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Tuesday 14 May, 2019

BHP Group PLC

2019 Global Metals, Mining and Steel Conference

RNS Number : 9356Y
BHP Group PLC
14 May 2019
 

 

 

Issued by:

BHP Group Plc

 

Date:

14 May 2019

 

To:

London Stock Exchange

JSE Limited

 

For Release:

Immediately

 

Contact:

Helen Ratsey +44 (0) 20 7802 7540

 

 

  BHP  - 2019 Global Metals, Mining and Steel Conference Presentation

 

 

 

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:

 

·    2019 Global Metals, Mining and Steel Conference Presentation.

 

The document may also be accessed via BHP's website - bhp.com

 

 

 

NEWS RELEASE

 

Release Time

IMMEDIATE

Date

14 May 2019

Release Number

11/19

 

 

 

BHP CEO speaks at Bank of America Merrill Lynch Global Metals, Mining and Steel Conference

 

BHP Chief Executive Officer, Andrew Mackenzie, today said BHP's focus remains clear: to maximise cash flow, maintain capital discipline and increase value and returns.

 

Speaking at the Bank of America Merrill Lynch Global Metals, Mining and Steel Conference in Barcelona, Mr Mackenzie, said BHP's strategy provides the framework to make the most of our portfolio while developing options to secure future success.

 

Since the beginning of 2016, BHP has strengthened its balance sheet through a US$16 billion reduction in net debt, reinvested US$20 billion in the business and returned more than US$25 billion to shareholders.

 

"We have increased volumes, reduced costs, and kept our people safer at work. These actions lifted return on capital by around 50 per cent," Mr Mackenzie said. "These are strong outcomes. There is still substantial opportunity to maximise the value of existing assets to release latent capacity and improve performance.

 

"We have shaped our portfolio around commodities with attractive fundamentals and we hold exploration licences and development options in the world's premier copper, oil and potash basins.

 

"Developments such as climate change and dramatic shifts in technology present both challenges and opportunities. To make sure that we secure the future prosperity of our Company, we constantly test our current assets and future options against many divergent scenarios for how the world will look well into the future. Decarbonisation, the electrification of transport, the future of work and food security are examples of strategic themes that we monitor.

 

"For example, Nickel West, which we will now retain in the portfolio, offers high-return potential as a future growth option, linked to the expected growth in battery markets and the relative scarcity of quality nickel sulphide supply.

 

"While nobody can predict what will happen with absolute precision, I am confident BHP's portfolio can thrive under almost all plausible outcomes in this changing world."

 

Mr Mackenzie said BHP was well placed in the short, medium and longer term with strict financial discipline and a transparent and consistent approach to capital allocation.

 

"Our institutionalised capital allocation framework transparently directs cash to its best use, be that development opportunities, the balance sheet, or returns to shareholders. We have a resilient portfolio, a transformation agenda and a suite of options and ideas to create future value at the right time. We have demonstrated this is the right formula for our shareholders.

 

"Regardless of how the world evolves, BHP is set up for a strong future."

 

An audio-webcast of the presentation will be made available at: https://edge.media-server.com/m6/p/d2ky883h 

 

A summary of guidance and project details contained in the presentation is included below.

 

Guidance

 

Asset

FY19e

Medium term

 

Production

Unit costs1

Production

Unit costs1

Western Australia
Iron Ore

265-270 Mt
(100% basis)

<US$15/t

290 Mt
(100% basis)

<US$13/t

Conventional Petroleum

113-118 MMboe

<US$11/boe

~110 MMboe average

<US$13/boe

Queensland Coal

43-46 Mt

US$68-72/t

49-54 Mt

US$57-64/t

Escondida

1.12-1.18 Mt

<US$1.15/lb

~1.20 Mt average

<US$1.15/lb

           

 

Future options

 

Options

Potential execution timing

Capex
(US$m)

Tollgate

IRR2

(%)

Risk3

(1-5)

Description

Ruby

Petroleum

<1 year

>250

Feasibility

>15

●●

Tie back into existing processing facilities in Trinidad & Tobago

Mad Dog northwest water injection

Petroleum

<5 years

>250

Pre-feasibility

*

Non-
operated

Incremental production of existing A-Spar production wells in Mad Dog field

Scarborough

Petroleum

<5 years

<2,000

Pre-feasibility

*

Non-
operated

Tie back development to existing LNG facility

Olympic Dam BFX4

Copper

<5 years

Up to
~2,500

Pre-feasibility

12-25

●●

Development into the Southern Mine Area, debottlenecking of existing surface infrastructure to increase production to 240‑300 ktpa

Resolution

Copper

>5 years

<3,000

Concept

~15

Non-
operated

Underground block cave with attractive grade profile and competitive cost curve position

Jansen Stage 15

Potash

<5 years

5,300 -
5,700

Feasibility

14-15

●●●

Tier 1 resource with potential initial capacity of 4.3‑4.5 Mtpa, with valuable expansion optionality

Jansen Stage 2-45

Potash

>15 years

~4,000

per stage

Opportunity assessment

~20

●●

Sequenced brownfield expansions of up to 12 Mtpa (4 Mtpa per stage)

Aggregate

 

 

 

~17

 

Aggregate unrisked value2 of ~US$14 billion spanning commodities and time periods

 

Note: * Mad Dog northwest water injection and Scarborough IRRs under review with joint venture partners.

 

 

 

 

 

 

 

 

Exploration

 

Options

Location

Ownership

Maturity

Earliest first production

Description

Trion

Petroleum

Mexico - Gulf of Mexico

60%

Operator

Appraisal

Mid 2020s

Large oil discovery in the Mexican deepwater Gulf of Mexico

Wildling

Petroleum

US - Gulf of Mexico

80+%

Operator

Appraisal

Mid 2020s

Large oil resource across multiple horizons near operated infrastructure in US Gulf of Mexico

Samurai

Petroleum

US - Gulf of Mexico

50%

Appraisal

Early 2020s

Oil discovery in the Wildling mini basin

Northern Gas

Petroleum

Trinidad and Tobago

70%

Operator

Exploration

Mid 2020s

Potential material gas play in Deepwater Trinidad, well positioned to the Atlantic LNG plant onshore T&T

Magellan Southern Gas

Petroleum

Trinidad and Tobago

65%

Operator

Exploration

Mid 2020s

Potential material gas play in Deepwater Trinidad, well positioned to the Atlantic LNG plant onshore T&T

Western GOM

Petroleum

US - Gulf of Mexico

100%

Operator

Frontier

Early 2030s

Acquired a significant acreage position in Western Gulf of Mexico

Trinidad Oil

Petroleum

Trinidad and Tobago

65-70%

Operator

Frontier

Late 2020s

Potential oil play in deepwater Trinidad

Orphan Basin

Petroleum

Canada

100%

Operator

Frontier

Early 2030s

Recent bid success for blocks with large oil resource potential in the offshore Orphan Basin in Eastern Canada

Multi-billion barrel equivalent risked potential; unrisked NPV of up to US$15 billion6

 

1. Based on an exchange rate of AUD/USD 0.75 and USD/CLP 663. Unit costs are in nominal terms.

2. Calculated at 2019 analyst consensus price forecasts (except Potash which are at CRU and Integer price forecasts); ungeared, post-tax, nominal rates.

3. 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.

4. IRR of 12% to 25% represents different development options of varying levels of certainty. The upper end of range relates to investment in a potential lower capital and production development towards BFX.

5. Based on CRU and Integer (Argus Media) price assumptions (2025-2035 average mid-case: CRU US$325/t and Integer (Argus Media) US$342/t). Jansen Stage 1 IRR of 14-15% reflects capex range and excludes remaining funded investment of
~US$0.3 billion for completion of the shafts and installation of essential service infrastructure and utilities. Jansen Stages 2-4 capex is presented in real terms (July 2019) - those options would be brownfield and predominately require surface infrastructure, with shorter construction schedules and less risk than Stage 1. The execution of future stages would be subject to our review of supply and demand fundamentals and successful competition for capital under our Capital Allocation Framework. However, we expect that each subsequent expansion would be approved for development after the previous expansion had reached 3 to 4 years of full production. The existing shafts are capable of supporting production for
Stages 2-4.

6. Petroleum exploration and appraisal NPV: Unrisked values at BHP long-term price forecasts.

 

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

 

 

 

Media Relations

 

Email: [email protected]

 

Investor Relations

 

Email: [email protected]

 

 

 

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

 

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

 

 

 

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

 

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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