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Welcome to this evening’s retail shareholder event whether it be in person or via webcast.

First, I would like to acknowledge that we are meeting on the land of the Wurundjeri people of the Kulin nation. They have had a spiritual, physical and economic connection to the lands and waterways of this country for generations past, and will do so for generations in the future. I would like to show my respect to Elders past and present and to the young leaders who hold the hopes and ambitions for tomorrow. 

Before we go much further, it’s important to point you to the disclaimer and remind you of its importance to this presentation.

Melbourne has a rich mining heritage and has been home to our global headquarters since 1885. Over the past 130 years, BHP has expanded its reach across the globe. But our biggest shareholder base both by number and value remains in Australia. Millions of Australians own BHP shares.

My executive team and I understand our duty and responsibility to our shareholders and to everyone in this room. That is why events like these are the ideal forum to update you on our work and progress. We highly value your opinion and perspective and I look forward to your insights and questions after this presentation.

Before I tell you about our future plans, I’d like to talk briefly about the past. When I started as CEO in 2013, I presented a strategy focused on portfolio simplification, productivity improvements and increased shareholder returns.

We had seven diverse commodities, 30 operated assets and a presence in 12 countries. To remain true to our strategy, we simplified our portfolio through a series of well-timed divestments and the demerger of South32.

Last year, the US$10.8 billion sale of our Onshore US assets brought our total divestment proceeds to more than US$18 billion over the past six years.

Today, we have four core commodities, 13 operated assets and the majority of our earnings are generated in low-risk OECD countries.

Our portfolio is truly unique, with abundant organic opportunities, but we constantly review this to make sure it is focused on high-quality assets in the right commodities. Our experience demonstrates that great orebodies get better over time. This allows us to unlock more options within our footprint that are low cost, low risk and highly capital efficient.

Not only is our portfolio simpler, but production silos have been dismantled and we are more connected than ever before. We share and replicate best practice more quickly to create safer and more reliable operations and we have developed a culture based on trust and collaboration.

Over the past six years we lifted volumes by over 20 per cent from assets still in our portfolio and reduced unit costs by over 30 per cent. We have also embedded financial discipline through a transparent and consistent approach to capital allocation. This applies to every single investment decision we make. Our Capital Allocation Framework transparently directs cash to its best use, be that the balance sheet, investments or returns to shareholders. This is the process we use to guide the deployment of capital to make sure we get the most out of every dollar. I am confident we have the right formula for our shareholders.

Since 2016, we have strengthened our balance sheet through a US$16 billion reduction in net debt, reinvested US$20 billion into high-return projects and importantly, returned more than US$25 billion to shareholders, which includes a record US$13 billion in the last six months in the form of ordinary dividends, special dividends and share buy-backs.

There is significant opportunity ahead to create more shareholder value. To maintain this momentum, we will unlock the next wave of productivity through technology and transformation. Like all global companies, BHP faces unprecedented challenges as the pace and quantum of technological change push us all towards new frontiers. We live in a world where technology continues to disrupt every aspect of the way we live and work.

To remain competitive, we must be ready to adapt and hungry to seize the opportunity before us. We stand at a pivotal moment in our history and what we do today will determine our long-term future in the decades ahead. To stay ahead of technological disruption, we must reshape our workforces, streamline processes and redesign the way we work.

That is why we established a dedicated Transformation Office to strengthen safety, generate greater value and competitive returns well into the future. This work consolidates and integrates our transformation programs focused on workforce capability, job design and technology that we plan to implement over the next five years. We established Integrated Remote Operated Centres, like the one on the slide here, as well as autonomous blast-hole drills. And the phased roll-out of autonomous trucks will also make us safer and our operations more predictable.

Our first ever ‘innovation mine’ located at our Eastern Ridge iron ore operation in Western Australia tests new solutions and innovations in geology, extraction and processes, and develops workforce capability so that our people are equipped for the rapid pace of change that lies ahead. Successful trials are quickly replicated across other operations.

But our future success is not simply about technology or transformation. Corporations and their workforces are an integral part of society. They must be driven by authentic engagement to make a broader contribution. At BHP, this is underpinned by a belief that social value is a precondition to shareholder value. As custodians of natural resources, we have an obligation to shape the future to create prosperity for shareholders, our communities and society more broadly.

This does not mean that long-term shareholder value is not critical to BHP. It always will be because BHP would not exist without our shareholders. You trust us with your funds and must be confident that we will deliver competitive returns. But we must also acknowledge our partnerships with communities, governments, and others will prepare us for the future. That’s why our contribution to our communities really matters.

Relationships with community partners, including suppliers, are now less transactional and more about sustainable partnerships that can solve complex problems faced by business and society. Our Local Buying Program helps small, local businesses that are located near our Australian operations to engage with BHP. Since 2012, approved spend on local suppliers across Australia has been greater than A$300 million. We also build relationships and trust through our governance and transparency standards.

For the past 18 years, we have disclosed details of our tax and royalty payments. We pay our fair share and this helps governments, fund essential services and communities to plan for the future.

In financial year 2018 our tax, royalty and other payments to governments totalled US$7.8 billion. Of this, three-quarters was paid in Australia. During the last decade, we paid US$82 billion in taxes, royalties and other payments, with three-quarters paid in Australia. To put this contribution in perspective, it costs about A$23 billion to fund Medicare in Australia each year. So over the past 10 years, BHP’s taxes and royalty payments have effectively funded approximately three years of Medicare for the entire nation of Australia.

BHP is ideally positioned to navigate the complex challenges the world faces. Our business is well prepared to meet increased demand for the world’s resources as more people push for higher living standards. This will transform the global landscape through infrastructure, electrification and decarbonisation. The challenge is to deliver resources safely, sustainably and efficiently amid geopolitical volatility and economic uncertainty.

Despite the current global challenges that threaten trade and investment flows, we are confident our core commodities - iron ore, coal, oil, copper and potentially potash - will meet this demand in the future. China, India, ASEAN and the global impact of China’s Belt and Road Initiative are all expected to provide additional demand for our products amid a push towards a more open trading environment.

In 2013, I said I could not think of a better opportunity right now to run a global resources company based in Australia. Six years later, we have seized that opportunity to build a foundation to generate significant value creation and shareholder returns for decades to come.

We are simpler, more connected, more efficient, with a skilled workforce equipped for the changes ahead. We have streamlined our portfolio in the best commodities and jurisdictions. And our commitment to fulfil our broader purpose not only contributes to society, but strengthens shareholder value in the long-term. That’s because profit and purpose are deeply intertwined.

With a strong balance sheet, net debt at the lower end of our target range, a rich suite of growth options and disciplined investment plans funded by the strong performance of our operation, we expect to grow the value of our company and return a higher proportion of excess free cash flow to our shareholders.

This sets up BHP and our shareholders for a great future.

 

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