0.64
0.45
%Cu
2.04
0.83
%Cu
0.95
0.84
–
–
–
0.32
0.12
–
0.41
0.10
–
–
kg/tU3O8
0.61
0.27
%Zn
0.15
2.08
–
–
–
–
–
–
–
–
100
150
g/tAu
0.70
0.34
g/tAg
7
13
g/tAg
5
2
ppmMo
350
70
58
2.3
38
40
6.7
BHP
Annual Report 2022
215
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review Iron ore
Mineral Resources
As at 30 June 2022
Commodity
deposit1,2
Iron ore operations
Australia
WAIO3,4,5,6
Brazil
Samarco7
Ore Reserves
As at 30 June 2022
Commodity
deposit
Iron ore operation
Australia
WAIO1,3,4,8,9,10,11,12,13
Ore type
Mt
%Fe
%P %SiO2 %Al2O3
%LOI
Mt
%Fe
%P %SiO2 %Al2O3
%LOI
Mt
%Fe
%P %SiO2 %Al2O3 %LOI
Mt
%Fe
%P %SiO2 %Al2O3 %LOI
Mt
%Fe
%P %SiO2 %Al2O3 %LOI
Measured Resources
Indicated Resources
Inferred Resources
Total Resources
BKM
CID
DID
MM
NIM
ROM
2,860
350
–
1,660
10
Mt
3,150
60.7
55.8
–
61.6
59.0
%Fe
39.3
0.13
0.05
–
0.07
0.08
%Pc
0.05
4.6
6.3
–
3.2
10.1
2.6
2.3
–
1.7
1.2
5.3
11.1
–
6.3
3.9
5,050
350
200
1,930
120
Mt
1,880
59.7
56.3
61.7
59.9
61.6
%Fe
37.6
0.14
0.06
0.05
0.06
0.06
%Pc
0.05
5.2
6.4
3.8
4.6
8.0
2.5
2.3
3.6
2.2
1.1
6.1
10.3
3.6
7.0
1.7
12,350
880
60
4,590
70
Mt
600
58.8
54.7
60.1
59.2
60.4
%Fe
37.2
0.14
0.06
0.06
0.07
0.05
%Pc
0.06
5.8
6.8
4.8
5.1
10.0
2.7
3.0
4.3
2.4
1.2
6.7
11.1
4.2
7.2
1.7
20,260
1,570
260
8,180
200
Mt
5,630
59.3
55.3
61.3
59.8
61.1
%Fe
38.5
0.14
0.06
0.06
0.07
0.06
%Pc
0.05
5.5
6.6
4.0
4.6
8.8
2.6
2.7
3.7
2.2
1.2
6.3
10.9
3.7
7.0
1.8
20,440
1,630
210
8,280
200
Mt
59.4
55.3
61.6
60.1
61.1
%Fe
38.3
0.14
0.06
0.06
0.07
0.06
%Pc
0.05
50
5,900
5.4
6.6
3.9
4.3
8.8
2.6
2.6
3.6
2.2
1.2
6.3
10.9
3.6
6.9
1.8
As at 30 June 2021
Total Resources
BHP
interest
%
88
Ore type
Mt
%Fe
%P %SiO2 %Al2O3
%LOI
Mt
%Fe
%P %SiO2 %Al2O3
%LOI
Mt
%Fe
%P
%SiO2
%Al2O3
%LOI
(years)
%
Mt
%Fe
%P
%SiO2
%Al2O3
%LOI
(years)
Proved Reserves
Probable Reserves
Total Reserves
Reserve
BHP
life
interest
As at 30 June 2021
Total Reserves
BKM
BKM Bene
CID
MM
1,260
–
50
750
62.4
–
56.9
62.4
0.13
–
0.05
0.06
3.2
–
5.4
2.7
2.3
–
1.6
1.5
4.6
–
11.1
6.0
1,420
–
10
1,140
61.8
–
57.7
61.2
0.13
–
0.05
0.06
3.8
–
5.0
3.4
2.3
–
1.4
1.8
4.9
–
10.6
6.6
2,680
–
60
1,900
62.1
–
57.0
61.7
0.13
–
0.05
0.06
3.6
–
5.4
3.2
2.3
–
1.6
1.7
4.7
–
11.0
6.4
16
88
2,480
30
60
1,880
62.4
59.4
57.2
61.6
0.13
0.13
0.05
0.06
3.4
7.5
5.6
3.2
2.2
3.4
1.7
1.7
4.7
2.0
10.5
6.4
Reserve
life
15
1 The Mineral Resources and Ore Reserves qualities listed refer to in situ mass percentage on a dry weight basis. Wet tonnes are reported for WAIO deposits and Samarco,
including moisture contents for WAIO: BKM – Brockman 3%, CID – Channel Iron Deposits 8%, DID – Detrital Iron Deposits 4%, MM – Marra Mamba 4%, NIM – Nimingarra
3.5% and Samarco: ROM – 6.5%.
2 A single cut-off grade was applied in WAIO per deposit ranging from 50-58%Fe with an additional threshold of <6%Al203 applied to the DID ore type. For Samarco the cut-off
grade was 22%Fe.
3 WAIO – Mineral Resources and Ore Reserves are reported on a Pilbara basis by ore type to align with our production of blended lump products which comprises BKM and
MM ore types and blended fines products including CID. This also reflects our single logistics chain and associated management system.
4 WAIO – BHP interest is reported as Pilbara Ore Reserves tonnes weighted average across all joint ventures which can vary from year to year. BHP ownership varies between
85% and 100%.
5 WAIO – The increase in DID ore type was due to updated resource estimates supported by additional drilling.
6 WAIO – Mineral Resources are restricted to areas which have been identified for inclusion based on a risk assessment, including heritage sites.
7 Samarco – The decrease in Mineral Resources is due to changes in geotechnical parameters partially offset by economic assumptions.
8 Approximate drill hole spacings used to classify the reserves were:
Deposit
WAIO
Proved Reserves
50m × 50m
Probable Reserves
150m × 50m
9 WAIO – Recovery was 100% for all ore types (tonnage basis).
10 WAIO – Iron ore is marketed for WAIO as Lump (direct blast furnace feed) and Fines (sinter plant feed).
11 WAIO – Cut-off grades used to estimate Ore Reserves range from 50–62%Fe for all material types. Ore delivered to process facility.
12 WAIO – Ore Reserves are all located on State Agreement mining leases that guarantee the right to mine. Across WAIO, State Government approvals (including
environmental and heritage clearances) are required before commencing mining operations in a particular area. Included in the Ore Reserves are select areas where one
or more approvals remain outstanding, but where, based on the technical investigations carried out as part of the mine planning process and company knowledge and
experience of the approvals process, it is expected that such approvals will be obtained as part of the normal course of business and within the time frame required by the
current mine schedule.
13 WAIO – The increase in BKM ore type and reserve life was due to an updated resource estimate and updated geotechnical parameters partially offset by depletion.
BKM Bene ore type is included in the BKM ore type.
216
BHP
Annual Report 2022
Mineral Resources
As at 30 June 2022
Commodity
deposit1,2
Iron ore operations
Australia
WAIO3,4,5,6
Brazil
Samarco7
Ore Reserves
As at 30 June 2022
Commodity
deposit
Iron ore operation
Australia
Ore type
Mt
%Fe
%P %SiO2 %Al2O3
%LOI
Mt
%Fe
%P %SiO2 %Al2O3
%LOI
Mt
%Fe
%P %SiO2 %Al2O3 %LOI
Mt
%Fe
%P %SiO2 %Al2O3 %LOI
Measured Resources
Indicated Resources
Inferred Resources
Total Resources
BHP
interest
%
As at 30 June 2021
Total Resources
Mt
%Fe
%P %SiO2 %Al2O3 %LOI
BKM
CID
DID
MM
NIM
ROM
2,860
350
–
1,660
10
Mt
3,150
60.7
55.8
–
61.6
59.0
%Fe
39.3
0.13
0.05
–
0.07
0.08
%Pc
0.05
4.6
6.3
–
3.2
10.1
2.6
2.3
–
1.7
1.2
5.3
11.1
–
6.3
3.9
5,050
350
200
1,930
120
Mt
1,880
59.7
56.3
61.7
59.9
61.6
%Fe
37.6
0.14
0.06
0.05
0.06
0.06
%Pc
0.05
5.2
6.4
3.8
4.6
8.0
2.5
2.3
3.6
2.2
1.1
6.1
10.3
3.6
7.0
1.7
12,350
880
60
4,590
70
Mt
600
58.8
54.7
60.1
59.2
60.4
%Fe
37.2
0.14
0.06
0.06
0.07
0.05
%Pc
0.06
5.8
6.8
4.8
5.1
10.0
2.7
3.0
4.3
2.4
1.2
6.7
11.1
4.2
7.2
1.7
20,260
1,570
260
8,180
200
Mt
5,630
59.3
55.3
61.3
59.8
61.1
%Fe
38.5
0.14
0.06
0.06
0.07
0.06
%Pc
0.05
5.5
6.6
4.0
4.6
8.8
2.6
2.7
3.7
2.2
1.2
6.3
10.9
3.7
7.0
1.8
88
50
20,440
1,630
210
8,280
200
Mt
5,900
59.4
55.3
61.6
60.1
61.1
%Fe
38.3
0.14
0.06
0.06
0.07
0.06
%Pc
0.05
5.4
6.6
3.9
4.3
8.8
2.6
2.6
3.6
2.2
1.2
6.3
10.9
3.6
6.9
1.8
Ore type
Mt
%Fe
%P %SiO2 %Al2O3
%LOI
Mt
%Fe
%P %SiO2 %Al2O3
%LOI
Mt
%Fe
%P
%SiO2
%Al2O3
%LOI
Proved Reserves
Probable Reserves
Total Reserves
WAIO1,3,4,8,9,10,11,12,13
BKM
BKM Bene
CID
MM
1,260
62.4
0.13
–
50
750
–
56.9
62.4
–
0.05
0.06
3.2
–
5.4
2.7
2.3
–
1.6
1.5
4.6
–
11.1
6.0
1,420
61.8
0.13
–
10
1,140
–
57.7
61.2
–
0.05
0.06
3.8
–
5.0
3.4
2.3
–
1.4
1.8
4.9
–
10.6
6.6
2,680
–
60
1,900
62.1
–
57.0
61.7
0.13
–
0.05
0.06
3.6
–
5.4
3.2
2.3
–
1.6
1.7
4.7
–
11.0
6.4
Reserve
life
(years)
BHP
interest
%
16
88
As at 30 June 2021
Total Reserves
Mt
%Fe
%P
%SiO2
%Al2O3
%LOI
2,480
30
60
1,880
62.4
59.4
57.2
61.6
0.13
0.13
0.05
0.06
3.4
7.5
5.6
3.2
2.2
3.4
1.7
1.7
4.7
2.0
10.5
6.4
Reserve
life
(years)
15
BHP
Annual Report 2022
217
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review Metallurgical coal
Coal Resources
As at 30 June 2022
Commodity
deposit1,2
Mining
method
Coal
type
Measured Resources
Indicated Resources
Inferred Resources
Total Resources
Mt
%Ash
%VM
%S
Mt
%Ash
%VM
%S
Mt
%Ash
%VM
%S
Mt
%Ash
%VM
%S
Mt
%Ash
%VM
%S
As at 30 June 2021
Total Resources
BHP
interest
%
Metallurgical coal operations
Queensland coal
CQCA JV
Goonyella Riverside
Broadmeadow3
Goonyella Complex3
Peak Downs
Caval Ridge
Saraji4
Norwich Park5
Saraji South5
Blackwater
Daunia6
BHP Mitsui Coal7
South Walker Creek
OC
UG
Poitrel
OC
Metallurgical coal projects
Queensland coal
CQCA JV
Red Hill3
Saraji East4
BHP Mitsui Coal7
Nebo West
Bee Creek
Wards Well
OC
UG
OC
UG
OC
OC
OC
OC
UG
OC
UG
OC
UG
OC
UG
OC
OC
OC
UG
OC
UG
OC
OC
UG
UG
OC
UG
OC
OC
UG
OC
Met
Met
Met
Met
Met
Met
Met
Met/Th
Met/Th
Met
Met
Met
Met
Met/Th
Met/Th
Met/PCI
Met/Th
Met/PCI
Met/PCI
Met
Met
Met
Met
Met
Anth
Met/Th
Met/PCI
Met
–
–
623
1,423
1,012
304
–
1,131
81
–
–
281
–
322
–
–
92
–
–
–
–
–
–
–
–
–
–
–
–
–
8.7
9.8
10.2
12.3
–
10.4
9.5
–
–
9.4
–
5.2
–
–
12.9
–
–
–
–
–
–
–
–
–
–
–
–
–
21.9
20.8
19.4
22.0
–
16.9
15.7
–
–
17.2
–
29.6
–
–
20.2
–
–
–
–
–
–
–
–
–
–
–
–
–
0.51
0.53
0.60
0.56
–
0.62
0.56
–
–
0.66
–
0.42
–
–
0.42
–
–
–
–
–
–
–
–
–
–
–
50
662
424
147
463
200
779
222
–
–
–
–
–
–
–
9
–
–
–
–
–
–
–
–
–
–
–
12.4
9.3
11.4
11.9
12.2
13.1
6.6
7.2
–
30.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
24.8
18.9
20.2
18.8
15.7
16.3
0.59
0.51
0.75
0.49
0.67
0.60
22.1
20.0
19.4
20.7
16.4
16.2
0.52
0.52
0.63
0.54
0.65
0.59
84
10.5
16.8
0.74
491
17.1
0.69
29.8
29.1
0.43
0.36
29.7
29.1
0.43
0.36
17.1
0.35
15.1
19.8
0.42
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
795
2,508
1,944
666
2,100
445
1,628
222
–
120
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9.0
9.7
10.5
12.1
11.0
11.7
9.7
6.0
7.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
50
50
50
50
–
50
50
50
–
–
–
–
–
–
820
1,002
1,968
681
932
–
–
–
–
–
–
465
42
222
137
–
391
298
150
1,642
25
1,686
1,637
51
71
23
–
1,313
10.5
12.1
10.8
9.1
9.8
–
–
–
–
–
–
9.8
9.7
6.0
7.2
8.1
–
10.0
10.0
8.0
12.4
9.9
10.2
8.4
10.0
9.3
8.9
–
22.8
21.9
–
–
–
–
–
–
19.4
20.7
17.6
17.6
17.2
29.7
29.1
20.8
–
14.0
13.7
24.0
19.8
19.8
15.7
13.7
7.2
15.2
20.8
–
0.53
0.53
–
–
–
–
–
–
0.64
0.54
0.66
0.70
0.69
0.43
0.36
0.36
–
0.32
0.31
0.36
0.49
0.52
0.66
0.59
0.67
0.41
0.52
–
–
–
122
423
508
216
–
506
164
–
–
126
–
528
–
–
19
–
–
–
–
–
–
–
–
–
–
–
–
–
9.3
10.3
10.4
11.9
–
11.0
11.0
–
–
9.7
–
5.5
–
–
18.8
–
–
–
–
–
–
–
–
–
–
–
–
–
22.0
19.4
19.1
20.1
–
16.0
16.3
–
–
17.2
–
29.7
–
–
18.9
–
–
–
–
–
–
–
–
–
–
–
–
–
0.53
0.54
0.63
0.56
–
0.68
0.59
–
–
0.72
–
0.44
–
–
0.43
–
–
–
–
–
–
–
–
–
–
–
Coal Reserves
≥ 0.5m seam thickness
≥ 2.0m seam thickness
≥ 0.5m seam thickness
≥ 0.3m seam thickness
≥ 0.5m seam thickness
≥ 2.0m seam thickness
≥ 0.5m seam thickness
≥ 0.3m seam thickness
≥ 2.0m seam thickness
≥ 0.3m seam thickness
1 Tonnages are reported on an in situ moisture basis. Coal qualities are for a potential product on an air-dried basis.
2 Cut-off criteria:
Deposit
Mining method
Coal Resources
Goonyella Complex OC
UG
OC
OC
Peak Downs
Caval Ridge
Saraji
Saraji South
Blackwater
Daunia
≥ 0.5m seam thickness, core yield ≥50% and <35% raw ash
≥ 2.0m seam thickness, core yield ≥50% and <35% raw ash
≥ 0.5m seam thickness and <35% raw ash
≥ 0.3m seam thickness, core yield ≥30% and <35% raw ash
≥ 0.5m seam thickness, core yield ≥50% and <35% raw ash
≥ 2.0m seam thickness, core yield ≥50% and <35% raw ash
≥ 0.5m seam thickness, core yield ≥50%
≥ 0.3m seam thickness, core yield ≥50% and <40% raw ash
≥ 2.0m seam thickness, core yield ≥50% and <40% raw ash
≥ 0.3m seam thickness, core yield ≥50% and <35% raw ash
3 Goonyella Complex – Includes Broadmeadow, Goonyella Riverside and Red Hill Coal Resources. The decrease in OC Coal Resources was due to an updated resource
estimate and depletion. The decrease in UG Coal Resources was due to changes in the mine plan.
4 Saraji Coal Resources – Includes Saraji East Coal Resources. The increase in UG Coal Resources and associated decrease in OC Coal Resources was due to a change
in mining method assumptions. Change in coal type from Met to Met/Th.
5 Saraji South – Norwich Park has been renamed to Saraji South and remained on care and maintenance.
6 Daunia – The decrease in Coal Resources was due to an update in the resource estimate. Change in coal type from Met/PCI to Met/Th.
7 Divestment of BHP Mitsui Coal completed 3 May 2022.
218
BHP
Annual Report 2022
Coal Resources
As at 30 June 2022
Queensland coal
CQCA JV
Goonyella Riverside
Broadmeadow3
Goonyella Complex3
Peak Downs
Caval Ridge
Saraji4
Norwich Park5
Saraji South5
Blackwater
Daunia6
BHP Mitsui Coal7
South Walker Creek
Poitrel
Metallurgical coal projects
Queensland coal
CQCA JV
Red Hill3
Saraji East4
BHP Mitsui Coal7
Nebo West
Bee Creek
Wards Well
OC
UG
OC
UG
OC
OC
OC
OC
UG
OC
UG
OC
UG
OC
UG
OC
OC
OC
UG
OC
OC
UG
OC
UG
OC
OC
UG
UG
Met
Met
Met
Met
Met
Met
Met
Met
Met
Met
Met
Met/Th
Met/Th
Met/Th
Met/Th
Met/PCI
Met/Th
Met/PCI
Met/PCI
Met
Met
Met
Met
Met
Anth
Met/Th
Met/PCI
Met
623
1,423
1,012
304
1,131
81
281
322
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8.7
9.8
10.2
12.3
10.4
9.5
9.4
5.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21.9
20.8
19.4
22.0
16.9
15.7
0.51
0.53
0.60
0.56
0.62
0.56
17.2
0.66
29.6
0.42
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
122
423
508
216
506
164
126
528
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9.3
10.3
10.4
11.9
11.0
11.0
9.7
5.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
22.0
19.4
19.1
20.1
16.0
16.3
0.53
0.54
0.63
0.56
0.68
0.59
17.2
0.72
29.7
0.44
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
92
12.9
20.2
0.42
19
18.8
18.9
0.43
Commodity
deposit1,2
Mining
method
Coal
type
Metallurgical coal operations
Measured Resources
Indicated Resources
Inferred Resources
Total Resources
Mt
%Ash
%VM
%S
Mt
%Ash
%VM
%S
Mt
%Ash
%VM
%S
Mt
%Ash
%VM
%S
BHP
interest
%
As at 30 June 2021
Total Resources
Mt
%Ash
%VM
%S
–
–
50
662
424
147
–
463
200
–
–
84
–
779
222
–
9
–
–
–
–
–
–
–
–
–
–
–
–
–
12.4
9.3
11.4
11.9
–
12.2
13.1
–
–
10.5
–
6.6
7.2
–
30.2
–
–
–
–
–
–
–
–
–
–
–
–
–
24.8
18.9
20.2
18.8
–
15.7
16.3
–
–
16.8
–
29.8
29.1
–
17.1
–
–
–
–
–
–
–
–
–
–
–
–
–
0.59
0.51
0.75
0.49
–
0.67
0.60
–
–
0.74
–
0.43
0.36
–
0.35
–
–
–
–
–
–
–
–
–
–
–
–
–
795
2,508
1,944
666
–
2,100
445
–
–
491
–
1,628
222
–
120
–
–
–
–
–
–
–
–
–
–
–
–
–
9.0
9.7
10.5
12.1
–
11.0
11.7
–
–
9.7
–
6.0
7.2
–
15.1
–
–
–
–
–
–
–
–
–
–
–
–
–
22.1
20.0
19.4
20.7
–
16.4
16.2
–
–
17.1
–
29.7
29.1
–
19.8
–
–
–
–
–
–
–
–
–
–
–
–
–
0.52
0.52
0.63
0.54
–
0.65
0.59
–
–
0.69
–
0.43
0.36
–
0.42
–
–
–
–
–
–
–
–
–
–
–
–
50
50
50
50
–
50
50
50
–
–
–
–
–
–
820
1,002
–
–
1,968
681
932
–
–
465
42
–
–
1,642
222
137
–
391
298
150
25
1,686
1,637
51
71
23
1,313
–
9.1
9.8
–
–
10.5
12.1
10.8
–
–
9.8
9.7
–
–
6.0
7.2
8.1
–
10.0
10.0
8.0
12.4
9.9
10.2
8.4
10.0
9.3
8.9
–
22.8
21.9
–
–
19.4
20.7
17.6
–
–
17.6
17.2
–
–
29.7
29.1
20.8
–
14.0
13.7
24.0
19.8
19.8
15.7
13.7
7.2
15.2
20.8
–
0.53
0.53
–
–
0.64
0.54
0.66
–
–
0.70
0.69
–
–
0.43
0.36
0.36
–
0.32
0.31
0.36
0.49
0.52
0.66
0.59
0.67
0.41
0.52
–
BHP
Annual Report 2022
219
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review Metallurgical coal continued
Coal Reserves
As at 30 June 2022
Commodity
deposit1,2,8,9,10,11
Mining
method
Coal
type
Proved
Reserves
Probable
Reserves
Total
Reserves
Proved Marketable Reserves
Probable Marketable Reserves
Total Marketable Reserves
Total Marketable Reserves
Mt
Mt
Mt
Mt
%Ash
%VM
%S
Mt
%Ash
%VM
%S
Mt
%Ash
%VM
%S
Mt
%Ash
%VM
%S
Reserve
life
(years)
BHP
interest
%
As at 30 June 2021
Metallurgical coal operations
Queensland coal
CQCA JV
Goonyella Riverside
Broadmeadow12
Goonyella Complex12
OC
UG
OC
UG
OC
OC
OC
OC
OC
OC
OC
OC
Peak Downs13,14
Caval Ridge15
Saraji13
Norwich Park16
Saraji South16
Blackwater13
Daunia13,17
BHP Mitsui Coal7
South Walker Creek
Poitrel
OC
OC
Met
Met
Met
Met
Met/Th
Met
Met/Th
Met
Met
Met/Th
Met/PCI
Met/Th
Met/PCI
Met
–
–
425
38
749
209
442
–
151
147
–
73
–
–
–
–
54
–
296
109
54
–
32
225
–
13
–
–
–
–
479
38
1,045
318
496
–
183
372
–
86
–
–
–
–
314
29
444
121
284
–
106
128
–
60
–
–
–
–
8.8
9.0
10.6
10.5
10.5
–
9.5
8.8
–
8.1
–
–
–
–
22.4
22.9
21.8
22.3
17.9
–
17.5
26.5
–
20.4
–
–
–
–
0.52
0.53
0.58
0.57
0.63
–
0.66
0.43
–
0.34
–
–
–
–
40
–
168
67
24
–
22
191
–
11
–
–
–
–
9.7
–
10.6
10.5
10.6
–
10.7
9.1
–
9.0
–
–
–
–
23.2
–
22.1
22.4
19.2
–
17.3
26.2
–
20.1
–
–
–
–
0.54
–
0.69
0.57
0.88
–
0.72
0.42
–
0.31
–
–
–
–
355
29
612
188
308
–
128
319
–
71
–
–
–
–
8.9
9.0
10.6
10.5
10.5
–
9.7
9.0
–
8.2
–
–
–
–
22.5
22.9
21.9
22.3
18.0
17.5
26.3
20.4
–
–
–
–
–
–
0.52
0.53
0.61
0.57
0.65
0.67
0.42
0.34
–
–
–
–
–
25
44
29
30
–
87
24
17
–
–
–
50
50
50
50
–
50
50
50
–
–
405
108
–
–
623
196
318
165
–
331
73
–
98
39
9.2
9.3
–
–
10.6
11.0
10.5
10.3
–
9.0
8.2
–
9.2
8.1
25.3
23.5
–
–
21.8
22.3
18.0
16.7
26.3
20.2
–
–
13.5
23.1
Reserve
life
(years)
31
–
38
27
31
65
–
25
16
15
8.5
0.53
0.55
–
–
0.61
0.57
0.65
0.70
0.42
0.34
–
–
0.29
0.31
8 Geophysically logged, laboratory analysed, cored drillholes with a coal sample linear recovery greater than 95% were used to classify Coal Reserves. Drillhole spacings
vary between seams and geological domains, as determined by geostatistical analysis where possible. The range of maximum drillhole spacings used to classify the Coal
Reserves were:
Deposit
Goonyella Complex
Peak Downs
Caval Ridge
Saraji
Saraji South
Blackwater
Daunia
9 Product recoveries for the operations were:
Deposit
Goonyella Complex
Peak Downs
Caval Ridge
Saraji
Blackwater
Daunia
Proved Reserves
900m to 1,300m
250m to 1,500m
500m to 1,050m
450m to 2,200m
500m to 2,650m
450m to 1,000m
550m to 950m
Product recovery
74%
59%
59%
62%
86%
83%
Probable Reserves
1,750m to 2,400m
500m to 2,500m
500m to 2,100m
800m to 4,000m
1,000m to 3,600m
900m to 1,850m
1,000m to 1,800m
10 Total Coal Reserves were at 4% moisture content when mined. Total Marketable Reserves were at a product specification moisture content (9.5-10% Goonyella Complex;
9.5% Peak Downs; 10.5% Caval Ridge; 10.1% Saraji; 10-11% Saraji South; 7.5-11.5% Blackwater; 10-10.5% Daunia) and at an air-dried quality basis for sale after the
beneficiation of the Total Coal Reserves.
11 Coal delivered to handling plant.
12 Goonyella Complex – Includes Goonyella Riverside and Broadmeadow Coal Reserves which use the same infrastructure and reserve life applies to both. The decrease in
Coal Reserves and reserve life was mainly due to changes in the mine plan and changes in modifying factors.
13 Percentage of secondary thermal products for Reserves with coal type Met/Th are: Peak Downs 6%; Saraji 1%; Blackwater 2%; Daunia 3%. Contributions may vary year
on year based on market demand.
14 Peak Downs – The increase in reserve life was due to a reduction in the nominated production rate.
15 Caval Ridge – The increase in reserve life was due to a reduction in the nominated production rate.
16 Saraji South – Norwich Park has been renamed to Saraji South and remained on care and maintenance. The decrease of Coal Reserves and reserve life was mainly due
to changes in modifying factors.
17 Daunia – The increase in reserve life was due to a reduction in the nominated production rate.
220
BHP
Annual Report 2022
Coal Reserves
As at 30 June 2022
Commodity
deposit1,2,8,9,10,11
Mining
method
Coal
type
Metallurgical coal operations
Queensland coal
CQCA JV
Goonyella Riverside
Broadmeadow12
Goonyella Complex12
Peak Downs13,14
Caval Ridge15
Saraji13
Norwich Park16
Saraji South16
Blackwater13
Daunia13,17
BHP Mitsui Coal7
South Walker Creek
Poitrel
OC
UG
OC
UG
OC
OC
OC
OC
OC
OC
OC
OC
OC
OC
Proved
Reserves
Probable
Reserves
Total
Reserves
Proved Marketable Reserves
Probable Marketable Reserves
Total Marketable Reserves
Mt
Mt
Mt
Mt
%Ash
%VM
%S
Mt
%Ash
%VM
%S
Mt
%Ash
%VM
%S
Reserve
life
(years)
BHP
interest
%
Total Marketable Reserves
Mt
%Ash
%VM
%S
Reserve
life
(years)
As at 30 June 2021
Met
Met
Met
Met
Met/Th
Met
Met/Th
Met
Met
Met/Th
Met/PCI
Met/Th
Met/PCI
Met
–
–
425
38
749
209
442
–
151
147
–
73
–
–
–
–
54
–
296
109
54
–
32
225
–
13
–
–
–
–
479
38
1,045
318
496
–
183
372
–
86
–
–
–
–
314
29
444
121
284
–
106
128
–
60
–
–
–
–
8.8
9.0
10.6
10.5
10.5
–
9.5
8.8
–
8.1
–
–
–
–
22.4
22.9
21.8
22.3
17.9
17.5
26.5
–
–
–
–
–
–
0.52
0.53
0.58
0.57
0.63
0.66
0.43
–
–
–
–
168
–
–
40
–
67
24
–
22
191
–
11
–
–
9.7
23.2
0.54
–
–
–
10.6
10.5
10.6
–
10.7
9.1
–
9.0
–
–
22.1
22.4
19.2
17.3
26.2
–
–
–
–
–
–
–
0.69
0.57
0.88
0.72
0.42
–
–
–
–
–
–
–
20.4
0.34
20.1
0.31
–
–
355
29
612
188
308
–
128
319
–
71
–
–
–
–
8.9
9.0
10.6
10.5
10.5
–
9.7
9.0
–
8.2
–
–
–
–
22.5
22.9
21.9
22.3
18.0
–
17.5
26.3
–
20.4
–
–
–
–
0.52
0.53
0.61
0.57
0.65
–
0.67
0.42
–
0.34
–
–
–
25
44
29
30
–
87
24
17
–
–
–
50
50
50
50
–
50
50
50
–
–
405
108
–
–
623
196
318
165
–
331
73
–
98
39
9.2
9.3
–
–
10.6
11.0
10.5
10.3
–
9.0
8.2
–
9.2
8.1
25.3
23.5
–
–
21.8
22.3
18.0
16.7
–
26.3
20.2
–
13.5
23.1
0.53
0.55
–
–
0.61
0.57
0.65
0.70
–
0.42
0.34
–
0.29
0.31
31
–
38
27
31
65
–
25
16
15
8.5
BHP
Annual Report 2022
221
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review Energy coal
Coal Resources
As at 30 June 2022
Commodity
deposit1,2
Mining
method
Coal
type
Energy coal operations
Australia
Mt Arthur Coal3
Colombia
Cerrejón4
Energy coal project
Australia
OC
OC
Th
Th
Togara South
UG
Th
Coal Reserves
As at 30 June 2022
Commodity
deposit
Mining
method
Coal
type
Energy coal operations
Australia
Mt Arthur Coal1,5,6,7,8,9
Colombia
Cerrejón4
OC
OC
Th
Th
Measured Resources
Indicated Resources
Inferred Resources
Total Resources
Mt
%Ash
%VM
%S KCal/kg CV
Mt
%Ash
%VM
%S KCal/kg CV
Mt
%Ash
%VM
%S KCal/kg CV
Mt
%Ash
%VM
%S KCal/kg CV
Mt
%Ash
%VM
%S KCal/kg CV
BHP
interest
%
As at 30 June 2021
Total Resources
104
19.0
29.6
0.66
6,170
–
–
–
–
–
–
–
–
–
–
51
–
19.7
29.3
0.54
6,060
8.6
23.1
28.8
0.49
5,720
164
19.4
29.5
0.62
6,110
100
3,380
20.3
30.0
0.62
6,120
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,771
4.0
34.8
0.52
6,530
1,420
13.7
29.0
0.31
6,550
201
16.1
28.5
0.32
6,270
1,620
14.0
29.0
0.31
6,510
100
1,620
14.0
29.0
0.31
6,510
Proved
Reserves
Probable
Reserves
Total
Reserves
Proved Marketable Reserves
Probable Marketable Reserves
Total Marketable Reserves
Total Marketable Reserves
As at 30 June 2021
Mt
95
–
Mt
49
–
Mt
Mt %Ash %VM
%S KCal/kg CV
Mt %Ash %VM
%S KCal/kg CV
Mt
%Ash
%VM
%S KCal/kg CV
(years)
%
Mt
%Ash
%VM
%S KCal/kg CV
144
69
15.8
30.5
0.53
5,880
36
15.8
30.4
0.53
5,880
104
15.8
30.4
0.53
5,880
15.9
30.6
0.50
5,870
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9.9
32.4
0.61
6,210
Reserve
BHP
life
interest
8
–
100
–
211
335
Reserve
life
(years)
16
13
1 Cut-off criteria:
Deposit
Mt Arthur Coal
Togara South
Coal Resources
Coal Reserves
≥ 0.3m seam thickness and ≤35% raw ash
≥ 2.0m seam thickness and ≤25% raw ash
≥ 0.3m seam thickness, ≤32%ash, ≥40% coal plant yield
−
2 Qualities are reported on an air-dried in situ basis. Tonnages are reported as in situ.
3 Mt Arthur Coal – The decrease in Coal Resources was due to an updated economic assessment.
4 Cerrejón – Divestment of Cerrejon was completed on 11 January 2022.
5 Mt Arthur Coal – Approximate drill hole spacings used to classify the reserves were:
Deposit
Proved Reserves
Probable Reserves
Mt Arthur Coal
200m to 800m (geophysical logged, ≥95% core recovery) 400m to 1,550m (geophysical logged, ≥95% core recovery)
6 Mt Arthur Coal – Overall product recovery for the operation was 74%.
7 Mt Arthur Coal – Moisture content when mined is 8.7%. Moisture content for Marketable Reserves is 9.5%.
8 Mt Arthur Coal – Coal is delivered to handling plant where it may be washed through a coal handling and preparation plant or sold as raw product.
9 Mt Arthur Coal – The decrease in Marketable Coal Reserves and reserve life was mainly due to an updated mine plan.
222
BHP
Annual Report 2022
Coal Resources
As at 30 June 2022
Commodity
deposit1,2
Mining
method
Coal
type
Energy coal operations
Australia
Mt Arthur Coal3
Colombia
Cerrejón4
Energy coal project
Australia
OC
OC
Th
Th
Coal Reserves
As at 30 June 2022
Commodity
deposit
Mining
method
Coal
type
Energy coal operations
Australia
Colombia
Cerrejón4
Th
Th
OC
–
–
Mt
95
–
–
–
Mt
49
–
51
–
–
–
–
–
–
–
Measured Resources
Indicated Resources
Inferred Resources
Total Resources
Mt
%Ash
%VM
%S KCal/kg CV
Mt
%Ash
%VM
%S KCal/kg CV
Mt
%Ash
%VM
%S KCal/kg CV
Mt
%Ash
%VM
%S KCal/kg CV
BHP
interest
%
As at 30 June 2021
Total Resources
Mt
%Ash
%VM
%S KCal/kg CV
104
19.0
29.6
0.66
6,170
19.7
29.3
0.54
6,060
8.6
23.1
28.8
0.49
5,720
164
19.4
29.5
0.62
6,110
100
3,380
20.3
30.0
0.62
6,120
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,771
4.0
34.8
0.52
6,530
Togara South
UG
Th
1,420
13.7
29.0
0.31
6,550
201
16.1
28.5
0.32
6,270
1,620
14.0
29.0
0.31
6,510
100
1,620
14.0
29.0
0.31
6,510
Proved
Reserves
Probable
Reserves
Total
Reserves
Proved Marketable Reserves
Probable Marketable Reserves
Total Marketable Reserves
Mt
Mt %Ash %VM
%S KCal/kg CV
Mt %Ash %VM
%S KCal/kg CV
Mt
%Ash
%VM
%S KCal/kg CV
Reserve
life
(years)
BHP
interest
%
Total Marketable Reserves
Mt
%Ash
%VM
%S KCal/kg CV
As at 30 June 2021
Mt Arthur Coal1,5,6,7,8,9
OC
144
69
15.8
30.5
0.53
5,880
36
15.8
30.4
0.53
5,880
104
15.8
30.4
0.53
5,880
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8
–
100
–
211
335
15.9
30.6
0.50
5,870
9.9
32.4
0.61
6,210
Reserve
life
(years)
16
13
BHP
Annual Report 2022
223
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review Other assets
Mineral Resources
As at 30 June 2022
As at 30 June 2021
Commodity
deposit
Potash
Jansen1,2,3,4,5,6
Ore Reserves
As at 30 June 2022
Commodity
deposit
Potash
Jansen1,4,5,6,7,8
Measured Resources
Indicated
Resources
Inferred Resources
Total Resources
Total Resources
Ore
type
Mt
2
O
K
%
.
l
o
s
n
I
%
O
g
M
%
2
O
K
Mt %
.
l
o
s
n
I
%
O
g
M
%
Mt
2
O
K
%
.
l
o
s
n
I
%
O
g
M
%
2
O
K
%
.
l
o
s
n
I
%
O
g
M
%
BHP
interest
%
Mt
2
O
K
%
.
l
o
s
n
I
%
O
g
M
%
Mt
LPL
5,230 25.6 7.7 0.08
−
−
−
−
1,280 25.6 7.7 0.08
6,510 25.6 7.7 0.08
100
6,510 25.6 7.7 0.08
Proved Reserves
Probable Reserves
Total Reserves
Total Reserves
Ore
type
2
O
K
Mt %
.
l
o
s
n
I
%
O
g
M
%
O
K
Mt %
2
.
l
o
s
n
I
%
O
g
M
%
2
O
K
%
.
l
o
s
n
I
%
O
g
M
%
Reserve
life
(years)
BHP
interest
%
Mt
2
O
K
%
.
l
o
s
n
I
%
O
g
M
%
Reserve
life
(years)
Mt
As at 30 June 2021
LPL
–
–
–
–
1,070 24.9 7.5 0.10
1,070 24.9 7.5 0.10
94
100
–
–
–
–
–
1 Mineral Resources and Ore Reserves are stated for the Lower Patience Lake (LPL) potash unit.
2 Mineral Resources are reported using a seam thickness of 3.96m from the top of 406 clay seam.
3 Measured Resources grade has been assigned to Inferred Resources.
4 %K2O grade is equivalent to %KCl content using a mineralogical conversion factor of 1.583.
5 %MgO is used as a measure of carnallite (KCl.MgCl2.6H2O) content where per cent carnallite equivalent = %MgO × 6.8918.
6 Tonnages are reported on an in situ moisture content basis, estimated to be 0.3%.
7 Ore Reserves are based on an expected metallurgical recovery of 92%.
8 Ore Reserves previously announced 17 August 2021.
OC Disseminated Sulphide
OC Massive Sulphide
UG Disseminated Sulphide
UG Massive Sulphide
Oxide
SP
SP Oxidised
OC Disseminated Sulphide
SP
UG Disseminated Sulphide
UG Massive Sulphide
OC Disseminated Sulphide
SP
UG Disseminated Sulphide
UG Massive Sulphide
OC Disseminated Sulphide
UG Disseminated Sulphide
UG Massive Sulphide
OC Disseminated Sulphide
OC Disseminated Sulphide
Mineral Resources
As at 30 June 2022
Commodity
deposit1
Ore type
Nickel West operations
Leinster2
Mt Keith
Cliffs3
Yakabindie4
Venus5
Nickel West Projects
Honeymoon Well
Jericho
West Jordan
Ore Reserves
As at 30 June 2022
Commodity
deposit1,6,7,8
Nickel West Operations
Leinster9,10
Mt Keith
Cliffs11
Yakabindie12
Venus13
OC
UG
SP
OC
SP
UG
OC
SP
UG
224
BHP
Annual Report 2022
As at 30 June
2021
Measured
Resources
Indicated
Resources
Inferred
Resources
Total Resources
Mt
%Ni
Mt
%Ni
Mt
%Ni
Mt
%Ni
BHP
interest
%
Total Resources
Mt
%Ni
4.1
0.25
15
0.53
–
–
–
133
3.6
–
0.66
125
4.6
1.4
0.12
–
9.1
0.35
–
–
0.72
4.4
1.9
5.0
–
–
–
0.54
0.49
–
3.6
0.58
0.60
1.3
5.8
–
0.72
6.0
–
–
77
1.0
9.9
1.9
–
–
–
67
–
6.1
1.0
106
–
6.9
0.58
138
18
0.92
–
–
0.58
4.9
1.4
5.4
–
–
–
0.52
–
0.87
3.6
0.63
–
1.3
6.5
0.62
0.75
6.4
–
–
52
0.37
3.4
1.0
5.2
–
1.9
24
–
1.7
0.46
170
–
1.7
0.36
6.5
3.8
0.17
31
43
0.64
4.7
1.3
4.1
1.8
–
1.7
0.52
–
1.0
3.6
0.61
–
0.63
6.2
0.66
0.74
6.6
0.59
0.52
133
1.6
28
3.4
5.2
–
1.9
224
3.6
7.8
2.1
401
4.6
10
1.1
144
31
1.4
31
43
0.60
4.8
1.6
5.0
1.8
–
1.7
0.53
0.49
0.90
3.6
0.61
0.60
1.2
6.3
0.62
0.74
6.3
0.59
0.52
100
100
100
100
100
100
100
100
133
1.6
28
4.2
5.2
1.5
1.9
224
3.6
7.9
2.3
414
2.1
7.7
1.2
144
31
1.4
31
43
0.60
4.8
1.6
4.6
1.8
0.76
1.7
0.53
0.49
0.89
3.6
0.61
0.59
1.7
6.3
0.62
0.74
6.3
0.59
0.52
Ore type
Mt
%Ni
Mt
%Ni
Proved Reserves
Probable
Reserves
Total Reserves Reserve
life
(years)
%Ni
Mt
As at 30 June 2021
BHP
interest
%
Total Reserves
Mt
%Ni
Reserve
life
(years)
1.9
–
–
65
2.6
–
103
4.6
–
0.63
–
–
0.57
0.52
–
0.54
0.60
–
1.5
4.6
–
19
1.0
0.51
43
–
7.6
0.63
1.7
–
0.55
0.45
2.1
0.60
–
1.4
3.4
4.6
–
84
3.6
0.51
146
4.6
7.6
0.63
1.7
–
0.57
0.49
2.1
0.56
0.60
1.4
7.0
100
15
100
3.0
18
100
100
11
100
3.4
5.0
1.5
84
3.6
1.0
172
2.1
8.6
0.63
1.6
0.76
0.57
0.49
1.9
0.56
0.59
1.5
9.0
15
3.0
16
12
Ore type
Mineral Resources
Ore Reserves
1 Cut-off criteria:
Deposit
Leinster
Mt Keith
Cliffs
Yakabindie
Venus
Honeymoon
Well
Jericho
OC
OC Disseminated
Sulphide
OC Massive
Sulphide
UG
UG Disseminated
Sulphide
UG Massive
Sulphide
Oxide
SP, SP oxidised
OC Disseminated
Sulphide
OC
SP
UG Disseminated
Sulphide
UG Massive
Sulphide
UG
OC Disseminated
Sulphide
OC
SP
UG Disseminated
Sulphide
UG Massive
Sulphide
UG
OC Disseminated
Sulphide
UG Disseminated
Sulphide
UG Massive
Sulphide
OC Disseminated
Sulphide
−
≥ 0.40%Ni
≥ 0.54%Ni
−
Stratigraphic
−
−
Variable between
stratigraphic for block
cave and ≥1.0% Ni
Stratigraphic
≥ 1.2%Ni
−
Variable between
0.35%Ni and
0.40%Ni
−
−
≥ 0.40%Ni
≥ 0.73%Ni
−
−
−
−
−
≥ 0.35%Ni
–
−
6 Approximate drill hole spacings used to classify the reserves were:
OC
UG
Deposit
Leinster
Mt Keith
Cliffs
Yakabindie
Venus
Proved Reserves
Probable Reserves
25m × 25m
25m × 25m
40m × 60m
25m × 25m (and development)
40m × 60m
25m x 25m
40m × 40m
50m × 50m
80m × 80m
50m × 50m
80m × 60m
50m x 50m
7 Ore delivered to the process plant.
8 Metallurgical recoveries for the operations were:
OC
UG
Deposit
Leinster
Mt Keith
Cliffs
Yakabindie
Venus
Metallurgical recovery
78%
88%
63%
82%
63%
88%
9 Leinster – Ore Reserves includes operations and projects.
10 Leinster – The decrease in UG and SP ore types was due to depletion. OC and UG
ore types contribute 6 years and 7 years respectively to the reported reserve life.
Stratigraphic
−
11 Cliffs – The decrease in UG ore type was due to depletion and an update in
−
≥ 0.35%Ni
−
–
Variable between
stratigraphic for sub-
level cave ring design
and ≥ 0.4% Ni
Stratigraphic
−
≥ 0.35%Ni
≥ 0.40%Ni
Stratigraphic
≥ 0.40%Ni
economic assumptions.
12 Yakabindie – The decrease in the OC ore type was due to depletion and changes
in reserve modifying factors. The increase in SP ore type was due to movement of
extracted ore onto stockpiles. Increase in reserve life was due to a decrease in the
nominated production rate.
13 Venus – The decrease in UG ore type and reserve life was due to updated
modifying factors and depletion.
≥ 1.2%Ni
−
≥ 0.35%Ni
–
−
−
≥ 0.9%Ni
−
−
−
−
−
West Jordan OC Disseminated
≥ 0.40%Ni
Sulphide
2 Leinster – The decrease in UG Massive Sulphide ore type was due to
depletion partially offset by an update in the resource estimate supported by
additional drilling.
3 Cliffs – The decrease in the UG Massive Sulphide ore type was due to depletion
offset by an update in the resource estimate supported by additional drilling.
4 Yakabindie – The increase in SP was due to movement of extracted ore
onto stockpiles.
5 Venus – The increase in UG Disseminated Sulphide ore type was due to an update
in the definition of the resource boundary to align with the mining parameters.
BHP
Annual Report 2022
225
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review
6 Major projects
The Jansen Stage 1 project was tracking to plan at the end of FY2022. We are working to bring forward Jansen Stage 1 first production to 2026 and
assessing options to accelerate Jansen Stage 2. Approximately US$740 million in capital expenditure is planned for work at Jansen Stage 1 in FY2023,
which is expected to continue to focus on civil and mechanical construction on the surface and underground, as well as equipment procurement and
port construction.
Commodity
Project and
ownership
Project scope/
capacity1
Projects completed during FY2022
Potash
Jansen Potash Project
(Canada)
100%
Projects in execution at 30 June 2022
Potash
Jansen Stage 1
(Canada)
100%
Investment to finish the excavation and lining
of the production and service shafts, and to
continue the installation of essential surface
infrastructure and utilities
Design, engineering and construction of
an underground potash mine and surface
infrastructure, with capacity to produce
4.35 Mtpa
Capital expenditure1
US$M
Date of initial
production
Progress/
comments
Budget
Target
2,972
CY2027
Completed in
June 2022
5,723
CY2027
Approved in
August 2021.
The project is
8% complete
1 Unless noted otherwise, references to capacity are on a 100 per cent basis, references to capital expenditure from subsidiaries are reported on a 100 per cent basis and
references to capital expenditure from joint operations reflects BHP’s share.
Capital and exploration expenditure (continuing operations) of US$6.1 billion in the 2022 financial year was lower than guidance of US$6.5 billion primarily
due to favourable exchange rate movements. This included maintenance expenditure of US$2.8 billion and exploration of US$256 million.
Capital and exploration expenditure of approximately US$7.6 billion and US$9.0 billion are expected for the 2023 and 2024 financial years, including
a US$0.4 billion exploration program planned in the 2023 financial year. In the medium term, capital and exploration expenditure of approximately
US$10 billion per annum on average is expected. Guidance is subject to exchange rate movements.
7 People – performance data1,2,3
Table 1 – Workforce data and diversity by region FY2022
Region
Asia
Australia
Europe
North America
South America
Total
Number and % of employees
Average number and
% of contractors2
1,544
29,368
61
467
7,770
39,210
3.9
74.9
0.2
1.2
19.8
100
2,188
20,052
10
928
17,083
40,261
5.4
49.8
<1.0
2.3
42.4
100
Table 2 – Employees by category and diversity for FY2022
Employees by gender number and %
Male %
Female
Female %
40.1
69.3
47.5
55.5
68.1
67.7
925
9,027
32
208
2,482
12,674
59.9
30.7
52.5
44.5
31.9
32.3
South
America
7,448
322
Male
619
20,341
29
259
5,288
26,536
27,489
1,224
587
27
41
29,368
Gender
Region
Employment category
Total % of Total
Male
Female
Full time
Part time
Fixed term full time
Fixed term part time
Casual
Total
36,965
1,233
943
28
41
39,210
94.3
3.1
2.4
0.1
0.1
100
25,622
581
311
6
16
26,536
11,343
652
632
22
25
12,674
Asia
1,513
3
28
1,544
Table 3 – Employees by category and diversity for FY2022
Australia
Europe North America
56
4
1
459
2
5
1
61
467
7,770
Gender
Gender %
Age group %
Category
Senior leaders
Managers
Supervising and professional
Operators and general support
Total
Total
259
1,228
16,208
21,515
39,210
Male
168
781
10,131
15,456
26,536
Female
91
447
6,077
6,059
12,674
Male %
Female %
Under 30
30-39
40-49
64.9
63.6
62.5
71.8
67.7
35.1
36.4
37.5
28.2
32.3
0.0
0.2
10.1
18
14.0
12.4
28.3
40.4
29.7
34.0
53.6
48.5
31.2
26.3
29.2
50+
34.0
23.0
18.3
26.0
22.8
1 Based on a ‘point in time’ snapshot of employees as at 30 June including employees on extended absence, which was 948 in FY2022. There is no significant seasonal
variation in employment numbers.
2 Contractor data is collected from internal surveys and the organisation systems and averages for a 10-month period.
3 Employees who left BHP via the merger of our Petroleum business with Woodside Energy Group Ltd (Woodside), which completed on 1 June 2022 (approximately
1,000 employees), or the sale of our 80 per cent interest in BHP Mitsui Coal Pty Ltd (BMC) to Stanmore Resources, which completed on 3 May 2022 (approximately
500 employees), are excluded.
226
BHP
Annual Report 2022
8 Legal proceedings
The Group is involved from time to time in legal
proceedings and governmental investigations
of a character normally incidental to our
business, including claims and pending actions
against it seeking damages, or clarification
or prosecution of legal rights and regulatory
inquiries regarding business practices.
Insurance or other indemnification protection
may offset the financial impact on the Group of a
successful claim.
This section summarises the significant legal
proceedings and investigations and associated
matters in which the Group is currently involved
or has finalised since our last Annual Report.
The timing of many of the legal proceedings
and investigations continue to be delayed or
uncertain as a result of court closures or delays
in response to the COVID-19 pandemic.
Legal proceedings relating to the failure of
the Fundão tailings dam at the Samarco iron
ore operations in Minas Gerais and Espírito
Santo (Samarco dam failure)
The Group is engaged in numerous legal
proceedings relating to the Samarco dam
failure. While there has been progress in
priority areas, such as individual compensation
and indemnification for the damage caused
by the dam failure, it is not possible at this
time to provide a range of possible outcomes
for all proceedings or a reliable estimate of
potential future exposures. There are numerous
additional lawsuits against Samarco relating to
the dam failure to which the Group is not party.
Currently, there are approximately 54 ongoing
public civil claims and 36 that are suspended.
The most significant of these proceedings are
summarised below.
R$20 billion public civil claim commenced by
the Federal Government of Brazil, states of
Espírito Santo and Minas Gerais and other
authorities (R$20 billion Public Civil claim)
On 30 November 2015, the Federal Government
of Brazil, states of Espírito Santo and Minas
Gerais and other public authorities collectively
filed a public civil claim before the 12th Federal
Court of Belo Horizonte against Samarco
and its shareholders, BHP Billiton Brasil Ltda.
(BHP Brasil) and Vale S.A. (Vale), seeking the
establishment of a fund of up to R$20 billion
(approximately US$4 billion) in aggregate for
clean-up costs and damages.
On 2 March 2016, Samarco, BHP Brasil and
Vale, entered into a Framework Agreement
with the states of Espírito Santo and Minas
Gerais and other public authorities to establish
a foundation (Fundação Renova) to develop
and execute environmental and socioeconomic
programs (Programs) to remediate and provide
compensation for damage caused by the
Samarco dam failure.
The term of the Framework Agreement is
15 years, renewable for periods of one year
successively until all obligations under the
Framework Agreement have been performed.
Under the Framework Agreement, Samarco is
responsible, as a primary obligor, for funding
Fundação Renova’s annual calendar year
budget for the duration of the Framework
Agreement. The amount of funding for each
calendar year will be dependent on the
remediation and compensation projects to be
undertaken in a particular year. To the extent that
Samarco does not meet its funding obligations
under the Framework Agreement, each of BHP
Brasil and Vale has funding obligations under the
Framework Agreement, as secondary obligors,
in proportion to its 50 per cent shareholding
in Samarco.
R$155 billion public civil claim commenced
by the Federal Public Prosecutors’ Office
(R$155 billion Federal Public Prosecutors’
Office claim)
On 3 May 2016, the Brazilian Federal Public
Prosecutors’ Office filed a public civil claim
before the 12th Federal Court of Belo Horizonte
against Samarco, BHP Brasil and Vale – as well
as 18 other public entities (which has since been
reduced to five defendants1 by the 12th Federal
Court) – seeking R$155 billion (approximately
US$30 billion) for reparation, compensation
and collective moral damages in relation to the
Samarco dam failure.
This public civil claim and the R$20 billion Public
Civil claim are broad claims that encompass the
majority of the public civil claims filed against
Samarco, BHP Brasil and Vale. For this reason,
the 12th Federal Court has suspended other
public civil claims while negotiations continue
in relation to the settlement of the R$155 billion
Federal Public Prosecutors’ Office claim.
This public civil claim was suspended for a
period of two years from the date of ratification
of the Governance Agreement (described below)
on 8 August 2018.
On 19 March 2021, the parties to the case
agreed to extend the suspension of this case
until 27 April 2021. Although the stay period
has formally elapsed, neither party has made
any filings to date, and the parties are engaged
in negotiations to seek a definitive settlement
(summarised below).
Governance Agreement
On 25 June 2018, Samarco, BHP Brasil, Vale,
the other parties to the Framework Agreement,
the Public Prosecutors’ Office2 and the Public
Defense Office3 entered into a Governance
Agreement, which settled the R$20 billion
Public Civil claim and established a process
to renegotiate the Programs over two years to
progress settlement of the R$155 billion Federal
Public Prosecutors’ Office claim.
Under the Governance Agreement, renegotiation
of the Programs will be based on certain
agreed principles, including full reparation
consistent with Brazilian law, the requirement
for a technical basis for any proposed changes,
consideration of findings from experts appointed
by Samarco, BHP Brasil and Vale, consideration
of findings from experts appointed by
prosecutors and consideration of feedback from
impacted communities.
Since early CY2021, the parties have been
engaging in negotiations to seek a definitive and
substantive settlement of claims relating to the
dam failure. The negotiations are overseen by
the President of the National Council of Justice,
as the Chief Justice of the Supreme Court in
Brazil, and are expected to continue until at
least the expected end of the term of the current
President on 31 August 2022. Outcomes of
the negotiations are highly uncertain, and it
is therefore not possible to provide a reliable
estimate of potential outcomes and there is a
risk that a negotiated outcome may be materially
higher than amounts currently reflected in the
Samarco dam failure provision. Until revisions
to the Programs are agreed, Fundação Renova
will continue to implement the Programs in
accordance with the terms of the Framework
Agreement and the Governance Agreement.
Enforcement Proceedings
Since 7 January 2020, the 12th Federal
Court of Belo Horizonte has issued several
decisions creating 13 enforcement proceedings
(Enforcement Proceedings) linked to the
R$20 billion Public Civil claim and R$155 billion
Federal Public Prosecutors’ Office claim
described above.
Issues covered by these Enforcement
Proceedings include environmental
recovery, human health risk and ecological
risk, resettlement of affected communities,
infrastructure and development, registration of
certain impacted individuals under the Programs
and indemnities for people impacted by the
dam failure, resumption of economic activities,
water supply for human consumption and hiring
of technical advisers to impacted people, and
restructuring Fundação Renova’s management
system, among other key delivery areas.
In the context of these Enforcement
Proceedings, Samarco, BHP Brasil and Vale are
seeking determinations, including, among other
things, the repealing of fishing bans ordered
by the courts or administration entities, set-off
of compensation paid against future damages
that may need to be paid, and regarding the
hiring and supervision of technical assistants to
impacted people.
In August 2020, a Simplified Indemnification
System (the Novel System) was created by the
12th Federal Court of Belo Horizonte with specific
rules designed for those who could not easily
demonstrate their status as an impacted person
based on ‘rough justice’ principles. Led by
Fundação Renova, the Novel System has, as at
the date of this Report, settled with more than
68,000 claimants who were able to prove their
damages, with approximately 66,500 claims
already having been paid.
1 Currently, solely BHP Brasil, Vale and Samarco, the Federal Government and the state of Minas Gerais are defendants.
2 The Public Prosecutors’ Office includes the Federal, State of Minas Gerais and State of Espírito Santo public prosecutors’ offices.
3 The Public Defense Office includes the Federal, State of Minas Gerais and State of Espírito Santo public defense offices.
BHP
Annual Report 2022
227
GovernanceFinancial StatementsAdditional InformationOperating and Financial Review 8 Legal proceedings continued
On 26 June 2022, the President of the Federal
Court of Appeals issued a preliminary ruling
applying to impacted persons from Naque (a city
in Minas Gerais) regarding the Novel System,
determining that its terms do not provide a
full release from damages. The amounts paid
under the Novel System should therefore be
considered as a ‘minimum indemnification’
granting a partial release from damages. For the
same reasons, it was also determined that
impacted persons should have the option to
seek legal representation when settling claims
under the Novel System, and that the Novel
System settlement agreement does not prevent
impacted persons from pursuing lawsuits in
foreign jurisdictions. On 1 July 2022, the Federal
Prosecutors filed a motion requesting the
extension of the decision to all affected areas, as
well as any settlements which have already been
paid. On 6 July 2022, BHP Brasil filed its appeal
and, as at the date of this Report, no decision
has been made.
Certain creditors of Samarco have also
requested that the JR Court appoint an examiner
and a judicial manager for Samarco. The JR
Court has not ruled on that request yet.
On 18 April 2022, certain creditors of Samarco
voted to reject the Plan in a General Meeting
of Creditors (GMC). Samarco, BHP Brasil
and Vale have challenged the votes of such
creditors and the JR Court has not ruled on such
challenge yet.
On 18 May 2022, certain creditors of Samarco
submitted an alternative plan of reorganisation
(Lenders Plan), which, among other things,
caps Samarco’s Renova funding obligations and
contemplates a change in Samarco’s control.
On the same date, the local labour unions also
filed an alternative plan with the support of
Samarco’s shareholders. Samarco, BHP Brasil
and Vale filed objections to the Lenders Plan,
which are pending. No plan of reorganisation
has been approved or confirmed.
On 30 June 2022, the 12th Federal Court of
Belo Horizonte extended the deadline for claim
applications under the Novel System from
30 June 2022 to 31 August 2022.
No BHP entity is a debtor in Samarco’s JR case.
BHP Brasil is participating in Samarco’s JR
proceeding in its capacities as a shareholder and
creditor of Samarco.
Samarco’s judicial reorganisation
United States Chapter 15 case
On 9 April 2021, Samarco filed for judicial
reorganisation (JR) with the Second Business
State Court for the Belo Horizonte District of
Minas Gerais (JR Court). The JR proceeding
seeks to enable Samarco to negotiate and
implement an orderly restructuring of its
financial indebtedness in order to establish
a sustainable financial position for Samarco,
among other things, to continue to rebuild its
operations and meet its Fundação Renova
obligations. Samarco filed for JR following
multiple enforcement actions filed by some
of Samarco’s creditors that threatened its
operations. The JR Court granted Samarco’s JR
motion on 12 April 2021 and granted a stay of
the enforcement actions.
On 10 June 2021, Samarco submitted its first
proposed Plan of Reorganisation (Plan) to the
JR Court. Certain of Samarco’s creditors have
submitted formal objections to the Plan.
On 18 August 2021, the State Prosecutor’s
Office filed an application to hold BHP Brasil
and Vale responsible for Samarco’s debt.
On 18 October 2021, certain creditors of
Samarco filed a similar application with the
same purpose. Neither application has been
decided yet.
Pursuant to the list of creditors produced by
Judicial Administrators appointed by the JR
Court, Samarco’s obligation to fund Renova
is not subject to the JR. Certain creditors
of Samarco have challenged the Judicial
Administrators’ list of creditors. Among other
things, such creditors are seeking to disallow
shareholders’ claims against Samarco and
impair Samarco’s obligation to fund Renova.
No final decision has been rendered on these
issues yet.
On 19 April 2021, Samarco filed a petition with
the US Bankruptcy Court for the Southern
District of New York seeking recognition of the
JR proceeding under Chapter 15 of the US
Bankruptcy Code. On 13 May 2021, the US
Bankruptcy Court granted recognition of the
JR proceeding as a ‘foreign main proceeding’
and accordingly stayed enforcement actions
against Samarco in US territory. No BHP entity
is a debtor in Samarco’s Chapter 15 case.
BHP Brasil is participating in Samarco’s Chapter
15 proceeding in its capacities as a shareholder
and creditor of Samarco.
Civil public actions commenced by the State
Prosecutors’ Office in the state of Minas
Gerais (Mariana CPA cases)
The State Prosecutors of Mariana have
commenced several civil public actions (CPA)
against Samarco, BHP Brasil and Vale.
On 10 December 2015, the State Prosecutors’
Office in the state of Minas Gerais filed a
CPA against Samarco, BHP Brasil and Vale
before the State Court in Mariana claiming
indemnification (amount not specified) for moral
and material damages to an unspecified group of
individuals affected by the Samarco dam failure,
including the payment of costs for housing and
social and economic assistance (CPA Mariana I).
On 2 October 2018, the parties reached a
settlement dismissing the claim, which was
ratified by the Court. Under this settlement,
Fundação Renova has reached more than 100
individual agreements with impacted families in
Mariana for the payment of damages.
228
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Annual Report 2022
In connection with CPA Mariana I, the State
Prosecutors (Minas Gerais) started enforcement
proceedings against Samarco, BHP Brasil and
Vale. There are seven enforcement proceedings
under way seeking (i) to set a deadline for
completion of resettlement of the residents of
Mariana’s districts and for fines to be imposed
for delays to resettlement; (ii) to set the final
term that will allow new households to join the
resettlement; (iii) payment of compensation
to affected individuals for delivery of houses
below standard; (iv) to guarantee access to
water sources for the families of the collective
resettlements; (v) payment of fines for
alleged delays in presenting proposals and
making payments to affected individuals; and
(vi) payment of compensation to impacted
individuals who allege that they have not yet
received compensation and a penalty for the
alleged delays in making such payments.
In addition to CPA Mariana I, the State
Prosecutors (Minas Gerais) commenced nine
other CPAs in Mariana against Samarco, BHP
Brasil, Vale and, in some cases, Fundação
Renova. The claims presented in those CPAs
are related to damages that, according to the
State Prosecutors, are not covered by CPA
Mariana I.
The remaining CPAs have either been settled
by the parties, including BHP Brasil, or the
claims to which the CPAs relate have been
dismissed (though the decisions are not yet
final). Fundação Renova is responsible for any
pending obligations set forth in the settlement
agreements relating to the CPAs.
Fundação Renova dissolution lawsuit
On 24 February 2021, the Minas Gerais State
Prosecutor filed a CPA against Samarco, BHP
Brasil, Vale and Fundação Renova seeking the
dissolution of Fundação Renova. The plaintiffs
are seeking R$10 billion (approximately
US$2 billion) for moral damages and an
injunction for the immediate intervention of
Fundação Renova was also made, alleging the
need to preserve information and documents
produced by Fundação Renova to evaluate
criminal and civil responsibilities. On 25 May
2021, the Superior Court of Justice granted
urgent relief to suspend the lawsuit. As at
the date of this Report, the Court’s decision
regarding the merits remains pending.
Civil public action commenced by the State
Prosecutors’ Office in the state of Espírito
Santo and Minas Gerais (CPA Advertising)
On 11 May 2021, Federal and State Prosecutors
(Minas Gerais and Espírito Santo) filed a
CPA against Samarco, BHP Brasil, Vale and
Fundação Renova, challenging Fundação
Renova’s advertising expenditures. The plaintiffs
requested injunctive relief for Fundação Renova
to cease advertisements and stop incurring new
expenses on advertising. The plaintiffs requested
approximately R$56 million (approximately
US$11 million) to be paid as compensation to
the communities and approximately R$28 million
(approximately US$5 million) to be spent
on execution of Fundação Renova’s socio-
economic and socio-environmental programs.
A ruling is still pending.
Civil public action commenced by
Associations concerning the use of
tanfloc for water treatment (R$120 billion
Associations claim)
On 28 October 2021, Vila Lenira Residents
Association, State of Espírito Santo Rural
Producers and Artisans Association, Colatina
Velha Neighborhood Residents Association,
and United for the Progress of Palmeiras
Neighborhood Association filed a lawsuit against
Samarco, BHP Brasil and Vale and others,
including the State of Minas Gerais, the State
of Espirito Santo and the Federal Government.
The plaintiffs allege that the defendants carried
out a clandestine study on the citizens of the
locations affected by the Fundão’s Dam Failure,
using tanfloc – a tannin-based flocculant/
coagulant – that is currently used for wastewater
treatment applications. The plaintiffs claim that
this product allegedly put the population at risk
due to its alleged experimental qualities.
The plaintiffs are seeking multiple kinds of relief
– material damage, moral damages, loss of
profits – and that the defendants should pay for
water supply in all locations where there is no
water source other than the Doce River.
On 25 July 2022, Samarco, BHP Brasil and Vale
presented their defences individually, as well as
the State of Minas Gerais, the State of Espírito
Santo and the Federal Government. The Court’s
decision is still pending.
Public civil claims currently suspended
Approximately 20 of the proceedings to which
BHP Brasil is a party are currently suspended
due to their connection with R$20 billion Public
Civil claim and R$155 billion Federal Public
Prosecutors’ Office claim. There has not yet
been a ruling in these cases.
The suspended proceedings include
proceedings commenced by the State
Prosecutors (Minas Gerais and Espírito Santo),
Public Defenders (Minas Gerais and Espírito
Santo), and the states of Minas Gerais and
Espírito Santo against Samarco, BHP Brasil,
Vale and Fundação Renova. The claims relate
to environmental remediation measures,
compensation for the impacts of the dam failure,
including moral damages, reconstruction of
properties and populations, including historical,
religious, cultural, social, environmental and
intangible heritages affected by the dam
failure, and suspension of public water supply,
among others.
Other civil proceedings in Brazil
As noted above, BHP Brasil has been named as
a defendant in numerous lawsuits relating to the
Samarco dam failure. In addition, government
inquiries and investigations relating to the
Samarco dam failure have been commenced
by numerous agencies of the Brazilian
Government and are ongoing, including criminal
investigations by the federal and state police,
and by federal prosecutors.
BHP Brasil’s potential liabilities, if any, resulting
from other pending and future claims, lawsuits
and enforcement actions relating to the Samarco
dam failure, together with the potential cost of
implementing remedies sought in the various
proceedings, cannot be reliably estimated at
this time and therefore a provision has not been
recognised and nor has any contingent liability
been quantified for these matters. Ultimately,
these could have a material adverse impact
on BHP’s business, competitive position, cash
flows, prospects, liquidity and shareholder
returns. For more information on the Samarco
dam failure refer to OFR 8.
As at June 2022, Samarco had been named as
a defendant in more than 57,000 small claims
for moral damages in which people argue their
public water service was interrupted for between
five and 10 days. BHP Brasil is a co-defendant in
more than 24,000 of these cases.
The Brazilian Code of Civil Procedure provides
that repetitive claims can be settled through a
system known as the Resolution of Repetitive
Demands Procedure (IRDR). Under the IRDR,
a court will hear a ‘pilot case’ representative of
such recurring legal matters and the judgment
in that decision will set a precedent for the
resolution of similar cases in that jurisdiction.
An IRDR has been established in Minas Gerais
and the court in the pilot case has ruled that the
mandatory parameter for resolution of claims
will be the payment of R$2,000 (approximately
US$400) per individual claim for moral damages
due to the suspension of public water supply.
Appeals before higher courts are pending
judgment. Meanwhile, Samarco has reached
settlement in more than 9,900 individual cases.
Criminal charges
On 20 October 2016, the Federal Prosecutors’
Office in Brazil filed criminal charges against
Samarco, BHP Brasil, Vale and certain of
their employees and former employees in the
Federal Court of Ponte Nova, Minas Gerais.
On 3 March 2017, BHP Brasil and the charged
employees and former employees of BHP Brasil
(Affected Individuals) filed their preliminary
defences. The Federal Court granted Habeas
Corpus petitions in favour of all eight Affected
Individuals terminating the charges against those
individuals. The Federal Prosecutors’ Office
appealed seven of the decisions with hearings
of the appeals still pending. BHP Brasil rejects
outright the charges against BHP Brasil and the
Affected Individuals and will defend the charges
and fully support each of the Affected Individuals
in their defences of the charges.
Australian class action claim
BHP Group Limited is named as a defendant in
a shareholder class action in the Federal Court
of Australia on behalf of persons who acquired
shares in BHP Group Limited on the Australian
Securities Exchange or shares in BHP Group
Plc (now known as BHP Group (UK) Ltd) on
the London Stock Exchange and Johannesburg
Stock Exchange in periods prior to the Samarco
dam failure. The amount of damages sought in
the class action is unspecified.
On 12 May 2020, BHP Group Limited filed an
application seeking declaratory relief which, if
successful, would narrow the group of claimants
in the class action. BHP Group Limited was
unsuccessful at first instance and on appeal to
the Full Court of the Federal Court of Australia.
The High Court of Australia heard an appeal
from the Full Court’s decision on 9 August 2022
and a decision is pending.
United Kingdom group action claim
BHP Group (UK) Ltd (formerly BHP Group
Plc) and BHP Group Limited are named as
defendants in group action claims for damages
that have been filed in the courts of England.
These claims have been filed on behalf of
certain individuals, governments, businesses
and communities in Brazil allegedly impacted by
the Samarco dam failure.
On 7 August 2019, the BHP parties filed a
preliminary application to strike out or stay this
action on jurisdictional and other procedural
grounds. That application was successful before
the High Court and the action was dismissed.
However, on 8 July 2022, the Court of Appeal
reversed the dismissal decision and allowed the
action to proceed in England. The BHP parties
will now seek leave to appeal the Court of
Appeal judgment to the Supreme Court.
9 Shareholder
information
9.1 History and
development
BHP Group Limited (formerly BHP Billiton
Limited, then BHP Limited and, before that,
The Broken Hill Proprietary Company Limited)
was incorporated in 1885 and is registered in
Australia with ABN 49 004 028 077. BHP Group
Plc (formerly BHP Billiton Plc, and before that
Billiton Plc) was incorporated in 1996 and is
registered in England and Wales with registration
number 3196209. Successive predecessor
entities to BHP Group Plc have operated
since 1860.
We operated under a Dual Listed Company
(DLC) structure from 29 June 2001 until
31 January 2022. Under the DLC structure, the
two parent companies, BHP Group Limited and
BHP Group Plc, operated as a single economic
entity, run by a unified Board and senior
executive management team.
On 31 January 2022, we unified our corporate
structure under BHP Group Limited, which is
now the sole parent company.
9.2 Markets
As at the date of this Annual Report, BHP Group
Limited has a primary listing on the Australian
Securities Exchange (ASX) (ticker BHP) in
Australia, a standard listing on the London Stock
Exchange (LSE) (ticker BHP), a secondary
listing on the Johannesburg Stock Exchange
(ticker BHG) and is listed on the New York Stock
Exchange (NYSE) in the United States.
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GovernanceFinancial StatementsAdditional InformationOperating and Financial Review 9 Shareholder information continued
Trading on the NYSE is in the form of American
Depositary Receipts (ADRs) evidencing
American Depositary Shares (ADSs), with each
ADS representing two ordinary shares of BHP
Group Limited. Citibank N.A. (Citibank) is the
Depositary for the ADS program. BHP Group
Limited’s ADSs have been listed for trading on
the NYSE (ticker BHP) since 28 May 1987.
9.3 Organisational
structure
From June 2001 to January 2022, BHP operated
under a Dual Listed Company structure, with
two separate parent companies (BHP Group
Limited and BHP Group Plc) and their respective
subsidiaries operating as a single unified
economic entity.
On 31 January 2022, BHP unified its Dual Listed
Company structure, following which BHP Group
Plc became a subsidiary of BHP Group Limited.
BHP Group Limited is now the ultimate BHP
parent company of all subsidiaries within the
BHP Group.
9.4 Constitution
This section sets out a summary of BHP
Group Limited’s Constitution, as well as other
related arrangements under applicable laws
and regulations.
Provisions of the Constitution of BHP Group
Limited can be amended only where such
amendment is approved by special resolution. A
‘special resolution’ is a resolution that is passed
by 75 per cent (i.e. at least three quarters) of the
votes cast by BHP shareholders entitled to vote
being in favour of the resolution.
Directors
The Board may exercise all powers of BHP,
other than those that are reserved for BHP
shareholders to exercise in a general meeting.
Power to issue securities
Under the Constitution, the Board of Directors
has the power to issue any BHP shares or
other securities (including redeemable shares)
with preferred, deferred or other special rights,
obligations or restrictions. The Board may issue
shares on any terms it considers appropriate,
provided that:
– the issue does not affect any special rights
of shareholders
– if required, the issue is approved
by shareholders
– if the issue is of a class other than ordinary
shares, the rights attaching to the class are
expressed at the date of issue
Restrictions on voting by
Directors
A Director may not vote in respect of any
contract or arrangement or any other proposal
in which they have a material personal interest
except in certain prescribed circumstances,
including (subject to applicable laws) where the
material personal interest:
– arises because the Director is a shareholder
of BHP and is held in common with the other
shareholders of BHP
230
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Annual Report 2022
– arises in relation to the Director’s
remuneration as a Director of BHP
may be elected to the Board by ordinary
resolution passed in a general meeting.
Retirement of Directors
The Board has a policy under which all Non-
executive Directors must, if they wish to remain
on the Board, seek re-election by shareholders
annually. This policy took effect from the 2011
Annual General Meetings (AGMs) and replaced
the previous system that required Non-executive
Directors to submit themselves to shareholders
for re-election at least every three years.
A Director may be removed by BHP in
accordance with applicable law and must
vacate his or her office as a Director in certain
circumstances set out in the Constitution.
There is no requirement for a Director to retire
on reaching a certain age.
Rights attaching to shares
Dividend rights
Under Australian law, dividends on shares may
be paid only if the company’s assets exceed
its liabilities immediately before the dividend
is determined and the excess is sufficient for
payment of the dividend, the payment of the
dividend is fair and reasonable to the company’s
shareholders as a whole and the payment of
the dividend does not materially prejudice the
company’s ability to pay its creditors.
The Constitution provides that payment of any
dividend may be made in any manner, by any
means and in any currency determined by
the Board.
All unclaimed dividends may be invested or
otherwise used by the Board for the benefit of
BHP Group Limited until claimed or otherwise
disposed of according to law. BHP Group Limited
is governed by the Victorian unclaimed monies
legislation, which requires BHP Group Limited to
pay to the State Revenue Office any unclaimed
dividend payments of A$20 or more that have
remained unclaimed for over 12 months.
Voting rights
For the purposes of determining which
shareholders are entitled to attend or vote at a
meeting of BHP Group Limited, and how many
votes such shareholder may cast, the Notice of
Meeting will specify when a shareholder must be
entered on the Register of Shareholders in order
to have the right to attend or vote at the meeting.
The specified time must be not more than 48
hours before the time of the meeting.
Shareholders who wish to appoint a proxy to
attend, vote or speak at a meeting of BHP Group
Limited on their behalf must deposit the form
appointing a proxy so that it is received not less
than 48 hours before the time of the meeting.
– relates to a contract BHP is proposing to
enter into that is subject to approval by
the shareholders and will not impose any
obligation on BHP if it is not approved by
the shareholders
– arises merely because the Director is a
guarantor or has given an indemnity or
security for all or part of a loan, or proposed
loan, to BHP
– arises merely because the Director has a right
of subrogation in relation to a guarantee or
indemnity referred to above
– relates to a contract that insures, or would
insure, the Director against liabilities the
Director incurs as an officer of BHP, but only if
the contract does not make BHP or a related
body corporate the insurer
– relates to any payment by BHP or a related
body corporate in respect of an indemnity
permitted by law, or any contract relating to
such an indemnity, or
– is in a contract, or proposed contract with,
or for the benefit of, or on behalf of, a
related body corporate and arises merely
because the Director is a director of a related
body corporate
If a Director has a material personal interest
and is not entitled to vote on a proposal, they
will not be counted in the quorum for any
vote on a resolution concerning the material
personal interest.
Loans by Directors
Any Director may lend money to BHP at interest
with or without security or may, for a commission
or profit, guarantee the repayment of any money
borrowed by BHP and underwrite or guarantee
the subscription of shares or securities of
BHP or of any corporation in which BHP may
be interested without being disqualified as a
Director and without being liable to account to
BHP for any commission or profit.
Appointment and retirement
of Directors
Appointment of Directors
The Constitution provides that a person may be
appointed as a Director of BHP by the existing
Directors of BHP or may be elected by the
shareholders in a general meeting.
Any person appointed as a Director of BHP
by the existing Directors will hold office only
until the next general meeting that includes an
election of Directors.
A person may be nominated by shareholders as
a Director of BHP if:
– a shareholder provides a valid written notice
of the nomination; and
– the person nominated by the shareholder
satisfies candidature for the office and
consents in writing to his or her nomination
as a Director,
and the nomination is provided at least 40
business days before the date of the general
meeting. The person nominated as a Director
Rights to share in BHP Group Limited’s
profits
The rights attached to the ordinary shares of
BHP Group Limited, as regards the participation
in the profits available for distribution that the
Board determines to distribute, are as follows:
– The holders of any preference shares will be
entitled, in priority to any payment of dividend
to the holders of any other class of shares,
to a preferred right to participate as regards
dividends up to but not beyond a specified
amount in distribution.
– Any surplus remaining after payment of the
distributions above will be payable to the
holders of BHP Group Limited ordinary shares
in equal amounts per share.
Rights on return of assets on liquidation
On a return of assets on liquidation of BHP
Group Limited, the assets of BHP Group
Limited remaining available for distribution
among shareholders after the payment of all
prior ranking amounts owed to all creditors and
holders of preference shares, and to all prior
ranking statutory entitlements, are to be applied
on an equal priority with any amount paid to the
holders of BHP Group Limited ordinary shares,
and any surplus remaining is to be applied in
making payments solely to the holders of BHP
Group Limited ordinary shares in accordance
with their entitlements.
Redemption of preference shares
If BHP Group Limited at any time proposes to
create and issue any preference shares, the
terms of the preference shares may give either
or both of BHP Group Limited and the holder the
right to redeem the preference shares.
The preference shares terms may also give the
holder the right to convert the preference shares
into ordinary shares.
Under the Constitution, the preference shares
must give the holders:
– the right (on redemption and on a winding-up)
to payment in cash in priority to any other
class of shares of (i) the amount paid or
agreed to be considered as paid on each of
the preference shares; and (ii) the amount, if
any, equal to the aggregate of any dividends
accrued but unpaid and of any arrears of
dividends; and
– the right, in priority to any payment of
dividend on any other class of shares, to the
preferential dividend.
Capital calls
Subject to the terms on which any shares may
have been issued, the Board may make calls on
the shareholders in respect of all monies unpaid
on their shares. BHP has a lien on every partly
paid share for all amounts payable in respect of
that share. Each shareholder is liable to pay the
amount of each call in the manner, at the time
and at the place specified by the Board (subject
to receiving at least 14 days’ notice specifying
the time and place for payment). A call is
considered to have been made at the time when
the resolution of the Board authorising the call
was passed.
Borrowing powers
Subject to relevant law, the Directors may
exercise all powers of BHP to borrow money,
and to mortgage or charge its undertaking,
property, assets (both present and future) and
all uncalled capital or any part or parts thereof
and to issue debentures and other securities,
whether outright or as collateral security for
any debt, liability or obligation of BHP or of any
third party.
Variation of class rights
Rights attached to any class of shares issued
by BHP Group Limited can only be varied where
such variation is approved by:
– the company as a special resolution; and
– the holders of the issued shares of the
affected class, either by a special resolution
passed at a separate meeting of the holders
of the issued shares of the class affected, or
with the written consent of members with at
least 75 per cent of the votes of that class.
Annual General Meetings
The Annual General Meeting (AGM) provides
a forum to facilitate the sharing of shareholder
views and is an important event in the BHP
calendar. The meeting provides an update for
shareholders on our performance and offers an
opportunity for shareholders to ask questions
and vote. To vote at an AGM, a shareholder
must be a registered holder of BHP Group
Limited shares at a designated time before the
relevant AGM.
Key members of management, including
the Chief Executive Officer (CEO) and Chief
Financial Officer, are present and available to
answer questions. The External Auditor will also
be available to answer questions.
Proceedings at shareholder meetings are
webcast live from our website. Copies of the
speeches delivered by the Chair and CEO
to the AGM are released to the relevant
stock exchanges and posted on our website.
The outcome of voting on the items of business
are released to the relevant stock exchanges
and posted on our website as soon as they are
available following completion of the AGM and
finalisation of the polls.
More information on our AGMs is available at
bhp.com/meetings.
Conditions governing general
meetings
The Board may, and must on requisition in
accordance with applicable laws, call a general
meeting of the shareholders at the time and
place or places and in the manner determined
by the Board. No shareholder may convene a
general meeting of BHP except where entitled
under law to do so. Any Director may convene
a general meeting whenever the Director thinks
fit. General meetings can also be adjourned or
cancelled, or postponed where permitted by law
or the Constitution. Notice of a general meeting
must be given to each shareholder entitled to
vote at the meeting and such notice of meeting
must be given in the form and manner in which
the Board thinks fit subject to any applicable
law. Five shareholders of the company present
in person or by proxy constitute a quorum for
a meeting. A shareholder who is entitled to
attend and cast a vote at a general meeting of
BHP may appoint a person as a proxy to attend
and vote for the shareholder in accordance
with applicable law. All provisions relating to
general meetings apply with any necessary
modifications to any special meeting of any class
of shareholders that may be held.
Limitations of rights to own
securities
There are no limitations under the Constitution
restricting the right to own BHP shares or other
securities. In addition, the Australian Foreign
Acquisitions and Takeovers Act 1975 imposes
a number of conditions that restrict foreign
ownership of Australian-based companies.
For information on share control limits
imposed by relevant laws refer to Additional
information 9.8.
Documents on display
Documents filed by BHP Group Limited on
the Australian Securities Exchange (ASX)
are available at asx.com.au and documents
filed on the London Stock Exchange (LSE)
are available at data.fca.org.uk/#/nsm/
nationalstoragemechanism. Documents filed
on the ASX or on the LSE are not incorporated
by reference into this Annual Report.
The documents referred to in this Annual Report
as being available on our website, bhp.com, are
not incorporated by reference and do not form
part of this Annual Report.
BHP Group Limited files Annual Reports and
other reports and information with the US
Securities and Exchange Commission (SEC).
These filings are available on the SEC website
at sec.gov.
9.5 Share ownership
Share capital
The details of the share capital for BHP Group
Limited are presented in Financial Statements
note 16 ‘Share capital’ and remain current as at
4 August 2022.
Major shareholders
The table in ‘Ordinary share holdings and
transactions’ in Remuneration Report 5.4
and the information set out in ‘Executive Key
Management Personnel’ in Directors’ Report
4 present information pertaining to the shares
in BHP Group Limited held by Directors and
members of the Key Management Personnel.
BHP Group Limited is not directly or indirectly
controlled by another corporation or by any
government. No shareholder possesses voting
rights that differ from those attaching to all of
BHP Group Limited’s voting securities.
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GovernanceFinancial StatementsAdditional InformationOperating and Financial Review 9 Shareholder information continued
Substantial shareholders in BHP Group Limited
The following table shows holdings of 5 per cent or more of voting rights in BHP Group Limited’s shares as notified to BHP Group Limited under the
Australian Corporations Act 2001, Section 671B as at 30 June 2022.1
Title of class
Ordinary shares
Ordinary shares
Ordinary shares
Identity of person or
group
Citigroup Global Markets
Australia Pty Limited
BlackRock Group
First Sentier Investors
Holdings Pty Limited
Date of last notice
Date received
26 April 2022
Date of change
21 April 2022
Number
owned
318,921,856.17
% of total voting
rights2
6.2999%
3 February 2022
25 January 2022
31 January 2022
21 January 2022
351,161,439
148,776,229
6.93%
5.04%
1 Between 1 July 2022 and 4 August 2022, BHP received a substantial shareholder notice from State Street Corporation on 22 July 2022, which included the following
information: date of change 20 July 2022, the number of securities owned 261,205,833 and percentage of voting rights 5.16 per cent.
2 The percentages quoted are based on the voting rights provided in the last substantial shareholders notice.
Twenty largest shareholders as at 4 August 2022 (as named on the Register of Shareholders)1
BHP Group Limited
1. HSBC Custody Nominees (Australia) Limited2
2. J P Morgan Nominees Australia Pty Limited
3. Computershare Clearing Pty Ltd
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