Bhp Group Ltd · ASX:BHP
Bhp — Investor Day (October 2022)
30 slides from Bhp's investor day presentation, Oct 3, 2022
Slide 1: Steel and iron ore market outlook
Steel and iron ore market outlook Dr Huw McKay Vice President, Market Analysis and Economics Dr Rod Dukino Vice President, Sales and Marketing Sustainability 3 October 2022
Slide 2: Disclaimer
Disclaimer Forward-looking statements This presentation contains forward-looking statements, including: statements regarding our strategy, our values and how we define success; our expectations of a competitive advantage for our business or certain products; our commitment to generating social value
Slide 3: Portfolio positively leveraged to megatrends
Portfolio positively leveraged to megatrends Low cost assets and world class resource base across a differentiated set of commodities 30/30 year growth Portfolio Population Rising living Decarbonising Electrifying Geopolitical BHP 1.5C Urbanisation growth standards power transport risk scenario Cop
Slide 4: Steel is the building block of a better world
Steel is the building block of a better world Different climate scenarios do not produce highly divergent outcomes Buildings & infrastructure Transportation & machinery Cumulative steel demand ranges and scenarios (30yr/30yr, %) 250 Traditional application 200 BHP planning range 150 100 Renewable en
Slide 5: Essential value chains have differing demand drivers
Essential value chains have differing demand drivers Each is essential to our way of life and has a distinctive relationship to economic development Food value chain Steel value chain Energy value chain Population growth and dietary change Urbanisation and industrialisation Motorisation, electrifica
Slide 6: Industry has distinctive composition in each major region
Industry has distinctive composition in each major region Heterogeneity informs our approach to long run forecasting, with emphasis on a bottom-up methodology Steel demand by broad end-use Steel supply by basic process & fleet age Steel supply by metallic mix 100% 100% 100% 75% 75% 75% 50% 50% 50% 2
Slide 7: Stock of steel per head plateaus at high income levels
Stock of steel per head plateaus at high income levels Range of end-states in terms of capital stock depth are relatively narrow, but paths to the end-state are diverse Accumulated stock of steel in use per capita (tonnes finished steel /capita) 18 2021 actuals 2050 15 2040 2030 12 2021 9 2050 6 201
Slide 8: Stock levels ultimately converge, but run rates are diverse
Stock levels ultimately converge, but run rates are diverse China’s post-plateau run-rate trajectory remains uncertain, with diverse examples from economies already at the high income level Steel production by region per head (kg) World Industrial pioneers Continental scale powers 300 800 800 600 60
Slide 9: China: a young, advanced, coastal fleet
China: a young, advanced, coastal fleet New capacity positioned to service dynamic domestic demand centres and secure competitive access to imported raw materials Cumulative steel demand ranges and scenarios Map of China steel projects (30yr/30yr, %) Newly added capacity 2018-2023 by 250 blast furna
Slide 10: India: the major growth vector for global steel
India: the major growth vector for global steel Brownfield optionality puts official targets within reach; integrated steelmaking to gain share at expense of coal-based DRI Growing steel capacity in India Cumulative steel demand ranges and scenarios (Mt) (30yr/30yr, %) 200 BF-BOF Others 150 700 100
Slide 11: South East Asia: gearing up for domestic demand
South East Asia: gearing up for domestic demand Multiple countries within the region are building up capacity at home, seeking to reduce historical import dependency Cumulative steel demand ranges and scenarios Map of SE Asia steel projects (30yr/30yr, %) Burgeoning steel capacity in SE Asia 500 (Mt
Slide 12: Steel a net beneficiary of decarbonisation & climate
Steel a net beneficiary of decarbonisation & climate Net impact of decarbonising power and physical impacts of climate change is a modest uplift in medium and long term demand Global finished steel demand in 2030 & 2050 by driver (million tonnes) We estimate a modest uplift in our base case for stee
Slide 13: Essential for the decarbonisation of power
Essential for the decarbonisation of power Steel consumption in power will triple from today with demand from wind and solar 5 times bigger Renewable energy Global steel demand from power generation Renewable power tends to require (Mt finished steel, new capacity + rebuild) more steel compared to f
Slide 14: Capital ages faster under climate extremes
Capital ages faster under climate extremes Shorter capital lifetimes and higher capital stock turnover are the intuitive outcomes of a harsher physical climate Capital ages linearly as temperatures rise … … but the relationship is more complex with respect to precipitation Capital depreciation rate1
Slide 15: Global scrap ratio to rise steadily towards "50 in 50"
Global scrap ratio to rise steadily towards “50 in 50” Global ratio will reach and surpass pre-China boom levels, as end-of-life scrap availability in China more than doubles by 2050 Global steel production and scrap consumption1 Regional scrap to steel ratio (Mt) (ratio2 %) (ratio2 %) 2,500 60 60 5
Slide 16: Iron ore range is resilient, but notably lower than steel
Iron ore range is resilient, but notably lower than steel Alternative metallics compete with primary ore in coming decades Cumulative steel and iron ore demand ranges and scenarios The evolution of contestable demand: ~2 degrees (30yr/30yr, %) (%) 250 Steel (iron ore plus other metallics) Iron ore 7
Slide 17: Low expectations of the late 2010s were not fulfilled
Low expectations of the late 2010s were not fulfilled Consensus views of iron ore industry development pre-Brumadinho were a poor predictor of actual performance Contestable demand Majors’ seaborne exports Juniors’ seaborne exports + China’s (Mt) (Mt) domestic iron ore production (Mt) +125 1,826 1,8
Slide 18: Reliability of supply is highly valuable in an uncertain world
Reliability of supply is highly valuable in an uncertain world Accurate volume guidance, delivery to specifications, competitive price realisation, durably low cost operations and attractive margins Performance versus guidance mixed across the industry 2030 – BHP projected to remain the lowest cost
Slide 19: Steel decarbonisation pathways
Steel decarbonisation pathways Dr Rod Dukino Vice President, Sales and Marketing Sustainability 3 October 2022
Slide 20: Steel decarbonisation in three stages
Steel decarbonisation in three stages Regions will transit through these stages at different rates, based on local conditions faced by steel producers Optimisation stage Transition stage Green end state Up to 20% CO2 reduction vs. BAU 30-60% CO2 reduction vs. BAU >80% CO2 reduction vs. BAU Increment
Slide 21: Multiple 'near' net zero pathways for steel industry
Multiple ‘near’ net zero pathways for steel industry Pathways for industry to be largely decarbonised through primary steel production from iron ore Emissions Intensity 2.0 1.5 1.0 0.5 0 (t-CO2/t-steel) Pathways Gas recycle 1 H2 C Non-fossil carbon Modified BF C C Fossil carbon Renewable power CCUS
Slide 22: 3% of current iron ore supply is 'EAF quality' today
3% of current iron ore supply is ‘EAF quality’ today This will drive innovation along the value chain as steel decarbonisation scenarios develop Iron ore supply curve by quality band (2022) Fe grade (%) Pellet, 68 9% 66 Lump, 15% 64 Fines+ 62 Pellet Feed, 60 76% 58 56 54 52 50 Mt 0% 5% 10% 15% 20% 2
Slide 23: Differentiated regional steel decarbonisation pathways
Differentiated regional steel decarbonisation pathways Key enablers are policy, supply of renewable power and carbon storage capacity, age and scale of blast furnace fleet Optimisation BF optimisation Gas DRI H2 DRI-EF Green & Transition Energy efficiency, material quality Scrap, Modified BF Modifie
Slide 24: BHP's Climate Transition Action Plan
BHP’s Climate Transition Action Plan A framework to discuss our strategy and engagement FY2022 385Mt 16Mt 3Mt 9Mt https://www.bhp.com/sustainability/climate-change Western Australia Iron Ore site tour 3 October 2022 24
Slide 25: Partnerships with customers and other industry leaders
Partnerships with customers and other industry leaders Looking to scale modified Blast Furnace (BF) projects, engaging research and technology providers to de-risk alternate pathways Customer Partnerships Research Ventures Partnerships with 5 key Fundamental and industrial programs in Investing in g
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Slide 27: Footnotes
Footnotes 1. Slide 3: Largest copper endowment on a contained metal basis, equity share. Peers include: Anglo American, Antofagasta, Codelco, First Quantum Minerals, Freeport, Glencore, Rio Tinto, Southern Copper and Teck. Source peers: Wood Mackenzie Ltd, Q1 2022. Source BHP data: FY2021 BHP Annual
Slide 28: Appendix
BHP Appendix
Slide 29: Our decarbonisation targets and goals are clear
Our decarbonisation targets and goals are clear To support the net zero transition, we will continue to pursue sustainable provision of our products Operations (Scopes 1 and 2) Value chain (Scope 3) FY2030 2030 Target Reduce operational greenhouse gas Electricity Shipping Goals Steelmaking. Support
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