Annual Report 2019 Our Charter We are BHP, a leading global resources company. Our Purpose Our Values To bring people and resources Sustainability together to build a better world. Putting health and safety first, being environmentally responsible and supporting our communities. Our Strategy Our strategy is to have the best Integrity capabilities, best commodities Doing what is right and doing what we say we will do. and best assets, to create long-term value and high returns. Respect Embracing openness, trust, teamwork, diversity and relationships that are mutually beneficial. Performance Achieving superior business results by stretching our capabilities. Simplicity Focusing our efforts on the things that matter most. Accountability Defining and accepting responsibility and delivering on our commitments. We are successful when: Our people start each day with a sense of purpose and end the day with a sense of accomplishment. Our teams are inclusive and diverse. Our communities, customers and suppliers value their relationships with us. Our asset portfolio is world-class and sustainably developed. Our operational discipline and financial strength enables our future growth. Our shareholders receive a superior return on their investment. Andrew Mackenzie Chief Executive Officer May 2019 The Annual Report 2019 is available online at bhp.com. BHP Group Limited. ABN 49 004 028 077. Registered in Australia. This Annual Report covers BHP’s assets (including those under exploration, Registered office: 171 Collins Street, Melbourne, Victoria 3000, Australia. projects in development or execution phases, sites and closed operations) BHP Group Plc. Registration number 3196209. Registered in England and that have been wholly owned and/or operated by BHP and that have been Wales. Registered office: Nova South, 160 Victoria Street London SW1E 5LB owned as a joint venture(1) operated by BHP (referred to in this Report as United Kingdom. Each of BHP Group Limited and BHP Group Plc is a ‘assets’, ‘operated assets’ or ‘operations’) during the period from 1 July 2018 member of the Group, which has its headquarters in Australia. BHP is to 30 June 2019. Our functions are also included. a Dual Listed Company structure comprising BHP Group Limited and BHP Group Plc. The two entities continue to exist as separate companies BHP also holds interests in assets that are owned as a joint venture but but operate as a combined group known as BHP. not operated by BHP (referred to in this Annual Report as ‘non-operated joint ventures’ or ‘non-operated assets’). Notwithstanding that that this The headquarters of BHP Group Limited and the global headquarters of Annual Report may include production, financial and other information the combined Group are located in Melbourne, Australia. The headquarters from non-operated assets, non-operated assets are not included in the of BHP Group Plc are located in London, United Kingdom. Both companies BHP Group and, as a result, statements regarding our operations, assets have identical Boards of Directors and are run by a unified management and values apply only to our operated assets unless stated otherwise. team. Throughout this publication, the Boards are referred to collectively as the Board. Shareholders in each company have equivalent economic (1) References in this Annual Report to a ‘joint venture’ are used for convenience to collectively describe assets that are not wholly owned by BHP. Such and voting rights in the Group as a whole. references are not intended to characterise the legal relationship between the owners of the asset. In this Annual Report, the terms ‘BHP’, the ‘Company’, the ‘Group’, ‘our business’, ‘organisation’, ‘we’, ‘us’, ‘our’ and ‘ourselves’ refer to BHP Group Limited, BHP Group Plc and, except where the context otherwise requires, their respective subsidiaries as defined in note 13 ‘Related undertaking of the Group’ in section 5.2 of this Report. Those terms do not include non-operated assets. Contents 1 Strategic Report 4 Directors’ Report 1.1 Chairman’s Review 4 4.1 Review of operations, principal activities and state of aff airs 164 1.2 Chief Executive Off icer’s Report 5 4.2 Share capital and buy-back programs 165 1.3 BHP at a glance: FY2019 performance summary 6 4.3 Results, financial instruments and going concern 165 BHP at a glance: What we do 8 4.4 Directors 165 1.4 About BHP 9 4.5 Remuneration and share interests 166 1.5 Our performance 18 4.6 Secretaries 166 1.6 Our operating environment 23 4.7 Indemnities and insurance 166 1.7 Samarco 44 4.8 Employee policies 167 1.8 Tailings dams 47 4.9 Corporate governance 167 1.9 People 50 4.10 Dividends 167 1.10 Sustainability 55 4.11 Auditors 167 1.11 Our businesses 66 4.12 Non-audit services 167 1.12 Summary of financial performance 81 4.13 Political donations 168 1.13 Performance by commodity 95 4.14 Exploration, research and development 168 1.14 Other information 103 4.15 ASIC Instrument 2016/191 168 4.16 Proceedings on behalf of BHP Group Limited 168 2 Governance at BHP 4.17 Performance in relation to environmental regulation 168 2.1 Governance at BHP 106 4.18 Share capital, restrictions on transfer of shares and other additional information 168 2.2 Board of Directors and Executive Leadership Team 109 2.3 Shareholder engagement 115 2.4 Role and responsibilities of the Board 116 5 Financial Statements 2.5 Board membership 118 5.1 Consolidated Financial Statements 170 2.6 Chairman 118 5.2 BHP Group Plc 226 2.7 Renewal and re-election 118 5.3 Directors’ declaration 238 2.8 Director skills, experience and attributes 119 5.4 Statement of Directors’ responsibilities in respect 2.9 Director induction, training and development 121 of the Annual Report and the Financial Statements 239 2.10 Independence 121 5.5 Lead Auditor’s Independence Declaration under 2.11 Board evaluation 122 Section 307C of the Australian Corporations Act 2001 240 2.12 Board meetings and attendance 123 5.6 Independent Auditors’ reports 241 2.13 Board committees 124 5.7 Supplementary oil and gas information – unaudited 248 2.14 Risk management governance structure 132 2.15 Management 133 6 Additional information 2.16 Our conduct 134 6.1 Information on mining operations 254 2.17 Market disclosure 134 6.2 Production 263 2.18 Remuneration 134 6.3 Resources and Reserves 266 2.19 Directors’ share ownership 134 6.4 Major projects 290 2.20 Conformance with corporate governance standards 135 6.5 Climate change data 291 2.21 Additional UK disclosure 135 6.6 Legal proceedings 294 3 Remuneration Report 6.7 Glossary 297 3.1 Annual statement by the Remuneration 7 Shareholder information Committee Chairman 138 7.1 History and development 304 3.2 Remuneration policy report 144 7.2 Markets 304 3.3 Annual report on remuneration 150 7.3 Organisational structure 304 7.4 Material contracts 306 7.5 Constitution 306 7.6 Share ownership 310 7.7 Dividends 312 7.8 American Depositary Receipts fees and charges 313 7.9 Government regulations 313 7.10 Ancillary information for our shareholders 316 Forward looking statements This Annual Report contains forward looking statements, including Except as required by applicable regulations or by law, BHP does not statements regarding trends in commodity prices and currency exchange undertake to publicly update or review any forward looking statements, rates; demand for commodities; production forecasts; plans, strategies and whether as a result of new information or future events. objectives of management; closure or divestment of certain assets, Past performance cannot be relied on as a guide to future performance. operations or facilities (including associated costs); anticipated production Agreements for sale of Onshore US or construction commencement dates; capital costs and scheduling; operating costs; anticipated productive lives of projects, mines and facilities; On 28 September 2018, BHP completed the sale of 100 per cent of the issued provisions and contingent liabilities; and tax and regulatory developments. share capital of BHP Billiton Petroleum (Arkansas) Inc. and 100 per cent of the membership interests in BHP Billiton Petroleum (Fayetteville) LLC, which held Forward looking statements may be identified by the use of terminology the Fayetteville assets, for a gross cash consideration of US$0.3 billion. including, but not limited to, ‘intend’, ‘aim’, ‘project’, ‘anticipate’, ‘estimate’, ‘plan’, ‘believe’, ‘expect’, ‘may’, ‘should’, ‘will’, ‘continue’ or similar words. On 31 October 2018, BHP completed the sale of 100 per cent of the issued These statements discuss future expectations concerning the results of share capital of Petrohawk Energy Corporation, the BHP subsidiary which held assets or financial conditions, or provide other forward looking information. the Eagle Ford (being Black Hawk and Hawkville), Haynesville and Permian assets, for a gross cash consideration of US$10.3 billion (net of preliminary These forward looking statements are not guarantees or predictions of future customary completion adjustments of US$0.2 billion). performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control and which may cause actual While the effective date at which the right to economic profits transferred to results to differ materially from those expressed in the statements contained the purchasers was 1 July 2018, the Group continued to control the Onshore in this Annual Report. Readers are cautioned not to put undue reliance on US assets until the completion dates of their respective transactions. In addition, forward looking statements. the Group provided transitional services to the buyer, which ceased in July 2019. For example, our future revenues from our assets, projects or mines described For IFRS accounting purposes, Onshore US is treated as Discontinued in this Annual Report will be based, in part, on the market price of the minerals, operations in BHP’s Financial Statements.