BHP Group Limited Q4 FY2024 earnings call

• Safety: Tragic fatality in January, with ongoing efforts to reduce fatal and serious injuries; high potential injury frequency improved by 36% during the year.
• Operational Excellence: Met final production and unit cost guidance at all assets; iron ore as lowest cost globally, copper production growth.
• Growth Initiatives: Jansen potash Stage 1 ahead of schedule, first production late 2026; Copper SA synergies unlocked faster than anticipated; joint venture with Lundin Mining for copper in Argentina.
• Social Value: On track for 2030 GHG emissions reduction target, cut emissions 32% from 2020 baseline; increased female employee participation to over 37%; spent $3.3 billion with small/local/indigenous businesses.

Iron Ore: Delivered record production volumes with an EBITDA margin of 68%, being the lowest cost iron ore producer globally for over four years. South Flank completed ramp-up to full production capacity. Copper: Production grew 9% for the second consecutive year, with almost 300,000 tons additional copper per year, expected 4% growth in 2025. Strong performances at Escondida, Spence, and Copper South Australia. Nickel: Temporarily suspended Western Australia Nickel operations due to tough market conditions, with a $2.7 billion non-cash impairment. Potash: Jansen potash project Stage 1 ahead of initial schedule, first production forecast late 2026, Stage 2 in execution. Revenue contribution: Iron Ore likely the largest contributor given its size and performance, followed by Copper, Potash, and Nickel with the latter temporarily suspended.

• 2025 financial year capital and exploration expenditure expected around $10 billion, majority for growth and improvement.
• Medium-term average spend around $11 billion per year, two-thirds for future-facing commodities (e.g., Jansen, copper assets).
• Jansen potash Stage 1 first production forecast late 2026; copper production expected to grow with projects in SA, South America, and joint venture in Argentina.

• Market Conditions: Tough market for nickel led to suspension of Western Australia Nickel operations; potential surplus and price volatility in some commodities.
• Safety: Ongoing focus on reducing fatal and serious injuries; past incidents remind of importance.
• Regulatory/Policy: Impact on competitiveness and project returns in different jurisdictions (e.g., industrial relations, tax policies).

Q: Paul Young from Goldman Sachs asks about copper growth and returns in South Australia, specifically balancing free cash flow and investment.

A: Mike Henry responds about returns not yet included, investment balance, and capital allocation framework, noting returns escalate with scale and investment stacking up under the framework.

Q: Lyndon Fagan from JP Morgan inquires about FY '26 CapEx step-up and missing $11 billion, with Vandita Pant explaining higher spend on potash, copper projects, and fleet replacement.

A: Vandita Pant details maintenance spend, potash and copper project spends, and fleet replacement in assets like WAIO and Escondida.

Q: Rahul Anand from Morgan Stanley asks about capital allocation framework and dividends, specifically payout percentage and net debt.

A: Vandita Pant and Mike Henry discuss dividend decisions based on capital allocation framework, balance sheet, and value accretive projects, emphasizing rigorous application and importance of shareholder returns.

Q: James Redfern from Bank of America asks about iron ore expansion to 330 million tons and impact of lower prices, and South Australia Copper smelter refinery expansion details.

A: Mike Henry states expansion will compete under capital allocation framework, with studies to be completed in 2025; Vandita Pant mentions smelter refinery expansion at Olympic Dam with indicative timelines and approvals process.

Q: Kaan Peker from RBC asks about Filo and Josemaria conceptual development and infrastructure use.

A: Mike Henry and Vandita Pant discuss staged development, integrated plan with Lundin Mining, and consideration of infrastructure sharing for the projects.

Q: Glyn Lawcock from Barrenjoey asks about copper project sequencing and physical ability to deliver, and iron ore market outlook.

A: Mike Henry and Vandita Pant address project sequencing flexibility, alignment with partners, and iron ore market as cyclical with focus on cost curve and competition.