22 August 2023
At BHP we have progressed impact evaluations of certain physical climate-related risks. In FY2023, we worked to better understand and begin to quantify the potential impacts to site operations, safety, productivity and cost, building on the initial risk identification and assessment processes conducted in previous years.
Risks evaluated have focused on those with among the highest potential impact at our operated assets (excluding assets acquired from OZ Minerals), including disruption and/or damage to electrical infrastructure (e.g. motors, cooling and control systems) due to increased extreme temperatures across all Minerals Australia assets. For a discussion of our risk factors, refer to our Annual Report 2022.
As part of the impact evaluation work, we developed risk transmission channels to seek to understand the direct and indirect potential impacts of an extreme climate-related hazard occurring. One example of how we have applied this approach is at Western Australia Iron Ore (WAIO), where we explored different Intergovernmental Panel on Climate Change’s scenarios to better understand the potential impacts of future extreme heat risks. For more information on the data we use for climate projections refer to the BHP Annual Report 2023.
WAIO is projected to be operating in hotter conditions in the future, which may affect the operation and efficiency of business-critical infrastructure and equipment. For example, under the ‘very high greenhouse gas emissions’ SSP5-8.5 scenario (average global surface temperature over 2081-2100 very likely to be higher by 3.3°C to 5.7°C), the number of days over 40°C at Nelson Point in Port Hedland may increase from 34 days in the current climate to around 100 days in the 2070s. A similar trend is projected in the eastern Pilbara, increasing from 54 to 124 days.
With the support of an engineering consultancy, we assessed 143 types of equipment and infrastructure in use across our Port Hedland, East Pilbara and Central Pilbara operations, including civil and dam engineering structures, electrical and mechanical equipment, rail infrastructure and water treatment facilities. In seeking to quantify the potential impact of increased heat on the operations and efficiency, we identified thresholds at which equipment failure may occur and/or conditions that may lead to a deterioration in efficiency. For example, derating of power transmission cables, which reduces their carrying capacity, can start above 40°C. By exploring these thresholds and relationships in the context of future climate projections, we assessed (in line with the BHP Risk Framework) which equipment and infrastructure we would expect to be at a higher risk of failure or efficiency losses, and the relative potential impact on production.
Of the 143 equipment and infrastructure types, 10 were found to be of higher relative residual risk. These included roads and rail track infrastructure, electrical infrastructure, such as power lines and transmission cables, and mechanical equipment including safety showers and eyewashes. Measures are already in place that are intended to reduce the potential impact of hot weather, such as polymer-modified bitumen and cooling of safety showers. The findings will further inform our risk assessment and deployment of additional risk mitigation controls where required.