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BHP Operational Review for September Quarter

Mining News - Published on Fri, 18 Oct 2019

Image Source: bhp.com
BHP Chief Executive Officer, Andrew Mackenzie, said: “We delivered a solid start to the 2020 financial year through ongoing strong operational performance across our portfolio. While Group production for the quarter decreased slightly due to the expected impacts of planned maintenance and natural field decline in Petroleum, guidance remains unchanged and we are on track to deliver slightly higher volumes than last financial year. The South Flank iron ore project is 50 per cent complete, with all our major projects on schedule and budget. We achieved further encouraging exploration results in Petroleum and at the Oak Dam copper prospect.”

Highlights

Group copper equivalent production decreased by 3% in the September 2019 quarter largely due to planned maintenance across a number of operations and natural field decline in Petroleum. Volumes for the 2020 financial year are expected to be slightly higher than last year.

All production and unit cost guidance (based on exchange rates of AUD/USD 0.70 and USD/CLP 683) remains unchanged for the 2020 financial year.

All major projects under development are tracking to plan, with the Ruby oil and gas development in Trinidad and Tobago approved during the September 2019 quarter.

In Petroleum, the Trion 3-DEL appraisal well in Mexico encountered oil in the reservoirs up dip from all previous well intersections. Phase 4 of our deepwater drilling campaign in Trinidad and Tobago was completed, evaluation and development planning studies of the discoveries are ongoing.

Further high-grade mineralised intercepts of copper, with associated gold, uranium and silver, were confirmed during the second phase of the drilling program at Oak Dam in South Australia. The next drilling phase is expected to commence in November 2019.

Operational performance

Production and guidance are summarised below.
ProductionSep Q19YoYQoQFY20 Guidance
Petroleum (MMboe)29-11%-1%110 - 116
Copper (kt)4305%-3%1,705 - 1,820
Escondida (kt)293-1%2%1,160 - 1,230
Other copper(i) (kt)13720%-13%545 - 590
Iron ore (Mt)61-1%-3%242 - 253
WAIO (100% basis) (Mt)690%-3%273 - 286
Metallurgical coal (Mt)9-10%-21%41 - 45
Queensland Coal (100% basis) (Mt)16-10%-22%73 - 79
Energy coal (Mt)6-15%-24%24 - 26
NSWEC (Mt)4-10%-34%15 - 17
Cerrej'n (Mt)2-23%2%~9
Nickel (kt)221%-25%~87
 


Major development projects

During the September 2019 quarter, the BHP Board approved an investment of US$283 million (BHP share) for the development of the Ruby oil and gas project in Trinidad and Tobago.

At the end of the September 2019 quarter, BHP had six major projects under development in petroleum, copper, iron ore and potash, with a combined budget of US$11.4 billion over the life of the projects.

The Jansen Stage 1 potash project in Canada will be presented to the Board for final investment decision by February 2021. In order to make a final investment decision, work on engineering to support project planning and on finalising the port solution is required, and the Board has approved US$144 million for these activities. An additional US$201 million in funding was approved to further derisk the project, focussing on the mine’s scope of work, advancing other engineering and procurement activities, and preparation works for underground infrastructure. This will enable an efficient transition of the project team between the study and execution phase, should the project be approved. The release of funding to the project will be staged over this period.

Corporate update

As outlined in our 2019 financial year results announcement, we expect a US$3.8 billion increase in net debt over the 2020 financial year from the application of IFRS 16 ‘Leases’, new leases commencing in the year and a change in our definition of net debt to include fair value of derivatives related to net debt.

Susan Kilsby has been appointed as the Chairman of the Remuneration Committee and John Mogford has been appointed as the Chairman of the Sustainability Committee, both with effect from the conclusion of the BHP Group Limited Annual General Meeting on 7 November 2019. Susan has been a Non-executive Director of BHP since April 2019 and John has been a Non-executive Director of BHP since October 2017.

Source :

Posted By : Rabi Wangkhem on Fri, 18 Oct 2019
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