BHP Shareholder Q&A with CEO Mike Henry and CFO Vandita Pant - March 2025

Hello and welcome to BHP shareholder Q&A, which follows the release of our results for the 2025 financial half year in February. I'm Belinda Ford, and I'm here with BHP's Chief Executive Officer Mike Henry and Chief Financial Officer Vandita Pant. I've got a number of questions that have come through from shareholders, and I'd like to get into those, but before I do, Mike, can you give us an overview of what's happened in the half and what feedback you've had?

It was another great half. We improved safety, production outcomes, and we've advanced growth. On the safety front, we saw fewer high-potential safety incidents – those incidents that had the potential for serious injury – fewer of those over the course of the half than the same period the year prior. That was through a lot of very deliberate management attention and effort. On the production front, we saw record production in our flagship iron ore asset in Western Australia, 1% up for the period. We saw 14% improvement in production at BMA if we adjust for the Blackwater and the divestments. In copper, we saw 10% production growth over the period, and that keeps us on track for 24% growth in copper production over the past three years by the end of this financial year. On top of all that, we continue to advance growth in potash in Canada. Our Jansen Stage One project remains on track, and we expect we'll see first production next year – an exciting new commodity and growth pillar for BHP. In addition to that, we captured, or secured, another copper growth option for us, this time in Argentina, where we've created the Vonia joint venture alongside a Canadian mining company, Lundin Mining. We now have copper growth optionality in South Australia, in Chile, up in the US, and now in Argentina. So things are looking good both on the operational front and on the growth front.

Thank you, Mike. All right, let's move to some of the questions now and start, if I could, with you, Vandita. We've got a couple of questions about BHP's share price and dividends. Jeffrey asks, 'When will shareholder dividends be expected to reach higher grounds, and when do you envisage this to become a reality?' And Paul asks, 'Why is the BHP share price on the ASX been so stagnant at an approximate average of $40 for so many years, and what is the strategy, if any, to see the share price increase on the ASX in the future?'

Thanks, Vandita. I'm going to turn now to a few questions related to potash. Edwin asks, 'What are the main actual and potential uses for potash or potassium in commerce and business?' And Steven asks, 'I'm excited to hear more about the status of the Jansen project, not just progress on the mine but also development of the loadout facility.' Mike, can I direct these to you?

Well, Stephen, I'm also excited about potash. This is going to be a great business for BHP and for shareholders for decades to come. I'll start with the first part of the question, which was about what potash actually gets used for. It's a fertilizer, one of the three primary fertilizers. If you think about the dynamic at play here, the world's population is growing from circa 8 billion today to 10 billion by 2050, so that's going to be more mouths to feed. In addition to that, we're seeing, thankfully, standards of living rise around the world, and as standards of living rise, diets tend to become richer, more calorie intensive. That means that there's more agricultural input needed for that. That combination of more mouths to feed and richer diets means that there's going to be a lot more agricultural production needed over the coming decades. But that has to be achieved on a relatively constrained arable land footprint. So we have to get more yield off the farming land that's out there, and the route to doing that is through the scientific application of fertilizer. So we expect that that's going to give rise to strong, consistent growth in demand for potash. BHP is sitting on the world's best undeveloped – now being developed – resources of potash. It's going to allow us to become one of the world's largest producers of this commodity by early next decade. We're going to be sitting at the very low end of the cost curve, and that means that we're going to be able to generate really healthy returns and value for shareholders for many, many years to come in this commodity that is going to be needed for sustainable production of food to feed the world well into the future.

Vandita, related to the above question, Jason asks, 'Our potash strategy seems to challenge an oversupplied and political market. Considering global demand and short-term oversupply, how resilient is our potash investment, and what strategies are we using to mitigate risk?'

Thanks, Vandita. Um, we have a question here on portfolio, which I'll address to you, Mike. Mark asks, 'Can you unpack the thinking around the next major acquisition?' Mark wants you to frame the answer around: A, preferred assets in the commodity space, and B, the approach to committing billions in capex to a fossil-based project and the uncertainty around shareholder appetite for long-term returns and cost of capital recovery.

Okay, so interesting question. I probably should start by saying we don't need to do M&A. It's one tool in the toolkit for creating long-term returns and value for shareholders, but it's not our primary focus. I've been very – we all have been very clear with shareholders for years now that we have multiple levers for creating value. First and foremost, focusing on the base business and getting the most out of the capital we have deployed in the business through productivity – that's actually our single biggest value growth lever. We then have opportunities to figure out how we can go about getting more of the resources that we already have out of the ground more quickly, sustainably, for good returns. BHP is already the world's largest copper producer. We have the world's largest resources of copper. If we can just figure out the things that we can do to get more of those copper units out of the ground into market more quickly, that creates value. We're focused on greenfields exploration, so we've increased our greenfields exploration spend to find the next wave of future copper projects, predominant focus in copper. In addition to that, as we've seen recently with our acquisition of and creation of the Vonia joint venture in Argentina, we're looking at what we've coined 'early-stage entry' – getting a toehold position in these big resources that have been discovered by others, where we can bring our capability and balance sheet to bear on developing those resources. And then there's this final category of M&A. But we only pursue M&A when it's in the commodities that we like, and what we've said is the primary growth commodities for BHP are copper and potash. It has to be for the quality of resources that are aligned with our strategy, which is large, long-life, sitting at the low end of the cost curve. And most importantly, we have to be able to create more value for shareholders. So we're not just going to go out and buy copper for the sake of having more copper. We have to see a value unlock through BHP's ownership, and that can come through synergies to be released, it can come through our better ability to operate or grow the underlying assets. But there are only a few opportunities that would meet the very strict criteria that we set out, and we are always very disciplined, as we've seen in recent times, when it comes to any consideration of M&A.

Thanks, Mike. Another one on portfolio M&A for you. Gordon wants to know about your predictions on copper prices for the next five years.

Yes, so Gordon, we do not give out commodity price forecasts, but I can talk you through the demand and supply dynamics for copper, which is a very attractive commodity for us. The traditional demand for copper continues to be based on higher population in developing countries requiring and seeking higher standards of living and consumer goods. This demand is getting amplified now through higher copper needed for energy transition, including storage, transmission, etc., and for buildup of digital infrastructure, for example, the copper-hungry data centers which are needed for the world as it consumes more and more data. On the supply side, it is challenging to bring more copper mines to bear, and that means by the middle of the 2030s we have a 10-million-ton copper supply gap. Given this situation, most of the market watchers, for example consensus, copper price continues to go up because of this structural deficit expectation. Now if I were to step back and say what does it mean for BHP, BHP is currently the largest producer of copper in the world. In fact, on top of it, to the end of this financial year '25, we would have grown by 24% copper over the last 3 years, including 10% growth in just the last half. But building on the strong foundation and our position, what we can do is through our very attractive organic growth options supply to the world more of that copper that is needed over the next 10 years, as I was mentioning. And our suite of attractive growth options, as it is maturing, will come in and have more returns for our shareholders off the back of this very attractive commodity.

Thanks, Vandita. Mike, we've got a few related questions here. David's asked, 'I've been concerned for some time regarding the overdependence BHP has on returns from iron ore. Simandou is coming maybe as early as late this year with this high-grade ore, and potential plateau in the iron ore market volume. Is BHP prepared for what may come – potentially lower prices and some current product being displaced from the market?'

I'll start by saying that BHP foreshadowed, or foresaw, this period coming a decade ago, because we're a very long-range company. We do fundamental analysis. We knew that the Chinese economy would develop like any other major economy globally. As it's developed, it would have a very steel-intensive early phase of economic development that would plateau, and at some point in the future would move into decline. And along with that, iron ore demand would plateau and then begin to shrink over time. At the same time, we saw further supply coming into the market, including from the Simandou project in West Africa. So once we'd identified that future, we set about getting ourselves into the best possible competitive position we could be for that coming period of more intense competition. That saw us going from being the third or fourth lowest cost producer of iron ore in the world to being the lowest for over 5 years running. Now we've become a much more reliable producer, and we've improved the average quality of our product suite through the development of South Flank, which has given us a greater lump fraction in our product suite – that's a premium product – and it's allowed us to increase our average iron ore content, again allowing us to secure higher prices. So we've improved our margins, we've improved our competitive position, and we are well placed for this coming period where competition is likely to heat up a little bit. Now, in addition to ensuring that we've got the lowest cost, most reliable iron ore business in the world, we've also focused our growth efforts on developing other commodity pillars in BHP, specific focus in copper and potash. As you'd be aware, we've got the Jansen Stage One and Stage Two projects in execution in Canada. We expect first production from Jansen Stage One, our potash project, next year. In addition to that, we've grown copper production. We will have grown copper production by 24% over the last three years by the end of this financial year, and we've created a lot more growth options in copper in South Australia, in Chile, we have the existing growth option up in the US, and we've recently established a new joint venture in Argentina called the Vonia joint venture alongside a Canadian mining company, Lundin Mining. So we have growth options in copper now across four different jurisdictions, alongside this pipeline of attractive growth options that we have in potash.

Potash, thanks Mike. Um, we've got another question, and here this one I'll send to you as well. It's from Craig, and he talks about organizational structure. In the late 1990s, BHP sold their service companies of engineering and IT and lost generations of worth of technical capability, and has been relying very much on contractors ever since for key projects. Do you see that as a pivotal moment and a mistake, and what is being done to rebuild the technical capability of the company?

So we place very significant emphasis on technical excellence. A number of years ago, we reorganized BHP to focus on building technical and functional excellence throughout the company. As part of that, we've established what we term 'centers of excellence.' We have a center of excellence for maintenance and engineering, for example; a center of excellence for capital projects; a center of excellence for resource engineering or mine planning; and the list goes on. It's in these centers of excellence where we build serious, world-class technical expertise that is then able to support different parts of the business in those disciplines. These centers also set the standards that the businesses pursue in terms of the way they go about those various activities. I would say that they are one of the reasons why we've become a much better, more reliable, more efficient operator in recent years, and why we've gotten better at how we go about executing major capital projects. We lead the industry in terms of our ability to bring these big projects in on time and on budget, and that comes back to how we structured ourselves, the value that we place on technical expertise and excellence, as well as the BHP operating system.