Bhp Group Ltd · ASX:BHP
Bhp — Global Metals, Mining and Steel Conference 2019
25 slides from Bhp's conference presentation, May 14, 2019
Slide 1: Our strategy delivers value and returns
Our strategy delivers value and returns Andrew Mackenzie Chief Executive Officer 14 May 2019 Western Australia Iron Ore
Slide 2: Disclaimer
Disclaimer Forward-looking statements This presentation contains forward-looking statements, including statements which may include: trends in commodity prices and currency exchange rates; demand for commodities; plans; strategies and objectives of management; closure or divestment of certain operat
Slide 3: BHP's investment proposition
BHP’s investment proposition We have the assets, options, capabilities and discipline to sustainably grow long-term shareholder value and returns Maximise cash flow Capital discipline Value and returns Low-cost producer US$10-15 bn net debt ROCE to ~20% efficiency, technology, culture range to be ma
Slide 4: Our strategy to maximise value and returns
Our strategic framework Maximise the value of our existing portfolio Secure our future success Our strategy to maximise value and returns We aspire to have industry-leading capabilities applied to a portfolio of world-class assets in the most attractive commodities Culture and capabilities that enab
Slide 5: Social value secures our strategy
Our strategic framework Maximise the value of our existing portfolio Secure our future success Social value secures our strategy Drives transformation and the shift from social ‘licence’ to ‘value’ Social licence Social value Manage risk Create opportunity • Approach is grounded in risk management •
Slide 6: Balance sheet strength and capital allocation are critical
Our strategic framework Maximise the value of our existing portfolio Secure our future success Balance sheet strength and capital allocation are critical Our Capital Allocation Framework is transparent and embeds discipline Operating Capital productivity productivity Net operating cash flow Maintena
Slide 7: We navigate future uncertainty through scenario analysis
Our strategic framework Maximise the value of our existing portfolio Secure our future success We navigate future uncertainty through scenario analysis Maximise the value of our existing assets and optimise our portfolio to meet the evolving needs of markets Present Future portfolio portfolio Exampl
Slide 8: Our plans have delivered
Our strategic framework Maximise the value of our existing portfolio Secure our future success Our plans have delivered Our actions deliver a ~50% uplift in ROCE1 from FY16 to FY19e Transformation Returns Cost (ROCE1 excluding Onshore US, nominal %) ~5% unit cost reduction3 across our portfolio effi
Slide 9: Maximise the value of our present portfolio
Our strategic framework Maximise the value of our existing portfolio Secure our future success Maximise the value of our present portfolio Petroleum Escondida • Brownfield and major projects support average annual production • Remote Operations Centre to unlock bottlenecks and support of ~110 MMboe
Slide 10: Maximise the value of our present portfolio
Our strategic framework Maximise the value of our existing portfolio Secure our future success Maximise the value of our present portfolio Western Australia Iron Ore Queensland Coal • Phased roll-out of autonomous haul trucks to replicate • Improved equipment productivity through increased availabil
Slide 11: Transforming BHP
Our strategic framework Maximise the value of our existing portfolio Secure our future success Transforming BHP The world is undergoing significant change… we will be bolder and adapt faster to take advantage of this Transformation Current programs Outcomes World Class Functions Centres of Excellenc
Slide 12: Options provide ability to meet evolving market needs
Our strategic framework Maximise the value of our existing portfolio Secure our future success Options provide ability to meet evolving market needs Diversified across commodities, geographies and time periods Petroleum Copper Jansen Stage 1e Jansen Stage 2-4b Iron ore Canadaa Orphan Basin explorati
Slide 13: Broad suite of attractive opportunities
Our strategic framework Maximise the value of our existing portfolio Secure our future success Broad suite of attractive opportunities Comprehensive approach to evaluate and rank opportunities based on returns, risk and optionality Optionality In execution Orphan Basin Ecuador and South South Flank
Slide 14: Value and returns are at the centre of everything we do
Our strategic framework Maximise the value of our existing portfolio Secure our future success Value and returns are at the centre of everything we do Our plans deliver ROCE1 of ~20% in FY22 (at FY17 prices) and further improvement in value Returns • >10% unit cost reductions11 at bulk operations (R
Slide 15: BHP's investment proposition
BHP’s investment proposition We have the assets, options, capabilities and discipline to sustainably grow long-term shareholder value and returns Maximise cash flow Capital discipline Value and returns Low-cost producer US$10-15 bn net debt ROCE to ~20% efficiency, technology, culture range to be ma
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Slide 17: Appendix
Appendix BHP
Slide 18: Transformation – delivers significant value
Transformation – delivers significant value Increase in productivity, reduction in costs and application of technology Initiatives Value13 Timing16 Capex over Description 5-years (US$m) - BHP Operating System: piloted at Port Hedland and Perth Repair Centre WAIO ~5 years <800 - Value Chain Automatio
Slide 19: Future options – worked for value, timed for returns
Future options – worked for value, timed for returns Investment decisions made in accordance with our Capital Allocation Framework and fully consider the broader market impact Options Description Potential Capex Tollgate IRR13 Risk17 Investment considerations execution (US$m) (1-5) timing Ruby Tie b
Slide 20: Exploration – extending our conventional reserve life
Exploration – extending our conventional reserve life Investment decisions made in accordance with our Capital Allocation Framework and fully consider the broader market impact Options Location Ownership Maturity Earliest first Description Planned future activity production Trion Mexico - Gulf of 60
Slide 21: BHP guidance
BHP guidance Group FY19e Capital and exploration expenditure (US$bn) <8.0 Cash basis. FY20e: <US$8 billion. Including: Maintenance 2.1 Includes non-discretionary capital expenditure to maintain asset integrity, reduce risks and meet compliance requirements. Also includes capitalised deferred strippi
Slide 22: BHP guidance (continued)
BHP guidance (continued) Copper FY19e Medium term Copper production (kt) 1,645 – 1,740 Escondida: 1.12 – 1.18 Mt; Olympic Dam: 170 – 180 kt; Spence: 160 – 175 kt; Cerro Colorado: 60 – 70 kt; Antamina: 135 kt (zinc 85kt). Capital and exploration expenditure (US$bn) 2.9 Includes US$70 million explorat
Slide 23: BHP guidance (continued)
BHP guidance (continued) Coal FY19e Medium term Metallurgical coal production (Mt) 43 – 46 49 – 54 Energy coal production (Mt) 28 – 29 NSWEC: 18 – 19 Mt; Cerrejón: 10 Mt. Capital and exploration expenditure (US$bn) 0.6 Queensland Coal Production (Mt, 100% basis) 75 – 81 FY19 volumes expected to be t
Slide 24: Footnotes
Footnotes 1. Slides 3,8,14,15: ROCE: Represents annualised attributable profit after tax excluding exceptional items and net finance costs (after tax) divided by average capital employed. Capital employed is net assets before net debt. Presentation of future Return on Capital Employed (ROCE) does no
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