BHP Group Limited

Hello, and thank you for joining us to hear about BHP's results for the first half of the 2024 financial year. I'm joined by our Chief Financial Officer, David Lamont. We're pleased to present a set of results today that underscore the strength of our strategy and the quality of our execution. I must start, however, by acknowledging the loss of Luke O'Brien, a co-worker from one of our contracting partners who was fatally injured while on the job at Siraji in January of this year. The safety and well-being of our people is the priority, and it simply isn't acceptable if anyone is being seriously injured or worse while at work. And we are redoubling our ongoing efforts to reinforce our culture and controls when it comes to safety. Operationally, in the December 2023 half, we delivered a 7% increase in copper production. We maintained strong momentum at Western Australian Iron Ore and we remain on track to meet our original full-year production and unit cost guidance across all, bar one, of our assets. We progressed important portfolio changes in line with our strategy, including successfully integrating our new copper asset in South Australia, sanctioning additional investment in potash at Janssen in Canada, and further focusing our metallurgical coal portfolio on higher quality premium coals through the divestment of Blackwater and Donya. The period also had its challenges, with exceptional items relating to Western Australian nickel and Simarco offsetting an otherwise solid operational performance and overall healthy commodity prices. Our strong underlying results enabled us to determine an interim dividend of 72 US cents per share. In addition to delivering strong shareholder value, we've also advanced our social value initiatives. We've taken further steps towards our decarbonization ambitions, both at our operations and in our value chain. For example, we've just signed a framework agreement with Rio Tinto and BlueScope to investigate the development of a pilot iron-making electric smelting furnace using Pilbara iron ores and renewable power. Paired with direct reduced iron, this could open a pathway to a low-carbon alternative to the conventional blast furnace, which could reduce steel-making emissions intensity by around 80%. We continue to work towards a more inclusive and more diverse workplace, which helps foster good business outcomes and contributes to broader economic performance. Since 2016, we have more than doubled female employment to over 36% of our employee workforce. And women now make up more than 40% of our Minerals Americas team and half of my executive leadership team. With that, I'll hand over to David to take you through our financial results.

Thanks, Mike. We delivered a strong set of underlying financial results in the first half of the year, underpinned by solid operating performance. Underlying EBITDA increased by 5% to $13.9 billion at a margin of 53%. Including taxes and royalties of $5 billion, our effective tax rate was 41%, resulting in underlying attributable profit of $6.6 billion and a return on capital employed of 26%. Our operations generated significant amounts of cash with net operating cashflow of $8.9 billion. During the half, we spent 4.7 billion on capital and exploration expenditure to support growth. And our balance sheet remained strong with net debt finishing at 12.6 billion. Balancing investment returns to shareholders and maintaining a strong balance sheet, our interim dividend of 72 US cents per share, fully franked, equates to $3.6 billion and a payout ratio of 56%. Last week, we announced exceptional items in relation to Western Australian Nickel and Simarco. As we said in January, the nickel industry is undergoing a number of structural changes, primarily from the excessive rapid growth of Indonesian supply. As a result, the nickel price has fallen around 50% over the past year, and as much as half of global production now is estimated to be loss-making. It's in this context that we have recognised a non-cash impairment of $2.5 billion at our Western Australian nickel business. We have responded by optimising operations, reducing discretionary expenditure and reviewing capital plans to mitigate the impacts of the current low prices. This includes optimising the West Musgrave project schedule. We are also looking at potentially entering a period of care and maintenance, noting that this is not without its own challenges. Turning to Samarco, we remain fully committed to supporting full and fair remediation and compensation for the Fundale dam failure. In total, Renova has spent around $7.2 billion since 2016 and has made good progress, especially over the last 18 months. Around 84% of the resettlement cases have been completed and around 220 families have moved into their new homes. Renova has paid $430,000 people compensation and financial assistance and around 84% of registered claims have been processed. The Somarco operation itself continues to operate safely, with an expansion to double capacity recently announced, allowing it to continue to benefit local stakeholders, bringing jobs and local tax revenue. Notwithstanding this strong progress, Somarco, Vale and we continue to face legal challenges. BHP Brazil continues to engage in negotiations to seek a fair and reasonable settlement of the Brazilian Federal Public Prosecution Office claim. In light of these negotiations, we have reassessed our estimate of the costs required to resolve both this claim and the framework agreement obligations, and have recognised a $3.2 billion charge in the period. The provision now stands at $6.5 billion with cash outflows expected to occur over an extended period of time. Separate to the provision, we continue to outline a number of contingent liabilities in our financial accounts, including legal claims in and outside of Brazil, where we cannot reasonably determine a potential obligation at this time. While these are large numbers, the company remains very strong, operationally and financially. This half underlying EBITDA benefited from higher iron ore prices up 21% and copper up 5%. These were partly offset by lower energy coal and nickel prices, while metallurgical coal prices were more or less in line with that of last year. The impact of inflation started to ease this half, with lower prices for diesel, energy and price-linked consumables partly offsetting the negative impact of CPI increases, most notably labour and parts. That said, we continue to experience the lagged impact of inflation across both operating and capital costs. We can continue to deliver well in the areas that we control. Higher volumes delivered an increase of $300 million. And we manage controllable costs well, performing in line with our original full year unit cost guidance at all assets except BMA, which we have revised. Across the business, we have had strong performances in iron ore, copper and energy coal. Western Australian iron ore delivered an EBITDA margin of 69%. Volumes were impacted by tie-in activity for the rail technology program, which will support future growth, and the ongoing ramp-up of the central Pilbara hub. C1 costs of $16 per tonne in the half were up only 3%. Guidance for 2024 remains unchanged. In copper, our EBITDA margin remains healthy at 46%. Production increased by 7% with a record half at Spence, higher production at Escondida and strong performance at Copper South Australia. It's pleasing to see Olympic Dam delivering more consistent and reliable performance. BMA had a difficult half following significant maintenance, low starting inventories and the impact of wet weather late in the period, which hindered our ability to stabilise the value chain. As a result, and excluding Blackwater and Dornier from April 2024 due to the divestment completion, we have revised full year production and unit cost guidance. At NSW Energy Coal, production increased 36% through strong operational performance and a lower portion of washed coal. Full year production is now expected to be in the upper end of the guidance range. Our plans to cease mining in 2030 continue to progress well. and at Janssen, stage one is now 38% complete and on track, while more than 65% of engineering has been completed for stage two. I will now hand back to Mike for an update on the business.

Thanks, David. I'd like to now take some time to explain how we're seeing the world, our outlook for the commodities we produce, and what we're doing to grow value across BHP. The past six months have seen ongoing geopolitical complexity and volatility. We've seen physical disruptions to trade routes in the Red Sea, ongoing conflict in Ukraine, escalating hostilities in the Middle East, and more policy headwinds for international trade. Calendar year 2024 is also a year of elections, including in Queensland, India, Indonesia, and the US, which can bring elevated policy uncertainty. Economically, we expect the near term to be moderately more favourable than in the last calendar year, with a more balanced distribution of commodity demand globally. The inflation that has defined the last two years has peaked, driving more positive sentiment across financial markets, with potential flow-on effects to some exchange-traded commodities. Lower inflation, and eventually lower interest rates in the developed world, will help to establish more positive momentum in manufacturing sectors in the US and Europe. India's strong growth momentum is expected to continue, underpinned by healthy investment in steel-intensive sectors such as infrastructure and housing. The Chinese economy has been volatile since its zero COVID policy was eased in December 2022. Uncertainty remains high, and the officials have acknowledged that additional policies will be needed to put China's economic recovery on firmer ground. Overall, our outlook for China remains cautious and conditional on how quickly and effectively pro-growth policies flow through to the broader Chinese economy. Longer term, we remain positively leveraged to the trend shaping the future of the planet. The world's population will continue to grow, continue to seek higher standards of living, and continue to urbanize. The global economy is expected to be two and a half times larger by 2050, driving demand for the commodities we produce. The energy transition will further amplify that demand, as the world will need more decarbonization infrastructure and more investment in defensive measures against the physical impacts of climate change. For mining companies, cost differentiation is expected to be even more pronounced than it is today. There are also significant challenges to bringing on new supply, be that due to grade decline headwinds, a lack of economically viable discoveries, permitting challenges, or local stakeholder opposition. Those companies that manage the impacts of inflation and operate efficiently while maintaining the right portfolio and a strong social value proposition will be the companies that succeed. And this is BHP. Our capabilities, track record and scale enable us to win in this environment to the benefit of shareholders, other stakeholders and all those that depend on the timely supply of the metals and minerals essential to the world. I would note that these challenges also underline the importance of collaboration between industry and government, and the need for well-formed and stable fiscal and regulatory settings. In Australia, companies in the critical minerals industry are facing headwinds in the near term. The nickel and lithium sectors are under significant pressure due to market conditions and fierce global competition. At the same time as the need to be globally competitive has sharpened, we've seen changes made at both the state and federal level that increase cost of business without any commensurate increase in productivity, thereby dragging Australian competitiveness down. These include the sharply increased coal royalties in Queensland and federal industrial relations policies. These challenge Australia's ability to compete in global markets at a time that other nations have identified and are aggressively chasing a share of the generational opportunity in front of us. BHP is working hard to offset these policies, both with redoubled efforts to improve productivity, as we've demonstrated through our operational performance, and with the strategic shaping of our portfolio. We are focused on large assets in attractive commodities that are long life, low cost, with options to expand. The larger the ore body, the greater the opportunity for value growth, not just in the short term, but over decades. The biggest opportunity we have to grow value is through increasing productivity at our existing assets. To do that, we focus on optimization and efficiency. We do this through our culture of continuous improvement, the use of our BHP operating system, and leveraging technology and innovation. BHP's scale means that even small improvements can deliver a great deal of value. Large ore bodies also present opportunities for organic growth. Our projects and execution currently are tracking well. We are progressing a number of options, and we have substantial longer-dated growth options too. In the near to medium term, we're on track to increase Western Australian iron ore production to over 305 million tonnes per annum, and we're studying growth towards 330. We've sanctioned further growth in potash at Janssen. and we're advancing multiple options in copper in Chile and South Australia. Let me expand on this. Late last year, we sanctioned Janssen Stage 2. This $4.9 billion investment marks the next phase of our growth in Canada and underscores our confidence in potash. Stage 1 is progressing well, and Stage 2 will double our production capacity, creating the world's largest potash mine, deliver better returns with sizable synergies, and position BHP as a leader in the global potash industry. Our focus on technology and modern approach to mining and processing is expected to deliver industry-leading efficiencies, helping Janssen enter the market towards the bottom of the global cost curve. Janssen is expected to have strong EBITDA margins and to generate cash at all points in the cycle. Janssen is also designed to have around 50% lower operational greenhouse gas emissions intensity and to use up to 60% less fresh water than the average potash mine in the province. It is a mark of the demand for this commodity that we already have MOUs in place with buyers around the world to cover sales as the mine ramps up. This is a world-class asset in an investment-friendly jurisdiction. It is well positioned to create value for decades to come. We have similar expectations for Copper South Australia, which combines Carapatena, Prominent Hill, Olympic Dam and the Oak Dam project. Integration has already successfully unlocked synergies of more than 50 million US dollars per year, six months ahead of schedule. That's a great start. But more importantly, the operations are performing well. The projects are on track and our people continue to learn from each other. We're now focused on delivering even greater value. We've also had further exploration success. Recent drilling of OD deeps, which sits below the Olympic Dam ore body, has identified attractive mineralization above 1% copper grade with some areas above 2%. 65 kilometers away at Oak Dam, we're making good progress. We now have 12 drill rigs on site and are nearing completion of the accommodation camp. We hope to be able to provide an initial mineral resource for this deposit later this year. While it's early days, these are encouraging results. Copper South Australia is already one of the largest copper resources globally and benefits from significant byproducts including uranium, gold and silver. We are growing value on multiple fronts in Copper South Australia and our aspiration is to grow copper production in the asset to more than 500,000 tonnes per year. In the nearer term, we're focused on operational synergies, such as processing concentrate from Prominent Hill and Carapatena through Olympic Dam, and the deployment of the BHP operating system. In the longer term, our exploration success gives us even greater confidence that the resources there to support a two-stage smelter at Olympic Dam, which would be more than double its current capacity. This would grow production and allow us to capture even more of the benefits of processing all concentrate in-house. We expect to make an investment decision on this in the 2026 or 2027 financial years, and with stable and competitive government policies in place, we believe there will be a strong case for investment. It's clear that this new copper South Australia asset will be more than the sum of its parts. In Chile, we are continuing to actively define the path forward for Escondida. This is an important step in realizing the significant untapped resource potential there and in choosing the approach that creates the most value. In particular, we're studying our concentrator strategy. This covers options to replace the original Los Colorados concentrator at the mine, as well as potential expansions at Laguna Seca 1 and 2. We are also actively trialing multiple leaching technologies to help us extract more copper and utilize latent capacity, potentially while using less water and energy and reducing use of tailings dams. Escondida is already one of the most responsible copper producers globally through its use of renewable power and desalinated water. We will have more to say about these options later this calendar year. We are also growing value by expanding our margins. We see strong future demand for higher quality metallurgical coal, which enables steel makers to reduce their greenhouse gas emissions intensity through increasing productivity of their blast furnaces. We expect this to be increasingly reflected in the price of coal. Over the past five years, the average price discount for hard coking coal relative to premium hard coking coal was approximately 12%. Over the last few years, we have proactively upgraded our coal portfolio to concentrate on these higher-quality coals. We announced the final step in this process in October last year with our agreement to divest the Blackwater and Donya mines from our BMA joint venture for up to $4.1 billion. Following completion, over 85% of our metallurgical coal products will be premium hard-cocoon coal, versus only half when we began this journey. BMA is a leading global producer of these coals, and our customer base is growing. More than 40% of our met coal goes to India today, and the Indian government is targeting to more than double steel production capacity by 2030. Factoring in that BMA owns its own port, located a relatively short distance from its mines, its ability to blend coals, and its proximity to customer markets, we are well positioned over the long term. However, Queensland's royalties are set at extremely high levels. Combined with income taxes, our effective tax rate in Queensland of 62% this half makes Queensland so unattractive and risky compared to our other investment opportunities that we simply cannot allocate any growth capital to this state. Before I conclude, I'd like to acknowledge that this is the last set of results at which you'll hear from David Lamont. We announced David's departure from the CFO role in December. Over his three years as CFO, David has made a very significant contribution to our company's future. His breadth of experience has been invaluable over a period of portfolio transformation. Vandita Pant will start in the CFO role from March 1st, having most recently led our commercial function. I would also like to acknowledge the departure of Laura Tyler, our Chief Technical Officer, after almost 20 years with BHP. Laura has also made very significant contributions to BHP's current and future performance, and I would like to sincerely thank both David and Laura. As we work through the second half of the 2024 financial year, we remain focused on creating value now and into the future, at all times, with safety as our priority. Our portfolio is strong and diverse. The demand for commodities we produce is enduring, and our pipeline of projects and the people who deliver them position us to benefit from the global megatrends that are shaping our world now and will do so for decades. Thank you for joining us.