RNS Number : 9671H
BHP Billiton PLC
20 November 2018
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Issued by:
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BHP Group Plc
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Date:
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21 November 2018
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To:
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London Stock Exchange
JSE Limited
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For Release:
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Immediately
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Contact:
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Helen Ratsey +44 (0) 20 7802 7540
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BHP - Capital allocation briefing
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UK Listing Authority Submissions
The following document has today been submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do:
· Capital allocation briefing.
The document may also be accessed via BHP's website - bhp.com
NEWS RELEASE
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Release Time
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IMMEDIATE
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Date
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21 November 2018
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Release Number
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26/18
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Capital allocation briefing
BHP will be holding an investor and analyst briefing today in Melbourne on BHP's Capital Allocation Framework.
The purpose of the briefing is to provide greater detail in relation to BHP's capital allocation processes, and greater transparency on BHP's approach to capital allocation and investment decisions.
The presentation is available on BHP's website at: https://www.bhp.com/-/media/documents/media/reports-and-presentations/2018/181121_CapitalAllocationBriefing.pdf
The webcast of the briefing will be available at: https://edge.media-server.com/m6/p/nxkxg8iw
Further information on BHP can be found at: bhp.com
APPENDIX
The following information is included in Peter Beaven's presentation slides.
Latent capacity
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Options
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IRR2
(%)
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Risk3
(1-5)
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Timing4
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Capex
(US$m)
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Description
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WAIO
Debottlenecking
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>100
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●
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<2 years
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<250
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Supply chain debottlenecking initiatives at the port and rail, and releasing latent capacity at Jimblebar to increase production to 290 Mtpa
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Barracouta West
Petroleum
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~20
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Non operated
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<2 years
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~250
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Brownfield tieback opportunity to existing infrastructure in the Bass Strait.
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Escondida
EWS Expansion
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>50
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●●
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<2 years
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~500
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Expansion of desalination plant to reduce groundwater usage and maximise concentrator throughput
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Escondida
Debottlenecking
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>100
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●●
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various
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>500
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Concentrator debottlenecking, sulphide leach reprocessing of ripios, truck and shovel fleet upgrades
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Spence
Ripios processing
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~60
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●●
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2-5 years
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250-500
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Reprocessing of ripios dumped since the beginning of the Spence operations
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Queensland Coal
Latent capacity
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>100
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●
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>5 years
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>500
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Investing in stripping capacity and pipeline of productivity initiatives to shift the bottleneck towards the coal handling plants
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Spence
Debottlenecking
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>15
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●●●
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>5 years
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>500
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Processing lower grade hypogene material with increased recoveries, concentrator debottlenecking, in-pit semi mobile ore conveying
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Average/aggregate
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>100
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~US$4 bn
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Up to ~2 Mt of incremental Cu eq. capacity with
~US$16 bn unrisked NPV
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1. Projects as presented in May 2018 at the Bank of America Merrill Lynch Global Metals, Mining & Steel Conference; IRR: Returns at 2018 consensus price forecasts; ungeared, post tax, nominal return; Risk profile is based on a BHP assessment of each project against defined quantified and non-quantified risk metrics rated out of 5; 5 represents more risk; Timing: Represents potential first production
Future options
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Options
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Description
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Potential execution timing
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Capex (US$m)
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GIP
tollgate1
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IRR1
(%)
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Risk1
(1-5)
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Investment Considerations
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Atlantis Phase 3
Petroleum
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Tie back to existing Atlantis facility unlocked through Advanced Seismic Imaging
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<1 year
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>500
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Feasibility
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~25
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Non-
operated
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- Resilient to price
- Low risk, robust economics
- Non-operated JV
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Ruby
Petroleum
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Tie back into existing processing facilities in Trinidad & Tobago
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<1 year
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>150
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Feasibility
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- Similar scope to existing tie backs
- Utilisation of existing facility capacity
- Early life sensitivity to oil price
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Olympic Dam BFX
Copper
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Accelerated development into the Southern Mine Area, debottlenecking of existing surface infrastructure to increase production
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<5 years
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>2,000
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Pre-feasibility
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~20
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●●
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- Resilient to price
- Improved Cu grades in the Southern Mine Area
- Continued resource definition
- Power network instability
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Scarborough
Petroleum
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Tie back development to existing LNG facility
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<5 years
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<2,000
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Pre-Feasibility
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>15
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Non-
operated
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- Tier 1 resource
- Ability to process through North West Shelf
- Oversupply of LNG driving low price market environment
- Remote field location, deep water, severe metocean conditions
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Wards Well
Metallurgical Coal
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Long-life, premium hard coking coal resource, greenfield underground long-wall mine
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>5 years
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>1,000
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Opportunity assessment
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~15
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●●●●
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- Tier 1 resource
- Proximity to existing operating assets
- Geological definition required to de-risk
- Risk of impact on market supply
- Supply chain logistic complexities
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Resolution
Copper
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Underground block cave with attractive grade profile and competitive cost curve position
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>5 years
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<3,000
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Conceptual
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~15
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Non-
operated
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- High copper grades
- Resilient to price
- Non-operated JV
- Technical risk due to caving at the resource depth and tailings options.
- Permitting requirements
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Jansen Stage 12
Potash
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Tier 1 resource with valuable expansion optionality
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<5 years
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~5,000
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Feasibility
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~13
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●●●
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- Tier 1 resource, stable jurisdiction
- Operating costs of ~US$100/t (FOB Vancouver)
- Unrivalled position of land
- Risk of market oversupply
- New commodity entry
- Sensitive to price
- High capital cost and long payback
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Jansen Stage 2-4
Potash
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Sequenced brownfield expansions of up to 12 Mtpa (4 Mtpa per stage)
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>15 years
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~4,000
per stage
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Opportunity assessment
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~16
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●●
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- Long term growth optionality and value generation
- Risk of market oversupply
- Complexities from project size
- Significant capital requirement
- Further de-risking required
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Average/
aggregate
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Feasibility
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~17
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Aggregate unrisked value of ~US$15 bn spanning commodities and time periods
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Media Relations
Email: [email protected]
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Investor Relations
Email: [email protected]
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Australia and Asia
Gabrielle Notley
Tel: +61 3 9609 3830 Mobile: +61 411 071 715
United Kingdom and South Africa
Neil Burrows
Tel: +44 20 7802 7484 Mobile: +44 7786 661 683
North America
Judy Dane
Tel: +1 713 961 8283 Mobile: +1 713 299 5342
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Australia and Asia
Tara Dines
Tel: +61 3 9609 2222 Mobile: + 61 499 249 005
United Kingdom and South Africa
Elisa Morniroli
Tel: +44 20 7802 7611 Mobile: +44 7825 926 646
Americas
James Wear
Tel: +1 713 993 3737 Mobile: +1 347 882 3011
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BHP Group Limited ABN 49 004 028 077
LEI WZE1WSENV6JSZFK0JC28
Registered in Australia
Registered Office: Level 18, 171 Collins Street
Melbourne Victoria 3000 Australia
Tel +61 1300 55 4757 Fax +61 3 9609 3015
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BHP Group Plc Registration number 3196209
LEI 549300C116EOWV835768
Registered in England and Wales
Registered Office: Nova South, 160 Victoria Street
London SW1E 5LB United Kingdom
Tel +44 20 7802 4000 Fax +44 20 7802 4111
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headquartered in Australia
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