TIDMBHP

RNS Number : 8819Y

BHP Group PLC

19 January 2022

 
Release Time     IMMEDIATE 
Date             19 January 2022 
Release Number   02/22 
 

BHP OPERATIONAL REVIEW

FOR THE HALF YEARED 31 DECEMBER 2021

Note: All guidance is subject to further potential impacts from COVID-19 during the 2022 financial year.

   --    We remained fatality free at our operated assets for the third consecutive year. 

-- WAIO achieved near record production for the half year and Escondida achieved record material mined, notwithstanding the impacts of significant wet weather and the COVID-19 Omicron variant on some operations.

-- Production guidance for the 2022 financial year remains unchanged for iron ore, energy coal and nickel. Full year total copper production is trending towards the low end of the guidance range, reflecting lower production guidance for Pampa Norte. Metallurgical coal guidance has been reduced as a result of significant wet weather impacts and COVID-19 related labour constraints.

-- Full year unit cost guidance(1) for WAIO, Escondida and NSWEC remains unchanged. Unit cost guidance for Queensland Coal has been increased, reflecting lower expected volumes for the full year.

-- Progress on the review of our lower grade metallurgical coal and thermal coal assets continues. The Cerrejón divestment to Glencore completed in January 2022 and the announced share sale agreement to divest BHP Mitsui Coal ( BMC) is expected to complete in the middle of the 2022 calendar year.

-- Our potash major projects under development are tracking to plan. The Jansen shaft project is 98% complete and the Jansen Stage 1 project has commenced contract awards.

-- BHP announced a final decision to unify BHP's corporate structure under its existing Australian parent company, BHP Group Limited. Shareholder meetings to vote on unification will be held on 20 January 2022. Subject to shareholder approval and UK Court sanction, unification is expected to complete by 31 January 2022.

-- Completion of the proposed merger of our Petroleum business with Woodside is expected in the June 2022 quarter subject to satisfaction of conditions precedent including approval by Woodside shareholders. The half year financial results are being prepared on the basis that the Petroleum business is a discontinued operation and restated financial information for the year ended 30 June 2021 and the half year ended 31 December 2020 is provided in Attachment 1.

1

 
                               Dec H21        Dec Q21 
Production                   (vs Dec H20)   (vs Sep Q21)  Dec Q21 vs Sep Q21 commentary 
--------------------------  -------------  -------------  ------------------------------------------------------------------------------------------- 
Copper (kt)                         742.0          365.5  Lower volumes at Olympic Dam due to the planned smelter maintenance campaign, completed in 
                                                           January 2022. This was partially offset by higher volumes at Antamina. 
                                    (12%)           (3%) 
Iron ore (Mt)                       129.4           66.1  Higher volumes reflecting strong supply chain performance, increased ore car availability 
                                                          and the continued ramp up of South Flank. This was partially offset by the impact of tempor 
                                                          ary 
                                                          rail labour shortages due to COVID-19 related border restrictions. 
                                       1%             4% 
Metallurgical coal (Mt)(2)           17.7            8.8  Volumes flat due to double the amount of rainfall recorded in this quarter impacting most 
                                                           operations and planned maintenance in the previous quarter. 
                                     (8%)             0% 
Energy coal (Mt)(3)                   7.2            3.0  Lower volumes due to three times the amount of rainfall in this quarter impacting stripping 
                                                           and mine productivity, partially offset by mining in lower strip ratio areas. 
                                       5%          (30%) 
Nickel (kt)                          39.3           21.5  Higher volumes due to planned maintenance across the supply chain in the previous quarter. 
                                    (15%)            21% 
Discontinued operations 
Petroleum (MMboe)                    53.2           25.7  Lower volumes due to reduced seasonal gas demand at Bass Strait. This was partially offset 
                                                           by a Shenzi infill well brought online and higher production at North West Shelf . 
                                       5%           (7%) 
 

Group copper equivalent production decreased by 4%(4) in the December 2021 half year largely due to lower copper and metallurgical coal volumes.

2

Summary

BHP Chief Executive Officer, Mike Henry:

"BHP was fatality free at our operated assets for the third consecutive year. Our continuing focus on people and on operational reliability enabled us to achieve near record production in iron ore and to reduce the impacts of adverse weather and COVID-19 related labour constraints in our operations. Cost control remained strong across the business, in the face of a more inflationary environment. Unit cost guidance remains intact bar a change to metallurgical coal which is a function of the lowering of production guidance as a result of significant wet weather and in anticipation of Omicron headwinds in the early part of the second half of the financial year.

We completed major planned maintenance programs in our Iron Ore, Nickel West and Olympic Dam assets. In Nickel West, we achieved first saleable production of nickel sulphate crystals from the Kwinana plant, an exciting new addition to our product suite that will further enhance our offering into the battery electric vehicle market. The ramp-up of South Flank continues to progress well. The Spence Growth project is realising lower than expected recoveries and we are studying plant design modifications in order to lift recoveries to planned levels.

We continued to progress a number of actions related to our portfolio and corporate structure. We progressed the merger of our petroleum assets with Woodside and prepared for a shareholder vote on a unified corporate structure. We advanced the Jansen potash project and announced a share sale agreement of our interest in the BHP Mitsui Coal metallurgical coal joint venture. We bolstered options in future facing commodities investing in prospective copper assets in the Northern Territory and South Australia and we secured an early stage entry into a world-scale nickel sulphide resource in Tanzania.

Overall we made good progress in positioning our portfolio and performance to deliver returns for shareholders now and into the future."

3

Operational performance

Production and guidance are summarised below.

Note: All guidance is subject to further potential impacts from COVID-19 during the 2022 financial year.

 
                                       Dec H21   Dec Q21   Dec Q21                             Current 
                         Dec     Dec        vs        vs        vs        Previous FY22           FY22 
Production               H21     Q21   Dec H20   Dec Q20   Sep Q21             guidance       guidance 
--------------------  ------  ------  --------  --------  --------  -------------------  -------------  -------------- 
Copper (kt)            742.0   365.5     (12%)     (15%)      (3%)        1,590 - 1,760  1,590 - 1,760         Low end 
 Escondida (kt)        488.3   244.6     (15%)     (15%)        0%        1,000 - 1,080  1,020 - 1,080  Narrowed range 
 Pampa Norte (kt)      135.8    68.3       40%       26%        1%            330 - 370      260 - 300         Lowered 
 Olympic Dam (kt)       43.7    14.2     (56%)     (70%)     (52%)            140 - 170      140 - 150  Narrowed range 
 Antamina (kt)          74.2    38.4        1%      (1%)        7%            120 - 140      120 - 140       Unchanged 
Iron ore (Mt)          129.4    66.1        1%        6%        4%            249 - 259      249 - 259 
 WAIO (Mt)             127.3    65.1      (1%)        4%        5%            246 - 255      246 - 255       Unchanged 
 WAIO (100% basis) 
  (Mt)                 144.4    73.9        0%        5%        5%            278 - 288      278 - 288       Unchanged 
 Samarco (Mt)            2.1     1.0     >100%     >100%      (2%)                3 - 4          3 - 4       Unchanged 
Metallurgical coal 
 (Mt)(i)                17.7     8.8      (8%)      (7%)        0%              39 - 44        38 - 41 
 Queensland Coal 
  (100% basis) (Mt)     30.7    15.1     (10%)     (11%)      (3%)              70 - 78        68 - 72         Lowered 
Energy coal - NSWEC 
 (Mt)                    7.2     3.0        5%      (8%)     (30%)              13 - 15        13 - 15       Unchanged 
Energy coal - 
 Cerrejón 
 (Mt)(ii)                4.2     2.2     >100%     >100%        6%                  n/a            n/a 
Nickel (kt)             39.3    21.5     (15%)     (10%)       21%              85 - 95        85 - 95       Unchanged 
Discontinued 
operations 
Petroleum 
 (MMboe)(iii)           53.2    25.7        5%        8%      (7%)             99 - 106            n/a 
 

(i) We announced the share sale agreement to divest our interest in BHP Mitsui Coal (BMC) in November 2021, however will continue to report BMC as part of Queensland Coal. We maintain economic and operating control of BMC until the sale has completed.

(ii) We have ceased providing Cerrejón production guidance due to the completion of the divestment of our interest. The transaction has an effective economic date of 31 December 2020 and volumes have been reported separately.

(iii) Given our announcement of a binding share sale agreement for the merger of BHP's oil and gas portfolio with Woodside in November 2021, no further annual production guidance for FY22 for Petroleum will be provided. However, until merger completion, we expect a production run rate broadly consistent with the original FY22 production guidance of between 99 and 106 MMboe.

4

Summary of disclosures

BHP expects its December 2021 half year financial results to reflect certain items as summarised in the table below. The table does not provide a comprehensive list of all items impacting the period. The financial statements are the subject of ongoing work that will not be finalised until the release of the financial results on 15 February 2022. Accordingly the information in the table below contains preliminary information that is subject to update and finalisation.

 
                                                                                  H1 FY22 
                                                                                   impact 
Description                                                                       US$M(i)           Classification(ii) 
----------------------------------------------------------------------  -----------------  --------------------------- 
Unit costs for WAIO, Escondida and NSWEC are expected to be in line                     -              Operating costs 
with full year guidance 
(at guidance exchange rates), with WAIO tracking towards the bottom 
end of guidance 
Note: weaker Australian dollar and Chilean peso than guidance rates in 
the period(iii) 
Unit cost guidance for Queensland Coal has been increased to between                    -              Operating costs 
US$85 and US$94 per tonne 
(at guidance exchange rates), reflecting lower expected volumes for 
the full year 
Exploration expense (minerals exploration programs)                                    80          Exploration expense 
Higher depreciation and amortisation mainly at WAIO following South             425 - 475   Depreciation, amortisation 
Flank commissioning and                                                                                and impairments 
prior period update of closure provision at Yandi. 
The Group's adjusted effective tax rate for H1 FY22 is expected to be                   -             Taxation expense 
slightly below the full 
year guidance range of 32 to 37 per cent given Petroleum will be 
presented as a discontinued 
operation. An updated guidance range will be provided in the half year 
financial results 
Working capital movements relating to royalties, inventory builds, net      2,000 - 2,500        Operating cash inflow 
price impacts on receivables 
and other movements. 
Dividends received from Cerrejón                                            240(iv)        Operating cash inflow 
Dividends paid to non-controlling interests                                        1,250       Financing cash outflow 
Impairment of US deferred tax assets no longer expected to be                   400 - 450      Exceptional item charge 
recoverable after the Petroleum 
merger (after tax) 
Financial impact on BHP Brasil of the Samarco dam failure               Refer footnote(v)      Exceptional item charge 
 
   (i)      Numbers are not tax effected, unless otherwise noted. 

(ii) There will be a corresponding balance sheet, cash flow and/or income statement impact as relevant, unless otherwise noted.

(iii) Average exchange rates for H1 FY22 of AUD/USD 0.73 (guidance rate AUD/USD 0.78) and USD/CLP 798 (guidance rate USD/CLP 727).

(iv) There will be no net income statement impact in relation to Cerrejón for H1 FY22. While the dividends received will be recognised as other income, the associated adjustment to the proceeds to be received on sale completion results in an offsetting expense to reflect the reduction in the carrying value of the Cerrejón assets held for sale.

(v) Financial impact is the subject of ongoing work and is not yet finalised. See corporate update section for further information on Samarco.

The December 2021 half year financial results are being prepared on the basis that BHP Petroleum will be reported as a discontinued operation. BHP Petroleum will be excluded from the consolidated Income Statement and will not be included when calculating the minimum dividend payout. BMC will continue to be consolidated with Queensland Coal as a continuing operation until the expected completion in the middle of the 2022 calendar year. On the Balance Sheet, both BMC and BHP Petroleum will be reclassified as assets held for sale and excluded from net operating assets.

Major development projects

At the end of December 2021, BHP had two major projects under development, the US$2.97 billion Jansen mine shafts project and the US$5.7 billion Jansen Stage 1 project.

5

Average realised prices

The average realised prices achieved for our major commodities are summarised below.

 
                                                                           Dec H21   Dec H21  Dec H21 
                                                                                vs        vs       vs 
Average realised prices(i)             Dec H21  Dec H20  Jun H21    FY21   Dec H20   Jun H21     FY21 
-------------------------------------  -------  -------  -------  ------  --------  --------  ------- 
Copper (US$/lb)                           4.31     3.32     4.34    3.81       30%      (1%)      13% 
Iron ore (US$/wmt, FOB)                 113.54   103.78   158.17  130.56        9%     (28%)    (13%) 
Metallurgical coal (US$/t)              259.71    97.61   114.81  106.64      166%      126%     144% 
    Hard coking coal (US$/t)(ii)        278.60   106.30   118.54  112.72      162%      135%     147% 
    Weak coking coal (US$/t)(ii)        218.65    73.17   104.40   89.62      199%      109%     144% 
Thermal coal (US$/t)(iii)               137.68    44.35    70.83   58.42      210%       94%     136% 
Nickel metal (US$/t)                    19,651   15,140   17,537  16,250       30%       12%      21% 
Discontinued operations 
Oil (crude and condensate) (US$/bbl)     74.26    41.40    63.05   52.56       79%       18%      41% 
Natural gas (US$/Mscf)(iv)                5.80     3.83     4.86    4.34       51%       19%      34% 
LNG (US$/Mscf)                           15.10     4.45     7.04    5.63      239%      114%     168% 
 

(i) Based on provisional, unaudited estimates. Prices exclude sales from equity accounted investments, third party product and internal sales, and represent the weighted average of various sales terms (for example: FOB, CIF and CFR), unless otherwise noted. Includes the impact of provisional pricing and finalisation adjustments.

(ii) Hard coking coal (HCC) refers generally to those metallurgical coals with a Coke Strength after Reaction (CSR) of 35 and above, which includes coals across the spectrum from Premium Coking to Semi Hard Coking coals, while weak coking coal (WCC) refers generally to those metallurgical coals with a CSR below 35.

(iii) Export sales only; excludes Cerrejón. Includes thermal coal sales from metallurgical coal mines.

   (iv)   Includes internal sales. 

The large majority of iron ore shipments were linked to index pricing for the month of shipment, with price differentials predominantly a reflection of market fundamentals and product quality. Iron ore sales were based on an average moisture rate of 7.2 per cent. The large majority of metallurgical coal and energy coal exports were linked to index pricing for the month of shipment or sold on the spot market at fixed or index-linked prices, with price differentials reflecting product quality. The majority of copper cathodes sales were linked to index pricing for quotation periods one month after the month of shipment, and three to four months after the month of shipment for copper concentrates sales with price differentials applied for location and treatment costs. The large majority of oil sales were linked to West Texas intermediate (WTI) or Brent based indices, with differentials applied for quality, locational and transportation costs.

At 31 December 2021, the Group had 333 kt of outstanding copper sales that were revalued at a weighted average price of US$4.42 per pound. The final price of these sales will be determined over the remainder of the 2022 financial year. In addition, 323 kt of copper sales from the 2021 financial year were subject to a finalisation adjustment in the current period. The provisional pricing and finalisation adjustments will increase Underlying EBITDA(5) by US$11 million in the December 2021 half year and are included in the average realised copper price in the above table.

6

Corporate update

Portfolio

In November 2021, BHP announced it had signed a Share Sale and Purchase Agreement with Stanmore Resources Limited to divest its 80 per cent interest in BHP Mitsui Coal Pty Ltd (BMC), an operated metallurgical coal joint venture in Queensland. The purchase price comprises US$1.1 billion cash on completion, US$100 million in cash six months after completion and the potential for up to US$150 million in a price-linked earn-out payable in the 2024 calendar year. Completion is expected in the middle of the 2022 calendar year subject to the satisfaction of certain conditions, including customary competition and regulatory conditions.

In November 2021, BHP signed a binding Share Sale Agreement for the merger of BHP's oil and gas portfolio with Woodside to create a global top 10 independent energy company by production. It is proposed that Woodside will acquire BHP Petroleum in exchange for new Woodside shares. Completion of the merger is subject to satisfaction of conditions precedent including regulatory and competition authority approvals and approval by Woodside's shareholders. The process remains on track and the Australian Competition and Consumer Commission provided informal clearance of the merger in December 2021. The Woodside shareholder meeting to vote on the merger as well as completion of the merger is targeted for the June 2022 quarter. In addition to its primary listing on the Australian Securities Exchange, Woodside is pursuing a standard listing on the London Stock Exchange and a listing of American Depositary Receipts on the New York Stock Exchange.

In December 2021, BHP announced a final decision to unify BHP's corporate structure under its existing Australian parent company, BHP Group Limited. The Board believes that unification is in the best interests of BHP shareholders. Unification will create a corporate structure that is simpler and more efficient, reduces duplication and streamlines BHP's governance and internal processes. Shareholder meetings of BHP Group Limited and BHP Group Plc will take place on 20 January 2022 to approve unification. Unification is expected to complete by 31 January 2022 subject to shareholder approval of both BHP Group Limited and BHP Group Plc and UK Court sanction of the scheme.

In December 2021, BHP announced it would not increase or extend its offer to acquire Noront Resources. BHP is committed to its strict capital discipline framework and while the Eagle's Nest deposit is a promising resource, we do not see adequate long-term value for BHP shareholders to support an increase in BHP's offer to match the proposal from Wyloo Metals Pty Ltd.

In December 2021, BHP advanced its early-stage nickel interests by agreeing to invest in the Kabanga Nickel Project (Kabanga), a high-quality nickel sulphide deposit in Tanzania. Kabanga is a joint venture between Kabanga Nickel Limited (84 per cent interest) and the Government of Tanzania (16 per cent). BHP has made an initial investment of US$40 million in Kabanga, which will convert into an 8.9 per cent equity stake in Kabanga Nickel Limited once approvals and conditions are met. The proceeds will be used to accelerate drilling and study work. Further investments, including a second tranche of US$50 million, have been agreed in principle subject to the parties agreeing definitive documentation and certain other conditions. In parallel, BHP has invested US$10 million in Lifezone Limited to progress its low-carbon hydrometallurgical processing technology.

In January 2022, BHP completed the sale to Glencore of its 33.3 per cent interest in the Cerrejón joint venture in Colombia. The transaction was first announced on 29 June 2021 for a total cash consideration of US$294 million.

7

Samarco

Samarco's Judicial Reorganisation process is continuing in the Commercial Courts of Belo Horizonte, State of Minas Gerais. The Judicial Reorganisation is a process for Samarco to restructure its financial debts in order to establish a sustainable independent financial position that would allow Samarco to continue its operations safely and meet its Renova Foundation obligations. BHP Brasil will continue to support Samarco in this process.

Negotiations are ongoing with State and Federal Prosecutors and certain other Brazilian public authorities in relation to the review of the Framework Agreement. The Framework Agreement was entered into between Samarco, Vale and BHP Brasil and the relevant Brazilian authorities in March 2016 and established the Renova Foundation to develop and implement environmental and socio-economic programs to remediate and provide compensation for damage caused by the Samarco dam failure.

In October 2021, the 12th Federal Court delivered a ruling that expanded the scope of eligible individuals of the court mandated compensation process ("Novel System"), extended its geographical scope and increased indemnification amounts for certain categories of damage. The decision is under appeal and applications have been made to clarify certain aspects of the ruling. BHP is currently reviewing the impact of the 12th Federal Court's decision on the Group's provision for the Samarco dam failure and it is possible that the provision could materially increase.

In December 2021, BHP agreed to fund US$700 million in further financial support for the Renova Foundation, which will be offset against the Group's provision for the Samarco dam failure. Further funding requirements for the period to 31 December 2022 continue to be assessed and, will be subject to future approval by BHP.

We will provide an update to the ongoing potential financial impacts on BHP Brasil of the Samarco dam failure with the release of the financial results on 15 February 2022. Any financial impacts will continue to be treated as an exceptional item.

Copper

Production

 
                                Dec H21   Dec Q21   Dec Q21 
                                   vs        vs        vs 
              Dec H21  Dec Q21   Dec H20   Dec Q20   Sep Q21 
              -------  -------  --------  --------  -------- 
Copper (kt)     742.0    365.5     (12%)     (15%)      (3%) 
Zinc (t)       62,892   29,603     (18%)     (29%)     (11%) 
Uranium (t)       818      287     (55%)     (70%)     (46%) 
 

Copper - Total copper production decreased by 12 per cent to 742 kt. Full year production is trending towards the low end of the guidance range for the 2022 financial year, which reflects lower production guidance at Pampa Norte, and narrowed guidance ranges for Escondida and Olympic Dam. Volumes will be weighted to the second half of the financial year as expected.

Uncertainty around impacts from COVID-19 remains as the pandemic evolves, despite an improved operating environment for our Chilean assets in the December 2021 half year due to high COVID-19 vaccination rates and continued use of successful control measures at our operating sites.

8

Escondida copper production decreased by 15 per cent to 488 kt due to concentrator feed grade decline despite a record performance for material mined. Guidance for the 2022 financial year has been narrowed to between 1,020 and 1,080 kt as concentrator feed grade is expected to improve in the June 2022 half year as the mine sequence moves towards higher grade areas. Concentrator feed grade decline remains forecasted at approximately two per cent for the 2022 financial year. Medium term guidance of an annual average of 1.2 Mt of copper production over the next five years remains unchanged, with production expected to be weighted towards the latter years.

Pampa Norte copper production increased by 40 per cent to 136 kt, reflecting the continued ramp up of the Spence Growth Option (SGO), partially offset by the impact of planned lower ore stacking grade, which is expected to decline by approximately 10 per cent for the 2022 financial year. SGO demonstrated full concentrator throughput of 95 ktpd in the December 2021 quarter. Guidance for the 2022 financial year has been reduced from between 330 and 370 kt to between 260 and 300 kt, as the result of a fatality at the third party desalination plant which impacted Spence operations, operational uncertainty related to Cerro Colorado water access and licencing, including water extraction, and lower than expected recoveries at SGO. Plant design modifications, including modifications to the rougher floatation circuit will be required to increase SGO recoveries to achieve planned copper production levels. The Spence guidance to average 300 ktpa (including cathodes) in the first four years of production will be subject to the timing of these modifications being completed.

Olympic Dam copper production decreased by 56 per cent to 44 kt as a result of the major smelter maintenance campaign in the period. The maintenance campaign was completed in January 2022 and ramp up to full capacity is now expected by April 2022 (previously March 2022), due to COVID-19 impacts on the availability of workforce. The full scope of the maintenance campaign was delivered, including the rebuild of the flash furnace and its ancillary equipment and refurbishment of the acid plant, which has resulted in significant plant improvements. Guidance for the 2022 financial year has been narrowed to between 140 and 150 kt as production is trending towards the low end of the original guidance range.

Antamina copper production increased by one per cent to 74 kt reflecting higher copper head grades and zinc production decreased by 18 per cent to 63kt reflecting lower zinc head grades. Guidance remains unchanged for the 2022 financial year, with copper production of between 120 and 140 kt, and zinc production of between 115 and 130 kt.

Iron Ore

Production

 
                                              Dec H21   Dec Q21   Dec Q21 
                                                 vs        vs        vs 
                           Dec H21   Dec Q21   Dec H20   Dec Q20   Sep Q21 
                           --------  -------  --------  --------  -------- 
Iron ore production (kt)    129,401   66,102        1%        6%        4% 
 

Iron ore - Total iron ore production increased by one per cent to 129 Mt. Guidance for the 2022 financial year remains unchanged at between 249 and 259 Mt.

9

WAIO finished the half year at near record production levels at 127 Mt (144 Mt on a 100 per cent basis), despite impacts of temporary labour constraints relating to COVID-19 border restrictions and the planned major maintenance on car dumper one and the Jimblebar train load out. This reflects continued strong supply chain performance including higher car dumper performance and improved rail cycle times. South Flank ramp up to full production capacity of 80 Mtpa (100 per cent basis) over three years remains on track with a peak rate of 45 Mtpa achieved in the half year contributing to record lump sales. In December 2021, we approved the South Flank Autonomous Haulage Project to automate the current fleet of Komatsu haul trucks. The project is scheduled to commence in the June 2022 quarter and is expected to be completed within 18 months. The proposed easing of Western Australia's border restrictions on 5 February 2022 may introduce some short-term disruption to the operating environment as the COVID-19 pandemic evolves in the state.

Samarco production was 2.1 Mt (BHP share), following the recommencement of iron ore pellet production at one concentrator in December 2020. Guidance of between 3 and 4 Mt (BHP share) remains unchanged for the 2022 financial year.

Coal

Production

 
                                               Dec H21   Dec Q21   Dec Q21 
                                                  vs        vs        vs 
                             Dec H21  Dec Q21   Dec H20   Dec Q20   Sep Q21 
                             -------  -------  --------  --------  -------- 
Metallurgical coal (kt)(2)    17,668    8,818      (8%)      (7%)        0% 
Energy coal (kt)(3)            7,205    2,967        5%      (8%)     (30%) 
 

Metallurgical coal - Metallurgical coal production decreased by eight per cent to 18 Mt (31 Mt on a 100 per cent basis). Guidance for the 2022 financial year has been reduced to between 38 and 41 Mt (68 and 72 Mt on a 100 per cent basis) from between 39 and 44 Mt (70 and 78 Mt on a 100 per cent basis). The revision is a result of significant La Niña related wet weather impacts during the December 2021 quarter coupled with COVID-19 related labour constraints. Workforce absenteeism arising from the COVID-19 Omicron variant is anticipated to continue into the early part of the second half of the 2022 financial year.

Queensland Coal production decreased due to significant wet weather, with double the amount of rainfall, coupled with COVID-19 related labour constraints impacting stripping and mine productivity across most operations. A longwall move was successfully executed at Broadmeadow and the Caval Ridge wash plant maintenance was also completed on time during the December 2021 quarter.

Following the recent easing of Queensland's border restrictions, COVID-19 related absenteeism has increased and remains a risk for the remainder of the year.

Energy coal - Energy coal production increased by five per cent to 7 Mt. Guidance for the 2022 financial year remains unchanged at between 13 and 15 Mt. The divestment of our interest in Cerrejón was completed in January 2022 and Cerrejón volumes are no longer included in energy coal guidance.

NSWEC production increased as a result of increased stripping volumes enabled by continued truck productivity and mining in lower strip ratio areas, despite increased rainfall and COVID-19 related impacts. High quality products now make up approximately 80 per cent of sales compared to approximately 60 per cent of sales in the prior period.

10

Other

Nickel production

 
                                Dec H21   Dec Q21   Dec Q21 
                                   vs        vs        vs 
              Dec H21  Dec Q21   Dec H20   Dec Q20   Sep Q21 
              -------  -------  --------  --------  -------- 
Nickel (kt)      39.3     21.5     (15%)     (10%)       21% 
 

Nickel - Nickel West production decreased by 15 per cent to 39 kt, reflecting planned maintenance at the Kalgoorlie Smelter, Kwinana Refinery and the Leinster and Kambalda concentrators in the September 2021 quarter, and planned asset integrity work to support operational stability completed in the December 2021 quarter. Guidance for the 2022 financial year remains unchanged at between 85 and 95 kt, with volumes weighted towards the second half of the financial year. The first batch of nickel sulphate crystals were produced in the September 2021 quarter and customer certification continues. First saleable production was achieved in the December 2021 quarter.

Potash

Projects

 
                               Initial 
                 Capital      production 
Project and     expenditure     target 
 ownership         US$M          date     Capacity                         Progress 
-------------  ------------  -----------  -------------------------------  --------------------- 
Jansen Potash         2,972         CY27  Investment to finish the         The project is 
                                           excavation and lining of         98% complete. Target 
                                           the production and service       project completion 
                                           shafts, and to continue          in CY22. 
                                           the installation of essential 
                                           surface infrastructure 
                                           and utilities. 
  (Canada) 
  100% 
Jansen Stage          5,723         CY27  Design, engineering and          Approved in August 
 1                                         construction of an underground   2021, project is 
                                           potash mine and surface          3% complete 
                                           infrastructure, with capacity 
                                           to produce 4.35 Mtpa. 
  (Canada) 
  100% 
 

Minerals exploration

Minerals exploration expenditure for the December 2021 half year was US$110 million, of which US$80 million was expensed. We have continued to add to our early stage options in future facing commodities. Greenfield minerals exploration is being undertaken on advancing copper targets in Chile, Ecuador, Mexico, Peru, Canada, Australia and the south-west United States. Nickel targets are also being advanced in Canada and Australia. Specifically in copper, we are undertaking target drilling in Chile, Ecuador and the United States while further drilling is underway in Australia.

In October 2021, BHP executed its farm-in agreement for the early-stage prospective Elliott copper project covering 7,200 km(2) in the Northern Territory, Australia. Under the terms of the agreement, BHP can earn up to 75 per cent interest in Elliott by spending up to A$25 million over 10 years.

Also in October 2021, BHP exercised its option to form an exploration joint venture with Red Tiger Resources for the Intercept Hill copper project, which borders Oak Dam in South Australia.

At Oak Dam in South Australia, BHP is continuing next stage resource definition drilling, after commencing the program in May 2021.

In December 2021, BHP advanced its early-stage nickel interests by investing in the Kabanga Nickel Project (Kabanga), a high-quality nickel sulphide deposit in Tanzania. Kabanga is a joint venture between Kabanga Nickel Limited (84 per cent interest) and the Government of Tanzania (16 per cent).

11

Discontinued operations - Petroleum

Production

 
                                                                          Dec H21   Dec Q21   Dec Q21 
                                                                             vs        vs        vs 
                                                        Dec H21  Dec Q21   Dec H20   Dec Q20   Sep Q21 
                                                        -------  -------  --------  --------  -------- 
Crude oil, condensate and natural gas liquids (MMboe)      25.1     12.3       13%       15%      (3%) 
Natural gas (bcf)                                         168.5     80.1      (1%)        2%      (9%) 
Total petroleum production (MMboe)                         53.2     25.7        5%        8%      (7%) 
 

BHP announced on 22 November 2021 a binding share sale agreement for the proposed merger of BHP's oil and gas portfolio with Woodside. Completion of the merger is expected in the June 2022 quarter subject to satisfaction of conditions precedent including approval by Woodside shareholders. The effective date of the merger is 1 July 2021. T he half year financial results are being prepared on the basis that BHP Petroleum is a discontinued operation.

Total petroleum production increased by 5 per cent to 53 MMboe. No further guidance for the 2022 financial year will be provided for Petroleum given the business will be presented as a discontinued operation. However, until merger completion, we expect a production run rate broadly consistent with the original 2022 financial year production guidance of between 99 and 106 MMboe.

Crude oil, condensate and natural gas liquids production increased by 13 per cent to 25 MMboe, reflecting the additional 28 percent working interest acquired in Shenzi in November 2020, increased volumes from Ruby following first production in May 2021, and lower impact from weather events in the Gulf of Mexico, partially offset by natural field decline across the portfolio.

Natural gas production decreased by one per cent to 169 bcf, reflecting decreased production at North West Shelf and natural field decline across the portfolio, partially offset by increased volumes from Ruby and higher seasonal demand for gas at Bass Strait.

Projects

 
                                       Initial 
                         Capital      production 
Project and             expenditure     target 
 ownership                 US$M          date     Capacity                     Progress 
---------------------  ------------  -----------  ---------------------------  ------------------------ 
Mad Dog Phase                 2,154     Mid-CY22  New floating production      On schedule and budget. 
 2                                                 facility with the capacity   The overall project 
 (US Gulf of                                       to produce up to 140,000     is 97% complete. 
 Mexico)                                           gross barrels of oil 
 23.9% (non-operator)                              equivalent per day. 
Shenzi North                    392         CY24  A two-well subsea tie-in     On schedule and budget. 
 development                                       to the Shenzi platform,      The overall project 
 (US Gulf of                                       with the capacity to         is 5% complete. 
 Mexico)                                           produce up to 30,000 
 72% (operator)                                    gross barrels of oil 
                                                   equivalent per day. 
Scarborough                   1,500         CY26  New upstream facilities      Sanctioned in November 
 (Western Australia)                               designed to deliver          2021. 
 26.5% (non-operator)                              daily gas quantities         On schedule and budget. 
                                                   to manufacture 8 Mtpa        The overall project 
                                                   LNG and 180 TJ/day of        is 10% complete. 
                                                   domestic gas. 
 

On 22 November 2021, we announced the approval of US$1.5 billion in capital expenditure for development of the Scarborough upstream project located in the North Carnarvon Basin, Western Australia. The approved capital expenditure represents BHP's 26.5 per cent participating interest in Phase 1 of the upstream development. Final investment decisions have also been made by Woodside and the Scarborough Joint Venture.

In the December 2021 quarter, we completed the Ruby project in Trinidad & Tobago. The project was completed on schedule and within budget, and the Ruby field is currently producing both oil and gas.

12

The Mad Dog Phase 2 project's semi-submersible platform, Argos, was towed to final location in the US Gulf of Mexico and moored. Offshore execution of construction and commissioning is in progress. First production from Mad Dog Phase 2 is expected from mid-calendar year 2022.

In December 2021, we reached a commercial milestone with the Trion project in Mexico with the filing of a Declaration of Commerciality with the National Hydrocarbons Commission. As announced in August 2021, we have moved Trion into the Front End Engineering Design (FEED) phase and work is progressing to plan. Studies are underway, focused on completion of the engineering, commercial arrangements and execution planning required to progress readiness for a Final Investment Decision from mid-calendar year 2022.

Petroleum exploration

Exploration and appraisal wells drilled during the December 2021 quarter are summarised below.

 
                                                                                               Total 
                                    Formation                                      Water       well 
Well          Location    Target    age          BHP equity           Spud date    depth       depth      Status 
-----------  -----------  -------  -----------  -------------------  -----------  ----------  ----------  ------------ 
             Trinidad & 
              Tobago 
              Block                Late                              27 July                              Hydrocarbons 
Bongos-3X     TTDAA 14    Gas       Miocene     70% (BHP Operator)    2021        2,114 m      5,174 m    encountered 
             Trinidad & 
              Tobago 
Bongos-3X     Block                Late                              27 July                              Hydrocarbons 
 ST01         TTDAA 14    Gas       Miocene     70% (BHP Operator)    2021        2,114 m      5,169 m    encountered 
             Trinidad & 
              Tobago 
              Block                Late                              6 August                             Hydrocarbons 
Bongos-4      TTDAA 14    Gas       Miocene     70% (BHP Operator)    2021        2,177 m      5,163 m    encountered 
             Gulf of 
              Mexico               Early                             7 October                            Plugged and 
Wasabi-1      GC124       Oil       Miocene     75% (BHP Operator)    2021        764 m        2,673 m    abandoned 
             Gulf of 
              Mexico               Early                             17 November                          Drilling 
Wasabi-2      GC124       Oil       Miocene     75% (BHP Operator)    2021        764 m        6,895 m    ahead(i) 
 
   (i)    Well depth and status as at 31 December 2021. 

In Trinidad and Tobago, the Calypso appraisal drilling programme concluded on 20 December 2021. All wells encountered hydrocarbons. Bongos-3 confirmed volumes downdip of prior penetrations and Bongos-4 established volumes in a new segment. The well results are currently under evaluation and will be incorporated into the development plan.

In the central Gulf of Mexico, the Wasabi-1 well encountered a mechanical difficulty and was plugged and abandoned on 13 November 2021. Wasabi-2 (GC124-002) was spud on 17 November 2021 and drilling operations continue.

In Barbados, a 3D seismic survey was acquired in November 2021 over a portion of the Bimshire and Carlisle Bay blocks(6) . Processed data is expected to be delivered in mid-calendar year 2022.

BHP has acquired interests in offshore exploration blocks in the Red Sea in Egypt. In December 2021, the Minister of Energy in Egypt signed the Deed of Assignment for Red Sea Block 1, finalising the assignment of a 45 per cent participating interest from Chevron to BHP. The effective date of the transfer is 12 September 2021. This follows a separate agreement with Shell in March 2021 for BHP to acquire a 30 and 25 per cent non-operated working interest in Egypt's Red Sea Blocks 3 and 4, respectively. The effective date of BHP's participation in Blocks 3 and 4 is pending final government approvals.

Petroleum exploration expenditure for the December 2021 half year was US$243 million, of which US$112 million was expensed. An approximately US$540 million exploration and appraisal program is being executed for the 2022 financial year.

13

Variance analysis relates to the relative performance of BHP and/or its operations during the December 2021 half year compared with the December 2020 half year, unless otherwise noted. Production volumes, sales volumes and capital and exploration expenditure from subsidiaries are reported on a 100 per cent basis; production and sales volumes from equity accounted investments and other operations are reported on a proportionate consolidation basis. Numbers presented may not add up precisely to the totals provided due to rounding. Copper equivalent production is based on 2021 financial year average realised prices.

The following footnotes apply to this Operational Review:

(1) 2022 financial year unit cost guidance: Escondida US$1.20-1.40/lb, WAIO US$17.50-18.50/t, Queensland Coal US$85-94/t and NSWEC US$62-70/t; based on exchange rates of AUD/USD 0.78 and USD/CLP 727.

(2) We announced the divestment of our interest in BMC in November 2021, however will continue to report BMC production as part of Queensland Coal. We maintain economic and operating control of BMC until the sale has completed.

(3) We have ceased providing Cerrejón production guidance due to the completion of the divestment of our interest. The transaction has an effective economic date of 31 December 2020 and volumes have been reported separately.

   (4)       Excludes Petroleum production. 

(5) Underlying EBITDA is used to help assess current operational profitability excluding the impacts of sunk costs (i.e. depreciation from initial investment). Underlying EBITDA is 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).

   (6)       Permission for survey granted by the Barbados Ministry of Energy. 

The following abbreviations may have been used throughout this report: barrels (bbl); billion cubic feet (bcf); cost and freight (CFR); cost, insurance and freight (CIF); dry metric tonne unit (dmtu); free on board (FOB); grams per tonne (g/t); kilograms per tonne (kg/t); kilometre (km); metre (m); million barrels of oil equivalent (MMboe); million barrels of oil per day (MMbpd); million cubic feet per day (MMcf/d); million tonnes (Mt); million tonnes per annum (Mtpa); ounces (oz); pounds (lb); thousand barrels of oil equivalent (Mboe); thousand barrels of oil equivalent per day (Mboe/d); thousand ounces (koz); thousand standard cubic feet (Mscf); thousand tonnes (kt); thousand tonnes per annum (ktpa); thousand tonnes per day (ktpd); tonnes (t); and wet metric tonnes (wmt).

In this release, the terms 'BHP', the 'Group', 'BHP Group', 'we', 'us', 'our' and ourselves' are used to refer to BHP Group Limited, BHP Group plc and, except where the context otherwise requires, their respective subsidiaries as defined in note 30 'Subsidiaries' in section 3.1 of BHP's 30 June 2021 Annual Report and Form 20-F. Those terms do not include non-operated assets. Notwithstanding that this release 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. Our non-operated assets include Antamina, Cerrejón, Samarco, Atlantis, Mad Dog, Bass Strait and North West Shelf. BHP Group cautions against undue reliance on any forward-looking statement or guidance in this release, particularly in light of the current economic climate and significant volatility, uncertainty and disruption arising in connection with COVID-19. These forward looking statements are based on information available as at the date of this release and are not guarantees or predictions of future 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 from those expressed in the statements contained in this release.

14

Further information on BHP can be found at: bhp.com

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Stefanie Wilkinson

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 Email: media.relations@bhp.com        Email: investor.relations@bhp.com 
 
Australia and Asia                    Australia and Asia 
 
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15

NEWS RELEASE

19 January 2022

BHP OPERATIONAL REVIEW

FOR THE HALF YEARED 31 DECEMBER 2021

Production and sales summary (Excel version)

16

Production summary

 
                                                          Quarter ended                    Year to date 
                                           -------------------------------------------  ------------------ 
                                   BHP       Dec      Mar      Jun      Sep      Dec       Dec       Dec 
                                 interest    2020     2021     2021     2021     2021      2021      2020 
                               ----------  -------  -------  -------  -------  -------  --------  -------- 
Copper (1) 
Copper 
Payable metal in concentrate 
 (kt) 
 Escondida (2)                      57.5%    236.7    202.7    195.6    194.7    196.2     390.9     473.4 
 Pampa Norte (3)                   100.0%      0.7      5.6     21.1     26.4     24.2      50.6       0.7 
 Antamina                           33.8%     38.6     34.7     36.1     35.8     38.4      74.2      73.2 
 
 Total                                       276.0    243.0    252.8    256.9    258.8     515.7     547.3 
 
 
Cathode (kt) 
 Escondida (2)                      57.5%     50.9     46.6     51.1     49.0     48.4      97.4      98.8 
 Pampa Norte (3)                     100%     53.6     46.4     48.3     41.1     44.1      85.2      96.1 
 Olympic Dam                         100%     47.6     55.4     50.8     29.5     14.2      43.7      99.1 
 
 Total                                       152.1    148.4    150.2    119.6    106.7     226.3     294.0 
 
 
 
Total copper (kt)                            428.1    391.4    403.0    376.5    365.5     742.0     841.3 
 
 
Lead 
Payable metal in concentrate 
 (t) 
 Antamina                           33.8%      993      468      381      378      277       655     1,683 
 
 Total                                         993      468      381      378      277       655     1,683 
 
 
Zinc 
Payable metal in concentrate 
 (t) 
 Antamina                           33.8%   41,909   33,299   35,483   33,289   29,603    62,892    76,307 
 
 Total                                      41,909   33,299   35,483   33,289   29,603    62,892    76,307 
 
 
Gold 
Payable metal in concentrate 
 (troy oz) 
 Escondida (2)                      57.5%   47,789   37,954   38,893   41,962   42,937    84,899    90,121 
 Pampa Norte (3)                     100%        -        -    4,728    6,967    5,776    12,743         - 
 Olympic Dam (refined 
  gold)                              100%   23,837   37,075   48,478   26,277   37,805    64,082    60,445 
 
 Total                                      71,626   75,029   92,099   75,206   86,518   161,724   150,566 
 
 
Silver 
Payable metal in concentrate 
 (troy koz) 
 Escondida (2)                      57.5%    1,627    1,318    1,234    1,291    1,462     2,753     3,207 
 Pampa Norte (3)                     100%        -        -      214      273      215       488         - 
 Antamina                           33.8%    1,767    1,463    1,409    1,367    1,308     2,675     3,093 
 Olympic Dam (refined 
  silver)                            100%      193      275      185      191      258       449       350 
 
 Total                                       3,587    3,056    3,042    3,122    3,243     6,365     6,650 
 
 

17

Production summary

 
                                                          Quarter ended                    Year to date 
                                           -------------------------------------------  ------------------ 
                                   BHP       Dec      Mar      Jun      Sep      Dec       Dec       Dec 
                                 interest    2020     2021     2021     2021     2021      2021      2020 
                               ----------  -------  -------  -------  -------  -------  --------  -------- 
Uranium 
Payable metal in concentrate 
 (t) 
 Olympic Dam                         100%      945      834      614      531      287       818     1,819 
 
 Total                                         945      834      614      531      287       818     1,819 
 
 
Molybdenum 
Payable metal in concentrate 
 (t) 
 Pampa Norte (3)                     100%        -        -        -        -        -         -         - 
 Antamina                           33.8%      192      276      111      142      217       359       476 
 
 Total                                         192      276      111      142      217       359       476 
 
 
Iron Ore 
Iron Ore 
Production (kt) (4) 
 Newman                               85%   17,637   14,614   14,560   16,461   14,577    31,038    34,047 
 Area C Joint Venture                 85%   11,567   13,010   15,920   18,947   22,911    41,858    23,456 
 Yandi Joint Venture                  85%   16,413   16,112   18,405   11,834   12,261    24,095    34,079 
 Jimblebar (5)                        85%   16,740   15,241   15,337   15,009   15,324    30,333    36,815 
 Samarco                              50%       37      878    1,023    1,048    1,029     2,077        37 
 
 Total                                      62,394   59,855   65,245   63,299   66,102   129,401   128,434 
 
 
Coal 
Metallurgical coal 
Production (kt) (6) 
 BMA                                  50%    7,539    7,727    9,253    6,715    6,300    13,015    14,904 
 BHP Mitsui Coal (7) 
  (8)                                 80%    1,983    1,863    2,570    2,135    2,518     4,653     4,308 
 
 Total                                       9,522    9,590   11,823    8,850    8,818    17,668    19,212 
 
 
Energy coal 
Production (kt) 
 NSW Energy Coal                     100%    3,229    2,981    4,492    4,238    2,967     7,205     6,853 
 
 Total                                       3,229    2,981    4,492    4,238    2,967     7,205     6,853 
 
 
Production (kt) 
 Cerrejón                      33.3%      347    1,795    1,784    2,060    2,176     4,236     1,385 
 
 Total                                         347    1,795    1,784    2,060    2,176     4,236     1,385 
 
 
Other 
Nickel 
Saleable production 
 (kt) 
 Nickel West                         100%     24.0     20.4     22.4     17.8     21.5      39.3      46.2 
 
 Total                                        24.0     20.4     22.4     17.8     21.5      39.3      46.2 
 
 
Cobalt 
Saleable production 
 (t) 
 Nickel West                         100%      236      273      241      177      220       397       474 
 
 Total                                         236      273      241      177      220       397       474 
 
 

18

Production summary

 
                                                      Quarter ended                   Year to date 
                                       -------------------------------------------  ---------------- 
                              BHP        Dec      Mar      Jun      Sep      Dec      Dec      Dec 
                            interest     2020     2021     2021     2021     2021     2021     2020 
                          -----------  -------  -------  -------  -------  -------  -------  ------- 
Discontinued operations 
Petroleum (9) 
Production 
 Crude oil, condensate 
  and NGL (Mboe)                        10,729   11,601   12,205   12,751   12,345   25,096   22,236 
 Natural gas (bcf)                        78.5     82.6     88.6     88.4     80.1    168.5    169.4 
 
 Total (Mboe)                           23,812   25,368   26,972   27,484   25,695   53,179   50,469 
 
 
 
   (1)   Metal production is reported on the basis of payable metal. 

(2) Shown on a 100% basis. BHP interest in saleable production is 57.5%.

(3) Includes Cerro Colorado and Spence.

   (4)   Iron ore production is reported on a wet tonnes basis. 
   (5)   Shown on a 100% basis. BHP interest in saleable production is 85%. 

(6) Metallurgical coal production is reported on the basis of saleable product. Production figures include some thermal coal.

(7) Shown on a 100% basis. BHP interest in saleable production is 80%.

(8) We announced the divestment of our interest in BHP Mitsui Coal (BMC) in November 2021, but will continue to report BMC as part of Queensland Coal as we maintain economic and operating control of BMC until the sale has completed.

(9) LPG and ethane are reported as natural gas liquids (NGL). Product-specific conversions are made and NGL is reported in barrels of oil equivalent (boe). Total boe conversions are based on 6 bcf of natural gas equals 1,000 Mboe.

Throughout this report figures in italics indicate that this figure has been adjusted since it was previously reported.

19

Production and sales report

 
                                                                                             Year to 
                                                        Quarter ended                          date 
                                       ----------------------------------------------  ------------------ 
                                         Dec      Mar       Jun       Sep       Dec       Dec       Dec 
                                         2020     2021      2021      2021      2021      2021      2020 
                                       -------  -------  --------  --------  --------  --------  -------- 
Copper 
Metals production is payable metal 
 unless otherwise stated. 
 
Escondida, Chile (1) 
 Material mined                (kt)     97,274   95,978   104,043   113,874   117,284   231,158   180,631 
 Concentrator throughput       (kt)     36,303   32,654    31,903    33,528    35,787    69,315    71,036 
 Average copper grade 
  - concentrator               (%)       0.83%    0.78%     0.77%     0.73%     0.71%     0.72%     0.84% 
 Production ex mill            (kt)      246.1    207.8     202.8     201.2     203.6     404.8     490.0 
 
 Production 
 Payable copper                (kt)      236.7    202.7     195.6     194.7     196.2     390.9     473.4 
 Copper cathode (EW)           (kt)       50.9     46.6      51.1      49.0      48.4      97.4      98.8 
  - Oxide leach               (kt)        18.0     16.1      14.5      14.8      13.1      27.9      33.3 
  - Sulphide leach             (kt)       32.9     30.5      36.6      34.2      35.3      69.5      65.5 
 
 Total copper                  (kt)      287.6    249.3     246.7     243.7     244.6     488.3     572.2 
 
                               (troy 
 Payable gold concentrate       oz)     47,789   37,954    38,893    41,962    42,937    84,899    90,121 
                               (troy 
 Payable silver concentrate     koz)     1,627    1,318     1,234     1,291     1,462     2,753     3,207 
 
 Sales 
 Payable copper                (kt)      244.3    196.9     194.1     190.5     200.2     390.7     481.4 
 Copper cathode (EW)           (kt)       47.7     49.6      49.6      46.7      49.7      96.4      94.2 
                               (troy 
 Payable gold concentrate       oz)     47,789   37,954    38,893    41,962    42,937    84,899    90,121 
                               (troy 
 Payable silver concentrate     koz)     1,627    1,318     1,234     1,291     1,462     2,753     3,207 
 
   (1)      Shown on a 100% basis. BHP interest in saleable production is 57.5%. 

20

Production and sales report

 
                                                                                           Year to 
                                                       Quarter ended                         date 
                                       ---------------------------------------------  ---------------- 
                                         Dec      Mar       Jun       Sep      Dec      Dec      Dec 
                                         2020     2021      2021      2021     2021     2021     2020 
                                       -------  -------  --------  --------  -------  -------  ------- 
Pampa Norte, Chile 
 Cerro Colorado 
 Material mined                (kt)      6,750    6,153     5,498     5,378    4,782   10,160   19,368 
 Ore stacked                   (kt)      3,562    3,283     3,702     3,566    4,029    7,595    7,598 
 Average copper grade 
  - stacked                    (%)       0.58%    0.58%     0.58%     0.60%    0.62%    0.61%    0.62% 
 
 Production 
 Copper cathode (EW)           (kt)       15.8     13.9      14.7      13.4     15.3     28.7     31.6 
 
 Sales 
 Copper cathode (EW)           (kt)       16.6     13.2      15.4      12.1     16.0     28.1     31.2 
 
 Spence 
 Material mined                (kt)     18,485   19,195    21,262    21,154   24,025   45,179   36,745 
 Ore stacked                   (kt)      5,602    5,536     4,609     5,258    5,071   10,329   10,010 
 Average copper grade 
  - stacked                    (%)       0.83%    0.64%     0.72%     0.64%    0.66%    0.65%    0.95% 
 Concentrator throughput       (kt)      1,207    2,471     4,929     5,786    6,234   12,020    1,207 
 Average copper grade 
  - concentrator               (%)           -    0.58%     0.63%     0.65%    0.60%    0.62%        - 
 
 Production 
 Payable copper                (kt)        0.7      5.6      21.1      26.4     24.2     50.6      0.7 
 Copper cathode (EW)           (kt)       37.8     32.5      33.6      27.7     28.8     56.5     64.5 
 
 Total copper                  (kt)       38.5     38.1      54.7      54.1     53.0    107.1     65.2 
 
                               (troy 
 Payable gold concentrate       oz)          -        -     4,728     6,967    5,776   12,743        - 
                               (troy 
 Payable silver concentrate     koz)         -        -       214       273      215      488        - 
 Payable molybdenum            (t)           -        -         -         -        -        -        - 
 
 Sales 
 Payable copper                (kt)          -      1.8      20.8      28.4     24.9     53.3        - 
 Copper cathode (EW)           (kt)       40.9     30.7      34.1      27.7     31.2     58.9     65.0 
                               (troy 
 Payable gold concentrate       oz)          -        -   4,728.0   6,967.0    5,776   12,743        - 
                               (troy 
 Payable silver concentrate     koz)         -        -     214.0     273.0      215      488        - 
 Payable molybdenum            (t)           -        -         -         -        -        -        - 
 

21

Production and sales report

 
                                                                                        Year to 
                                                    Quarter ended                         date 
                                     -------------------------------------------  ------------------ 
                                       Dec      Mar      Jun      Sep      Dec       Dec       Dec 
                                       2020     2021     2021     2021     2021      2021      2020 
                                     -------  -------  -------  -------  -------  --------  -------- 
Copper (continued) 
Metals production is payable metal unless otherwise stated. 
 
Antamina, Peru 
 Material mined (100%)      (kt)      57,029   53,762   63,393   66,581   58,179   124,760   102,487 
 Concentrator throughput 
  (100%)                    (kt)      14,083   12,651   13,466   13,219   13,011    26,230    27,285 
 Average head grades 
  - Copper                  (%)        0.97%    0.94%    0.93%    0.97%    1.00%     0.98%     0.96% 
  - Zinc                    (%)        1.30%    1.16%    1.24%    1.16%    1.11%     1.14%     1.30% 
 
 Production 
 Payable copper             (kt)        38.6     34.7     36.1     35.8     38.4      74.2      73.2 
 Payable zinc               (t)       41,909   33,299   35,483   33,289   29,603    62,892    76,307 
                            (troy 
 Payable silver              koz)      1,767    1,463    1,409    1,367    1,308     2,675     3,093 
 Payable lead               (t)          993      468      381      378      277       655     1,683 
 Payable molybdenum         (t)          192      276      111      142      217       359       476 
 
 Sales 
 Payable copper             (kt)        40.7     31.7     37.3     32.7     41.9      74.6      74.5 
 Payable zinc               (t)       45,109   34,141   32,044   32,635   32,513    65,148    77,878 
                            (troy 
 Payable silver              koz)      1,728    1,342    1,540    1,103    1,405     2,508     3,038 
 Payable lead               (t)          945      689      556      232      344       576     1,693 
 Payable molybdenum         (t)          352      192      268       86      170       256       744 
 
Olympic Dam, Australia 
 Material mined (1)         (kt)       2,379    1,979    2,143    1,935    1,998     3,933     4,582 
 Ore Milled                 (kt)       2,377    2,238    2,429    2,024    1,105     3,129     4,820 
 Average copper grade       (%)        2.01%    2.02%    1.95%    2.03%    2.17%     2.08%     2.02% 
 Average uranium grade      (kg/t)      0.60     0.61     0.56     0.55     0.55      0.55      0.56 
 
 Production 
 Copper cathode (ER 
  and EW)                   (kt)        47.6     55.4     50.8     29.5     14.2      43.7      99.1 
 Payable uranium            (t)          945      834      614      531      287       818     1,819 
                            (troy 
 Refined gold                oz)      23,837   37,075   48,478   26,277   37,805    64,082    60,445 
                            (troy 
 Refined silver              koz)        193      275      185      191      258       449       350 
 
 Sales 
 Copper cathode (ER 
  and EW)                   (kt)        46.6     55.6     52.7     29.1     17.9      47.0      96.1 
 Payable uranium            (t)          999      779    1,179      536      541     1,077     1,858 
                            (troy 
 Refined gold                oz)      21,390   38,852   47,300   24,654   38,768    63,422    57,444 
                            (troy 
 Refined silver              koz)        165      242      245      126      290       416       387 
 
 

(1) Material mined refers to underground ore mined, subsequently hoisted or trucked to surface.

22

Production and sales report

 
                                                  Quarter ended                    Year to date 
                                   -------------------------------------------  ------------------ 
                                     Dec      Mar      Jun      Sep      Dec       Dec       Dec 
                                     2020     2021     2021     2021     2021      2021      2020 
                                   -------  -------  -------  -------  -------  --------  -------- 
Iron Ore 
Iron ore production and sales are reported on a wet tonnes basis. 
 
Western Australia Iron 
 Ore, Australia 
 Production 
 Newman                     (kt)    17,637   14,614   14,560   16,461   14,577    31,038    34,047 
 Area C Joint Venture       (kt)    11,567   13,010   15,920   18,947   22,911    41,858    23,456 
 Yandi Joint Venture        (kt)    16,413   16,112   18,405   11,834   12,261    24,095    34,079 
 Jimblebar (1)              (kt)    16,740   15,241   15,337   15,009   15,324    30,333    36,815 
 Wheelarra                  (kt)         -        -        -        -        -         -         - 
 
 Total production           (kt)    62,357   58,977   64,222   62,251   65,073   127,324   128,397 
 
 Total production (100%)    (kt)    70,407   66,695   72,848   70,587   73,852   144,439   144,559 
 
 
 Sales 
 Lump                       (kt)    16,703   15,593   16,410   17,546   17,827    35,373    33,759 
 Fines                      (kt)    46,124   42,939   48,837   45,039   46,809    91,848    94,514 
 
 Total                      (kt)    62,827   58,532   65,247   62,585   64,636   127,221   128,273 
 
 Total sales (100%)         (kt)    70,772   66,032   73,712   70,815   73,222   144,037   144,127 
 
 
   (1)      Shown on a 100% basis. BHP interest in saleable production is 85%. 
 
Samarco, Brazil (1) 
 Production            (kt)    37   878   1,023   1,048   1,029   2,077   37 
 
 Sales                 (kt)     -   646   1,052   1,111     950   2,061    - 
 
 

(1) Samarco commenced iron ore pellet production in December 2020 after meeting the licencing requirements to restart operations at the Germano complex in Minas Gerais and Ubu complex in Espírito Santo, Brazil.

23

Production and sales report

 
                                                    Quarter ended                   Year to date 
                                     -------------------------------------------  ---------------- 
                                       Dec      Mar      Jun      Sep      Dec      Dec      Dec 
                                       2020     2021     2021     2021     2021     2021     2020 
                                     -------  -------  -------  -------  -------  -------  ------- 
Coal 
Coal production is reported on the basis of saleable product. 
 
Queensland Coal, Australia 
 Production (1) 
 BMA 
 Blackwater                   (kt)     1,737    1,416    1,887    1,403    1,202    2,605    2,921 
 Goonyella                    (kt)     2,152    2,232    2,752    1,798    1,797    3,595    4,464 
 Peak Downs                   (kt)     1,213    1,595    1,597    1,223      960    2,183    2,700 
 Saraji                       (kt)     1,043    1,238    1,391      999    1,081    2,080    1,860 
 Daunia                       (kt)       464      496      478      377      304      681      954 
 Caval Ridge                  (kt)       930      750    1,148      915      956    1,871    2,005 
 
 Total BMA                    (kt)     7,539    7,727    9,253    6,715    6,300   13,015   14,904 
 
 Total BMA (100%)             (kt)    15,078   15,454   18,506   13,430   12,600   26,030   29,808 
 
 
 BHP Mitsui Coal (2) 
  (3) 
 South Walker Creek           (kt)     1,118    1,031    1,500    1,462    1,535    2,997    2,356 
 Poitrel                      (kt)       865      832    1,070      673      983    1,656    1,952 
 
 Total BHP Mitsui Coal        (kt)     1,983    1,863    2,570    2,135    2,518    4,653    4,308 
 
 
 
 Total Queensland Coal        (kt)     9,522    9,590   11,823    8,850    8,818   17,668   19,212 
 
 Total Queensland Coal 
  (100%)                      (kt)    17,061   17,317   21,076   15,565   15,118   30,683   34,116 
 
 
 Sales 
 BMA 
 Coking coal                  (kt)     6,531    6,752    7,801    5,415    4,875   10,290   12,718 
 Weak coking coal             (kt)       936    1,038    1,069      734      754    1,488    1,913 
 Thermal coal                 (kt)         3      206      400      576      455    1,031       61 
 
 Total BMA                    (kt)     7,470    7,996    9,270    6,725    6,084   12,809   14,692 
 
 Total BMA (100%)             (kt)    14,940   15,992   18,540   13,450   12,168   25,618   29,384 
 
 
 BHP Mitsui Coal (2) 
  (3) 
 Coking coal                  (kt)       604      357      535      313      458      771    1,275 
 Weak coking coal             (kt)     1,518    1,404    2,027    1,788    1,812    3,600    3,063 
 Thermal coal                 (kt)         -        -        -        -        -        -        - 
 
 Total BHP Mitsui Coal        (kt)     2,122    1,761    2,562    2,101    2,270    4,371    4,338 
 
 
 
 Total Queensland Coal        (kt)     9,592    9,757   11,832    8,826    8,354   17,180   19,030 
 
 Total Queensland Coal 
  (100%)                      (kt)    17,062   17,753   21,102   15,551   14,438   29,989   33,722 
 
 
   (1)      Production figures include some thermal coal. 
   (2)      Shown on a 100% basis. BHP interest in saleable production is 80%. 

(3) We announced the divestment of our interest in BHP Mitsui Coal (BMC) in November 2021, but will continue to report BMC as part of Queensland Coal as we maintain economic and operating control of BMC until the sale has completed.

24

Production and sales report

 
                                                  Quarter ended                Year to date 
                                     --------------------------------------  --------------- 
                                       Dec     Mar     Jun     Sep     Dec     Dec      Dec 
                                       2020    2021    2021    2021    2021    2021     2020 
                                     ------  ------  ------  ------  ------  -------  ------ 
NSW Energy Coal, Australia 
 Production                   (kt)    3,229   2,981   4,492   4,238   2,967    7,205   6,853 
 
 Sales 
 Sales thermal coal 
  - export                    (kt)    3,940   2,827   4,691   3,780   3,718    7,498   7,108 
 Inland thermal coal 
  (1)                         (kt)        -       -       -       -       -        -       - 
 
 Total                        (kt)    3,940   2,827   4,691   3,780   3,718    7,498   7,108 
 
 
 
   (1)      The domestic sales contract ended in the September 2019 quarter. 
 
                                                 Quarter ended                Year to date 
                                    --------------------------------------  --------------- 
                                      Dec     Mar     Jun     Sep     Dec     Dec      Dec 
                                      2020    2021    2021    2021    2021    2021     2020 
                                    ------  ------  ------  ------  ------  -------  ------ 
Cerrejón, Colombia 
 Production                  (kt)      347   1,795   1,784   2,060   2,176    4,236   1,385 
 
 Sales thermal coal 
  - export                   (kt)      370   1,746   1,619   2,180   2,012    4,192   1,364 
 
 
Other 
Nickel production is reported on the basis of saleable product 
 
Nickel West, Australia 
 Mt Keith 
 Nickel concentrate          (kt)     55.7    54.1    50.4    53.7    47.0    100.7   120.1 
 Average nickel grade        (%)      14.7    13.3    13.3    14.6    13.2     13.9    15.3 
 
 Leinster 
 Nickel concentrate          (kt)     72.8    71.5    71.4    73.8    77.4    151.2   139.0 
 Average nickel grade        (%)       9.5    10.2    10.5     8.9     9.1      9.0     9.3 
 
 Saleable production 
 Refined nickel (1)          (kt)     20.4    15.2    17.1    14.4    18.2     32.6    37.7 
 Nickel sulphate (2)         (kt)        -       -       -       -     0.4      0.4       - 
 Intermediates and nickel 
  by-products (3)            (kt)      3.6     5.2     5.3     3.4     2.9      6.3     8.5 
 
 Total nickel                (kt)     24.0    20.4    22.4    17.8    21.5     39.3    46.2 
 
 
 Cobalt by-products          (t)       236     273     241     177     220      397     474 
 
 Sales 
 Refined nickel (1)          (kt)     20.9    15.0    17.8    13.8    16.9     30.7    38.0 
 Nickel sulphate (2)         (kt)        -       -       -       -     0.1      0.1       - 
 Intermediates and nickel 
  by-products (3)            (kt)      2.6     5.9     4.0     3.9     3.1      7.0     7.2 
 
 Total nickel                (kt)     23.5    20.9    21.8    17.7    20.1     37.8    45.2 
 
 
 Cobalt by-products          (t)       237     273     241     177     220      397     475 
 
   (1)      High quality refined nickel metal, including briquettes and powder. 
   (2)      Nickel sulphate crystals produced from nickel powder. 
   (3)      Nickel contained in matte and by-product streams. 

25

Production and sales report

 
                                                                                   Year to 
                                                   Quarter ended                     date 
                                      --------------------------------------  ---------------- 
                                        Dec     Mar     Jun     Sep     Dec     Dec      Dec 
                                        2020    2021    2021    2021    2021    2021     2020 
                                      ------  ------  ------  ------  ------  -------  ------- 
Discontinued operations 
Petroleum (1) 
 
Bass Strait 
 Crude oil and condensate    (Mboe)    1,003     859   1,205   1,201     971    2,172    2,308 
 NGL                         (Mboe)    1,057   1,035   1,563   1,655   1,140    2,795    2,717 
 Natural gas                 (bcf)      23.4    22.7    32.8    35.8    25.8     61.6     57.5 
 
 Total petroleum products    (Mboe)    5,960   5,677   8,235   8,823   6,411   15,234   14,608 
 
 
North West Shelf 
 Crude oil and condensate    (Mboe)    1,180   1,183     933     973   1,027    2,000    2,395 
 NGL                         (Mboe)      165     188     177     148     180      328      327 
 Natural gas                 (bcf)      30.4    31.1    26.5    24.3    25.8     50.1     60.0 
 
 Total petroleum products    (Mboe)    6,412   6,554   5,527   5,171   5,507   10,678   12,722 
 
 
Pyrenees 
 Crude oil and condensate    (Mboe)      826     679     690     710     723    1,433    1,663 
 
 Total petroleum products    (Mboe)      826     679     690     710     723    1,433    1,663 
 
 
Macedon 
 Crude oil and condensate    (Mboe)        1       1       -       1       1        2        2 
 Natural gas                 (bcf)      12.6    12.4    12.6    12.7    12.6     25.3     25.3 
 
 Total petroleum products    (Mboe)    2,101   2,068   2,100   2,118   2,101    4,219    4,219 
 
 
Atlantis (2) 
 Crude oil and condensate    (Mboe)    2,385   2,590   3,117   3,171   3,222    6,393    4,806 
 NGL                         (Mboe)      147     171     218     222     186      408      301 
 Natural gas                 (bcf)       1.1     1.4     1.6     1.7     1.5      3.2      2.3 
 
 Total petroleum products    (Mboe)    2,715   2,994   3,602   3,676   3,658    7,334    5,490 
 
 
Mad Dog (2) 
 Crude oil and condensate    (Mboe)      930   1,209   1,099   1,155   1,137    2,292    2,141 
 NGL                         (Mboe)       38      57      77      46      56      102       86 
 Natural gas                 (bcf)       0.1     0.2     0.2     0.2     0.1      0.3      0.3 
 
 Total petroleum products    (Mboe)      985   1,299   1,209   1,234   1,210    2,444    2,277 
 
 
Shenzi (2) (3) 
 Crude oil and condensate    (Mboe)    1,764   2,328   2,023   2,016   2,335    4,351    3,159 
 NGL                         (Mboe)       87     130      87     102     134      236      158 
 Natural gas                 (bcf)       0.3     0.4     0.1     0.4     0.4      0.8      0.6 
 
 Total petroleum products    (Mboe)    1,901   2,525   2,127   2,185   2,536    4,721    3,417 
 
 
Trinidad/Tobago 
 Crude oil and condensate    (Mboe)       96     139     236     491     396      887      198 
 Natural gas                 (bcf)      10.5    14.4    14.7    13.3    13.9     27.2     23.3 
 
 Total petroleum products    (Mboe)    1,846   2,539   2,686   2,708   2,713    5,421    4,081 
 
 
Other Americas (2) 
 (4) 
 Crude oil and condensate    (Mboe)      190     187     104      83      81      164      402 
 NGL                         (Mboe)       11       -       8       3       -        3       13 
 Natural gas                 (bcf)       0.1       -     0.1       -       -        -      0.1 
 
 Total petroleum products    (Mboe)      218     187     129      86      81      167      432 
 
 
Algeria 
 Crude oil and condensate    (Mboe)      849     845     668     774     756    1,530    1,560 
 
 Total petroleum products    (Mboe)      849     845     668     774     756    1,530    1,560 
 
 

26

Production and sales report

 
                                                                                        Year to 
                                                     Quarter ended                        date 
                                      -------------------------------------------  ---------------- 
                                        Dec      Mar      Jun      Sep      Dec      Dec      Dec 
                                        2020     2021     2021     2021     2021     2021     2020 
                                      -------  -------  -------  -------  -------  -------  ------- 
Discontinued operations 
 (continued) 
Petroleum (1) 
 
Total production 
 Crude oil and condensate    (Mboe)     9,224   10,020   10,075   10,575   10,649   21,224   18,634 
 NGL                         (Mboe)     1,505    1,581    2,130    2,176    1,696    3,872    3,602 
 Natural gas                 (bcf)       78.5     82.6     88.6     88.4     80.1    168.5    169.4 
 
 Total                       (Mboe)    23,812   25,368   26,972   27,484   25,695   53,179   50,469 
 
 

(1) Total boe conversions are based on 6 bcf of natural gas equals 1,000 Mboe. Negative production figures represent finalisation adjustments.

   (2)      Gulf of Mexico volumes are net of royalties. 

(3) BHP completed the acquisition of an additional 28% working interest in Shenzi on 6 November 2020, taking its total working interest to 72%.

   (4)      Other Americas includes Neptune, Genesis and Overriding Royalty Interest. 

(5) BHP completed the sale of its interest in the Bruce and Keith oil and gas fields on 30 November 2018. The sale has an effective date of 1 January 2018.

27

Attachment 1

Restated financial information

For the year ended 30 June 2021 and the half year ended 31 December 2020

28

Contents

   Restated financial information                                                               Page 
   Basis of preparation of restated financial information                                   24 
   Consolidated Income Statement - Restated                                                    25 
   Consolidated Statement of Comprehensive Income                                       25 

Consolidated Balance Sheet 26

   Consolidated Cash Flow Statement - Restated                                                27 
   Consolidated Statement of Changes in Equity                                                 28 
   Restated supplementary financial information                                             29 

29

Basis of preparation of restated financial information

This financial information for the year ended 30 June 2021 and the half year ended 31 December 2020 for the Group is not audited and has been prepared to restate previously published information for the effects of applying IFRS 5/AASB 5 'Non-current Assets Held for Sale and Discontinued Operations' to the Group's Petroleum business.

On 22 November 2021, the Group and Woodside Petroleum Ltd ('Woodside') signed a binding share sale agreement (SSA) for the merger of the Group's oil and gas portfolio with Woodside ('Merger'). The merger, which has an effective date of 1 July 2021, is subject to satisfaction of conditions precedent by 30 June 2022 or an agreed later date including shareholder, regulatory and other approvals.

Prior to completion, the Group will carry on its Petroleum business in the normal course and, while the effective date at which the right to net cash flows transferred to Woodside was 1 July 2021, the Group continues to control its Petroleum assets until the completion date of the transaction.

As such , the Group will continue to recognise its share of revenue, expenses, net finance costs and associated income tax expense related to the operation until the completion date. However, as a t 31 December 2021, the Petroleum business will be classified as a disposal group held for sale and as a discontinued operation .

The nature of each change reflected in the attached restated financial information is as follows:

- 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 "Loss after taxation from Discontinued operations"; and

- All cash flows and other items relating to the Petroleum Discontinued Operation have been removed from the individual line items in the Consolidated Cash Flow Statement. The net cash flows attributable to the operating, investing and financing activities of the Petroleum Discontinued Operation are each disclosed in single amounts in each section of the Consolidated Cash Flow Statement.

The Consolidated Balance Sheet, the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Changes in Equity for these periods are not required to be restated.

30

Consolidated Income Statement - Restated

 
                                                                                Half year            Year 
                                                                                    ended           ended 
                                                                              31 Dec 2020    30 June 2021 
                                                                                     US$M            US$M 
                                                                            -------------  -------------- 
Continuing operations 
Revenue                                                                            24,044          56,921 
Other income                                                                          136             380 
Expenses excluding net finance costs                                             (13,821)        (30,871) 
Loss from equity accounted investments, related impairments and expenses            (470)           (915) 
 
Profit from operations                                                              9,889          25,515 
 
 
Financial expenses                                                                  (922)         (1,290) 
Financial income                                                                       46              67 
 
Net finance costs                                                                   (876)         (1,223) 
 
Profit before taxation                                                              9,013          24,292 
 
 
Income tax expense                                                                (3,965)        (10,376) 
Royalty-related taxation (net of income tax benefit)                                 (28)           (240) 
 
Total taxation expense                                                            (3,993)        (10,616) 
 
Profit after taxation from Continuing operations                                    5,020          13,676 
 
Discontinued operations 
Loss after taxation from Discontinued operations                                    (192)           (225) 
 
Profit after taxation from Continuing and Discontinued operations                   4,828          13,451 
 
   Attributable to non-controlling interests                                          952           2,147 
   Attributable to BHP shareholders                                                 3,876          11,304 
 
 
Basic earnings per ordinary share (cents)                                            76.6           223.5 
Diluted earnings per ordinary share (cents)                                          76.5           223.0 
Basic earnings from Continuing operations per ordinary share (cents)                 80.4           228.0 
Diluted earnings from Continuing operations per ordinary share (cents)               80.3           227.5 
 
 

31

Consolidated Statement of Comprehensive Income

 
                                                                                 Half year            Year 
                                                                                     ended           ended 
                                                                               31 Dec 2020    30 June 2021 
                                                                                      US$M            US$M 
                                                                             -------------  -------------- 
Profit after taxation from Continuing and Discontinued operations                    4,828          13,451 
Other comprehensive income 
Items that may be reclassified subsequently to the income statement: 
Hedges: 
   Gains taken to equity                                                             1,074             863 
   Gains transferred to the income statement                                       (1,000)           (837) 
Exchange fluctuations on translation of foreign operations taken to equity               -               5 
Tax recognised within other comprehensive income                                      (22)             (8) 
 
Total items that may be reclassified subsequently to the income statement               52              23 
 
Items that will not be reclassified to the income statement: 
Re-measurement (losses)/gains on pension and medical schemes                           (4)              58 
Equity investments held at fair value                                                    2             (2) 
Tax recognised within other comprehensive income                                         1            (20) 
 
Total items that will not be reclassified to the income statement                      (1)              36 
 
Total other comprehensive income                                                        51              59 
 
Total comprehensive income                                                           4,879          13,510 
 
   Attributable to non-controlling interests                                           953           2,158 
   Attributable to BHP shareholders                                                  3,926          11,352 
 
 

32

Consolidated Balance Sheet

 
                                                                                             Year 
                                                                  Half year ended           ended 
                                                                      31 Dec 2020    30 June 2021 
                                                                             US$M            US$M 
                                                                 ----------------  -------------- 
ASSETS 
Current assets 
Cash and cash equivalents                                                   9,291          15,246 
Trade and other receivables                                                 4,573           6,059 
Other financial assets                                                        227             230 
Inventories                                                                 4,511           4,426 
Assets held for sale                                                            -             324 
Current tax assets                                                            295             279 
Other                                                                         113             129 
 
Total current assets                                                       19,010          26,693 
 
Non-current assets 
Trade and other receivables                                                   270             337 
Other financial assets                                                      2,269           1,610 
Inventories                                                                 1,159           1,358 
Property, plant and equipment                                              73,711          73,813 
Intangible assets                                                           1,508           1,437 
Investments accounted for using the equity method                           2,094           1,742 
Deferred tax assets                                                         3,178           1,912 
Other                                                                          34              25 
 
Total non-current assets                                                   84,223          82,234 
 
Total assets                                                              103,233         108,927 
 
LIABILITIES 
Current liabilities 
Trade and other payables                                                    5,663           7,027 
Interest bearing liabilities                                                3,560           2,628 
Liabilities directly associated with the assets held for sale                   -              17 
Other financial liabilities                                                   237             130 
Current tax payable                                                         1,184           2,800 
Provisions                                                                  2,631           3,696 
Deferred income                                                                86             105 
 
Total current liabilities                                                  13,361          16,403 
 
Non-current liabilities 
Interest bearing liabilities                                               19,159          18,355 
Other financial liabilities                                                 1,187           1,146 
Non-current tax payable                                                       173             120 
Deferred tax liabilities                                                    3,603           3,314 
Provisions                                                                 12,128          13,799 
Deferred income                                                               199             185 
 
Total non-current liabilities                                              36,449          36,919 
 
Total liabilities                                                          49,810          53,322 
 
Net assets                                                                 53,423          55,605 
 
EQUITY 
Share capital - BHP Group Limited                                           1,111           1,111 
Share capital - BHP Group Plc                                               1,057           1,057 
Treasury shares                                                              (30)            (33) 
Reserves                                                                    2,335           2,350 
Retained earnings                                                          44,449          46,779 
 
Total equity attributable to BHP shareholders                              48,922          51,264 
Non-controlling interests                                                   4,501           4,341 
 
Total equity                                                               53,423          55,605 
 
 

33

Consolidated Cash Flow Statement - Restated

 
                                                                                           Half year            Year 
                                                                                               ended           ended 
                                                                                         31 Dec 2020    30 June 2021 
                                                                                                US$M            US$M 
                                                                                       -------------  -------------- 
Operating activities 
Profit before taxation from Continuing operations                                              9,013          24,292 
Adjustments for: 
   Depreciation and amortisation expense                                                       2,405           5,084 
   Impairments of property, plant and equipment, financial assets and intangibles                629           2,507 
   Net finance costs                                                                             876           1,223 
   Loss from equity accounted investments, related impairments and expenses                      470             915 
   Other                                                                                         294             573 
Changes in assets and liabilities: 
   Trade and other receivables                                                               (1,049)         (2,389) 
   Inventories                                                                                 (296)           (405) 
   Trade and other payables                                                                       45           1,149 
   Provisions and other assets and liabilities                                                  (59)             486 
 
Cash generated from operations                                                                12,328          33,435 
Dividends received                                                                               355             728 
Interest received                                                                                 60              97 
Interest paid                                                                                  (447)           (766) 
Settlement of cash management related instruments                                              (202)           (401) 
Net income tax and royalty-related taxation refunded                                              47             222 
Net income tax and royalty-related taxation paid                                             (2,993)         (7,432) 
 
Net operating cash flows from Continuing operations                                            9,148          25,883 
 
Net operating cash flows from Discontinued operations                                            221           1,351 
 
Net operating cash flows                                                                       9,369          27,234 
 
Investing activities 
Purchases of property, plant and equipment                                                   (2,835)         (5,612) 
Exploration expenditure                                                                         (86)           (192) 
Exploration expenditure expensed and included in operating cash flows                             56             134 
Net investment and funding of equity accounted investments                                     (361)           (553) 
Proceeds from sale of assets                                                                      86             158 
Other investing                                                                                 (89)           (260) 
 
Net investing cash flows from Continuing operations                                          (3,229)         (6,325) 
 
Net investing cash flows from Discontinued operations                                          (980)         (1,520) 
 
Net investing cash flows                                                                     (4,209)         (7,845) 
 
Financing activities 
Proceeds from interest bearing liabilities                                                       218             568 
Proceeds from debt related instruments                                                            90             167 
Repayment of interest bearing liabilities                                                    (6,181)         (8,357) 
Purchase of shares by Employee Share Ownership Plan (ESOP) trusts                              (174)           (234) 
Dividends paid                                                                               (2,767)         (7,901) 
Dividends paid to non-controlling interests                                                    (762)         (2,127) 
 
Net financing cash flows from Continuing operations                                          (9,576)        (17,884) 
 
Net financing cash flows from Discontinued operations                                           (19)            (38) 
 
Net financing cash flows                                                                     (9,595)        (17,922) 
 
Net (decrease)/increase in cash and cash equivalents from Continuing operations              (3,657)           1,674 
Net decrease in cash and cash equivalents from Discontinued operations                         (778)           (207) 
Cash and cash equivalents, net of overdrafts, at the beginning of the financial year          13,426          13,426 
Foreign currency exchange rate changes on cash and cash equivalents                              300             353 
 
Cash and cash equivalents, net of overdrafts, at the end of period                             9,291          15,246 
 
 

34

Consolidated Statement of Changes in Equity for the half year ended 31 December 2020 and the year ended 30 June 2021

 
                                       Attributable to BHP shareholders 
                ----------------------------------------------------------------------------- 
                   Share capital      Treasury shares 
                ------------------  ------------------ 
                                                                                 Total equity 
                      BHP      BHP        BHP      BHP                           attributable           Non- 
                    Group    Group      Group    Group               Retained          to BHP    controlling     Total 
US$M              Limited      Plc    Limited      Plc   Reserves    earnings    shareholders      interests    equity 
--------------  ---------  -------  ---------  -------  ---------  ----------  --------------  -------------  -------- 
Balance as at 
 1 July 2020        1,111    1,057        (5)        -      2,306      43,396          47,865          4,310    52,175 
 
Total 
 comprehensive 
 income                 -        -          -        -         53       3,873           3,926            953     4,879 
Transactions 
with owners: 
Purchase of 
 shares by 
 ESOP Trusts            -        -      (171)      (3)          -           -           (174)              -     (174) 
Employee share 
 awards 
 exercised net 
 of employee 
 contributions 
 net of tax             -        -        147        2      (106)        (43)               -              -         - 
Vested 
 employee 
 share awards 
 that have 
 lapsed, been 
 cancelled or 
 forfeited              -        -          -        -        (2)           2               -              -         - 
Accrued 
 employee 
 entitlement 
 for 
 unexercised 
 awards net of 
 tax                    -        -          -        -         84           -              84              -        84 
Dividends               -        -          -        -          -     (2,779)         (2,779)          (762)   (3,541) 
 
Balance as at 
 31 December 
 2020               1,111    1,057       (29)      (1)      2,335      44,449          48,922          4,501    53,423 
 
 
 
                                       Attributable to BHP shareholders 
                ----------------------------------------------------------------------------- 
                   Share capital       Treasury shares 
                -------------------  -------------------                        -------------  ------------ 
                                                                                 Total equity 
                      BHP       BHP        BHP       BHP                         attributable          Non- 
                    Group     Group      Group     Group              Retained         to BHP   controlling      Total 
US$M              Limited       Plc    Limited       Plc   Reserves   earnings   shareholders     interests     equity 
--------------  ---------  --------  ---------  --------  ---------  ---------  -------------  ------------  --------- 
Balance as at 
 1 July 2020        1,111     1,057        (5)         -      2,306     43,396         47,865         4,310     52,175 
 
Total 
 comprehensive 
 income                 -         -          -         -         22     11,330         11,352         2,158     13,510 
Transactions 
with owners: 
Purchase of 
 shares by 
 ESOP Trusts            -         -      (229)       (5)          -          -          (234)             -      (234) 
Employee share 
 awards 
 exercised net 
 of employee 
 contributions 
 net of tax             -         -        202         4      (149)       (57)              -             -          - 
Vested 
 employee 
 share awards 
 that have 
 lapsed, been 
 cancelled or 
 forfeited              -         -          -         -        (4)          4              -             -          - 
Accrued 
 employee 
 entitlement 
 for 
 unexercised 
 awards net of 
 tax                    -         -          -         -        175          -            175             -        175 
Dividends               -         -          -         -          -    (7,894)        (7,894)       (2,127)   (10,021) 
 
Balance as at 
 30 June 2021       1,111     1,057       (32)       (1)      2,350     46,779         51,264         4,341     55,605 
 
 

35

Restated supplementary financial information

For the half year ended 31 December 2020 and financial year ended 30 June 2021

The following pages present the supplementary financial information for the Group for the half year ended 31 December 2020 and the financial year ended 30 June 2021, restated for the effect of the application of IFRS 5/AASB 5 'Non-current Assets Held for Sale and Discontinued Operations'.

As a consequence of this accounting treatment, 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 Group's reportable segments as summarised below. Petroleum underlying EBITDA, revenue, net operating assets and capital and exploration expenditure do not form part of the comparative restated reportable segment(1) .

Segment summary(2)

A summary of performance for the 31 December 2020 half year and 30 June 2021 financial year is presented below and excludes Petroleum discontinued operations.

 
Half year 
ended                                                                     Net                               Exploration 
31 Dec 2020                 Underlying   Underlying   Exceptional   operating       Capital   Exploration            to 
US$M           Revenue(3)       EBITDA         EBIT      Items(4)      assets   expenditure      gross(5)     profit(6) 
------------  -----------  -----------  -----------  ------------  ----------  ------------  ------------  ------------ 
Copper              7,067        3,738        2,899          (38)      26,623         1,108            18            18 
Iron Ore           14,058       10,244        9,320         (500)      19,026         1,101            49            26 
Coal                2,170        (201)        (601)         (959)       8,792           320            11             4 
Group and 
 unallocated 
 items(7)             749          106        (218)          (14)       3,892           306             8             8 
 
Total Group        24,044       13,887       11,400       (1,511)      58,333         2,835            86            56 
 
 
 
Year ended                                                                Net                               Exploration 
30 June 2021                Underlying   Underlying   Exceptional   operating       Capital   Exploration            to 
US$M           Revenue(3)       EBITDA         EBIT      Items(4)      assets   expenditure      gross(5)     profit(6) 
------------  -----------  -----------  -----------  ------------  ----------  ------------  ------------  ------------ 
Copper             15,726        8,489        6,809         (144)      26,928         2,180            53            53 
Iron Ore           34,475       26,278       24,294       (1,319)      18,663         2,188           100            55 
Coal                5,154          288        (577)       (1,567)       7,512           579            20             7 
Group and 
 unallocated 
 items(7)           1,566           18        (673)       (1,308)       2,921           665            19            19 
 
Total Group        56,921       35,073       29,853       (4,338)      56,024         5,612           192           134 
 
 

(1) As a result of the above mentioned planned Merger transaction with Woodside, the Group's Petroleum business does not form part of the reportable segments summarised above. Restated Petroleum financial information has been included below to reflect the performance of the Group's Petroleum discontinued operations business.

 
Petroleum - 
Discontinued                                                            Net 
operations                  Underlying              Underlying    operating        Capital   Exploration   Exploration 
US$M              Revenue       EBITDA     D&A            EBIT       assets    expenditure         gross     to profit 
---------------  --------  -----------  ------  --------------  -----------  -------------  ------------  ------------ 
Half year ended 
 31 December 
 2020               1,595          793     901           (108)        8,548            498           195           242 
Year ended 30 
 June 2021          3,896        2,306   1,868             438        8,073            994           322           382 
 
 

(2) Group and segment level information is reported on a statutory basis which reflects the application of the equity accounting method in preparing the Group financial statements - in accordance with IFRS. Underlying EBITDA of the Group and the reportable segments, includes depreciation, amortisation and impairments (D&A), net finance costs and taxation expense of US$259 million for H1 FY21 and US$626 million for FY21 related to equity accounted investments. It excludes exceptional items loss of US$678 million for H1 FY21 and US$1,456 million for FY21 related to share of profit/loss from equity accounted investments, related impairments and expenses.

Group profit before taxation comprised Underlying EBITDA, exceptional items, depreciation, amortisation and impairments of US$3,998 million for H1 FY21 and US$9,558 million for FY21 and net finance costs of US$876 million for H1 FY21 and US$1,223 million for FY21.

36

(3) Revenue is based on Group realised prices and includes third party products. Sale of third party products by the Group contributed revenue of US$958 million and Underlying EBITDA of US$58 million for H1 FY21 and revenue of US$2,285 million and and Underlying EBITDA of US$65 million for FY21.

(4) Exceptional items loss of US$1,511 million H1 FY21 (FY21: US$4,338 million) excludes net finance costs of US$41 million H1 FY21 (FY21: US$85 million) included in the total loss before taxation of US$358 million H1 FY21 (US$1,087 million FY21) related to the Samarco dam failure. Refer to Exceptional items and Significant events - Samarco dam failure notes to the financial statements evident in the respective published 2021 annual report and FY21 half year reports for further information.

   (5)   Includes US$30 million capitalised exploration H1 FY21 (FY21: US$58 million). 

(6) Includes US$ nil of exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) H1 FY21 (FY21: US$ nil).

(7) 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, as well as revenues from unallocated operations. Exploration and technology activities are recognised within relevant segments.

Restated financial information for Petroleum Discontinued operations for the 31 December 2020 half year and the 30 June 2021 financial year, is presented below.

 
Half year ended                                                          Net                               Exploration 
 31 Dec 2020                     Underlying          Underlying    operating       Capital   Exploration            to 
 US$M              Revenue(1)        EBITDA   D&A          EBIT       assets   expenditure      gross(2)     profit(3) 
----------------  -----------  ------------  ----  ------------  -----------  ------------  ------------  ------------ 
Australia 
 Production 
 Unit(4)                  123            80    95          (15)          176            14 
Bass Strait               478           319   396          (77)        1,407            33 
North West Shelf          402           311   120           191        1,224            47 
Atlantis                  212           127    71            56        1,131           125 
Shenzi                    137            89    59            30        1,005            10 
Mad Dog                    88            61    26            35        1,774           164 
Trinidad/Tobago            68            40    19            21          439            70 
Algeria                    75            54     -            54           95             1 
Exploration                 -         (181)    80         (261)        1,122             1 
Other(5)                   39         (105)    37         (142)          175            33 
 
Total Petroleum 
 from Group 
 production             1,622           795   903         (108)        8,548           498 
 
Third party 
products                    3             -     -             -            -             - 
 
Total Petroleum         1,625           795   903         (108)        8,548           498           195           242 
 
Adjustment for 
 equity 
 accounted 
 investments(6)           (6)           (2)   (2)             -            -             -             -             - 
 
Total Petroleum 
 statutory 
 result                 1,619           793   901         (108)        8,548           498           195           242 
 
Inter-segment 
adjustments              (24)             -     -             -            -             -             -             - 
 
Total 
 Discontinued 
 Operations - 
 Petroleum              1,595           793   901         (108)        8,548           498           195           242 
 
 

37

 
Year ended                                                               Net                               Exploration 
 30 June 2021                   Underlying           Underlying    operating       Capital   Exploration            to 
 US$M              Revenue(1)       EBITDA     D&A         EBIT       assets   expenditure      gross(2)     profit(3) 
----------------  -----------  -----------  ------  -----------  -----------  ------------  ------------  ------------ 
Australia 
 Production 
 Unit(4)                  327          202     186           16           64            23 
Bass Strait             1,066          798     775           23        1,136            70 
North West Shelf          893          761     239          522        1,281           104 
Atlantis                  560          401     162          239        1,109           178 
Shenzi                    417          309     175          134          970           113 
Mad Dog                   231          174      54          120        1,885           308 
Trinidad/Tobago           204           80      44           36          433           152 
Algeria                   164          135       -          135          107             2 
Exploration                 -        (296)     122        (418)        1,148             - 
Other(5)                   85        (256)     114        (370)         (60)            44 
 
Total Petroleum 
 from Group 
 production             3,947        2,308   1,871          437        8,073           994 
 
Third party 
 products                  11            1       -            1            -             - 
 
Total Petroleum         3,958        2,309   1,871          438        8,073           994           322           382 
 
Adjustment for 
 equity 
 accounted 
 investments(6)          (12)          (3)     (3)            -            -             -             -             - 
 
Total Petroleum 
 statutory 
 result                 3,946        2,306   1,868          438        8,073           994           322           382 
 
Inter-segment 
adjustments              (50)            -       -            -            -             -             -             - 
 
Total 
 Discontinued 
 Operations - 
 Petroleum              3,896        2,306   1,868          438        8,073           994           322           382 
 
 

-- Petroleum revenue includes: crude oil US$769 million H1 FY21 (FY21: US$2,013 million), natural gas US$434 million H1 FY21 (FY21: US$977 million), LNG US$292 million (FY21: US$682 million), NGL US$96 million (FY21: US$212 million) and other (including Inter-segment adjustments) US$4 million (FY21: US$12 million).

   --      Includes US$14 million of capitalised exploration H1 FY21 (FY21: US$26 million). 

-- Includes US$61 million of exploration expenditure previously capitalised, written off as impaired (included in depreciation and amortisation) H1 FY21 (FY21: US$86 million).

   --      Australia Production Unit includes Macedon and Pyrenees. 

-- Predominantly divisional activities, business development and Neptune (sale finalised in May 2021). Also includes the Caesar oil pipeline and the Cleopatra gas pipeline, which are equity accounted investments. The financial information for the Caesar oil pipeline and the Cleopatra gas pipeline presented above, with the exception of net operating assets, reflects BHP's share.

-- Total Petroleum statutory result revenue excludes US$6 million H1 FY21 (FY21: US$12 million) revenue related to the Caesar oil pipeline and the Cleopatra gas pipeline. Total Petroleum statutory result Underlying EBITDA includes US$2 million H1 FY21 (FY21: US$3 million) D&A related to the Caesar oil pipeline and the Cleopatra gas pipeline.

38

Alternative Performance Measures

We use various Alternative Performance Measures (APMs) to reflect our underlying financial performance.

These APMs are not defined or specified under the requirements of IFRS, but are derived from the Group's restated Financial Statements for the half year ended 31 December 2020 and year ended 30 June 2021 prepared in accordance with IFRS. The APMs and below reconciliations included in this document for the restated half year ended 31 December 2020 and year ended 30 June 2021 periods are unaudited. The APMs are consistent with how management review financial performance of the Group with the Board and the investment community.

The definitions and calculation methodology to compute the Group's APMs have not changed as a result of the proposed Merger. For further information and a list of the "Definition and calculation of alternative performance measures" refer to the Group's 2021 published Annual report.

Comparative periods have been adjusted for the effects of applying IFRS 5/AASB 5 'Non-current Assets Held for Sale and Discontinued Operations'.

The following tables provide reconciliations between the APMs and their nearest respective IFRS measure. As the Group's balance sheet is not required to be restated under IFRS 5/AASB 5 'Non-current Assets Held for Sale and Discontinued Operations', certain APMs such as Net Debt Waterfall, Net debt and gearing ratio and Underlying ROCE have not been restated and are presented consistently as previously published in respective comparable period financial information.

Exceptional items

To improve the comparability of underlying financial performance between reporting periods some of our APMs adjust the relevant IFRS measures for exceptional items.

39

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 Financial Statements. The exceptional items included within the Group's profit for each restated comparative period are detailed below.

 
                                                                                                              Year 
                                                                                   Half year ended           ended 
                                                                                       31 Dec 2020    30 June 2021 
                                                                                              US$M            US$M 
Exceptional items                                                                         Restated        Restated 
---------------------------------------------------------------------------------  ---------------  -------------- 
Continuing operations 
Revenue                                                                                          -               - 
Other income                                                                                     -              34 
Expenses excluding net finance costs, depreciation, amortisation and impairments             (286)           (545) 
Depreciation and amortisation                                                                    -               - 
Net impairments                                                                              (547)         (2,371) 
Loss from equity accounted investments, related impairments and expenses                     (678)         (1,456) 
 
Profit/(loss) from operations                                                              (1,511)         (4,338) 
 
 
Financial expenses                                                                            (41)            (85) 
Financial income                                                                                 -               - 
 
Net finance costs                                                                             (41)            (85) 
 
Profit/(loss) before taxation                                                              (1,552)         (4,423) 
 
 
Income tax (expense)/benefit                                                                 (590)         (1,057) 
Royalty-related taxation (net of income tax benefit)                                             -               - 
 
Total taxation (expense)/benefit                                                             (590)         (1,057) 
 
Profit/(loss) after taxation from Continuing operations                                    (2,142)         (5,480) 
 
Discontinued operations 
Profit/(loss) after taxation from Discontinued operations                                     (28)           (317) 
 
Profit/(loss) after taxation from Continuing and Discontinued operations                   (2,170)         (5,797) 
 
   Total exceptional items attributable to non-controlling interests                          (10)            (24) 
   Total exceptional items attributable to BHP shareholders                                (2,160)         (5,773) 
 
 
Exceptional items attributable to BHP shareholders per share (US cents)                     (42.8)         (114.2) 
 
Weighted basic average number of shares (Million)                                            5,057           5,057 
 
 

APMs derived from Consolidated Income Statement

Underlying attributable profit - Continuing operations

 
                                                                                                                  Year 
                                                                                       Half year ended           ended 
                                                                                           31 Dec 2020    30 June 2021 
                                                                                                  US$M            US$M 
Underlying attributable profit - Continuing operations                                        Restated        Restated 
------------------------------------------------------------------------------------  ----------------  -------------- 
Profit after taxation from Continuing and Discontinued operations attributable to 
 BHP shareholders                                                                                3,876          11,304 
Loss after taxation from Discontinued operations attributable to BHP shareholders                  192             225 
Total exceptional items attributable to BHP shareholders                                         2,160           5,773 
Total exceptional items attributable to BHP shareholders for Discontinued operations              (28)           (317) 
 
Underlying attributable profit - Continuing operations                                           6,200          16,985 
 
 

40

Underlying basic earnings per share - Continuing operations

 
                                                                                                                  Year 
                                                                                       Half year ended           ended 
                                                                                           31 Dec 2020    30 June 2021 
                                                                                                  US$M            US$M 
Underlying basic earnings per share - Continuing operations                                   Restated        Restated 
------------------------------------------------------------------------------------  ----------------  -------------- 
Underlying attributable profit - Continuing operations                                           6,200          16,985 
Weighted basic average number of shares (Million)                                                5,057           5,057 
 
Underlying attributable earnings per ordinary share - Continuing operations (US 
 cents)                                                                                          122.6           335.9 
 
 

Underlying EBITDA

 
                                                                                                      Year 
                                                                           Half year ended           ended 
                                                                               31 Dec 2020    30 June 2021 
                                                                                      US$M            US$M 
Underlying EBITDA                                                                 Restated        Restated 
------------------------------------------------------------------------  ----------------  -------------- 
Profit from operations                                                               9,889          25,515 
Exceptional items included in profit from operations                                 1,511           4,338 
 
Underlying EBIT                                                                     11,400          29,853 
 
Depreciation and amortisation expense                                                2,405           5,084 
Net impairments                                                                        629           2,507 
Exceptional item included in Depreciation, amortisation and impairments              (547)         (2,371) 
 
Underlying EBITDA                                                                   13,887          35,073 
 
 

Underlying EBITDA margin

 
Half year ended 31 Dec 2020 
 US$M                                                                       Group and unallocated items/ 
 Restated                                       Copper   Iron Ore    Coal                eliminations(1)   Total Group 
---------------------------------------------  -------  ---------  ------  -----------------------------  ------------ 
Revenue - Group production                       6,129     14,050   2,170                            737        23,086 
Revenue - Third party products                     938          8       -                             12           958 
 
Revenue                                          7,067     14,058   2,170                            749        24,044 
 
Underlying EBITDA - Group production             3,683     10,241   (201)                            106        13,829 
Underlying EBITDA - Third party products            55          3       -                              -            58 
 
Underlying EBITDA                                3,738     10,244   (201)                            106        13,887 
 
Segment contribution to the Group's 
 Underlying EBITDA(2)                              27%        74%    (1%)                                         100% 
Underlying EBITDA margin(3)                        60%        73%    (9%)                                          60% 
 

41

 
Year ended 30 June 2021 
 US$M                                                                       Group and unallocated items/ 
 Restated                                       Copper   Iron Ore    Coal                eliminations(1)   Total Group 
---------------------------------------------  -------  ---------  ------  -----------------------------  ------------ 
Revenue - Group production                      13,482     34,457   5,154                          1,543        54,636 
Revenue - Third party products                   2,244         18       -                             23         2,285 
 
Revenue                                         15,726     34,475   5,154                          1,566        56,921 
 
Underlying EBITDA - Group production             8,425     26,277     288                             18        35,008 
Underlying EBITDA - Third party products            64          1       -                              -            65 
 
Underlying EBITDA                                8,489     26,278     288                             18        35,073 
 
Segment contribution to the Group's 
 Underlying EBITDA(2)                              24%        75%      1%                                         100% 
Underlying EBITDA margin(3)                        62%        76%      6%                                          64% 
 
 

(1) Group and unallocated items includes functions, other unallocated operations including Potash, Nickel West, legacy assets and consolidation adjustments.

   (2)   Percentage contribution to Group Underlying EBITDA, excluding Group and unallocated items. 
   (3)   Underlying EBITDA margin excludes Third party products. 

APMs derived from Consolidated Cash Flow Statement

Capital and exploration expenditure

 
                                                                                                       Year 
                                                                            Half year ended           ended 
                                                                                31 Dec 2020    30 June 2021 
                                                                                       US$M            US$M 
Capital and exploration expenditure                                                Restated        Restated 
-------------------------------------------------------------------------  ----------------  -------------- 
Capital expenditure (purchases of property, plant and equipment)                      2,835           5,612 
Add: Exploration expenditure                                                             86             192 
 
Capital and exploration expenditure (cash basis) - Continuing operations              2,921           5,804 
 
Capital and exploration expenditure - Discontinued operations                           693           1,316 
 
Capital and exploration expenditure (cash basis) - Total operations                   3,614           7,120 
 
 

Free cash flow

 
                                                                                  Year 
                                                       Half year ended           ended 
                                                           31 Dec 2020    30 June 2021 
                                                                  US$M            US$M 
Free cash flow                                                Restated        Restated 
----------------------------------------------------  ----------------  -------------- 
Net operating cash flows from Continuing operations              9,148          25,883 
Net investing cash flows from Continuing operations            (3,229)         (6,325) 
 
Free cash flow - Continuing operations                           5,919          19,558 
 
Free cash flow - Discontinued operations                         (759)           (169) 
 
Free cash flow - Total operations                                5,160          19,389 
 
 

42

APMs derived from Consolidated Balance Sheet

The Group's balance sheet is not required to be restated under IFRS 5, however Net operating assets presented below, has been restated to reflect the exclusion of Petroleum from the Group's reportable segments which is to be recognised as held for sale as at 31 December 2021.

Net operating assets

 
                                                                 Half year ended            Year 
                                                                     31 Dec 2020           ended 
                                                                            US$M    30 June 2021 
                                                                        Restated            US$M 
                                                                                        Restated 
                                                                ----------------  -------------- 
Net assets                                                                53,423          55,605 
 
Less: Non-operating assets 
Cash and cash equivalents                                                (9,291)        (15,246) 
Trade and other receivables(1)                                             (202)           (280) 
Other financial assets(2)                                                (2,225)         (1,516) 
Current tax assets                                                         (295)           (279) 
Deferred tax assets                                                      (3,178)         (1,912) 
Assets held for sale                                                           -           (324) 
Petroleum discontinued operations operating assets(3)                   (13,745)        (13,757) 
 
Add: Non-operating liabilities 
Trade and other payables(4)                                                  218             227 
Interest bearing liabilities                                              22,719          20,983 
Other financial liabilities(5)                                               752             588 
Current tax payable                                                        1,184           2,800 
Non-current tax payable                                                      173             120 
Deferred tax liabilities                                                   3,603           3,314 
Liabilities directly associated with the assets held for sale                  -              17 
Petroleum discontinued operations operating liabilities(3)                 5,197           5,684 
 
Net operating assets                                                      58,333          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 and other investments.

(3) Represents the Petroleum operating assets and operating liabilities as at 31 December 2020 and 30 June 2021 that are to be recognised as held for sale as at 31 December 2021 under IFRS 5.

   (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.

43

Other APMs

The definition and calculation methodology to compute the Group's underlying ROCE calculation below, has not changed as a result of the discontinued operations impacts connected with the planned Petroleum Merger. As per our definitions, the Group's underlying ROCE includes the contribution from Discontinued operations.

However, Underlying ROCE by segment and Underlying ROCE by assets presented below, have been restated to reflect the portion attributable to the Group's Petroleum Discontinued operations and the Group's continued operations.

For further information and a list of the "Definition and calculation of alternative performance measures" refer to the Group's 2021 published Annual report.

Underlying return on capital employed (ROCE) by segment

 
 
Half year ended 31                                          Group and 
Dec 2020                                                  unallocated                          Petroleum 
US$M                                                           items/         Total         Discontinued 
Restated              Copper   Iron Ore      Coal     eliminations(1)    Continuing            operation   Total Group 
-------------------  -------  ---------  --------  ------------------  ------------  -------------------  ------------ 
Annualised profit 
 after taxation 
 excluding net 
 finance costs and 
 exceptional items     3,918     12,454   (1,066)                 256        15,562                (260)        15,302 
Average capital 
 employed             23,941     16,367     8,743               5,877        54,928                9,813        64,741 
 
Underlying Return 
 on Capital 
 Employed                16%        76%     (12%)                   -         28.3%               (2.6%)         23.6% 
 
 
Year ended 30 June                                          Group and 
2021                                                      unallocated                          Petroleum 
US$M                                                           items/         Total         Discontinued 
Restated              Copper   Iron Ore      Coal     eliminations(1)    Continuing            operation   Total Group 
-------------------  -------  ---------  --------  ------------------  ------------  -------------------  ------------ 
Profit after 
 taxation excluding 
 net finance costs 
 and exceptional 
 items                 4,191     16,640     (454)               (395)        19,982                  149        20,131 
Average capital 
 employed             23,710     16,042     8,262               4,470        52,484                9,489        61,973 
 
Underlying Return 
 on Capital 
 Employed                18%       104%      (5%)                   -         38.1%                 1.6%         32.5% 
 
 
 

(1) Group and unallocated items includes functions, other unallocated operations including Potash, Nickel West, legacy assets and consolidation adjustments.

44

Underlying return on capital employed (ROCE) by asset

 
Half 
 year 
 ended                                                                                                New 
 31 Dec          Western                                                                            South 
 2020          Australia                                                                            Wales                           Petroleum 
 US$M               Iron                          Pampa            Olympic   Queensland   Cerrej   Energy                Total   Discontinued    Total 
 Restated            Ore   Antamina   Escondida   Norte   Potash       Dam         Coal        n     Coal   Other   Continuing   operation(1)    Group 
------------  ----------  ---------  ----------  ------  -------  --------  -----------  -------  -------  ------  -----------  -------------  ------- 
Annualised 
 profit 
 after 
 taxation 
 excluding 
 net 
 finance 
 costs 
 and 
 exceptional 
 items            12,458        522       3,292     172       78        78        (330)     (58)    (482)   (168)       15,562          (260)   15,302 
Average 
 capital 
 employed         18,614      1,364      10,593   3,752    4,468     8,028        7,622      519      557   (589)       54,928          9,813   64,741 
 
Underlying 
 Return 
 on Capital 
 Employed            67%        38%         31%      5%       2%        1%         (4%)    (11%)    (87%)       -        28.3%         (2.6%)    23.6% 
 
 
 
Year 
 ended                                                                                                New 
 30 June         Western                                                                            South 
 2021          Australia                                                                            Wales                             Petroleum 
 US$M               Iron                          Pampa            Olympic   Queensland   Cerrej   Energy                  Total   Discontinued    Total 
 Restated            Ore   Antamina   Escondida   Norte   Potash       Dam         Coal        n     Coal     Other   Continuing   operation(1)    Group 
------------  ----------  ---------  ----------  ------  -------  --------  -----------  -------  -------  --------  -----------  -------------  ------- 
Profit 
 after 
 taxation 
 excluding 
 net 
 finance 
 costs 
 and 
 exceptional 
 items            16,665        593       3,281     302        5       214        (103)     (13)    (203)     (759)       19,982            149   20,131 
Average 
 capital 
 employed         18,661      1,353      10,353   3,760    3,710     8,021        7,475      483      269   (1,601)       52,484          9,489   61,973 
 
Underlying 
 Return 
 on Capital 
 Employed            89%        44%         32%      8%       0%        3%         (1%)     (3%)    (75%)         -        38.1%           1.6%    32.5% 
 
 
   (1)   Includes exploration expenditure previously classified in Group and unallocated. 

45

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January 19, 2022 02:00 ET (07:00 GMT)

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