Wrap Text
BHP Group Plc 2021 AGM Speeches
BHP Group Plc
Registration number 3196209
Registered in England and Wales
Share code: BHP
ISIN: GB00BH0P3Z91
14 October 2021
To: Australian Securities Exchange cc: New York Stock Exchange
London Stock Exchange JSE Limited
BHP GROUP PLC ANNUAL GENERAL MEETING SPEECHES
Please find attached addresses to shareholders to be delivered by the Chair and the Chief
Executive Officer at BHP Group Plc’s Annual General Meeting today.
In accordance with the Dual Listed Company structure of the Group, all of the items of business to
be conducted at BHP Group Plc’s Annual General Meeting will be treated as joint electorate
actions with BHP Group Limited and the poll results on these items will not be known until the
conclusion of BHP Group Limited’s Annual General Meeting on 11 November 2021. The results of
the polls will be released to the market shortly after conclusion of the BHP Group Limited Annual
General Meeting.
The meeting can be accessed at https://edge.media-server.com/mmc/p/8e2yermz.
Further information on BHP can be found at bhp.com.
Authorised for lodgement by:
Stefanie Wilkinson
Group Company Secretary
BHP Group Limited ABN 49 004 028 077 BHP Group plc Registration number 3196209
LEI WZE1WSENV6JSZFK0JC28 LEI 549300C116EOWV835768
Registered in Australia Registered in England and Wales
Registered Office: Level 18, 171 Collins Street Registered Office: Nova South, 160 Victoria Street
Melbourne Victoria 3000 Australia London SW1E 5LB United Kingdom
Tel +61 1300 55 4757 Fax +61 3 9609 3015 Tel +44 20 7802 4000 Fax +44 20 7802 4111
Members of the BHP Group which is headquartered in Australia
BHP Group Plc Annual General Meeting
Speeches by Ken MacKenzie, Chair
and
Mike Henry, Chief Executive Officer
14 October 2021
BHP Group Plc Annual General Meeting
14 October 2021
Ken MacKenzie, Chair
Global uncertainty and complexity
This year has been exceptionally challenging. The Covid-19 pandemic has continued to
spread across the globe, and has tested all of us.
I have always felt honoured to serve as your Chair, however, never before have I been
more proud of the performance of our company and people than in the past year.
During this period of global disruption, we have continued to produce the commodities the
world requires, kept our world-class assets running safely and efficiently, and played a
substantial role in global economic development. Importantly, we have been able to
continue to make a valuable contribution to the communities where we operate –
partnering with local businesses, regional and Indigenous communities, supporting local
jobs and continuing to pay taxes and royalties to governments – an economic contribution
of approximately US$41 billion for the year.
Throughout this time, we have been grateful for the support of all our partners – our
customers, our suppliers and our communities.
We are also grateful for the support from you – our shareholders. I have always enjoyed
the opportunity presented by the AGM to thank you in person for your ongoing support
and to hear first-hand your thoughts and concerns. Unfortunately, virtual engagement is
not the same – and the entire Board and management team look forward to a time when
we can all meet again in person.
FY2021 Financial Highlights
Despite the complexity of our current world, BHP performed very strongly in FY21 under
the leadership of our CEO Mike Henry and the hard work of our 80,000 team members
around the globe.
• Earnings were up 69% to US$37.4 billion
• We generated record free cash flow of US$19.4 billion up 140%
• Net debt finished down 66% for the year at US$4.1 billion
• Return on capital employed strengthened to 32.5%.
On the back of these strong results, a record total dividend of US$3.01 was paid per
share for FY2021, bringing BHP’s returns to shareholders to more than US$15 billion for
the full year, and more than US$38 billion over the past three years.
Driven by our purpose
Priorities
Our performance is underpinned by our purpose – to bring people and resources together
to build a better world.
Our five priorities – Safety, Portfolio, Capital Discipline, Capability and Culture, and Social
Value – are the foundations that enable us to deliver now and into the future.
The safety and wellbeing of our people remains our top priority. It is pleasing that we have
had over two and a half years without a fatality at our operated assets and key indicators
continue to improve.
However, while improvements to traditional safety measures are positive, we know that
our commitment to health and safety requires more work. Sexual harassment is a critical
health and safety issue for BHP and for our industry. One incident at our sites is one too
many – and we remain committed to working to ensure that all our people can go to work
feeling safe and respected.
Unlocking value and positioning for the future
Unification
Moving to another of our priorities – portfolio and transformation.
At BHP, we are always looking to the future. As our world continues to evolve, we must be
ready to position the organisation to capture future opportunities, and unlock value for our
shareholders.
Given the strength of our position we believe now is the right time to make a number of
strategic, transformative changes.
The first of these is our intention to unify BHP’s corporate structure under BHP Group
Limited.
The current Dual Listing structure was established to help facilitate the BHP and Billiton
merger in 2001 and, although it has served us well, its suitability for our organisation has
diminished over time.
Unification will offer a number of benefits due to the simplification of the company’s
structure. These include moving from two parent companies to one parent company, with
one share register and one share price globally.
It would also enable BHP to be more efficient, and agile in responding to future
opportunities.
If unification is implemented, BHP Group Plc shareholders will have their shares
exchanged for BHP Group Limited shares on a one-for-one basis. There will be no
change for BHP Group Limited shareholders. In addition, BHP’s Board, management,
strategy, and dividend policy will remain the same.
I want to be clear that London is and will remain a vital location for BHP. We value our
partnerships and relationships in the UK, and intend to maintain our London corporate
office. Further, I have committed to continuing my annual engagement with retail
shareholders in the UK, through ShareSoc and the UKSA.
The unification proposal is subject to a number of approvals including shareholder
meetings and votes in the first half of 2022. I look forward to discussing the proposal with
you at that time.
Portfolio
In addition to unification, we have also announced a number of strategic steps towards
transforming our portfolio for the future.
In 2020, we conducted our own scenario analysis which indicated that a world aligned to
the Paris Agreement 1.5°C outcome was the most beneficial to BHP shareholders and
illustrated the important role BHP has to play in the global energy transition.
Under this scenario, we expect demand for many of our commodities to be driven by
continued economic growth, decarbonisation and electrification. For example copper,
nickel and steel will play a vital role in supporting the global energy transition, while we
expect that demand for potash will continue to increase to support the dietary
requirements of growing populations.
And at the same time, we continue to assess our portfolio to determine the right mix of
attractive commodities and assets to create shareholder value.
It is against these dimensions of value and decarbonisation that we have announced
changes to our portfolio that will position us to capture these future-facing opportunities,
and unlock long-term value for shareholders.
We have invested in the Jansen Stage 1 potash project in Canada located in the world’s
best potash basin, providing significant exposure to this future-facing commodity with
strong demand and potential growth.
We have also announced the proposed merger of our petroleum business with
Woodside. We believe this transaction will unlock value for BHP shareholders as the
combined business will be better positioned to navigate the energy transition.
We are confident these changes, alongside our commitments to climate leadership, and
our financial and social value-based decision-making, will ensure we are well positioned to
be at the centre of global demand for key commodities into the future.
Climate Change
Now moving to climate change. As I mentioned earlier, our scenario analysis shows that
the more the world decarbonises, the more valuable BHP becomes. So our business
agenda is aligned with our climate-change agenda.
This year we have made strong progress towards meeting our commitments including
initiatives focused on reducing our operational and value-chain emissions.
We have:
• established a substantial pipeline of decarbonisation projects at our operated
assets to achieve our emissions reduction target of at least 30% by FY2030;
• our best estimate of the capital expenditure to implement these projects is US$2-4
billion; and
• we have also committed a further US$75 million to partnerships focused on steel
decarbonisation with four of our major steelmaking customers.
Importantly, we have also aligned a component of executive remuneration to performance
against our climate goals and targets.
Last year we also published our Climate Change Report and in September, we published
the BHP Climate Transition Action Plan, which sets out the steps BHP intends to take
towards net zero Scopes 1, 2 and 3 emissions.
Our Plan was welcomed by leading investors engaging with us through the Climate Action
100+ initiative.
As you know, at this year’s AGMs, we have asked our shareholders to vote on our new
Climate Transition Action Plan. We believe it is important that all of our shareholders have
an opportunity to engage with us on our climate strategy and actions, and this advisory
vote is intended to provide a forum for discussion and feedback on the Plan.
Responsibility for our strategy, of course, remains with the Directors, however we will take
into account the feedback we receive as part of the vote.
We look forward to hearing your views on this important topic.
Social Value
Today I have spoken a lot about our climate change position, however it represents only
one aspect of our priority to create social value for our stakeholders.
Social value focuses on our commitment to make a positive contribution to society – to our
people, partners, economy, environment and local communities. Its principles are
embedded in both our business planning and our decision-making.
This year we have continued our work to create social value across the jurisdictions in
which we operate.
There are three key areas I particularly want to reference today.
First, is our work towards building a more diverse workforce. Since 2016, we’ve increased
female representation across the business by more than two thirds – to over 30 per cent.
This is an important milestone as we continue to progress on our aspirational goal of
gender balance by 2025.
The second area I want to highlight is our focus on supporting the economic recovery of
communities due to the Covid-19 crisis. One example of this is our work in Chile. BHP
has created the ‘Vamos Juntos’/ Forward together’ program to support local communities
where we operate, to have the resources and capabilities to cope with the health, social
and economic impacts of Covid-19. The program includes increased testing capability for
the virus, providing medical and sanitary supplies to strengthen the public health network
as well as supporting vulnerable people through the sanitisation of public spaces.
The final area I wanted to talk about is our continued work with Traditional Owner groups
and other Indigenous representative organisations to further strengthen our cultural
heritage management practices.
The long-term nature of our business gives BHP the opportunity to establish lasting
relationships with Indigenous peoples.
We understand that Indigenous peoples have a deep connection to their natural
environments and that these are tied to their physical, spiritual, cultural and economic
wellbeing.
BHP recognises and respects the significant contribution that Indigenous peoples make to
national and international economic prosperity.
As one of many examples across the world, the journey of iron ore from Banjima or
Nyiyaparli Country in Western Australia is a story in which an essential element of global
growth is enabled by two proud and culturally strong traditional owner communities.
We recognise our responsibility to respect and sustain the cultural landscapes in which we
operate and work in partnership to ensure we respect the rights of the Indigenous peoples
who are its custodians.
This year in Australia we have worked closely with the First Nations Heritage Protection
Alliance to jointly develop a set of Principles to guide BHP’s approach to Indigenous
cultural heritage in Australia. I sincerely wish to thank those who have given their support
and guidance on this important work.
We have also set targets to increase Indigenous employment within BHP and I am
pleased to report our Indigenous people’s workforce participation rate has increased to
7.2 per cent in Australia, 7.5 per cent in Chile and 13.7 per cent in Canada.
These are just some of the social and environmental programs we have underway.
Overall, in FY2021, we have invested approximately US$175 million in social value
initiatives.
Board renewal
Before I hand across to Mike Henry, I would like to acknowledge our directors, Anita Frew
and Susan Kilsby who will retire at the conclusion of the 2021 Annual General Meetings. I
would like to sincerely thank Anita and Susan for their considerable contribution to the
Board and to the shareholders of BHP.
During the year we continued our focus on board renewal and welcomed Xiaoqun Clever
and Christine O’Reilly to the Board in October 2020.
I am also pleased that Michelle Hinchliffe will join us as a director in March. Michelle
brings significant expertise in financial risk management and strong global experience,
and we look forward to welcoming her early next year.
We will continue to focus on our board renewal process and will seek to appoint another
female independent Non-executive Director in this financial year.
Conclusion
In conclusion, there is no doubt we continue to live in an uncertain and challenging world.
Despite this complexity, the good news is BHP is in a strong and resilient position:
• We have a clear strategy to deliver long-term value by repositioning our portfolio
towards future-facing commodities;
• We have strength in our balance sheet, our people and performance culture; and
• We have announced an important step towards redefining our corporate structure
for the opportunities that lie ahead.
In short, we believe the future is clear.
It has been a significant year for BHP – one that will transform the company and unlock
long-term value for our shareholders.
I wish to thank you for your ongoing support and it is now my pleasure to invite Mike Henry
to speak with you.
Mike Henry, Chief Executive Officer
Welcoming remarks
Thanks Ken.
It is a pleasure to be able to join some of our shareholders here today in London.
And to those connecting virtually, I look forward to when we can meet more of you in
person.
Main Introduction
Following on from Ken, I’d like to talk a bit more about the underlying business:
• Our recent operational and financial performance;
• How we are shaping the company to create value and returns through meeting the
world’s resources needs;
• And, our approach to our operations and engagement with those around us in a
way that maximises long term shareholder value and generates value for others
who depend on and support BHP.
Strong operational and financial results
Thanks to the resilience and commitment of BHP employees and contractors, and support
from our partners and communities, we delivered a strong set of outcomes in the last
financial year.
Most importantly, we improved overall underlying safety performance and it has now been
more than two and a half years without a fatality in BHP operations. Safety remains
priority number one.
As Ken noted, our strong operational performance, coupled with the tailwind of high
commodity prices, saw us deliver record free cash flow, an even stronger balance sheet,
and of course a record final dividend to shareholders.
In addition to seeking to maximise returns for every dollar invested through running the
base business very well – with a strong focus on operational and cost discipline – we are
also seeking to grow value through ensuring that we have the right portfolio and are able
to capitalise on the opportunity to meet the world’s growing needs for certain resources.
Guided by our Capital Allocation Framework, last year we invested US$2.3 billion in
maintenance, in line with our intent to ensure reliable operations.
We also invested more than US$5 billion in development, growth and exploration across
our business.
Creating significant value
Our focus on operational excellence shone through in:
• Production and throughput records at Western Australian Iron Ore and Escondida.
• Our highest ever copper production at Olympic Dam since BHP acquired it 16
years ago.
• And delivery of four major projects on budget, and on or ahead of time.
This focus is unlocking further significant value for shareholders and is supporting our
ability to continue to grow value for those others who benefit from BHP’s presence.
In the year past we paid US$2.1 billion to local suppliers in the communities where we
operate.
We announced significant funding towards global response and recovery efforts from the
Covid-19 pandemic last year. More than US$50 million was invested in community
programs in areas where we operate in Australia, North America, South America and Asia
to support greater access to local health services and relief programs.
And the BHP Foundation is now working with 40 partner organisations across 49
countries to advance solutions to some of the world’s most pressing sustainable
development challenges. This includes:
• Working with Transparency International to identify corruption risks in mining
licensing and permitting processes.
• Partnering with the United Nations Office of Women to provide “second chance”
education for marginalised women and girls to re-enter formal learning
environments.
• And supporting Indigenous Australians in landscape-scale conservation programs
through the Ten Deserts project, covering a vast area of the Australian continent.
Advancing decarbonisation
Now, in addition to the economic and social benefit our presence brings to so many
others, we are also very focused on ensuring that the assets we run and our supply
chains are operating sustainably.
This includes a strong focus on showing leadership when it comes to reducing the
greenhouse gas emissions that accompany the production and processing of our
products.
We recently released our Climate Transition Action Plan, which reflects our resolve in this
regard. Shareholders are being asked to vote on this today through the Say on Climate
resolution.
Within this plan we outline our continuing commitment to net zero operational emissions
by no later than 2050, and our mid-term target of at least 30 per cent emissions reduction
by 2030 on 2020 levels. We’ve been taking action on this front for over two decades now
and our signing of multiple renewable energy contracts recently will help accelerate this
reduction in the near term.
Of course it is not just about operational emissions, or Scope 1 and 2 emissions. We also
must focus on the emissions generated by others in the value chain through the transport
and processing of our products, and the provision of goods and services to BHP. These
are our Scope 3 emissions.
While we can’t determine the outcomes on that front alone, we are working with our
customers and suppliers to stimulate and support their efforts to reduce emissions. This is
in keeping with our long-term goal to pursue net zero Scope 3 greenhouse gas emissions
by 2050 for our reshaped portfolio.
In the past year, we have entered into research and development partnerships with
companies covering 10 per cent of the world’s steel production to assist steelmaking
decarbonisation efforts.
We undertook the world’s first LNG-fuelled bulk carrier tender, which will lower emissions
of shipping our iron ore, and have subsequently set a target of net zero emissions from
the maritime transport of our products by 2050.
We are also targeting net zero for our direct suppliers’ emissions from the provision of
goods and services to BHP, also by 2050.
We continue to deliver strong operational and financial performance, and ever more
sustainable outcomes.
Reshaping our portfolio for a changing world
Our Company is in great shape and this is shining through in the numbers.
Building upon this solid base, as we look to the future, we will seek to grow value through
positioning the BHP portfolio to benefit from the big trends unfolding in the world around
us. These include population growth, rising living standards, electrification and
decarbonisation. We want to grow in those commodities that stand to benefit greatest
from these trends.
Against that backdrop:
• we took the decision to proceed with Jansen, which will contribute to more
sustainable farming;
• we announced the intent to merge our petroleum business with Woodside,
creating a large, more resilient company, better able to navigate the energy
transition and grow value while doing so; and
• we intend to continue to grow our already strong positions in nickel and copper.
In copper, we have some solid growth ahead over the next five years, thanks to the
recently commissioned Spence Growth project, improving grades at Escondida and more
reliable production out of Olympic Dam.
We have increased our exploration effort and have work underway in Ecuador, Peru,
Chile, Mexico, the US and Australia.
And we are currently looking at targeted investment in early stage development options –
as we did with SolGold in Ecuador and the Elliot copper project in Australia.
In nickel, we have established agreements with Midland Exploration in Canada and made
an offer to acquire Noront Resources.
This combination of exploration, targeted early stage investments, and unlocking
significant organic growth in our existing operated assets sets us up to deliver more of our
products to meet the world’s needs.
Creating competitive advantage through our people and culture
Now, everything I’ve spoken about – safety, strong operational and financial performance,
growth - only happens with great people and culture.
This is something that I am really passionate about.
We need to continue to build capability and have a number of efforts underway to do so.
We are strengthening our organisational capability as a competitive advantage.
We’re recruiting new talent as well as developing even greater technical and operational
capability through our Centres of Excellence.
We are investing in building skills through the BHP FutureFit Academy, where we trained
more than 500 apprentices and trainees in the past year, with a commitment to 2,500 over
five years.
We are enabling our people and improving the way we work through the BHP Operating
System, which makes continuous improvement part of what we do in our business every
day.
Our plans to unify the BHP corporate structure and provide a single share register will
make us simpler and more agile - which is in line with our broader drive for a high
performance, inclusive workforce and culture.
We are not yet fully where we want to be, and perhaps there will always be more to do,
but we are making some strong progress.
Female participation at BHP has increased by more than two thirds since we set our
aspirational gender goal in 2016 and we are a better performing company for it. We
remain wholeheartedly committed to the important effort underway towards gender
balance.
Indigenous representation in our Australian workforce has risen to 7.2 per cent and 7.5
per cent in Chile. We remain focused on partnering with Indigenous and First Nations
peoples in all the regions in which we work.
Our proximity to Indigenous communities makes them critical partners, whose rights,
connection to land and cultural heritage we respect. Understanding these rights and
working with Indigenous peoples is integral to our exploration and mine planning
processes.
At our Jansen Stage 1 Project, our goal is for First Nations employees to make up 20 per
cent of the workforce and we have Opportunity Agreements in place with six First Nations
communities around the site. These are both firsts in the potash industry.
We remain frustrated that we continue to experience instances of sexual harassment and
assault in our camps and operations. This conduct is completely unacceptable and we are
absolutely committed to eliminating it from BHP.
This year, we introduced a policy to limit alcohol consumption at our Australian camps and
launched a dedicated support service providing assistance to anyone in our workforce
impacted by sexual assault or harassment. We’ve focused initiatives on education and on-
site security, with a further AU$300 million committed for security improvements in 2022.
We also continue to take an approach to ensuring consequences for those that behave
badly that is designed to send a clear message that there is simply no place for this
conduct in our workplaces.
We are determined to create and maintain an environment at BHP where we attract and
retain the best talent and empower our people to make the daily decisions that make us
safer, more productive and more capable of meeting the needs of our customers,
communities and nations.
Conclusion
The future for BHP is clear.
We are shaping our Company to meet the world’s needs, and we are shaping our teams
to get the very best out of our assets.
We are doing so because it drives results and fosters high performance. It enables us to
get the most out of ourselves, and out of the commodities we produce.
And importantly, we are doing it because it adds value: to the world, to the communities
we work in, and of course to our shareholders.
The plans we have announced and the strategy underpinning them will allow us to
continue to create even greater value now and into the future.
It is an exciting time for the Company.
I want to thank everyone – our stakeholders and especially our shareholders – for your
ongoing support for our Company.
The Chair then conducted the formal items of business.
Sponsor: UBS South Africa (Pty) Limited
Date: 14-10-2021 09:45:00
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