|
|
BHP Group plc - Director/PDMR Shareholding
BHP Group plc - Director/PDMR Shareholding
SENS Announcement Classification:
1. Dealings
2. by Director
|
|
Click here for original article
|
| |
BHP - 2021 US annual report
Financial Conduct Authority Submissions
The following document has today been submitted to the FCA National Storage Mechanism and will shortly be available for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
- US Annual Report (Form 20-F) https://www.bhp.com/-/media/documents/investors/annual- reports/2021/bhpform20f2021
The document may also be accessed via BHP’s website - bhp.com - or using the web link above.
|
|
Click here for original article
|
| |
BHP - Jansen briefing
The following document has today been submitted to the FCA National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism:
- Jansen briefing
BHP will be hosting an investor and analyst briefing today on the Jansen project.
The presentation will be available on BHP’s website at: https://www.bhp.com/investors/presentations-events/presentations-and-briefings
An archive of the webcast will be made available shortly after the event.
|
|
Click here for original article
|
| |
BHP - annual financial report 2021
Financial Conduct Authority Submissions
The following documents have today been submitted to the FCA National Storage Mechanism and will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
- Annual Report 2021
https://www.bhp.com/-/media/documents/investors/annual- reports/2021/210914_bhpannualreport2021.pdf
- Economic Contribution Report 2021
https://www.bhp.com/-/media/documents/investors/annual- reports/2021/210914_bhpeconomiccontributionreport2021.pdf
- Climate Transition Action Plan
https://www.bhp.com/-/media/documents/investors/annual- reports/2021/210914_bhpclimatetransitionactionplan2021.pdf
- XML format of the Economic Contribution Report 2021
https://www.bhp.com/-/media/documents/investors/annual- reports/2021/210914_bhpeconomiccontributionreport2021_xml.xml
- BHP Group Plc Notice of Meeting 2021
https://www.bhp.com/-/media/documents/investors/annual- reports/2021/bhpnoticeofmeetingplc2021.pdf?la=en
- BHP Group Plc Proxy Form (UK Principal Register)
https://www.bhp.com/plcagm
- BHP Group Plc Proxy Form (South Africa Branch Register)
https://www.bhp.com/plcagm
The documents may also be accessed via BHP’s website - bhp.com - or using the web links above.
Additional Information
The following information is extracted from the Annual Report 2021 (section references are to sections of the Annual Report) and should be read in conjunction with the announcement of BHP’s Results for the Year Ended 30 June 2021 issued on 17 August 2021. Both documents can be found at bhp.com and together, constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. This material is not a substitute for reading the Annual Report 2021 in full.
1. Principal risks and uncertainties
1.1 How we manage risk
Risk management helps us to protect and create value, and is central to achieving our purpose and strategic objectives. Our Risk Framework has four pillars: risk strategy, risk governance, risk process and risk intelligence.
Risk strategy
Risk classification
We classify all risks to which BHP is exposed using our Group Risk Architecture. This is a tool designed to identify, analyse, monitor and report risk, which provides a platform to understand and manage risks. Similar risks are considered together in groups and categories. This gives the Board and management visibility over the aggregate exposure to risks on a Group-wide basis and supports performance monitoring and reporting against BHP’s risk appetite.
Risk appetite
BHP’s Risk Appetite Statement is approved by the Board and is a foundational element of our Risk Framework. It provides guidance to management on the amount and type of risk we seek to take in pursuing our objectives.
Key risk indicators
Key risk indicators (KRIs) are set by management to help monitor performance against our risk appetite. They also support decision-making by providing management with information about financial and non-financial risk exposure at a Group level. Each KRI has a target, or optimal level of risk we seek to take, as well as upper and lower limits. Where either limit is exceeded, management will review potential causes to understand if BHP may be taking too little or too much risk and to identify whether further action is required.
Risk culture
Our risk management approach is underpinned by a risk culture that supports decision-making in accordance with BHP’s values, objectives and risk appetite. We use a common foundation across BHP to build the tools and capabilities required to enable us to understand, monitor and manage our risk culture. These include tailored cultural assessments, Group-wide risk culture dashboards and the inclusion of behavioural auditing in our internal audit plan.
Strategic business decisions
Strategic business decisions and the pursuit of our strategic objectives can inform, create or affect risks to which BHP is exposed. These risks may represent opportunities as well as threats. Our Risk Appetite Statement and KRIs assist in determining whether a proposed course of action is within BHP’s risk appetite.
Our focus when managing risks associated with strategic business decisions is to enable the pursuit of high-reward strategies. Therefore, as well as having controls designed to protect BHP from threats, we seek to implement controls to enhance and/or increase the likelihood of opportunities being realised. For example, we might establish additional governance, oversight or reporting to help ensure new initiatives remain on track.
Risk governance
Three lines model
BHP uses the ‘three lines model’ of risk governance and management to define the role of different teams across the organisation in managing risk. This approach sets clear accountabilities for risk management and provides appropriate ‘checks and balances’ to support us in protecting and growing value.
The first line is provided by our frontline staff, operational management and people in functional roles – anyone who makes decisions, deploys resources or contributes to an outcome is responsible for identifying and managing the associated risks. The Risk team and other second-line functions are responsible for providing expertise, support, monitoring and challenge on risk-related matters, including by defining Group-wide minimum standards.
The third line, our Internal Audit and Advisory team, is responsible for providing independent and objective assurance over the control environment (governance, risk management and internal controls) to the Board and Executive Leadership Team. Additional assurance may also be provided by external providers, such as our External Auditor.
BHP Board and Committees
The Board reviews and monitors the effectiveness of the Group’s systems of financial and non-financial risk management and internal control. The broad range of skills, experience and knowledge of the Board assists in providing a diverse view on risk management. The Risk and Audit Committee (RAC) and Sustainability Committee assist the Board by reviewing and considering BHP’s risk profile (covering operational, strategic and emerging risks) on a biannual basis.
For more information refer to sections 2.1.7, 2.1.10 and 2.1.11.
Performance against risk appetite is monitored and reported to the RAC, as well as the Sustainability Committee for HSEC matters, enabling the Board to challenge and hold management to account where necessary.
Second-line risk-based reviews are undertaken to provide greater oversight and enhance our understanding and management of the Group’s most significant risks, with outcomes reported to management, the RAC and Sustainability Committee. These outcomes may be used to develop remediation plans, adjust BHP’s Risk Appetite Statement or KRIs, enhance our Risk Framework or inform strategic decisions.
Additional information on risk management and internal controls is shared between the Board, the RAC and, for HSEC matters, the Sustainability Committee, and is provided by the Business Risk and Audit Committees (covering each business region), management committees, our Internal Audit and Advisory team and our External Auditor. For more information refer to section 2.1.
Risk process
Our Risk Framework requires identification and management of risks (both threats and opportunities) to be embedded in business activities through the following process:
• Risk identification – threats and opportunities are identified and each is assigned an owner, or accountable individual.
• Risk assessments – risks are assessed using appropriate and internationally recognised techniques to determine their potential impacts and likelihood, prioritise them and inform risk treatment options.
• Risk treatment – controls are implemented to prevent, reduce or mitigate threats, and enable or enhance opportunities.
• Monitoring and review – risks and controls are reviewed periodically and on an ad hoc basis (including where there are high-potential events or changes in the external environment) to evaluate performance.
Our Risk Framework includes requirements and guidance on the tools and process to manage current and emerging risks.
Current risks
Current risks are risks that could impact BHP today or in the near future, and comprise current operational risks (risks that have their origin inside BHP or occur as a result of our activities) and current strategic risks (risks that may enhance or impede the achievement of our strategic objectives).
Current risks include material and non-material risks (as defined by our Risk Framework). The materiality of a current risk is determined by estimating the maximum foreseeable loss (MFL) if that risk was to materialise. The MFL is the estimated impact to BHP in a worst-case scenario without regard to probability and assuming all risk controls, including insurance and hedging contracts, are ineffective.
Our principal risks are described in section 1.16.
Our focus for current risks is to prevent their occurrence or minimise their impact should they occur, but we also consider how to maximise possible benefits that might be associated with strategic risks (as described in the ‘Risk strategy’ section). Current material risks are required to be evaluated once a year at a minimum to determine whether our exposure to the risk is within our risk appetite.
Emerging risks
Emerging risks are newly developing or changing risks that are highly uncertain and difficult to quantify. They are generally driven by external influences and often cannot be prevented.
BHP maintains a ‘watch list’ of emerging themes that provides an evolving view of the changing external environment and how it might impact our business. We use the watch list to support the identification and management of emerging risks, as well as to inform and test our corporate strategy.
Once identified, our focus for emerging risks is on structured monitoring of the external environment, advocacy efforts to reduce the likelihood of the threats manifesting and identifying options to increase our resilience to these threats. Risk intelligence
The Risk team provides the Board and senior management with insights on trends and aggregate exposure for our most significant risks, as well as performance against risk appetite. Risk reports may also provide an update on the Risk Framework, overview of (and material changes in) the risk profile and updates on emerging risk themes and risk culture. They are supported by an opinion from the Chief Risk Officer (or other relevant individual).
We maintain a risk insights dashboard designed to provide current, data-driven and actionable risk intelligence to our people at all levels of the business to support decision-making. This tool empowers the business to manage risks more effectively, with increased accuracy and transparency.
The Board also receives reports from other teams to support its robust assessment of BHP’s emerging and principal risks, including internal audit reports, ethics and compliance reports and the Chief Executive Officer’s report.
For information on our principal risks, robust risk assessment and viability statement, refer to section 1.16
Risk factors
Our principal risks are described below and may occur as a result of our activities globally, including in connection with our operated and non-operated assets, third parties engaged by BHP or through our value chain.
Our principal risks, individually or collectively, could threaten our viability, strategy, business model, future performance, solvency or liquidity and reputation. They could also materially and adversely affect the health and safety of our people or members of the public, the environment, the communities in which we or our third-party partners operate, or the interests of our stakeholders leading to litigation (including class actions) or a loss of stakeholder and/or investor confidence. References to ‘financial performance’ includes our financial condition and liquidity, including due to decreased profitability or increased operating costs, capital spend, remediation costs or contingent liabilities. While the risks described in this section represent our principal risks, BHP is also exposed to other risks that are not described in this section.
Each of our principal risks may present opportunities as well as threats. We take risk for strategic reward in the pursuit of our strategy and purpose, including to grow our asset portfolio and develop the right capabilities for the future of our business. Potential threats and opportunities associated with each of our principal risks are described below, along with the key controls to manage them. These controls are not exhaustive and many Group-wide controls (such as Our Code of Conduct, Risk Framework, mandatory minimum performance requirements for risk management, health, safety and other matters, dedicated non-operated joint venture teams and our Contractor Management Framework) help to support effective and efficient management of all risks in line with our risk appetite. While we implement preventative and/or mitigating controls designed to reduce the likelihood of a threat from occurring and minimise the impacts if it does, these may not be effective.
Key changes to our principal risks in FY2021 are the introduction of risks associated with inadequate business resilience and adopting technologies. The way in which we articulate our other principal risks has also changed since our FY2020 Annual Report. For example, risks associated with operational events have been consolidated into a single risk factor rather than being discussed across two risk factors. We have also disaggregated and combined elements of principal risks. For example, risks associated with third-party performance are embedded throughout our principal risks and climate change risks have been separated to provide a greater focus on transition risks, while risks associated with the potential physical impacts of climate change are addressed alongside other business resilience risks (as well as across other relevant principal risks). We have also simplified the presentation of our principal risks. These changes are designed to provide greater accessibility and value to stakeholders in understanding our principal risks.
With the exception of risks associated with operational events, exposure to all of our principal risks increased in FY2021. These increases were largely driven by uncertainties in the external environment, such as the continuing global impacts of the COVID-19 pandemic, heightened geopolitical tensions and societal and stakeholder expectations of business (including in relation to social, environmental and climate-related risks), and increasing frequency and sophistication of cyberattacks against companies in the resources industry and governments. While our influence over most of these aspects of our external environment is limited, we continue to monitor signals and review our control environment to improve management of associated risks
OPERATIONAL EVENTS
Risks associated with operational events in connection with our activities globally, resulting in significant adverse impacts on our people, communities, the environment or our business.
Why is this important to BHP?
We engage in activities that have the potential to cause harm to our people and assets, and/or communities and the environment, including serious injuries, illness and fatalities, loss of infrastructure, amenities and livelihood and damage to sites of cultural significance. An operational event at our operated or non-operated assets or through our value chain could also cause damage or disruptions to our assets and operations, impact our financial performance, result in litigation or class actions and cause long-term damage to our licence to operate and reputation. The potential physical impacts of climate change could increase the likelihood and/or severity of risks associated with operational events. Impacts of operational events may also be amplified if we fail to respond in a way that is consistent with our corporate values and stakeholder expectations.
Examples of potential threats
• An offshore well blow out, including at one of our assets in the US Gulf of Mexico, Australia, Trinidad and Tobago or Algeria, or at one of our appraisal and exploration options in Mexico, Trinidad and Tobago, Western and Central Gulf of Mexico or Australia.
• Failure of a water or tailings storage facility, such as the tragic failure of the Fundão dam at Samarco in 2015 or a failure at one of our facilities in Australia, Chile, Colombia, Peru, the United States, Canada or Brazil.
• Unplanned fire events or explosions (on the surface and underground).
• Geotechnical stability events (such as an unexpected and large fall of ground at our underground or open pit mines, or potential interaction between our mining activities and community infrastructure or natural systems), including at our underground mines in Australia, the United States and Canada.
• Air, land (road and rail) and marine transportation events (such as aircraft crashes or vessel collisions, groundings or hydrocarbon release) that occur while transporting people, supplies or products to exploration, operation or customer locations, which include remote and environmentally sensitive areas in Australia, South America, Asia and the United States.
• Critical infrastructure or hazardous materials containment failures, other occupational or process safety events, or workplace exposures.
• Operational events experienced by third parties, which may result in unavailability of shared critical infrastructure (such as railway lines or ports) or transportation routes (such as the Port Hedland channel in Western Australia).
Examples of potential opportunities
• Our focus on safety and the welfare of our people, communities and the environment may increase workforce and other stakeholder confidence, enhancing our ability to attract and retain talent and access (or lower the cost of) capital.
• Collaborating with industry peers and relevant organisations on minimum standards (such as the Global Industry Standard on Tailings Management and Large Open Pit Project guidelines on open-pit mining design and management) supports improvements to wider industry management of operational risks and may also identify opportunities to improve our own practices.
Key management actions
• Planning, designing, constructing, operating, maintaining and monitoring surface and underground mines, water and tailings storage facilities, wells and other infrastructure and equipment in a manner designed to maintain structural integrity, prevent incidents and protect our people, assets, communities, the environment and other stakeholders.
• Specifying minimum requirements and technical specifications, such as for transportation (including high-occupancy vehicles, aircraft and their operators), and compliance with operating specifications, industry codes and other relevant standards, including BHP’s mandatory minimum performance requirements.
• Defining key accountable roles, such as a dam owner (an internal BHP individual who is accountable for maintaining effective governance and integrity of each tailings storage facility), and providing training and qualifications for our people.
• Inspections, reviews, audits and other assurance activities, such as independent dam safety reviews and geotechnical review boards.
• Maintaining evacuation routes, supporting equipment, continuity plans and crisis and emergency response plans.
• Incorporating future climate projections into operational event risks through ongoing assessment of potential physical climate change risks.
FY2021 insights Further information
While our overall exposure to risks associated with • section 1.13.4 Safety operational events remained relatively stable in FY2021, our • section 1.13.15 Tailings risk profile has adapted to changes in our operating context. storage facilities For example, a greater focus on exploration has increased • section 1.15 Samarco our use of helicopters to conduct geophysical surveys and • bhp.com/sustainability transport personnel. We have also had to adapt the way we transport people to and from work due to the COVID-19 pandemic (for example, more buses have been scheduled due to social distancing requirements).
Accessing key markets
Risks associated with market concentration and our ability to sell and deliver products into existing and future key markets, impacting our economic efficiency.
Why is this important to BHP?
We rely on the sale and delivery of the commodities we produce to customers around the world. Changes to laws, international trade arrangements, contractual terms or other requirements and/or geopolitical developments could result in physical, logistical or other disruptions to our operations in, or the sale or delivery of our commodities to, key markets. These disruptions could affect sales volumes or prices obtained for our products, adversely impacting our financial performance, results of operations and growth prospects.
Examples of potential threats
• Government actions, including economic sanctions, tariffs or other trade restrictions, imposed by or on countries where we operate or into which we sell or deliver our products may prevent BHP from trading or make it more difficult for BHP to trade in key markets. For example, China has imposed import restrictions and tariffs on some Australian exports, including energy and metallurgical coal. The imposition of further tariffs or other restrictions on any of our other products could adversely affect our financial performance.
• Physical disruptions to the delivery of our products to customers in key markets including due to the disruption of shipping routes, closure or blockage of ports or land logistics (road or rail) or military conflict. In some cases, physical disruptions may be driven or intensified by weather, climate variability or climate change.
• Legal or regulatory changes (such as royalties or taxes, port or import restrictions or customs requirements, shipping/maritime regulatory changes, restrictions on movements or imposition of quarantines, or changing environmental restrictions or regulations, including measures with respect to carbon-intensive imports) and commercial changes (such as changes to the standards and requirements of customers) may adversely impact our ability to sell or deliver, or realise full market value for, our products.
• Failure to maintain strong relationships with customers, or changes to customer demands for our products (such as vertical integration), may reduce our market share or adversely impact our financial performance.
• Increasing geopolitical tensions may adversely affect our strategic and business planning decisions and/or increase the time it takes us to manage our access to key markets, particularly if we fail to detect or anticipate deviations in the geopolitical environment in a timely manner.
Examples of potential opportunities
• Monitoring macroeconomic, geopolitical and policy developments and trends may reveal new markets or identify opportunities to strengthen secondary markets for existing products.
• Leveraging the opportunity to create value by developing strategic partnerships and strong, mutually beneficial relationships with our customers.
• Building a deep understanding of the geopolitical risks faced by BHP and their potential impacts on our business could enhance our strategy, business planning and response, providing a potential competitive advantage.
• Identifying the potential for weather, climate variability or climate change to disrupt delivery of products and implementing management measures may increase the resilience of our operations and supply chain.
• Signal monitoring and building relationships with and understanding the perspectives of influential stakeholders may improve our ability to understand, respond to and manage any impacts from policy changes (such as trade policies).
Key management actions
• Monitoring and assessing our ability to access key markets, and maintaining sales plans, product placement and business resilience strategies and relationships with relevant stakeholders (such as the Chinese, United States and Australian Governments, and our customers in China and elsewhere).
• Maintaining response plans for various scenarios (including physical disruptions of logistics) to mitigate disruptions to our ability to access key markets.
• Monitoring geopolitical and macroeconomic developments and trends, including through signal monitoring and our enterprise-level watch list of emerging themes, to provide an early indication of events that could impact our ability to access key markets.
• Identifying weather and/or climate-related vulnerabilities and implementing controls to mitigate disruptions to our ability to physically access key markets.
• Diversification of our asset and commodity portfolio, such as our ongoing investment in potash through the Jansen Potash Project, to reduce exposure to market concentration risks.
FY2021 insights Further information
Exposure to risks associated with our access to key markets • section 4.10.2 increased in FY2021 as a result of tensions between Shareholder information Australia, the United States and China, and import – Markets restrictions and tariffs imposed by China on some Australian exports (including energy and metallurgical coal). Although our influence over these aspects of our external environment is limited, adjustments to our portfolio may reduce exposure to market concentration risk in the longer term.
Optimising portfolio returns and managing commodity price movements
Risks associated with our ability to position our asset portfolio to generate returns and value for shareholders (including securing growth options in future facing commodities) and to manage adverse impacts of short- and long-term movements in commodity prices.
Why is this important to BHP?
We take decisions and actions in pursuit of our strategy to optimise our asset portfolio and to secure and create growth options in future facing commodities (such as copper, nickel and potash). A strategy that does not support BHP’s objectives and/or ill-timed execution of our strategy (including as a result of not having sector-leading capabilities) or other circumstances, may lead to a loss of value that impacts our ability to deliver returns to shareholders and fund our investment and expansion opportunities. It may also result in our asset portfolio being less resilient to fluctuations in commodity prices, which are determined by or linked to prices in world markets. In the short term, this may reduce our cash flow, ability to access capital and our dividends. A failure to optimise our asset portfolio for structural movements in commodity prices over the long term may result in asset impairments and could adversely affect the results of our operations, our financial performance, and returns to investors.
Examples of potential threats
• Failure to optimise our portfolio through effective and efficient acquisitions, exploration, large project delivery, mergers, divestments or expansion of existing assets.
• Failure to identify potential changes in commodity attractiveness and missed entry or commodity exit opportunities, resulting in decreased return on capital spend for, or overpayment to acquire or invest in, new assets or projects, stranded assets or reduced divestment proceeds.
• Failure to achieve expected commercial objectives from assets or investments, such as cost savings, sales revenues or operational performance (including as a result of inaccurate commodity price assumptions or resources and reserves estimates), may result in returns that are lower than anticipated and loss of value (such as that experienced with US shale).
• Renegotiation or nullification of permits, increased royalties, or expropriation or nationalisation of our assets, or other legal, regulatory, political, judicial or fiscal or monetary policy instability may adversely impact our ability to achieve expected commercial objectives from assets or investments, access reserves, develop, maintain or operate our assets, or otherwise optimise our portfolio.
• Inability to predict long-term trends in the supply, demand and price of commodities and optimise our asset portfolio accordingly may restrict our ability to generate long-term returns from the portfolio.
• Commodity prices have historically been and may continue to be subject to significant volatility, including due to global economic and geopolitical factors, industrial activity, commodity supply and demand (including inventory levels), technological change, product substitution, tariffs and exchange rate fluctuations. Our usual policy and practice is to sell our products at prevailing market prices and as such fluctuations in commodity prices may affect our financial performance. For example, a USD1 per tonne decline in the average iron ore price and USD1 per barrel decline in the average oil price would have an estimated impact on FY2021 profit after taxation of USD163 million and USD24 million, respectively. Long-term price volatility or sustained low prices may adversely impact our financial performance as we do not generally have the ability to offset costs through price increases.
Examples of potential opportunities
• Acquisition of new resources in future facing commodities may strengthen our portfolio and protect and grow value over the long term.
• Ability to predict long-term commodity demand, supply and price trends may lead to BHP being able to identify and acquire new future facing commodities and assets ahead of our competitors or exit from declining commodities in a timely manner, strengthening our portfolio and leading to long-term portfolio returns.
• BHP may be perceived as a welcome and valued or preferred partner for the development of new resource opportunities, enabling us to secure new assets or exploration opportunities to create long-term optionality in the portfolio.
Key management actions
• Strategies, processes and frameworks to grow and protect our portfolio and to assist in delivering ongoing returns to shareholders include:
o our exploration and business development programs, which focus on replenishing our resource base and enhancing our portfolio (including creating and securing more options in future facing commodities)
o our long-term strategic outlook and ongoing strategic processes to assess our competitive advantage and enable the identification of threats to or opportunities for our portfolio through forecasting and scenario modelling
o monitoring signals to interpret external events and trends, and designing commodity strategies and price protocols that are reviewed by management and the Board
o our Capital Allocation Framework, corporate planning processes, investment approval processes and annual reviews (including resilience testing) of portfolio valuations
o our balance sheet and liquidity framework, which is designed to maintain a robust balance sheet with sufficient liquidity and access to diverse sources of funding
• Pursuing a considered approach to new country entry, including development of capability to operate in higher-risk jurisdictions, in order to support portfolio opportunities in new jurisdictions.
• Further developing BHP’s social value proposition to position BHP as a preferred partner for the development of resource opportunities in line with the expectations of local communities, host governments and other global stakeholders.
• Managing commodity price exposure through the diversity of commodities, markets, geographies and currencies provided by our portfolio, as well as our financial risk management practices in relation to our commercial activities.
FY2021 insights Further information
Our exposure to risks associated with optimising our • section 1.5 Positioning for portfolio and managing commodity price movements future increased in FY2021 as a result of volatility and • section 1.17 Performance by uncertainty across global economies, including due to commodity the continuing effects of the COVID-19 pandemic. We • note 23 'Financial risk announced the sale of Cerrejón in June 2021 as part of management' in section 3 our intention to consolidate our portfolio of coal assets to higher-quality metallurgical coal, and remain open to all options for BMC and NSWEC. Heightened societal expectations regarding the use of coal will continue to be a portfolio consideration. On 17 August 2021, we also announced our intention to merge our Petroleum assets with Woodside,(1) which is designed to unlock synergies and increase value and choice for BHP’s shareholders.
(1) On 17 August 2021, BHP announced it had entered into a merger commitment deed with Woodside to combine their respective oil and gas portfolios by an all-stock merger. Completion of the merger is subject to confirmatory due diligence, negotiation and execution of full form transaction documents, and satisfaction of conditions precedent including shareholder, regulatory and other approvals, and expected to occur in the second quarter of CY2022.
Significant social or envronmental impacts
Risks associated with significant impacts of our operations on and contributions to communities and environments throughout the life cycle of our assets and across our value chain.
Why is this important to BHP?
The long-term viability of our business is closely connected to the wellbeing of the communities and environments where we have a presence. At any stage of the asset life cycle, our activities and operations may have or be seen to have significant adverse impacts on communities and environments. In these circumstances, we may fail to meet the evolving expectations of our stakeholders (including investors, governments, employees, suppliers, customers and community members) whose support is needed to realise our strategy and purpose. This could lead to loss of stakeholder support or regulatory approvals, increased taxes and regulation, enforcement action, litigation or class actions, or otherwise impact our licence to operate and adversely affect our reputation, ability to attract and retain talent, operational continuity and financial performance.
Examples of potential threats
• Engaging in or being associated with activities (including through our non-operated joint ventures and value chain) that have or are perceived to have individual or cumulative adverse impacts on the environment, biodiversity and land management, water access and management, human rights or cultural heritage.
• Failing to meet stakeholder expectations in connection with our legal and regulatory obligations, relationships with Indigenous peoples, community wellbeing and the way we invest in communities.
• Political, regulatory and judicial developments (such as constitutional reform in Chile that could result in adjustments to water and other resource rights, or the Dasgupta Review in the United Kingdom that could result in government actions that impact the management of biodiversity and ecosystems) or changing stakeholder expectations could result in more stringent operating requirements on our business. For example, changes to regulations or stakeholder expectations may delay the timing or increase costs associated with closure and rehabilitation of assets, or expose BHP to unanticipated environmental or other legacy liabilities.
• Failing to identify and manage potential physical climate change risks to communities, biodiversity and ecosystems. For example, changes to species habitat or distribution as a result of sustained higher temperatures could result in land access restrictions or litigation, or limit our access to new opportunities.
Examples of potential opportunities
• Our support for responsible stewardship of natural resources may enhance the resilience of environments and communities to potential threats (including the potential physical impacts of climate change).
• Strong social performance, including sustainable mining and a focus on the wellbeing of communities, could generate competitive advantage in the jurisdictions where we operate.
• Our global social value strategy may improve stakeholder relations, build community trust and increase investor confidence and demand for our commodities.
• Greater clarity, transparency and standards associated with regulatory regimes that support and protect communities and the environment may increase requirements across our sector, generating competitive advantage for companies that have already invested in social performance.
Key management actions
• Our Requirements for Community and Our Requirements for Environment and Climate Change standards provide requirements and practices that are designed to strengthen our social, human rights and environmental performance. Our Human Rights Policy Statement, Water Stewardship Position Statement, Climate Change Position Statement and Indigenous Peoples Policy Statement set out our commitments and approach to these matters.
• Engaging in regular, open and honest dialogue with stakeholders to better understand their expectations, concerns and interests, and undertaking research to better understand stakeholder perceptions.
• Building social value into our decision-making process, along with financial considerations.
• Building stakeholder trust and contributing to environmental and community resilience, including through collaborating on shared challenges (such as climate change and water stewardship), enhanced external reporting of our operated assets’ potential impacts on biodiversity and maximising the value of social investments through our social investment strategy.
• Conducting regular research and impact assessments for operated assets to better understand the social, environmental, human rights and economic context. This supports us to identify and analyse stakeholder, community and human rights impacts, including modern slavery risks and emerging issues. We also complete due diligence screening on suppliers through our Ethical Supply Chain and Transparency program.
• Integrating closure into our planning, decision-making and other activities through the life cycle of our operated assets, as set out in our mandatory minimum performance requirements for closure.
FY2021 insights Further information
Our exposure to risks with potentially significant social or • section 1.12 People and environmental impacts increased in FY2021 due to culture environmental, political and regulatory developments, • section 1.13.8 Community and increasing societal expectations, including of • section 1.13.10 Indigenous regulators and other stakeholders on Indigenous peoples peoples’ rights and potential impacts of our operations • section 1.13.11 Social throughout the asset life cycle. We believe the nexus investment between water, climate change, biodiversity and society • section 1.13.12 Environment is becoming increasingly clear as a driver of social • section 1.13.13 Water expectations. • section 1.13.14 Land and biodiversity • bhp.com/sustainability
Low-carbon transition
Risks associated with the transition to a low-carbon economy.
Why is this important to BHP?
Transition risks arise from policy, regulatory, legal, technological, market and other societal responses to the challenges posed by climate change and the transition to a low-carbon economy. As a world-leading resources company, BHP is exposed to a range of transition risks that could affect the execution of our strategy or our operational efficiency, asset values and growth options, resulting in a material adverse impact on our financial performance, share price or reputation, including litigation. The complex and pervasive nature of climate change means transition risks are interconnected with and may amplify our other principal risks. Additionally, the inherent uncertainty of potential societal responses to climate change may create a systemic risk to the global economy.
Examples of potential threats
• Introduction or improvement of low-carbon technologies or changes in customer preference for products that support the transition to a low-carbon economy may decrease demand for some of our products (which may be abrupt or unanticipated), increase our costs or decrease the availability of key inputs to production. For example:
o ‘Green steel’ technologies may reduce demand for our metallurgical coal or iron ore, or electric vehicle penetration may reduce demand for our petroleum products.
o Implementing low-carbon processes or new investments to respond to market demand for products that support a low-carbon economy (such as potential capital spend at our Jansen Potash Project to deliver fertiliser products or at our Nickel West asset to supply the battery market) may increase operating or development costs.
• Failure to address investor concerns on the potential impact of climate change on and from BHP’s portfolio and operations may result in reduced investor confidence and/or investor actions seeking to influence BHP’s climate strategy.
• Social concerns around climate change may result in investors divesting our securities, pressure on BHP to divest or close remaining fossil fuel assets and on financial institutions not to provide financing for our fossil fuel assets, or otherwise adversely impact our ability to optimise our portfolio.
• Perceived or actual misalignment of the resources industry’s or BHP’s climate actions (goals, targets and performance) with societal and investor expectations, or a failure to deliver our climate actions, may result in damage to our reputation, climate-related litigation (including class actions) or give rise to other adverse regulatory, legal or market responses.
• Changes in laws, regulations, policies, obligations, government actions, and our ability to anticipate and respond to such changes (which may be abrupt or unanticipated), including emission targets, restrictive licencing, carbon taxes, border adjustments or the addition or removal of subsidies, may give rise to adverse regulatory, legal or market responses.
Examples of potential opportunities
• Our copper, nickel, iron ore and metallurgical coal provide essential building blocks for renewable power generation and electric vehicles, and can play an important part in the transition to a low-carbon economy.
• Our potash fertiliser options can promote more efficient and more profitable agriculture and alleviate the increased competition for arable land.
• Increased collaboration with customers and original equipment manufacturers, such as BHP’s partnerships with each of China Baowu, JFE and HBIS for research and development of steel decarbonisation pathways, can provide opportunities for development of new products and markets.
Key management actions
• Establishing public views and commitments on, and mandatory minimum performance requirements for managing, climate change threats and opportunities, which are set out in our Climate Change Position Statement, our Climate Change Report 2020, our Climate Transition Action Plan 2021 and the Our Requirements for Environment and Climate Change standard.
• Using climate-related scenarios, themes and signposts (such as monitoring policy, regulatory, legal, technological, market and other societal developments) to evaluate the resilience of our portfolio and inform our strategy.
• Considering transition risks (including carbon prices) when making capital expenditure decisions or allocating capital through our Capital Allocation Framework, supporting the prioritisation of capital and investment approval processes.
• Seeking to mitigate our exposure to risks arising from policy and regulation in our operating jurisdictions and markets by reducing our operational emissions and taking a product stewardship approach to emissions in our value chain.
• Advocating for the introduction of an effective, long-term policy framework that can deliver a measured transition to a low-carbon economy.
FY2021 insights Further information
Our exposure to transition risks increased in FY2021 due • section 1.5 Positioning for primarily to political developments – with the Biden future administration renewing the United States’ focus on • section 1.13.7 Climate climate and net zero goals set by China, Japan and the change and portfolio European Union – and greater investor and other resilience stakeholder interest in understanding how climate change • BHP Climate Change might impact our strategy and portfolio. Stakeholder Report 2020 expectations of BHP regarding disclosure of climate • BHP Climate Transition change-related information have grown accordingly (for Action Plan 2021 example, Climate Action 100+ requested information from • bhp.com/climate BHP to conduct its first net zero company benchmark in FY2021). Actions by investors and proxy advisers seeking to hold companies accountable for their climate strategies also accelerated during FY2021. We anticipate these and potentially other factors will continue to affect transition risks in FY2022, following publication in August 2021 of the first part of the Intergovernmental Panel on Climate Change’s Sixth Assessment Report, Climate Change 2021: The Physical Science Basis. However, our recent proposed portfolio changes would, subject to their completion, reduce our exposure to certain transition risks.
Sensitivity of our portfolio to demand for fossil fuels
We acknowledge there is a range of possible energy transition scenarios, including those aligned with the Paris goals, that may indicate different outcomes for our individual commodities. Our most recent portfolio analysis published in our Climate Change Report 2020 demonstrates the Group can continue to thrive over the next 30 years, as the global community takes action to decarbonise, even under our Paris-aligned 1.5°C trajectory.(2)
There are inherent limitations with scenario analysis and it is difficult to predict which, if any, of the scenarios might eventuate and none of the scenarios considered constitutes a definitive outcome for the Group.
The long-term commodity price outlooks under our 1.5°C Paris-aligned scenario are either largely consistent with or favourable to, the price outlooks in our current planning cases, with the exception of energy coal, oil and natural gas.
The long-term commodity price outlooks under our 1.5°C Paris-aligned scenario, excluding energy coal, oil and natural gas, reflect:
• copper and nickel benefiting from the dramatic pace of electrification over and above our current planning cases
• iron ore growth underpinned by the benefit to steel demand from the construction of renewables, particularly wind power.
• potash growth reflecting the potential for greater penetration of biofuels
• metallurgical coal supported by the limited alternatives in steelmaking over the scenario timeframe
Given these positive long-term price outlooks, a material adverse change is not expected under our 1.5°C Paris-aligned scenario to the carrying values of our assets and liabilities related to these commodities, including property, plant and equipment and closure and rehabilitation provisions.
For energy coal, oil and natural gas, long-term commodity price outlooks under our 1.5°C Paris-aligned scenario are unfavourable compared to the price outlooks in our current planning cases. Price outlooks for these commodities published in the International Energy Agency’s (IEA) Net Zero by 2050: A Roadmap for the Global Energy Sector Special Report (May 2021) (IEA NZE) are also unfavourable to the price outlooks in our current planning cases.
Despite recent progress, all 1.5°C pathways to 2050 represent a major departure from today’s global trajectory and we do not believe the technological, regulatory, or economic foundations for a rapid transition to net zero emissions are currently in place. Therefore, a 1.5°C Paris- aligned scenario is currently not an input into our planning cases. This is consistent with the IAE’s acknowledgement that the window for its Net Zero by 2050 roadmap is narrow, albeit still achievable.
While the price outlooks under the IEA NZE and our 1.5°C Paris-aligned scenario are unfavourable compared to the price outlooks in our current planning cases, recent portfolio announcements and impairments recognised in FY2021 limit the exposure of the carrying value of our assets to long-term commodity prices for energy coal, oil and natural gas, as:
• On 17 August 2021, we announced the proposed merger of our Petroleum assets with Woodside. The merger is subject to confirmatory due diligence, negotiation and execution of full form transaction documents, and satisfaction of conditions precedent, including shareholder, regulatory and other approvals. The preliminary terms of the merger did not provide an indicator of impairment for our Petroleum assets at 30 June 2021. The merger is expected to be completed during the first half of CY2022, following which, the Group's revenue would no longer be directly exposed to long-term oil and gas prices, including those under 1.5°C scenarios.
• In June 2021, we entered into a Sale and Purchase Agreement to divest our 33.3 per cent interest in the Cerrejón energy coal joint venture in Colombia, subject to the satisfaction of customary competition and regulatory requirements. The divestment is expected to complete in the second half of FY2022.
• Following the write downs taken by the Group in FY2021, the carrying value of our NSWEC assets is no longer material. Further, the profitability and cash flow of NSWEC assets is immaterial to the Group in FY2021.
In relation to New South Wales Energy Coal (NSWEC), regulatory approvals required to continue operations post FY2026 would be inconsistent with the IEA NZE scenario, which assumes no new coal mine extensions are approved beyond CY2021. In isolation, and without considering the impact of changes management would make to operating and investment plans, bringing forward the majority of rehabilitation activities by one year could increase the closure and rehabilitation provision at NSWEC by approximately USD10 million.
(2) This scenario aligns with the Paris Agreement goals and requires steep global annual emissions reductions, sustained for decades, to stay within a 1.5°C carbon budget. Refer to the BHP Climate Change Report 2020 available at bhp.com/climate for information about the assumptions, outputs and limitations of our 1.5°C Paris-aligned scenario. 1.5°C is above pre-industrial levels.
Adopting technologies and maintaining digital security
Risks associated with adopting and implementing new technologies, and maintaining the effectiveness of our existing digital landscape (including cyber defences) across our value chain.
Why is this important to BHP?
Our business and operational processes across our value chain are dependent on the effective application of technology, which we use as a lever to deliver on our current and future operational, financial and social objectives. This exposes BHP to risks originating from adopting or implementing new technologies, or failing to take appropriate action to position BHP for the digital future, which may impact the capabilities we require, the effectiveness and efficiency of our operations and our ability to compete effectively. We may also fail to maintain the effectiveness of our existing and future digital landscape, including cyber defences, exposing us to technology availability, reliability and cybersecurity risks. These could lead to operational events, commercial disruption (such as an inability to process or ship our products), corruption or loss of system data, a misappropriation or loss of funds, unintended disclosure of commercial or personal information, enforcement action or litigation. An inability to adequately implement new technology, or any sustained disruption to our existing technology, may also adversely affect our licence to operate, reputation, results of operations and financial performance. As we continue to leverage technology to improve productivity and safety, we expect the importance of safe, secure and reliable technology to our business will continue to grow.
Examples of potential threats
• Failure to achieve efficiencies through our investment in technologies, or to keep pace with advancements in technology, resulting in an inability to access systems or digital infrastructure required to support our operations or customers’ and other stakeholders’ evolving expectations. For example, delays, costs and failures to achieve efficiencies arising from difficulties in integrating new technologies with existing technologies, or from failures of new technology to perform as expected.
• Failing to identify, access and secure necessary infrastructure and key inputs (including electricity, internet bandwidth, data, software, licences or other rights in intellectual property, hardware and talent) to support new technology innovations and advanced technologies may adversely affect our ability to operate or adopt those technologies. This includes artificial intelligence and machine learning, process automation, robotics, data analytics, cloud computing, smart devices and remote working. For example, adopting new technology to reduce emissions through the use of alternative energy sources may require new infrastructure (such as at our mines and ports), and effective implementation of new digital technologies will be heavily dependent on access to relevant data.
• Failure or outage of our existing or future information and operating technology systems.
• Cyber events or attacks (including ransomware, state-sponsored and other cyberattacks) on our existing or future information and operating technology systems, including on third-party partners and suppliers (such as our cloud service providers). For example, a cyberattack on our autonomous systems for haulage and drilling may reduce operational productivity and/or adversely impact safety.
Examples of potential opportunities
• Application of digital solutions across our operations and value chain may unlock greater productivity and safety performance. For example, using predictive analytics to enable operations to identify asset condition and efficiencies may improve safety, production and equipment availability, and reduce maintenance and other costs.
• Technology solutions to reduce emissions may support BHP and our suppliers and customers in achieving climate action targets. For example, BHP is collaborating with other miners and suppliers to develop new technology to electrify haul trucks.
• Developing and applying artificial intelligence in mine planning, remote operation and advanced robotic technologies may identify or provide access to previously unknown or inaccessible deposits and development of end-to-end autonomous mining systems.
• Using digital simulations and predictive trend modelling may enable us to optimise the deployment of new technologies, such as automation and electrification, support early identification of process variances and faults, and support the marketing of our products to customers.
Key management actions
• Our assets, functions and projects are responsible for managing localised or project- specific exposure to technology risks. Enterprise-level risks that are specific to technology, such as those that pose a greater threat to our wider business and strategic opportunities, are generally managed by our global Technology team and other relevant stakeholders to support delivery of our technology strategy.
• We collaborate with industry and research partners to develop technological solutions.
• Our Technology Risk Committee oversees the management and improvement of technology risks and controls, and supports the embedment of a sustainable risk culture in our Technology team.
• We employ a number of measures designed to protect against, detect and respond to cyber events or attacks, including BHP’s mandatory minimum performance requirements for technology and cybersecurity, cybersecurity performance requirements for suppliers, cybersecurity strategy and resilience programs, an enterprise security framework and cybersecurity standards, cybersecurity awareness plans and training, security assessments and monitoring, restricted physical access to hardware and crisis management plans.
FY2021 insights Further information
Risks associated with technology and the pace of • section 1.6.2 How we technological innovation continue to evolve rapidly. The deliver value – Group’s exposure to technology risks increased in FY2021 Technology due primarily to an increase in the frequency and sophistication of cyberattacks against companies in the resources industry and governments. BHP continues to leverage technology to deliver value while taking actions to manage associated risks and strengthening cyber capabilities. During FY2021, we implemented programs to enable rapid technology development, improve operational performance and to create new analytic capabilities.
Ethical misconduct
Risks associated with actual or alleged deviation from societal or business expectations of ethical behaviour (including breaches of laws or regulations) and wider or cumulative organisational cultural failings, resulting in significant reputational impacts.
Why is this important to BHP?
The conduct of BHP or our people or third-party partners could result in an actual or alleged deviation from expectations of ethical behaviour or breaches of laws and regulations. This may include fraud, corruption, anti-competitive behaviour, money laundering, breaching trade or financial sanctions, market manipulation, privacy breaches, ethical misconduct and wider organisational cultural failings. A failure to act ethically or legally may result in negative publicity (including on social media), investigations, public inquiries, regulatory enforcement action (including fines), litigation or other civil or criminal proceedings, or increased regulation. It could also threaten the validity of our tenements or permits, or adversely impact our reputation, results of operations, financial performance or share price. Impacts may be amplified if our senior leaders fail to uphold BHP’s values or address actual or alleged misconduct in a way that is consistent with societal and stakeholder expectations, and our workplace culture may also be eroded, adversely affecting our ability to attract and retain talent. Ethical misconduct risks and impacts are heightened by the complex and continuously evolving legal and regulatory frameworks that apply to the jurisdictions where we operate and potentially conflicting obligations under different national laws.
Examples of potential threats
• Failing to prevent breaches of international standards, laws, regulations or other legal, regulatory, ethical, environmental, governance or compliance obligations, such as external misstatements, inaccurate financial or operational reporting or a breach of our continuous disclosure obligations.
• Corruption (particularly in high-risk or less economically developed jurisdictions), market conduct or anti-competitive behaviour, including in relation to our joint venture operations.
• Failing to comply with trade or financial sanctions (which are subject to rapid change and may potentially result in conflicting obligations), health, safety and environmental laws and regulations, native title and other land right or tax or royalty obligations.
• Failing to protect our people from harm (including to mental and physical health) due to the misconduct of others that takes place in connection with their work, such as discrimination or sexual harassment and assault.
Examples of potential opportunities
• Our capability to manage ethical misconduct risks may expand portfolio growth options by providing greater assurance that we can operate legally and ethically in high-risk jurisdictions.
• Managing ethical risks in line with societal and stakeholder expectations may distinguish BHP from competitors and enhance our ability to raise capital, attract and retain talent, obtain permits, partner with external organisations or suppliers, or market our products to customers.
Key management actions
• Setting the ‘tone from the top’ through Our Charter, which is central to our business and describes our purpose, values and how we measure success.
• Implementing internal policies, standards, systems and processes for governance and compliance to support an appropriate culture at BHP, including:
o Our Code of Conduct and BHP’s mandatory minimum performance requirements for business conduct, market disclosure and other matters
o training on Our Code of Conduct and in relation to anti-corruption, market conduct and competition
o ring fencing protocols to separate potentially competitive businesses within BHP
o governance and compliance processes, including classification of sensitive transactions, as well as accounting, procurement and other internal controls, and tailored monitoring of control effectiveness
o oversight and engagement with high-risk areas by our Ethics and Compliance function, Internal Audit and Advisory team and the Disclosure Committee
o review and endorsement by our Ethics and Compliance function of the highest-risk transactions, such as gifts and hospitality, engagement of third parties, community donations and sponsorships above defined thresholds
o automated counterparty and transaction screening against lists of entities subject to trade sanctions
o our EthicsPoint anonymous reporting service, supported by an ethics and investigations framework and central investigations team
• Continuing to enforce Our Code of Conduct via appropriate investigations and responses including disciplinary action, in addition to deployment of appropriate safety controls to prevent harm.
FY2021 insights Further information
Our exposure to ethical misconduct risks increased in • Our Charter and Our FY2021, including due to continued exploration of potential Code of Conduct growth options in high-risk or less economically developed • section 2.1.15 Our jurisdictions and escalating trade san
|
|
Click here for original article
|
| |
BHP - economic contribution report extract 2021
BHP's Economic Contribution Report (Report) for the year ended 30 June 2021 was released on Tuesday, 14 September 2021.
In the past 12 months, the COVID-19 pandemic has brought human tragedy and economic disruption globally. However, against this backdrop of unprecedented challenge, our people continued to support one another and kept our operations running safely. This enabled us to continue to provide significant support to local businesses, regional and Indigenous communities, to protect local jobs and continue to pay taxes and royalties to governments.
BHP’s purpose is to bring people and resources together to build a better world. We are proud of the valuable contribution we make to communities where we operate and to society as a whole. The economic contribution we make is an important part of this. This significant contribution of taxation and royalty revenue to the countries where we operate gives governments the opportunity to provide essential services to their citizens and invest in their communities for the future. BHP has a long-standing commitment to transparency. We have disclosed details of our tax and royalty payments for more than 20 years and during that time we have continually updated and expanded our disclosures. This Report meets the requirements of the Australian Voluntary Tax Transparency Code and aims to provide a greater understanding of BHP’s global tax profile, tax contributions and the manner in which we govern and manage our tax obligations. This year, our Economic Contribution Report 2021 reflects the requirements of the Global Reporting Initiative (GRI) Standard 207: Tax issued by the Global Sustainability Standards Board.
BHP is subject to the different tax regimes that apply in each of those countries and complies with applicable taxation laws in all the jurisdictions where we operate, including the Organisation for Economic Co-operation and Development (OECD) Country-by-Country reporting measures. This information provides tax authorities around the world with details of how we conduct our business and how BHP’s international-related parties transact with each other.
Our Economic Contribution Report 2021 has today been submitted to the FCA National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. It is also available to be downloaded on the BHP website at:
www.bhp.com/-/media/documents/investors/annual-reports/2021/210914_bhpeconomiccontributionreport2021.pdf
BHP’s total direct economic contribution for FY2021 was USD40.9 billion. This includes payments to suppliers, wages and benefits for around 80,000 employees and contractors, dividends, taxes, royalties and voluntary investment in social projects across the communities where we operate.
In FY2021, our tax, royalty and other payments to governments totalled USD11.1 billion. Of this, 84.7 per cent or USD9.4 billion was paid in Australia. During the last decade, we paid USD84.0 billion globally in taxes, royalties and other payments, including USD65.4 billion (approximately AD80.3 billion) in Australia.
Basis of report preparation
The Report is prepared from data recorded in our financial systems, being the same data and financial systems used to prepare our Financial Statements. In preparing the Report, we have followed the draft guidance material produced by the Australian Accounting Standards Board.
The ‘Total payments as defined by the UK Regulations’ included in pages 20 to 25 have been prepared in accordance with the Reports on Payments to Governments Regulations 2014, as amended by the Reports on Payments to Governments (Amendment) Regulations 2015 and the UK Regulations implement the EU Accounting Directive (Chapter 10, Directive 2013/34/EU) (the ‘UK Regulations’).
Taxes, royalties and other payments to governments are presented in this Report on a cash paid and cash received basis for the year ended 30 June 2021.
For our controlled assets, amounts included in our total payments to governments are 100 per cent of the assets’ payments to governments. For our non-operated and operated joint ventures, amounts included in our payments to governments are 100 per cent of the amounts paid by BHP and, in the case of BHP Mitsubishi Alliance (BMA), 50 per cent of payments made by the operating entity for BMA in which BHP has a 50 per cent ownership. For our investments in joint ventures and associates that are equity accounted by BHP, no amounts have been included in our total payments to governments as BHP is not the operator and does not make payments on behalf of the asset. For information purposes, the BHP share of the payments made by our significant equity accounted investments have been shown on page 6 even though no amounts have been included in our total payments to governments.
Taxes, royalties and other payments, both cash and in-kind (non-cash), to governments, net of refunds, are collectively referred to in this Report as ‘total payments to governments’ and include the following payment categories:
Corporate income taxes
Payments to governments based on taxable profits under legislated income tax rules. This also includes payments made to revenue authorities in respect of disputed claims and withholding taxes. For the purposes of allocating corporate income taxes to particular countries in the Payments made by country and level of government section of this Report, withholding taxes are allocated to the country to which the withholding taxes are remitted – for example, Chilean withholding taxes paid to the Chilean Government are allocated to Chile.
Royalty-related income taxes
Payments to governments in relation to profits from the extraction of natural resources, including Petroleum Resource Rent Tax (PRRT) in Australia and Specific Tax on Mining Activities (STMA) in Chile. This also includes payments to revenue authorities in respect of disputed claims. Royalty-related income taxes are presented as income tax in section 3.1.1 Consolidated Income Statement in the Annual Report 2021.
Taxes levied on production
Payments to governments in relation to crude excise, carbon tax and severance tax on the extraction of natural resources. Taxes levied on production are presented as expenses, not income tax, in section 3.1.1 Consolidated Income Statement in the Annual Report 2021.
Royalties
Payments to governments in relation to revenue or production generated under licence agreements. This also includes payments to revenue authorities in respect of disputed claims. Royalties are presented as expenses, not income tax, in section 3.1.1 Consolidated Income Statement in the Annual Report 2021. Royalty-related income taxes are excluded from Royalties.
Production entitlements
Payments to governments entitled to a share of production under production sharing agreements. Production entitlements are most often paid in-kind. In-kind payments are measured based on the market value of the commodity on the date of delivery to the government.
Fees
Payments to governments in the form of fees typically levied on the initial or ongoing right to use a geographical area for exploration, development and/or production. This includes licence fees, rental fees, entry fees and other payments for licences and/or concessions.
Payments for infrastructure improvements
Payments to governments for the construction of public infrastructure, such as roads, bridges and port facilities.
Dividend payments
Payments to governments with ownership interests in specific assets; not payments to governments as holders of ordinary shares in BHP. There were no dividend payments to governments for the year ended 30 June 2021.
Signature, discovery or production bonuses
Payments to governments upon signing an oil and gas lease, when discovering natural resources, and/or when production has commenced.
Other payments
Payments to governments under other legislated tax rules, such as payroll tax, fringe benefits tax, excise duties, property tax and land tax. These payments are not specifically required to be disclosed by the UK Regulations.
Excluded amounts
The following are not included in total payments to governments:
- Taxes collected
- Tax payments made to governments on behalf of our employees.
- Indirect taxes
- Tax payments made to or received from governments in the nature of sales tax, value added tax and goods and services tax.
- Penalties and interest
- Payments to governments resulting from the imposition of penalties, fees or interest.
Other
Certain payments, whether made as a single payment or as a series of related payments below USD100,000 (being a lower amount than the GBP86,000 threshold set out in the UK Regulations).
Projects
Payments made on a project-by-project basis (refer to Payments made on a project-by-project basis section of this Report) present payments by entity when not specifically attributable to a project.
Payments in relation to our Corporate and Commercial function have been included in the total payments to governments as defined by the UK Regulations. The payments are not attributable to specific projects and reflect functional support for the Group that, in FY2021, consisted entirely of projects that undertook relevant activities as defined by the UK Regulations.
The Payments made on a project-by-project basis section presents corporate income tax amounts for each project/entity taking into account the effects of tax consolidation in Australia. These include:
• losses from one entity can be offset against taxable income of another entity within the same tax consolidated group
• only the head entity of a tax consolidated group is liable to make corporate income tax payments to the ATO
• typically, corporate tax groups allocate the aggregate corporate income tax payments made by the head entity to the ATO among entities within the Australian tax consolidated group
Reporting currency
All payments to governments on pages 20 to 25 have been reported in US dollars. Payments denominated in currencies other than US dollars are translated for this Report at the exchange rate at the date of the payment, unless stated otherwise.
Glossary
Adjusted effective tax rate
Total taxation expense excluding exceptional items and exchange movements included in taxation expense divided by Profit before taxation and exceptional items.
Adjusted effective tax and royalty rate
Total taxation expense excluding exceptional items and exchange movements included in taxation expense plus royalty expense divided by Profit before taxation, royalties and exceptional items.
BHP or the Group
BHP Group Limited and BHP Group Plc and their respective subsidiaries.
Current tax expense
The amount of corporate income tax and royalty-related income tax and production entitlements currently payable and attributable to the year, measured at rates enacted or substantively enacted at year-end, together with any adjustment to those taxes payable in respect of previous years.
Deferred tax expense
The amount of corporate income tax and royalty-related income tax and production entitlements attributable to the current year but payable in future years provided using the balance sheet liability method.
Employees and contractors
Employee data is the weighted average number of employees at the last day of each calendar month for a 10- month period based on BHP ownership.
Contractor data is collected from internal surveys and the organisation systems and averages for a 10-month period.
Global Reporting Initiative Standards
The GRI Standards represent global best practice for reporting publicly on a range of economic, environmental and social impacts. Sustainability reporting based on the Standards provides information about an organisation’s positive or negative contributions to sustainable development.
Government
Any national, regional or local authority of a country (includes a department, agency or undertaking that is a subsidiary undertaking where the authority is the parent undertaking).
Income tax expense
The total of current tax expense and deferred tax expense.
Low-tax jurisdictions
In classifying which countries are ‘low-tax jurisdictions’, we have applied the EU list of non-cooperative jurisdictions for tax purposes, issued in December 2017 by the European Union and subsequently updated. The updated list used in this Report was issued in February 2021.
Payments to shareholders, lenders and investors
Geographical distribution is based on the registered address of shareholders (for returns to shareholders including dividends) and country of incorporation of the borrower for interest payments.
Profit before taxation
Profit before taxation when presented by country is adjusted for intercompany dividends.
Project
Consistent with the UK Regulations, a project is defined as the operational activities that are governed by a single contract, licence, lease, concession or similar legal agreements and form the basis for payment liabilities with a government. If multiple such agreements are ‘substantially interconnected’ they may be considered a project. For these purposes ‘substantially interconnected’ means forming a set of operationally and geographically integrated contracts, licences, leases or concessions or related agreements with substantially similar terms that are signed with a government, giving rise to payment liabilities.
Report
The Report has been prepared for BHP’s financial year from 1 July 2020 to 30 June 2021.
Social investment
Includes community contributions and associated administrative costs (including costs borne by BHP to facilitate the operation of the BHP Foundation), and BHP’s equity share in community contributions for both operated and non-operated joint ventures.
UK Regulations
The Reports on Payments to Governments Regulations 2014, as amended.
|
|
Click here for original article
|
| |
BHP - board changes
BHP announced that Susan Kilsby and Anita Frew will retire after the BHP Group Limited and BHP Group Plc 2021 Annual General Meetings.
As previously announced, Ms Kilsby was appointed Chair of the Board of Fortune Brands Home & Security, Inc in January 2021 and had confirmed her intention to retire as a BHP Director during 2021 and no later than the 2021 Annual General Meetings. Ms Frew joined the Board of Rolls Royce Holdings plc as a Non-executive Director in July 2021 and is Chair with effect from 1 October 2021. Both Directors will step down from the BHP Board given the time commitments associated with their respective chair appointments.
In light of these retirements and the importance of continuity on the Board during the ongoing renewal process, the Board has requested that Malcolm Broomhead seek re-election at the 2021 Annual General Meetings for a further year. The Board supports Malcolm’s re-election given his extensive knowledge of BHP and the mining and resources sector, and the proposed corporate transactions that the Group is undertaking at this time. Malcolm has informed the Board that he will not remain on the Board after the 2022 Annual General Meetings.
As previously announced, Michelle Hinchliffe will also join the BHP Board from 1 March 2022.
|
|
Click here for original article
|
| |
BHP Group plc - Australian economic contribution f
BHP Group plc - Australian economic contribution figures for FY2021
SENS Announcement Classification:
1. General
2.
|
|
Click here for original article
|
| |
BHP - dividend currency exchange rates
On 17 August 2021, the Board of BHP determined to pay a final dividend of USD200 cents per share for the year ended 30 June 2021. Currency conversions are based on foreign currency exchange rates on a single day or an average for a period of days ending on or before the Record Date.
For the 2021 final dividend: (i) the Australian dollar currency conversion will be based on the average rate over a four day period commencing on 31 August 2021 and ending on 3 September 2021; (ii) the UK pounds sterling currency conversion will be based on the average rate over a two day period commencing on 2 September 2021 and ending on 3 September 2021; (iii) the New Zealand dollar currency conversion will be based on the rate on 3 September 2021; and (iv) the South African rand currency conversion will be based on the average rate over a two day period commencing on 26 August 2021 and ending on 27 August 20211.
The following table sets out the currency exchange rates applicable for the dividend:
Dividend USD200 cents per ordinary share - Exchange rate; Dividend per ordinary share in local currency
- Australian cents - 0.736575 ; 271.527000
- British pence - 1.385250; 144.378271
- New Zealand cents - 0.712722; 280.614321
- South African cents - 14.92710; 2 985.42000
The dividend will be paid on 21 September 2021.
|
|
Click here for original article
|
| |
BHP Group plc - BHP Group Plc Notification of Majo
BHP Group plc - BHP Group Plc Notification of Major Interest in Shares
SENS Announcement Classification:
1. General
2.
|
|
Click here for original article
|
| |
BHP - appointment of director
BHP has announced the appointment of Michelle Hinchliffe to the BHP Board as an independent Non-executive Director with effect from 1 March 2022.
Ms Hinchliffe will also become a member of the Risk and Audit Committee effective 1 March 2022.
|
|
Click here for original article
|
| |
| |
|
| Closing price data source: JSE Ltd. All other statistics calculated by ProfileData. |
| |
|
|
