Annual Report 2020 BHP Annual Report 2020 BHP Annual Report Bringing people and resources together to build a better world 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 eff orts 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. Mike Henry Chief Executive Off icer February 2020 The Annual Report 2020 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 ‘operated assets’ or ‘operations’) during the period from 1 July 2019 to member of the Group, which has its headquarters in Australia. BHP is a 30 June 2020. Our functions are also included. Dual Listed Company structure comprising BHP Group Limited and BHP Group Plc. The two entities continue to exist as separate companies but BHP also holds interests in assets that are owned as a joint venture but not operate as a combined group known as BHP. operated by BHP (referred to in this Annual Report as ‘non-operated joint ventures’ or ‘non-operated assets’). Notwithstanding that this Annual The headquarters of BHP Group Limited and the global headquarters of the Report may include production, financial and other information from combined Group are located in Melbourne, Australia. The headquarters of non-operated assets, non-operated assets are not included in the BHP BHP Group Plc are located in London, United Kingdom. Both companies Group and, as a result, statements regarding our operations, assets and have identical Boards of Directors and are run by a unified management 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 and voting rights in the Group as a whole. In this Annual Report, the terms ‘BHP’, the ‘Company’, the ‘Group’, ‘our (1) References in this Annual Report to a ‘joint venture’ are used for convenience business’, ‘organisation’, ‘we’, ‘us’, ‘our’ and ‘ourselves’ refer to BHP Group to collectively describe assets that are not wholly owned by BHP. Such Limited, BHP Group Plc and, except where the context otherwise requires, references are not intended to characterise the legal relationship between their respective subsidiaries as defined in note 13 ‘Related undertakings the owners of the asset. of the Group’ in section 5.2 of this Report. Those terms do not include non-operated assets. Contents 1 Strategic Report 1.1 Chair’s Review 4 4.8 Employee policies 169 1.2 Chief Executive Officer’s Report 5 4.9 Corporate governance 169 1.3 BHP at a glance: FY2020 6 4.10 Dividends 169 1.4 Performance 8 4.11 Auditors 169 1.5 Our operating environment 22 4.12 Non-audit services 169 1.6 Capability and culture 44 4.13 Political donations 170 1.7 Sustainability 51 4.14 Exploration, research and development 170 1.8 Samarco 75 4.15 ASIC Instrument 2016/191 170 1.9 Portfolio: Our business 78 4.16 Proceedings on behalf of BHP Group Limited 170 1.10 Summary of financial performance 95 4.17 Performance in relation to environmental regulation 170 1.11 Performance by commodity 100 4.18 Share capital, restrictions on transfer of shares and other 1.12 Other information 108 additional information 170 2 Governance at BHP 5 Financial Statements 2.1 Chair’s letter 110 5.1 Consolidated Financial Statements 172 2.2 Board of Directors and Executive Leadership Team 112 5.2 BHP Group Plc 230 2.3 Role and responsibilities of the Board 118 5.3 Directors’ declaration 242 2.4 Board meetings and attendance 119 5.4 Statement of Directors’ responsibilities in respect 2.5 Key Board activities during FY2020 120 of the Annual Report and the Financial Statements 243 2.6 Stakeholder engagement 122 5.5 Lead Auditor’s Independence Declaration under 2.7 Director skills, experience and attributes 124 Section 307C of the Australian Corporations Act 2001 244 2.8 Board evaluation 127 5.6 Independent Auditors’ reports 245 2.9 Nomination and Governance Committee Report 128 5.7 Supplementary oil and gas information – unaudited 254 2.10 Risk and Audit Committee Report 130 2.11 Sustainability Committee Report 135 6 Additional information 2.12 Remuneration Committee Report 136 6.1 Alternative Performance Measures 260 2.13 Risk management governance structure 137 6.2 Information on mining operations 269 2.14 Management 137 6.3 Production 277 2.15 Our conduct 138 6.4 Resources and Reserves 280 2.16 Market disclosure 138 6.5 Major projects 304 2.17 Conformance with corporate governance standards 138 6.6 Sustainability – performance data 305 2.18 Additional UK disclosure 139 6.7 Legal proceedings 330 3 Remuneration Report 6.8 Glossary 333 3.1 Annual statement by the Remuneration Committee Chair 142 7 Shareholder information 3.2 Remuneration policy report 144 7.1 History and development 342 3.3 Annual report on remuneration 150 7.2 Markets 342 7.3 Organisational structure 342 4 Directors’ Report 7.4 Material contracts 343 4.1 Review of operations, principal activities and state of affairs 166 7.5 Constitution 343 4.2 Share capital and buy-back programs 167 7.6 Share ownership 347 4.3 Results, financial instruments and going concern 167 7.7 Dividends 349 4.4 Directors 167 7.8 American Depositary Receipts fees and charges 350 4.5 Remuneration and share interests 168 7.9 Government regulations 350 4.6 Secretaries 168 7.10 Ancillary information for our shareholders 352 4.7 Indemnities and insurance 168 Forward looking statements duration and severity of the COVID-19 pandemic and its impact on our This Annual Report contains forward looking statements, including: business; political uncertainty; labour unrest; and other factors identified statements regarding trends in commodity prices and currency exchange in the risk factors set out in section 1.5.4. rates; demand for commodities; production forecasts; plans, strategies and Except as required by applicable regulations or by law, BHP does not objectives of management; closure or divestment of certain assets, undertake to publicly update or review any forward looking statements, operations or facilities (including associated costs); anticipated production whether as a result of new information or future events. or construction commencement dates; capital costs and scheduling; Past performance cannot be relied on as a guide to future performance. operating costs and supply of materials and skilled employees; anticipated Sale of Onshore US productive lives of projects, mines and facilities; provisions and contingent liabilities; and tax and regulatory developments. On 28 September 2018, BHP completed the sale of 100 per cent of the issued share capital of BHP Billiton Petroleum (Arkansas) Inc. and 100 per cent of the Forward looking statements may be identified by the use of terminology membership interests in BHP Billiton Petroleum (Fayetteville) LLC, which held including, but not limited to, ‘intend’, ‘aim’, ‘project’, ‘see’, ‘anticipate’, the Fayetteville assets, for a gross cash consideration of US$0.3 billion. ‘estimate’, ‘plan’, ‘objective’, ‘believe’, ‘expect’, ‘may’, ‘should’, ‘will’, ‘would’, ‘continue’ or similar words. These statements discuss future expectations On 31 October 2018, BHP completed the sale of 100 per cent of the issued concerning the results of assets or financial conditions, or provide other share capital of Petrohawk Energy Corporation, the BHP subsidiary that held 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 based on the information available as customary completion adjustments of US$0.2 billion). at the date of this Annual Report and are not guarantees or predictions of future performance and involve known and unknown risks, uncertainties and While the effective date at which the right to economic profits transferred other factors, many of which are beyond our control and which may cause to the purchasers was 1 July 2018, the Group continued to control the actual results to differ materially from those expressed in the statements Onshore US assets until the completion dates of their respective transactions. contained in this Annual Report. BHP cautions against reliance on any In addition, the Group provided transitional services to the buyer, which forward looking statements or guidance, particularly in light of the current ceased in July 2019.