18 August 2021
Alongside strong financial results and a record dividend, BHP today announced changes to its portfolio and corporate structure, positioning it even more strongly to grow value through producing the commodities the world needs for economic growth and decarbonisation.
Chief Executive Officer Mike Henry said: "BHP continues to deliver attractive shareholder returns, underpinned by strong operational and financial performance. We are proactively positioning for the future with a portfolio and capabilities that will enable us to grow long-term value. We will sustainably supply the commodities needed by the world.”
Today BHP announced:
- An investment of US$5.7 billion in the Jansen Stage 1 project in Canada, a new high-margin business in the world’s best potash basin, which also opens up a new future growth front for BHP.
- The creation of a global top 10 independent energy company through an agreement to pursue a merger of BHP’s petroleum business with Woodside. BHP shareholders will own 48 per cent of this company.
- The intended unification of BHP’s corporate structure to a single primary listing on the Australian Securities Exchange, to make BHP simpler and more agile.
Consistent with BHP’s strategy to secure further growth opportunities in future facing commodities, the company also recently made a public offer to acquire Canada’s Noront Resources to gain access to a highly prospective nickel basin in an attractive region. Noront’s Board has unanimously recommended shareholders accept BHP’s offer.
Mr Henry said: “BHP’s products are essential to global economic growth, improved living standards and the energy transition.
“The world will need more copper and nickel for electrification, renewable power and electric vehicles, iron ore and high-quality metallurgical coal to produce the steel for infrastructure, including that required for decarbonisation, and the potash required for sustainable global food production.
“We are actively positioning BHP to meet the world’s needs and to continue to sustainably generate value for our shareholders, employees, and business partners, as well as for our host communities and governments.”
Delivering record returns
BHP today announced a record final dividend of US$2 per share, bringing total shareholder returns to more than US$15 billion for the year.
Mr Henry said: “Our 2021 results are testament to the hard work and commitment of our people across BHP. BHP’s operational performance and capital discipline along with high commodity prices underpinned our strong financial results.
“This has enabled us to make a total economic contribution of US$40.9 billion for the year that includes community investment, payments to local suppliers and taxes, royalties, and payments to governments.”
Jansen Stage 1 – entry into a top-tier potash basin
BHP’s Board has approved a US$5.7 billion investment in Jansen Stage 1 in Canada. The project will deliver 4.35 million tonnes of potash per year with initial production targeted for 2027, ramping up over two years.
Mr Henry said: “Jansen does much more than simply add a new commodity to our portfolio, it opens up a new front for growth for BHP. Jansen is located in the world’s best potash basin and is in an attractive investment jurisdiction.
“Jansen will deliver healthy returns as a high-margin, expandable resource which can support a century or more of operations. Potash provides BHP with greater diversification by commodity, country, and customer. This is a new and exciting chapter in BHP’s history.”
Potash is a potassium-rich salt mainly used in fertiliser and is an essential nutrient for plant growth. Potash demand is underpinned by a growing global population and the requirement for more productive farming with a lower environmental footprint.
Jansen Stage 1 will be low cost and is expected to be one of the world’s most sustainable potash mines, designed for a low carbon footprint and low water intensity.
Jansen Stage 1 will create 3,500 jobs during peak construction and 600 jobs in ongoing operations, and opportunities for local and Indigenous businesses. The Jansen workforce will be gender balanced from the start and First Nations employees make up 20 per cent of the team. In the first of their kind in the potash industry, BHP has signed Opportunity Agreements with six First Nations communities around the site.
Petroleum business merger – creating a global top 10 independent energy company
BHP is proposing to merge its Petroleum assets with Woodside to create a global independent energy company with a portfolio spanning the world’s premier oil and gas regions from the North West Shelf to the Gulf of Mexico.
Mr Henry said: “Merging BHP’s Petroleum business with Woodside will create a global top 10 independent energy company that will unlock synergies and increase value and choice for BHP’s shareholders. The combined business will be more resilient and will offer ongoing value through the energy transition.
“Our Petroleum and Jansen decisions will increase the weighting of BHP’s remaining portfolio towards the future facing commodities that are most positively leveraged towards population growth, rising living standards, electrification and decarbonisation. This merger will also free up capital for investment in these commodities to grow long-term value and shareholder returns.”
The merged company would benefit from significant growth optionality, with a suite of high-return brownfield and greenfield projects in some of the world’s best oil and gas basins. This includes BHP’s recent decision to commit more than US$800 million to both develop the Shenzi North project and to continue to advance the Trion project.
BHP shareholders will own 48 per cent of the merged entity and Woodside shareholders will own 52 per cent.
The merger, which is subject to regulatory and other approvals, is expected to be completed during the second quarter of the 2022 calendar year.
A unified corporate structure – flexibility for the future
BHP currently operates as a dual-listed company with two parent entities, both holding primary listings: BHP Group Limited in Australia (BHP Ltd) and BHP Group Plc (BHP Plc) in the United Kingdom.
BHP is proposing to adopt a single company structure under BHP Ltd with a primary listing on the Australian Securities Exchange (ASX). Under a unified corporate structure, BHP Ltd shares would be listed on the Australian, London and Johannesburg stock exchanges, with an American Depository Receipt (ADR) program on the New York Stock Exchange.
Mr Henry said: “Now is the time to simplify the BHP corporate structure. Unification will make BHP more efficient and agile, better positioning the company for continued performance and growth.”
If a unified structure is implemented, eligible BHP Plc shareholders would receive one share in BHP Ltd for each share they hold. The holdings of BHP Ltd shareholders would not change. BHP’s dividend policy and ability to distribute fully franked dividends also would not change.
Subject to final Board approval, BHP shareholders are expected to vote on unification at shareholder meetings planned for the first half of 2022.