Bringing people and

resources together to

build a better world

Annual

Report

2023

Company details

refer to OFR 11.1

Forward-looking statements

refer to OFR 11.2

Cover image: Western Australia Iron Ore

Contents

1 Our business 06

1.1 Where we operate 06

1.2 Our portfolio 08

1.3 How we create and deliver value 10

2 Why BHP 12

3 Positioning for growth 16

Chief Financial Officer’s review 18

Our performance highlights 02

Chair’s review 04

Chief Executive Officer’s review 05

4 Financial review 19

4.1 Group overview 19

4.2 Key performance indicators 19

4.3 Financial results 20

4.4 Debt and sources of liquidity 22

5 Our assets 24

5.1 Minerals Australia 24

5.2 Copper South Australia 27

5.3 Minerals Americas 28

5.4 Commercial 30

6 Sustainability 31

6.1 Safety 31

6.2 Our sustainability approach 32

6.3 Sustainability governance 33

6.4 Material sustainability topics 33

6.5 2030 goals 35

6.6 People 36

6.7 Sexual harassment 39

6.8 Health 40

6.9 Ethics and business conduct 41

6.10 Digital security and data privacy 43

6.11 Value chain sustainability 43

6.12 Climate change 44

6.13 Environment 61

6.14 Community 64

6.15 Indigenous peoples 65

6.16 Tailings storage facilities 67

6.17 Independent limited

assurance report

7 Samarco 71

8 How we manage risk 72

8.1 Risk factors 73

9 Performance by commodity 82

9.1 Copper 82

9.2 Iron Ore 83

9.3 Coal 83

9.4 Other assets 84

9.5 Impact of changes to

commodity prices

10 Non-IFRS

financial information

10.1 Definition and calculation of

non-IFRS financial information

10.2 Definition and calculation of

principal factors

11 Other information 96

201–248

Additional

Information

Financial information summary 202

Information on mining operations 203

Financial information by commodity 217

Production 219

Mineral Resources and Ore Reserves 221

Major projects 234

People – Performance data 234

Legal proceedings 235

Shareholder information 238

Glossary 244

06–96

Operating and

Financial Review

02–05

Overview

97–131

Governance

Corporate Governance Statement 98

Directors’ Report 112

Remuneration Report 115

132–200

Financial

Statements

Consolidated Financial Statements 133

Notes to the Financial Statements 139

Our performance

Positioning

for growth

How we create and

deliver value

Sustainability

and social value

We’ve positioned our business

to support the megatrends

shaping our world. Copper for

renewable energy. Nickel for

electric vehicles. Iron ore and

higher-quality metallurgical coal

for steel for new infrastructure.

And we are moving into potash

to support more sustainable

farming. A resource mix for

today – and critical to the future.

BHP Annual Report 2023 01

Financial

Operational

02 BHP Annual Report 2023

Our performance highlights

1 Presented on a Total operations basis.

2 FY2022 has been restated to conform to the FY2023 basis of preparation that includes payments to suppliers for operating costs on an accruals basis and payments to

suppliers for capital expenditure on a cash basis.

OZ Minerals acquisition

Creating a Copper South Australia province by combining

Olympic Dam with OZ Minerals assets. Expected copper

production of between 310 kt and 340 kt in FY2024.

Jansen first

production

brought

forward to

late CY2026

Feasibility

study for

Stage 2

expected

in FY2024.

Underlying earnings per share

265.0 USc

FY2022: 470.6 USc

170 USc

Shareholder cash dividends per share

FY2022: 325 USc

US$22.9 bn

Profit from operations

FY2022: US$34.1 bn

Attributable profit

FY2022: US$30.9 bn

US$12.9 bn

Tax and royalty payments

FY2022: US$17.3 bn

US$13.8 bn

Payments to suppliers

FY2022: US$23.3 bn

US$22.1 bn

Record

production

at WAIO

Thanks to a

strong supply

chain performance,

including improved

rail performance

and increased

car dumper

utilisation.

Social value

Strong

performance

in copper

Group copper

production

increased 9%

to 1716.5 kt

following strong

performances

at Escondida,

Spence and

Olympic Dam.

Nickel production up 4%

Longer term, we believe nickel will be

a core beneficiary of the electrification

megatrend and that nickel sulphides

will be particularly attractive.

BHP Annual Report 2023 03

Additional InformationFinancial StatementsGovernanceOperating and Financial Review

3 For more information on our decarbonisation targets and goals refer to OFR 6.12.

4 Female workforce participation is employees only, as at 30 June 2023.

5 This includes contribution to suppliers, wages and benefits for employees, dividends, taxes, royalties and voluntary social investment. For more information refer to the

Economic Contribution Report 2023.

6 This includes the US$19.6 billion in specie dividend in connection with the merger of BHP Petroleum with Woodside.

7 For more information on the BHP Responsible Minerals Program refer to bhp.com/responsiblemineralspolicy.

Decarbonisation

Healthy environment

Indigenous partnerships

Safe, inclusive and future-ready workforce

Thriving, empowered communities

Responsible supply chains

Pilot case study

Natural Capital Accounting (NCA)

35.2%

FY2022: 32.3%

Female employee workforce representation

US$54.2 bn

FY2022: US$82.5 bn

2,6

Total economic contribution

US$332.6 m

↑↑

122% on FY2022

a mining industry first on NCA at our closed Beenup site

Indigenous procurement

BHP Responsible Minerals

Program

commenced

Standards and certifications

% on FY2022

On track to meet our FY2030 target

Operational greenhouse gas (GHG) emissions

During FY2023, our key priority

areas were safety, culture and

capability, capital discipline,

portfolio and social value.

I am confident our ongoing

delivery against these key

areas will position BHP to

continue to grow long-term

value for our shareholders

and create social value

with our partners

and stakeholders.”

04 BHP Annual Report 2023

Chair’s review

Dear Shareholders,

I am pleased to provide BHP’s Annual Report for FY2023.

In FY2023, we achieved strong performance and made progress towards

our social value and sustainability commitments, targets and goals. However,

these achievements were overshadowed by the tragic deaths of our colleagues

Jody Byrne at our Western Australia Iron Ore (WAIO) operations and Nathan

Scholz at Olympic Dam during the second half of the year. Our investigation into

Jody Byrne’s death at WAIO has been completed and the findings shared with

industry peers. Our investigation into Nathan Scholz’s death at Olympic Dam is

ongoing. We are determined to learn from these events and prevent them from

happening again.

Our priorities

During FY2023, our key priority areas were safety, culture and capability, capital

discipline, portfolio and social value. I met with many of our shareholders and

visited sites in Australia, Singapore, Chile and Brazil where I had the opportunity

to engage with our workforce, suppliers, customers, local communities and

Indigenous partners. These discussions reinforced the work we have been

doing across these priority areas. I am confident our ongoing delivery against

these key areas will position BHP to continue to grow long-term value for our

shareholders and create social value with our partners and stakeholders.

Safety and culture

The safety of our people is our highest priority. I am deeply saddened by the

deaths of Jody Byrne and Nathan Scholz, and I offer my condolences to their

family, friends and colleagues.

Our commitment to the goal of zero fatalities and serious injuries at BHP

remains unwavering and, following these tragic events, we have enhanced the

organisation’s focus on the execution of our safety systems and processes in

the field and strengthened our control environment. We continue to drive the

safety culture needed to eliminate fatalities and serious injuries at BHP.

Our commitment to safety includes addressing sexual harassment, racism and

bullying in our workplaces. We are determined to eliminate these harmful behaviours

at BHP. There is more to do and we are committed to providing a safe, inclusive and

diverse workplace culture where our people can perform at their best.

We know that inclusive and diverse teams are safer and more productive.

We are on track to achieve our aspirational goal for a gender-balanced

workforce by the end of FY2025 and have doubled the representation of women

since CY2016 when we set our gender-balance goal.

Portfolio

Our objective is to position BHP’s portfolio of commodities to create value for

today and the future. We have reshaped our portfolio to align with the global

megatrends of decarbonisation, electrification, urbanisation and a rising

population. Mining is essential for decarbonisation and the energy transition.

The world needs copper for renewable energy, nickel for electric vehicles, and

iron ore and higher-quality metallurgical coal for steel to build new infrastructure.

And we’re moving into potash, which will be vital to food security and more

sustainable farming to support a growing population.

BHP has a world-class portfolio of assets that stands to benefit from the

increased demand generated from the global megatrends unfolding around

us, and we have made changes to our portfolio this year to further align to

these megatrends.

We acquired OZ Minerals in May 2023, adding complementary copper and

nickel assets in Australia to Olympic Dam and Nickel West. We are consolidating

our metallurgical coal portfolio to focus on higher-quality coals preferred by

our steelmaking customers and the Jansen Potash Project in Canada is

progressing, with first production now expected in late CY2026.

Delivering value

Our Capital Allocation Framework is used to assess the most effective and

efficient way to deploy capital and is embedded in our decision making at BHP.

In FY2023, through our Capital Allocation Framework, we were able to deliver

substantial shareholder returns and create financial and social value for our

partners and stakeholders.

The Board determined dividends totaling US$8.6 billion to shareholders for the

year, taking the total amount in cash dividends for the past three years to over

US$40 billion.

In addition to the value delivered to our shareholders, we created significant

financial value in the communities where we operate through payments to

suppliers, wages to our employees, community contributions and taxes and

royalties paid to governments. In FY2023, our total economic contribution was

US$54.2 billion, including US$2.6 billion to local suppliers who support our

operations by providing goods and services.

We also delivered tangible social value outcomes in each of the six pillars of our

social value framework. Our social value pillars are focused on: decarbonisation,

the environment, Indigenous partnerships, workforce, communities and supply

chains. Key highlights in FY2023 included:

– We are working with our steel manufacturing customers to develop

solutions to help them reduce their greenhouse gas emission intensity,

and have collaborative partnerships with seven major steelmakers,

which together represent a total of approximately 19 per cent of reported

global steel production according to recent World Steel Association data.

Through these partnerships, we are supporting the industry to develop

technologies and pathways that have the potential to reduce the GHG

emission intensity of steelmaking.

– We released our updated Reconciliation Action Plan (RAP) in Australia,

which was recognised with ‘Elevate’ status from Reconciliation Australia,

which is provided to organisations with a proven track record in respectful

engagement with Aboriginal and Torres Strait Islander peoples. The RAP

was developed in partnership with many Aboriginal and Torres Strait

Islander businesses, communities and peak bodies across Australia.

– We are making progress against our social value metrics for Indigenous

workforce participation. BHP is the largest Indigenous employer in the

Australian resources sector and we have increased Indigenous employment

in our operations in Chile and at our Jansen Potash Project in Canada.

Board evaluation and governance review

Our structured and continuous Board succession and renewal process allows

the Board to continue to be fit for purpose and have a balance of experience

and fresh perspectives.

As part of the renewal process, John Mogford and Malcolm Broomhead retired

from the Board in October 2022 and November 2022, respectively. I would like

to thank John and Malcolm for their outstanding contribution to the Board and

commitment to value creation for BHP shareholders.

In FY2023, an external evaluation of the Board was carried out to assess the

performance and effectiveness of the Board and its Committees. Separately,

we reviewed the Board and Committee responsibilities and refreshed the Board

and Committee governance documents to streamline our governance approach,

including on key matters such as climate, technology and people.

Conclusion

BHP will face challenges and uncertainty in FY2024. Cost inflation is expected

to remain in the short to medium term and the changing geopolitical landscape

is impacting global markets. I believe BHP is well positioned to successfully

navigate these challenges and continue to create value for shareholders and

broader communities, customers, suppliers and partners.

We have built a global business that can make the most of the many

opportunities before us. It’s an exciting time to be at BHP.

Thank you for your ongoing support.

Ken MacKenzie

Chair

At BHP, we are already

providing the materials

and jobs critical to

the future and we see

clear opportunities to

use our strengths to

continue to grow value

for shareholders.”

BHP Annual Report 2023 05

Additional InformationFinancial StatementsGovernanceOperating and Financial Review

Chief Executive Officer’s review

Dear Shareholders,

BHP performed solidly in FY2023. Our commitment to operational excellence

saw us achieve another year of strong production results and cost performance.

We continued to create and advance further growth options across our portfolio.

This consistent execution of our strategy gives me great confidence in our

ability to continue to generate long-term value for our shareholders, partners,

customers and stakeholders.

However, in reviewing our performance each year we always look first to

safety. Tragically, this year saw two BHP colleagues, Jody Byrne and Nathan

Scholz, lose their lives in the workplace. These events underscore the absolute

importance of safety and we are resolute in our commitment to eliminate

fatalities and serious injuries at BHP.

Our operational performance was strong in FY2023, with record annual

production achieved at Western Australia Iron Ore (WAIO), where we

remain the lowest-cost major producer, and at Spence and Olympic Dam.

At Escondida, we navigated operational challenges to deliver solid production,

and our Queensland coal operations achieved strong underlying performance,

offsetting the impact of significant wet weather.

We saw lower revenue in FY2023 due to weaker prices in key commodities.

On the cost side, we managed the impact of inflation better than our competitors

through disclipined cost control. We remain focused on productivity to stay

competitive, which will remain important in FY2024 as we operate amid

continued global economic volatility.

We delivered earnings of more than US$13 billion and announced dividends

totalling 170 US cents per share for the year. That’s US$8.6 billion flowing back

to our investors, including the many millions of Australians who hold BHP shares

directly or via their superannuation funds. Our total economic contribution paid

to governments, suppliers, contractors, communities and employees for the

year was US$54.2 billion, including US$13.8 billion paid in taxes and royalties.

Positioned for growth

Population growth, rising global living standards and decarbonisation of the

global energy system all mean the demand for many metals and minerals

we produce is anticipated to grow. With our purpose of bringing people and

resources together to build a better world, no company is better positioned

to responsibly supply these resources than BHP.

We believe increasing productivity of our existing assets remains the greatest

single value lever for BHP. This requires an ongoing focus on cost efficiency

and throughput maximisation, ensuring we make the most of what we have

– maximising the value our assets can create.

Our substantial resource base continues to provide organic development

opportunities. We have the world’s largest copper mineral resources

and the

world’s second-largest nickel sulphide resources.

The Jansen Stage 1 Potash

Project in Canada, which is creating a new growth front for the company

in potash, remains ahead of plan, and studies for Stage 2 are progressing.

FY2023 also saw us continue to progress our strategy to increase our copper

and nickel prospects globally. These interests include Kabanga Nickel in

Tanzania, Oak Dam in Australia, and Ocelot in the United States. It also

encompassed projects in Serbia and Peru, the Filo del Sol project in Argentina

and Chile and, of course, the acquisition of OZ Minerals. Bringing together the

copper assets from OZ Minerals with OIympic Dam will create a Tier 1 copper

province in South Australia. The acquisition of OZ Minerals also brings potential

for further copper and nickel growth in both the near and long term.

Social value in action

The world needs the growing demand for metals and minerals to be met

responsibly and more sustainably. We continue to make good progress against

the goals within our social value framework announced in FY2022. As of today,

we have among the lowest absolute operational GHG emissions of the major

diversified mining companies.³ In FY2023, our operational GHG emissions

reduced by 11 per cent from adjusted FY2022 levels, and we remain on track

to achieve our FY2030 target to reduce operational GHG emissions by at least

30 per cent from FY2020 levels.

BHP’s relationship with the Indigenous peoples on whose traditional lands we

operate is vitally important. In FY2023 we launched our updated Indigenous

Peoples Policy Statement, which outlines our global approach to engaging

and partnering with Indigenous peoples based on deep respect for the

cultures, rights and perspectives of Indigenous peoples. BHP spent around

US$333 million with Indigenous suppliers globally in FY2023, more than

double last year’s figure.

As well as increasing the value of our procurement, we are focused on building

our relationships with Indigenous suppliers to create higher-value, long-term

contracting partnerships that support economic empowerment and drive

innovation and growth for Indigenous enterprises.

Differentiated culture

Our strong performance in FY2023 is thanks to the more than 80,000 great people

working at BHP. We continue to build an inclusive, performance-orientated culture.

We are empowering our people through the BHP Operating System, our way of

working that seeks to make improvement part of what we do every day.

I am proud to say female employee representation grew to more than 35 per

cent in FY2023, and representation of Indigenous peoples grew to 8.6 per cent

of our operational employees in Australia, 9.7 per cent in Chile and 7.7 per cent

in our Jansen Potash Project in Canada.

We have made progress, but there is still work to do. Our priority is to ensure

our workplaces are safe and inclusive for everyone who works for, or with, BHP.

We continue to focus on eliminating incidents of sexual harassment, racism

and bullying through ongoing leader communication, company-wide workforce

training that sets clear expectations about appropriate conduct, and ongoing

work to support impacted people and review policies and processes to

eliminate this unacceptable behaviour.

Innovating for the future

Data and technology, including automation and artificial intelligence, are further

unlocking growth opportunities and enhancing our operating performance,

enabling us to be safer, more efficient and more sustainable. We’re using

autonomous trucks at some of our sites across Western Australia and

Queensland and extending this to Spence and Escondida. At Jimblebar and

Newman, truck automation has resulted in a 90 per cent reduction in heavy

vehicle safety risks.

Through BHP Ventures and the Xplor program, we have increased our investment

in innovation, building partnerships with companies to help us discover innovative

ways to unlock more of the critical minerals needed for the energy transition.

Mining is an industry for today and tomorrow. At BHP, we are already providing

materials and jobs critical to the future and we see clear opportunities to use our

strengths to continue to grow value for shareholders. I am incredibly optimistic

about the future of our company.

Thank you for your continued support.

Mike Henry

Chief Executive Officer

1 Largest copper mineral resources on a contained metal basis, equity share.

Peers include: Anglo American, Antofagasta, Codelco, First Quantum Minerals,

Freeport, Glencore, Rio Tinto, Southern Copper and Teck. Source peers: Wood

Mackenzie Ltd, Q2 2023. Source BHP data: BHP Annual Report 2023.

2 Second largest nickel sulphide resources on a contained metal basis, equity share.

Source peers: MinEx Consulting Global Ni Database, July 2022. Source BHP data:

BHP Annual Report 2023.

3 For more information refer to BHP’s Operational decarbonisation investor briefing

presentation on 21 June 2023, available at bhp.com/operationaldecarbonisation-jun23.

06 BHP Annual Report 2023

1 Our business

Coal

Nickel

Iron ore

Copper

1.1 Where we operate

Western Australia Iron Ore

Production

252.5 Mt

Revenue

US$24.7 bn

Underlying EBITDA

US$16.7 bn

Nickel West

Production

80.0 kt

Revenue

US$2.0 bn

Underlying EBITDA

US$164 m

BHP Mitsubishi Alliance

Production

58.0 Mt

Revenue

US$7.7 bn

Underlying EBITDA

US$3.2 bn

NSW Energy Coal

Production

14.2 Mt

Revenue

US$3.3 bn

Underlying EBITDA

US$1.8 bn

London

Gurgaon

Singapore

Perth

1 Thisincludescontributiontosuppliers,wagesandbenefitsforemployees,dividends,taxes,royaltiesandvoluntarysocialinvestment.Formoreinformationrefertothe

EconomicContributionReport2023.

2 FormoreinformationrefertotheEconomicContributionReport2023

3 Basedona‘point-in-time’snapshotofemployeesasat30June2023,includingemployeesonextendedabsence,asusedininternalmanagementreportingforthepurposes

ofmonitoringprogressagainstourgoals.ThisdoesnotincludeemployeesthattransitionedfromOZMineralson2May2023(1,457employeesasat30June2023and

around4,000contractorsonaverageduringFY2023).TheseemployeeswillbeincludedintheoverallBHPemployeereportingfromFY2024.

Melbourne

Adelaide

Brisbane

BHP principal

office locations

Non‑operated

joint venture

Key

Kuala Lumpur

Tokyo

Shanghai

Manila

Facts at a glance FY2023

Total economic

contribution

(US$)

Payments to

suppliers

(US$)

No. of employees

and contractors

3,4

Global total

54.2 bn 22.1 bn 83,211

Australia

40.4bn 12.8bn 50,093

Chile

8.8bn 6.5bn 24,738

Canada

0.9bn 0.8bn 2,626

Rest of

the world

4.1bn

2.0bn 5,754

Copper South

Australia

Production

232.4 kt

Revenue

US$2.8 bn

Underlying EBITDA

US$703 m

Australia

US$

12.1 bn

Taxesandroyaltiespaid

Operating and Financial Review Governance Financial Statements Additional Information

BHP Annual Report 2023 07

Operating and Financial Review

Copper

Potash

Escondida

Production

1055.3 kt

Revenue

US$8.8 bn

Underlying EBITDA

US$4.9 bn

Pampa Norte

Production

288.8 kt

Revenue

US$2.5 bn

Underlying EBITDA

US$754 m

Antamina

Saskatoon

Toronto

Washington, DC

Tucson

Quito

Belo Horizonte

Lima

Santiago

Iquique

4 InFY2023someofouremployeesdidnotidentifyasmaleorfemale(<0.1%oftotalemployees),wehaveexcludedtheseemployeesfromthedatapresentedinthegender

compositiontablestoprotecttheprivacyofthoseemployees.Wewillexploreoptionstoincludeouremployeeswhodonotidentifyasmaleorfemaleinourdiversityreporting

(including‘TellUsAboutYou’surveydata)infuturereportingperiodsandcontinuingtoprotecttheirprivacy.

5 IncludesOlympicDamaswellasProminentHillandCarrapateenawhichwereacquiredon2May2023aspartoftheacquisitionofOZMineralsLtd.

6 IncludesSpenceandCerroColorado.

7 IncludesNewcastleCoalInfrastructureGroup(NCIG),whichisanequityaccountedinvestmentanditsfinancialinformationpresentedabove,withtheexceptionofnet

operatingassets,reflectsBHPGroup’sshare.TotalCoalstatutoryresultexcludescontributionrelatedtoNCIGuntilfutureprofitsexceedaccumulatedlosses.

8 Restoftheworldincludesconsolidationadjustmentsrelatedtointra-grouptransactions.

9 InAugust2021,BHPapprovedUS$5.7billionincapitalexpenditureforJansenStage1.FirstpotashproductionisexpectedinlateCY2026.

10 BHPMitsubishiAlliance(BMA)isincludedandshownona100percentbasis.

Jansen Potash

Resolution

Copper

Iron ore 257.0 Mt

Coal 72.2 Mt

Nickel 80.0 kt

Potash

US$5.7 bn

Copper 1,716.5 kt

FY2023 production

In development

Samarco

Carajás

Copper

Iron ore

Global total

US$

13.8 bn

Taxesandroyaltiespaid

Canada

US$

27m

Taxesandroyaltiespaid

Chile

US$

1.5 bn

Taxesandroyaltiespaid

Rest of the world

US$

142m

Taxesandroyaltiespaid

08 BHP Annual Report 2023

Copper

Nickel

1 Our business continued

1 Largestcoppermineralresourcesonacontainedmetalbasis,equityshare.Peersinclude:AngloAmerican,Antofagasta,Codelco,FirstQuantumMinerals,Freeport,Glencore,

RioTinto,SouthernCopperandTeck.Sourcepeers:WoodMackenzieLtd,Q22023.SourceBHPdata:BHPAnnualReport2023.

2 Basedonpublishedunitcostsofmajorironoreproducersasreportedat30June2023.Theremaybedifferencesinthemannerthatthirdpartiescalculateorreportunitcostsdata

comparedtoBHP,whichmeansthird-partydatamaynotbecomparablewithourdata.

3 BenchmarkingisbasedonCY2022datafromSkarnAssociatesandreportedBHPdataforCY2022(asSkarnAssociates’dataispreparedonacalendaryearbasis).Formore

informationrefertothe‘AdditionalClimateChangeData’tabintheBHPESGStandardsandDatabook2023availableatbhp.com/climate

4 Secondlargestnickelsulphideresourcesonacontainedmetalbasis,equityshare.Sourcepeers:MinExConsultingGlobalNiDatabase,July2022.SourceBHPdata:BHPAnnualReport2023.

Wehavecontinuedtofocusourportfolioonironoreandhigher-qualitymetallurgicalcoal

preferredbyoursteelmakingcustomers,copperwhichisusedinelectrification,nickelwhichis

usedinelectriccarsandpotashtomakefoodproductionandlandusemoreefficientandmore

sustainable.Amongourby-products,weareamajorproducerofuraniumand,followingthe

acquisitionofOZMineralsinMay2023,weexpecttobecomeamajorproducerofgold.

Potash

Metallurgical coal

Iron ore

1.2 Our portfolio

A resource mix

for today – and for

the future

Wearedevelopingoneoftheworld’slargestpotashminesinCanada.Theproposedminehas

beendesignedbasedonamoresustainableapproachwitharelativelylowGHGemissionfootprint

andwaterintensitycomparedtoexistingpotashmines.TheJansenPotashProjectisexpected

toincreaseBHP’sproductdiversification,customerbaseandoperatingfootprint,andopenanew

futuregrowthfront.TheUS$5.7billionJansenStage1istrackingtoplanandinFY2023webrought

forwardtheexpecteddateforfirstproductiontolateCY2026.ThefeasibilitystudyforJansen

Stage2continuestoprogressandisontracktobecompletedduringFY2024.

For more information refer to OFR 5.3

WearecontinuingtofocusourmetallurgicalcoaloperationsinQueenslandonhigher-quality

productandhaveoneofthelowestGHGemissionproductionintensitiesofbenchmarkedexport

metallurgicalcoalmines.

Webelieveawholesaleshiftawayfromblastfurnacesteelmaking,

whichusesmetallurgicalcoal,isstilldecadesinthefutureandasaresultmetallurgicalcoal

willremainanessentialinputintothesteelmakingprocessandacriticalinputtosupport

decarbonisationinfrastructureoverthecomingdecades.Webelievehigher-qualitycoalsfor

steelmakinghavegreaterpotentialupsideforqualitypremiumsassteelmakersseektoimprove

blastfurnaceutilisationandreduceGHGemissionintensityofproduction.Ourmetallurgical

coaloperationsachievedastrongunderlyingperformanceinFY2023,withGoonyellaRiverside

andDauniatransitioningtoautonomousfleets.

For more information refer to OFR 5.1

Weholdthesecond-largestnickelsulphideresourcesglobally

andournickeloperationsinWestern

AustraliahaveoneofthelowestGHGemissionproductionintensitiesofbenchmarkednickel

minesandprocessingplants.³WeareassessingoptionstoexpandMtKeithoperationsandhave

completedapproximately100kilometresofdevelopmentandexplorationdrillinginFY2023.Weare

continuingtoseekmorenickelresourcesthroughexploration,acquisitionandearly-stageentry.

TheWestMusgravenickelmineacquiredaspartofOZMinerals,whencomplete,haspotential

tobeafeedsourcetotheNickelWestsmeltingandrefiningassets.

For more information refer to OFR 5.1

Weholdtheworld’slargestcoppermineralresources.

Weareusingtechnicalinnovationsuch

asnewflotationtechnologytohelplowerenergycostsandunlockvalueandarelookingtosecure

morecopperresourcesthroughexploration,acquisitionandearly-stageentry.Escondidain

Chileistheworld’slargestcoppermineandincreasedproductionby5percentinFY2023.

ImprovedreliabilityandproductivityhelpedOlympicDaminSouthAustraliaachieverecordannual

copperproduction.SpenceinChilealsoachievedrecordannualcopperproduction,largelydueto

higherconcentratorthroughput.ThecopperassetsacquiredwithOZMineralsareintheprocess

ofbeingintegratedwithOlympicDamandourOakDamdeposittocreateCopperSouthAustralia.

For more information refer to OFR 5.2 and 5.3

WesternAustraliaIronOre(WAIO)isthelowest-costmajorironoreproducerglobally

and has one

ofthelowestGHGemissionproductionintensitiesofbenchmarkedseaborneironoreoperations.

WAIOachievedrecordproductioninFY2023of253milliontonnes(Mt)throughproductivitygains

initssupplychain,railnetworkandcardumpers.Wearefocusedonincreasingannualproduction

atWAIOtogreaterthan305Mtoverthemediumterm.WearealsostudyinggrowingtheWAIO

businessto330milliontonnesperannum(Mtpa).WithinWAIO,SouthFlankremainsontrack

torampuptofullproductioncapacityof80Mtpa(100percentbasis)bytheendofFY2024.

SouthFlankcompletedthedeploymentofautonomoustrucksinMay2023.

For more information refer to OFR 5.1

Operating and Financial Review

BHP Annual Report 2023 09

Additional InformationGovernance Financial Statements

10 BHP Annual Report 2023

1.3 How we create and deliver value

1 Our business continued

Exploration

and acquisition

Weseektoaddhigh-qualityTier1

copper and nickel interests through

ourexplorationactivitiesandearly-

stageentryandacquisitionoptions.

Closure and

rehabilitation

Weconsiderclosureand

rehabilitation throughout the

assetlifecycletohelpminimise

ourimpactandoptimisepost-

closurevalueforall.

Process

and logistics

Weprocessandrefineore,safely

managewasteandefficiently

and sustainably transport our

productstocustomers.

Sales, marketing

and procurement

Wemaximisevaluethroughour

centralisedmarketingandprocurement

organisations,commercialexpertise,

understandingofmarketsand

customerandsupplierrelationships.

Development

and mining

Westrivetoachievethe

industry’sbestperformancein

safety,operationalexcellence,

projectmanagementand

allocationofcapital.

Our strategy

Wewillresponsiblymanagethemost

resilientlong-termportfolioofassets,

inhighlyattractivecommodities,

and will grow value through being

excellentatoperations,discovering

anddevelopingresources,acquiring

the right assets and options, and

capitalallocation.

Throughourdifferentiatedapproachto

social value, we will be a trusted partner

whocreatesvalueforallstakeholders.

1 Thisfigureexcludesareasweholdundergreenfieldexplorationlicences(orequivalenttenements)anddoesnotincludetheareaswenowstewardfollowingtheacquisitionofOZMinerals.

2 Areathathasaformalmanagementplanincludingconservation,restorationorregenerativepractices.

3 FormoreinformationrefertotheEconomicContributionReport2023.

4 Operationalelectricitycomprisesapproximatelyonequarterofourtotaloperationalenergyconsumption.Renewableelectricityconsumptionincludesthird-partysuppliedrenewable

electricityasevidencedbyrenewableenergycertificatesorsupplier-provideddocumentation,inlinewiththeGreenhouseGasProtocolScope2Guidance.

5 FY2022hasbeenrestatedtoconformtotheFY2023basisofpreparationthatincludespaymentstosuppliersforoperatingcostsonanaccrualsbasisandpaymentstosuppliersforcapital

expenditureonacashbasis.

6 FormoreinformationonhowwecalculateGHGemissionsrefertoMetrics,targetsandgoalsinOFR6.12.

Total voluntary social investment

US$149.6m

FY2022 US$186.4 m

Operating and Financial Review Governance Financial Statements Additional Information

BHP Annual Report 2023 11

Operating and Financial Review

What we need

The value we create

Exceptional capability

Operationalexcellenceandcapitaldiscipline

arekeytogeneratinglong-termvalue.

Responsible resource management

Weseektoefficientlyandresponsiblymanage

waterandpowerandtobelong-termstewards

oftheareaoflandandwaterweown,leaseor

manage,currentlyjustunder6.5millionhectares.¹

Effective risk management

Riskmanagementhelpsustoprotectand

create value, and is central to achieving our

purposeandstrategicobjectives.

People

Wehavemorethan80,000employeesand

contractorsglobally.Ouraimisforthemtobe

engaged and supported in a way that sees

themworkinsaferandmoreproductiveways.

World‑class assets

Wehaveaportfoliooflarge,high-quality,low-

costassets.Weareinvestingintechnologyto

improveproductivityanddriveongoinggrowth

acrossouroperations.

Salary, wages and

incentivesforouremployees

US$4.7 bn

FY2022 US$4.5 bn

Tax,royaltyandotherpayments

togovernments

US$13.8 bn

FY2022 US$17.3 bn

Operational greenhouse

gasemissions

9.8MtCO

-e

11% from FY2022

Payments to suppliers

US$22.1 bn

FY2022 US$23.3 bn

Operationalelectricitysourced

fromrenewables

67%

FY2022 47%

Area under nature-positive

managementpractices

82,132 hectares

FY2022 65,870 hectares

Shareholder dividends

US$8.6 bn

FY2022 US$36.0 bn

Indigenousprocurementspend

US$332.6m

FY2022 US$149.9 m

Strong relationships

Suppliers: Morethan7,800suppliersin53

countriesprovideuswithgoodsandservices.

Partners:Weseektobethepartnerof

choiceforcustomers,businesspartnersand

communitystakeholders.

For more information refer to OFR 6.6

For more information refer to OFR 2

For more information refer to OFR 1.2 For more information refer to OFR 6 For more information refer to OFR 8

For more information on exceptional

performance and disciplined use of

capital refer to OFR 2

12 BHP Annual Report 2023

2 Why BHP

Theworldisonapathofpopulationgrowth,increasedurbanisationanda

lowerGHGemissionfuture.

BHPiscommittedtoplayingourroleinbuildingabetterworld.Weseekto

dosoresponsiblyandsustainablywhilecontinuingtocreatevalueforour

shareholdersandthebroadercommunity.

Our products are vital

Muchofwhattheworldneedsfortheseglobalmegatrendsrequiresmetals

andmineralsweproduce.

Decarbonisationandtheenergytransitionthroughelectrificationcannot

happenwithoutmining.Solarfarms,windfarmsandelectricvehiclesneed

copperandnickel.

Ironoreandmetallurgicalcoalareneededforsteeltobuildnew

renewablestechnologyandinfrastructureandtogrowcities.

Andwearemovingintopotashusedinfertiliserstoassistwithfood

securityforagrowingpopulationandmoreefficientandsustainable

landuse.

Ourcoreproductsareimportantinhelpingshapeoursocietyfor

thebetter–andweexpecttheywillbeincreasinglynecessaryina

decarbonisingworld.

We have scale

OneofthethingsthatsetsBHPapartfromourpeersisthescaleofour

resourcesandthelong-termgrowthopportunitywebelievethisprovides.

For more information refer to OFR 1.2

How we produce resources sets us apart

Wearecommittedtosafety,thedevelopmentofourmorethan80,000

employeesandcontractors,andtopromotingandmaintaininganinclusive

anddiverseworkforce.Werecruitandretainthebestpeopleandempower

themtorunouroperationssafelyandproductively.

Wearecommittedtocontinuousimprovementandwestrivetooperate

morereliablyandefficientlythanourcompetitors,generatingsocialvalue

aswellasfinancialvalue.

For information refer to OFR 1 and for Safety and People

refer to OFR 6.1 and OFR 6.6

Our commitment to social value

Wearecommittedtosocialvalue,ourpositivecontributiontosociety.

SocialvalueisaboutcreatingmutualbenefitforBHP,ourshareholders,

Indigenouspartnersandthebroadercommunity.Weconsidersocialvalue

andfinancialvalueinthedecisionswemake.

Webelievesocialvalueandsustainabilityarevitaltoourfutureasthey

support stable operations, reduce risk and open doors to opportunities,

partnerships,capitalandtalent.Theyhelptoensurewecancontinueto

generatevalueforourpartnersandstakeholders,includingourshareholders.

For more information refer to ‘Social value’ later in this section

and OFR 6

BHP is part of the solution

Thecoreresourcesweproducearecriticaltothefutureandcanhelp

addressglobalchallenges,suchasclimatechange.Wewillcontinue

topromotetheissuesweunderstandmattertoourpeopleandthe

communitiesandcountriesweworkin,seekingpositivechangeinour

industryandatnational,regionalandlocallevels.

Webringtogetheressentialresources,astrongbalancesheetanda

differentiatedoperatingcapabilityunderpinnedbyourtechnicalCentres

ofExcellenceandtheBHPOperatingSystem(BOS).

Webelievethiscombination,togetherwithourcommitmenttosocial

valueandsustainability,willhelpusgrowvaluemoreconsistentlyforour

partners and stakeholders, and underpin continued attractive returns and

long-termvalueforourshareholders.

For more information on BOS refer to ‘Operational excellence’ later

in this section

FutureFit AcademyOperations Services

Our people

Operating and Financial Review Governance Financial Statements Additional Information

BHP Annual Report 2023 13

Operating and Financial Review

Fatalities

FY2022 zero

Inclusion and diversity

Wecontinuetobuildamoreinclusiveanddiverseworkforce

thatfurtherenhancesourperformanceandbetterreflectsthe

communitieswhereweoperate:

– Weremainontracktoachieveouraspirationalgoalforagender-

balancedemployeeworkforcegloballybyFY2025.

– WemadeprogressduringFY2023againsttargetsforincreased

IndigenousemploymentinourMineralsAustraliaoperations,

MineralsAmericasoperationsinChileandourJansenPotash

ProjectinCanada.

For more information refer to OFR 6.6

Every day, our more than 80,000

employees and contractors strive

to build a better world. Our aim is

to support their ability to do so by

providing the tools, opportunity

and a safe and inclusive working

environment to allow them to

perform at their best.

Health and safety

Employees

> 4,300

maintaining

43%

of BHP’s haul trucks across

Minerals Australia

308km

of conveyors in our WAIO

operations

GraduatessinceMay2020

400

are female

and

25%

identify as Indigenous

Operations Services and BHP FutureFit Academy

OperationsServicesperformsbusiness-criticalservicesacrossour

operationsinAustralia,includingmaintainingalargeportionofour

ultra-classtruckfleetandmovingsignificantvolumesofmaterialaspart

ofproductionservices.AttheendofFY2023,OperationsServiceshad

morethan4,300employeesandwasresponsibleformaintaining43per

centofBHP’shaultrucksacrossMineralsAustralia,including96percent

ofultra-classtrucksatBHPMitsubishiAllianceand308kilometresof

conveyorsinourWAIOoperations.

TheBHPFutureFitAcademyisanexcitingcareerpathwayintothe

miningsectortojoinOperationsServices.SincetheFutureFitAcademy

waslaunchedinMay2020,ithaswelcomedmorethan920students

andgraduated400apprenticesandmaintenanceassociatesatits

facilitiesinPerthinWesternAustraliaandMackayinQueensland.Ofthe

graduates,82percentarefemale,25percentidentifyasIndigenous

andthemajorityarenewtotheminingindustry.DuringFY2023,

theAcademytrainedmorethan530apprenticesandtrainees,

with227graduating.

1 Combinedemployeeandcontractorfrequencyper1millionhoursworked.

High-potentialinjury

frequencyrate

13%

from FY2022

Total recordable

injuryfrequencyrate

4.5

9% from FY2022

Workersexposedtoourmostmaterialoccupationalexposuresof

dieselparticulatematter(DPM)respirablesilicaandcoalminedust

33%

from FY2022

For more information refer to OFR 6.1 and 6.8

Exceptional performance

Operating productivity Capital productivity

Net operating cash flow

Maintenancecapital Strong balance sheet Minimum50%payoutratiodividend

Excess cash flow

Debt reduction Additional dividends Buy-backs Organicdevelopment Acquisitions/divestments

Maximise value and returns

14 BHP Annual Report 2023

2 Why BHP continued

Operating and financial strength

Thestrengthofourportfolio,ouroperatingexcellenceandfinancialrigour

fromthedisciplinedapplicationoftheCapitalAllocationFramework

(CAF)havehelpedusdeliverstrongandconsistentreturns.Weachieved

netoperatingcashflowofUS$18.7billioninFY2023.Ournetoperating

cashflowhasbeenaboveUS$15billionfor13ofthelast14years.

InFY2023,throughourCAFwekeptourbalancesheetstrong,delivered

growthandreturnsforourshareholders,madeprogresstowardsour

socialvalueandGHGemissionsreductionobjectivesandprioritised

capitaltomaintainreliableoperations.

Operational excellence

Theimportanceandvalueofoperationalexcellenceandcostcontrolindealing

withchallengingcircumstanceswasevidentinFY2023.Weachievedproduction

guidanceacrosscopper,ironore,metallurgicalcoalandenergycoal,including

recordannualproductionatWAIO,OlympicDamandSpence.Ourfocuson

costdisciplinemeantwecontinuedtomanageinflationarypressureseffectively.

TheBOSisourwayofworkingthatseekstomakeimprovementpartofwhat

wedoeverydaythroughtheapplicationoftheBOStoolsandpracticesto

ouroperations.WecontinuedtodeploytheBOSthroughoutourbusinessin

FY2023andexpectfulldeploymentbytheendofFY2024.

Technology and innovation

Theuseoftechnologyandourfocuson

innovation,togetherwiththeBOS,have

helpedacceleratecontinuousimprovement

inourvaluechain–fromtheintroduction

ofadvancedtechnologiesdesignedto

improvesafetyandincreaseproductivityof

our operated assets, to reducing water and

energyconsumption.

TechnologyisakeyleverforBHPandhas

beenusedto:

– supportthemaintenanceofsafe,

predictable and productive operations

– driveproductivityimprovements,withan

emphasisonautomationandreal-time,

data-driveninsightsanddecision-making

– unlockthenextstageofvaluegrowth

potential,fromrealisinggreatermargins

atourexistingoperationstofinding

new assets

– improvesustainabilityoutcomes

through innovation

– help drive inclusion and diversity through

technologies,suchasremoteoperations

anddecisionsupporttoolsthatmakeroles

moreaccessibletoawiderrangeofpeople

Financial excellence

WeuseourCAFtoassessthemosteffectiveandefficientwaytodeploycapital.SincetheCAF’sintroductioninFY2016,wehavebalancedreinvestmentin

ourbusinesswithcashreturnstoshareholders.

OurCAFpromotesdisciplineinallcapitaldecisions.

Theadvanceduseofnextgenerationtechnologies,

suchasartificialintelligence(AI),cloudanddata

analytics,isenablingquickerandmoreeconomic

recoveryofourexistingresources,moresafely

andmoresustainably.Itisalsohelpingachieve

aperformanceupliftbydeliveringoperational

improvementsinironore,copperandnickel.

Examplesofourapplicationoftechnologyand

innovationinFY2023include:

– AroundUS$13millionperyearforthepast

two years in additional revenue was unlocked

through cloud-based technology, which uses

theGradeAdjustmentModelandStacksOn

applications to reduce shipping grade variability

and increase operational planning accuracy

fromminetoport.Thistechnologyhasbeen

introducedatWAIO’sJimblebar,Newman

Hub,MiningAreaC,SouthFlankandYandi

operations,andisintheprocessofbeingrolled

outtoPortHedland.

– Increased copper recovery has been achieved

atEscondidabyusingAIrecommendations,

newmachinelearninganddataprocessing

platformstohelpoptimiseflotation

operationalparameters.

– Anadditional40kilotonnes(kt)ofcoalwas

deliveredatBMAthroughtheProcessArea

SetPointOptimisation(PASPO)digital

toolinFY2023.Builtin-house,thePASPO

technologyusesmachine-learningmodelsto

optimisecoalhandlingandprocessingplant

operatingsettings,andaccuratelyforecast

productblend.WebelievethePASPOwas

oneofthefirstsuccessfulapplicationsof

machinelearningintheresourcesindustry

and it won the 2022 AustIndustry Innovation

oftheYearAwardattheQueenslandMining

Awards.SinceitsinceptioninCY2020,the

PASPOtoolhasdeliveredmorethan450kt

ofadditionalcoal.

– Reductionof59gigawatthoursofenergy

and2millioncubicmetresofwater

comparedtoFY2022byoptimisingenergy

andwaterconsumptioninconcentrators

anddesalinationplantsatEscondida.

Solutionsprovidedreal-timeoptionsto

enableoperatorstoimplementwater

optimisationplansandreal-timedata

analyticsonlargevolumesofenergyusage

datatoidentifyanomaliesandautomate

correctiveactions.

Social value

Operating and Financial Review Governance Financial Statements Additional Information

BHP Annual Report 2023 15

Operating and Financial Review

1 NaturepositiveisdefinedbytheWorldBusinessCouncilforSustainable

Development(WBCSD)/TNFDas‘Ahigh-levelgoalandconceptdescribinga

futurestateofnature(e.g.biodiversity,ecosystemservicesandnaturalcapital)

whichisgreaterthanthecurrentstate.’Itincludeslandandwatermanagement

practices that halt and reverse nature loss – that is, supporting a healthy,

functioningecosystem.

2 Excludesgreenfieldexplorationlicences(orequivalenttenements),whichare

locatedoutsidetheareaofinfluenceofourexistingmineoperations.

3 Thisfigureexcludesgreenfieldexplorationlicences(orequivalenttenements),

whicharelocatedoutsidetheareaofinfluenceofourexistingmineoperations,

anddoesnotincludetheareasthatwenowstewardfollowingtheacquisition

ofOZMinerals.Thoseareaswillbeincludedinourlandandbiodiversitydata

fromFY2024.

Wearecommittedtosocialvalueandsustainabilityandaremaking

progressinresponsiblyprovidingmoreoftheresourcestheworldneeds

todevelop.Webelievethiscommitmentcanhelpusbecomeapartnerof

choicewithcommunities,governments,suppliersandourcustomers.

Weseektobeavaluedpartnerwiththecommunitieswhereweoperate

andtheIndigenouspeoplesweinteractwith.

WereleasedarevisedIndigenousPeoplesPolicyStatement

inNovember2022andlaunchedare-designedandco-created

ReconciliationActionPlan(RAP)inAustraliainJune2023,which

outlinesourcommitmenttoearlyengagement,tolisteningandlearning,

and ensuring we capture and integrate Aboriginal and Torres Strait

Islanderpeoples’voices,values,knowledgeandperspectivesinour

decision-making.

TheRAPhasbeenrecognisedwith‘Elevate’statusfromReconciliation

Australia, which is provided to organisations with a proven track record in

respectfulengagementwithAboriginalandTorresStraitIslanderpeoples

and taking a leadership role to advance national reconciliation and create

amoreequitableAustralia.Commitmentsmadeintheplaninclude

targetsbytheendofFY2027toincreaseIndigenousrepresentation

acrossourAustralianworkforceto9.7percentandtoachievea

A$1.5billionspend(from1July2023)inaggregateacrossourAustralian

assetswithTraditionalOwnerandIndigenousbusinesses.Wearealso

working to develop regional Indigenous peoples plans to advance our

existingandnewrelationshipswithIndigenouspeoplesinCanadaand

SouthAmerica.

Throughourcommitmenttosustainability,weseektoreducetheimpact

wehaveontheplanetthroughouroperationalactivities.Wehaveseta

long-termgoaltoachievenetzerooperationalGHGemissionsby2050.

Wemanageourdecarbonisationprojectsacrossouroperatedassets

throughourCAFtohelpususeourcapitaleffectively.Wearealso

workingwithoursuppliersandcustomerstoassistthemwithreducing

theirGHGemissions.

Wehavesetgoalsinareassuchastheenvironmentandwaterstewardship,

andareintheprocessofestablishingplansinaccordancewithour2030

Healthyenvironmentgoaltocreatenature-positive

outcomesbyhavingat

least30percentofthelandandwaterwesteward

attheendofFY2030

underconservation,restorationorregenerativepractices.At30June2023,

wewerethestewardofjustunder6.5millionhectaresoflandandwater.

For more information refer to OFR 6.5

How WAIO intends to manage an expected

increase in surplus water

ByFY2040,around40percentoftheoreatWesternAustraliaIron

Ore(WAIO)isexpectedtobeaccessedfrombelowthewatertable.

Thiscouldmeanaroundafour-foldincreaseindewateringvolumesto

thatinFY2022andanincreaseinsurpluswater(dewateringvolumes

thatareexcesstooperationalrequirements).

BHP’sintentistousesurpluswaterforbeneficialuseasmuchas

practicableandmanageittopreventorminimiseouradverseimpacts

onwaterresources.InJune2023,WAIOreleasedacontext-based

watertargetthatbyFY2030atleast50percentofsurpluswater

willbeprioritisedforbeneficialusetoimprovethesustainabilityof

regionalgroundwaterresourcesorgeneratesocialvalue.

AtWAIO’sMiningAreaC,forexample,additionalaquiferreinjection

boresandinfiltrationpondsareplannedtobeexpandedsothatmore

than70percentofsurpluswaterisreturnedtotheground.

For more information refer to bhp.com/News/case‑

studies/2023/08/pilbara‑water‑scheme‑success

For more information on BHP’s approach to water management,

refer to OFR 6.13

16 BHP Annual Report 2023

3 Positioning for growth

We have continued to create a

simpler, more efficient BHP, that we

believe is better able to capitalise

on the megatrends shaping our

world. As the population grows,

urbanisation increases and as the

world increasingly pursues a lower

GHG emissions energy transition,

we continue to position our

portfolio for success.

Unlocking growth potential at our assets

Ourbiggestnear-termgrowthleverisfromimprovingproductivityatour

existingassetsandunlockingmoreoftheiruntappedpotential.

WAIOwasdesignedwithaninitialcapacityof240Mtannually,and

inFY2023itproducedarecord285Mt(100percentbasis),dueto

optimisationswehavemadeovertheyears.

Weareundertakinginitiativestoresponsiblygrowourproductiontomore

than305Mtperyearoverthemediumterm,throughtherampupofour

newestmine,SouthFlank,debottleneckingourportandrailsystems,

therolloutofautonomoushaulagetrucksandongoingproductivity

enhancements.Wearealsostudyingoptionstofurthergrowannual

productionto330MtwiththestudyexpectedtobecompletedinCY2025.

Escondidahassignificantuntappedresourcepotentialandweare

progressingstudiesintopotentiallyreplacingtheLosColorados

concentrator.Wearealsolookingatdifferentleachingtechnologiesthat

couldhelpusextractmorecopperandhavepotentialtolowerwaterand

energyconsumption,reduceoreliminatetheneedfortailingsdams,and

enableproductionofcathode-finishedproductthatdoesnotrequiresmelting.

Developing a position in potash

Potashisusedinfertiliserstoenablemoreefficientandsustainable

farming.Withtheworld’spopulationcontinuingtogrowandrisingconcerns

aroundfoodsecurityandlanduse,webelievepotashisapotentialnew

growthfrontforBHP.

AttheendofFY2023,JansenStage1(JS1)was26percentcomplete.

ProductionisexpectedtocommenceinlateCY2026.WhenJS1reaches

fullproductioncapacity,itisexpectedtoproduceapproximately4.35Mtof

potashperyear,increasingCanada’stotalpotashoutputbynearly22per

cent.WeintendtoprogressivelyrampuptofullproductionbyCY2028.

Atitsconstructionpeak,around3,500rolesareexpectedtobeinvolvedin

JS1,witharound600permanentpositionsonceproductioncommences,

includingatanewIntegratedOperationsCentreinSaskatoon.

StudiesforJansenStage2(JS2)areprogressing.IfapprovedbytheBHP

Board,JS2mayincreaseoptionalityandstrengthencapitalefficiencyand

operationalproductivity.ExistingJS1infrastructurecouldbeleveragedto

allowforanacceleratedJS2productiontimeline.Shoulditproceed,JS2is

expectedtoaddanadditional4Mtpaofpotashatfullproductioncapacity,

withpossiblefirstproductionestimatedtooccurinFY2029.

OZ Minerals: Creating a new copper province in

South Australia

Wewillpursuegrowththroughacquisitionwhenwebelievewecancreate

valueforourshareholders.

BHPcompletedtheacquisitionofOZMineralson2May2023increasing

ourexposuretofuture-facingcommoditiesbyaddingcopperandnickel

resourcesthatcomplementourexistingresourcesinAustralia.

WeareintegratingOZMinerals’twoSouthAustralianminesandoptions,

whichincludeProminentHillaswellasCarrapateena,withOlympicDam

andtheOakDamdeposittocreateasignificantminingprovincecalled

CopperSouthAustralia.Thisprovinceisexpectedtoproducecopper,gold

anduraniumoxidefordecadestocome.

Weexpecttobeinnovativeinthecreationoftheprovinceandintend

toincorporatetheOZMinerals’‘Think&ActDifferently’approachto

innovation.Theapproachseekstobuildcapabilityacrossthemining

valuechaintohelpusbetterunderstandfutureopportunitiesand

findnewwaystounderstandorebodiesandresponsiblyextractand

processcommodities.

Ourfocusisonbuildingscaleandoptionality.WhileOZMineralsis

expectedtoaddabout120,000tonnesofcopperproductionannually

(basedonitsCY2022performanceandincludingproductioninBrazil),

webelieveitalsobringspotentialforfurthercopperandnickelgrowthin

themediumterm.

InWesternAustralia,theWestMusgravenickelmine,whencomplete,

haspotentialtobeafeedsourcetotheNickelWestsmeltingand

refiningassets.

For more information refer to OFR 5.2 Copper South Australia

and OFR 5.1 West Musgrave

Creating and accelerating longer‑term options

BHP Ventures

BHPVenturesisourdedicatedventurecapitalunit.Itlooksforgame-

changingtechnologiesandemergingcompaniestohelpdriveongoingand

moresustainablegrowthwithinBHPandprovideuswithaportfolioofnew

growthoptionsforthedecadesahead.

BHPVenturescomplementstheinnovationalreadyunderwaywithinBHP

byforgingnewpartnershipsandcreatingfreshopportunitiestostrengthen

ourportfolioandsupportthedecarbonisationofouroperatedassetsand

decarbonisationopportunitiesinourvaluechain.Forourpartners,BHP

Venturesprovidesanopportunitytocollaboratewithus.

BHPVentures’focusareasinclude:

– supportinginnovationinourcoreoperations,primarily

around decarbonisation

– opportunitiesthatenableustogrowourresourcebasebyextracting

morefromwhatwehavetoday

– opportunitiesthatprovidenewoptionsforBHPbeyondourcore

business,includinginourportfolioandvaluechain

BHP Xplor

BHPXplorisourglobalacceleratorprogramtargetinginnovative,

early-stagemineralexplorationcompaniestofindcriticalresources

necessarytodrivetheenergytransition.Wearesearchinggloballyfor

thenextgenerationofexplorerstounlockcopper,nickelandothercritical

mineraldeposits.

InJanuary2023,BHPXplorannounceditsfirstcohortofsevencompanies.

EachofthesecompaniesreceivedacashpaymentofuptoUS$500,000

fromBHPandgainedaccesstoanetworkofinternalandexternalexperts,

tosupportthedevelopmentoftheiropportunityandtoprovidepotential

investmentoptionsforBHPtoacceleratetheexplorationforminerals

neededfortheenergytransition.

Subjecttothefinalisationofdefinitiveagreements,furtherinvestment

isexpectedinthreeofthesevenparticipatingcompaniesinthefirst

cohort,duetotheirregionofinterest,potentialtechnicalopportunity,

teamcapabilityandstrategicalignment.

BHP exploration regions

Serbia

Bulgaria

London

Ecuador

Peru

Chile

United States

Canada

Tanzania

Australia

Adelaide

Sweden

Brazil

Operating and Financial Review Governance Financial Statements Additional Information

BHP Annual Report 2023 17

Operating and Financial Review

DuringFY2023,weadvancedourexploration

programsglobally,includingundertaking

furtherdrillingattheOcelotprojectinArizona.

Thisconfirmedthepresenceofabodyof

mineralisationatdepth,albeitatalowergrade

thananticipated.Wepursuedearlierstage

explorationopportunitiesforcopperinAustralia,

Canada, Chile, Ecuador, Peru, Serbia and the

UnitedStates.Thisinvolvedreconnaissance

workthroughtargetdefinitionanddrilltesting.

Wehavealsoincreasedthenumberofhigh-

qualitynickelprojectswithintheexploration

pipeline.InAustralia,weareactivelyexploring

nickel targets, while in Canada, we continued

ourpartnershipwithMidlandExplorationInc,

throughour5percentinterestandcollaboration

onatargetgenerationprogram.BHPmadea

US$40millioninvestmentinKabangaNickelin

TanzaniainFY2022andtheexplorationteam

hascompletedaseriesofstudiestoassess

the additional upside potential to the known

resource.Asconfirmatorydrillingadvances,

wewillcontinuetoevaluatefurtherwork

requiredtotestthispotential.

TheacquisitionofOZMineralsbringsthe

opportunitytounlocksynergiesandfurther

growourportfolioofcopperandnickel

projects.InSouthAustralia,thisacquisition

hassignificantlyincreasedourlandposition

andisenablingustodevelopanimportant

province with additional upside copper discovery

opportunities.WeexpecttofullyintegratetheOZ

Mineralsexplorationactivitiesintoourprograms

duringFY2024.

InJune2023,BHPacquireda100percent

interestinRagnarMetalsSwedenABfor

US$6.4million.Thisincludestheearly-stage

Granmurenproject,adrill-readynickel-copper

targetinsouthernSweden.Theexploration

teamexpectstocommenceactivitiesfocusedon

completedinitialdrilltestsduringFY2024.

Ourexplorationpartnershipscontinuedtodeliver

encouragingresults.InAustralia,wecontinued

our partnership with Encounter Resources to

exploreforsediment-hostedcopperdeposits

intheNorthernTerritory.Wefinalisedour

explorationagreementwithMundoroCapital

covering Serbia and Bulgaria, with initial

drillingcompletedduringFY2023inSerbia.

WeextendedourpartnershipwithKobold

Metals,aBHPVenturesportfoliocompanythat

isdevelopingatechnologyplatformfordata-

drivenexploration.Thepartnershipcontemplates

anadditional18monthsoffurtherexplorationin

northernWesternAustraliafornickel.

Growth through exploration, focused on copper and nickel

Exploration expenditure

Our resource assessment exploration expenditure increased by 42 per cent in FY2023 to

US$255 million, while our greenfield expenditure increased by 23 per cent to US$95 million.

Expenditure on resources assessment and greenfield exploration over the last three financial years is

set out below.

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

Greenfield exploration 95 77 54

Resources assessment 255 179 138

Total metals exploration and assessment 350 256 192

Exploration expense

Exploration expense represents that portion of exploration expenditure that is not capitalised in

accordance with our accounting policies, as set out in Financial Statements note 11 ‘Property, plant

and equipment’.

Exploration expense for each segment over the last three financial years is set out below.

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

Exploration expense

Copper 145 85 53

Iron Ore 52 54 55

Coal 6 6 7

Group and unallocated items

91 54 19

Total Group 294 199 134

1 Group and unallocated items includes functions, other unallocated operations, including Potash, Nickel West,

West Musgrave (acquired on 2 May 2023 as part of the acquisition of OZ Minerals Ltd), legacy assets and

consolidation adjustments.

Nickelexplorationregions Explorationregionaloffice

Copperexplorationregions

Explorationheadoffice

Tucson

Santiago

Toronto

18 BHP Annual Report 2023

Chief Financial Officer’s review

Dear Shareholders,

IampleasedtoreportonBHP’sFY2023financialresults.

BHPdeliveredanotherstrongsetofresultsthisyeardespitelower

commoditypricesandinflationarypressures.Ourunderlyingattributable

profitwasUS$13.4billion,or265UScentspershare.UnderlyingEBITDA

remainedhealthyatUS$28billionwhileourmargin,at54percent,and

returnoncapitalemployed,at29percent,remainedstrong–reflectingthe

qualityandresilienceofourassets,andconsistentoperatingperformance.

Wecontinuetodeliverstrongmarginsandaconsistentlyhighbaselineof

cashflow.Overthepastdecade,wehavedeliveredmarginsofover50

percent–significantlyaheadofournearestcompetitors–andgenerated

averagenetoperatingcashflowsofmorethanUS$20billionperyear.

Thisstabilityisahallmarkofourbusinessanddemonstratesthequalityof

ourportfolioandtheconsistencyofourreturns.

Ensuringshareholderscontinuetobenefitfromourconsistentandreliable

performance,we’veannouncedafinaldividendof80UScentspershare.

Togetherwiththeshareholderdividendforthefirsthalfof90UScents

pershare,thetotalreturntoshareholdersforFY2023wasUS$8.6billion,

whichrepresenteda64percentpayoutratio.

Thebiggestdriveroftheyear-on-yeardeclineinearningswaslower

commodityprices.Ironoreandcopper,ourtwolargestsegments,saw

pricesdown18percentand12percentrespectively,comparedtolast

year.Wealsocontinuedtoseethelaggedeffectofinflation,whichhada

negativeUS$1.7billionimpact.

Inareaswithinourcontrolweperformedwell.Productionwasupthreeper

centincopperequivalentterms,supportedbyrecordannualproductionat

WesternAustraliaIronOre,SpenceandOlympicDam.Onthecostfront

wemetunitcostguidanceforthemajorityofourassets.

Duringtheyear,wespentUS$7.1billiononcapitalandexploration

expenditure,anincreaseof16percentyearonyear.

Lookingforward,weexpecttoincreaseourcapitalspendasweunlock

productivity,decarboniseouroperationsanddelivergrowthinfuture-

facingcommodities.AfterincorporatingtheOZMineralsassets,wenow

expecttospendaroundUS$10billiononcapitalandexplorationinboth

the2024and2025financialyears.Themajorityofthiswillbedirectedto

improvementandgrowth,asweprogressJansen,CopperSouthAustralia

projectsandgrowthinthePilbara.

Wehavecontinuedtodelivervalue.BHP’stotaldirecteconomic

contributioninFY2023wasUS$54.2billion.Thisincludespayments

tosuppliers,wagesandbenefitsformorethan80,000employeesand

contractors,dividends,taxes,royaltiesandvoluntaryinvestmentin

socialprojectsacrossthecommunitieswhereweoperate.

InFY2023,ourtax,royaltyandotherpaymentstogovernmentstotalled

US$13.8billion.Duringthelastdecade,wepaidUS$94.2billion

globallyintaxes,royaltiesandotherpayments,includingUS$74.9billion

(approximatelyA$101billion)inAustralia.Ourglobaladjustedeffective

taxrateinFY2023was30.9percent.Onceroyaltiesareincluded,

ourFY2023rateincreasesto41.3percent.

Weareproudofourfinancialandoperationalperformanceandthe

valuewehavecontinuedtogenerateforourshareholders,partners

andstakeholders.

Thankyouforyourcontinuedsupport.

David Lamont

ChiefFinancialOfficer

BHP delivered another

strong set of results,

reflecting the quality

and resilience of our

assets, and consistent

operating performance.

Our underlying

attributable profit was

US$13.4 billion, or

265 cents per share.

Underlying EBITDA

was US$28 billion,

at a margin of

54 per cent.”

US$54.2 bn

Our total FY2023 economic contribution

2022:US$82.5 bn

170 US cents

Shareholder dividends per share

2022:325UScents

US$13.8 bn

Tax, royalty and other payments to governments

in FY2023

2022:US$17.3bn

28.8 per cent

Underlying return on capital employed

2022:48.7percent

Operating and Financial Review Governance Financial Statements Additional Information

BHP Annual Report 2023 19

Operating and Financial Review

4 Financial review

4.1 Group overview

WeprepareourConsolidatedFinancial

StatementsinaccordancewithInternational

FinancialReportingStandards(IFRS),asissued

by the International Accounting Standards

Board.WepublishourConsolidatedFinancial

StatementsinUSdollars.AllConsolidated

IncomeStatement,ConsolidatedBalance

SheetandConsolidatedCashFlowStatement

informationbelowhasbeenderivedfromaudited

ConsolidatedFinancialStatements.

For more information refer to

Financial Statements.

Weusevariousnon-IFRSfinancialinformation

toreflectourunderlyingperformance.Non-IFRS

financialinformationisnotdefinedorspecified

undertherequirementsofIFRS,howeveris

derivedfromtheGroup’sConsolidatedFinancial

StatementspreparedinaccordancewithIFRS.

Non-IFRSfinancialinformationisconsistent

withhowmanagementreviewsfinancial

performanceoftheGroupwiththeBoardand

theinvestmentcommunity.OFR10‘Non-IFRS

financialinformation’includesournon-IFRS

financialinformationandOFR10.1‘Definition

andcalculationofnon-IFRSfinancialinformation’

outlineswhywebelievenon-IFRSfinancial

informationisusefulandtherelevantcalculation

methodology.Webelievenon-IFRSfinancial

informationprovidesusefulinformation,howeverit

shouldnotbeconsideredasanindicationof,oras

asubstitutefor,statutorymeasuresasanindicator

ofactualoperatingperformance(suchasprofit

ornetoperatingcashflow)oranyothermeasure

offinancialperformanceorpositionpresented

inaccordancewithIFRS,orasameasureofa

company’sprofitability,liquidityorfinancialposition.

4.2 Key performance

indicators

Ourkeyperformanceindicators(KPIs)enable

ustomeasureourdevelopmentandfinancial

performance.TheseKPIsareusedtoassess

performanceofourpeoplethroughouttheGroup.

For information on our approach

to performance and reward

refer to Remuneration Report.

For information on our overall approach

to executive remuneration, including

remuneration policies and remuneration

outcomes refer to Remuneration Report.

FollowingBHP’ssaleoftheOnshoreUSassets

inFY2019andsubsequentlythemergerofour

PetroleumbusinesswithWoodsideinFY2022,

thecontributionoftheseassetstotheGroup’s

resultsispresentedasDiscontinuedoperations.

Footnotestotablesandinfographicsindicate

whetherdatapresentedinOFR4.2isinclusive

orexclusiveofPetroleumassets.Detailsofthe

contributionofthePetroleumassetstotheGroup’s

resultsaredisclosedinFinancialStatementsnote

28‘Discontinuedoperations’.

Summary of financial measures

Year ended 30 June

US$M 2023 2022

Consolidated Income Statement (Financial Statements 1.1)

Revenue 53,817 65,098

Profit/(loss)aftertaxationfromContinuingoperations 14,324 22,400

Profit/(loss)aftertaxationfromContinuingandDiscontinuedoperationsattributableto

BHPshareholders 12,921 30,900

Dividendsperordinaryshare–paidduringtheperiod(UScents) 265.0 350.0

Dividendsperordinaryshare–determinedinrespectoftheperiod(UScents) 170.0 325.0

InspeciedividendonmergerofPetroleumwithWoodside(UScents) − 386.4

Basicearnings/(loss)perordinaryshare(UScents) 255.2 610.6

Consolidated Balance Sheet (Financial Statements 1.3)

Total assets 101,296 95,166

Net assets

48,530 48,766

Consolidated Cash Flow Statement (Financial Statements 1.4)

Netoperatingcashflows 18,701 32,174

Capitalandexplorationexpenditure 7,083 7,545

Other financial information (OFR 10)

Net debt 11,166 333

Underlyingattributableprofit 13,420 23,815

Underlyingattributableprofit–Continuingoperations 13,420 21,319

Underlying EBITDA 27,956 40,634

Underlyingbasicearningspershare(UScents) 265.0 470.6

Underlyingbasicearningspershare–Continuingoperations(UScents) 265.0 421.2

Underlyingreturnoncapitalemployed(percent) 28.8 48.7

1 IncludesdataforContinuingandDiscontinuedoperationsforthefinancialyearsbeingreported.

2 ExcludesdatafromDiscontinuedoperationsforthefinancialyearsbeingreported.

3 Formoreinformationonnon-IFRSfinancialinformationrefertoOFR10.

Underlying attributable profit

1,3

US$ billion

9.1

17.1

13.4

23.8

FY2019 FY2020 FY2021 FY2022 FY2023

Underlying EBITDA

2,3

US$ billion

19.1

19.9

35.1

28.0

40.6

FY2019 FY2020 FY2021 FY2022 FY2023

Net operating cash flows

US$ billion

17.9

15.7

27.2

18.7

32.2

FY2019 FY2020 FY2021 FY2022

FY2023

Underlying return on

capital employed

1,3

Per cent

16.0

16.9

32.5

28.8

FY2019 FY2020 FY2021 FY2022

FY2023

48.7

20 BHP Annual Report 2023

4 Financial review continued

Reconciling our financial results to our key performance indicators

Profit Earnings Cash Returns

Measure

Profit after taxation

from Continuing and

Discontinued operations

US$M

14,324

Profit after taxation

from Continuing and

Discontinued operations

US$M

14,324

Net operating cash

flows from Continuing

operations

US$M

18,701

Profit after taxation

from Continuing

and Discontinued

operations

US$M

14,324

Made

up of

Profitaftertaxation Profitaftertaxation CashgeneratedbytheGroup’s

consolidatedoperations,after

dividends received, interest, proceeds

andsettlementsofcashmanagement

relatedinstruments,taxationand

royalty-relatedtaxation.Itexcludes

cashflowsrelatingtoinvestingand

financingactivities

Profitaftertaxation

Adjusted

for

Exceptionalitems

beforetaxation

Taxeffectof

exceptionalitems

Exceptionalitems

aftertaxattributable

to non-controlling

interests

Exceptionalitems

attributabletoBHP

shareholders

Profitaftertaxation

attributable to

non-controlling

interests

340

266

(107)

499

(1,403)

Exceptionalitemsbefore

taxation

Taxeffectofexceptional

items

Depreciation and

amortisationexcluding

exceptionalitems

Impairmentsofproperty,

plantandequipment,

financialassetsand

intangiblesexcluding

exceptionalitems

Netfinancecosts

excludingexceptional

items

Taxationexpense

excludingexceptional

items

340

266

5,061

1,079

6,811

Exceptionalitemsafter

taxation

Netfinancecosts

excludingexceptional

items

Incometaxexpenseon

netfinancecosts

Profitaftertaxation

excludingnetfinance

costsandexceptional

items

Net assets at the

beginningofperiod

Net debt at the beginning

ofperiod

Capitalemployedatthe

beginningofperiod

Net assets at the end

ofperiod

Net debt at the end

ofperiod

Capitalemployedatthe

endofperiod

Averagecapitalemployed

48,766

333

48,530

11,166

606

1,079

(342)

15,667

49,099

59,696

54,398

To reach

our KPIs

Underlying attributable profit 13,420 Underlying EBITDA 27,956 Net operating cash flows 18,701 Underlying return

on capital employed

28.8%

Why do

we use it?

Underlyingattributableprofitallowsthe

comparabilityofunderlyingfinancial

performancebyexcludingtheimpacts

ofexceptionalitems.

Underlying EBITDA is used to help

assesscurrentoperationalprofitability

excludingtheimpactsofsunkcosts(i.e.

depreciationfrominitialinvestment).It

isameasurethatmanagementuses

internallytoassesstheperformance

oftheGroup’ssegmentsandmake

decisionsontheallocationofresources.

Netoperatingcashflowsprovide

insightsintohowwearemanaging

costs and increasing productivity

acrossBHP.

Underlyingreturnoncapitalemployed

isanindicatoroftheGroup’scapital

efficiency.Itisprovidedonanunderlying

basistoallowcomparabilityofunderlying

financialperformancebyexcludingthe

impactsofexceptionalitems.

4.3 Financial results

ThefollowingtableprovidesmoreinformationontherevenueandexpensesoftheGroupinFY2023.

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

Continuing operations

Revenue

53,817 65,098 56,921

Otherincome 394 1,398 380

Expensesexcludingnetfinancecosts (31,873) (32,371) (30,871)

Profit/(loss)fromequityaccountedinvestments,relatedimpairmentsandexpenses 594 (19) (915)

Profit from operations 22,932 34,106 25,515

Netfinancecosts (1,531) (969) (1,223)

Totaltaxationexpense (7,077) (10,737) (10,616)

Profit after taxation from Continuing operations 14,324 22,400 13,676

Discontinued operations

Profit/(loss)aftertaxationfromDiscontinuedoperations − 10,655 (225)

Profit after taxation from Continuing and Discontinued operations 14,324 33,055 13,451

Attributable to non-controlling interests 1,403 2,155 2,147

AttributabletoBHPshareholders 12,921 30,900 11,304

1 Includesthesaleofthird-partyproducts.

ProfitaftertaxationattributabletoBHPshareholdersdecreasedfromUS$30.9billioninFY2022toUS$12.9billioninFY2023.AttributableprofitofUS$12.9billion

includesanexceptionallossofUS$0.5billion(aftertax),comparedtoanAttributableprofitofUS$30.9billionincludinganexceptionalgainofUS$7.1billion(after

tax)primarilyrelatingtothenetgainonmergerofourPetroleumbusinesswithWoodsidecompletedinFY2022.TheFY2023exceptionallossinAttributableprofit

includesaUS$0.3billionexceptionallossrelatedtoSamarcodamfailureimpactsandaUS$0.2billionexceptionallossrelatedtotheimpactofChileantaxreform.

Operating and Financial Review Governance Financial Statements Additional Information

BHP Annual Report 2023 21

Operating and Financial Review

For more information on Exceptional items refer to Financial

Statements note 3 ‘Exceptional items’ and Financial Statements

note 28 ‘Discontinued operations’.

RevenueofUS$53.8billiondecreasedbyUS$11.3billion,or17percent

fromFY2022.Thisdecreasewasmainlyduetoloweraveragerealised

pricesforironore,metallurgicalcoalandcoppercombinedwiththe

divestmentofBHPMitsuiCoal(BMC)inFY2022,partiallyoffsetbyhigher

averagerealisedpricesforthermalcoalandnickel.

HighersalesvolumeswereachievedacrossCopper,IronOreand

NickelsupportedbyrecordproductionatOlympicDam,Spenceand

WAIO.OlympicDamsalesvolumesincreasedfollowingthecompletion

oftheplannedmajorsmeltermaintenancecampaigninthepriorperiod.

Escondidasalesvolumesincreasedmainlyduetofavourablefeedgrade

andhigherthroughputwasachievedattheSpenceGrowthOption(SGO).

MinimaldisruptionsfromCOVID-19alsosupportedhighervolumesacross

theGroup.

For information on our average realised prices and production

of our commodities refer to OFR 9.

TotalexpensesexcludingnetfinancecostsofUS$31.9billiondecreased

byUS$0.5billion,or2percentfromFY2022.Thisreflectedlowerthird-

partycommoditypurchasesofUS$1.1billionmainlyatAntaminadueto

lowercopperprices,lowerdepreciation,amortisationandimpairment

expenseofUS$1.1billionreflectingtheincreaseinminelifeatYandiin

FY2022,lowerdepreciationofindex-linkedfreightcontractsandthenon-

recurrenceofimpairmentatCerroColoradoinFY2022.Expenseswere

alsolowerduetothenon-recurrenceofcorporatestructureunification

costsinFY2022ofUS$0.4billion.Partiallyoffsettingtheseimpactswasan

increaseinrawmaterialsandconsumablesexpenditureofUS$0.7billion

beingthenetimpactofhigherpricesandthedivestmentofBMCin

FY2022,combinedwithhigherdrawdownofinventoriesdrivenbyhigher

productionatOlympicDamandSpenceduetothecompletionofthe

plannedmajorsmeltermaintenancecampaigninthepriorperiodand

SGO,respectively.

Profitfromequityaccountedinvestments,relatedimpairmentsand

expensesofUS$594millionincreasedbyUS$613millionfromFY2022

reflectingtheSamarcodamfailurecostestimateupdateinFY2022partially

offsetbylowerAntaminaprofitsdrivenbylowercopperprices.

For more information on the total impact of the Samarco dam

failure provision and impairment charges connected with

equity accounted investments refer to Financial Statements

note 3 ‘Exceptional items’ and Financial Statements note 13

‘Impairment of non‑current assets’ respectively.

NetfinancecostsofUS$1.5billionincreasedbyUS$0.6billion,or58per

centfromFY2022primarilyduetohighereffectiveinterestratesandthe

impactofUS$5.0billionadditionalborrowingsusedtofundtheacquisition

ofOZMineralsLimited(OZL).

For more information on net finance costs and the OZL acquisition

refer to Financial Statements note 23 ‘Net finance costs’ and note 29

‘Business combinations’ respectively.

TotaltaxationexpenseofUS$7.1billiondecreasedbyUS$3.7billionfrom

FY2022inlinewithlowerprofitsprimarilyfromloweraveragerealised

pricespartiallyoffsetbyUS$0.3billionChileantaxreformimpacts.

For more information on income tax expense refer to

Financial Statements note 6 ‘Income tax expense’.

Principal factors that affect Underlying EBITDA

Thefollowingtableandcommentarydescribetheimpactoftheprincipalfactors

thataffectedUnderlyingEBITDAforFY2023comparedwithFY2022.

US$M

Underlying EBITDA for year ended 30 June 2022 40,634

Netpriceimpact:

Change in sales prices (9,182) Loweraveragerealisedpricesforironore,metallurgicalcoal,andcopper,partiallyoffsetbyhigher

averagerealisedpricesforthermalcoalandnickel.

Price-linked costs (83) HighercoalroyaltiesmainlyasaresultofthenewQueenslandGovernmentroyaltyregime(despite

lowerprices)largelyoffsetbylowerIronOreroyaltiesinlinewithlowerprices.

(9,265)

Changeinvolumes 1,545 Highersalesvolumesachievedacrosscopper,ironoreandnickelsupportedbyrecordproduction

atOlympicDam,SpenceandWAIO.OlympicDamsalesincreasedfollowingthecompletionofthe

plannedmajorsmeltermaintenancecampaigninthepriorperiod,Escondidasalesincreasedmainly

duetofavourablefeedgrade,andhigherconcentratethroughputwasachievedattheSpenceGrowth

Option(SGO).MinimaldisruptionsfromCOVID-19alsosupportedhighervolumesacrosstheGroup.

Changeincontrollablecashcosts:

Operatingcashcosts (1,318) PrimarilyduetounfavourableinventorymovementstoensureconsistentfeedtoSGOatSpenceand

drawdownofinventorybuiltduringSCM21inthepriorperiodatOlympicDam.

InventorydrawdownsalsooccurredatNickelWesttomitigatedisruptioncausedbyheavyrainatMt

Keithandthird-partyorequalityanddeliveryissues,aswellasatCerroColoradoinpreparationfor

closureinDecember2023.

Ourcoaloperationsalsoexperiencedhighercostsduetoincreasedmaintenance,labourcostsand

inventorydrawdownsduetoimpactsofsignificantwetweatheratBMA.NSWECexperiencedhigher

freightcostsattheNCIGcoalexportterminal.

Explorationandbusinessdevelopment (108) HigherexplorationspendfordrillingactivitiesatOakDamatOlympicDam.

(1,426)

Changeinothercosts:

Exchangerates 667 ImpactofmovementsintheAustraliandollarandChileanpesoagainsttheUSdollar.

Inflation (1,412) ImpactofinflationontheGroup’scostbase.

Fuel,energy,andconsumableprice

movements

(272)

Predominantlyhigherdiesel,explosivesandammoniaprices.

Non-cash 7

One-offitems (411) Includesthereviewofemployeeallowancesandentitlements,andOZLacquisitioncosts.

(1,421)

Ceased and sold operations (1,434) DivestmentofBHP’s80percentinterestinBMCinFY2022.

Newandacquiredoperations 57 ContributionfromtherecentlyacquiredoperationsofOZLinFY2023.

Otheritems (734) Includeslowerrecoveryoffreightcostscausedbymovementsinthefreightindexoncontinuousvoyage

charter(CVC)voyagesanddecreasedprofitfromAntaminadrivenbyloweraveragecopperrealisedprices.

Underlying EBITDA for year ended 30 June 2023 27,956

1 ForinformationonthemethodofcalculationoftheprincipalfactorsthataffectUnderlyingEBITDA,refertoOFR10.2.

22 BHP Annual Report 2023

4 Financial review continued

Business combinations

On2May2023,theGroupacquired100percentoftheissuedsharecapitalofOZMineralsLimited(OZL)foranetcashconsiderationofUS$5.9billion,

beingA$26.50(attheaveragehedgedexchangerateofAUD/USD0.6681)perOZLshareover337,314,920shareslessUS$0.1billionofcashandcash

equivalentsacquired.AcquisitionrelatedcostsofUS$0.1billionhavebeenexpensedandincludedinotheroperatingexpensesintheincomestatement.

For more information refer to Financial Statements note 29 ‘Business combinations’.

Cash flow

ThefollowingtableprovidesasummaryoftheConsolidatedCashFlowStatementcontainedinFinancialStatements1.4,excludingtheimpactofforeign

currencyexchangeratechangesoncashandcashequivalents.

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

NetoperatingcashflowsfromContinuingoperations 18,701 29,285 25,883

NetoperatingcashflowsfromDiscontinuedoperations − 2,889 1,351

Net operating cash flows 18,701 32,174 27,234

NetinvestingcashflowsfromContinuingoperations (13,065) (4,973) (6,325)

NetinvestingcashflowsfromDiscontinuedoperations − (904) (1,520)

NetcashcompletionpaymentonmergerofPetroleumwithWoodside − (683) −

CashandcashequivalentsdisposedonmergerofPetroleumwithWoodside − (399) −

Net investing cash flows (13,065) (6,959) (7,845)

NetfinancingcashflowsfromContinuingoperations (10,315) (22,734) (17,884)

NetfinancingcashflowsfromDiscontinuedoperations − (33) (38)

Net financing cash flows (10,315) (22,767) (17,922)

Net (decrease)/increase in cash and cash equivalents (4,679) 2,448 1,467

Net(decrease)/increaseincashandcashequivalentsfromContinuingoperations (4,679) 1,578 1,674

Netincrease/(decrease)incashandcashequivalentsfromDiscontinuedoperations − 1,952 (207)

NetcashcompletionpaymentonmergerofPetroleumwithWoodside − (683) −

CashandcashequivalentsdisposedonmergerofPetroleumwithWoodside − (399) −

Net operating cash inflows from Continuing operationsof

US$18.7billiondecreasedbyUS$10.6billion.Thisisprimarilydueto

significantlyloweraveragerealisedpricesandtheinflationaryimpactson

thecostbasepartiallyoffsetbyfavourableforeignexchangemovements.

Net investing cash outflows from Continuing operationsof

US$13.1billionincreasedbyUS$8.1billion.Thisincreaseprimarilyreflects

theUS$5.9billionacquisitionofOZLcompletedon2May2023,higher

capitalexpenditureofUS$0.9billionwhichincludesmajorprojectssuchas

JansenStage1andalsothenon-recurrenceofnetproceedsreceivedin

thepriorperiodrelatedtothesaleofBHP’s80percentinterestinBMCto

StanmoreResourcesLimitedofUS$1.3billion.

For more information on the acquisition of OZL and a breakdown

of capital and exploration expenditure on a commodity basis refer

to Financial Statements note 29 ‘Business combinations’ and OFR

9 respectively.

Net financing cash outflows from Continuing operationsof

US$10.3billiondecreasedbyUS$12.4billion.Thisdecreasemainly

reflectslowerdividendspaidtoBHPshareholdersofUS$4.6billionand

higherproceedsfrominterestbearingliabilitiesofUS$7.0billionprimarily

reflectingfundingfortheOZLacquisition.

For more information refer to Financial Statements note 21 ‘Net debt’.

Underlying return on capital employed (ROCE)of28.8percent

decreasedby19.9percentagepoints(FY2022:16.2percentagepoint

increase)reflectingthesignificantdecreaseinprofitaftertaxation

excludingnetfinancecostsandexceptionalitemsofUS$10.9billion

primarilyduetoloweraveragerealisedpricesandinflationaryimpactson

thecostbase.

For more information on ROCE refer to OFR 10.

4.4 Debt and sources of liquidity

Ourpoliciesondebtandliquiditymanagementhavethe

followingobjectives:

– a strong balance sheet through the cycle

– diversificationoffundingsources

– maintainborrowingsandexcesscashpredominantlyinUSdollars

Interest bearing liabilities, net debt and gearing

AttheendofFY2023,InterestbearingliabilitieswereUS$22.3billion

(FY2022:US$16.4billion)andCashandcashequivalentswere

US$12.4billion(FY2022:US$17.2billion).ThisresultedinNetdebt

ofUS$11.2billion,whichrepresentedanincreaseofUS$10.8billion

comparedwiththenetdebtpositionat30June2022.Thiswasprimarily

duetonetinvestingcashflows(includingtheacquisitionofOZMinerals),

anddividendpayments,whichmorethanoffsettheoperatingcashflows

generated.Gearing,whichistheratioofNetdebttoNetdebtplusNet

assets,was18.7percentat30June2023,comparedwith0.7percentat

30June2022.

For more information on Net debt and gearing refer to Financial

Statements note 21 ‘Net debt’ and OFR 10.

DuringFY2023,grossdebtincreasedbyUS$5.9billiontoUS$22.3billion

asat30June2023.Thisincreaseincludesthedrawdownofthe

US$5.0billionOZMineralsacquisitionfacilityinApril2023and

US$2.75billionUSbondissuanceinFebruary2023.TheGroupalso

redeemed£0.6billionof6.5percentGBPhybridnotesinOctober2022,

repaid€0.4billionof0.75percentEURseniornotesthatmaturedon

28October2022(thebalancefollowinganearlyrepurchaseprogram)and

repaidCAD$0.8billionof3.23percentCADseniornotesthatmaturedon

15May2023.

Atthesubsidiarylevel,EscondidarepaidUS$0.4billionofdebtand

receivedproceedsfromdebtofUS$0.5billionincludingtherefinancingofa

US$0.3billionloanfacilityduetomatureintheperiod.

Operating and Financial Review Governance Financial Statements Additional Information

BHP Annual Report 2023 23

Operating and Financial Review

Funding sources

InFebruary2023,theGroupissuedthreetranchesofUSDbondscomprisingUS$1billion4.875percentbondsdue2026,US$1billion4.75percent

bondsdue2028andUS$750million4.9percentbondsdue2033.InFebruary2023,theGroupalsoenteredintoaUS$5billionsyndicatedloanfacilityto

supporttheOZMineralsacquisitionandfullydrewdownonthisfacilityinApril2023.

OurGroup-levelborrowingfacilitiesarenotsubjecttofinancialcovenants.Certainspecificfinancingfacilitiesinrelationtospecificassetsarethesubject

offinancialcovenantsthatvaryfromfacilitytofacility,butthiswouldbeconsiderednormalforsuchfacilities.

InadditiontotheGroup’suncommitteddebtissuanceprograms,weholdthefollowingcommittedstandbyfacility:

Facility available

2023

US$M

Drawn

2023

US$M

Undrawn

2023

US$M

Facilityavailable

2022

US$M

Drawn

2022

US$M

Undrawn

2022

US$M

Revolvingcreditfacility

5,500 – 5,500 5,500 – 5,500

Total financing facility 5,500 – 5,500 5,500 – 5,500

1 Thefacilityisduetomatureon10October2026.ThecommittedUS$5.5billionrevolvingcreditfacilityoperatesasaback-stoptotheGroup’suncommittedcommercial

paperprogram.ThecombinedamountdrawnunderthefacilityorascommercialpaperwillnotexceedUS$5.5billion.Asat30June2023,US$nilcommercialpaperwas

drawn(FY2022:US$nil),thereforeUS$5.5billionofcommittedfacilitywasavailabletouse(FY2022:US$5.5billion).Acommitmentfeeispayableontheundrawnbalance

andinterestispayableonanydrawnbalancecomprisingareferencerateplusamargin.Theagreedmarginsaretypicalforacreditfacilityextendedtoacompanywiththe

Group’screditrating.

For more information on the maturity profile of our debt obligations and details of our standby and support agreements refer to

Financial Statements note 24 ‘Financial risk management’.

Information in relation to our material off‑balance sheet arrangements, principally contingent liabilities, commitments for capital expenditure and

commitments under leases at 30 June 2023 is provided in Financial Statements note 11 ‘Property, plant and equipment’, Financial Statements note

22 ‘Leases’ and Financial Statements note 34 ‘Contingent liabilities’, respectively.

Inouropinion,workingcapitalissufficientforourpresentrequirements.TheGroup’sMoody’screditratingchangedfromA2/P-1toA1/P-1outlookstable

(long-term/short-term)on28February2023.TheGroup’sS&PGlobalratinghasremainedatA-/A-1outlookstable(long-term/short-term).Creditratingsare

forward-lookingopinionsoncreditrisk.Moody’sandS&PGlobal’screditratingsexpresstheopinionofeachagencyontheabilityandwillingnessofBHP

tomeetitsfinancialobligationsinfullandontime.Acreditratingisnotarecommendationtobuy,sellorholdsecuritiesandmaybesubjecttosuspension,

reductionorwithdrawalatanytimebyanassigningratingagency.Anycreditratingshouldbeevaluatedindependentlyofanyotherinformation.

Thefollowingtableexpandsonthenetdebt,toprovidemoreinformationonthecashandnon-cashmovementsinFY2023.

Year ended 30 June

2023

US$M

2022

US$M

Net debt at the beginning of the period (333) (4,121)

Netoperatingcashflows 18,701 32,174

Netinvestingcashflows (13,065) (6,959)

Netfinancingcashflows (10,315) (22,767)

Net (decrease)/increase in cash and cash equivalents from Continuing and Discontinued operations (4,679) 2,448

Carrying value of interest bearing liability net (proceeds)/repayments (4,893) 2,194

Carrying value of debt related instruments settlements/(proceeds) 677 –

Carrying value of cash management related instruments (proceeds)/settlements (331) (378)

Fairvaluechangeonhedgedloans

803 1,286

Fairvaluechangeonhedgedderivatives

(691) (1,277)

Foreigncurrencyexchangeratechangesoncashandcashequivalents (134) (458)

Leaseadditions(excludingleasesassociatedwithindex-linkedfreightcontracts) (472) (736)

Acquisitionofsubsidiariesandoperations

(1,111) –

Divestmentanddemergerofsubsidiariesandoperations – 492

Other (2) 217

Non‑cash movements (1,607) (476)

Net debt at the end of the period (11,166) (333)

1 TheGrouphedgesagainstthevolatilityinbothexchangeandinterestratesondebt,andalsoexchangeratesoncash,withassociatedmovementsinderivativesreportedin

Otherfinancialassets/liabilitiesaseffectivehedgedderivatives(crosscurrencyandinterestrateswaps),inaccordancewithaccountingstandards.Formoreinformationrefer

toFinancialStatementsnote24‘Financialriskmanagement’.

2 US$1,111millionofInterestbearingliabilitieswereacquiredon2May2023aspartoftheacquisitionofOZMineralsLtd.ExcludesUS$104millioncashacquiredwhichis

includedinNetinvestingcashflows.

Dividends

Ourdividendpolicyprovidesforaminimum50percentpayoutofUnderlyingattributableprofit(Continuingoperations)ateveryreportingperiod.

TheminimumdividendpaymentforthesecondhalfofFY2023wasUS$0.67pershare.TheBoarddeterminedtopayanadditionalamountofUS$0.13

pershare,takingthefinaldividendtoUS$0.80pershare(US$4.1billion).Intotal,cashdividendsofUS$8.6billion(US$1.70pershare)havebeen

determinedforFY2023.

Western Australia Iron Ore

Marble Bar

Orebody 18

Newman

East

Yandi

Mining Area C

South Flank

Newman West

Jimblebar

Port Hedland –

Newman Rail Line

Goldsworthy

Rail Line

Chichester

Deviation

Finucane Island

Karratha

Great

Northern

Highway

Yarrie

Nimingarra

South Hedland

Karijini

National

Park

Nelson Point

Port Hedland

Western

Australia

Existing

operations

Non-operational

mines

Port

24 BHP Annual Report 2023

5.1 Minerals Australia

MineralsAustraliaincludesoperatedassetsinWesternAustralia,QueenslandandNewSouthWales,focusedonironore,metallurgicalcoal,

nickelandenergycoal.ThecommoditiesproducedbyourMineralsAustraliaassetsaretransportedbyrailandroadtoportandexportedtoour

globalcustomers.

5 Our assets

Iron ore

Western Australia Iron Ore

Overview

WesternAustraliaIronOre(WAIO)isanintegratedsystemoffour

processinghubsandfiveopen-cutoperationalminesinthePilbararegion

ofnorthernWesternAustralia,connectedbymorethan1,000kilometresof

railinfrastructureandportfacilities.

WAIO’sPilbarareservebaseisrelativelyconcentrated,allowing

developmentthroughintegratedmininghubsconnectedtotheminesand

satelliteorebodiesbyconveyorsorspurlines.Thisapproachseeksto

maximisethevalueofinstalledinfrastructurebyusingthesameprocessing

plantandrailinfrastructureforseveralorebodies.

Oreiscrushed,beneficiated(wherenecessary)andblendedatthe

processinghubs–MtNewmanoperations(whichhasourbeneficiation

plant),Yandi,MiningAreaCandJimblebar–tocreatelumpandfines

productsthataretransportedalongthePortHedland–MtNewmanrailline

totheFinucaneIslandandNelsonPointportfacilitiesatPortHedland.

TherearefourmainWAIOjointventures(JVs):MtNewman,Yandi,Mt

Goldsworthy(whichincludestheSouthFlankminingarea)andJimblebar.

BHP’sinterestineachis85percent,withMitsuiandITOCHUowning

theremaining15percent.Thejointventuresareunincorporated,

exceptJimblebar.

BHP,Mitsui,ITOCHUandPOSCOarealsoparticipantsinthePOSMAC

JV.BHP’sinterestinPOSMACis65percent.TheorefromthePOSMAC

JVissoldtotheMtGoldsworthyJV.

AlloreistransportedontheMtNewmanJVandMtGoldsworthyJV

raillines.TheNelsonPointportfacilityisownedbytheMtNewmanJV

andtheFinucaneIslandfacilityisownedbytheMtGoldsworthyJV.

On7September2021,BHPreceivedregulatoryapprovaltoincrease

ourexportcapacityatWAIO’sPortHedlandoperationsupto330million

tonnesperannum(Mtpa)(100percentbasis).Wearecurrentlystudying

expansionalternativesforgrowthto330Mtpawiththefeasibilitystudy

expectedtobecompletedinCY2025.

Ournear-termfocusremainsonstableproductionof290Mtpaofironore.

Successfultie-inofcapitalprojects,includingtheportdebottlenecking

project,isexpectedtoenablegrowthinexcessof305Mtpainthe

mediumterm.

Key developments in FY2023

WAIOachievedrecordproductionof253milliontonnes(Mt)or285Mtona

100percentbasis,reflectingcontinuedstrongsupplychainperformance,

includingrailperformanceandincreasedcardumperutilisation.

SouthFlankremainsontracktorampuptofullproductioncapacityof

80Mtpa(100percentbasis)bytheendofFY2024.

SouthFlankmininghastransitionedtofullautonomoushaulage.

Themine’s41Komatsu903Etrucksand185piecesofancillaryequipment

havebeenfittedwithautomationkitsandarefullyoperationalacrossthe

mine’sautonomousoperatingzones.SinceMarch2022,wehavedelivered

morethan3,000trainingmodulestohelpourpeopleupskillintonewroles,

bothon-siteandinourremoteoperationscentreinPerth.Thistraining

helpsensureeveryoneunderstandsandcanworksafelyinandaroundour

autonomousfleet.

Yandicontinuesitsend-of-liferampdownandisexpectedtoprovide

supplychainflexibilitywithalowerlevelofproductiontocontinuefora

fewyears.

TheShiploaderAutomationProjecthascontinuedtoseesuccesswiththe

automationlargelycompleteontwoshiploadersandworkisadvancing

withautomationequipmentinstalledonsevenofBHP’seightshiploaders.

TogetherwithautonomoushaulagerolloutsatSouthFlankandNewman

West,theseinitiativesareexpectedtodeliversignificantsafety,production

andcostimprovementsaswellasnewjobanddevelopmentopportunities.

ThePortDebottleneckingProject1isontrackforcompletioninCY2024

withmajormilestonesachievedtodate,includingthesafeandsuccessful

completionofthestacker6upgradeanderectionofthebucketwheel

reclaimer11inthesouthyard.

BHPsignedanagreementwithBPAustraliaforatrialtoassess

hydrotreatedvegetableoil(HVO)performance,suitabilityandGHG

emissionreductioncapabilityinminingequipmentatourYandioperations.

The trial has provided valuable insight and knowledge in renewable

dieselandwillbeusedtoevaluatehowrenewabledieselmaybea

practicalcomplementarytransitionpathwaytosupportBHP’soperational

decarbonisationplan.

Collinsville

Mackay

Bowen

Dalrymple

Bay

BMA Hay Point

Coal Terminal

Daunia

Peak Downs

Dysart

Blackwater

Emerald

Rockhampton

Gladstone

Tanna

Saraji

Moranbah

Broadmeadow

Goonyella

Riverside

Caval

Ridge

North Queensland

Export Terminal

Queensland,

Australia

BMA Mine

Rail

Terminal

BMA Terminal

Newcastle

Maitland

Singleton

Cessnock

Quirindi

Gunnedah

Tamworth

Mt Arthur

Muswellbrook

NSW,

Australia

NSWEC

Port

Rail

BHP Mitsubishi Alliance (BMA) NSW Energy Coal

Operating and Financial Review Governance Financial Statements Additional Information

BHP Annual Report 2023 25

Operating and Financial Review

Coal

BHP Mitsubishi Alliance

Overview

BHPMitsubishiAlliance(BMA)(BHPownership:50percent)operates

sevenmetallurgicalcoalmines–GoonyellaRiverside,Broadmeadow,

Daunia,PeakDowns,Saraji,BlackwaterandCavalRidgeintheBowen

Basin,Queensland.BMA’sminesareopencut,exceptfortheBroadmeadow

undergroundlongwalloperation.AsmallproportionofBMA’sproductionis

soldasenergycoal.BMAhasaccesstoinfrastructure,includingamodern,

multi-userrailnetwork,andownsandoperatesitsowncoal-loadingterminal

atHayPoint,nearMackay.BMAhascontractedcapacityattwoothermulti-

userportfacilities–thePortofGladstone(RGTannaCoalTerminal)and

DalrympleBayCoalTerminal(DBCT).InFebruary2023,weannounced

togetherwithMitsubishiDevelopmentPtyLtdourintentiontopursueoptions

todivesttheDauniaandBlackwatermines.Theprocessforthispotential

divestmentisprogressinginlinewithourplans.

Key developments in FY2023

BMAproductionof29Mt(58Mtona100percentbasis)wasinlinewith

thepriorperiod.Theslowdowninproductionresultingfromthesignificant

wetweatherexperiencedinthefirstthreequarterswasoffsetbystrong

underlyingoperationalperformance,inparticular,continuedimprovement

intruckproductivityatGoonyellaandDauniafollowingthecompletionof

theirtransitionstoautonomousfleet.Productionfortheperiodwasfurther

supportedbyadrawdownofrawcoalinventoryandimprovedlabour

availabilitycomparedtothepriorperiod.

WiththefullautomationofBMA’sDauniaandGoonyellatruckfleetscomplete,

(thelatterbeingthelargestautonomoustruckfleetusedatanoperatingcoal

mineintheworld)thesafetyandproductivitybenefitsassociatedwiththese

transformationsarebeingrealisedbyBMA.Onsafety,ourhigh-potential

vehicleinteractioneventsaredown48percentatDauniaandGoonyella

highlightingthecompellingcaseforautomation.Withourteamstrainedand

continuingtobuildfurthercapabilityinthenewrolesrequiredbyautomation,

significantproductivityimprovementisbeingdeliveredacrossbothoperations

(withGoonyellaachievingitshighestevertruckhoursinMay2023)translating

tomoreproductivematerialmovementwithfurtherupsidepotential.

Duringtheyear,BMAcontinuedwiththefabricationandinstallationofa

replacementberthstructureandshiploaderatHayPointCoalTerminal.

Theprojectiswelladvancedandtheresilienceoftheshiploadertosignificant

weatherandmajorcycloneeventshasimproved.Theprojectisontrackto

commissionthereplacementberthstructureandshiploaderinQ1FY2024.

Whileweintendtocontinuetoinvestintheproductivityofourexistingassets,

BMAisnotmakingsignificantnewinvestmentsinQueenslandgiventhe

changestotheroyaltyregimeimposedbytheStateGovernmentinFY2023,

whichhaveincreasedriskandreducedcompetitivenessofinvestmentsin

thestate.

New South Wales Energy Coal

Overview

NewSouthWalesEnergyCoal(NSWEC)(BHPownership:100percent)

comprisestheMtArthurCoalopen-cutenergycoalmineintheHunterValley.

IthasaccesstoinfrastructureintheHunterRegion,includingamulti-userrail

networkandcoalloadingterminalaccessatthePortofNewcastlethrough

NewcastleCoalInfrastructureGroup(BHPownership:28percent)andPort

WaratahCoalServices.

On16June2022,weannouncedwewouldretainNSWECinourportfolio,

seektherelevantapprovalstocontinueminingbeyondthecurrentconsent

thatexpiresattheendof2026andproceedwithamanagedprocesstocease

miningattheassetbytheendofFY2030.Continuationofminingtotheendof

FY2030isintendedtoprovidethetimetoworkwithourpeopleandthelocal

communityonanequitablechangeandtransitionapproachaswellasthetime

toplanandexecutethenecessaryworksforapositivelegacyofBHPminingin

theHunterValley.

Key developments in FY2023

NSWECproductionincreasedby3percentto14.2Mtdrivenbyan

improvementinweatherconditionsinthesecondhalfandanupliftintruck

productivitycomparedtothepriorperiod.Additionaldeployedcapacityinto

anewminingareaalsoresultedinanupliftinprimestrippingvolumes.

ProductionforFY2024isexpectedtobebetween13and15Mt.

Higher-qualityproductsmadeup77percentofsales,comparedto89per

centinthepriorperiod,reflectingtheimpactsofthechangeinexportmarket

conditionsandthecommencementofdomesticsalesundertheNewSouth

WalesGovernmentCoalMarketPriceEmergencyDirections(Directionsfor

CoalMines)intheJune2023quarter.ThereservationallocationforFY2024is

expectedtobeatleast0.7MtinlinewiththeDirectionsforCoalMines.

TheNewSouthWalesParliamentpassedlegislationinlateDecember2022

amendingtheEnergyandUtilitiesAdministrationAct1987togivetheNew

SouthWalesGovernmentpowerstodeclarea‘coalmarketpriceemergency’

andimposeapricecaponcoalusedinNewSouthWalespowergenerators.

Thesepowerswereenactedimmediately(foraperiodfrom22December

2022until30June2024)forexistingcoalproducerswhosolddomesticallyand

werethenextendedon30January2023toincludeexport-onlycoalproducers

(includingNSWEC).

NSWECcommenceddeliveringitsallocationof0.175Mtperquarteras

prescribedintheDirectionsforCoalMinesinApril2023.AsNSWEC’scostof

productionexceedsthepricecapprescribedundertheDirections,NSWEC

appliedforahighercappriceutilisingtheprocessandguidanceprovidedby

theNewSouthWalesGovernmentandtheAustralianEnergyRegulator(AER),

whichwasgrantedinJune2023.

Mt Keith

West

Musgrave

Cliffs

Leinster

Mt Keith Satellite

(Yakabindie)

Albany

Ravensthorpe

Kambalda

Concentrator

Newman

Fremantle

Geraldton

Perth

Kwinana Refinery

Kalgoorlie Smelter

Western

Australia

Nickel West

Port

Highway

Nickel West

26 BHP Annual Report 2023

5 Our assets continued

Nickel

Nickel West

Overview

NickelWest(BHPownership:100percent)isafullyintegratednickel

businesslocatedinWesternAustralia,withthreestreamsofconcentrate.

Itcomprisesopen-cutandundergroundmines,concentrators,asmelter

andrefinery.NickelWestownsthemajorityoftenementsofknown

resourceintheAgnew-WilunabasininWesternAustralia.

DisseminatedsulphideoreisminedattheMtKeithopen-pitoperationand

MtKeithSatellitemine(Yakabindie)andcrushedandprocessedon-site

toproducenickelconcentrate.NickelsulphideoreisminedattheCliffs

andLeinsterundergroundminesandprocessedthroughaconcentrator

anddryeratLeinster.AconcentratorplantinKambaldaprocessesoreand

concentratepurchasedfromthirdparties.

ThethreestreamsfeedtheKalgoorlienickelsmelter,whichusesaflash

furnacetoproducenickelmatte.TheKwinananickelrefinerythenturns

thisintonickelpowder,briquettesandnickelsulphate.

Key developments in FY2023

NickelWestproductionincreasedby4percentto80kilotonnes(kt)dueto

anincreasedproportionofconcentrateandmatteproductsandinventory

drawdowns.Thiswaspartiallyoffsetbytheslowerthanplannedrampupof

therefineryfollowingplannedmaintenanceintheDecember2022quarter

andaheavyraineventattheMtKeithoperationsinearlyApril2023

impactingmineprogression.

Duringtheyear,NickelWestexperiencedongoingissueswiththequality

andvolumeoforedeliveriesfromMincorResourcescontaininghighlevels

ofarsenic,andinMarchadviseditwouldnolongeracceptoff-specification

product.Inthesecondhalf,NickelWestpurchasedmorethird-party

productscomparedtothefirsthalf,includinghighercostthird-party

concentratetooffsettheimpactoftheoresupplyissues.

InconjunctionwithNickelWest,TransAltahascompletedtheconstruction

oftheNorthernGoldfieldsSolarProject,alarge-scale,off-gridmining

solarandbatteryenergystoragesystem,tohelppowerNickelWest’sMt

KeithandLeinsteroperations.TheprojectincludesasolarfarmatMount

KeithandasolarfarmandbatteryenergystoragesystematLeinster.

Early-stageprojectcommissioningbeganintheJune2023quarterwith

energisationdueforcompletioninAugust2023.Theprojectwillreduce

Scope2emissionsandisakeydeliverableinNickelWest’sPathtoNet

Zerostrategy.

West Musgrave

Overview

TheWestMusgraveProject(BHPownership:100percent;acquiredas

partofOZMinerals)isagreenfieldnickelandcopperprojectlocatedon

NgaanyatjarraCountryintheWestMusgraveRangesofWesternAustralia,

approximately1,300kilometresnortheastofPerthand1,400kilometres

northwestofAdelaide,neartheintersectionofthebordersofWestern

Australia,SouthAustraliaandtheNorthernTerritory.

Key developments in FY2023

AfinalinvestmentdecisionwastakeninSeptember2022withconstruction

commencingintheDecember2022quarter(priortotheacquisitionof

OZMineralsbyBHP).Initialprojectactivitiesfocusedonthecontinued

recruitmentofprojectexecutionandoperationsreadinesspersonnel,

procurementofcertainlong-leaditems,executionofkeycontracts

andcriticalpathon-siteactivities.Siteactivitieshaveprogressed

safely,includingthecommencementofbulkearthworkstoestablish

keyinfrastructuresuchasthemineralsprocessingplantandliving

hub.Otherkeyactivitiesincludequarryoperations,mobilisationand

commissioningofconcretebatchplantfacilitiesaswellasinstallationof

theconstructionvillageandfacilities.

Existing

operations

Project

OZ Minerals

BHP

transmission

line

South Australia

Prominent Hill

Olympic Dam

Oak Dam

Carrapateena

~180km

Copper South Australia

Operating and Financial Review Governance Financial Statements Additional Information

BHP Annual Report 2023 27

Operating and Financial Review

5.2 Copper South Australia

CopperSouthAustraliacomprisessurfaceandundergroundminingoperationsinoneoftheworld’smostsignificantcopper,gold,silveranduranium

basins.CopperSouthAustraliawasformeduponouracquisitionofOZMineralsinMay2023andcombinesourOlympicDamoperatedassetwiththe

acquiredoperatedassetsofCarrapateenaandProminentHill.TheundergroundminingandconventionalcrushingoperationsofCarrapeteenaand

ProminentHillproducecopperconcentrateandarelocatedincloseproximitytotheminingandintegratedcrushing,grinding,concentrating,smeltingand

refiningoperationsofOlympicDam,whichproducescoppercathode.ThecommoditiesproducedbyCopperSouthAustraliaaretransportedbyroadand

railtoourdomesticcustomersandviatheAdelaideandWhyallaportstobeexportedtoourglobalcustomers.

Copper

Olympic Dam

Overview

LocatedonKokathaCountryintheGawlerCraton,SouthAustralia,Olympic

Dam(BHPownership:100percent)isoneoftheworld’smostsignificant

depositsofcopper,gold,silveranduranium.Itcomprisesundergroundand

surfaceoperationsandisafullyintegratedprocessingfacilityfromoretometal.

Oreminedundergroundishauledbyanautomatedtrainsystemtocrushing,

storageandorehoistingfacilitiesortruckeddirectlytothesurface.

OlympicDamhasafullyintegratedmetallurgicalcomplexwithagrinding

andconcentratingcircuit,ahydrometallurgicalplantincorporatingsolvent

extractioncircuitsforcopperanduranium,acoppersmelter,acopper

refinery,includinganelectro-refineryandanelectrowinning-refinery,anda

recoverycircuitforpreciousmetals.

Key developments in FY2023

OlympicDamachievedarecordcathodeproductionoutcomeunderBHP

operatorshipof212kt,primarilydrivenbyrecordconcentratorandsmelter

performance.Recordtotalmaterialmilledwasachievedat10.8Mt(10.5Mt

FY2011)andrecordconcentratesmeltedwasachievedat508kt(471

ktFY2016).Thestrongplantperformancewasdeliveredfollowingthe

successfulmajorsmeltermaintenancecampaigninFY2022andthrough

debottleneckingprogramsofexistingfacilities.Recordgoldproduction

wasalsodeliveredinFY2023at186thousandtroyounces(koz)(146

kozFY2021).

TheundergroundminecontinuestodevelopfurtherintotheSouthern

MineArea,with~65percentoftotaloreproductioncurrentlyfromthispart

ofthemine.Averagecoppergraderemainsstrongat2.04percentand

investmentoverthepastfewyearshasenabledmineperformancetoliftto

9.3Mt(8.8MtFY2022).Theshort-termfocusisonoptimisingoperational

performanceanddebottleneckingexistingfacilitiestofurtherimprove

productionperformance.

OlympicDamsignedarenewablePowerPurchaseAgreement(PPA)with

Neoen,whichisexpectedtomeethalfofOlympicDam’selectricityneeds

fromFY2026basedoncurrentforecastdemand.

On29March2023,BHPreceivedenvironmentalapprovalfromtheSouth

AustralianStateGovernmentforOakDam’snextphaseexploration

program.Resourcedefinitiondrillinghassinceincreasedtoninedeep

directionaldiamonddrillrigsontheexplorationlicence(EL)attheendof

FY2023with11rigsplannedbyNovember2023.BHPisalsoinstalling

a150-roomaccommodationvillageandsupportfacilitiesadjacenttothe

drillingtargetarea.

Carrapateena

Overview

Carrapateena(BHPownership:100percent;acquiredaspartofOZ

Minerals)isanundergroundcopper,goldandsilverminelocatedon

KokathaCountryintheGawlerCraton,SouthAustralia,approximately180

kilometresbyroadsoutheastofOlympicDamand160kilometresnorthof

PortAugusta.

UndergroundminingatCarrapateenaisbysub-levelcaving.

Conventionalcrushing,grindingandflotationproducescopperconcentrate.

Key developments in FY2023

Inthetwomonthssinceacquisition,Carrapateenaproduced11.7ktof

copperconcentrate.

TheCarrapateenacavesafelypropagatedtosurfaceattheendofCY2022

(priortotheacquisitionofOZMineralsbyBHP),whichwasanimportant

de-riskingeventforthemine.

Progresswasalsomadeonconvertingthebottomhalfofthe

Carrapateenaminefromasub-levelcavetoablockcave,withtheaimof

unlockingthemine’spotentialtobeamultigenerational,lowquartilecash

costproducingprovince.Significantprogresswasmadeduringtheyear

onenablingundergroundinfrastructure,suchascrushersandventilation.

ThetailingsstoragefacilitymainembankmentStage2liftwascompleted

andanewregrindmillwascommissioned.

Prominent Hill

Overview

ProminentHill(BHPownership:100percent;acquiredaspartofOZ

Minerals)isanundergroundcopper,goldandsilverminelocatedon

AntakirinjaCountryintheGawlerCraton,SouthAustralia,200kilometres

northwestofOlympicDam.

ProminentHillwasfirstdevelopedasanopen-pitmine,however,mining

activitiesarecurrentlyprincipallyundergroundviasub-levelopenstoping.

Conventionalcrushing,grindingandflotationproducecopperconcentrate.

Key developments in FY2023

Inthetwomonthssinceacquisition,ProminentHillproduced8.2ktof

copperconcentrate.

Tuuka,themainaccessdeclinethatenablesshaftsinking,continuedto

progress.Shaftworksadvanced,includingshaftpre-sinkingwiththepilot

holecompleteandbackreamingunderway.Headframeliftisanticipatedin

earlyFY2024.Theinstallationofundergroundprimaryventilationfanswas

completed.Workonthepermanentrefrigerationworksadvancedwiththe

supplyandinstallationofthecondenserunitsandsupportingstructure.

28 BHP Annual Report 2023

5 Our assets continued

Copper

Potash

5.3 Minerals Americas

The Minerals Americas asset group includes projects, operated assets and non-operated joint ventures in Canada, Chile, Peru, the United States and Brazil.

Our operated copper assets in the Americas, Escondida and Pampa Norte, are open-cut mines that produce copper concentrate and copper cathodes.

The non-operated assets in the Minerals Americas portfolio are open-cut mines that produce copper (Antamina) and iron ore (Samarco). We have a 100

per cent interest in the Jansen Potash Project in Canada and a 45 per cent interest in the Resolution Copper Project in the United States. The commodities

produced by our Minerals Americas assets are transported to port by pipeline, rail or road and exported to customers around the world.

CHILE

BOLIVIA

ARGENTINA

PERU

Iquique

Pacific

Ocean

Tocopilla

Antofagasta

Mejillones

Calama

Pica

Spence

Minera Escondida

Cerro

Colorado

Chile

Mine

Escondida and Pampa Norte

Regina

Weyburn

Assiniboia

Young

Melville

Wolverine

Burr

Boulder

Moose Jaw

Prince Albert

Yorkton

Jansen

Saskatoon

BHP project

BHP mineral

leases

Saskatchewan,

Canada

Jansen Potash Project

Escondida

Overview

Escondida (BHP ownership: 57.5 per cent) is a leading producer of copper

concentrate and cathodes, with by-products including gold and silver and

cathodes. It is located in the Atacama Desert in northern Chile.

Escondida’s two pits feed three concentrator plants, as well as two

leaching operations (oxide and sulphide).

Key developments in FY2023

Escondida copper production increased by 5 per cent to 1,055 kt primarily

due to higher concentrator feed grade of 0.82 per cent, compared to 0.78

per cent in FY2022. The positive impact of the higher grade was partially

offset by the impact of road blockades across Chile as part of civil unrest in

the December 2022 quarter, which reduced availability of some key mine

supplies. Full-year production came in at the low end of revised guidance

largely as a result of measures implemented to manage geotechnical events

in a high-grade section of the Escondida pit. These included a resequencing

of the mine plan, resulting in lower-than-anticipated volumes of mined ore and

increased processing of lower grade stockpiles through the concentrators.

Escondida Cathodes was awarded the Shingo prize for operational excellence

by the Shingo Institute – an organisation that helps companies achieve

operational excellence through the principles in the Shingo Model – Cultural

Enablers, Continuous Improvement, and Enterprise Alignment.

Pampa Norte

Overview

Pampa Norte (BHP ownership: 100 per cent) consists of two assets in the

Atacama Desert in northern Chile – Spence and Cerro Colorado.

Spence produces copper cathodes and copper concentrate, with by-

products including gold, silver and molybdenum.

Cerro Colorado produces copper cathodes. Its current environmental

licence expires at the end of CY2023.

Key developments in FY2023

Pampa Norte copper production increased by 3 per cent to 289 kt, including

a record 240 kt at Spence and 49 kt at Cerro Colorado. This was largely

Jansen Potash Project

Overview

The Jansen Potash Project (BHP ownership: 100 per cent) is located about

140 kilometres east of Saskatoon, Canada.

Jansen’s large resource provides the opportunity to develop the project

in stages, with Jansen Stage 1 (Jansen S1) expected to produce

approximately 4.35 Mt of potash per annum on completion, which is

expected in late CY2026, and sequenced brownfield expansions of up to

12 Mtpa (approximately 4 Mtpa per stage).

BHP holds mineral leases covering around 9,600 square kilometres in the

Saskatchewan potash basin.

Key developments in FY2023

Jansen S1 is tracking in line with our plan and was 26 per cent complete

as at 30 June 2023. During FY2023, we completed all piling activities for

the mill and storage facilities. The feasibility study for Jansen Stage 2

continues to progress and is on track to be completed during FY2024.

a result of higher concentrator throughput at the Spence Growth Option

(SGO), partially offset by lower production at Cerro Colorado as it transitions

towards closure.

We continue to closely monitor the previously identified anomalies in

the Spence tailings storage facility (TSF) and are aiming to ensure safe

operational conditions. In order to remediate the anomalies, changes to the

original TSF design will be required and further study is being undertaken.

In collaboration with the Engineer of Record, Independent Tailings Review

Board and expert consultants, work is ongoing to finalise the schedule, scope

and cost of the TSF design, including through studies, site characterisation

and modelling. Production guidance at Spence remains subject to the

remediation of the TSF anomalies.

Cerro Colorado is transitioning to closure by December 2023. Operating costs

at Cerro Colorado are expected to be approximately US$70 million and

US$45 million for the December 2023 and June 2024 half years, respectively.

We are exploring options to extend the life of Cerro Colorado, including through

the use of leaching technologies and desalinated water, which could see the

operation restart in approximately 2030, subject to environmental approvals.

Phoenix

Tucson

USA

MEXICO

Oak Flat

Resolution Copper

Mica Mountain

Mt Graham

Turkey Creek

East Clear Creek

Tangle Creek

Cave Creek

Appleton Ranch

Dripping Springs

Kitt Peak

Mt Lemmon

Resolution Copper

Route

Arizona,

USA

Punta

Lobitos

Huarmey

Lima

Huari

Huaraz

San Marcos

0 50km

Antamina

mine

Huari

Province,

Ancash,

Peru

Antamina mine

Pipeline

Port

Operating and Financial Review Governance Financial Statements Additional Information

BHP Annual Report 2023 29

Operating and Financial Review

Copper

Antamina

Overview

Antamina(BHPownership:33.75percent)isalarge,low-costcopperandzinc

mineinnorthcentralPeruwithby-products,includingmolybdenumandsilver.

AntaminaisoperatedindependentlybyCompañíaMineraAntaminaS.A.

Key developments in FY2023

Antaminacopperproductiondecreasedby8percentto138kt(BHP

share)reflectinglowercopperfeedgrades,partiallyoffsetbyhigher

throughput.Zincproductionwas1percenthigherat125kt(BHPshare)

reflectinghigherthroughput.

InFY2022,AntaminasubmittedtoPeruvianauthoritiesaModificationof

theEnvironmentalImpactAssessmenttosustainminelifefrom2028to

2036entirelywithinAntamina’scurrentoperationalarea.DuringFY2023,

Antaminacontinuedtomonitortheprogressofthepermittingprocessand

providedsupplementaryinformationtothePeruvianauthoritiesasrequired.

Resolution Copper

Overview

ResolutionCopper(BHPownership:45percent),locatedintheUSstate

ofArizona,isoperatedbyRioTinto(55percentownershipinterest).

ResolutionCopperisoneofthelargestundevelopedcopperprojects

intheworldandhasthepotentialtobecomeoneofthelargestcopper

producersinNorthAmerica.TheResolutionCopperdepositliesmorethan

1,600metresbeneaththesurface.

Key developments in FY2023

DuringFY2023,Resolutioncontinuedtheengineeringandpermitting

phaseoftheproject.Theprojectissubjecttoafederalpermittingprocess

ledbytheUSForestService.TheUSForestServicepublishedaFinal

EnvironmentalImpactStatementinJanuary2021,whichwasrescindedin

March2022toallowadditionalenvironmentalanalysisandconsultationwith

NativeAmericanTribes.TheUSForestServicehasindicatedthereisno

timelineforrepublicationoftheFinalEnvironmentalImpactStatementand

theprocessissubjecttothreelawsuits,whichhavebeenfiledagainstthe

USForestServiceonbehalfofNativeAmericanTribemembersandnon-

governmentorganisations.Resolutionhaspubliclystateditscommitment

todeepeningongoingengagementwithNativeAmericanTribesandother

stakeholderswhilealsocollaboratingtocreatesharedvalueopportunities.

TheUSGovernmenthascontinuedtoconsultwithNativeAmericanTribes.

Throughtheprocessofconsultation,theUSGovernmenthasidentified

areasofculturalheritageandmitigationstrategies.Theconsultationprocess

hasledtochangesintheprojectdesigntomitigatepotentialimpacts.

Antamina Resolution Copper

Non‑operated minerals joint ventures

Iron ore

Samarco

Overview

Samarco(BHPownership:50percent)comprisesamineandthree

concentratorslocatedintheBrazilianstateofMinasGerais,andfour

pelletplantsandaportlocatedinAnchietainthestateofEspíritoSanto.

Three400-kilometrepipelinesconnecttheminesitetothepelletising

facilities.SamarcoisoperatedindependentlybySamarcoMineração

S.A.Samarco’smainproductisironorepellets.Pelletsareindependently

marketedbySamarcoandsoldtocustomersaroundtheworld.

Samarco’soperationsweresuspendedinNovember2015afterthe

Fundãodamfailure.SinceitsrestartinDecember2020,80percent

ofthetailingsgeneratedarefiltratedanddrystacked,and20percent

aredepositedinaconfinedpitenablingSamarcotooperatewithouta

conventionaltailingsdamstructure.

Key developments in FY2023

Samarcoproduced4.5MtofironorepelletsandorefinesinFY2023

(BHPshare).Samarcoiscurrentlyoperatingat26percentofitstotal

26Mtpaproductioncapacityandhasshippedmorethan20Mtofpellets

andfinessincetheresumptionofoperationsinDecember2020.InJune

2023,Samarcoreceivedinvestmentapprovaltoincreaseitsproduction

capacitytoapproximately60percentofitsfullproductioncapacityby

earlyCY2025.Thiswillinvolverestartingthesecondconcentratorandthird

pelletisingplant,expandingtheexistingfiltrationplantandincreasingthe

minefleet.

Samarcohasbeenprogressivelydecommissioningitsupstreamtailings

damstructuresinaccordancewithBrazilianlegislation.DuringFY2023,

decommissioningworksforthesmallerofthetwotailingsdams,the

GermanoPitdam,werecompleted.Theprogressivedecommissioningof

theremainingupstreamtailingsdamstructure,theGermanoMaindam,is

plannedforcompletionbyFY2029.Thesestructureshavebeencertified

byindependentthirdpartiesasstableandarefollowinglocalstabilityand

monitoringrequirements.

SamarcoiscontinuingbroaderstudiestoreviewsolutionsforSamarcoto

operatewithouttailingsdamsbeyondFY2030.Formoreinformationonthe

FundãodamfailureandtheresponserefertoOFR7.

30 BHP Annual Report 2023

LNG bulk carrier Mount Tourmaline

5 Our assets continued

5.4 Commercial

BHP’sCommercialfunctionseekstomaximisecommercialandsocialvaluewhileminimisingcostsacrosstheend-to-endsupplychain.Thefunctionis

organisedaroundcoreactivitiesinourvaluechain,supportedbycreditandmarketriskmanagementandstrategy,planningandintegrityactivities.

Sales and Marketing

SalesandMarketingconnectsBHP’sresourcestomarketthrough

commercialexpertise,salesandoperationsplanning,customerinsights

andproactiveriskmanagement.Itpresentsasinglefacetomarketsacross

multipleassets,withaviewtorealisingmaximumvalueforourproducts

andsupportingsustainabilityinitiativesinourdownstreamsupplychain.

Maritime and Supply Chain Excellence

MaritimeandSupplyChainExcellencemanagesBHP’senterprise-wide

maritimetransportationstrategyandthecharteringofoceanfreighttomeet

BHP’sinboundandoutboundtransportationneeds.Itfocusesonsupply

chainexcellenceandsourcingcost-efficientmarinefreightinadditionto

partneringwithinthemaritimeecosystemoninitiativesintendedtosupport

reductionsintheGHGemissionintensityofBHP-charteredshippingofour

products.Italsoseekstomanagesupplychainriskbyvettingthesafety

performanceoftheshipsloadingBHPcargo.

Procurement

OurglobalProcurementteamconnectsassetteamsandsuppliersto

procurethegoodsandservicesusedbyourprojects,operatedassetsand

functionsglobally.Procurementpartnerswithoursupplierstooptimise

equipmentperformance,reduceoperatingcosts,optimiseworkingcapital

andgeneratesocialvalue.Throughinnovation,weworkwithsuppliers

tosupportreductionsintheGHGemissionintensityofinboundgoods

andservicesandtheoperationalGHGemissionsofouroperatedassets.

Procurementmanagessupplychainrisk,fosterssupplierinnovationand

looks to develop positive and enduring relationships with global suppliers

andlocalbusinessesinthecommunitieswhereweoperate.

Market Analysis and Economics

OurMarketAnalysisandEconomicsteamdevelopsBHP’sproprietary

viewontheoutlookforcommoditydemandandprices,aswellasourinput

costs,theworldeconomyandfinancialmarketsandtheimpactofclimate

change.TheteamworkswithourProcurement,MaritimeandSalesand

Marketingsub-functionstohelpoptimiseend-to-endcommercialvalue

andwiththePortfolioStrategyandDevelopmentandExternalAffairs

functionstoidentifyandrespondtolong-runstrategicchangesinour

operatingenvironment.

Governance Financial Statements Additional Information

BHP Annual Report 2023 31

Operating and Financial Review

6 Sustainability

Sustainability is key to our purpose of bringing people and resources together

to build a better world. We seek to achieve our purpose through collective

effort, including partnering with suppliers and customers to make our business

more sustainable and contribute to global sustainable development goals.

For more information on BHP’s approach to and definition of

sustainability refer to this OFR 6 and Additional information 10.4

6.1 Safety

A culture that embraces care and trust as core values is fundamental to

achieving improved outcomes.

Our highest priority is to protect the safety and wellbeing of our workforce

and the communities where we operate. Tragically, we lost two of our

colleagues in FY2023. We recognise the severity and impact of these events

and place importance on continuing to provide support to families, friends

and colleagues of Jody Byrne at Western Australia Iron Ore (WAIO) and

Nathan Scholz at Olympic Dam.

We continue to focus on building resilience within our safety systems

and processes, by identifying areas of organisational improvement and

strengthening our control environment.

Our leaders are also reinforcing that it is safe to speak up in their

engagements with our workforce in order for us to learn and improve.

We recently held a senior leadership conference dedicated to safety and

senior leaders cascaded key themes from the conference to their teams to

help re-emphasise the importance of working together to build and sustain a

strong safety culture.

The investigation into Jody Byrne’s death has been completed and findings

shared with industry peers. The Olympic Dam investigation into Nathan

Scholz’s death is ongoing. Through the investigations into these events, we

will seek to identify lessons that can be shared and applied across our whole

organisation to prevent or significantly reduce the likelihood and severity of

recurrence, including potential ongoing improvements to our risk framework

and underpinning culture.

We also recognise it is vital to learn from everyday successful work and from

others across the mining and other high-risk industries in our effort to learn

faster and improve our approach to workplace safety.

In FY2023, as part of our safe, inclusive and future-ready workforce social

value pillar, our criteria for reporting life-altering injuries and illnesses was

further developed.

Life-altering injuries and illnesses include cases that are serious at the point of

diagnosis as well as those cases that may initially be considered less severe

but may result in the prolonged inability to return to full duties. By measuring

this metric, we believe we can better focus our organisational efforts on

reducing these injuries and illnesses from occurring and improve our return-to-

work management strategies and workforce health and wellbeing.

Our safety performance

In FY2023 we recorded:

– two fatal incidents in which two colleagues lost their lives

– an increase of 13 per cent in the high-potential injury frequency rate from

FY2022. The highest number of events with potential for one or more fatalities

was related to vehicle and mobile equipment accidents. High-potential injury

trends remain a primary focus to assess progress against our most important

safety objective, eliminating fatalities

– an increase in total recordable injury frequency (TRIF) of 9 per cent from

FY2022. The highest number of recordable injuries was related to slips, trips

and falls for employees, followed by caught between objects. For contractors,

the highest number of recordable injuries was for caught between objects

– a consistent application of field leadership activities, which occurred at a

‘sustainable frequency rate’ of 9,383 activities per million hours worked

with over 1.6 million activities completed. Scheduled activities compared to

non-scheduled activities increased by 3 per cent from FY2022 and coaching

increased by nearly 3 per cent from FY2022

– four safety fines at our operated assets

We have a sustained focus on improving our management of risk, via our

existing programs and systems, such as:

– Fatality Elimination Program

– Integrated Contractor Management Program

– Field Leadership Program

We aim to continue to enhance the application of these programs and

systems in FY2024 and to continue to learn and improve. We greatly

value the opportunity to learn from and collaborate with others across our

industry and within similar high-risk work environments. An example of

this is our key role in supporting the International Council on Mining and

Metals (ICMM) in its work to encourage the development and adoption of

capable solutions across diesel particulate matter emission reduction and

the elimination of fatalities related to vehicle interaction.

Fatality Elimination Program

The tragic loss of two colleagues has amplified the importance of our Fatality

Elimination Program (FEL) even further. It is paramount that we learn and

improve from these tragic events and remain committed to our goal to have

no fatalities.

We are seeking to enhance the effectiveness of the Fatality Elimination Program

by operationalising our recent fatality investigation learnings. While BHP’s top

10 material risks are predominately associated with actual high-potential and

near miss events, which has driven the development of Fatality Elimination

Program control management plans at our assets, we recognise there are

ongoing improvement opportunities relating to the development, verification

and validation of critical controls for other material risks.

In FY2023 we:

– continued implementation of the five-year fatality elimination roadmap,

including the recommended sequencing of strengthened controls based

on effort, cost and near miss reduction impact

– continued our ongoing quarterly review routine of high-potential near miss

and actual events to ensure we remain focused on the relevant risks and

conditions that may increase the likelihood of accidents

– undertook an internal audit across Minerals Australia operated assets

(December 2022) to assess the adequacy of controls identified under

the respective Fatality Elimination Program plans. Key audit findings and

recommendations identified the opportunity to improve the approach to the

overall FEL program progress reporting and provision of supporting evidence.

A Minerals Americas operated assets audit is planned for FY2024

The fatality risk management framework will be reviewed to determine if there

are any opportunities for improvement in FY2024 following a review of the fatality

investigation findings.

Integrated Contractor Management Program

Our commitment to safety includes for the many thousands of contractors who

represent a large part of our total workforce.

Our Integrated Contractor Management Program is designed to make it safer

and easier for contractors to work with us. Introduced in FY2020, the program is

focused on building long-term mutually beneficial relationships, integrating and

simplifying processes and systems, and creating an inclusive, respectful and

Performance data – workforce health and safety

for FY2023

1,2

High-potential injury events

Year ended 30 June 2023 2022 2021 2020

High-potential injuries

4,7

30 24 33 42

Employees Contractors

High-potential injury frequency

0.03 0.04

Total recordable injury frequency (per million hours worked)

Year ended 30 June 2023 2022 2021 2020

Total recordable injury frequency

4.5 4.1 3.8 4.3

Employees Contractors

Total recordable injury frequency

1.01 0.81

1 Data excludes OZ Minerals.

2 Data excludes OZ Minerals exposure hours and Discontinued operations, as follows:

BHP Mitsui Coal (sale completed 3 May 2022) and operated assets in our Petroleum

business up to the date of the merger with Woodside (1 June 2022).

3 High-potential injury includes injuries with fatality potential. The basis of calculation

was revised in FY2020 from event count to injury count as part of a safety reporting

methodology improvement.

4 One additional event from FY2022 was reclassified to be a high-potential injury post

FY2022, updating the total from 23 to 24.

5 Employee and contractor frequency per 200,000 hours worked.

6 Combined employee and contractor frequency per 1 million hours worked.

7 OZ Minerals exposure hours and high-potential injuries are excluded from this

calculation. Since the acquisition of OZ Minerals on 2 May 2023, there have been

three high-potential injuries recorded at former OZ Minerals assets.

1 Data excludes OZ Minerals.

32 BHP Annual Report 2023

6 Sustainability continued

6.2 Our sustainability approach

Our approach to sustainability includes identifying opportunities to create a

positive contribution to society through social value. Our approach to social

value, including the targets and goals we have set for ourselves, is outlined

in OFR 6.5. We recognise our business interacts with a range of material

sustainability issue areas and governance of our approach to managing our

potential and actual impacts is key to operating more sustainably.

For information on governance of sustainability refer to OFR 6.3

Reporting standards and frameworks

We commit to a number of sustainability frameworks, standards and

initiatives and we disclose data both as required by law and according to the

requirements of those frameworks, standards and initiatives. This is detailed in

the BHP ESG Standards and Databook 2023.

The BHP ESG Standards and Databook 2023 is available at

bhp.com/sustainability

In FY2023, we engaged with government, standard setting regulatory bodies

and organisations on new standards or updates to existing standards and

investor-led initiatives including providing feedback to:

– the Global Reporting Initiative (GRI) on the Mining Sector Standard

exposure draft

– the Taskforce on Nature-related Financial Disclosures (TNFD) Forum

– the International Sustainability Standards Board (ISSB)

– the Australian Government’s initial consultation on climate-related

financial disclosure

caring workforce culture. Since its introduction, the program has standardised

roles and responsibilities of contract owners and promoted improved

partnerships with BHP service providers.

We undertook assurance and audit activities in FY2023, assessing controls

against the global Our Requirements for Contractor Management standard

and continued to use the contractor perception survey in parallel with our

employee perception survey.

Field Leadership Program

Leaders spending time in the field helps maintain safe operations. Our global

Field Leadership Program encourages the workforce to provide feedback to

their leaders about safety to reinforce an interdependent culture of safety.

It involves leaders engaging with workers in the field to drive a common

approach to improving health, safety and environment (HSE) performance.

The program helps verify that critical safety controls are in place, being applied

and are effective in managing risks that have the potential to result in fatalities.

In FY2023 we:

– continued to improve the quality of field leadership activities by increasing

coaching and delivery of field leadership engagements

– conducted field leadership activities to support the verification of risks that

have the potential to result in fatalities across our operated assets

– continued to embed the global, standardised field leadership procedure

designed to increase the effectiveness of field leadership activities across

the business

– leveraged predictive data analytics to initiate a ‘critical control observation

uplift program’ during the end of the calendar year holiday season, to focus

each respective operation on potential hot spots and blind spots

More information on safety is available at

bhp.com/safety

Our sustainability approach

To bring people

and resources

together to build

a better world

Our purpose

Purpose led

Our purpose underpins everything

that we do and is central to our

sustainability approach.

Strong foundations

Through Our Charter values, strategy

and operating model, we set the

direction for the way we do business.

Strong foundations are created

through meeting our compliance

obligations and operating within

social licence as managed through

Our Requirements standards, which

set the minimum standard for BHP,

opportunity and threat management,

and meeting the sustainability

standards that we commit to.

Social value

Building on strong foundations,

we aspire to create social value for

society that is purposeful, proactive,

mutually beneficial and respectful.

Governance Financial Statements Additional Information

BHP Annual Report 2023 33

Operating and Financial Review

Our Modern Slavery Statement 2023, prepared under the Australian

Modern Slavery Act (2018) and UK Modern Slavery Act (2015), provides

additional information regarding our management of modern slavery risks.

Our Modern Slavery Statement 2023 is available at

bhp.com/-/media/Documents/Investors/Annual-Reports/2023/230822_

bhpmodernslaverystatement2023

OZ Minerals integration

We are integrating the former OZ Minerals’ operations and functions into

our business, following our acquisition of OZ Minerals on 2 May 2023.

We will seek opportunities to learn from and leverage effective practices

from OZ Minerals as we integrate.

OZ Minerals Limited released its most recent Annual Report and

Sustainability Review in February 2023, which outlined its sustainability

performance during CY2022. Consistent with BHP, OZ Minerals adopted

the GRI Standards and the recommendations of the Taskforce on Climate-

related Financial Disclosures (TCFD) as the basis to prepare and report

its sustainability disclosures. OZ Minerals received reasonable assurance

over the energy and GHG emission data for its Australian assets and limited

assurance over selected sustainability information within its Annual Report

and Sustainability Review and 2022 Sustainability Review Databook.

In the identification of our material sustainability topics, we have included

consideration of the sustainability issues that OZ Minerals identified as

material for disclosure through its materiality assessment in 2022.

For more information refer to OFR 6.4

This Report includes the OZ Minerals sustainability-related data and

information that is required to be disclosed under legal and regulatory

requirements or necessary to meet applicable voluntary standards and

benchmarks. Specific OZ Minerals data and information are noted in certain

sections, such as workforce gender metrics and material climate-related

transition and physical risks, where expressly stated, but not otherwise.

During FY2024, we will focus on integrating and aligning OZ Minerals’ pre-

acquisition approach and relevant performance-related data into our sustainability

reporting and assurance processes to allow for more detailed disclosure across

the full suite of material sustainability topics in the BHP Annual Report 2024 and

supplementary materials (e.g. our ESG Standards and Databook).

For more information on OZ Minerals’ sustainability performance for

CY2022 refer to OZ Minerals’ 2022 Annual Report and Sustainability

Review and 2022 Sustainability Review Databook, published in February

2023, as well as OZ Minerals’ 2022 Modern Slavery Statement, which

was approved by the Board of OZ Minerals Limited on 5 April 2023 and

published on 1 May 2023

6.3 Sustainability governance

We define our approach to sustainability through Our Charter, which is governed

through the Our Requirements standards. These standards describe our

mandatory minimum performance requirements and provide the foundation to

develop and implement management systems at our operated assets.

The BHP Board has oversight of our approach to and delivery on sustainability

and is supported by each of its Committees. For more information on BHP’s

governance structure, including the work of the Board and each Committee,

refer to the Corporate Governance Statement.

For more information on the governance of climate change

refer to OFR 6.12

In March 2023, we expanded management’s Climate Change Steering

Committee to a Sustainability and ESG Steering Committee (SteerCo) with the

purpose of facilitating review of a broader range of cross-functional and strategic

issues relating to key sustainability and ESG topics. The key responsibilities of

the SteerCo relating to climate change have not changed from FY2022.

The membership of the SteerCo includes the Chief Legal, Governance and

External Affairs Officer, the Chief Operations Officer, the Chief Commercial Officer

and the Presidents of Minerals Americas and Minerals Australia from the Executive

Leadership Team (ELT) as well as sustainability and ESG leaders within BHP.

Matters considered by the SteerCo may also be subject to review or approval by

the ELT, and the Board or its Committees in accordance with their remits.

Prior to its expansion, the Climate Change SteerCo met twice in FY2023 and

the expanded Sustainability and ESG SteerCo met once during FY2023.

They discussed topics including our social value scorecard and preparation for

emerging mandatory climate-related reporting requirements.

6.4 Material sustainability topics

Annual sustainability materiality assessment

Each year we identify the sustainability topics most material to our business

partners and stakeholders. These considerations inform our approach

to sustainability.

In alignment with the recommendations of the GRI, we consider the actual and

potential negative and positive impacts of our business in order to determine our

material sustainability topics. As part of our assessment, we considered a broad

range of inputs, including BHP’s group priority and emerging risks, information

recorded in our internal event management system, our social value framework,

insights from interviews with senior leaders and subject matter experts across

the business and the sustainability issues OZ Minerals identified as material

for disclosure through its materiality assessment in 2022. We sought to ensure

our external partners’ and stakeholders’ perspectives informed our assessment

by including consideration of issues raised at our Annual General Meeting

and investor roundtables, industry sustainability standards and guidance,

sustainability-related regulatory focus areas, relevant media articles about our

impacts and input from the Forum on Corporate Responsibility. Our material

sustainability topics were reviewed by the Sustainability Committee.

For more information on our assessment refer to

bhp.com/sustainability

The material sustainability topics identified through this assessment are

shown against our social value pillars and are largely consistent with FY2022

as illustrated in the table on page 34.

Respecting human rights

We recognise sustainability topics, if not carefully managed, can adversely

impact people’s human rights.

Governance and capability

The basis for BHP’s human rights approach is an ongoing commitment

to operate in a manner consistent with the United Nations Guiding

Principles on Business and Human Rights (UNGPs) and the 10 UN Global

Compact Principles.

Our Human Rights Policy Statement details our commitment to respecting

human rights, including the additional issue-specific human rights standards

we seek to adhere to, as well as the systems and processes set out for

our people, business partners and other relevant parties. In FY2023, we

completed a review of the Human Rights Policy Statement, identifying an

opportunity to simplify its format and language to state our expectations for

human rights due diligence and other practices more clearly. The updated

Human Rights Policy Statement was approved by the Board in February 2023.

Our Code of Conduct (Our Code) which applies to everyone who works for

us, with us or on our behalf, and Our Code training covers our expectations in

relation to human rights.

Due diligence

We recognise our business activities may create human rights risks and

potential impacts across several different areas. In FY2023, all operated assets

and exploration regions completed human rights baseline studies, which seek to

provide an objective baseline of the external human rights context in the regions

where we operate. These studies include a review of the national and regional

human rights policies, frameworks and issues as well as analysis of priority

human rights risks and issues for the communities that host our operations, such

as labour conditions, environment, community wellbeing and Indigenous rights.

Building on the findings of the baseline studies, we are progressing Human Rights

Impact Assessments at all operated assets and exploration regions, expected

to be completed in FY2024. These assessments seek to compare asset and

exploration plans with the external context to identify and prioritise potential and

actual human rights risks, impacts and opportunities for management.

34 BHP Annual Report 2023

6 Sustainability continued

Social value

pillar

Material topic

Overview of potential and actual impacts

SDG index Read more

Decarbonisation

Climate change

We recognise climate change may pose risks to fundamental human rights, including

the rights to life, health, food and an adequate standard of living. We continue to work

towards our climate change targets and goals and the implementation of our climate

change adaptation strategy.

6.12 Climate change

Healthy

environment

Biodiversity and land management

The nature of our operations can have significant environmental impacts and those

impacts can adversely affect human rights.

6.13 Environment –

Biodiversity

Water

Access to safe, clean water is a basic human right and water is essential to maintaining

healthy ecosystems, cultural and spiritual values and sustaining economic growth.

Unmanaged or uncontrolled operational water-related risks have the potential to

adversely impact the health and safety of our employees, contractors and community

members, spiritual and cultural values, communities, environmental resources, BHP’s

legal rights to continue operations and compliance with regulations.

Indigenous

partnerships

Indigenous peoples

Many of our operations globally are located on or near Indigenous traditional lands and

we acknowledge that potential impacts of our operations may extend beyond direct

physical impacts and include impacts on intangible cultural heritage or on Indigenous

peoples’ culture and way of life.

Safe, inclusive

and future-ready

workforce

People

Our ambition is to have a workforce that is truly representative of the societies where we

operate, across attributes of indigeneity, gender, age, race, disability, sexuality, carer and

veteran status and the intersectionality between them.

Safety

The nature of our business is such that our workforce can be exposed to risks that can

impact their safety and long-term wellbeing.

Health

We recognise our working environments can impact and potentially expose our

workforce at our offices and operated assets to potential health and wellbeing impacts.

Sexual harassment

We acknowledge the presence of sexual harassment in the mining industry and BHP

considers it a material health and safety risk, harmful to impacted individuals, bystanders,

our stakeholders and our operations. Sexual harassment can also result in financial impacts

to economies through lost productivity, workforce turnover and other associated impacts.

Thriving,

empowered

communities

Community

Human rights of community members may potentially be impacted, including rights

related to freedom of expression and self-determination as well as economic, social and

cultural rights, such as health and wellbeing, work, adequate housing and water and

sanitation.

Responsible

supply chains

Value chain sustainability

How we manage our role and work with others in our value chain can have significant

positive or negative impacts on the economy, environment and people.

Other topics Sustainability governance

Appropriate oversight and management of key sustainability topics underpins our ability

to actively promote the positive impacts of our business while reducing the potential and

actual negative impacts.

Ethics and business conduct

Corruption can adversely impact the human rights of community members.

Digital security and data privacy

If not carefully managed, digital technologies can pose a risk to the promotion

and protection of human rights.

Tailings storage facilities

If not appropriately managed, tailings storage facility failures can have catastrophic

impacts on people and nearby environments and communities.

Economic performance

BHP’s contribution to the global economy is significant and our economic

performance enables us to provide support to local businesses and regional

Indigenous communities. Our economic performance also creates value for our

shareholders and other investors through the returns we provide.

FY2023 material topics and overview of potential and actual impacts

6.14 Community

6.11 Value chain

sustainability

6.12 Climate change

Modern Slavery

Statement

6.13 Environment –

Oceans and

fresh water

6.15 Indigenous

peoples

6.6 People

6.1 Safety

6.8 Health

6.7 Sexual

harassment

6.3 Sustainability

governance

6.9 Ethics and

business conduct

8.1 Risk factors

6.10 Digital security

and data privacy

6.16 Tailings storage

facilities

Economic

Contribution Report

6.5 2030 goals

Governance Financial Statements Additional Information

BHP Annual Report 2023 35

Operating and Financial Review

6.5 2030 goals

Our social value scorecard

In June 2022, we launched our social value framework, focused on the six pillars of decarbonisation, environment, Indigenous partnerships, workforce,

communities and supply chains.

Each pillar is anchored to an aspirational 2030 goal and underpinned by a set of metrics to measure performance and milestones to track progress.

These are outlined in our social value scorecard below. Our scorecard provides clarity to our partners, stakeholders and our teams on our ambitions

and allows us to measure and transparently report progress.

2030 social value scorecard

Decarbonisation

Healthy environment

Indigenous partnerships

Safe, inclusive and

future-ready workforce

Thriving, empowered

communities

Responsible supply chains

2030 goals Key metrics Short-term milestones

(FY2023 progress)

Short-term milestones

(FY2024 focus)

Planet • People • Prosperity

32% reduction in operational

GHG emissions from FY2020

41% reduction

in emission

intensity of BHP-chartered

shipping of our products from

CY2008

US$114 million committed in

steelmaking partnerships and

ventures to date

1.3% area under nature-

positive management

practices

0 assets with natural

capital account

Indigenous employee

representation:

8.6% Australia

7.7% Canada

9.7% Chile

US$332.6 million

Indigenous procurement

Progress to Plan

9,16

Relationship Health

10,16

Reduction in life altering

injury or illness

12 ,16

87% Engagement and

Perception Survey

wellbeing score

35.2% Female employee

representation

US$54.2 billion Total

economic contribution

Assets have co-created host

community plans

% Co-designed

outcomes

on-track according to plan

64 Customer Net Promoter

Score (NPS)

48 Supplier Net Promoter

Score (NPS)

FY2023: 95% of study

phase projects are

presented for tollgates

or meet milestones

as scheduled in

BHP’s operational

decarbonisation plan

FY2024: Operationalise

five low/zero GHG

emission vessels

FY2023: Publish

context-based

water targets

FY2023: Complete

important biodiversity and

ecosystems (IBE) baseline

mapping for all land and

water areas

FY2023: Release revised

Global Indigenous

Peoples Strategy

(renamed Indigenous

Peoples Policy Statement)

FY2023: Increase formal

Indigenous voice

mechanisms in

decision-making

FY2023: Achieve 100%

adherence to sexual

harassment program

FY2023: Release

Equitable Transition

principles

FY2024: Delivery of equipment for

proof-of-concept trials for electrified Rail

and Excavator solutions

FY2024: Commence construction of

boiler diesel displacement solution

FY2024: Complete a pilot scale Electric

Smelter Furnace design study

FY2024: Engage the market to

introduce additional lower/zero GHG

emission BHP-chartered vessels

through industry partnerships

FY2024: Establish ‘nature-positive’

plans to deliver the Group-level

2030 goal

FY2024: Indigenous voices and

perspectives are incorporated into

co-designed priorities in each region.

FY2024: >90% implementation of

controls identified and approved

through the Fatality Elimination

Program and assigned to FY2024

FY2024: Female employee

representation exceeds 37%

FY2024: Co-design external

community-facing targets

FY2024: Implement LME Responsible

Sourcing requirements

FY2024: Complete ICMM Performance

Expectations for all operating assets

FY2024: Determine ethical supplier

improvement plans with partners,

where required

At least 30% reduction in operational

GHG emissions; support 40% emission

intensity reduction of BHP-chartered

shipping of our products, and support

development of technologies and

pathways capable of 30% emission

intensity reduction in integrated

steelmaking.

1,2

Create nature positive

outcomes by

having at least 30% of the land and

water we steward

under conservation,

restoration or regenerative practices.

In doing so we focus on areas of highest

ecosystem value both within and

outside our own operational footprint,

in partnership with Indigenous peoples

and local communities.

Respectful relationships that hear and

act upon the distinct perspectives,

aspirations and rights of Indigenous

peoples and support the delivery

of mutually beneficial and jointly

defined outcomes.

A thriving workforce that is safe,

healthy, gender balanced at every level,

culturally diverse

and inclusive and

skilled for the future.

Partner with communities and

stakeholders to co-create and

implement plans that deliver jointly

defined economic, social and

environmental outcomes.

Together with our partners, we create

sustainable, ethical and transparent

supply chains.

In progress/on track

Key metrics: Milestones:

Improved

No change/data not yet available

Complete

New/revised

Footnotes are on the next page.

36 BHP Annual Report 2023

6 Sustainability continued

Footnotes refer to 2030 social value scorecard on previous page.

1 With widespread adoption expected post-2030.

2 For the definition of the terms used to express these positions, including ‘target’,

‘goal’, ‘operational GHG emissions’, ‘net zero’ and ‘carbon neutral’ refer to Additional

information 10.4. For more information on the essential definitions, assumptions and

adjustments for our targets and goals refer to Metrics, targets and goals in OFR 6.12.

3 Excluding in-kind contributions.

4 Nature positive is defined by the WBCSD/TNFD as ‘A high-level goal and concept

describing a future state of nature (e.g. biodiversity, ecosystem services and

natural capital) which is greater than the current state.’ It includes land and water

management practices that halt and reverse nature loss – that is, supporting healthy,

functioning ecosystems.

5 Excluding greenfield exploration licences (or equivalent tenements), which are located

outside the area of influence of our existing mine operations. 30 per cent will be

calculated based on the areas of land and water that we steward at the end of FY2030.

For more information refer to the BHP ESG Standards and Databook 2023, available at

bhp.com/sustainability.

6 Area under stewardship that has a formal management plan, including conservation,

restoration or regenerative practices. 1.3 per cent is calculated based on the areas of

land and water that we stewarded at 30 June 2023. For more information refer to the

BHP ESG Standards and Databook 2023, available at bhp.com/sustainability.

7 Natural capital accounts are a way to measure the amount, condition and value of

environmental assets in a given area. It helps describe changes in ecosystems and how

these impact wellbeing and economies.

8 All land and water areas at our operated assets (excluding OZ Minerals and legacy

assets) in Minerals Australia and Minerals Americas. Legacy assets refer to those BHP-

operated assets, or part thereof, located in the Americas that are in the closure phase.

9 Progress to plan will be partner-measured using a traffic light score on Indigenous

partnership satisfaction in relation to the milestones agreed in partnership.

10 Relationship health will be partner-measured using a traffic light score.

11 Cultural diversity in our workforce will be measured based on our substantive progress

towards reflecting the cultural diversity of the community.

12 Reduction in life-altering injury or illness: includes life-altering or long-term permanent

disabling injuries and illnesses as defined by the BHP Risk Management Framework.

13 The core components of the sexual harassment program included completion of

Active Bystander training and Safety Stops, Positive Duty consultation with external

experts and employees, development of the Priority Group Experience Framework,

ongoing evaluation of the Minerals Australia Alcohol standard, sexual harassment

Risk and Control Framework enhancements, contractor engagement, transparency

and disclosure, response and support improvements, internal communications and

embedment of learnings from external reviews into under-reporting.

14 Co-design requires meaningful engagement and contribution to the plan from a variety

of interested stakeholders.

15 Net Promoter Scores show respective feedback from our customers and suppliers,

and measures the willingness of our customers/suppliers to recommend BHP to

others. It is used as a proxy for gauging overall satisfaction.

16 Information available in FY2024.

17 Point in time data at 30 June 2023.

18 8.6 per cent refers to Indigenous employee representation at Minerals Australia

operations. Total indigenous employee representation in Australia, including non-

operational roles (2.7 per cent), was 7.7 per cent at 30 June 2023. While for FY2023

this does not include OZ Minerals employees who joined BHP via acquisition on

2 May 2023, former OZ Minerals operations in Australia had 3.8 per cent Indigenous

employee representation at 30 June 2023.

19 7.7 per cent refers to Indigenous employee representation at the Jansen Potash Project

and operations. Total indigenous workforce representation at the Jansen Potash Project

and operations, including contractors (21.4 per cent), was 20.8 per cent at 30 June 2023.

20 9.7 per cent refers to Indigenous employee representation at Minerals Americas

operations in Chile.

21 Against CY2008, which was selected as the baseline year for this goal to align with the

base year for the International Maritime Organisation’s 2030 emissions intensity goal and

its corresponding reasoning and strategy.

22 This includes contribution to suppliers, wages and benefits for employees, dividends,

taxes, royalties and voluntary social investment. For more information refer to the

Economic Contribution Report 2023.

In support of work to deliver the capabilities of today and tomorrow, BHP’s

FutureFit Academy (located in Western Australia and Queensland) provides a

pathway for new employees, some of who have never worked in our industry

before, to join Minerals Australia through an accredited maintenance and

production traineeship or a trade apprenticeship. Once trained and qualified,

employees move to one of our Australian assets.

The FutureFit Academy is designed as an inclusive learning environment,

welcoming employees who are new to the industry and providing permanent

employment from day one. Our student cohort includes 80 per cent female

participation and is made up of an over 20 per cent Indigenous intake.

The FutureFit Academy is recognised globally as an innovative learning facility.

During FY2023, the FutureFit Academy continued to expand its innovative

approach to developing apprentices and trainees. As a unique learning offering in

the industry, the FutureFit Academy expanded its reach across Minerals Australia.

The FutureFit Academy commenced an expansion project to be completed in

late CY2023 to provide a larger footprint in Perth, Western Australia with the

move to a purpose-built, state-of-the-art learning centre that includes fabrication

and auto electrical trades in addition to the core mechanical fitting and heavy

diesel programs. A satellite FutureFit Academy was also established in Newman,

Western Australia, providing a belt splicing program for experienced students.

Career pathways for vocational education is a core feature of the FutureFit

Academy model and a retention rate of over 85 per cent has been consistently

maintained for students relative to the industry average of less than 50 per cent.

The strong partnership with vocational educational institutions and our FutureFit

Academy ensures the learning programs provide nationally accredited

qualifications and are a unique attraction and retention lever for BHP.

Our intern and graduate programs also serve to attract and develop emerging

talent for critical skills we need for the future. In FY2023, 220 interns joined BHP

for eight to 24 weeks to gain experience in their chosen field of study through

on the job learning and working on mine sites alongside technical professionals.

Our selected interns have early access to apply for our annual graduate program

intakes. We expanded our graduate program to include Canada and the United

States to meet the needs for future skills across our operations in those regions

with 160 graduates onboarded globally in FY2023.

At least twice a year we ask our employees and contractors about their experiences

working with BHP via an Engagement and Perception Survey. After each survey,

our team leaders assess what is working well and what they can learn from others

before taking action to address improvement areas. In March 2023, we had a

response rate of 79 per cent of employees and 7,775 of our on-structure contractors.

We achieved a strong engagement score of 84 per cent. In particular, 82 per

cent of our employees and our embedded contractors who completed the survey

recommend BHP as a great place to work, which places us in the top 25 per cent of

global organisations as benchmarked by Qualtrics.

Our metrics and milestones are expected to evolve over time as our plans

mature and we further understand the outcomes of our efforts. To demonstrate

continual progress towards 2030, we intend to develop new short-term

milestones each year and report annually on our performance. New and existing

milestones planned for FY2024 to demonstrate annual progress towards the

2030 goals are presented in the scorecard, but are not intended to represent the

full roadmap to 2030. We aim to continue to learn and improve our pathways to

2030 and anticipate developing new, additional metrics in the coming years.

At its core, our scorecard represents an emphasis on partnerships, listening

and co-design, recognising that it is not for us alone to decide what is of value

to communities or the environment and addressing challenges like climate

change and nature loss requires collaboration.

Our performance in FY2023 against the scorecard is provided on page 35,

along with revised and updated milestones, to demonstrate our progress

towards our 2030 goals. Additional information on how the metrics and

milestones support progress towards our 2030 goals and the methods we use

to measure progress are detailed in the BHP ESG Standards and Databook

2023 available at bhp.com/sustainability.

Social investment

In FY2023, our voluntary social investment totalled US$149.6 million.

This investment consisted of US$79.6 million in direct funding to community

development and environmental projects and donations, US$14.7 million

equity share to non-operated joint venture social investment programs,

a US$34.5 million donation to the BHP Foundation and US$1.2 million

under the Matched Giving Program. Administrative costs

to facilitate direct

social investment activities totalled US$13.7 million and US$5.9 million and

supported the activities of the BHP Foundation.

More information on social investment, including case studies and other

initiatives to support communities where we operate is available at

bhp.com/social-investment

More information on the BHP Foundation is available at

bhp-foundation.org

6.6 People

Our more than 80,000 employees and contractors around the world are the

foundation of our business. We aim to attract and retain the best people.

Our distinctive way of working through the BHP Operating System (BOS)

empowers our people to bring the best of themselves to improve their work

every day. We offer competitive remuneration and invest in the development

of our people to build capability and drive stronger performance.

Developing our capabilities and an enabled culture

In FY2023, we completed integrated strategic workforce plans for each of our

operating assets. Developed by leveraging data and insights, these workforce

plans foreshadow our resourcing and capability needs for the business today

and tomorrow.

1 Costs associated with implementing social investment activities, including labour, travel,

research and development, communications and costs to facilitate the operation of the

BHP Foundation.

2 Qualtrics, LLC is a leading global employee and customer experience survey company,

which provides external benchmarks via their online platform.

Governance Financial Statements Additional Information

BHP Annual Report 2023 37

Operating and Financial Review

Inclusion and diversity

We believe an inclusive and diverse workforce promotes safety, productivity

and wellbeing, and underpins our ability to attract and retain the best people.

Our systems, processes and practices are designed to support fair and

equitable treatment for our people. Our Inclusion and Diversity Position

Statement confirms our vision, commitment and contributions to inclusion, equity

and diversity. Since 2016, we have been embedding flexible working, partnering

with our supply chain partners to support our commitment to inclusion and

diversity, and undertaking work to mitigate bias in our systems with the aim of

ensuring our workplaces are safe and inclusive for a diverse range of people.

Our goal is to attract and retain a workforce that is representative of society.

We intend to do this by addressing the barriers and impacts of bias and

discrimination experienced by people within underrepresented groups through

listening to their experience and gaining insights from our engagement

surveys and the recently deployed self-identification survey, ‘Tell Us About

You’. So far, almost 11,000 people have confidentially shared with us

information about themselves.

To help mitigate gender pay disparities, we have taken steps to reduce potential

bias in remuneration offered at the time of recruitment and we conduct an annual

gender pay review. The results of the pay review are reported to the BHP People

and Remuneration Committee.

For information on our approach to addressing workplace

sexual harassment refer to OFR 6.7 and racism refer to OFR 6.6

Gender balance

In CY2016, we announced our aspiration to achieve gender balance within

our employee workforce globally by the end of FY2025, which we define as a

minimum 40 per cent women and 40 per cent men in line with the definitions used

by entities such as the International Labour Organization.

We increased the representation of women working at BHP by 2.9 percentage

points in FY2023, with over 10,000 more female employees at the end of FY2023

than in 2016. As at 30 June 2023, women represented 35.2 per cent of our

employee workforce. Since we first set our gender balance aspiration in 2016,

BHP has now doubled the representation of women (from 17.6 per cent to 35.2

per cent). We are confident of achieving gender balance by the end of FY2025.

1 Based on a ‘point in time’ snapshot of employees as at 30 June 2023, including

employees on extended absence, as used in internal management reporting for the

purposes of monitoring progress against our goals. This does not include employees

that transitioned from OZ Minerals on 2 May 2023 (24.6 per cent female at 30 June

2023); these employees are included in the overall BHP employee reporting from

FY2024. ‘People leaders’ are defined as employees with one or more direct reports.

Senior executives are defined as employees in the Executive Leadership Team (ELT)

and direct reports to the ELT in grade 15 and above roles.

The table below shows the gender composition of our employees,

senior leaders and the Board over the last three financial years

1,2,3

2023 2022 2021

Female employees 14,898 12,674 11,868

Male employees 27,421 26,536 27,953

Female people leaders 2,006 1,695 1,439

Male people leaders 4,754 4,380 4,276

Female ELT

members 5 5 5

Male ELT

members 5 5 5

Female Board members 4 4 4

Male Board members 6 8 8

The gender breakdown of new hires in FY2023 was 51.9 per cent men and

48.1 per cent women. We improved our representation of women in leadership

in FY2023 by 1.8 percentage points compared to FY2022. As at 30 June 2023,

29.7 per cent of people leaders were women and of our senior executives 40.7

per cent were women and 59.3 per cent were men.

Indigenous employment

Indigenous peoples are critical partners of BHP’s operations around the world.

We recognise, as part of our global Indigenous Peoples Policy Statement,

that we can contribute to the economic empowerment of Indigenous peoples

through providing opportunities for employment, training and procurement and

by supporting Indigenous enterprises.

We have set targets to increase Indigenous employment in our Minerals

Australia operations, Minerals Americas operations in Chile and our Jansen

Potash Project and operations in Canada.

Indigenous employee representation

Location Period

Target

(%)

30 June

2023

(%)

Minerals Americas operations

employees in Chile

By the end of FY2025 10.0 9.7

Minerals Australia operations

employees in Australia

By the end of FY2027 9.7 8.6

Jansen Potash Project and

operation employees in Canada

By the end of FY2026 20.0 7.7

1 Point in time data at 30 June 2023.

2 Indigenous employee representation overall in Australia at 30 June 2023 was

7.7 per cent, including Minerals Australia operations, 8.6 per cent Indigenous,

and non-operational locations, 2.7 per cent Indigenous. For FY2023 this does not

include employees of OZ Minerals who joined BHP via acquisition on 2 May 2023,

which has 3.8 per cent Indigenous employee representation at the operation in

Australia at 30 June 2023.

3 Indigenous workforce representation at Jansen Potash Project and operations

of 20.8 per cent includes employees, 7.7 per cent Indigenous and contractors,

21.4 per cent Indigenous.

For more information on our 2030 goals related to Indigenous

partnerships refer to OFR 6.15

Racial equity program

We recognise and acknowledge racism impacts our people’s sense of

identity, value, feeling of respect and psychological safety. There is no

place for racism at BHP or anywhere in the community. We are taking

action to better understand the prevalence of racism at BHP to promote

an anti-racist workplace and ensure racial equity.

In 2022, we started our listening journey with a series of engagement

sessions on racism led by Chief Commercial Officer (CCO) Vandita

Pant. We dedicated listening sessions facilitated by external psychology

and racial diversity experts and heard from 200 employees across BHP

about their experience of racism at BHP. Our people reported a lack of

capability in leaders and our processes in responding and reacting to

racism. Our listening sessions, combined with learning from external

experts, including the Australian Race Discrimination Commissioner, have

helped inform our workplan to improve the lived experience of our racially

and culturally diverse workforce. The current program of work is targeted

to address behavioural racism as well as systemic racism as may be

embedded in workplace policies, systems and practices. We are committed

to partnering with our people and using EmBRace (Employees Beyond

Race) employee resource groups, Indigenous employee networks and

external experts to co-create solutions.

Our actions to date include:

– In April 2018, Our Code of Conduct was refreshed to provide guidance

on racial discrimination and the Respectful Behaviours campaign

was launched.

– In September 2020, racism was classified as a Category A breach of

Our Code of Conduct, requiring all events to be reported to EthicsPoint

and all investigations to be undertaken by independent Ethics and

Compliance teams.

– In February 2022, the ‘Tell Us About You’ internal survey was released

to obtain self-identified information about BHP’s people, including

ethnicity, cultural background and languages spoken. The data collected

from the survey, which is always open, enables us to better recognise

1 Based on a ‘point in time’ snapshot of employees as at 30 June, as used in internal

management reporting for the purposes of monitoring progress against our goals.

For 2023, this does not include employees that transitioned from the OZ Minerals

business via acquisition on 2 May 2023, (359 female employees and 1,098 male

employees at 30 June 2023). These employees are included in the overall BHP

employee reporting from FY2024.

2 For 2021 this included employees of BHP Petroleum, who left BHP via the merger with

Woodside (approximately 1,000 employees) and BHP Mitsui Coal operations, which sold

to Stanmore Resources (approximately 500 employees) during FY2022.

3 In FY2023, some of our employees did not identify as male or female (<0.1% of total

employees). We have excluded these employees from other data presented in the

gender composition table to protect the privacy of those employees. We will explore

options to include our employees who do not identify as male or female in our diversity

reporting including ‘Tell Us About You’ survey data in future reporting periods and

continuing to protect their privacy.

4 ELT is Executive Leadership Team.

38 BHP Annual Report 2023

6 Sustainability continued

and celebrate the diversity of our workforce, take action to remove

barriers for under represented groups and provide targeted support and

resources to these groups where appropriate.

– In March 2022, we established a racial equity working group, led by

CCO Vandita Pant as the executive sponsor, to focus on eliminating

racism and ensuring we create an environment free from racial

discrimination, where people from all backgrounds can thrive. This group

works alongside our Indigenous engagement teams in Australia, Chile

and Canada to incorporate our Reconciliation Action Plan commitments.

– In line with our commitment to have human centric and caring grievance

processes, we expanded the Ethics Support Service, a team dedicated

to providing support, options and coordination, as well as management

of racism matters. This team is the first point of contact for people

impacted by racism to guide and support them through the process.

– In October 2022, we launched EmBRace our newest employee

resource group focused on discussions around race and racial diversity.

Local chapters have now been set up in Australia, Singapore and Manila

– We launched an internal global awareness and communication

campaign in December 2022, including featuring the ‘People of BHP’

to celebrate our diversity and started the conversation with a new

campaign ‘Let’s talk about race!’

– Throughout FY2023, we rolled out the Active Bystander Training for all

leaders and employees, focused on ‘calling it out’, helping leaders take

action, listen and act on what our people tell us.

Over the next year we intend to continue to progress our work of identifying

and addressing structural barriers to equity in recruitment, development

and promotion processes, build awareness and capability in our leaders

and continue to improve our grievance processes to support people who

tell us when they have experienced racism.

LGBT+ inclusion

Our LGBT+ ally employee inclusion group, Jasper, established in 2017, is a

natural extension of our inclusion and diversity aspirations. Its membership

base grew to around 2,800 in FY2023, with 16 chapters globally.

In FY2023, we continued to close gaps for LGBT+ inclusion, such as

co-creating with Jasper inclusive grievance and support processes for

people who experience sexual harassment.

Case study – Jasper and Ethics

Support Service

BHP’s support systems, processes and resources aim to be LGBT+

inclusive and safe and accessible to all. To help achieve this, the Ethics

Support Service worked with Jasper through inception and design

phases to ensure the services offered promoted LGBT+ inclusion.

This included ensuring Jasper was engaged in risk assessments,

the design of procedures and empathy mapping to assess inclusion

throughout the end-to-end support service processes. Feedback received

via Jasper and the Ethics Support Service has been positive, with

employees reporting they feel seen and heard and appreciate having

someone to talk to as they navigate through a difficult situation.

For more information refer to

bhp.com/people

Disability

Our teams have been improving the accessibility of our workplaces in Chile for

people with a disability. There are now 121 direct employees (1.59 per cent)

in our Chilean workforce who live with a disability, and who are supported

by a program of work to build knowledge and awareness and to implement

workplace adjustments and inclusive infrastructure changes at our operations.

We intend to build on these foundations by developing a global Disability

Action Plan, informed by listening sessions and an audit conducted in FY2023.

Our global employee resource group, Amber, was established in FY2023 and

is playing a critical role in co-creating the plan and improvements.

Flexible working

Enabling our people to work flexibly remains a critical pillar in our strategy

to attract and retain a diverse, inclusive and high performing workforce.

For our office-based teams this may include flexible workdays, or ad hoc

agreed changes to hours to enable the employee to attend appointments

or manage personal commitments. In FY2023, we updated our guidance

on hybrid working for our corporate office-based employees and requested

our people to spend at least two to three days together in the office each

week and the remainder from home, for travel or working from other

locations. By putting some structure around how we spend our time

together in the office, we deliberately create opportunities for a more

meaningful employee experience. In doing so, our people retain a degree

of autonomy in how and where they work so they have both the benefits

of flexibility and the social connection, collaboration and innovation that

comes from being together in the office environment.

For operational teams we remain focused on roster and job re-design

to give people more options to integrate life and work. For example, a

new early start night shift option is now on offer for a crew of haul truck

operators at WAIO’s Newman Operations West to help our teams manage

family and work commitments.

Employee relations

In Australia, the Federal Government introduced its first tranche of

industrial relations legislative reforms in December 2022, bringing

significant changes to the enterprise bargaining framework. The legislation

introduced several changes to workplace laws in Australia, including

changes relating to the approval and termination of enterprise agreements,

the powers of the Fair Work Commission to intervene and make workplace

determinations, when industrial action can be taken and access to multi-

employer bargaining. We continue to monitor progress of further legislative

reforms expected to be tabled in early FY2024, including the Federal

Government’s proposed ‘Same Job, Same Pay’ policy, which may have

the potential to add to our labour costs.

In Chile, we are navigating a number of legal developments that may

have implications for employee relations, for example, the new 40-hour

shift regulation.

During FY2023, Minerals Australia participated in 17 collective bargaining

processes, with four enterprise agreements completed (three presently

in operation and one before the Fair Work Commission for approval)

and 13 subject to ongoing negotiations as at the date of this Report.

Minerals Americas participated in two collective bargaining processes

during FY2023. Across our operations, there were four rounds of collective

bargaining where protected industrial action occurred during FY2023 –

three at our Minerals Australia operations (BMA Enterprise Agreement

2022, Operations Services Maintenance Enterprise Agreement and

Operations Services Production Agreement) and one at our Minerals

Americas operations in Chile (Spence Union 1).

For more information refer to

bhp.com/people

Review of employee allowances and entitlements

In FY2023, we identified issues with certain allowances and entitlements

affecting a number of our current and former employees in Australia.

A review has confirmed that certain rostered employees across our

Australian operations have had leave incorrectly deducted on public

holidays since 2010. Our preliminary review disclosed in June 2023

indicated there were approximately 28,500 affected current and

former employees, with an average of six leave days in total that were

incorrectly deducted from affected employees over this 13-year period.

Following further review and verification of our payroll records, the number

of affected current and former employees has increased to approximately

34,000 and the average number of incorrectly deducted leave days has

decreased slightly to approximately five leave days in total. OZ Minerals

was affected by a similar leave deduction issue before being acquired by

BHP in May 2023.

Current employees were first contacted in June 2023 to confirm that

leave that has been incorrectly deducted will be re-credited with 10 per

cent provided on top of what we owed to recognise that this should

never have happened. We will contact former employees regarding

remediation payments for leave incorrectly deducted and an additional

10 per cent top up. We have established a dedicated hotline and a website

(bhp.com/payrollreview) to provide assistance to affected employees.

In addition, our preliminary review identified approximately 400 current

and former employees at Port Hedland who may be entitled to additional

allowances due to an error with the employment entity in their contract.

Governance Financial Statements Additional Information

BHP Annual Report 2023 39

Operating and Financial Review

1 ‘Sexual harassment’ is, as defined in the Sex Discrimination Act 1984 (Cth), an

unwelcome sexual advance, unwelcome request for sexual favours or other

unwelcome conduct of a sexual nature, in circumstances where a reasonable

person would have anticipated the possibility that the person harassed would be

offended, humiliated and/or intimidated. Sexual harassment encompasses a range

of conduct, including displaying sexually graphic images, sexually suggestive

comments, suggestive or inappropriate looks, gestures or staring, non-consensual

touching or acts of a sexual nature and sexual assault. We note the definition of

sexual harassment may vary in different jurisdictions.

2 EthicsPoint is our confidential reporting tool. It is accessible to all, including

external partners and stakeholders and the public, to report conduct that may be

unethical, illegal or inconsistent with Our Code of Conduct.

3 This does not include investigations that are currently in progress and is exclusive

of OZ Minerals data.

We have addressed this going forward by adjusting allowances for current

employees and will undertake a process to remediate current and former

employees for any associated historical impacts, including engaging with the

Fair Work Ombudsman in relation to the approach. Review and verification

of our payroll records of this issue is ongoing.

Based on currently available information, the cost of remediating the leave

issue and the contracting issue is estimated to be US$280 million pre-tax,

incorporating costs, including associated superannuation and interest

payments (BHP share) and this has been reflected in the Group’s FY2023

financial result.

We have self-reported to the Fair Work Ombudsman and engaged Protiviti,

a global assurance firm, to conduct a review of our payroll systems.

COVID-19

Minerals Australia removed the vaccine site access requirement for all

workplaces with effect from 1 March 2023. Minerals Americas removed the

vaccine, mask and distance requirements for all operated asset workplaces

with effect from September 2022.

For more information on people refer to

bhp.com/people

6.7 Sexual harassment

Our priority is to ensure our workplaces are safe and inclusive for everyone

who works or engages with BHP. We acknowledge the presence of sexual

harassment

in the mining industry. We consider sexual harassment to

be a material health and safety risk, harmful to impacted individuals,

bystanders, our partners and stakeholders.

BHP welcomed the Anti-Discrimination and Human Rights Legislation

Amendment (Respect at Work) Act 2022 (Cth) (Respect@Work Act),

which came into effect in December 2022. This amended the Sex

Discrimination Act 1984 (Cth) to require employers to take reasonable

and proportionate measures to eliminate, as far as possible, unlawful sex

discrimination, sexual harassment, sex-based harassment, victimisation

and work environments that are hostile on the grounds of sex.

Our approach to prevent sexual harassment

In CY2018, we defined sexual harassment as a health and safety risk,

to be overseen in the same way as other work health and safety risks.

Since this time, we have been engaging our workforce and external

experts as we address harmful behaviours with a risk-based approach.

In FY2022, a Project Management Office (PMO) was established through

the office of the CEO to provide central governance over all sexual

harassment work, which included priority focus areas, such as driving

progress toward gender balance, creating a safe and respectful workplace,

building accountability and capability of leaders, upskilling our workforce to

be active bystanders, enhancing our policies, processes and controls, and

providing person-centred and trauma-informed response and support.

In FY2023, the Sexual Harassment Prevention PMO continued to increase

transparency, drive accountability and rigorous governance, incorporate

organisational lessons learned and best practice into key programs of

work and regularly engage senior management and the Board.

Our focus in FY2024 will be to continue:

– focusing on initiatives that increase female representation across

our operations

– implementing our enhanced suite of sexual harassment prevention

controls, which incorporate organisational learnings and third-party

expert recommendations

– engaging and empowering our entire workforce to take action as active

bystanders and enhancing their capabilities

– encouraging increased incident reporting and enhancing our approach to

supporting impacted persons to thrive at BHP

Reports of sexual harassment

There were 475 reports of sexual harassment in FY2023. We continue

to take action to increase awareness and promote reporting, response

and investigations in relation to these matters. Since October 2020, BHP

managers and leaders have been required to enter any serious conduct

issues raised directly with them, including sexual harassment, into EthicsPoint²

(anonymously if requested). As expected, with this focus on safe reporting and

leadership reporting onus, the reported cases remain high. During the year, 44

per cent of sexual harassment reports received into EthicsPoint were logged

by managers or leaders on behalf of their direct reports.

In FY2023, we reported all established cases of sexual harassment closed

in this financial year regardless of when they were initially reported. This is

a change from FY2022 where we disclosed established cases of sexual

harassment that were reported and closed in FY2022. The change to the

categorisation of cases was a result of BHP’s continuous improvement efforts

to better capture the types of conduct occurring.

This change in reporting has an impact in the comparability of the number of

established sexual harassment cases between FY2022 and FY2023. Of the

167 established cases in FY2023, 43 cases were opened in FY2022 (or prior

years) but closed this financial year.

During FY2023, across BHP’s global operations and offices, 167

investigated cases of sexual harassment conduct were established as

having occurred.

Of the 167 established cases:

– one was a sexual assault

– 38 involved sexualised and indecent touching

– 41 involved sexually aggressive comments, stalking, grooming and

image-based harassment

– 87 involved other forms of sexual harassment, including sexualised

conversations or jokes

– 165 individuals responsible had their employment terminated

(or were removed from site if a contractor) or resigned

This is an increase from 103 reported last financial year, which is partly

due to 43 cases that were reported in years prior to FY2023 but closed this

financial year.

In addition to the matters listed above, in FY2023 92 reports of sexual

harassment were dealt with by way of non-investigative resolution pathways,

instead of an investigation being conducted. These resolution pathways

included supported conversations with respondents, additional training,

monitoring or awareness raising on BHP’s expectations of respectful

behaviours in the workplace. This process only occurs where the resolution

pathway is proportionate to the nature of the conduct and with the agreement

of the impacted person. We continue to monitor and review the use of our

resolution pathways to ensure they are meeting the needs of impacted people

and to improve reporting to support organisational lessons learned.

In addition to non-investigative resolution pathways, there are cases

of sexual harassment that cannot be investigated due to insufficient

information. Examples include anonymous reports and non-participation

of the impacted person. However, all cases are assessed for safety

and other risks as part of preliminary investigative actions and all

participants are offered support irrespective of whether the matter can be

formally investigated.

Leadership

Our position on sexual harassment is reinforced through regular senior

leadership communications. These include messages from our CEO,

Executive Leadership Team and on-site signage regarding our expectations

and avenues for support. Executive and senior leader remuneration are

linked to Group-wide performance criteria, which includes progress towards

greater inclusion, diversity and gender representation. This includes the

program of work to address sexual harassment.

Respectful behaviour and sexual harassment prevention and response

training is provided to BHP line leaders, aimed at setting clear expectations

40 BHP Annual Report 2023

6 Sustainability continued

about appropriate conduct, supporting leaders to respond appropriately

and drive consistent disciplinary outcomes.

Risk assessment and transparency

Defining sexual harassment as a health and safety risk in CY2018, to

be overseen in the same way as other work health and safety risks, was

intended to provide a robust framework for addressing these behaviours,

allowing us to apply a systematic, risk-based approach to evaluating and

managing the risks. Our approach includes conducting risk assessments

to identify scenarios in which sexual harassment risks may arise, their

potential causes and the controls we can implement to prevent them and

reduce harm. This process identified factors that can contribute to the risk

of workplace sexual harassment that are more pronounced in the mining

industry, (including isolated or remote working locations, a largely male-

dominated workforce and accommodation villages), as well as factors

that are common across all industries and workplaces.

In FY2023, we worked to further enhance our current controls to help prevent

sexual harassment and reduce its harmful impacts. Engagements with

external experts, as well as members of our workforce, have identified a

need for further focus on preventative controls, particularly with respect to

culture and behaviours. Our core controls to prevent sexual harassment

include recruitment processes; training; security measures at accommodation

villages; contractor and third-party engagement; emergency response;

trauma-informed care for impacted persons; accessible, confidential reporting,

person-centred response and investigations; and appropriate disciplinary

action. We will also embed new controls related to leadership, technology

and continuous improvement in FY2024.

Culture

BHP has a clear aspiration to have a gender-balanced employee workforce

by FY2025. A diverse and inclusive workforce in every team and at every

level is an important part of our approach to preventing sexual harassment.

BHP recognises that suppliers and contractors in our ecosystem have

shared values around preventing sexual harassment and sex-based

discrimination in our industry and communities. Third-party contractors

are expected to comply with Our Code of Conduct and have access to

BHP EthicsPoint, Support Service, Employee Assistance Program (EAP)

and other related care and medical/psychological treatment pathways.

Contractors are also embedded in many aspects of BHP’s way of working,

including in routines such as toolbox talks and safety shares, perception

surveys and required training.

Knowledge of sexual harassment prevention,

response and support

Since FY2018, we have been continuing to develop a sustained program

of work designed to increase the capability of our workforce to identify

and call out disrespectful behaviour, including sexual harassment,

racism and bullying.

BHP prioritises the wellbeing, psychological safety and needs of all people

affected by sexual harassment, sex-based discrimination and victimisation.

We established our global Support Service in FY2022 to provide dedicated,

end-to-end case coordination for anyone impacted by sexual harassment,

which is designed to assist them to obtain appropriate support and

information. The Support Service can also provide resolution options when

an investigation is not wanted by the impacted person or cannot proceed.

In FY2023, improvements were made to the Support Service, including

increased resourcing and support for participants of racism cases.

Reporting

We encourage our workforce to report concerns, including by providing

centralised and confidential reporting tools and mandatory reporting

requirements for line leaders. We do not tolerate any form of retaliation for

raising a concern. We ceased using non-disclosure agreements (NDAs)

or imposing confidentiality obligations on complainants in respect of their

experiences in settlement agreements relating to sexual harassment in

March 2019. We do not enforce any NDAs or confidentiality obligations on

complainants of sexual harassment in historical agreements.

Investigations of reports of sexual harassment are conducted by our

specialised Response and Investigations team, which is independent from

our other business units. This team includes experts trained in a person-

centred, trauma-informed approach to help place the impacted person

at the centre of decisions made during the investigation process and

to minimise the risk of further harm to that individual.

We took steps to further improve our reporting and response processes in

FY2023, including the implementation of a new response and investigation

framework to help ensure BHP’s response to all alleged misconduct is

trauma-informed and proportionate to potential harm. Improvements have

also been made to the reporting and sharing of misconduct outcomes.

Measuring

De-identified information and trend analysis data on the number of

complaints, nature of complaints, resolution pathways, outcomes and

timelines are accessible by leadership to raise awareness and support

continuous improvement of how we prevent and mitigate the impacts of

sexual harassment.

We measure our progress and are committed to continually improving our

approach. In FY2023 we:

– engaged Kristen Hilton (former Victorian Equal Opportunity and Human

Rights Commissioner) to enhance our sexual harassment prevention

and response framework, review the program of work being undertaken

by the sexual harassment PMO and identify areas for prioritisation

– conducted an internal sexual harassment prevention program audit

across our Minerals Australia and Minerals Americas operated asset

workforce, following audits conducted in FY2021 and FY2022

– conducted a number of assurance reviews to test and improve the

operational effectiveness of the critical controls in place at BHP’s assets

and workplaces

– contributed to knowledge sharing with other industry participants in

relation to addressing sexual harassment and considered broader

learnings from external reports, such as the Australian Human Rights

Commission’s Respect@Work: Sexual Harassment National Inquiry

Report (2020), Time for respect: Fifth national survey of sexual

harassment in Australian Workplaces (2022), and the WA Parliamentary

Inquiry report ‘Enough is enough’ Sexual harassment against women in

the FIFO mining industry

– undertook a series of listening workshops with employees, with a

particular focus on improving our critical controls

– undertook consultation sessions to inform our global action plan for

FY2024 and FY2025

We also remain committed to working with others in the industry and

beyond to address sexual harassment risks. BHP is a member of the

Minerals Council of Australia’s Respect@Work Taskforce and the

Chamber of Minerals and Energy Western Australia’s Safe and Respectful

Behaviours Working Group. Both groups aim to build industry capability

and capacity though sharing knowledge and developing shared resources.

6.8 Health

We set clear mandatory minimum performance standards to identify,

assess and manage health risks and their potential impacts, and monitor

the health of our workforce.

Occupational exposures

Exposure data in this Report in all cases is presented without considering

protection from the use of personal protective equipment (where required

as outlined in the Our Requirements for Health standard).

BHP follows the hierarchy of controls to reduce exposures to as low as

reasonably practicable. Our Risk Framework and minimum requirements

emphasise preventive controls that reduce the likelihood of chemical and

physical hazards in the atmospheres where workers undertake their routine

work. When these preventive controls are inefficient or ineffective, we

implement mitigating controls, such as respiratory protective equipment

until appropriate preventive controls are identified, implemented and verified

to consistently reduce exposure well below occupational exposure limits.

Occupational exposure limits indicate the level of permissible exposure for a

length of time (usually eight hours) to a chemical or physical hazard that is not

likely to affect the health of a worker. Occupational exposure limits for our most

material exposures are set according to the latest scientific evidence.

In FY2023, for our most material exposures of diesel particulate matter (DPM),

respirable silica and coal mine dust we had a 33 per cent reduction in the

Governance Financial Statements Additional Information

BHP Annual Report 2023 41

Operating and Financial Review

number of workers potentially exposed compared with our FY2022 exposure

profile. This includes no workers potentially exposed to coal mine dust, 35 per

cent reduction in the number of workers with potential exposure to DPM and 32

per cent reduction in the number of workers potentially exposed to respirable

silica. When exposure reduction is considered over the last six years, we have

achieved a 79 per cent reduction to our most material exposures.

We are committed to having no AL4 (fatalities and life-threatening illnesses)

events and a reduction in life-altering injuries and illnesses. Due to the latency

between initial exposure and diagnosis of disease for our most material airborne

contaminant exposures, we must demonstrate ongoing exposure reduction

and effectiveness of controls, where exposures may remain elevated. As we

continue to manage exposures to as low as reasonably practicable, in FY2023,

we had reduction plans developed at the asset level. The exposure reduction

plans were prioritised based on risk with a focus on the assets’ most material

exposures. The implementation of these exposure reduction projects and

sustaining the results achieved will continue to be a focus in FY2024.

1 Data excludes Discontinued operations as follows: BHP Mitsui Coal (sale

completed on 3 May 2022) and BHP’s oil and gas portfolio (merger with Woodside

completed on 1 June 2022).

2 Occupational exposures data excludes Projects.

3 As of FY2021, the occupational exposure limit for Coal was reduced to 1.5 mg/m

compared to 2.0mg/m3 in previous years.

Coal mine dust exposures Silica exposures DPM (Diesel) exposures

Exposure reduction trend over time

1,2,3

4,200

3,500

2,800

2,100

1,400

700

211681

1,514 169

1,783

377

14 1,046 312

327

FY2022 FY2023FY2021FY2020FY2019

1,006

Occupational illness

The reported occurrence of occupational illness for employees in FY2023 was

304, which was 4.35 per million hours worked. This represented an increase

in incidence compared with FY2022, which was 4.11 per million hours worked.

For our contractor workforce, the reported occupational illness in FY2023 was

202, which was 1.99 per million hours worked, representing an increase in

incidence compared with FY2022, which was 1.70 per million hours worked.

Due to regulatory regimes and limited access to data, we do not have full

oversight of the incidence of contractor noise-induced hearing loss cases.

Musculoskeletal illness is the predominant occupational illness category

representing 72 per cent of our workforce illnesses. These conditions affect

the musculoskeletal system and connective tissues caused by repetitive work-

related stress, strain or exposure over time. Musculoskeletal illness does not

include disorders caused by slips, trips, falls or similar incidents.

Noise-induced hearing loss represents 7 per cent of illnesses. Workers exposed

to noise above acceptable levels participate in hearing conservation programs,

which include a periodic hearing test and hearing protection fit testing.

We have established design recommendations that seek to eliminate or

reduce high or prolonged noise exposures by focusing on the source of the

noise. Other illness categories include skin diseases, temperature-related

illnesses, mental illness, bites, stings and other unspecified illnesses.

Heat stress contributed to 2 per cent of our reported occupational illnesses.

High temperatures and strenuous activity place some of our workforce at an

increased risk of heat illness. Currently, high-risk work groups are identified

and a range of controls are in place to manage heat stress. In FY2024, further

heat stress awareness training through field leadership, guidance material

and awareness campaigns, along with targeted heat stress management,

including hydration testing, will be introduced to support the management

of tasks completed in high temperatures. In recognition that climate change

may exacerbate existing heat stress risks, we are also piloting an approach at

Olympic Dam site to better understand and quantify the potential impact of heat

stress on our workforce under different future climate scenarios.

For a case study on how we are assessing the potential impact

of extreme heat on critical infrastructure and equipment under

different climate scenarios, refer to

bhp.com/news/case-studies/2023/08/heat-stress

As part of our approach to managing occupational illnesses, we monitor and

assess some of our workers’ health through health surveillance that involves

a systematic evidence-based collection of health data. These surveillance

programs may reduce the severity or progression of disease.

Coal mine dust lung disease

As at 30 June 2023, nine cases of coal mine dust lung disease

were reported

to the Queensland Department of Natural Resources Mines and Energy

(DNRME).

Four of the accepted coal mine dust lung disease claims in FY2023

were current BHP employees, while the remaining five were former workers.

For cases involving current employees, we offer counselling, medical support

and redeployment options where relevant. Former employees are subject to

workers’ compensation insurance and associated care is managed through that

process outside of BHP.

Mental health

The wellbeing and safety of our people is of paramount importance

as we continue to work towards enhancing the safety, inclusiveness

and future-readiness of our workforce. In FY2023, to make meaningful

and positive improvement, we built stronger relationships through our

active contributions to the Global Business Collaboration for Better

Workplace Mental Health. Wellness Committees have been set up across

our operated assets and corporate offices. There is strong ongoing

participation in global health campaigns, such as Mental Health Month,

RUOK day and Movember, which aim to increase awareness and overall

mental wellbeing.

Building on the momentum of FY2021 when we introduced our first global

BHP Mental Health Month, our focus for the FY2023 campaign was

to educate our teams on identifying workplace psychosocial hazards.

These campaigns are designed to promote awareness of the importance of

individual and team wellbeing and educate leaders on the role they play in

supporting our people when they seek support and the various resources

available to them at BHP.

In FY2023, the Psychosocial Risk Assessment Program was established in

recognition of the importance of understanding any psychosocial hazards

that may be impacting wellbeing at work. The program utilised industry

best practice research with business consultation activities to identify the

most significant psychosocial hazards within our business. This has laid

the foundation for a number of best practice mitigating and preventative

controls at both local and global levels that are designed to address the

risk arising from these hazards.

6.9 Ethics and business conduct

Our conduct

Our Code of Conduct (Our Code)

brings our values to life so we can make the

right choices every day. It applies to everyone who works for us, with us or on

our behalf. To ensure all employees and contractors understand how Our Code

applies, regular training is undertaken. There are consequences for breaching

Our Code and we encourage people to speak up where a decision or action is

not in line with Our Code or Our Charter.

BHP encourages individuals to speak up and report concerns about any

conduct that is inconsistent with Our Charter, Our Code or internal requirements,

or conduct that may be illegal or improper. BHP requires reports of business

conduct concerns to be treated with appropriate confidentiality and prohibits

1 Coal mine dust lung disease is the name given to the lung diseases related to

exposure to coal mine dust and includes coal workers’ pneumoconiosis, silicosis,

mixed dust pneumoconiosis and chronic obstructive pulmonary disease.

2 Cases reported to DNRME are not an indication of work relatedness.

BHP evaluates each case for work relatedness and where identified, the case will

be included in occupational illness reporting.

3 Information is available at bhp.com/our-approach/our-company/our-code-of-conduct/.

42 BHP Annual Report 2023

6 Sustainability continued

any kind of retaliation against people who make or may make a report, or

who cooperate with an investigation. These reports may also be made to

regulators. We consider all forms of retaliation to be misconduct and grounds

for disciplinary action, up to and including termination of employment. We have

a number of key policy and process documents to support a safe to speak up

culture, including our BHP whistleblower policy.

Our Code is available in five languages and accessible at

bhp.com/our-approach/our-company/our-code-of-conduct/

In FY2023, 5,289 business conduct concerns were received (out of a total

6,447 reports into EthicsPoint.

These include reports directly made by

employees, contractors or community members. It also includes reports made

to leaders (28 per cent) who are then required to register them in EthicsPoint.

There is a global service to support people involved in sexual harassment and

racism incidents and to discuss resolution options, which also encourages

employees and contractors to report instances of sexual harassment and

racism. There continues to be a greater awareness and focus on health and

wellbeing in the workplace which may be a contributing factor to the increase

in FY2023 reports of bullying and harassment.

Of the business conduct reports received, 36 per cent were made

anonymously.

Of the total business conduct reports closed during FY2023,

38 per cent contained one or more established allegations.

Business conduct cases by issue type FY2023

Harassment and bullying (3,067) 58.0%

Health, safety or environment breach (522) 9.9%

Fraud (520) 9.8%

Sexual Harassment (475) 9.0%

Discrimination (377) 7.1%

Cybersecurity or data privacy breach (216) 4.1%

Retaliation for speaking up (68) 1.3%

Other* (44) 0.8%

* Other: Inclusions are Deficiencies in a business conduct investigation; Anti-competitive

behaviour; Attempting to identify an anonymous reporter; Ask a question; Improper

political or governmental conduct.

Employees and contractors can raise their concerns through a number of

channels, including through leaders. Anyone, including external partners and

stakeholders and the public, can lodge a concern in the form of a report, either

online in EthicsPoint or via the 24-hour, multilingual call service. Reporters of

misconduct concerns can choose to raise their concern anonymously.

Reports received are assessed by the Ethics and Investigations team and

an appropriate response is applied, which may include an investigation

or other resolution. In assessing the appropriate response, BHP applies a

proportionate and person-centred approach to the report considering all

participants. People impacted by reports of sexual harassment and racism

are offered specialised support by the Ethics Support Service, which

enables people impacted to have input into the response. In determining

the appropriate response, the type and severity of the alleged misconduct

is considered and may include an investigation, training, facilitated

conversations, a line leader intervention or verbal/written warnings.

Quarterly reporting on the most serious reports is provided to senior

leaders and the BHP Board Risk and Audit Committee, and includes

reported case metrics, outcomes and insights. The reporting supports

leadership awareness and informs priorities for ongoing improvement.

Feedback is obtained regularly from stakeholders, including case

participants, external experts and management, to continually improve

our response to reports.

Transparency and accountability

We support initiatives by governments of the countries where we

operate to publicly disclose the content of our licences or contracts

for the development and production of minerals that form the basis of

our payments to government, as outlined in the Extractive Industries

Transparency Initiative (EITI) Standard.

Other initiatives include our work with Transparency International chapters,

representation on the Board of the EITI, financial support for and Steering

Committee membership of the Bribery Prevention Network (in Australia)

and funding of the BHP Foundation, including its Natural Resource

Governance Global Program.

In FY2023, we continued our active and public support for ultimate

beneficial ownership transparency. We published information on how we

use beneficial ownership information as part of our anti-corruption due

diligence on investments, partners, contractors and suppliers. We also

made clear via published statements and web content that we do not

partner or contract with entities that are assessed as presenting a high

corruption risk that decline to provide beneficial ownership information as

part of our due diligence process. In parallel with these steps, we published

a list of entities in which BHP Group Limited’s effective interest is 100 per

cent and certain entities in which BHP Group Limited’s effective interest

is less than 100 per cent, including all controlled subsidiaries operating in

the mining sectors, all mining operations joint ventures generating material

revenue for BHP (and available information in relation to the other legal

owners in these joint ventures) and entities in which we hold a partial

interest (with some exclusions – refer to bhp.com/ethics).

These efforts are complementary to the BHP Foundation’s partnership

with EITI and Open Ownership to support governments to transform the

availability and use of beneficial ownership data for effective governance in

the extractive sector.

Multi-lateral measures to improve governance such as these are intended

to help ensure transparency and accountability as cornerstones of

a successful energy transition that benefits the citizens of countries

bestowed with critical minerals.

Anti-corruption

We continue our commitment to contribute to the global fight against

corruption in the resources industry. Our commitment to anti-corruption is

embodied in Our Charter and Our Code.

As part of this commitment, we prohibit authorising, offering, giving or

promising anything of value directly or indirectly to anyone to influence them

in their role, or to encourage them to perform their work disloyally or otherwise

improperly. We also prohibit facilitation payments, which are payments to

government officials for routine government actions. Our people must take

care that third parties acting on our behalf do not violate anti-corruption

laws. Disciplinary action, including dismissal or termination of contractual

relationships, may follow from a breach of these requirements.

To manage corruption risk, we work to ensure optimal resource allocation

to areas of our business with the highest exposure to corruption risks.

The identification, assessment and management of corruption risks

associated with growth opportunities remains a significant area of focus for

our Compliance function, via a sub-team dedicated to supporting functions

1 Some EthicsPoint reports are enquiries, or are not related to business conduct

concerns, or are a duplicate of an existing report. Case classification is made

at the time of the report, however the classification can be changed as more

information is uncovered during the investigation process. The data captures a

point in time and is subject to change as some cases will be re-classified.

2 This excludes reports not containing a business conduct concern and excludes

reports logged by leaders on behalf of others.

3 The calculation is based on reports completed in FY2023, containing one or

more established allegations. Not all reports resulted in a finding. This can occur

if there is insufficient information, the respondent is not able to be identified, was

previously terminated, or the impacted person did not wish to proceed. This figure

includes cases opened in FY2023 and prior to FY2023.

Governance Financial Statements Additional Information

BHP Annual Report 2023 43

Operating and Financial Review

that are responsible for initiating transactions and growth opportunities in

countries with high corruption risks.

Activities that potentially involve higher exposure to corruption risk require

review or approval by our Compliance function, as documented in our

anti-corruption compliance framework. In FY2023, Compliance conducted

monitoring focused on verifying the operation of anti-corruption controls in

relation to higher risk relationships and activities, including the provision of

community donations and sponsorships, identification and management

of potential conflict of interest circumstances in local procurement, and

governance in relation to sole source procurement decisions.

Our Compliance function regularly reviews our anti-corruption framework

for compliance with the requirements of the US Foreign Corrupt Practices

Act, the UK Bribery Act, the Australian Criminal Code and the applicable

laws and regulatory developments of all places where we do business.

These laws are consistent with the standards of the OECD Convention

on Combating Bribery of Foreign Public Officials in International

Business Transactions.

Our Compliance function is independent of our assets and regions and

reports to the Chief Legal, Governance and External Affairs Officer.

The Chief Compliance Officer also reports quarterly to the Risk and Audit

Committee on compliance issues and meets at least annually with the Risk

and Audit Committee Chair.

The Compliance function also participates in anti-corruption risk

assessments in respect of our operated assets or functions, our interests in

non-operated assets and new business opportunities that we consider are

exposed to material anti-corruption risks. In FY2023, the function provided

input into 29 anti-corruption risk assessments.

Risk awareness in first-line employees remains a critical preventative

measure. Anti-corruption training is required to be provided to all

employees and contractors as part of mandatory annual training on Our

Code undertaken in the financial year. Our Compliance function also

regularly communicates and engages with identified higher-risk roles.

In FY2023, additional risk-based anti-corruption training was undertaken

by 6,833 employees and contractors, as well as employees of some of

our business partners and community partners.

For more information on ethics and business conduct refer to

bhp.com/ethics

6.10 Digital security and data privacy

Digital security

Our business and operational processes across our value chain are

increasingly dependent on the effective application and adoption of

technology, which we use as a lever to deliver on our current and future

operational, financial and social objectives.

For more information on our approach to digital security

refer to OFR 8.1

Data privacy

We are committed to responsibly handling and protecting our people’s

personal data.

Our commitment to protecting personal information and privacy is

embodied in Our Code and BHP’s Data Privacy Principles.

BHP primarily collects and uses personal data from our candidates,

employees and contractors for the purposes of managing our business

operations and to ensure the health, safety and protection of our

workforce. We believe transparency and respect for any personal data

collected by BHP and our third parties are foundational to BHP’s Data

Privacy Framework.

Our Data Privacy Office is independent and oversees the implementation

and monitoring of BHP’s Data Privacy framework by the functions and

assets that collect and use personal data. We monitor for changes to

BHP’s operating environment and consider the impacts to the operation

of BHP’s Data Privacy Framework. With rapid changes to regulation

and community expectations, we engage regularly with various

external experts on changes to data privacy regulations and regulatory

enforcement activities.

Data is a key enabler to maintaining a safe, inclusive, and future-ready

workforce, which includes recent key initiatives, such as BHP’s pandemic

response, fatality elimination, Indigenous engagement, and to meet our

inclusion and diversity objectives.

Personal data collection by BHP is expected to adhere to BHP’s Privacy

by Design Framework. High data privacy risk activities that require the

collection and use of personal data are required to undergo a data privacy

impact assessment. This assessment considers the appropriateness of the

activity and defines the safeguards for the protection and responsible use

of personal data.

Senior leaders who are accountable for data privacy risks monitor key

metrics on a regular basis, meeting at least annually to review changes

to our global data privacy risk profile and share knowledge to improve

consistency in how an individual’s data is handled.

Data privacy breach simulations are conducted periodically to assess

our readiness to respond to data privacy incidents. BHP takes a people-

centric approach, prioritising activities that support and seek to rectify any

potential harm or loss of rights caused to an individual.

Data privacy training is required for all employees and contractors who

handle personal data as part of their responsibilities. This includes a new

joiners eLearn and periodic refresher courses. The FY2023 data privacy

refresher eLearn was assigned to 12,083 employees and contractors.

6.11 Value chain sustainability

Responsible supply chains

Responsible supply chains is one of our six social value pillars, with our

2030 goal being to create sustainable, ethical and transparent supply

chains together with our partners.

The following programs of work support our progress towards this

goal and indirectly support other pillars in our social value scorecard.

These programs are intended to help ensure that minerals are responsibly

sourced, produced and traced.

Responsible production and sourcing standards

BHP is committed to the adoption of a set of standards for the responsible

production and sourcing of minerals and metals. The adoption of these

standards is primarily aimed at ensuring we continuously improve against

industry best practices. By being independently assessed against these

standards, we can more transparently demonstrate to our stakeholders

our intent to be a responsible actor within the mining and metals industry

and for the global value chains we serve. This also allows us to align with

ESG-related requirements set out by national mining associations, industry

associations, commodity exchanges and emerging regulations.

During FY2023, we commenced implementation of the sustainability

standards strategy we outlined in our Annual Report 2022. Our strategy

defines our pathway for the implementation of responsible production and

sourcing standards and is focused on the foundations needed to enable a

more efficient adoption of standards to better position BHP’s participation in

the sustainability standards landscape.

In FY2023, we socialised our approach to standards and external

engagement with the Forum on Corporate Responsibility. We also worked

on standards development in collaboration with industry associations,

standards bodies, commodity exchanges and industry schemes, such

as the International Council for Mining and Metals (ICMM), Towards

Sustainable Mining (TSM), The Copper Mark, ResponsibleSteel, the

London Metal Exchange (LME) and the Organisation for Economic

Cooperation and Development (OECD). This included emphasising the

importance of harmonising standards to improve the focus on effective

implementation and comparability between companies’ disclosures

about their performance. We expect to continue our work with the

standards ecosystem in FY2024, to further improve harmonisation of the

standards landscape.

44 BHP Annual Report 2023

6 Sustainability continued

Standards accreditations

Our Chilean operations Escondida and Spence and Olympic Dam in

Australia maintained full accreditation against The Copper Mark during

FY2023 (following a provisional award in FY2022) to recognise their

responsible production practices. The Copper Mark is a voluntary

assurance framework that independently assesses participants

against 32 performance criteria across environmental, social and

governance dimensions.

For more information refer to

coppermark.org

Nickel West, Olympic Dam and WAIO completed independent third-party

verification of self-assessments against the ICMM Mining Principles and

associated Performance Expectations. The ICMM Mining Principles require

member companies to conduct a prioritisation process to determine which

assets will be subject to third-party validation across a three-year cycle.

All of BHP’s long-term operated assets (excluding NSW Energy Coal

and acquired OZ Minerals assets) have completed self-assessments

against the ICMM Mining Principles and the associated Performance

Expectations and the external validation sequence has been determined

in consideration of commitments made by BHP to other standards, to

enable operational efficiencies.

Metals and minerals due diligence

Our Responsible Minerals Program is our minerals and metals supply

chain due diligence management system, which is aligned with the

OECD’s Due Diligence Guidance for Responsible Supply Chains of

Minerals from Conflict-Affected and High-Risk Areas (OECD Guidance).

The program requires fit-for-purpose due diligence with respect to the

upstream minerals and metals supply chains for our operated assets

and third-party trading activities.

The program prioritises due diligence over suppliers of minerals and

metals where our operated assets or the inbound supply chain for the

products those assets produce have any extraction, transportation

or trade association with a conflict-affected and/or high-risk area.

The program applies exclusively to suppliers selling minerals and/or

metals directly into our operated assets that will physically form a part of

our products or selling minerals and/or metals to BHP that BHP intends

to market to a third party.

We commenced implementation of the Responsible Minerals Program

in FY2023, including the publication of our Responsible Minerals Policy.

In FY2024, we plan to undergo an assessment against the Joint Due

Diligence Standard for Copper, Lead, Molybdenum, Nickel and Zinc for

applicable sites, and we intend to publish our Step 5

report on our website

in accordance with the OECD Guidance. The Joint Due Diligence Standard

was established by The Copper Mark in collaboration with relevant metals

associations to promote responsible minerals and metals supply chains for

these commodities, aligned with the OECD Guidance.

Traceability

We see our core products as being important to the world’s energy

transition. We strive to provide quality products in a responsible and

more sustainable way. Against a backdrop of emerging regulations and

standards globally, we see product traceability as a key enabler to help

future-proof our supply chains.

In FY2023, we engaged with our customers, downstream partners,

industry experts and technology partners to define a multi-year product

traceability strategy. The strategy builds on BHP’s responsible supply

chain objectives and is focused on partnering with multi-stakeholder

alliances to shape the transparency and traceability ecosystem and

building the foundations needed to enable efficient adoption of emerging

standards and regulations.

While the strategy has been developed based on existing and likely future

regulatory and customer requirements, we will continue to actively monitor

and respond to new developments within the traceability landscape.

Value chain sustainability

Downstream

minerals

value chain

Upstream

minerals

supply chain

Minerals

production

(Outbound)

Value chain

standards

development

(Inbound)

Responsible

sourcing standards

alignment

(Operations)

Responsible production

standards alignment

ESG standards

governance,

advocacy and

development,

transparency

and traceability

6.12 Climate change

Our position

Our position on climate change continues to be shaped, broadened and

strengthened by our strategic interests and the dynamic global response.

We believe:

– warming of the climate is unequivocal, the human influence is clear and

physical climate-related impacts are unavoidable

– the world must continue to increase both the levels of ambition and pace

of greenhouse gas (GHG) emission reductions to meet the aims of the

Paris Agreement

– demand for renewable and low to zero GHG emission energy and

lower GHG emission technologies is likely to grow at unprecedented

rates as the world seeks to meet the aims of the Paris Agreement

while supporting responsible global economic development, including

progress on the United Nations Sustainable Development Goals

– commodities and materials we produce underpin this transition and are

critical to achieving global climate ambitions

– a circular economy plays an important role in reducing GHG emissions

associated with the extraction and use of mining products

– an acceleration of global effort to drive energy efficiency is a critical

element in avoiding, reducing and removing GHG emissions

– policies to encourage rapid action should be implemented in an

equitable manner to address competitiveness concerns, achieve

lowest cost abatement and support equitable change and transition

For the full statement of our position and more information

on our actions on climate change refer to

Our position at bhp.com/climate

1 Step 5 refers to the Five-Step Framework within the OECD Guidance.

Governance Financial Statements Additional Information

BHP Annual Report 2023 45

Operating and Financial Review

Our disclosures and approach to reporting

OZ Minerals

The contribution of the GHG emissions of the acquired OZ Minerals

operations and functions is not material to BHP’s operational and value

chain GHG emission reduction targets and goals for the purposes of

baseline adjustments or the FY2023 reported GHG emission inventory.

We plan to incorporate OZ Minerals-related GHG emissions into our

GHG emission inventory and adjust the baselines for our targets and

goals for FY2024 reporting (in alignment with GHG Protocol guidance).

As a result, except where expressly stated (e.g. for material transition

and physical climate-related risks), all GHG emissions and other climate-

related data, metrics or other information presented in this Report exclude

the impact of the acquired OZ Minerals business.

For more information on our reporting approach to OZ Minerals

integration (including for our climate-related disclosures) refer to

OFR 6.2 and OFR 8 and for OZ Minerals’ sustainability performance

and data for CY2022 refer to OZ Minerals’ 2022 Annual Report and

Sustainability Review and 2022 Sustainability Review Databook

TCFD-consistent disclosures

In accordance with the UK Listing Rules as set by the UK Financial

Conduct Authority, we believe that our disclosures are consistent with

the Task Force on Climate-related Financial Disclosures’ (TCFD) four

recommendations and 11 recommended disclosures.

The ‘Navigating our disclosures’ table that follows sets out each of the

TCFD’s recommended disclosures, grouped under the four thematic

areas and where our aligned disclosures can be found within this Report,

together with reference to where voluntary additional information can

be found in the BHP ESG Standards and Databook 2023.

The ‘Navigating our disclosures’ table also sets out where information

about progress against our Climate Transition Action Plan 2021 can

be found.

Supplementary disclosures that have been published outside of this

Report (for FY2023 or in prior years) include:

– the energy and resources modelling from BHP’s 1.5°C scenario,

which was conducted in CY2020, published in the BHP Climate

Change Report 2020, available at bhp.com/climate. For more

information about our scenario analysis, refer to Transition

to a low-carbon economy, later in this OFR 6.12

– our Climate Transition Action Plan 2021 (CTAP), available at

bhp.com/climate. We describe the CTAP below, together with

our progress (refer to the ‘Navigating our disclosures’ table)

– a detailed description of how our measurement of GHG emissions

aligns with the GHG Protocol methodology in the BHP Scopes 1, 2

and 3 GHG Emissions Calculation Methodology 2023. GHG emission

data for recent prior year periods, in addition to FY2023, are available

in the BHP ESG Standards and Databook 2023

Both the BHP Scopes 1, 2 and 3 GHG Emissions Calculation

Methodology 2023 and the BHP ESG Standards and Databook 2023

are available at bhp.com/climate

Navigating our disclosures

Task Force on Climate-related Financial

Disclosure recommended disclosures

Our response

Governance: Disclose the organisation’s governance around

climate-related risks and opportunities.

a) Describe the board’s oversight of

climate-related risks and opportunities

– This OFR 6.12: Governance,

pages 56–57

– Governance: Corporate Governance

Statement, pages 99–106

b) Describe management’s role in

assessing and managing climate-

related risks and opportunities

– This OFR 6.12: Governance,

pages 56–57

– Governance: Corporate Governance

Statement, pages 107-111

– Governance: Remuneration Report,

pages 118–126

Strategy: Disclose the actual and potential impacts of climate-related risks

and opportunities on the organisation’s businesses, strategy, and financial

planning where such information is material.

a) Describe the climate-related risks

and opportunities the organisation

hasidentifiedovertheshort,

medium, and long term

– This OFR 6.12: Climate-related

risk management, page 51

– This OFR 6.12: Transition to a

low-carbon economy, pages 51–54

– This OFR 6.12: Physical climate-

related risk and adaptation,

pages 54–56

– OFR 8.1: Risk factors, pages 73–81

– Financial Statements: Note 16,

pages 162–165

b) Describe the impact of climate-

related risks and opportunities

on the organisation’s businesses,

strategy,andfinancialplanning

– This OFR 6.12: Operational GHG

emission reductions, pages 46–48

– This OFR 6.12: Value chain GHG

emission reductions, pages 49–50

– This OFR 6.12: Carbon credits

and offsetting, pages 50–51

– This OFR 6.12: Climate-related

risk management, page 51

– This OFR 6.12: Transition to a

low-carbon economy, pages 51–54

– This OFR 6.12: Physical

climate-related risk and adaptation,

pages 54–56

– This OFR 6.12: Metrics, targets

and goals, pages 56–60

– OFR 8.1: Risk factors, pages 73–81

– Financial Statements: Note 16,

pages 162–165

c) Describe the resilience of the

organisation’s strategy, taking into

consideration different climate-

related scenarios, including

a 2°C or lower scenario

– This OFR 6.12: Transition to a

low-carbon economy, pages 51–54

Risk Management: Disclose how the organisation identifies, assesses,

and manages climate-related risks.

a) Describe the organisation’s

processes for identifying and

assessing climate-related risks

– This OFR 6.12: Climate-related

risk management, page 51

– OFR 8: How we manage risk,

pages 72–73

b) Describe the organisation’s

processes for managing

climate-related risks

– This OFR 6.12: Climate-related

risk management, page 51

– This OFR 6.12: Physical climate-

related risk and adaptation,

pages 54–56

– OFR 8: How we manage risk,

pages 72–73

c) Describe how processes for

identifying, assessing, and managing

climate-related risks are integrated

into the organisation’s overall

risk management

– This OFR 6.12: Climate-related

risk management, page 51

– OFR 8: How we manage risk,

pages 72–73

Metrics and Targets: Disclose the metrics and targets used to assess

and manage relevant climate-related risks and opportunities where

such information is material.

a) Disclose the metrics used by the

organisation to assess climate-

related risks and opportunities

in line with its strategy and risk

management process

– This OFR 6.12: Transition to a low-

carbon economy, pages 51–54

– This OFR 6.12: Metrics, targets

and goals, pages 56–60

– Governance: Remuneration Report,

pages 118–126

Voluntary additional disclosures:

– BHP ESG Standards and Databook

2023: available at bhp.com/climate

b) Disclose Scope 1, Scope 2, and,

if appropriate, Scope 3 GHG

emissions, and the related risks

– This OFR 6.12: Metrics, targets

and goals, pages 56–60

c) Describe the targets used by the

organisation to manage climate-

related risks and opportunities

and performance against targets

– This OFR 6.12: Operational GHG

emission reductions, pages 46–48

– This OFR 6.12: Value chain GHG

emission reductions, pages 49–50

– This OFR 6.12: Metrics, targets

and goals, pages 56–60

46 BHP Annual Report 2023

6 Sustainability continued

Progress against Climate Transition

Action Plan 2021 commitments Our response

Pursuing net zero – our role, opportunity

to act, and a suite of actions to

drive results

– This OFR 6.12: Operational GHG

emission reductions, pages 46–48

– This OFR 6.12: Value chain GHG

emission reductions, pages 49–50

– This OFR 6.12: Metrics, targets

and goals, pages 56–60

Our position and progress on GHG

emission reduction targets and goals

(Scopes 1, 2 and 3)

– This OFR 6.12: Operational GHG

emission reductions, pages 46–48

– This OFR 6.12: Value chain GHG

emission reductions, pages 49–50

– This OFR 6.12: Metrics, targets

and goals, pages 56–60

Assessing capital alignment with a 1.5ºC

world – our approach to strategy and

operational and commercial decision-

making in consideration of a range of

different global, sectoral and regional

scenarios, including a 1.5ºC outcome

– This OFR 6.12: Transition to a

low-carbon economy, pages 51–54

– Financial Statements: Note 16,

pages 162–165

– BHP Climate Change Report 2020:

available at bhp.com/climate,

pages 13–21

Just transition/Equitable change and

transitions – our approach to dealing

with the challenges associated with

the transition of our communities and

workforce as assets come to the end of

their operating life

– This OFR 6.12: Transition to a

low-carbon economy, pages 51–54

– OFR 6.14: Equitable change and

transition at New South Wales

Energy Coal, page 65

Climate policy engagement, including

our strengthened approach to reviewing

our membership of industry associations

– This OFR 6.12: Transition to a

low-carbon economy, pages 51–54

– bhp.com/sustainability/climate-

change/advocacy-on-climate-policy

– bhp.com/about/operating-ethically/

industry-associations

Climate governance – This OFR 6.12: Governance:

pages 56–57

– Governance: Corporate Governance

Statement, pages 99–111

– Governance: Remuneration Report,

pages 118–126

For more information on our alignment with other sustainability and

ESG standards, including the Climate Action 100+ Net Zero Company

Benchmark and GHG Protocol refer to BHP ESG Standards and

Databook 2023, available at bhp.com/climate

Climate Transition Action Plan

InSeptember2021,BHPpublisheditsfirstClimateTransitionActionPlan

(CTAP), which sets out the strategic approach to achieving our long-

term GHG emission reduction targets and goals and our commitment

to additional actions.

Given the global nature of our business, customers and supply chain, the

development of the CTAP considered the aims of the Paris Agreement

and the then current commitments and policy settings of relevant key

jurisdictions at that time. The CTAP was published before Australia (where

our global headquarters are located) published its Long-Term Emissions

Reduction Plan and passed legislation to enshrine its national targets

for 2030 and net zero by 2050. We continue to monitor and take into

consideration the evolving policy and regulatory landscape in our relevant

jurisdictions as part of the periodic review by Management and the Board

of the setting of and progress towards our operational and value chain

GHG emission reduction targets and goals.

BHP’s CTAP was approved with 84.9 per cent of votes in favour in the

‘Say on Climate’ advisory vote at the 2021 Annual General Meetings.

As part of that process, we proposed holding an advisory vote in relation to

BHP’s CTAP every three years and will hold the next advisory vote in 2024.

Operational GHG emission reductions

Overview

In FY2023, we reduced operational GHG emissions (Scopes 1 and 2 from

our operated assets) by 11 per cent from FY2022 and our operational GHG

emissions have fallen 32 per cent since FY2020, the baseline year for our

target and goal (adjusted for methodology changes and divestments; for

more information refer to Metrics, targets and goals later in this OFR 6.12).

This represents positive, early action towards reducing GHG emissions

to a level aligned to our medium-term target. However, the challenge to

decarbonise in coming years is anticipated to grow due to expanding

business activity and the current lack of available technology solutions,

particularly for diesel displacement. Progress towards our medium-term

target is expected to be non-linear, but we remain on track to meet it by

FY2030. We did not account for the retirement of any carbon credits in

FY2023 to achieve this reduction or to support meeting our operational

GHG emission reduction medium-term target and long-term goal.

Despite our reduction of operational GHG emissions, total operational energy

consumption increased by 4 per cent from FY2022 (adjusted for methodology

changes and divestments; for more information refer to Metrics, targets and

goals later in this OFR 6.12). This was largely driven by increased fuel and

electricity consumption at Olympic Dam compared to FY2022 when the

asset was undergoing scheduled maintenance, as well as increased electricity

usage at Escondida and Spence and increased fuel usage at BMA.

The GHG emission intensity of our operated assets in CY2022 is estimated

torankinthefirstquartile(ironoreandnickel)orfirsthalf(copperand

metallurgical coal) of global mining operations analysed,

based on CY2022

data from Skarn Associates and reported BHP data for CY2022 (as Skarn

Associates’ data is prepared on a calendar year basis). For more information

on how we calculate and compare GHG emissions intensity, refer to the

BHP ESG Standards and Databook 2023, available at bhp.com/climate.

Our operational GHG emission reduction strategy continues to prioritise

structural abatement in areas that are technically and commercially feasible,

while working in collaboration with our suppliers, partners and peers on

accelerating the development of other potential decarbonisation technologies.

In June 2023, we updated investors on our progress and plans to achieve our

operational GHG emission reduction medium-term target and long-term goal.

For more information on our progress and plans for operational

decarbonisation refer to

bhp.com/news/media-centre/reports-presentations/2023/06/

operational-decarbonisation-investor-presentation

Medium-term target (FY2030) and long-term goal (CY2050)

– Reduce operational GHG emissions by at least 30 per cent from FY2020 levels

by FY2030.

– Achieve net zero operational GHG emissions by 2050.

Progress against adjusted baseline

– FY2023: 9.8 MtCO

-e

– FY2022: 11.0 MtCO

-e

– FY2021: 14.6 MtCO

-e

– FY2020 baseline: 14.5 MtCO

-e

Baseline and subsequent years have been adjusted for

methodology changes and divestments. For more information

on the essential definitions, assumptions and adjustments for

this target and goal refer to Metrics, targets and goals, later in

this OFR 6.12

Delivered in FY2023

– reduced operational GHG emissions by 11 per cent from FY2022 (adjusted for

methodology changes and divestments; for more information refer to Metrics,

targets and goals, later in this OFR 6.12). This was achieved primarily through

Power Purchase Agreements (PPAs) for renewable and lower GHG emission

electricity (such as hydro and gas generation) for our operated assets

– signedtwonewrenewablePPAs.Thefirst,withNeoen,istoprovide

renewable electricity to Olympic Dam commencing in FY2026 and the

second, with Alinta Energy, is to provide renewable electricity to WAIO’s Port

Hedland port facilities commencing in FY2025

– began a 12-month trial at Olympic Dam of a fully electric Jumbo (used in

underground mining development to drill holes) that does not emit any GHG

emissions in operation. This trial builds on other electric vehicle initiatives at

Nickel West and BMA’s Broadmeadow mine, building towards the maturation,

scale and deployment of technological alternatives to diesel-based vehicles

and material movement

– signed new and progressed work under existing partnership agreements with

strategic original equipment manufacturers, such as Caterpillar, Komatsu,

ProgressRail and Wabtec, to accelerate diesel displacement technologies for

material movement

– deepenedourunderstandingofthemeasurementandquantificationof

fugitive methane emissions from BMA using emerging technologies, such as

methane emissions-sensing satellites, drones and on-site measurements.

We also began a vent air methane destruction project (where methane is

vented from a mine in a way that it can be captured and combusted) at

BMA’s Broadmeadow mine

– met our social value scorecard short-term milestone through

completion or progression of study phase projects in BHP’s operational

decarbonisation plan

1 Global mining operations analysed cover seaborne iron ore operations, export

metallurgical coal mines, copper mines and nickel mines and processing plants.

Governance Financial Statements Additional Information

BHP Annual Report 2023 47

Operating and Financial Review

Shifting to renewable and other low to zero GHG emission electricity

Most of our operated assets are grid-connected in geographic areas that

have access to renewable electricity through a network. This has enabled

us to sign a number of renewable electricity PPAs for a proportion of our

demand (on current projections) rapidly and at-scale. We aim to prioritise

and incentivise new generation where commercially feasible, with eight

out of nine of our current PPAs wholly or partially enabling new generation.

All PPAs to date have been commercially attractive and operationally low

risk, which has enabled reductions to our operational GHG emissions at

low or no additional cost. Renewable electricity PPAs for our operated

assets have been the primary reason for a reduction of our Scope 2

emissions by 70 per cent since FY2020 (adjusted for methodology

changes and divestments; for more information refer to Metrics, targets

and goals, later in this OFR 6.12)

Switching from diesel to electricity to power our material movement is

likelytosignificantlyincreasetheamountofelectricityrequiredatoursites.

We are studying the spare network capacity and the ability to meet this

load growth with existing networks. We continue to monitor commitments

by our peers that are expected to increase future electricity demand and to

work with our network service providers to understand and plan for future

capacity. Some on-site renewable or other low to zero GHG emission

electricity may be required due to future lack of available capacity, as well

as to achieve potential savings on network costs.

Displacement of diesel

Primarily used for material movement, diesel represents our largest source

of operational GHG emissions and displacement is a core technical

challenge.Ourstudiesindicatethatelectrificationthroughbatteryelectric

vehicles is the most technically feasible and commercially attractive

solution for material movement for most of our operated assets.

We are working with original equipment manufacturer partners and industry

peers to accelerate the availability of battery electric vehicle technology

for mining vehicles and equipment. We have seen progress with our

original equipment manufacturer partners and peer collaboration to date.

We expect original equipment manufacturers to be ready to produce

battery electric vehicles at scale in the latter half of this decade.

Giventhistrajectory,theremaybeinstanceswherevehiclefleetswillneed

tobereplacedbydieselhaultruckstoensurecontinuedsafeandefficient

production.Forexample,asignificantproportionofourWAIOminingfleet

is due for replacement prior to the anticipated availability of battery electric

vehiclesolutions,whichwouldrequireustopurchaseasignificantquantity

of diesel haul trucks. This is factored into our decarbonisation planning.

In relation to hard-to-electrify uses of diesel, such as for bulldozers, most

are anticipated to be addressed in the 2030s under the assumption of

improved technical capabilities associated with electric options, more

commercially attractive sources of sustainable biofuels or other technically

feasible pathways.

Managing fugitive methane

Fugitive methane emissions from coal mining operations, although relatively

small in relation to other GHG emission sources at BHP’s operated assets,

are considered hard-to-abate as there are very few available solutions that

are at a satisfactory technological and commercial readiness level for use in

the mines we operate. Those fugitive methane abatement technologies that

are proven do not address 100 per cent of the methane emissions, so it is

likelythatasizeableresidualvolumewillremainuntreatedwithoutsignificant

technological progress and further investment.

In the short term, we have begun a vent air methane destruction project

at BMA’s Broadmeadow, our only underground metallurgical coal mine.

Thisprojectoffersco-benefitsbyreducingfugitivemethaneemissionsand

reducing safety risks for workers when underground.

We are working with satellite imaging and data companies to help increase

our understanding of fugitive methane emission levels over time as well

as any potential changes associated with mining levels (given the general

tendency for methane density to increase as coal mines deepen).

Our other mines at BMA, which are open-cut operations, have geological

and technology readiness challenges for reduction of fugitive methane

emissions. Draining is currently the dominant technology used in methane

abatement at open-cut coal mining operations, but the majority of draining

occurspriortominingactivities.Therefore,theabilitytoretrofitadraining

solution for an existing coal mine remains unclear. We continue to monitor

for new and evolving abatement technologies, with funding allocated to

further explore suitable opportunities as they arise.

We plan to begin drilling at multiple BMA sites in FY2024 to obtain

a deeper understanding of methane quality and quantity (in both

magnitude and density) and to help inform future versions of our methane

management plan.

For more information on our measurement methods for coal

mine fugitive methane emissions refer to BHP Scopes 1, 2 and 3

GHG Emissions Calculation Methodology 2023, available at

bhp.com/climate

Capital allocation towards pathways and solutions

Decarbonisation is embedded in our annual investment and prioritisation

processes. All investment decisions consider the quantity of GHG emissions

associated with the project, the cost per tonne of CO

-e associated with the

project and the alignment with the Group pathways to a net zero trajectory.

In FY2023, we spent US$122 million on initiatives associated with

operational GHG emission reductions, together with value chain GHG

emission reductions in areas such as steelmaking and shipping, and BHP

Venturesinvestments.Thisfiguredoesnotincludetheoperatingexpenditure

associated with renewable electricity arrangements established at a number

of our operated assets, which collectively represented the main source of

operational GHG emission abatement for BHP in FY2023.

From FY2024 to FY2030, we expect to spend around US$4 billion (nominal

value)onoperationaldecarbonisation,withplansreflectinganannualcapital

allocation of between approximately US$250 million and approximately

US$950millionperyearoverthenextfiveyears.

On current assumptions, the overall portfolio of decarbonisation projects

to support achievement of our medium-term target is expected to deliver

a positive net present value (NPV) for the Group, while to date, most

implemented projects have delivered a positive or neutral NPV.

BHP Ventures also continues to build a portfolio of investments to help

accelerate innovation in the mining industry through assessment and

execution of additional investments across emerging technology areas,

including long-duration energy storage solutions, diesel displacement and

carbon dioxide removal.

For more information on our range of investments to drive

decarbonisation and sustainable growth refer to

bhp.com/about/our-businesses/ventures

Projected and potential operational abatement pathways

and capacity

Our operational GHG emission abatement pathway to FY2030 sets out our

material decarbonisation projects and initiatives that are intended to achieve

our medium-term target (as shown in the chart ‘Projected operational GHG

emission abatement pathway to FY2030’ on the next page). Importantly, we

are not planning to use carbon credits to offset GHG emissions to meet our

medium-term target.

Many of the decarbonisation projects planned to commence in the 2020s

are likely to extend beyond our medium-term target period and to make a

substantial contribution towards our long-term goal. We seek to prioritise

projects that are both technically and commercially de-risked, with

preference given to projects that can be delivered with a positive NPV.

Potential projects are evaluated and ranked based on key variables that

help to evaluate their risk (threat and opportunity), including technology

readiness, operational integration, the maturity and certainty of abatement

andthefinancialmetricsassociatedwiththeproject.

As we look beyond our medium-term target towards our long-term goal

of net zero operational GHG emissions, we will continue to embed

decarbonisation objectives into mine designs and processing options while

continuing initiatives to reduce existing GHG emission sources through our

plans for widespread diesel displacement. We intend to do this largely via

electrificationandreducinggasconsumptionatoursmeltersandrefineries

usingoptionssuchasdirectelectrificationandgreenhydrogen,subjectto

evaluation of their risk. Fugitive methane is likely to remain a hard-to-abate

GHG emission source. However, we estimate up to 50 per cent of BMA’s

total forecast fugitive methane emissions could be extracted and actively

managed with the use of currently available technologies.

48 BHP Annual Report 2023

6 Sustainability continued

Due to the nature of decarbonisation and the need for us to decarbonise our

operations while we continue to maintain and grow the business, we expect the

pathway to net zero will not be a steady downward trajectory, but will include

temporaryincreasesassociatedwithnewandexpandedoperations,fleet

replacement and other operational realities (as shown in the chart below).

Our decarbonisation pathway can be compared against a cumulative budget,

reflectingahypotheticalstraightlinebetweenourFY2020baselineand

FY2030 medium-term target, and another hypothetical straight line between our

FY2030 medium-term target and CY2050 long-term goal (refer to the charts

below). Our current cumulative planned performance has us on track to remain

within the cumulative budget until around FY2040, in part as a result of early action

taken to date. The potential emergence of accelerated decarbonisation options in

the 2030s and 2040s may further accelerate our GHG emission reductions.

The role of offsetting in our operational decarbonisation pathway

Because of our prioritisation of structural abatement, our decarbonisation

pathway to FY2030 does not assume the use of carbon credits to meet our

medium-term target. However, if our planned abatement projects fail to deliver

theexpectedGHGemissionreduction,weretaintheflexibilitytousehigh-

integrity carbon credits (those that meet our integrity standards) to manage our

pathway to FY2030.

Looking beyond FY2030, we may purchase and retire high-integrity carbon

credits to offset operational GHG emissions that we have determined cannot

beentirelyavoidedduetotechnological,physicalorfinancialconstraints.

These carbon credits may be used to offset operational GHG emissions and

support achievement of our long-term goal. For example, carbon credits may be

used to offset fugitive methane emissions considered hard-to-abate.

Our individual operated assets may also be subject to regulated GHG emission

thresholds and regional carbon pricing (including GHG emission trading

schemes). In cases where our direct GHG emission reductions are not able to

meettherequirementsspecifiedfortheseschemes,wemaypurchaseandretire

eligible carbon credits to meet our compliance obligations. We do not intend to

account for these carbon credits in order to reach our medium-term target.

For more information on how we expect to use carbon credits, our

integrity standards for carbon credits and the anticipated impact

of Australia’s Safeguard Mechanism refer to Carbon credits and

offsetting at bhp.com/climate

Projected operational GHG emission abatement pathway to FY2030

32%

Operational GHG emissions (MtCO2-e)

FY2030

medium-term

target

FY2023

Natural

gas

Other

changes

Australia

PPAs

Chile

PPAs

FY2020

Organic

growth

New

PPAs

Diesel

Fugitive

methane

and other

sources

42%

61%

19%

20%

43%

15%

Diesel Electricity Fugitive methane and other sources Organic growth

-2.5

2.5

7.5

12.5

FY2020 FY2030

FY2040

Operational GHG emissions (MtCO2-e)

Projected and potential operational GHG

emission abatement pathway to CY2050

CY2050

Diesel

Negative GHG

emission solutions

Natural gasElectricity

Uncertainty range

Fugitive methane and other sources

BHP’s net zero

trajectory

Decarbonisation

pathway

100

150

200

250

300

Operational GHG emissions (MtCO

2-e)

Projected cumulative operational GHG emissions

to CY2050

FY2020 FY2030 FY2040 CY2050

Uncertainty range

BHP’s net zero

trajectory

Decarbonisation

pathway

1 Future operational GHG emission estimates are based on latest annual business plans. Excludes acquired OZ Minerals assets and plans. FY2020 to FY2022 GHG emission data has

been adjusted for methodology changes and divestments; for more information refer to Metrics, targets and goals, later in this OFR 6.12. ‘Other changes’ represents a mix of GHG

emission reduction initiatives and changes in production. ‘Organic growth’ represents increase in GHG emissions associated with our operations. ‘New PPAs’ refers to GHG emission

reductions from renewable PPAs already entered and/or intended to be signed with reductions occurring post FY2023 and before FY2030. ‘Fugitive methane and other sources’ includes

(as part of ‘other sources’) other feedstocks and heat sources, such as coal, coke, fuel oil and LPG and mineral carbonation. GHG emission calculation methodology changes may affect

the information presented in this chart. Forecast information is subject to change due to technical, operational, or commercial risks that may impact future outcomes.

2 Future GHG emission estimates are based on latest annual business plans. Excludes acquired OZ Minerals assets and plans. FY2020 to FY2022 GHG emission data has been

adjusted for methodology changes and divestments; for more information refer to Metrics, targets and goals, later in this OFR 6.12. ‘Decarbonisation pathway’ represents planned

decarbonisationactivitiestoreachBHP’soperationalGHGemissionreductiontargetandgoal.‘Uncertaintyrange’referstohigher-riskoptionscurrentlyidentifiedthatmayenablefasteror

more substantive decarbonisation, but which currently have a relatively low Technology Readiness Level, higher operational integration risk and/or are not yet commercially available and

includes projects that may require changes to recognition of carbon sequestration such as mineral carbonation. ‘BHP’s net zero trajectory’ refers to a hypothetical straight line between our

FY2020 baseline and FY2030 medium-term target and another hypothetical straight line between our FY2030 medium-term target and CY2050 long-term goal. ‘Negative GHG emission

solutions’ include carbon credits (avoidance, reductions or removals) or other technologies that result in emission reductions. This shows the requirement in order to reach net zero if

decarbonisationatthelowerlineofthe‘Uncertaintyrange’wereachieved(butdoesnotreflectprobability).‘Fugitivemethaneandothersources’includes(aspartof‘othersources’)other

feedstocks and heat sources, such as coal, coke, fuel oil and LPG, and use of self-generated carbon credits. GHG emission calculation methodology changes may affect the information

presented in these charts. ‘Fugitive methane and other sources’ is estimated in accordance with the Australian National Greenhouse and Energy Reporting measurement methodology

anddoesnotreflectthetendencyformethanedensitytoincreaseascoalminesdeepen,duetocurrentuncertaintywithrespecttofutureopportunitiestomanagemethaneatourBMA

mines. Forecast information is subject to change due to technical, operational or commercial risks that may impact future outcomes.

Governance Financial Statements Additional Information

BHP Annual Report 2023 49

Operating and Financial Review

Value chain GHG emission reductions

Overview

Long-term goal (CY2050)

– We are pursuing the long-term goal of net zero Scope 3 GHG emissions by

2050. Achievement of this goal is uncertain, particularly given the challenges

of a net zero pathway for our customers in steelmaking, and we cannot ensure

the outcome alone.

Progress against restated baseline

– FY2023: 370.5 MtCO

-e

– FY2022: 401.3 MtCO

-e

– FY2021: 400.6 MtCO

-e

– FY2020 baseline: 413.0 MtCO

-e

Baseline and subsequent years have been restated for

methodology changes. For more information on the essential

definitions, assumptions and adjustments for this goal refer

to Metrics, targets and goals, later in this OFR 6.12

We seek to address Scope 3 emissions by focusing on how we invest,

partnerandinfluencetosupportGHGemissionreductionsinour

value chain.

Our reported Scope 3 emission inventory for FY2023 remains dominated

by the downstream GHG emissions from the use of iron ore and

metallurgical coal to produce steel (84 per cent) and the combustion of

energy coal (10 per cent). In hard-to-abate sectors, such as steelmaking

and shipping, our investments and collaborations may not begin to make

a material impact on value chain GHG emissions associated with our

business for a decade or more. However, our planned closure of NSWEC

by the end of FY2030 is anticipated to result in a material reduction in our

reported Scope 3 Category 11, Use of sold product emissions. This closure

is intended to almost entirely reduce downstream GHG emissions from

energy coal combustion in our inventory, although a small residual amount

of these GHG emissions may remain in our reported Scope 3 emission

inventory from our BMA operations, as BHP has historically marketed a

small portion of BMA products against energy coal indexes.

For additional transparency to assist tracking of our progress, we are

disclosing a baseline year of FY2020 for our value chain GHG emission

long-term goal, consistent with our operational GHG emission long-

term goal of net zero, together with a baseline year of FY2020 for our

medium-term goal for steelmaking and CY2008 for our medium-term

goal for shipping (the latter for alignment with the International Maritime

Organisation). We are reviewing our approach to baseline adjustments

for material acquisitions and divestments for our Scope 3 targets and

goals, and may calculate and include adjusted baselines in future reports.

As measurement of our inventory improves, this may also lead to changes

tothebaselinefiguresforScope3emissions.Wedidnotaccountforthe

retirement of any carbon credits in FY2023 for the purposes of calculating

our progress towards achieving our value chain GHG emission targets

and goals.

Improving GHG emission measurement is essential to quantifying the GHG

emission reductions in our value chain, as our current Scope 3 emission

estimationsmaynotreflectortracktheimpactofsomeoftheactions

we are taking now to progress towards our long-term goal. We do not

anticipatesignificantreductionsinourreportedScope3emissioninventory

in the medium term, in part due to the way we currently estimate Scope

3emissions,whichisgenerallynotsupplier-orcustomer-specificand

thereforewouldnotreflecttheGHGemissionreductionstheyachieve.

We are seeking ways to improve the availability of data. For example,

in shipping we have had early successes in developing a carbon

accounting and decision support system tailored to ship chartering

(DNV’s Veracity data platform). In other areas, we aim to progressively

improve Scope 3 measurement capability and we intend to partner with

our GHG emission intensive customers and suppliers to address these

challenges. We are preparing cradle-to-gate life cycle assessments of

some of our products, starting with nickel and metallurgical coal with an

aim to complete these in FY2024 in order to meet customer requests and

growing market expectations.

Steelmaking

Overview

BHP is supporting the industry and our customers to develop solutions to reduce

GHG emission intensity from steelmaking through a mix of research, customer

partnerships and industry advocacy.

Medium-term goal (CY2030)

– Support industry to develop technologies and pathways capable of 30 per

cent emissions intensity reduction in integrated steelmaking, with widespread

adoption expected post-2030.

Progress against goal

– Metric: Financial value committed in steelmaking partnerships

and ventures to date

– FY2023: US$114 million to date (excluding in-kind contributions)

For more information on the essential definitions, assumptions

and adjustments for this goal refer to Metrics, targets and goals,

later in this OFR 6.12

Delivered in FY2023

– we now have collaborative partnerships with ArcelorMittal, China Baowu,

JFE Steel, HBIS Group, POSCO, Tata Steel and Zenith Steel who collectively

represent approximately 19 per cent of reported global steel production

(World Steel in Figures 2023, World Steel Association). These partners

account for direct sales in FY2023 of approximately 33 per cent of our iron

ore and metallurgical coal

– continued lab and pilot scale trials of electrolytic iron production from our

iron ores through our BHP Ventures investment companies Boston Metal

and Electra

– engaged with steelmaking customers who account for approximately

83 per cent of our FY2023 direct sales to exchange views on potential

decarbonisation pathways and discuss ways to align GHG emission

calculation methodologies

Pathways and strategy

Our collaboration partnerships in the steel sector (described in the

followingtable)reflectthemultiplepathsbeingexploredtoreach,and

our initial steps towards, a potential ‘green end state’, which is the label

we give to the stage in our steel decarbonisation framework where

widespread ‘near zero emission steel’ production could be achievable

(as per the ResponsibleSteel International Standard 2.0 Performance

Level 4 threshold).

For more information on the potential primary steelmaking technology

pathways for our Pilbara ores refer to

bhp.com/news/prospects/2023/06/pathways-to-decarbonisation-

episode-seven-the-electric-smelting-furnace

Partners Projects

Blast furnace and basic oxygen furnace potential pathway

China Baowu – completed Phase 1 R&D and launched the Low Carbon

Knowledge Centre for ongoing R&D and technology piloting

Zenith – low-carbon emission iron ore sintering

– feasibility of low-fossil carbon gas injection

HBIS – enhanced lump for low-carbon emission blast furnace

JFE, POSCO – coke and ferrous properties for low carbon emission

blast furnace

Tata Steel – generation and use of biogenic carbon in steelmaking

ArcelorMittal, HBIS,

China Baowu

– application of carbon capture and/or utilisation technologies

Direct reduced iron and electric smelting potential pathway

JFE, HBIS, China

Baowu, POSCO,

Technology

providers

– use of BHP iron ores in blends for direct reduced

iron production

– R&D and trials in different direct reduced iron

furnaceconfigurations

– joinedthePOSCOHyrexpartnershipforfluidisedbed

direct reduced iron

University of

Newcastle, Hatch

– bench-scale R&D on electric smelting furnace

– started design study for small pilot scale electric smelting

furnace facility to establish viability and share learnings on

raw material and operational parameters

Electrolysis potential pathway

Boston Metal,

Electra

– lab and pilot trials of electrochemical metal production

from BHP ores

50 BHP Annual Report 2023

6 Sustainability continued

Shipping

Overview

We are one of the largest dry bulk charterers in the world and aim to use

our chartering size and scale to increase the speed of the shipping industry’s

progresstowardsdecarbonisation.Weseektoinfluencethesupplychainand

broader market by creating demand for lower and zero GHG emission fuels

andenergyefficienttechnologiesinshipping.

Medium-term goal (CY2030)

– Support 40 per cent emission intensity reduction of BHP-chartered shipping

of BHP products.

Progress against baseline

– FY2023: 3.2 gCO

-e per deadweight tonne (dwt) per nautical mile (nm)

– CY2008 baseline: 5.4 gCO

-e/dwt/nm

Long-term target (CY2050)

– Net zero by 2050 for the GHG emissions from all shipping of BHP products.

Progress against baseline

– FY2023: 6.1 MtCO

-e

– FY2022: 7.4 MtCO

-e

– FY2021: 7.5 MtCO

-e

– FY2020 baseline: 7.1 MtCO

-e

For more information on the essential definitions, assumptions

and adjustments for this goal refer to Metrics, targets and goals,

later in this OFR 6.12

Delivered in FY2023

– GHG emission intensity of BHP-chartered shipping is 41 per cent below

CY2008, the baseline year for our medium-term goal, representing positive,

early action towards reducing GHG emission intensity to a level aligned

to our medium-term goal. The challenge to maintain and reduce GHG

emission intensity even further in coming years will grow due to expanding

business activity and the availability of lower and zero GHG emission

intensity solutions, however, we remain on track to meet this goal

– charteredfouradditionaldual-fuelledliquefiednaturalgas(LNG)vessels

capable of reducing GHG emissions by up to 30 per cent per voyage when

runonLNGcomparedtoconventionalfuelandtakingintoaccountefficiency

ofthevesseldesign.BHPnowhasfivedual-fuelledLNGvesselsinour

time-charteredfleet.WeviewLNGasatransitionalfuelandareexploring

other interim GHG emission abatement options for shipping, such as biofuels,

pending suitable availability of low to zero GHG emission fuels

– collaborated with a consortium of miners, shippers and the Global Maritime

Forum to analyse the feasibility of usage of lower and zero GHG emission

ammonia. The subsequent report ‘Fuelling the decarbonisation of iron ore

shipping between Western Australia and East Asia with clean ammonia’

anditsfindingsareavailableatglobalmaritimeforum.org

– issued an Expression of Interest to establish an ammonia value chain for

design and build of ammonia-fuelled vessels and supply of ammonia as a

fuel. This proposed project aims to support establishment of infrastructure

related to the supply of ammonia and build regulatory alignment in

jurisdictions across the shipping supply chain for safe handling, bunkering

and storage

– executedafixed-term(oneyear)agreementtointroducebiofuelsintothe

fuel mix for shipping of BHP’s products for certain voyages, resulting in

up to 19 per cent GHG emission reduction per voyage leg compared to

conventional fuel (with the level of reduction depending on the bunkering

specification).ThebiofuelsusedarecertifiedundertheInternational

SustainabilityandCarbonCertificationsystem

– pioneered real-time measurement, exchange and analysis of quality-assured

voyage data with ship owners through DNV’s Veracity data platform to enable

BHP to optimise and introduce chartering choices as a strategic lever by

selectingvesselswithacomparativelylowerGHGemissionprofile

Pathways and strategy

Vessel propulsion is still primarily powered by the combustion of fuel oil.

The long distances travelled, need for suitable port infrastructure, long life

of vessels, safety concerns and nascent alternative fuel options contribute

to making this a hard-to-abate sector. As a large shipping customer,

we play a number of important roles, including to:

– help create demand for lower and zero GHG emission fuels, such as

ammonia, which assists to accelerate the adoption of technologies once

provenandprovidesuppliersconfidencetomakeinvestmentdecisions

– partner to bring new vessel propulsion technologies (e.g. wind assisted

propulsion) to maturity to reduce or eliminate the use of bunker fuel

– advocate for industry regulations to increase the speed and scale

of shipping decarbonisation

– use real-time data analytics to optimise vessel and route selection

toimproveefficiency

Suppliers

Overview

In FY2023, we spent approximately US$20.6 billion on goods and services

from approximately 8,000 suppliers. Our top 500 suppliers by spend make up

approximately 70 per cent of this spend and we are prioritising our engagement

withthiscohortaspartofthefirststepstowardsourlong-termtarget.

We are not currently able to measure the Scopes 1 and 2 emissions of our

directsuppliers(thespecificboundaryofthistarget),andthereforeScope3

Category 1 Purchased goods and services GHG emissions are currently used

as a proxy for both the FY2020 baseline and subsequent years of our long-

term target for suppliers.

Long-term target (CY2050)

– Net zero by 2050 for the operational GHG emissions of our direct suppliers.

Progress against restated baseline

– FY2023: 9.1 MtCO

-e

– FY2022: 8.8 MtCO

-e

– FY2021: 9.3 MtCO

-e

– FY2020 baseline: 9.2 MtCO

-e

Baseline and subsequent years have been restated for

methodology changes. For more information on the essential

definitions, assumptions and adjustments for this target refer to

Metrics, targets and goals, later in this OFR 6.12

Delivered in FY2023

– assessed the decarbonisation targets of our top 500 suppliers, including through

direct engagement, to understand their alignment with our long-term target of net

zero by CY2050 for the operational GHG emissions of our direct suppliers, with

55 per cent aligned in FY2023 (compared to 27 per cent in FY2022)

Pathways and strategy

BHP’sopportunitytoinfluenceoursupplierstosettheirowntargetsandgoals

for decarbonisation is broad: from the types of goods and services we procure,

to the way we assess tenders and how we set and evaluate performance

expectations. Over the long-term, we intend to continue to engage with and

seektoinfluenceoursupplierstosetgoalsandtargetsthatalignwithBHP’s

long-term target. Once suppliers are aligned, we consider them best placed

to operationally manage achievement of their own goals and targets and

BHP intends to monitor their progress. We seek to enhance our contracting

arrangements with suppliers to meet this aim.

Carbon credits and offsetting

BHP prioritises structural abatement of our operational GHG emissions

toachieveourmedium-termtargetandlong-termgoalandtofulfilour

regulatory obligations. While we prioritise structural abatement, we

acknowledge that carbon credits are likely to be needed to offset hard-to-

abate GHG emissions with limited or no technological solution and in a

temporary capacity as abatement options are being studied, or to ensure

compliance with local or regional GHG emission pricing schemes.

1 DatatoshowourprogresstowardsthisgoalhasbeenpublishedforthefirsttimeforFY2023reporting.

2 CY2008 was selected as the baseline year for this goal to align with the base year for the International Maritime Organisation’s 2030 emission intensity goal and its corresponding

reasoning and strategy.

Governance Financial Statements Additional Information

BHP Annual Report 2023 51

Operating and Financial Review

BHP is committed to transparently disclosing the carbon credits we use

towards meeting the targets and goals we have set, as well as for our

regulatory obligations.

BHPhasfiveusecasesinwhichwemayuseorsupportthesupplyofcarbon

credits, which we have updated since FY2022 to provide more clarity and detail.

BHP may use carbon credits in the following cases, to complement the

structural abatement of GHG emissions that we prioritise:

Operational GHG emissions

Using carbon credits to meet our operational GHG emission long-term goal

for hard-to-abate GHG emissions, as we work to decarbonise our operated

assets. Potentially offsetting to reduce our carbon footprint beyond the

straight line trajectory of our GHG emission reduction target and goal.

Value chain GHG emissions

Supporting our suppliers and customers in using carbon credits to

supplement their focus on GHG emissions abatement, including bundling

carbon credits with commodity transactions.

Regulatory compliance

Using carbon credits to offset GHG emissions for regulatory compliance in

our operational locations.

Social investment

Improving environmental, social and economic outcomes through

targeted investment in nature-based solutions, in line with our social

value framework.

Commercial opportunities

Creating new product options for our customers or originating high-integrity

carbon credits through project development or direct investment.

For information on how we source carbon credits, including our

integrity standards for carbon credits, refer to Carbon credits and

offsetting, at bhp.com/climate

Climate-related risk management

BHP applies a single, Group-wide approach, known as the Risk Framework,

totheidentification,assessmentandmanagementofrisks,includingclimate-

relatedrisks.Wedefineriskstoincludeboththreatsandopportunities.

Our Risk Framework provides a common foundation for the management of

climate-related risks together with all our risks and supports the integration of

processes for identifying, assessing and managing climate-related risks into

BHP’s approach to decision-making and strategy formation. This enables the

relativesignificanceofclimate-relatedriskstobeconsideredandaddressed

inthecontextofBHP’soverallriskprofile.

Threats are assessed to determine their potential impacts and likelihood.

To do this, BHP considers a range of aspects (including environment,

ecosystems, community, company reputation, investment attractiveness

and ability to access opportunities) using a standard severity table that

measures the maximum foreseeable loss, linked to our mandatory minimum

performance requirements for risk management. These requirements also

set a process to determine the maximum foreseeable gain for an opportunity.

We then implement controls designed to prevent, minimise or mitigate

threats and enable or enhance opportunities. Risks and controls are required

to be assessed at least annually and are also assessed on an ad hoc

basis as needed, to evaluate performance and determine if remediation is

required.Werecognisethatclimatechangemayinfluenceorexacerbate

risksacrossourriskprofile,impactingissuesincludingassetintegrity,

pricing of inputs, access to markets, changes to regulation and access

to funding. Decisions on the prioritisation of actions to manage threats or

pursue opportunities such as these are made consistent with our standard

risk, planning and investment processes. Using a consistent approach

allows us to consider climate-related risks across our business, integrated

throughourriskprofile,tofocusouractionsonthosethatarematerialand

integrate management of them into our core activities and business plans.

Wecontinuetoembedclimate-relatedriskacrossourriskprofileandto

build out the controls required to manage threats or enhance opportunities.

We also continue to review the completeness of our climate-related

riskprofile,seekingtoidentify,assessandmanageemergingclimate-

related risks.

BHP recognises that the transition to a low-carbon economy and physical

climate-relatedimpacts,togetherwiththeirpotentialsignificantfinancial,

social and environmental effects, are risk factors for the Group (for a

description of material risk factors for BHP, including those that are

climate-related, refer to OFR 8.1). Climate-related risk factors are broadly

categorised as:

– transition risks, which arise from existing and emerging policy,

regulatory, legal, technological, market and other societal responses

to the challenges posed by climate change and the transition to a

low-carbon economy. We have provided detailed disclosures on the

management of risks associated with the transition to a low-carbon

economy, later in this OFR 6.12

– physical risks, which refer to acute risks that are event-driven, including

increased severity and frequency of extreme weather events and chronic

risks resulting from longer-term changes in climate patterns. We have

provided detailed disclosures on the management of these risks in Physical

climate-related risk and adaptation, later in this OFR 6.12

In setting and monitoring delivery of our strategy, the Board and

Management consider climate-related risks (threats and opportunities),

both physical and transition, across the following time horizons:

– short-term (up to two years), aligning with our two-year budget process

– medium-term(twotofiveyears),definingsupportiveactionsand

initiatives that sit outside of our two-year budget process in order to

support our long-term strategy

– long-term(fiveto30years),givenoursupply,demandandpricing

forecasts and our scenarios for portfolio analysis extend to 2050 and

in some cases beyond. Given the long-term nature of some climate-

related risks, we qualitatively and quantitatively explore scenarios

across a range of climate-related outcomes and assess the impact they

could have

Asclimatechangehasthepotentialtoinfluenceorexacerbaterisks

acrossourriskprofile,manyofwhichmayhaveamaterialfinancialimpact

(negative from threats and positive from opportunities) to BHP, climate-

related risks arise or require management across each of these time

horizons. As such, while time horizons help us to assess potential impacts

andplanourresponse,wedonotusethemspecificallytocategorise

climate-related risks. The linkage of these time horizons to our planning

processes and activities and strategy formation informs our decision-

making and enables us to take appropriate and timely actions to manage

these risks.

For more information on the management of risks, which include

climate-related risks, within BHP’s Risk Framework and the process

to formally transition OZ Minerals’ operations and functions to

BHP’s Risk Framework refer to OFR 8

Transition to a low-carbon economy

Scenario analysis

In CY2020, BHP developed a 1.5°C scenario

for the purpose of analysing

the resilience of our portfolio to accelerated global action on climate

change. We consider a range of inputs, including our 1.5°C scenario,

when testing the resilience of our portfolio, forming strategy and making

investment decisions. The energy and resources modelling from BHP’s

1.5°C scenario conducted in 2020 remains consistent with the updated

carbonbudgetreleasedintheWorkingGroupIreportasthefirstpartof

the IPCC’s Sixth Assessment Report in 2021. In addition, we periodically

benchmark our 1.5°C scenario against a number of published scenarios

that align with a 1.5°C carbon budget, such as the IPCC and third-party

energy and resource research organisations (including the International

Energy Agency, IHS Markit, Wood Mackenzie, Bloomberg New Energy

Finance and CRU). We are currently preparing an updated 1.5°C

scenario to be completed in FY2024.

1 This scenario requires steep global annual GHG emission reduction, sustained for

decades, to stay within a 1.5°C carbon budget. 1.5°C is above pre-industrial levels.

For more information about the assumptions, outputs, and limitations of our 1.5°C

scenario refer to the BHP Climate Change Report 2020, available at bhp.com/climate

52 BHP Annual Report 2023

6 Sustainability continued

At the time of publication of this Report, indicators show the appropriate

measures are not in place globally to drive decarbonisation at the pace

or scale required for the aims of the Paris Agreement to be achieved as

the most likely future outcome. However, as governments, institutions,

companies and society increasingly focus on addressing climate change,

the potential for a non-linear and/or more rapid transition and the

subsequent impact on threats and opportunities increases.

Our operational planning, price outlooks and strategy formation are

informed (together with other market sources of information) by our

operational planning cases. As an input to our operational planning cases,

we use our current estimates (as updated in FY2023) of the most likely

high-, mid- and low-range of future states for the global economy and

associated sub-systems; three pathways that we refer to collectively as our

‘One Energy View’. These are proprietary assessments of the likely future

demand and supply of key commodities, rather than climate scenarios

designed to test the resilience of our portfolio to different global climate

action trajectories. However, our One Energy View pathways implicitly

present a global average temperature outcome given they cover the

energy sector. Among other changes in FY2023, our updated One Energy

Viewreflectsanaccelerationinactiononclimatechangeoverthepastfew

years, resulting in all three of its pathways ultimately reaching global net

zero GHG emissions, albeit employing different technological and policy

assumptions and different underlying macro-economic growth assumptions

to get there. In all three One Energy View pathways, most developed

economies reach net zero around 2050, while other large economies

reach net zero in 2060 and 2070, and they result in an implied global

average temperature outcome of around 2°C by 2100.

Weseektomaximiseourexposuretoproductswithsignificantopportunity

under all pathways and scenarios and to minimise the risk that capital may

be stranded in a rapidly decarbonising world. Our assessment in CY2020

indicated that the portfolio we then held would be resilient and have

potentiallyhigherfinancialvalueoverallunderour1.5°Cscenariowhen

compared to our then current central planning cases that were associated

with higher implied global average temperature outcomes. Since that

assessment, we have continued to consider our 1.5°C scenario in our

decision-making and strategy formation. We have made changes to our

portfolio, including the divestment of our Petroleum business, all but one

energy coal asset (NSWEC, at which we intend to cease mining by the

end of FY2030) and our interest in lower-grade metallurgical coal assets,

all of which would be expected to increase the resilience of our portfolio

as a whole under our 1.5°C scenario.

Impact on our business, strategy and capital alignment and allocation

The results of our climate-related risk (threats and opportunities)

assessment across our short-, medium- and long-term time horizons

(for more information refer to Climate-related risk management, earlier

in this OFR 6.12), as well as our 1.5°C scenario, continued to be

systematically integrated into our strategy and capital allocation process

during FY2023, enabling us to test the extent to which our business,

strategy and capital allocation are aligned with a rapidly decarbonising

global economy. For an overview of how climate-related issues have

impacted our operational activities and our approach with respect to our

value chain refer to Operational GHG emission reductions and Value chain

GHG emission reductions, earlier in this OFR 6.12. For more information

on how consideration of climate-related issues serves as an input to

ourfinancialprocesses,includingthepotentialimpactofclimate-related

issuesonfinancialperformanceandfinancialposition,refertoFinancial

Statements, Note 16, pages 162–165.

We continue to engage with investors, industry and standard setters to

explorewaysofestablishingclearmethodologiesforclassificationand

measurement of ‘green revenue’

and associated capital expenditure

within the resources sector, including engagement with the investor-led

initiative Climate Action 100+ (CA100+) as part of the development of its

proposedNetZeroStandardforDiversifiedMining.Wenotethatthere

are still divergent and evolving views on what constitutes ‘green revenue’,

withnocleardefinitionorexpectationsforothersustainabilityindicators,

for the resources sector.

Traceability of end use for many commodities, such as copper, still remains

a challenge as they undergo multiple stages of processing and have a

diverse range of end uses. Given this continued uncertainty, this year we

havepresentedmultipleclassificationsofourcommoditiestoreflecta

view on their actual or potential contribution to the transition to a low-

carbon economy.

The table on the next page outlines our FY2022 and FY2023 production,

revenue and associated capital expenditure for our major commodities,

includingtheidentificationofkeytransitionmaterialsasdefinedinthe

draftNetZeroStandardforDiversifiedMining,aswellaswhatweclassify

as our future-facing commodities (i.e. those that BHP determines to be

positively leveraged in the energy transition and broader global response

to climate change, with potential for decades-long demand growth to

supportemergingmega-trendslikeelectrificationanddecarbonisation).

This table is intended only to present an indicative approach pending

clearandresolvedmethodologiesfortheidentificationofthekeytransition

materials that contribute to the transition to a low-carbon economy and

the calculation of the revenues they generate. We also acknowledge that

theclassificationsinthetablefocusprimarilyonthethemeofenablingthe

transition to a low-carbon economy to mitigate climate change and that

broader sustainability indicators in relation to how these commodities are

produced are also important to consider.

Although steelmaking materials (iron ore and higher quality metallurgical

coal)arenotincludedintheclassificationsabove,wehaveincludedthem

in the table for completeness and we believe they also play an important

role in the transition.

We are consolidating our remaining metallurgical coal portfolio to

focus on the higher-quality coal used for steelmaking to meet expected

ongoing demand for steel. The use of higher-quality coal enables more

efficientsteelmakingandlowerGHGemissionintensity,whichmayhelp

steelmakers in their medium-term GHG emission reduction efforts. We see

the blast furnace with carbon capture, utilisation and storage route, which

would require metallurgical coal as an input, as an important part of the

journey towards the end-state objective of widespread ‘near zero emission

steel’ production. External analysis, such as the International Energy

Agency’s net zero by 2050 scenario, supports the role of the blast furnace

with carbon capture, utilisation and storage route in the end-state.

For more information on the International Energy Agency’s

net zero by 2050 scenario refer to

iea.org/reports/net-zero-by-2050

In FY2022, we announced that we would retain (rather than sell) NSWEC,

our only remaining energy coal asset, in our portfolio. We intend to

seek the relevant approvals with the New South Wales and Australian

Governments to continue mining beyond its current mining consent that

expires in CY2026 and proceed with a managed process to cease mining

at the asset by the end of FY2030. Additional capital is expected to be

required for the proposed life extension of the Mt Arthur Coal mine through

to the end of FY2030, should relevant approvals be received. Spend in

FY2023 and all currently approved spend for this asset is limited to

maintenance capital.

Our capital expenditure plans are increasingly focused on future-facing

commodities between FY2024 and FY2028, as illustrated in the ‘Capital

spend in future-facing commodities’ chart on the next page.

2 As indicated by our scenario analysis, including our 1.5°C scenario. Currently,

major commodities in the BHP portfolio that fall within this criterion include

copper, nickel and potash.

1 ‘Green revenue’ is a label referenced externally, including by standard setters

and in investor-led benchmarks, which is intended as a measure of the extent

to which products and services contribute to the transition to a low-carbon,

resourceefficientandsociallyinclusiveeconomy.Formoreinformationrefer

tounep.org/regions/asia-and-pacific/regional-initiatives/supporting-resource-

efficiency/green-economy.

Governance Financial Statements Additional Information

BHP Annual Report 2023 53

Operating and Financial Review

Commodity Classification

Year

ended

30 June

Copper equivalent

production

Mt and %

Revenue

US$M and %

Major capital

(Growth)

expenditure

US$M and %

Other capital

expenditure

1,2

US$M and %

Total capital

expenditure

US$M and %

Copper

– CA100+ draft Net Zero

StandardforDiversifiedMining

key transition materials

– BHP future-facing commodity

2023 1.72 26.8% 14,902 27.7% 299 20.6% 2,544 45.2% 2,843 40.1%

2022 1.57 24.5% 15,992 24.6% 221 27.6% 2,390 45.0% 2,611 42.7%

Nickel – CA100+ draft Net Zero

StandardforDiversifiedMining

key transition materials

– BHP future-facing commodity

2023 Battery-suitable:

Battery-suitable:

0.9%

678

12.0%

691

9.8%

0.13 2.0% 962 1.8%

Other: Other:

0.11 1.7% 917 1.7%

2022 Battery-suitable:

Battery-suitable:

0.0%

404

7.6%

404

6.6%

0.15 2.4% 1,164 1.8%

Other: Other:

0.08 1.2% 536 0.8%

Potash – BHP future-facing commodity 2023 0.00 0.0% 0.0 0.0% 838 57.7% (193) -3.4% 645 9.1%

2022 0.00 0.0% 0.0 0.0% 442 55.2% (67) -1.3% 375 6.1%

Uranium – FTSE Green Revenues

ClassificationSystem

2023 0.05 0.7% 362 0.7% Includedwithinfiguresforcopper

2022 0.03 0.5% 207 0.3% Includedwithinfiguresforcopper

Iron ore 2023 2.84 44.3% 24,678 45.9% 144 9.9% 1,919 34.1% 2,063 29.1%

2022 2.78 43.4% 30,632 47.1% 17 2.1% 1,926 36.3% 1,942 31.8%

Metallurgical

coal

2023 0.99 15.4% 7,429 13.8% 97 6.7% 405 7.2% 502 7.1%

2022 1.26 19.6% 11,990 18.4% 121 15.1% 382 7.2% 503 8.2%

Energy

coal

2023 0.41 6.5% 3,528 6.6% 0 0.0% 170 3.0% 170 2.4%

2022 0.40 6.2% 3,559 5.5% 0 0.0% 132 2.5% 132 2.2%

Other

2023 0.17 2.6% 1,039 1.9% 61 4.2% 108 1.9% 169 2.4%

2022 0.14 2.1% 1,018 1.6% 0 0.0% 144 2.7% 144 2.4%

1 FY2022figuresareinclusiveofBMC(divestmentofourinterestinBMCcompletedon3May2022).FY2022figuresdonotincludecommoditiesassociatedwithourdivested

Petroleumbusiness(mergerwithWoodsidecompletedon1June2022).FY2023figuresincludeOZMinerals.Copperequivalentproductionhasbeencalculatedbasedon

FY2023averagerealisedproductpricesusingaboundarybasedontheaccountingtreatmentinBHP’sconsolidatedfinancialstatements.Insomeinstances,thesumof

percentages may not equal 100% due to rounding.

2 Othercapitalexpenditureincludesmaintenanceanddecarbonisationcapital,improvementcapitalandexploration.NegativefiguresforPotashresultfromtheaccounting

treatment for this category.

3 Ithasnotbeenpossibletodifferentiatebasedonenduse,thereforefiguresrepresenttotals,ratherthantheproportionthatweidentifyascontributingtothetransitiontoa

low-carbon economy.

4 CA100+NetZeroStandardforDiversifiedMiners:ConsultationDraft,May2023.Finalclassificationsmaydiffer.

5 Battery-suitablenickelisdefinedasnickelbriquettes,nickelpowderandnickelsulphate.Itdoesnotincludeoff-specificationnickelmetal.Calculatedbasedongrossrevenue

from battery suitable nickel multiplied by percentage of BHP’s sales of battery-suitable nickel, as applicable to battery material suppliers. Where a customer’s planned end

use is not known with certainty to be for battery supply, assumptions of usage have been made using historical nickel usage for those customers.

6 Capital expenditure is presented for all of nickel as it is not possible to disaggregate between ‘Battery-suitable’ and ‘Other’ due to the integrated nature of the operations.

7 FTSERussell’sGreenRevenuesClassificationSystem,v1.1,February2023.

8 Capital expenditure for uranium is included within copper’s capital expenditure as it is not possible to disaggregate due to the integrated nature of operations.

9 Other includes by-products cobalt, gold, lead, molybdenum, silver and zinc.

Maintenance and

decarbonisation capital

Capital expenditure (US$B, nominal) Percentage of capital expenditure in future-facing commodities (%)

Capital spend in future-facing commodities

Steelmaking materials

major capital

Improvement capitalFuture-facing commodities

major capital

ExplorationOrganic development Petroleum

Percentage of capital expenditure

in future-facing commodities

FY2022 FY2023 FY2024e FY2025e FY2026e

to FY2028e

10 ‘Future-facing commodities’ means copper, nickel and potash (the major commodities we classify as our future-facing commodities). Major capital represents projects

> US$250M. FY2022 ‘Percentage of capital expenditure in future-facing commodities’ is calculated from a total that excludes our divested Petroleum business

(merger with Woodside completed on 1 June 2022).

54 BHP Annual Report 2023

6 Sustainability continued

Carbon pricing

Our assets and markets will continue to be subject to evolving climate

change regulations that may result in increasing levels of carbon prices by

region and economic activity. Similarly, the competitiveness of our products

and the downstream processes in which they are used are subject to

carbon pricing legislation in customer countries. We use an explicit

regulatory carbon price forecast for major BHP operational and customer

countries that aligns with our One Energy View pathways framing and

associated regional net zero ambitions.

In determining our outlook, we consider factors such as a country’s current

and announced climate change policies, targets and goals (including net

zero) and societal factors, such as public acceptance and demographics.

Our forecast of ranges of regional carbon prices for major BHP operational

countries and key customer countries is outlined below.

January 2022 US$ real

per tCO

FY2030

Low

FY2030

High

FY2050

Low

FY2050

High

Australia 25 75 150 225

Brazil 5 50 125 200

Chile 8 41 150 225

Canada 65 102 200 225

Key customer countries 0 175 25 250

For more than a decade we have incorporated regional carbon price

assumptions in our planning, investment decisions and asset valuations.

Carbon prices are used together with our operational planning cases

based on the current economic outlook for asset planning, asset valuations

and operational decision-making as well as when considering initiatives

to meet our operational GHG emission reduction medium-term target

and long-term goal.

Our carbon price forecasts are also used along with other qualitative and

quantitative metrics, such as the outcomes of our 1.5°C scenario analysis,

in assessing investments under the Capital Allocation Framework and

to inform our portfolio strategy and investment decisions.

Equitable change and transition

There are communities around the world that rely on mining of

certaincommoditiesfortheireconomicandfinanciallivelihood.

These communities may be disproportionately impacted by the transition

to a low-carbon economy. Solutions that aim to provide an equitable

transition away from mining of those commodities requires a multi-

stakeholderapproachincludingthelocalcommunity,investors,financiers,

government at all levels and resource companies such as BHP.

For more information on our principles for how we respond

to the issue of ‘just transition’ refer to

bhp.com/local-communities

For examples of how we plan, consult and implement our

approach, such as for the intended closure and transition

of NSWEC refer to OFR 6.14

Policy engagement

BHP recognises the role we must play in helping the world achieve the

aims of the Paris Agreement. Part of this involves taking concrete steps to

progress towards achieving our operational and value chain GHG emission

reduction targets and goals. It also involves engaging with governments

and the broader community in support of policies that enable a global

transition to net zero.

Achieving the aims of the Paris Agreement will require supportive policy

across jurisdictions, globally. The policy-making process is complex and

change is unlikely to be smooth or linear. We believe BHP can best support

policy development by ensuring we meet our own climate targets and goals

and strategies, continuing to make the case for the economic opportunities

arising from the energy transition and focusing on those policy areas

wherewearelikelytohavethegreatestabilitytoinfluencechange.

Our Climate Policy Principles outline our views on how governments

can best pursue the aims of the Paris Agreement, with a focus on both

the principles we believe should guide how governments approach

policymaking, and the policy outcomes we believe governments

shouldseek.WefirstreleasedourClimatePolicyPrinciples(then

referred to as our Global Climate Policy Standards) in August 2020.

Reflectingrecentchangestoourstrategyandportfolio,andtheevolving

nature of climate policy debates, we published an updated version of our

Climate Policy Principles in May 2023. We commit to conducting our own

advocacy efforts consistent with our Climate Policy Principles, and to using

ourClimatePolicyPrinciplestoseektoinfluencetheadvocacyofthe

industry associations of which we are a member.

You can read our Climate Policy Principles at bhp.com/sustainability/

climate-change/advocacy-on-climate-policy

Direct advocacy

BHP engages directly and regularly with governments on issues relating to

climate change and the transition to net zero GHG emissions. We remain

committed to developing policy advocacy positions that align with our

support for global efforts to meet the aims of the Paris Agreement,

harnessing opportunities to decarbonise our operations as cost effectively

as possible and promoting policies that support our key markets, including

forcommoditieswithsignificantpositiveexposuretotheenergytransition.

We focus our direct advocacy efforts on areas where we have the greatest

abilitytoinfluencechange.Forexample,overthepastyear,wehave:

– supported the increase in Australia’s 2030 GHG emission reduction

target from 26-28 per cent to 43 per cent

– engaged with the Australian Government on its proposed reforms

to the Safeguard Mechanism

– advocated in favour of climate-related disclosure requirements that

are decision-useful, appropriately contextual and globally consistent

– contributed to the Australian Industry Energy Transitions Initiative,

which included a ‘call to action’ for government, industry and

investors to collaborate on developing pathways to decarbonise

hard-to-abate sectors, such as steelmaking, consistent with the

aims of the Paris Agreement

– advocated for greater efforts in the decarbonisation

of international shipping

For more information on our approach to direct advocacy on climate

change refer to

bhp.com/sustainability/climate-change/advocacy-on-climate-policy

Indirect advocacy

BHP is a member of industry associations around the world. We believe

these associations perform a number of functions that can lead to better

outcomes on public policy, practice and standards.

Just as we do to ourselves, we hold the industry associations of which

we are a member to high standards. We expect them to act with integrity,

beconstructiveintheirengagementswithstakeholdersandreflectthe

views and positions of their members.

In June 2023, we published our fourth and latest industry association

review. This review assessed the climate policy advocacy of 15

industry associations we consider to be material.

Of these 15 industry

associations, the review found:

– 10 were aligned with the Global Climate Policy Standards we released

in August 2020

– fivehadsomenon-materialmisalignment.Takingintoaccountthenature

of misalignment and the associations’ broader activities and consistent

with our principles for participating in industry associations, we

decidedtoremainamemberofthesefiveassociations,whileactively

encouragingthemtoaddresstheidentifiedareasofmisalignment

In February 2023, we engaged with investors and other stakeholders on

possible further improvements we could make to our industry association

review approach. Based on the feedback we received, we intend to

increase the frequency of our industry association reviews to every two

years. In the intervening years, we expect to publish (as relevant) an

updateontheprogresswehavemadeinaddressingidentifiedareas

ofmisalignmentandanyrelevantfindingsfromourreal-timemonitoring.

For more information on our approach to industry associations refer to

bhp.com/about/operating-ethically/industry-associations

1 These15associationssatisfiedatleastoneofourtwomaterialitycriteriaasatJuly2022:

(1) Our base membership fee was equal to or greater than US$100,000; and/or (2) there

issignificantstakeholderinterestintheadvocacyoftheassociation(asdeterminedby

whethertheassociationwaslistedonInfluenceMap’srankingofindustryassociations).

Governance Financial Statements Additional Information

BHP Annual Report 2023 55

Operating and Financial Review

Quantification and embedment of management of operational physical climate-related risks

Obtaining a globally

consistent dataset

of current and future

climate data for

different time horizons

and scenarios.

Climate data

projections

Engineering

assessments to

understand the

potential direct impact

of climate-related

events on our site.

Operational

site impacts

Applying internal

models to assess

potential impacts

to safety, cost

and productivity.

Safety, productivity,

and cost impacts

Incorporating assessment

results into internal

planning models to

understand potential

financialimpactsand

value-at-risk.

Financial impacts

and value-at-risk

Embedding consideration

of value-at-risk into internal

business planning processes

and enhancing resilience of

our operations through capital

investments, as required.

Incorporating into business

planning and investments

Physical climate-related risk and adaptation

Our approach

BHP’s operations are exposed to physical climate-related risks and

these risks may be exacerbated by climate change. Our adaptation

strategy outlines the proactive and collaborative approach we intend

to progressively take to enhance the safety, productivity and climate

resilience of our operated assets, investments, portfolio, supply

chain, communities and ecosystems by adapting to physical

climate-related risks.

Our approach to further evaluate and progressively seek to quantify

our operational physical climate-related risks and ultimately embed

management of these risks deeper into business processes, including

capital allocation, is illustrated in the diagram below.

Our approach considers the inherent uncertainty in climate scenario

projections, including by seeking to establish a knowledge base, using

a globally consistent climate dataset and undertaking asset-level risk

evaluations to identify the range of potential climate hazards projected by

different models under different climate scenarios. For physical climate-

related risks, we use Shared Socioeconomic Pathways (SSP) scenarios

used by the IPCC, incorporating an ensemble of latest generation

(CMIP6) climate models in order to explore the potential changes to

climate-related hazards that drive physical risks.

This includes in a

high GHG emission future (SSP5-8.5) with around a 4.4°C increase in

global average temperature above pre-industrial levels by the end of

the century, where greater risk would be expected, and a medium GHG

emission future (SSP2-4.5), representing an increase of around 2.7°C

above pre-industrial levels.

Climate-related data

We have obtained a bespoke dataset of latest-generation climate

projections from WTW,

an insurance advisor to BHP, which covers all of

our operated assets, the current climate and three future time horizons

(2035, 2055 and 2075) and three climate scenarios: SSP1-2.6, SSP2-

4.5 and SSP5-8.5. This dataset provides a globally consistent basis to

underpin our ongoing assessment of physical climate-related risks and

design of appropriate adaptation measures. The dataset covers more than

20 climate-related hazards relevant to our global operations, with data

downscaled from General Circulation Models, to focus in on our operated

assets.Hazardsrelatedtophysicalclimate-relatedrisksidentifiedas

having the highest potential impact

(and which we started to evaluate

further during FY2023) include extreme high temperature, extreme

precipitation,flood,tropicalcyclones,sealevelriseandstormsurge.

Evaluation of priority risks

In FY2023, we progressed asset-level impact evaluations of physical

climate-related risks to better understand and work towards quantifying

the potential impacts to site operations, safety, productivity and cost

for our operated assets (excluding for acquired OZ Minerals assets).

Thishasbuiltupon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,

including:

– floodingofmineand/orkeyproductioninfrastructure(e.g.plants,

conveyor belts) due to extreme precipitation – applicable to all

operated assets

– disruption and/or damage to port and coastal infrastructure and

operations due to higher sea levels, cyclones, storm surge and

changes in marine ecosystems – applicable to WAIO, BMA

and Escondida

– disruption and/or damage to electrical infrastructure (e.g. motors,

cooling and control systems) due to extreme temperatures –

applicable to all Minerals Australia assets

– disruption and/or damage to water supply infrastructure due

toextremeprecipitationorflooding–applicabletoEscondida,

Pampa Norte and Olympic Dam

– workforce health and safety incidents due to extreme events

(e.g. extreme temperature causing heat stress) – pilot study

conducted at Olympic Dam

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 hazard occurring and how these could translate

intofinancialimpacts.Forexample,extremeprecipitationmayfloodmine

pits and other critical infrastructure, leading to disruptions in production

and additional costs for pumping and repairs. Similarly, extreme heat

or precipitation may cause safety risks triggering response plans,

which may include operational stoppages.

The recently acquired OZ Minerals assets face many of the same

physical climate-related risks as our other operated assets, while

somerisksarespecifictotheirlocationssuchasreducedannual

rainfall in Brazil potentially increasing power costs and creating supply

disruptions due to reduced hydroelectric power generation. The materiality

ofphysicalclimate-relatedriskspreviouslyidentifiedbyOZMinerals

will be assessed in accordance with BHP’s Risk Framework and where

deemed material, we intend to further evaluate them using the risk

evaluationandquantificationapproachoutlinedearlier.

1 Scenarios used to inform strategy and transition planning are referenced in Transition to a low-carbon economy, earlier in this OFR 6.12. These scenarios consider physical

climate-related risk through the potential impact on capital degradation, but are primarily focused on transition risk that stems from the pace of change, technology innovation

and policy drivers. As part of our ongoing work to consider physical climate-related risks in more detail through our climate hazard evaluations, we apply the widely accepted

practice of using SSPs, paired with greenhouse gas and aerosol concentration pathways that align to different climate outcomes to explore a range of plausible climate futures.

2 IPCC, 2021, Climate Change 2021. The Physical Science Basis: Summary for Policymakers, Table SPM.1.

3 Data developed for BHP by WTW’s Climate and Resilience Hub https://www.wtwco.com/en-au/solutions/climate.

4 Risks were assessed in accordance with BHP’s Risk Framework. Hazards with the highest potential impact were determined through the Maximum Foreseeable Loss severity

ratingfortheassociatedrisks,whichmayrelatetoarangeofimpactsincludingfinancial,healthandsafety,environmental,communityorreputational.

5 The risks with the highest potential impact for each of our operated assets (excluding acquired OZ Minerals assets) are available in our Annual Report 2022 and at bhp.com/climate.

56 BHP Annual Report 2023

6 Sustainability continued

In FY2024, we intend to continue our work on the impact assessments

being conducted with respect to site operations, safety, productivity and

costs at our operated assets, as well as our work on the subsequent steps

ofcalculatingpotentialfinancialimpactstofeedintoafuturevalue-at-risk

assessment and prioritisation of additional adaptation measures.

Value chain risk assessment

We have conducted an assessment to understand how physical climate-

related risks may exacerbate selected existing risks within our value chain,

such as for the delivery and storage of critical production inputs and supplies

and ability to get our products to market. Our assessment used a climate data

mapping exercise to understand which key roads, railways, warehouses and

load and discharge ports used for our supplies and products are most at risk

of exposure to climate-related hazards. We have applied natural catastrophe

modelstoquantifytheprojectedannualdowntimeforcertainflood-related

risks along our value chain under SSP2-4.5 and SSP5-8.5 climate scenarios

and three future time horizons consistent with the climate dataset for our

operated assets. This assessment suggested the aggregated changes in

riskprofilecomparedtothecurrentclimatebaselinewereeithermodestor

notsignificant.Theresultsoftheseassessmentsarebeingincorporatedinto

routine annual risk evaluations, which will assess if additional risk controls

are needed (for more information refer to OFR 8). In FY2024, we intend

to develop a workplan to assess additional value chain risks.

Ecosystems and communities

We recognise climate change has a vast range of intersecting potential

impacts and similarly the adaptation measures we take can bring

broadersocialvaluebenefits,includingintheareasofbiodiversity,

nature and community resilience. We are building our understanding of

the ecosystem-based adaptation options available to our business and

continuing our investment in nature-based solutions and other innovative

adaptation measures, including through our social investment commitment

aligned with our social value framework. For example, we have launched

a pilot for parametric insurance for a coral reef ecosystem in Fiji, to enable

quick response in the event of a cyclone and greater long-term resilience.

For more information and case studies on work with ecosystems

and communities refer to

bhp.com/environment and bhp.com/communities

We are building our capability to take a proactive and collaborative

approach to engaging the communities in which we operate (including

communities surrounding our legacy assets) on the topic of climate

resilience, recognising climate vulnerability and resilience intersects

with many other matters of importance to communities. This includes

targetedanalysisofthefactorsthatmayinfluencethelevelofvulnerability

or adaptive capacity within each community. We acknowledge the

importance of an inclusive and equitable approach to community

adaptation that involves Indigenous and local knowledge.

Governance

Structure and activities

Climate change is a material governance and strategic issue for BHP.

The Board’s oversight of and Management’s role in assessing and

managing climate-related risks (threats and opportunities) are explained

in the diagram on the following page.

The Board and its Committees and Management regularly considered

climate change-related items during FY2023, including as part of

discussions and decisions on performance, strategy, risk, sustainability

and executive remuneration.

For more information on the role and composition of the Board

and its Committees and each Committee’s key activities in FY2023,

including in relation to climate-related matters, refer to Corporate

Governance Statement 3, 4 and 5

Board experience

TheBoardmaintainsaskillsmatrixthatidentifiestheskillsandexperience

the Board needs for the next period of BHP’s development, considering

BHP’s circumstances and the changing external environment.

The Board skills matrix (refer to Corporate Governance Statement 4.5)

reflectsBHP’scurrentpurposeandidentifiesthefuture-facingskills

the Board intends to build, acquire and retain over the medium-term

in anticipation of the company’s needs as it pursues its strategy of securing

growth options in future-facing commodities. Examples of skills in the

matrix include:

– operating risk – which includes extensive experience with the

development and oversight of complex frameworks focused on the

identification,assessmentandassuranceofoperationalworkplace,

health, safety, environmental, climate and community risks

– mining – which includes a proven record in terms of health,

safety and environmental performance and results

– social value, community and stakeholder engagement – which includes

an extensive track record of positive external stakeholder engagement

including in relation to community issues and social responsibility

Non-executiveDirectorsarerequiredtohavesignificantexperienceacross

multiple Board skill areas and are expected to contribute to all elements of the

strategy and Risk Framework. The Board collectively possesses all the skills

and experience set out in the Board skills matrix and Directors participate in

an ongoing training and development program. For more information on the

skills matrix, the process for Board evaluation and director training, induction

and development refer to Corporate Governance Statement 4.

Metrics, targets and goals

The primary metrics we consider when assessing and managing climate-

related risks (threats and opportunities) include:

– Scopes 1, 2 and 3 GHG emissions

– capitalallocationandalignment,includingbyreferencetofinancial

spend in US$ (refer to Operational GHG emission reductions and

Transition to a low-carbon economy both earlier in this OFR 6.12)

– production, reserves and resources (refer to Production and Mineral

Resources and Ore Reserves in Additional Information 4 and 5)

For information on the proportion of Management’s Cash and Deferred

Plan linked to climate change factors, refer to pages 118–126 of

the Remuneration Report.

For information on our approach to carbon prices, refer to Transition

to a low-carbon economy earlier in this OFR 6.12.

We report on a number of other sustainability-related metrics

(e.g. water use, biodiversity) in our sustainability disclosures at

bhp.com/sustainability and in the BHP ESG Standards and Databook

2023, available at bhp.com/climate, and recognise their interconnection

with climate change. However, we do not currently use these as our core

metrics for the assessment and management of climate-related risks.

For more information on our social value and sustainability-related

goals, metrics and milestones refer to OFR 6.5

In the following tables, we present operational energy consumption and

Scopes1,2and3GHGemissionmetrics,aswellasdefinitions,assumptions

and adjustments for our GHG emission reduction targets and goals.

Operational energy consumption: Operational control basis

– Fuel and electricity consumption refers to the annual quantity of energy

consumed by BHP from the combustion of fuel and operation of our

facilities, together with energy consumed resulting from the electricity,

heat, steam or cooling purchased by BHP for our use.

– Organisational boundary: We have made our calculations based

on an operational control approach in line with the Greenhouse

Gas Protocol Corporate Accounting and Reporting Standard.

– Data has been rounded to the nearest 1 PJ.

– Data in italics indicates that it has been adjusted since reported

in our Annual Report 2022.

– Operational energy consumption from renewable sources includes

third-party supplied renewable electricity as evidenced by renewable

energycertificatesorsupplier-provideddocumentation,inlinewiththe

Greenhouse Gas Protocol Scope 2 Guidance. FY2023 operational

energy consumption from renewable sources includes third-party

supplied renewable electricity and a small volume of hydrotreated

vegetable oil associated with a trial at WAIO’s Yandi iron ore operations.

– FY2022 operational energy consumption from renewable sources has

been restated from 17.1 per cent, after our Cerro Colorado copper

operationsurrenderedrenewableenergycertificatesforallelectricity

consumption in CY2022.

Governance Financial Statements Additional Information

BHP Annual Report 2023 57

Operating and Financial Review

The Board and

Management also seek

advice from external

experts including the

Forum on Corporate

Responsibility (FCR).

The FCR meets with

management throughout

the year and has an

annual meeting with the

Sustainability Committee.

In April 2023, the

Sustainability Committee

met with the FCR to

discuss the FCR’s

views on BHP’s key

emerging risk themes

(which include risk

themes related to

climate change),

criteria to prioritise the

identifiedrisks,andthe

interdependence of risks.

External input on climate-related issues

Board

Climate change is a Board-level issue, including in relation to our strategic approach, risk management, public disclosures, annual

budgetsandbusinessplans.TheBoardapprovessignificantsocial,communityandsustainabilitypolicies,includingthoserelatedto

climate change and public sustainability goals and targets and oversees performance against our goals and targets and strategies.

The Board met 15 times during FY2023 with climate-related issues regularly on the agenda, including in relation to reviewing and

approving public sustainability disclosures (including in relation to progress against our climate change targets and goals), reviewing

and approving the report on our fourth industry association review, assessing corporate strategy options, and approving certain

investment requests. Climate-related topics are also incorporated into Director site visits to assist the Board in their oversight of site-

specificprogressandconsiderations.SixsiteswerecoveredaspartoftheFY2023sitevisitprogram.

The Board is supported on a variety of climate-related issues by the Committees it has established. Report outs from each of these

Committees are provided at Board meetings to update the Board on the key issues discussed, including, where applicable, climate-

related issues.

Directors also participate in training on climate-related issues as part of their ongoing training and development. Examples of training

provided in FY2023 include on biodiversity and the new International Sustainability Standards Board standards. Directors also receive

regular updates on emerging climate-related issues and sustainability disclosure standards.

Board’s governance and oversight role

CEO and Executive Leadership Team (ELT)

Responsible for executing the strategy in relation to climate

change matters, in accordance with their delegated authority, as

well as being held to account for a range of measures, including

climate-related performance. The CEO and ELT are responsible

for implementation of climate change strategy, and policies, and

achievement of climate change targets and goals, by BHP.

The performance measures for the FY2023 Cash and

Deferred Plan scorecard include a climate change metric

on decarbonisation with a 10 per cent weighting.

The ELT is supported in monitoring climate-related risks and

issues through monthly progress and performance reporting

of operational GHG emissions, decarbonisation activities,

and adaptation activities, as well as periodic reporting on

climate-related risk, provided by a range of BHP’s asset

and functions teams.

Sustainability and ESG Steering Committee

Responsible for facilitating direction, management decisions

and review on a broader range of cross-functional and strategic

issues relating to key sustainability and ESG topics. In March

2023, we expanded the Climate Change Steering Committee to

become the Sustainability and ESG Steering Committee. The

key responsibilities of this Committee relating to climate change

have not changed from FY2022 but now includes consideration

of climate change, and other sustainability and ESG issues,

and related emerging areas of risk, investor and stakeholder

expectations, and legal and regulatory requirements.

Group Climate and Sustainability Officer (Group CSO)

Responsible for driving BHP’s climate change strategy, including

climate considerations in broader company strategy and portfolio

evaluation, operational and value chain decarbonisation, physical

climate-related risk and adaptation, stakeholder engagement

and disclosure. Dr Fiona Wild is BHP’s Group CSO.

The Group CSO is supported in monitoring climate-related

issues through monthly progress and performance reporting

of operational GHG emissions, decarbonisation activities,

and adaptation activities, as well as periodic reporting on

climate-related risk, provided by a range of BHP’s assets

and functions teams.

Management’s assessment and management role

Sustainability and Climate Change team

Responsible for collaborating with BHP’s asset and function teams, external partners and industry to develop practical climate change solutions. The team regularly

prepares information and advice for the Management-level and Board-level stakeholders and Committees, on climate-related strategy, risks (both threats and

opportunities) and performance against climate-related metrics. The team also uses key risk indicators to help monitor performance against our appetite for climate-

related risks and monitors relevant signposts through our emerging risk process.

Assets, Portfolio Strategy and Development, Finance, Technical, Operations and Commercial functions and teams

Responsible for undertaking climate change-related activities.

BHP assets, functions and teams

Risk and Audit Committee

Assists the Board in overseeing and reviewing emerging

and priority group risks, including climate-related risks, risk

management, and internal controls.

The Risk and Audit Committee also reviews and recommends

totheBoardpublicfinancialdisclosuresrelatedtosustainability

matters including climate change reports and climate transition

action plans.

For more information on the Risk and Audit

Committee and its key activities for FY2023

refer to Corporate Governance Statement 5.2

People and Remuneration Committee

Assesses performance measures and outcomes against

those measures. In doing so, the Committee considers

recommendations from the Sustainability Committee in

relation to health, safety, environment, climate change, and

community measures.

For more information on the People and

Remuneration Committee and its key activities

for FY2023 refer to Corporate Governance

Statement 5.4

Sustainability Committee

Assists the Board with overseeing climate performance including

with respect to risk management, monitoring implementation of

the Group’s strategy, policies, targets and goals, and process

in relation to climate matters, reviewing the frameworks for

identification,management,andreportingofclimaterisks,

and both recommending climate performance measures, and

evaluating performance against those measures, for the CEO

and other members of the Executive Leadership Team.

For more information on the Sustainability

Committee and its key activities for FY2023

refer to Corporate Governance Statement 5.3

Nomination and Governance Committee

Considers the composition of the Board to ensure it has

the skills and experience to contribute to all elements of the

strategy and risk framework.

From 1 July 2023, the Nomination and Governance Committee

also reviews and makes recommendations to the Board on the

Group’ssignificantsocial,communityandsustainabilitypolicies,

including those related to climate change, and reviews and

makes recommendations to the Board on the Group’s public

sustainability targets and goals.

For more information on the Nomination and

Governance Committee and its key activities for

FY2023 refer to Corporate Governance Statement 5.1

Reviews and monitors

Reports and informs

Directs and monitors

InformsInforms

Reports and informs

58 BHP Annual Report 2023

6 Sustainability continued

– Operational energy intensity has been restated due to a change in

methodology for calculating copper equivalent production. For FY2021

to FY2023 copper equivalent production has been calculated based on

FY2023 average realised product prices, to allow comparison between

years.Productionfiguresusedareconsistentwithenergyreporting

boundaries (i.e. BHP operational control) and are taken on a 100 per

cent basis. Previously reported operational energy intensity was 21 GJ/t

copper equivalent production for FY2021 and 18 GJ/t copper equivalent

production for FY2022.

Operational energy consumption: Operational control basis

(continued)

– Divestments are our interest in BMC (sale completed on 3 May 2022)

and our Petroleum business (merger with Woodside completed on

1 June 2022).

Year ended 30 June

Energy consumption (PJ) – on a Total operations

basis, unless otherwise indicated 2023 2022 2021

Consumption of fuel

– Coal and coke 1 1 1

– Natural gas 11 22 23

– Distillate/gasoline 85 87 91

– Other 2 2 3

Consumption of electricity 38 37 37

Total operational energy consumption 137 149 155

Total operational energy consumption adjusted

for divestments

137 132 137

Operational energy consumption from

renewable sources

25.7 17.3 0.5

Consumption of electricity from grid 34 33 33

Operational energy intensity (GJ per tonne of

copper equivalent production)

18 19 19

Scopes 1 and 2 emissions: Operational control basis

– Scope 2 refers to indirect GHG emissions from the generation of

purchased or acquired electricity, steam, heat or cooling that is

consumed by our operated assets. Our Scope 2 emissions have been

calculated using the market-based method in line with the Greenhouse

GasProtocolScope2Guidance,unlessotherwisespecified.

– Organisational boundary: Scopes 1 and 2 emissions have been

calculated based on an operational control approach in accordance

with the Greenhouse Gas Protocol Corporate Accounting and

Reporting Standard. Scope 1 refers to direct GHG emissions from our

operated assets.

– Data has been rounded to the nearest 0.1 MtCO

-e.

– Data in italics indicates that it has been adjusted since reported in our

Annual Report 2022.

– Operational GHG emission intensity has been restated due to a change

in methodology for calculating copper equivalent production. For FY2021

to FY2023 copper equivalent production has been calculated based on

FY2023 average realised product prices, to allow comparison between

years.ProductionfiguresusedareconsistentwithoperationalGHG

emission reporting boundaries (i.e. BHP operational control) and are

taken on a 100 per cent basis. Previously reported operational GHG

emission intensity was 2.2 tCO

-e/t copper equivalent production in

FY2021 and 1.5 tCO

-e/t copper equivalent production in FY2022.

– FY2021 and FY2022 percentages of Scope 1 emissions covered under

aGHGemission-limitingregulationhavebeenrestateduponconfirming

that GHG emissions from our Jansen Potash Project were not covered

under emission-limiting regulation for those periods. Previously reported

percentages were 81 per cent for FY2021 and 78 per cent for FY2022.

– ThefinalvalidationforsurrenderoftherightstoclaimGHGemission

reductions assigned via the Chilean energy market’s Renewable Energy

Certificate(REC)systemisexpectedtooccurbyJune2024withrespect

to the FY2023 period. As a result, we will re-calculate our Scope 2 GHG

emissionwithrespecttoEscondidaandPampaNortefollowingthefinal

validationandrestatethosefiguresaspartofourannualreportingfor

FY2024 if required to adjust for any differences.

– Divestments are our interest in BMC (sale completed on 3 May 2022)

and our Petroleum business (merger with Woodside completed on

1 June 2022).

Year ended 30 June

Operational GHG emissions (MtCO

-e) – on a Total

operations basis, unless otherwise indicated 2023 2022 2021

Scope 1 emissions 8.0 9.2 10.1

Scope 2 emissions 1.8 3.1 6.2

Total operational GHG emissions 9.8 12.3 16.3

Carbon credits retired 0 0 0.3

Total operational GHG emissions

minus retired carbon credits

9.8 12.3 16.0

Scope 1 emissions adjusted for divestments 8.0 7.9 8.8

Scope 2 emissions adjusted for divestments 1.8 3.0 6.1

Total operational GHG emissions adjusted

for divestments

9.8 11.0 14.9

Scope 2 emissions (location-based) 3.8 4.8 5.0

Operational GHG emission intensity (tCO

-e per

tonne of copper equivalent production)

1.3 1.6 2.0

Scope 1 emissions covered under GHG emission-

limiting regulation (%)

81% 71% 74%

Scope 1 emissions from methane (%) 15% 18% 22%

Scope 3 emissions

– Organisational boundary: Downstream Scope 3 emissions are estimated

and reported on an equity share basis, but for upstream Scope 3

emissionstheboundaryisdefinedonacategory-by-categorybasisdue

to data limitations.

– Scope 3 emissions have been calculated using methodologies

consistent with the Greenhouse Gas Protocol Corporate Value Chain

(Scope 3) Accounting and Reporting Standard. Scope 3 emission

reporting necessarily has a degree of overlap in reporting boundaries

due to our involvement at multiple points in the life cycle of the

commodities we produce and consume.

– Data in italics indicates that it has been adjusted since reported in our

Annual Report 2022.

– In FY2023, we updated the spend-based data methodology to account for

inflation.ThisnewmethodologywasappliedtoFY2020toFY2023dataand

impacts Category 1, Category 4, Category 6 and Category 7 where spend-

baseddataisused.Foreachreportingyear,aninflationcorrectionvalue

was applied to the emission factors sourced from the GHG Protocol Quantis

Scope 3 Evaluator tool. This has resulted in the restatement of Category

1, which was 10.1 MtCO

-e in FY2021 and 9.9 MtCO

-e in FY2022, and

Category 4, which was 4.6 MtCO

-e in FY2022.

– In FY2023, we updated the emission factor used for calculating distillate

and gasoline emissions in Category 3 after a more accurate emission

factor was published in the National Greenhouse Accounts Factors

(2022). This new emission factor was applied to FY2020 to FY2023

data, resulting in restatements. Previously reported data for Category 3

was 1.1 MtCO

-e for FY2021 and 1.0 MtCO

-e for FY2022.

– Category 15 was restated from 2.7 MtCO

-e for FY2022 due to an increase

in GHG emissions reported by Tamakaya Energía SpA (Kelar Power plant).

– Comparing progress in Scope 3 emission reduction between years

should consider the role that divestments played in the reduction of

GHG emissions. Data excludes divestments from the completion

date or effective economic date (as applicable) of the divestment.

Divestmentsreflectedinthetablebelowincludethemergerofour

Petroleum business with Woodside (completed on 1 June 2022),

divestment of our interest in the ROD Integrated Development

(completed in April 2022), divestment of our interest in BMC (completed

on 3 May 2022), and divestment of our interest in Cerrejón (with an

effective economic date of 31 December 2020). The most material

changes between years occurred in Category 11 and Category 15.

To further aid in comparability between years, we disclose total Scope

3 emissions adjusted for divestments in the BHP ESG Standards and

Databook 2023, available at bhp.com/climate.

Governance Financial Statements Additional Information

BHP Annual Report 2023 59

Operating and Financial Review

Year ended 30 June

Scope 3 emissions (MtCO

-e) 2023 2022 2021

Value chain – upstream

Category 1, Purchased goods and services

(including capital goods)

9.1 8.8 9.3

Category 3, Fuel- and energy-related activities 2.4 2.3 2.3

Category 4, Upstream transportation

and distribution

4.4 4.5 4.8

Category 6, Business travel 0.1 0.1 0.1

Category 7, Employee commuting 0.2 0.3 0.4

Value chain – downstream

Category 9, Downstream transportation

and distribution

2.8 3.2 3.1

Category 10, Processing of sold products

– Steelmaking

– Iron ore processing to crude steel 282.9 270.8 260.7

– Metallurgical coal processing to crude steel 28.7 34.5 39.8

– Copper processing 1.1 1.0 1.0

– Nickel processing 0.5 0.3 0.0

Category 11, Use of sold products

– Energy coal 37.0 37.6 38.3

– Natural gas, crude oil and condensates,

natural gas liquids

0.0 35.0 38.1

Category 15, Investments

(i.e. our non-operated assets)

1.3 2.8 2.7

Total Scope 3 emissions 370.5 401.3 400.6

For more information on the calculation methodologies,

assumptions, treatment of divestments and acquisitions and key

references used in the preparation of our GHG emissions data refer

to BHP Scopes 1, 2 and 3 GHG Emissions Calculation Methodology

2023 at bhp.com/climate

GHG emission targets and goals

For definition of the terms used to express our GHG emission

reduction targets and goals, including ‘target’, ‘goal’, ‘net zero’

and ‘carbon neutral’ refer to Additional information 10.4

The use of carbon credits will be governed by BHP’s

approach to offsetting described by Carbon credits

and offsetting at bhp.com/climate

Operational GHG emissions – medium-term target

Reduce operational GHG emissions by at least 30 per cent from FY2020 levels

by FY2030.

Target period FY2020 to FY2030

Target type Absolute

Target percentage

reduction

At least 30%

Target setting

method

Absolute target measured on a cumulative GHG emission

basis against an overall carbon budget. The target percentage

reduction was established in FY2020 by applying the same

rate of reduction to BHP’s GHG emissions as the rate at which

the world’s GHG emissions would have to contract in order

to meet the Paris Agreement goal to hold global average

temperature increase to well-below 2°C above pre-industrial

levels (known as the ‘absolute contraction method’).

Carbon budget for

target period

134.7 MtCO

-e.Thisreflectsalinearreductionbetweenour

adjusted FY2020 baseline and the FY2030 target year.

Boundary Scopes 1 and 2 – Operational control.

Scope 2 accounting

approach

Market-based. A residual mix emission factor (RMF) that

meetsGHGProtocolScope2Guidancedefinitioniscurrently

unavailable in the markets in which we operate to account

for grid electricity GHG emissions remaining after removal

of quantities directly contracted between parties. This may

result in double counting of renewable or other lower GHG

emissions electricity contributions across grid-supplied

consumers. The Australian Government published a RMF at

the end of FY2023. We will review the RMF and its impact on

our Scope 2 emission accounting for FY2024.

Key adjustments

made to baseline and

subsequent data

Baseline and performance data has been adjusted for

divestment of our interest in BMC (sale completed on 3 May

2022) and our Petroleum business (merger with Woodside

completed on 1 June 2022) and for methodology changes

(use of Intergovernmental Panel on Climate Change (IPCC)

Assessment Report 5 (AR5) Global Warming Potentials and

thetransitiontoafacility-specificGHGemissioncalculation

methodology for fugitives at Caval Ridge).

GHG gases included CO

, CH

, N

O, HFC, PFC, SF

Carbon credits and

offsetting

Not planned. Carbon credits may be used as a last resort option

if planned abatement projects fail to deliver to the estimated

abatement.

Progress Progress towards this target is expected to be non-linear. Refer

to Operational GHG emission reductions, earlier in this OFR

6.12.

Operational GHG emissions – long-term goal

Achieve net zero operational GHG emissions by CY2050.

Goal period FY2020 to CY2050

Goal type Absolute

Goal setting method Our long-term goal was developed with the ambition to

achieve net zero for our operational GHG emissions by

CY2050. Our progress against this goal will be measured

on an absolute basis. Any future target(s) we set for the

post-FY2030 period will be dependent on a range of factors,

including our understanding of technology pathways, growth,

policy settings and a deeper understanding of the role of

other abatement mechanisms including carbon credits.

Carbon budget for

goal period

Refer to our medium-term target above for the period

to FY2030. For the remainder of the goal period, we

compare our projected performance based on our current

understanding of technology solutions to a carbon budget that

reflectsahypotheticalstraight-linetrajectorybetweenFY2030

and CY2050 and consider that in our planning to better

understand our ability to achieve our net zero goal.

Boundary Scopes 1 and 2 – Operational control.

Scope 2 accounting

approach

Market-based. An RMF that meets GHG Protocol Scope 2

Guidancedefinitioniscurrentlyunavailableinthemarketsin

which we operate to account for grid electricity GHG emissions

remaining after removal of quantities directly contracted between

parties. This may result in double counting of renewable or

other lower GHG emission electricity contributions across

grid-supplied consumers. The Australian Government published

a RMF at the end of FY2023. We will review the RMF and its

impact on our Scope 2 emission accounting in FY2024.

Key adjustments

made to baseline and

subsequent data

Baseline and performance data has been adjusted for

divestment of our interest in BMC (sale completed on 3 May

2022) and our Petroleum business (merger with Woodside

completed on 1 June 2022) and for methodology changes

(use of Intergovernmental Panel on Climate Change (IPCC)

Assessment Report 5 (AR5) Global Warming Potentials and

thetransitiontoafacility-specificGHGemissioncalculation

methodology for fugitives at Caval Ridge).

GHG gases included CO

, CH

, N

O, HFC, PFC, SF

Carbon credits and

offsetting

Planned

Progress Progress towards this goal is expected to be non-linear. Refer to

Operational GHG emission reductions, earlier in this OFR 6.12.

Value chain GHG emissions – long-term goal

Pursue the long-term goal of net zero Scope 3 GHG emissions by 2050.

Achievement of this goal is uncertain, particularly given the challenges of a

net zero pathway for our customers in steelmaking, and we cannot ensure the

outcome alone.

Goal period FY2020 to CY2050

Goal type Absolute

Goal setting method Setasapointintime,i.e.withthespecificdateof‘by

CY2050’ to reach the goal of net zero Scope 3 GHG

emissions,whilereflectingthechallengesanduncertainty

and our inability (as BHP alone) to ensure Scope 3 emission

reductions. As a result, the goal is not based on a trajectory

anddoesnotimplyaspecificcarbonbudget,andsoScope

3emissionsmayfluctuate(withsomeincreasesand/ornon-

linear decreases) during the period before the goal date.

Boundary Total reported Scope 3 emissions are estimated on an equity

basis for downstream GHG emissions. For the upstream

GHGemissioncomponent,theboundaryisdefinedona

category-by-category basis due to data limitations.

Key adjustments

made to baseline and

subsequent data

Baseline and performance data has been restated where

methodology changes have been made to previously

reported GHG emissions, but has not been adjusted for our

divestments (except to exclude data from the date of the

divestment). We are reviewing our approach to baseline

adjustments for material acquisitions and divestments

for our Scope 3 targets and goals and may calculate and

include adjusted baselines in future reports.

60 BHP Annual Report 2023

6 Sustainability continued

GHG gases included Gases currently included in Scope 3 emissions measurement

aredefinedbytheavailabledatawhichdiffersbyScope

3 category. We intend to continue to improve our GHG

emissioncalculationsovertimetoencompassspecific

greenhouse gases as data becomes available.

Carbon credits and

offsetting

Not planned, but will be periodically reassessed.

Progress Refer to Value chain GHG emission reductions, earlier in this

OFR 6.12.

Value chain GHG emissions, steelmaking – medium-term goal

Support industry to develop technologies and pathways capable of 30 per cent

emission intensity reduction in integrated steelmaking, with widespread adoption

expected post-2030.

Goal period FY2020 to CY2030

Goal type/Goal

percentage reduction

Not applicable

Goal setting method Qualitative.Trackedbasedonthefinancialvalue(US$)we

commit in collaborative partnerships and venture capital

investments with the aim to support industry to develop

technologies and pathways capable of reduction in GHG

emission intensity in integrated steelmaking of at least 30%.

Progress Refer to Value chain GHG emission reductions, earlier in this

OFR 6.12.

Value chain GHG emissions, shipping – medium-term goal

Support 40 per cent emission intensity reduction of BHP-chartered shipping

of BHP products.

Goal period CY2008 to CY2030

Goal type Intensity

Goal percentage

reduction

40%

Goal setting method Setasapointintime,i.e.withthespecificdateof‘byCY2030’

for our goal to support a 40% GHG emissions intensity

reduction of BHP-chartered shipping of BHP products, while

reflectingthechallengesanduncertaintyandourinability(as

BHP alone) to ensure Scope 3 emission reductions. As a

result, the goal is not based on a trajectory and does not imply

aspecificcarbonbudget,andsoScope3emissionsmay

fluctuate(withsomeincreasesand/ornon-lineardecreases)

during the period before the goal date.

Boundary Scope 3, Category 4 (subset) – GHG emissions from maritime

transportation not owned or operated by BHP, but chartered

and paid for by BHP, where the transportation was of products

sold by BHP. In some cases, the goal’s boundary may differ

from required reporting boundaries.

Calculation method Average gCO

-e per deadweight tonne per nautical mile

(gCO

-e/dwt/nm), weighted based on International Maritime

Organisation(IMO)definedvesselsizerangesutilisedbyBHP

during the time period, using a well-to-wake CO

-e emission

factor from British Standards Institution EN 16258 standard.

Baseline method IMO 2008 average gCO

per deadweight tonne per nautical

mile,weightedbasedonIMO-definedvesselsizerangesutilised

by BHP during the baseline period (excluding for commodities

no longer in BHP’s portfolio), using IMO’s CO

emission factor

subsequently converted to a well-to-wake CO

-e emission factor

from British Standards Institution EN 16258 standard. CY2008

was selected as the baseline year for this goal to align with

the base year for the IMO’s 2030 emission intensity goal and

its corresponding reasoning and strategy.

Key adjustments

made to baseline and

subsequent data

We are reviewing our approach to baseline adjustments for

material acquisitions and divestments for our Scope 3 targets

and goals and may calculate and report adjusted baselines in

future reports.

GHG gases included CO

, CH

, N

Carbon credits and

offsetting

Not planned but will be periodically reassessed.

Progress Refer to Value chain GHG emission reductions, earlier in this

OFR 6.12.

Value chain GHG emissions, shipping – long-term target

Target net zero by 2050 for the GHG emissions from all shipping of BHP products.

Ability to achieve the target is subject to the widespread availability of carbon neutral

solutions to meet our requirements, including low/zero GHG emission technologies,

fuels, goods and services.

Target period FY2020 to CY2050

Target type Absolute

Target setting

method

Setasapointintime,i.e.withthespecificdateof‘byCY2050’

to reach the target of net zero GHG emissions from all

shippingofBHPproducts,whilereflectingthechallengesand

uncertainty and our inability (as BHP alone) to ensure Scope

3 emission reductions. As a result, the target is not based on

atrajectoryanddoesnotimplyaspecificcarbonbudget,and

Scope3emissionsmayfluctuate(withsomeincreasesand/or

non-linear decreases) during the period before the target date.

Boundary Scope 3, Category 4 and 9 (subset) – GHG emissions from

maritime transportation not owned or operated by BHP where

the transportation is of BHP products. May be BHP-chartered

or third party-chartered. Excludes transportation of products

purchased by BHP. In some cases, the target’s boundary may

differ from required reporting boundaries.

Key adjustments

made to baseline and

subsequent data

No adjustments have been made for methodology changes

or our divestments. We are reviewing our approach

to baseline adjustments for material acquisitions and

divestments for our Scope 3 targets and goals and may

calculate and include adjusted baselines in future reports.

GHG gases included CO

, CH

, N

Carbon credits and

offsetting

Not planned but will be periodically reassessed.

Progress Refer to Value chain GHG emission reductions,

earlier in this OFR 6.12.

Value chain GHG emissions, suppliers – long-term target

Target net zero by 2050 for the operational GHG emissions of our direct suppliers.

Ability to achieve the target is subject to the widespread availability of carbon

neutral solutions to meet our requirements, including low/zero GHG emissions

technologies, fuels, goods and services.

Target period FY2020 to CY2050

Target type Absolute

Target setting

method

Setasapointintime,i.e.withthespecificdateof‘byCY2050’to

reach the target of net zero for the operational GHG emissions

ofourdirectsuppliers,whilereflectingthechallengesand

uncertainty and our inability (as BHP alone) to ensure Scope

3 emission reductions. As a result, the target is not based on

atrajectoryanddoesnotimplyaspecificcarbonbudget,and

Scope3emissionsmayfluctuate(withsomeincreasesand/

or non-linear decreases) during the period before the target date.

Boundary Scope 3, Category 1, 3, 6 and 7 (subset) – Scopes 1 and 2

emissions of our direct suppliers included in BHP’s reported

Scope 3 reporting categories of purchased goods and

services (including capital goods), fuel- and energy-related

activities, business travel and employee commuting. In

some cases, the target’s boundary may differ from required

reporting boundaries.

Key adjustments

made to baseline and

subsequent data

Baseline and performance data has been restated where

methodology changes have been made to previously

reported GHG emissions, but has not been adjusted for our

divestments. We are reviewing our approach to baseline

adjustments for material acquisitions and divestments for our

Scope 3 targets and goals and may calculate and include

adjusted baselines in future reports.

GHG gases included Gases currently included in Scope 3 emission measurement

aredefinedbytheavailabledata,whichdiffersbyScope

3 category. We intend to continue to improve our GHG

emissioncalculationsovertimetoencompassspecific

greenhouse gases as data becomes available.

Carbon credits and

offsetting

Not planned but will be periodically reassessed.

Progress Refer to Value chain GHG emission reductions, earlier in this

OFR 6.12.

Non-operational areas

Outcome we seek

– focus area for delivering at least 30%

of the land and water we steward

under conservation, restoration or

regenerative practices

– build resilience of natural environment

How we manage

– 2030 Healthy environment goal

– Our Requirements for Environment and

Climate Change standard

Operational areas

Outcome we seek

– no net loss of biodiversity over mine

life cycle

– compliance with environmental permits

How we manage

– 2030 Healthy environment goal

– Our Requirements for Environment and

Climate Change standard

– Mitigation hierarchy

– no-go commitments

– Asset Environmental Management System

– Risk management

Outside BHP footprint

Outcome we seek

– contributing to global scale conservation

and nature positive outcomes

How we manage

– BHP Social Investment Strategy,

portfolio and funding

Amount contributed: almost US$100 million since 2011

Governance Financial Statements Additional Information

BHP Annual Report 2023 61

Operating and Financial Review

In FY2023, BHP owned, leased or managed an area of just under 6.5 million hectares

consisting of:

6.13 Environment

Demonstrating environmental responsibility is core to Our Charter value

of Sustainability.

We recognise that nature and the resources and services it provides

are fundamental to the world’s economic security and the wellbeing of

all stakeholders. Over the past year, we have seen increasing societal

focus on the need to halt and reverse current trends in nature loss in

the coming decade, including the adoption of the Kunming-Montreal

Global Biodiversity Framework during the Conference of the Parties to

the Convention on Biological Diversity in December 2022. We intend to

contribute our part towards the global efforts to halt and reverse nature

loss, which includes progressively assessing and disclosing our risks,

impacts and dependencies on nature and taking appropriate actions to

contribute towards nature-positive

outcomes through our 2030 Healthy

environment goal.

As defined by the TNFD, nature has four major components, or realms:

land, oceans, fresh water and atmosphere. At BHP, we are evolving our

environmental sustainability reporting to align with this concept of nature.

There is growing pressure on and competition for natural resources with

climate change amplifying certain sensitivities of our natural systems.

Where and how we operate is critical to ensuring the ongoing viability

of our business and our contribution to global efforts to protect the vital

ecosystems and realms of nature on which the world depends. With the

adoption of the Kunming-Montreal Global Biodiversity Framework and

the rapid evolution of frameworks for corporate disclosures (such as the

TNFD) and for business action on nature, BHP is continuing to review and

consider how to evolve our existing environmental disclosures in line with

these emerging frameworks, initiatives and regulatory reforms, including

environmental policy and law, in the jurisdictions where we operate.

BHP’s approach to environmental management

BHP’s operations and growth strategy depend on obtaining and maintaining

the right to access natural resources. We remain committed to maintaining

effective environmental management systems to implement our approach

to environmental management and to drive continuous improvement in our

environmental performance.

Specific environmental aspects, such as water, land and biodiversity, may

involve higher levels of risk to the health and resilience of our business, the

natural environment and our partners and stakeholders. We have developed

specific strategies and programs of work to help manage these risks as

discussed later in this section.

As at 30 June 2023, BHP owned, leased or managed an area of just under

6.5 million hectares

with just over 2 per cent disturbed for mining operation

purposes. Most of the area we steward is located in Australia and is for

non-operational land uses, such as pastoral leases or land set aside for

conservation. BHP’s approach to environmental management is tailored to

different area types in our portfolio. See Figure below for a visualisation of

this approach.

Our primary approach to preventing or minimising our adverse

environmental impacts (to air, water, land and biodiversity) within our

operational footprint is to apply the mitigation hierarchy (avoid, mitigate,

rehabilitate, compensatory actions). For an example of how we apply the

‘avoid’ pillar refer to our no-go commitments on page 62.

For more information on governance of sustainability topics,

including nature refer to OFR 6.3

1 Nature positive is defined by the World Business Council for Sustainable

Development (WBCSD)/TNFD as ‘A high-level goal and concept describing a

future state of nature (e.g. biodiversity, ecosystem services and natural capital)

which is greater than the current state.’ It includes land and water management

practices that halt and reverse nature loss – that is, supporting healthy,

functioning ecosystems.

2 This figure excludes areas we hold under greenfield exploration licences (or

equivalent tenements) and does not include the areas that we now steward

following the acquisition of OZ Minerals. The OZ Minerals areas will be included

in our land, water and biodiversity data from FY2024. The area we own, lease or

manage has decreased by less than 1 per cent from FY2022.

1 Excluding greenfield exploration licences (or equivalent tenements) which are outside the area of influence of our existing mine operations. 30 per cent will be calculated

based on the areas of land and water that we steward at the end of FY2030.

2. As per footnote 2 above.

3. Social investment funds contributed to voluntary environmental resilience initiatives.

98%

6.3 million

hectares non-

operational

area

The areas we hold for

strategic purposes or

alternative use (e.g.

pastoral or conservation)

154,000 hectares

operational area

The area we hold for mining

Outside BHP footprint

On areas held by others, BHP seeks to

contribute to nature-positive outcomes

on a global scale, including thought

leadership on approach to assessment

of nature positive outcomes

62 BHP Annual Report 2023

6 Sustainability continued

Our no-go commitments are:

– We do not explore or extract resources within the boundaries of

World Heritage listed properties

– We do not explore or extract resources adjacent to World Heritage

listed properties, unless the proposed activity is compatible with the

outstanding universal values for which the World Heritage property

is listed

– We do not explore or extract resources within or adjacent to the

boundaries of the International Union for Conservation of Nature

(IUCN) Protected Areas Categories I to IV, unless a plan is

implemented that meets regulatory requirements, takes into account

stakeholder expectations and contributes to the values for which the

protected area is listed

– We do not operate where there is a risk of direct impacts to

ecosystems that could result in the extinction of an IUCN Red List

Threatened Species in the wild

– We do not dispose of mined waste rock or tailings into a river or

marine environment

The requirement to apply the mitigation hierarchy, our no-go commitments

and other Group-wide approaches to environmental management is set out

in the Our Requirements for Environment and Climate Change standard and

our mandatory minimum performance requirements for risk management.

These requirements outline an integrated, risk-based approach to managing

any actual or reasonably foreseeable adverse and positive impacts (direct,

indirect and cumulative) on nature and/or natural resources. This includes a

requirement to establish and implement environmental risk monitoring and

review practices in our business planning and project evaluation cycles.

Our mandatory minimum performance standards require development and

implementation of Environmental Management Systems that align with global

environmental frameworks such as ISO 14001, which is verified either by ISO

14001 certification or through our internal assurance processes. They also

require our operated assets to define the intended asset-level environmental

objectives by setting target environmental outcomes that are consistent with

the assessed risks and potential impacts.

Under our 2030 Healthy environment goal, we seek to create nature-positive

outcomes by having at least 30 per cent of the land and water we steward

under conservation, restoration or regenerative practices by the end of

FY2030. Our non-operational areas are the primary focus of our 2030 Healthy

environment goal due to their size. Nevertheless, both the 2030 goal and

mitigation hierarchy are expected to be used as management approaches for

both operational and non-operational areas.

For more information on our 2030 goals

refer to OFR 6.4

Beyond BHP’s footprint, we commit to making voluntary contributions to

support environmental resilience across the regions where we operate through

social investment, on ground action and thought leadership.

Our collaborative work with strategic partners, including Conservation

International, research organisations and local communities, is focused

on contributing to enduring environmental and social benefits through

projects and programs focused on conservation and ecosystem restoration,

water stewardship and climate change mitigation and adaptation.

Our preference is to invest our voluntary social investment funds in projects

that contribute to cultural, economic and community benefits in addition to

environmental resilience.

Since FY2011, we have invested almost US$100 million of our social

investment funds in voluntary environmental resilience initiatives outside our

operational area. This funding is in addition to our investment in day-to-day

environmental management activities relating to our operations.

For more information on our environmental approach refer to Our

Requirements for Environment and Climate Change standard and our

environmental management and governance processes at

bhp.com/environment

Key progress in FY2023

Our 2030 Healthy environment goal is supported by successive short-term

milestones that we intend to develop and disclose each year until FY2030.

During FY2023, as part of our progress to achieve our 2030 Healthy

environment goal, we completed the following milestones:

– published our asset-level context based water targets (CBWTs)

that were informed by catchment-scale risk assessments and Water

Resource Situational Analyses.

For more information refer to the Oceans

and fresh water section below.

– completed baseline mapping of Important Biodiversity and/or

Ecosystems (IBE) – for all land and water areas at our operated assets

in Minerals Australia and Minerals America (excluding OZ Minerals and

legacy assets

), and formalised our approach to biodiversity and land

management in a Group-level biodiversity strategic framework that

identified three priority areas – valuing natural capital, innovation and

collaboration and nature-related disclosures. For more information refer

to the Biodiversity section on the following page.

– continued to invest in voluntary conservation projects and thought leadership

related to areas beyond BHP’s footprint, as part of our contribution to

environmental resilience more broadly. This included the release of our

Natural Capital Accounting for the Mining Sector - Beenup Site Pilot Case

Study bhp.com/news/media-centre/releases/2023/05/bhp-case-study-a-first-

for-natural-capital-accounting-in-mining to progress collective thinking on the

application of natural capital accounting principles for the mining sector.

As at 30 June 2023, we had 82,132 hectares under nature-positive

management practices

, which is 1.3 per cent of the land and water we

steward

. Development of natural capital accounts for our operated assets

has not yet commenced, but will be guided by the insights and learnings

from the Beenup Site pilot case study.

Oceans and fresh water

Access to safe, clean water is a basic human right and water is essential to

maintaining healthy ecosystems. Water is integral to what we do and vital to the

longevity of BHP. We depend on access to water and cannot operate without it.

Our Water Stewardship Position Statement outlines our vision for a water

secure world by 2030 and this vision is aligned with the United Nations

Sustainable Development Goals. Our position statement is supported by our

Water Stewardship Strategy, which focuses on understanding and managing

water-related risk, disclosure, contributing to the resolution of shared water

challenges, valuing water and sharing innovations and learning.

We strive to effectively manage our interactions with and prevent or

minimise our adverse impacts on water resources. We work to reduce

stress on water resources from our operations by requiring our operated

assets, as part of the BHP Risk Framework, to identify, assess and

manage water-related risk and make strategic business decisions in line

with our risk appetite statement. BHP’s portfolio of long-life operated

assets means we plan in decades and must take into account the needs

and circumstances of future generations in our decisions. We consider

both our operated assets’ needs and the potential for regional changes to

water resources due to our activities, climate change, pollution, population

growth and changing expectations. We consider the interactions that we

and external parties have with water resources within catchments, shared

marine regions and groundwater systems, and the need to manage water-

related risks for the different physical environments, hydrological systems

and socio-political and regulatory contexts in which we work.

For more information on the water-related risks (both threats and

opportunities), impacts and dependencies that we have evaluated and

the actions we take to seek to prevent, mitigate or enhance them refer

to bhp.com/water

For information on BHP’s risk process, including effectiveness of

actions taken, refer to OFR 8

1 CBWTs are intended to apply at the asset-level for our operated assets. Due to the

previous divestment review of NSWEC, the development of CBWTs for this asset

is planned to be completed in FY2024, along with CBWTs for our legacy assets.

We will review the need to revise or develop new or additional CBWTs when there

are substantial changes to our portfolio or one of our operated assets moves into

the operational phase, which may firstly require a Water Resource Situational

Analysis (WRSA) to the extent that an existing WRSA is not applicable.

2 Legacy assets refer to those BHP-operated assets, or part thereof, located in the

Americas that are in the closure phase.

3 Area under stewardship that has a formal management plan, including

conservation, restoration or regenerative practices. 1.3 per cent is calculated

based on areas of land and water that we stewarded at 30 June 2023.

For more information refer to the BHP ESG Standards and Databook 2023,

available at bhp.com/sustainability.

Governance Financial Statements Additional Information

BHP Annual Report 2023 63

Operating and Financial Review

Beyond our operational activities, we engage across communities,

government, business and civil society to catalyse actions to improve

water governance, increase recognition of water’s diverse values and

advance sustainable solutions. Our key collaboration in FY2023 was our

engagement of third parties (e.g. universities) to review publicly available

information and engage with partners and stakeholders (e.g. communities,

Indigenous groups, policymakers and other private corporations within

our catchment areas) to identify shared water challenges through Water

Resource Situation Analyses (WRSAs). The WRSAs for our operated

assets that are currently operational (except for NSWEC due to the

previous divestment review) were published on our website in FY2023

and are intended to support continued collaboration between partners and

stakeholders to understand and manage shared water resources within

our operating regions. While water challenges vary across our catchments,

some of the common challenges identified in the WRSAs include data

sharing, frameworks for collaboration and balancing different values for

water – economic, social and cultural. More information on the WRSAs

is available at bhp.com/sustainability/environment/water/shared-water-

challenges/what-is-wrsa. We also partner with others to advance the

thinking in our priority areas of action. During FY2022 and FY2023, we

collaborated with the University of Notre Dame to develop a framework

for corporations and policymakers to consider the human right to water to

support social equity and reduce corporate risk. The draft was presented

at the United Nations 2023 Water Conference and will now be expanded to

consider broader environmental rights.

We report on water metrics at bhp.com/water and in the BHP ESG

Standards and Databook 2023 available at bhp.com/sustainability, in line

with the ICMM’s Water Reporting, Good Practice Guide (2

Ed) (ICMM

guidance) and the Minerals Council of Australia’s Water Accounting

Framework (WAF). These reporting frameworks are generally aligned with

the reporting requirements of the GRI Standards, Sustainability Accounting

Standards Board and the CEO Water Mandate

. Detailed information on

water accounting and reporting of metrics required by the ICMM guidance

is available at bhp.com/water.

Water data and accounting relies on a variety of data sources, including

from water modelling, direct measurement and estimation techniques

based on available known methodologies (e.g. estimation of evaporation

from water storages). In line with our commitment to continuous

improvement of our water accounts and data, we continue to review our

assumptions for accounting for water metrics and refine our methodology

in water models and water balances, recognising that water modelling and

balances contain a degree of uncertainty. Water models and measurement

techniques will continue to evolve and our understanding and knowledge

will grow over time. Our focus in FY2024 will be a review and refinement

of our water accounts and model at our Nickel West asset.

We continue to seek opportunities to source our water from lower grade

sources (e.g. seawater) rather than use high quality (as defined in ICMM

Guidance and the WAF) water resources from the catchments where we

operate. In FY2023, seawater continued to be our largest source of water

withdrawal; groundwater (a mixture of high and low-quality water) remained

our most significant non-seawater source and the amount withdrawn was

similar to FY2022. The magnitude of our global water withdrawal, discharge

and consumption data changed during FY2023 following the divestment of

our Petroleum and BMC assets in late FY2022. Detailed data is available at

bhp.com/water. The definitions of water quality types are available in section

2.4.2 of ICMM Guidance. In FY2023, we continued to use the data obtained

from our water accounting to identify and assess water efficiency and

treatment opportunities within our operated assets.

We committed in our Water Stewardship Position Statement to developing

context-based water targets (CBWTs). In FY2023, we released our first suite

of CBWTs that will apply until 2030. These targets were informed by BHP’s

view of water-related risks in the relevant catchment and by the shared water

challenges identified in the WRSAs. The CBWTs aim to improve our internal

BHP water management and contribute to collective benefit and shared

1 The CEO Water Mandate is a UN Global Compact initiative that mobilises

business leaders on water, sanitation, and the Sustainable Development Goals.

Companies that endorse the CEO Water Mandate commit to continuous progress

against six core elements of their water stewardship practice and, in so doing,

better understand and manage their own water risks. The six core areas are: Direct

Operations, Supply Chain & Watershed Management, Collective Action, Public

Policy and Community Engagement and Transparency. BHP is an active signatory

to the Mandate.

approaches to water management in the regions where we operate. They also

support BHP’s 2030 Healthy environment goal and are expected to contribute

to the protection or restoration of water-dependent ecosystems in the vicinity

of our operated assets. The CBWTs are underpinned by a series of milestones

(for more information refer to bhp.com/sustainability/environment/water/

shared-water-challenges). We intend to report on our progress against these

milestones and targets from the FY2024 annual reporting period onwards.

For more information on our approach to water stewardship,

progress against our Water Stewardship Strategy, water performance

in FY2023 and case studies on activities we are undertaking to

progress towards meeting our water stewardship vision refer to

bhp.com/water

Biodiversity

We have a Group-level biodiversity strategy that outlines our purpose

and strategic priorities, and which is designed to inform operational

decision-making across the full life cycle of mining operations at our

operated assets. The Group-level strategy provides a clear direction that

enables alignment of asset-level biodiversity and land objectives and

supports delivery of the 2030 Healthy environment goal. The focus areas

in the biodiversity strategy are valuing natural capital, innovation and

collaboration, and nature-related disclosures.

For more information on our 2030 goals refer to OFR 6.4

and for information on our biodiversity strategy refer to

bhp.com/biodiversity

Our operated assets are required to have plans and processes that

capture local biodiversity, land risks and regulatory requirements and detail

how to prevent or minimise any actual or potential impacts.

In May 2023, we published the Natural Capital Accounting for the Mining

Sector – Beenup Pilot Case Study, which was based on BHP’s former

mineral sands site located in Western Australia. The site was closed in

1999 and rehabilitation and restoration of the site was completed over

the period from 2000 to 2015. The objective of the case study was to pilot

how natural capital might be valued in the mining context, to determine the

data requirements to build a set of natural capital accounts (NCAs) and to

evaluate the use of natural capital accounting as a tool to track progress

on contributing to nature-positive outcomes aligned with our 2030 Healthy

environment goal. The Beenup pilot case study is intended to be used

as a guide for future studies and a basis of learning and improvement to

contribute to development of a consistent and meaningful approach to

natural capital accounting in the mining sector. Insights from the Beenup

case study are being piloted at an operational site in Minerals Australia and

are intended to assist us as we progress towards all of our operated assets

having NCAs in line with one of the key metrics for our 2030 Healthy

environment goal.

Biodiversity initiatives supported through social investment continued

through FY2023. Our voluntary social investment projects were focused in

three areas:

– Thought leadership – testing of natural capital accounting principles

through the Natural Capital Accounting for the Mining Sector – Beenup

Site Pilot Case Study

– On ground action – monitoring and evaluation and the use of

environmental DNA to develop indices of ecosystem health

– Environmental resilience – through support for research on coral reef

restoration to build resilience on coral reefs, and the application of

Conservation International’s seascapes framework to build resilience

in coastal communities, which is currently being piloted in the Lau

Region, Fiji

In FY2023, BHP participated in a pilot of the TNFD beta framework,

coordinated by the ICMM, as part of the market consultation and testing

phase of the draft disclosure framework.

For more information on our approach to biodiversity and land

management and current performance refer to

bhp.com/biodiversity

64 BHP Annual Report 2023

6 Sustainability continued

Atmosphere

We report our approach, management and data related to climate change

in OFR 6.12. Our emission of nitrous oxides, particulates and sulphur

dioxide are considered non-material in comparison to global emissions as

determined by the GRI materiality assessment process. We have extensive

particulate monitoring and management programs at some of our operated

assets. We report air emissions (such as particulates and nitrous oxides) as

part of the BHP ESG Standards and Databook 2023, available at bhp.com/

sustainability, and discuss our approach and management to these on our

environment webpage at bhp.com/environment.

Legal cases – Environment

We are facing ongoing legal cases involving environmental matters.

Examples are: Lagunillas (Cerro Colorado) and Monturaqui (Escondida),

as described below.

Lagunillas (Cerro Colorado)

In 2021, an individual filed an environmental damage claim against Cerro

Colorado (CMCC) before the Chilean Environmental Court, alleging

CMCC’s water extraction from the Lagunillas aquifer had damaged the

aquifer, as well as a nearby lagoon and wetlands. The substantive case

was heard in FY2022 and an agreement was reached between the two

parties to seek to settle the claim. The settlement proposal was submitted

to the Environmental Court for approval, which decided it would not rule

on the proposal but would instead issue a ruling on the merits of the case.

In May 2023, the Court indicated that the Presiding Judge had submitted a

draft ruling on the case’s underlying merits for the other judges to review.

In parallel, the Antofagasta Court of Appeals intervened and granted

an appeal filed by CMCC seeking to reverse an earlier decision by the

Environmental Court that denied the parties the opportunity to be heard

in relation to the settlement proposal’s adequacy. The Court of Appeals

ordered the Environmental Court to schedule a special hearing to assess

the adequacy of the environmental measures included in the settlement

proposal and to decide whether to approve or reject the proposal.

Monturaqui (Escondida)

In March 2022, the Chilean Environmental Regulator (SMA) sanctioned

Escondida, concluding it had breached its environmental permit causing

irreparable environmental damage due to its water extraction from the

Monturaqui aquifer. Escondida’s infraction was classified as ‘very serious’

and the SMA imposed a fine of ~US$ 8.3 million. Escondida filed a

reconsideration motion before the same regulator, which was rejected

in January 2023. In February 2023, Escondida filed a further appeal

before the First Environmental Court seeking to annul the SMA decision.

The appeal is pending.

Shortly after the March 2022 SMA decision, an environmental damage

claim was filed in the Environment Court by the Chilean Attorney General’s

Office against Escondida (and two other operators), in which it was alleged

that the defendants’ extraction of water from the Monturaqui aquifer has

caused environmental damage. In March 2022, the Peine Indigenous

Community filed a claim against Escondida based on the same facts as

the SMA sanction. Both the Chilean Attorney General’s Office and the

Peine claims have been consolidated into a single case. In May 2023, the

three defendants submitted a joint settlement proposal to the claimants.

The substantive case was heard from 24 July to 28 July 2023. At the

hearing, the Court ordered a site visit to take place during August 2023,

following which the Court will schedule a hearing to enable the parties to

deliver closing arguments.

6.14 Community

The core business activities and supplementary social, economic and

environmental initiatives of BHP can significantly contribute to improved

outcomes for the communities where we operate and in return secure

sustained support for our operations. We recognise the continuously evolving

nature of society, communities and our business requires us to maintain a

dual approach to community relations, where we acknowledge and address

immediate risks, impacts and opportunities to the communities where we

operate, while having an agile long-term strategy that enables broader

shifts in the ways we approach community engagement and investment in

response to community values and expectations. In FY2023, we progressed

the management of short-term risks, impacts and opportunities as well as the

development of a long-term strategic approach.

Community understanding

We apply the same approach to community engagement and research across

all our operated assets and exploration regions globally. This includes:

– Community perception surveys – snapshots of the communities where we

operate and key opinion leaders’ perspectives on their community priorities

and of sector and BHP performance, completed every two years. The last

surveys were completed in late FY2022

– Community baseline studies – desktop assessments that provide quantitative

and qualitative data on social, cultural, economic and political characteristics

of the communities where we operate. These were completed in FY2023

– Community impact and opportunity assessments – analysis of the

surveys and baseline studies against asset plans to identify and prioritise

actual and potential community risks, impacts and opportunities.

The assessments utilise our Risk Framework to support integration into

the risk profile for our operated assets and functions. These commenced

in FY2023 and are expected to be completed in FY2024

– Community engagement and social investment indicators – data collected

related to community engagements (e.g. number of community concerns

and use of the operational grievance mechanisms) and social investment

partnerships (e.g. outcome indicators of a particular project) that provide

insights to the communities’ relationships with us

In FY2023, we generally observed that communities continued to value the

economic and other opportunities associated with BHP’s operations, although

they also continued to hold strong interests about the impacts of mining.

Primarily these relate to environmental performance, economic resilience and

some of the social and cultural impacts mining can have. Many communities

have provided feedback that engagement should be more purposeful and

occur early enough in the planning process to allow community feedback to be

practically taken into consideration, with solutions designed in partnership.

Social investment is positively received as a tool to contribute value. However, it

is not seen by many communities as an offset for other impacts the community

may experience or perceive from our activities. Furthermore, social investment is

seen as marginal relative to the upside opportunities realised through increases

in procurement and employment. At a regional and local level, we know each

community has a diverse range of interests across infrastructure, economic

opportunities, healthcare, environment and sociocultural values. The unique

nature of each community’s priorities requires flexibility in the approach to

engagement and investment taken by our operated assets.

This feedback has informed the strategy for our goal under the thriving,

empowered communities pillar of our social value framework, which

includes the co-design of plans within each community as a key metric.

We are working to develop Group-level principles that will provide guidance

on co-design leading practice, while each operated asset will have the

ability to engage in a manner that is preferred by the local community

and address the highest priority focus areas for that community through

business activities, advocacy and social investment.

Community events, complaints and grievances

In FY2023, there were 154 community concerns and complaints received

globally across our operated assets through our local complaints and

grievance mechanisms (zero of which were classified as grievances).

1,2

This represents a total 1 per cent decrease from FY2022 figures.

The map opposite shows stakeholder concerns reflecting complaints

received through our local grievance mechanisms and other sources,

such as community perception surveys.

FY2023 progress and initiatives

In response to the lessons learned from prior community engagement and due

diligence, in FY2023 we progressed:

– design and testing of a stakeholder management system that enables

us to maintain improved records of community engagements and our

commitments, as well as an improved external facing complaints and

grievance portal to improve accessibility for community members to provide

direct feedback to us. We intend to launch these systems in FY2024

– updates to our internal standards, designed to provide improved guidance

for community engagement and social investment leading practice as well

as enhance integration with our existing business processes, such as asset

planning and risk assessments. Embedment of the revised standards is

planned to commence in FY2024

Chile

Western Australia

Governance Financial Statements Additional Information

BHP Annual Report 2023 65

Operating and Financial Review

Stakeholder concerns by region

Equitable change and transition at New South Wales

Energy Coal

Following an extensive review of available options, in June 2022, BHP

made the decision to retain New South Wales Energy Coal (NSWEC) in our

portfolio, seek the relevant approvals to continue mining beyond the current

consent that expires at the end of CY2026 and proceed with a managed

process to cease mining at the asset by the end of FY2030 (Pathway

to 2030).

Our ambition is to work with stakeholders to achieve sustainable landforms

and land uses to contribute to supporting the needs of the Hunter region.

This ambition is underpinned by BHP’s social value framework and our

equitable change and transitions principles. We recognise the importance

of bringing a positive contribution to local communities, including our

contribution to creating long-term prosperity and resilience as the Upper

Hunter region enters a transitional period.

An important part of Pathway to 2030 is to seek the relevant approvals to

continue mining past the existing end of CY2026 consent expiry. This is

intended to provide the time to work with our people and the local community

on an equitable change and transition approach and the detailed plan for

mine closure. Work continues on the modification application, which is

intended to be submitted in the second half of 2023.

As part of our Pathway to 2030 commitment, BHP has engaged extensively

with partners and stakeholders following the decision to cease mining at

NSWEC. Dialogue has included detailed information sessions with our

employees, contractors and suppliers, the community (including members

of local communities, local Business Chambers, Indigenous partners and

industry representatives) and multiple levels of government. Over the

coming period, we intend to continue to work together with our people and

the community to progress the Pathway to 2030 engagement program with

partners and stakeholders.

More information on our approach to community is available at

bhp.com/communities

6.15 Indigenous peoples

Indigenous peoples are important partners for BHP. Around the world, BHP

operates on or close to the traditional lands of Indigenous peoples and we have

a deep respect for their distinct cultures, rights, perspectives and aspirations.

BHP is committed to working collaboratively with Indigenous peoples to develop

long-term partnerships based on trust and mutual benefit. It is through this

commitment that we aim to support reconciliation with Indigenous peoples and

contribute to improved social, economic and environmental outcomes.

First adopted in FY2015, our Global Indigenous Peoples Framework was

reviewed in FY2022 to bring it into greater alignment with BHP’s purpose and

social value framework, and to strengthen our consideration of the collective

rights and perspectives of Indigenous peoples in a changing global context.

Our revised global Indigenous Peoples Policy Statement (IPPS), released in

FY2023 is the product of extensive consultation internally with BHP leaders

and employees and externally with Indigenous peoples and organisations,

leading external experts, non-government organisations and investors.

Our IPPS outlines a global approach to engaging and partnering with

Indigenous peoples including our approach to free, prior and informed consent

(FPIC). A global Indigenous Engagement team coordinates our approach

and standards for BHP’s engagement with Indigenous peoples across our

operated assets and functions within each region and globally across BHP.

Regionally, Indigenous Peoples Plans are being co-designed with Indigenous

peoples to outline how we will engage with Indigenous communities and

partners in accordance with our IPPS and the priority topics on which we

intend to focus our engagement in each country or region where we operate.

We acknowledge the importance of a diverse workforce that understands

the lived experiences of and cultural nuances and protocols that exist within

Indigenous societies. Dedicated Indigenous Engagement teams work at both

the local and global level, and are responsible for managing BHP’s policies,

relationships and agreements with Indigenous peoples. The Indigenous

Engagement teams work across the organisation with our leadership to

maintain a high level of cultural competence, including supporting BHP to

follow our processes for seeking FPIC, assessing and mitigating adverse

impacts to Indigenous peoples’ collective rights, cultural heritage management,

procurement from Indigenous businesses, Indigenous employment and our

efforts to contribute to the economic and social development of Indigenous

communities where we operate.

1 An event or community complaint relating to an adverse impact/event that has escalated

to the point where a third-party intervention or adjudication is required to resolve it.

2 Data excludes OZ Minerals.

Canada

– Road and traffic impacts

due to increased

operations

– Social behaviour

of employees and

contractors in

communities

– Local employment and

procurement growth

– Indigenous peoples

engagement approaches

– Transition of

COVID-19 policies

– Environmental performance

and sustainability of

the industry

– Local employment, future

work opportunities and

workforce development

– Socio-economic

diversification related to the

transition of Cerro Colorado

– Management of

legacy issues

– Transparency and

anti-corruption

New South Wales

– Equitable transition of

Mount Arthur Coal

– Coal industry outlook

and socio-economic

diversification of the region

– Operational activity – dust,

noise and traffic

– Cumulative impacts of

mining industry

Queensland

– Improvements in quality of

social services

– Skilled labour shortages and

workforce development

– Access to quality,

affordable housing

– Coal industry outlook

and socio-economic

diversification of the region

– Operational activity –

dust, noise and traffic

– Access to quality, affordable

housing and social services

– Community safety and rising

rates of crime and anti-social

behaviour

– Air and water quality

– Access to education and

local employment

South Australia

– Availability and quality

of childcare

– Improvements in health and

education services

– Improving approaches to

engagement and mutually

agreeing priorities

– Social behaviour of

employees and contractors

in communities

Incorporate Indigenous voices, values,

knowledge and perspectives.

BHP will seek out Indigenous voices, values, knowledge

and perspectives in the way we work. We will connect with

Indigenous peoples to better appreciate the historical, legal,

social, environmental, cultural and political landscape where

we operate or seek to operate, and how to better manage the

environment we share.

Strengthen engagement with Indigenous

peoples through dialogue and co-design

BHP will engage early and support meaningful dialogue

with Indigenous peoples by sharing knowledge and

information both ways and ensure our processes allow for

active participation in appropriate aspects of the design,

implementation and monitoring of plans that impact

Indigenous peoples.

BHP’s Indigenous Peoples Policy Statement

BHP’s ambition is to create long-term relationships with Indigenous peoples based on trust and mutual benefit. We aim to support reconciliation with

Indigenous peoples’ and contribute to improved social, economic and environmental outcomes. Through this Policy Statement we will be guided by the aims

of the United Nations Declaration on the Rights of Indigenous peoples’ as articulated in the Policy Statement’s Principles, which are summarised below.

Seek to obtain the free, prior and informed consent

of potentially affected Indigenous peoples’

BHP’s default position will be that a proposed new operation or capital

project should not proceed without consent; and where consent has not

been provided, BHP will escalate senior management involvement in the

process to determine if the new operation or capital project will proceed.

Respect Indigenous peoples’ cultural and

intellectual property and data sovereignty

BHP acknowledges the value and ownership of information related to

Indigenous cultural heritage and the rights to information regarding

Indigenous peoples’ narratives, traditions and lore.

Principles

Regional Indigenous Peoples Plans

66 BHP Annual Report 2023

6 Sustainability continued

Indigenous partnerships

Under the Indigenous partnerships pillar of our social value framework, we have

set ourselves the goal of delivering respectful relationships that hear and act

upon the distinct perspectives, aspirations and rights of Indigenous peoples and

support the delivery of mutually beneficial and jointly defined outcomes (refer

to OFR 6.5). In FY2023, we completed a milestone toward this goal with the

release of a revised Global Indigenous Peoples Strategy (now described as our

Indigenous Peoples Policy Statement (IPPS)). We also made progress against

a milestone of increasing formal Indigenous voice mechanisms in decision-

making, through the global consultations in FY2023 for the new IPPS and

consultations for the regional Indigenous Peoples Plans in Australia and Canada

respectively, as well as through our ongoing engagement mechanisms with

Indigenous peoples and communities on whose traditional lands we operate

our assets. We initiated a global program of research with Indigenous

partners and organisations in FY2023, to support our aim of reporting on

the health of our relationships with Indigenous partners in FY2024.

We also revised one of the key metrics for our 2030 Indigenous partnerships

goal in FY2023. The original metric for FY2024, published in June 2022, stated

that we would ‘co-create plans which define priorities and are designed to deliver

mutually beneficial outcomes’. We updated this metric to be: ‘Indigenous voices

and perspectives are incorporated into co-designed priorities in each region’.

This update clarifies the deliverable and aligns with our new IPPS commitments

to incorporate Indigenous voices and perspectives in our work.

We are making progress against our social value scorecard metrics

for Indigenous workforce participation and Indigenous procurement.

Indigenous employment teams developed and implemented Indigenous

workforce initiatives in FY2023 to provide pathways to employment, support

our Indigenous workforce, build a more culturally capable non-Indigenous

workforce and meet our employment metrics. In Australia, our Indigenous

employment was at 8.6 per cent in FY2023

and our target is to reach

9.7 per cent by FY2027. In Chile, our Indigenous employment was at 9.7

per cent in FY2023

and our target is to reach 10 per cent by FY2025.

In Canada, our Indigenous employment was at 7.7 per cent in FY2023

and

our target is to reach 20 per cent by FY2026.

For more information about Indigenous

employment refer to OFR 6.6

In FY2023, we expanded our global program to improve engagement with

Indigenous businesses across all our operating locations with the goal of

increasing direct procurement spend to over US$400 million by FY2025.

Compared to FY2022, our direct global spend with Indigenous businesses

increased by 122 per cent to $US332.6 million in FY2023 and the number

of Indigenous vendors engaged rose by 50 per cent to 219. Through this

program, we have seen continued growth in spend with Indigenous

businesses across our Australian assets with FY2023 direct spend of

US$267.5 million. Jansen Stage 1 in Canada delivered direct spend of

US$65 million in FY2023.

Minerals Australia

In FY2023, following a review of the status of all Native Title and cultural

heritage agreements and negotiations with Indigenous peoples across

Minerals Australia, BHP established an agreement-making program that is

scheduled to be progressed over the next three to five years. This program

seeks to modernise agreement making across Minerals Australia, enhance

good practice and ensure greater alignment with our revised IPPS,

including our approach to FPIC.

Minerals Australia released its sixth Reconciliation Action Plan (RAP)

in June 2023 for the period to the end of FY2027 to contribute towards

reconciliation between Indigenous and non-Indigenous Australians and to

take forward BHP’s global IPPS in Australia. We developed the Elevate

RAP in partnership with Traditional Owner groups, Aboriginal and Torres

Strait Island Islander employees, businesses, organisations, communities

and peak bodies across Australia.

In a planned ongoing initiative, BHP hosted its inaugural Traditional Owner

Forum in November 2022, which brought together senior leaders from

Traditional Owner groups across Australia, BHP leadership and relevant

team members. The forum was called for by Traditional Owners, who

requested the opportunity for two-way dialogue with BHP senior leaders.

In Minerals Australia, a new Cultural Heritage Technical Standard was

developed in FY2023 that goes beyond existing legislative frameworks

and requires all our Australian-based operated assets to meet the public

targets defined in the Elevate RAP. This new standard puts good faith

negotiation with Indigenous people at the centre of the process through

cultural heritage agreement-making and the delivery of Cultural Heritage

Management Plans. In FY2023, four new Heritage Agreements and 14

1 Point in time data as at 30 June 2023.

Governance Financial Statements Additional Information

BHP Annual Report 2023 67

Operating and Financial Review

Potash Project before expanding to regional and national Indigenous

organisations. We held an open community forum in March 2023 with

the six First Nations partners to our Jansen Potash Project, as well as

surrounding regional First Nations, Metis groups, educational institutions

and other First Nation economic development groups. We expect to

complete the Indigenous Partnership Plan in FY2024.

Resolution Copper

Resolution Copper Mining is owned by Rio Tinto (55 per cent) and

BHP (45 per cent) and managed by Rio Tinto. We acknowledge the

Resolution Copper project area includes areas of cultural significance for

Native American Tribes and their members. Development of the project

continues to be studied and remains subject to regulatory reviews by

federal, state and local governments. Resolution Copper Mining continues

to cooperatively engage in these regulatory processes and has publicly

stated its commitment to deepening ongoing engagement with Native

American Tribes and other stakeholders to understand and seek to mitigate

potential negative impacts, while also collaborating to create shared value

opportunities. We are monitoring and support Resolution Copper Mining’s

engagement processes.

6.16 Tailings storage facilities

A primary focus is on managing the safety and integrity of our tailings

storage facilities (TSFs) across our operated and closed assets, to protect

people, the environment and communities where we operate.

TSFs are dynamic structures that accommodate the left-over materials

from the processing of mined ore. A failure event has the potential to

impact people, communities, the environment and the economy. In 2015,

the tragic failure of the Fundão TSF at Samarco, a non-operated joint

venture (NOJV) owned 50 per cent by BHP, led to increased focus on the

management of our TSFs. We remain committed to strengthened tailings

management to deliver operations that are safer for the environment and

community. We will continue to work with stakeholders, share our progress

and apply learnings to realise positive outcomes at BHP and across

the industry.

In FY2023, we continued works aimed at reducing our TSF risk, for example:

– At the WAIO Boodarie TSF, we progressed the TSF to a state of

safe closure, as defined by the Global Industry Standard on Tailings

Management (GISTM), when we completed the embankment reshaping

and capping of tailings.

– The construction of buttresses commenced at Olympic Dam’s TSF5, BMA’s

Peak Downs Old Tailings Dam TSF and legacy asset’s Solitude TSF, to

further reduce the low likelihood of a failure event.

– We made progress at our operated and closed assets to align with

the GISTM.

BHP added four operated TSFs to our portfolio as a result of the OZ

Minerals acquisition.

For information about the Fundão TSF failure at Samarco and our

progress with the response refer to OFR 7

Our approach

Our short-term strategy focuses on improvement of key risk indicator (KRI)

performance, including options studies to reduce and mitigate potential

downstream impacts, particularly to those who could be at risk in the event

of a TSF failure. We are also committed to aligning with tailings industry

standards, including the GISTM and Towards Sustainable Mining.

Our medium- and long-term strategies focus on complex risk reduction

projects and the identification and use of improved tailings management

and storage solutions. Where feasible, we replace traditional above ground

TSFs with in-pit TSFs and we are collaborating with others to progress

tailings technology. For example, we have partnered with Rio Tinto to

develop technology that may significantly increase water recovery from

mine tailings. In addition, while our NOJVs are independently controlled

and have their own operating and management standards, we encourage

NOJVs to consider alternative tailings solutions as an option in asset

planning where appropriate.

new Cultural Heritage Management Plans were successfully negotiated

with Aboriginal Corporations. These Cultural Heritage Management Plans

mainly covered existing operations at WAIO and were an outcome of our

commitment to modernise existing government approvals through further

consultation. In line with our social value agenda, new heritage protection

areas were agreed through the Cultural Heritage Management Plans for

significant heritage values as identified by Traditional Owners.

Minerals Americas

We have continued to work towards building partnerships with Indigenous

peoples in the Americas regions where we operate or plan to operate.

We continue to strengthen our cultural heritage practices for our operated

assets in Minerals Americas through the development of a management

system framework that considers tangible and intangible cultural heritage

across the life cycle of our projects. We have established a team

specialising in cultural heritage both at regional and operational levels.

This work has raised the visibility of cultural heritage in Minerals Americas

and further embedded consideration of potential impacts to cultural

heritage in the processes and planning of BHP’s activities.

Chile

At Escondida, we continued to advance the implementation of the

settlement concerning the environmental sustainability of the Salar de

Punta Negra, signed at the end of FY2021 between Escondida, the

Chilean Attorney General’s Office, the Peine Atacameña Indigenous

community and the Council of Atacameña Peoples. We are progressing

the first of three phases of the agreement, which focuses on diagnosing

the environmental condition of the Salar de Punta Negra after groundwater

extraction for operational purposes ceased in 2019. We intend to

undertake eight different studies to complete the diagnosis. Along with

the studies, this phase also included the development of a governance

framework to implement the settlement with the participation of

Escondida, the Chilean Attorney General’s Office, the Peine Atacameña

and the Council of Atacameña Peoples, together with a Promotion and

Enhancement Plan.

Our Cerro Colorado operation is preparing for closure at the end of

CY2023 due to the expiration of its permits to operate. We intend to

continue developing technical studies to inform potential mine life

extension in the future as well as technical studies for final closure if life

extension is not feasible. We are engaging with impacted Indigenous

peoples to include their voices during study phases for both scenarios.

We continue to work on implementing our agreements with Indigenous

peoples, including fulfilling our commitments and investing in social

projects. We completed improvements to the community town hall and of

culturally significant walls in the Parca locality. We are also investing in an

agricultural development program that seeks to promote and improve crop

production in local Indigenous communities, delivering new knowledge and

tools to the farmers of Parca, Iquiuca, Mamiña and Quipisca.

In Mamiña, Macaya and Iquiuca, we are supporting innovative solutions

for Indigenous communities to adapt to potential climate-related impacts

through the Kuskalla project (meaning ‘together’ in Quechua language),

which is optimising the management of energy, water and organic waste

using solar panels, water models and a biodigester.

Canada

There are six primary First Nations communities in the vicinity of our

Jansen Potash Project. BHP has entered into Opportunity Agreements

with all six First Nations to formalise our relationships in a range of areas,

including providing local employment and business opportunities and

building the skills and capabilities of local residents. During FY2023,

progress was made towards implementation of these agreements,

including through key projects, such as the opening of the Muskowekwan

Family Healing and Wellness Centre, to support addressing the systemic

impacts of historical trauma faced by First Nations peoples.

BHP is developing an Indigenous Partnership Plan to operationalise

our global IPPS and advance our existing and new relationships with

Indigenous peoples in Canada. We are developing the plan through a

co-design process with the relevant Indigenous peoples. We commenced

consultations on the Indigenous Partnerships Plan with the six

First Nations communities that are directly impacted by our Jansen

68 BHP Annual Report 2023

6 Sustainability continued

1 For the purposes of this chart, GISTM classifications have been used for extreme

and very high consequence classification TSFs and the CDA classification system

for all other TSFs.

2 We keep TSF classifications under review. As we transition the classification of

all TSFs to the GISTM, changes in consequence classifications may occur due to

differences in the GISTM and CDA consequence classification matrices.

3 SP1/2 and SP3 TSF at New South Wales Energy Coal are inactive TSFs, which

have been assessed to have no credible failure modes and are therefore shown as

not having a CDA classification.

4 Boodarie TSF is classified as being in a ‘state of safe closure’, as defined by the GISTM.

Classification of operated tailings facilities

1,2,3,4

Extreme 2

Very high 20

High 17

Significant 17

Low 17

N/A 2

State of safe closure 1

Case study – BHP and Rio Tinto collaboration

A collaboration agreement between BHP and Rio Tinto aims to accelerate

the development of technology that could significantly increase water

recovery from mine tailings, in turn reducing the TSF environmental footprint

and moisture content. In addition, the water recovered from tailings by

filtration could be re-used in processing facilities, reducing overall water

consumption. It also creates opportunities to productively re-use tailings,

for example as raw material for glass, construction or agriculture industries.

BHP Chief Technical Officer, Laura Tyler, said: ‘The world will need

more critical minerals in the decades to come to support economic

development and decarbonisation pathways. It is important that we

continue to work together across the global mining sector to raise

standards and make sure our operations are as safe and sustainable as

they can be. Responsible management of tailings and improved water

use is a big part of that.’

Global Industry Standard on Tailings Management

We are committed to achieving alignment with the GISTM for all operated

TSFs. The Accountable Executive model is embedded in our tailings

management processes and four Accountable Executives, who oversee

TSF operations (three) and governance (one) in accordance with defined

terms of reference, are direct reports of the BHP Chief Executive Officer

and accountable to the Board’s Sustainability Committee.

As of August 2023, all extreme and very high consequence classification

operated TSFs

align with the GISTM,

and a public disclosure document

for these TSFs is published on our website.

Governance and risk management

Our Tailings Storage Facility Policy Statement was updated in FY2023 and

is available at bhp.com/sustainability/tailings-storage-facilities.

It outlines our commitment to the safe management of TSFs, governance

and risk management, transparency, emergency preparedness, response

and recovery in the event of a failure. We proactively engage with partners

and stakeholders on emergency preparedness and response in relation to

TSF risk.

Ongoing governance activities identify risk reduction and improvement

opportunities and allow effective management of TSF failure risk.

KRIs are set by management and help to monitor performance of our

TSFs against our risk appetite in dam integrity and design, overtopping/

flood management and emergency response planning. KRIs are

routinely reported to the Sustainability Committee and the Risk and

Audit Committee.

We also use the ‘three lines model’ for risk governance. We mandate three

key first-line roles across our operated assets: Dam Owner, Responsible

Tailings Facility Engineer and Engineer of Record. Annual performance

reviews, dam safety reviews, independent tailings review boards and

project-specific independent peer reviews provide independent and

objective assurance through the second line. Third-line assurance

of the overall governance and control framework is provided through

internal audits.

For more information on BHP’s approach to risk management

including KRIs refer to OFR 8

Transparency and disclosure

We support detailed, transparent and integrated disclosure regarding TSF

management, including updating our Church of England Disclosure

and

publishing a public disclosure document for our priority TSFs

, in alignment

with the GISTM. Our work continues with industry partners to support the

development of disclosure standards and improvements for tailings storage

management across the mining industry, including through the ICMM

Tailings Working Group and our support of the Investor Mining and Tailings

Safety Initiative.

Actively engaging with our affected partners and stakeholders regarding

our TSFs is also a priority. For example, in FY2023, following consultation

with three Indigenous groups, the design and build methodology of the

Olympic Dam TSF buttress was changed to preserve certain identified

cultural heritage sites.

Operated and non-operated tailings portfolio

The consequence classifications described in this Report align to the

GISTM for priority TSFs and the Canadian Dam Association (CDA)

classification system for all other TSFs. The TSF consequence

classification reflects the modelled consequences of a failure and it is not a

reflection of the current physical stability of the TSF. The TSF consequence

classification can also change over time, for example, following the

construction of an embankment raise.

1 Excludes any OZ Minerals TSFs while their GISTM consequence classifications

are evaluated.

2 Based on BHP’s assessment of the requirements for GISTM conformance, which utilises

the ICMM Conformance Protocols for GISTM. We keep this guidance under review.

3 In April 2019, the Church of England Pensions Board and the Council on Ethics

Swedish National Pension Funds wrote to approximately 700 mining firms to request

specific disclosures of their TSFs. Our updated disclosure is included in our ESG

Standards and Databook available at bhp.com/sustainability.

4 Prioritised BHP operated and closed asset TSFs are those classified as extreme or

very high by the GISTM consequence classification guidance.

5 The number of TSFs is based on the definition in the GISTM. We keep this definition

under review.

6 ‘Inactive’ includes TSFs in construction, not in operational use, under reclamation,

reclaimed, closed and/or in post-closure care and maintenance.

7 Samarco’s Germano TSFs have commenced decommissioning activities following the

February 2019 ruling by the Brazilian Government regarding upstream TSFs.

As at 30 June 2023, there were 76 TSFs

at our operated and closed assets,

including four TSFs acquired from OZ Minerals in FY2023, and:

– 58 are inactive,

most are associated with our North American legacy

assets portfolio

– two are classified as extreme and another 20 are classified as very high

under the GISTM

There are 10 TSFs at our NOJVs, which are all located in the Americas.

Three are active TSFs – one is located at Antamina in Peru and two are

located at Samarco in Brazil. In addition, there are seven inactive TSFs

– two upstream facilities at Samarco in Brazil (with decommissioning

activities underway),

four facilities at Resolution Copper in the United

States and one facility at Bullmoose in Canada.

Governance Financial Statements Additional Information

BHP Annual Report 2023 69

Operating and Financial Review

70 BHP Annual Report 2023

6.17 Independent Assurance Report to the Management

and Directors of BHP Group Limited (BHP)

What we assured

Ernst & Young (EY) was engaged by BHP to provide limited assurance over certain sustainability data and disclosures in BHP’s

Annual Report and ESG Standards and Databook and online for the year ended 30 June 2023 in accordance with the noted Criteria,

as defined in the following table:

What we assured (Limited Assurance Subject Matter) What we assured it against (Criteria)

BHP’s qualitative disclosures in Section 6 of the Operating and

Financial Review within the BHP Annual Report 2023

– Management’s own publicly disclosed criteria

BHP’s sustainability policies and standards as disclosed in the

ICMM tab in the BHP ESG Standards and Databook 2023 at

bhp.com/sustainability

– International Council on Mining and Metals (ICMM)

Mining Principles and relevant Performance Expectations and

mandatory Position Statements (Subject Matter 1 of the ICMM

Assurance and Validation Procedure 2023 (ICMM Procedure))

BHP’s identification and reporting of its material sustainability

issues, risks and opportunities described within Section 6 of the

BHP Annual Report 2023 and online at bhp.com/sustainability/

approach

– ICMM Procedure Subject Matter 2

– Global Reporting Initiative (GRI) Standards 2021

GRI 3: Material Topics

BHP’s implementation of systems and approaches to manage

its material sustainability risks and opportunities

– ICMM Procedure Subject Matter 3

BHP’s reported performance of its material sustainability issues,

risks and opportunities in Section 6 of the Operating and

Financial Review within the BHP Annual Report 2023 and the

BHP ESG Standards and Databook 2023, referenced above.

– ICMM Procedure Subject Matter 4

– Management’s own publicly disclosed criteria including GRI

Topic Standards and Sustainability Accounting Standards

Board (SASB) Mining and Metals Standard

– World Resource Institute/World Business Council for

Sustainable Development (WRI/WBCSD) Greenhouse Gas

(‘GHG’) Protocol: A Corporate Accounting and Reporting

standard, including the GHG Protocol Scope 2 Guidance

and the Corporate Value Chain (Scope 3) Accounting and

Reporting Standard

– BHP Scopes 1, 2, and 3 GHG Emissions Calculation

Methodology 2023

Water stewardship reporting, at an operated asset level, in

the BHP Annual Report 2023, the BHP ESG Standards and

Databook 2023, referenced above, and supporting disclosures

included online at bhp.com/sustainability/environment/water

– ICMM guidance and minimum disclosure Standards:

Water Reporting: Good practice guide (2nd edition), 2021

In addition, we were engaged by BHP to provide reasonable assurance over the following information in accordance with the noted

Criteria, as defined in the following table:

What we assured (Reasonable Assurance Subject Matter) What we assured it against (Criteria)

Scope 1 and Scope 2 greenhouse gas emissions as reported

in Section 6 of the Operating and Financial Review within the BHP

Annual Report 2023 and the BHP ESG Standards and Databook

2023, referenced above.

– World Resource Institute/World Business Council for

Sustainable Development (WRI/WBCSD) Greenhouse

Gas Protocol

– BHP’s Scopes 1, 2 and 3 GHG Emissions Calculation

Methodology 2023

Our Conclusions

– Limited Assurance

Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that

suggests the Limited Assurance Subject Matter has not been prepared, in all material respects, in accordance with the Criteria

defined above.

– Reasonable Assurance

In our opinion, the Reasonable Assurance Subject Matter is prepared, in all material respects, in accordance with the Criteria

defined above.

Key responsibilities

EY’s responsibility and independence

Our responsibility was to express limited and reasonable

assurance conclusions on the noted subject matter as defined

in the ‘what we assured’ column in the tables above (the Limited

Assurance Subject Matter and the Reasonable Assurance

Subject Matter listed above, collectively the ‘Subject Matter’).

We have complied with the independence and relevant

ethical requirements, which are founded on fundamental

principles of integrity, objectivity, professional competence

and due care, confidentiality and professional behaviour.

EY applies Auditing Standard ASQM 1 Quality Management

for Firms that Perform Audits or Reviews of Financial Reports

and Other Financial Information, or Other Assurance or

Related Services Engagements, which requires the firm

to design, implement and operate a system of quality

management including policies or procedures regarding

compliance with ethical requirements, professional standards

and applicable legal and regulatory requirements.

BHP’s responsibility

BHP’s management was responsible for selecting the Criteria

and ensuring the Subject Matter was prepared, in all material

respects, in accordance with that Criteria. This responsibility

includes establishing and maintaining internal controls,

maintaining adequate records and making estimates that are

relevant to the preparation of the subject matter, such that it is

free from material misstatement, whether due to fraud or error.

Our approach to conducting the review

We conducted our assurance procedures in accordance with

the International Auditing and Assurance Standards Board’s

International Standard for Assurance Engagements Other Than

Audits or Reviews of Historical Financial Information (‘ISAE

3000’) and the Standard for Assurance on Greenhouse Gas

Statements (‘ISAE 3410’) and the terms of reference for this

engagement as agreed with BHP on 6 February 2023.

For the limited assurance engagement, these standards require

that we plan and perform our engagement to express a conclusion

on whether anything has come to our attention that causes us

to believe that the Subject Matter is not prepared, in all material

respects, in accordance with the Criteria, and to issue a report.

For the reasonable assurance engagement, these standards

require that we plan and perform our engagement to obtain

reasonable assurance about whether, in all material respects,

the Subject Matter is presented in accordance with the Criteria,

and to issue a report.

The nature, timing and extent of the assurance procedures

selected depend on our judgement, including an assessment of

the risk of material misstatement, whether due to fraud or error.

Description of assurance procedures

performed

The Limited Assurance procedures we performed were based on

our professional judgement and included, but were not limited to:

– Interviewing select corporate and site personnel to

understand the reporting process at group, business, asset,

and site level, including management’s processes to identify

BHP’s material issues

– Reviewing BHP policies and management standards

to determine alignment with the ICMM’s 10 Sustainable

Development principles and position statements

– Checking the BHP Annual Report 2023 to understand how

BHP’s identified material issues, risks and opportunities are

reflected within the qualitative disclosures

– Evaluating whether the information disclosed in the Limited

Assurance Subject Matter is consistent with our understanding

of sustainability management and performance at BHP

– Evaluating the suitability of the Criteria and that the Criteria

have been applied appropriately to the Subject Matter

– Conducting virtual and in-person site procedures at BHP

locations on a sample basis, based on our professional

judgement, to evidence site level data collection and

reporting to Group as well as to identify completeness

of the sustainability performance data and statements

included within the Subject Matter

– Undertaking analytical procedures of the quantitative

disclosures in the Subject Matter

– Reviewing data, information or explanation about the

sustainability performance data and statements included

within the Subject Matter

– Reviewing other information within the BHP Annual Report

2023 for consistency and alignment to other quantitative

and qualitative information within the Subject Matter

– On a sample basis, based on our professional judgement,

re-performing calculations to check accuracy of claims

within the Subject Matter

– On a sample basis, based on our professional judgement,

agreeing qualitative and quantitative statements within the

Subject Matter and underlying data to source information

to assess completeness of claims, including process

conversations, review of invoices, incident reports, meter

calibration records, and meter data.

– Checking the water balance for each operated asset

inclusive of understanding the methodologies used to

consider consistency with the Criteria, and reviewing

meter and calibration records on a sample basis, based

on our professional judgement.

Additional reasonable assurance procedures we performed

were based on professional judgement and included, but

were not limited to:

– For our reasonable assurance of Scope 1 and Scope 2

greenhouse gas emissions, on a sample basis, based

on our professional judgement, agreeing underlying

data to source information to assess completeness

of performance data, which included invoices, meter

calibration records and meter data.

We believe that the evidence obtained is sufficient and

appropriate to provide a basis for our reasonable and limited

assurance conclusions.

Inherent limitations

While we considered the effectiveness of management’s

internal controls when determining the nature and extent of our

procedures, our assurance engagement was not designed to

provide assurance on internal controls. Our procedures did not

include testing controls or performing procedures relating to

checking aggregation or calculation of data within IT systems.

The greenhouse gas (GHG) emission quantification process

is subject to scientific uncertainty, which arises because of

incomplete scientific knowledge about the measurement of

GHGs. Additionally, GHG procedures are subject to estimation

and measurement uncertainty resulting from the measurement

and calculation processes used to quantify GHG emissions

within the bounds of existing scientific knowledge.

Additional inherent limitations – limited

assurance scope

Procedures performed in a limited assurance engagement

vary in nature and timing from, and are less in extent than for

a reasonable assurance engagement. Consequently, the level

of assurance obtained in a limited assurance engagement is

substantially lower than the assurance that would have been

obtained had a reasonable assurance engagement been

performed. Our procedures were designed to obtain a limited

level of assurance on which to base our conclusion and do not

provide all the evidence that would be required to provide a

reasonable level of assurance.

Additional inherent limitations –

reasonable assurance scope

While our procedures performed for our reasonable assurance

engagement are of a higher level of assurance, due to the use

of sampling techniques, it is not a guarantee that it will always

detect material misstatements.

Other matters

We have not performed assurance procedures in respect of

any information relating to prior reporting periods, including

those presented in the Limited and Reasonable Assurance

Subject Matter. Our report does not extend to any disclosures

or assertions made by BHP relating to future performance

plans and/or strategies disclosed in the BHP Annual Report

2023, the BHP ESG Standards and Databook 2023, and

supporting disclosures online.

Use of our assurance report

We disclaim any assumption of responsibility for any

reliance on this assurance report to any persons other than

management and the directors of BHP, or for any purpose

other than that for which it was prepared. Our review included

web-based information that was available via web links as

of the date of this statement. We provide no assurance over

changes to the content of this web-based information after

the date of this assurance report.

Ernst & Young

Melbourne, Australia

22 August 2023

Mathew Nelson

Partner

A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation

Governance Financial Statements Additional Information

BHP Annual Report 2023 71

Operating and Financial Review

7 Samarco

Fundão dam failure

As a result of the Fundão dam failure in November 2015, a significant

volume of tailings (39.2 million cubic metres) resulting from the iron ore

beneficiation process was released. Tragically, 19 people died as a result

of the failure. The communities of Bento Rodrigues, Paracatu de Baixo

and Gesteira were flooded and other communities and the environment

downstream in the Rio Doce basin were also affected.

Samarco restarted its operations at a reduced production level in

December 2020.

For information on Samarco’s operations

refer to OFR 5.3

Our response and support for Fundação Renova

BHP Brasil has been and remains fully committed to supporting the

extensive ongoing remediation and compensation efforts of Fundação

Renova in Brasil.

The Framework Agreement entered into between Samarco, Vale and BHP

Brasil and the relevant Brazilian authorities in March 2016 established

Fundação Renova, a not-for-profit, private foundation that is implementing

42 remediation and compensatory programs. BHP Brasil provides support

to Fundação Renova, including through representation on the foundation’s

governance structures.

To 30 June 2023, BHP Brasil has provided US$2.3 billion to fund

Framework Agreement programs when Samarco has been unable

to do so.

Fundação Renova

Compensation and financial assistance

Fundação Renova continues to provide compensation to people impacted

by the dam failure.

Compensation and financial assistance of approximately R$14.4 billion

(approximately US$2.9 billion)

has been paid to support approximately

427,000 people affected by the dam failure up until 30 June 2023.

This includes:

– Approximately R$9.6 billion (approximately US$1.9 billion)

has

been paid to approximately 90,000 people under the court-mandated

simplified indemnity system (known as the Novel system). The Novel

system is designed to provide compensation for informal workers who

have had difficulty proving the damages they suffered, such as cart

drivers, sand miners, artisanal miners and street vendors.

– Approximately 33,000 people received Emergency Financial Assistance.

– Approximately 39,000 people received general damages (including loss

of life, injury, property damage, business impacts, loss of income and

moral damages) and more than 290,000 people have been paid a total

of approximately R$305.5 million (approximately US$69 million)

for

temporary water interruption.

Updates on the progress of Fundação Renova’s compensation program

are available at fundacaorenova.org/en/repair-data/indemnities-and-

productive-resumption.

Resettlement

A key priority for Renova is the resettlement of the communities of Bento

Rodrigues, Paracatu and Gesteira. For Bento Rodrigues and Paracatu, this

includes construction of houses and all infrastructure and public services

such as roads, power, water and sewer networks, health and services

centres and schools. At Gesteira, pursuant to an agreement finalised in

May 2023 and ratified by the Courts, families and the public authorities

have opted to receive compensation instead of building a new community.

As at 30 June 2023, approximately 75 per cent of resettlement cases have

been completed

, either via completion of construction or cash payment

for those families who have opted for this option instead of the other

resettlement solutions offered by Fundação Renova.

During FY2023, families began moving into their new homes and as

at 30 June 2023, there were more than 40 families living in their new

homes, both in Bento Rodrigues and Paracatu, as well as other locations.

Approximately 10 per cent of the total resettlement cases were in progress

as at 30 June 2023, the majority of which are expected to be completed

by the end of CY2023.

The resettlements have involved ongoing engagement and consultation

with a large number of stakeholders, including the affected community

members, their technical advisers, state prosecutors, municipal leaders,

regulators and other interested parties. New towns were designed on land

chosen by the communities, to be as close as possible to the previous

layout, attending to the wishes and needs of the families and communities

while also meeting permitting requirements. Each family receives access

to an architect to design their house within size parameters, which is

then finalised and built by Renova.

Mandated COVID-19 workforce restrictions and suspensions of works

on-site, increases to the technical scope for resettlement of the

communities and permitting delays have impacted the timeline for

completion. Ongoing efforts to accelerate completions while maintaining

the safety requirements continued throughout FY2023.

Updates on the progress of Fundação Renova’s

resettlement program are available at

fundacaorenova.org/en/repair-data/

resettlement-and-infrastructure

Other socio-economic programs

Fundação Renova continues to implement a wide range of socio-economic

programs in addition to the compensation and resettlement programs.

These programs cover health and infrastructure projects in the Rio Doce

basin, promotion of economic development in the impacted communities

and sewage treatment facilities to improve the water quality in the

Rio Doce.

One of the infrastructure projects is related to the Risoleta Neves

Hydroelectric Power Plant (Candonga), which was shut down after the

Fundão dam failure, and restarted its operations in the state of Minas

Gerais in March 2023. By June 2023, all three generating units were

successfully resumed and are now interconnected to the national grid,

generating 46 megawatts of energy.

Environmental remediation

Since December 2019, the riverbanks and floodplains have been

vegetated, river margins stabilised and in general, water quality and

sediment qualities have returned to historic levels. Long-term remediation

work is continuing to re-establish agriculture and native vegetation.

A ban on fishing activities along the coast of Espírito Santo and a

precautionary conservation restriction preventing fishing for native

fish species in the Rio Doce in Minas Gerais remain in place.

Fundação Renova continues to support the recovery of habitats

and aquatic ecology and engage with the authorities with the goal

of lifting the restrictions.

Updates on the progress of Fundação Renova’s

environmental remediation programs are available at

fundacaorenova.org/en/repair-data/

socio-environmental-repairs

Legal proceedings

BHP Group Limited, BHP Group (UK) Ltd (formerly BHP Group Plc)

and BHP Brasil are involved in legal proceedings relating to the

Fundão dam failure at Samarco.

For information on the significant

legal proceedings involving BHP

refer to Additional information 7

1 USD amount is calculated based on actual transactional (historical) exchange

rates related to Renova funding.

2 Resettlement cases completed includes completed construction (families

moved in or handover to families in progress) or cash payment solution.

3 For those families who chose not to join the resettlement with their previous

community and instead resettled elsewhere.

72 BHP Annual Report 2023

8 How we manage risk

Risk strategy

Risk classification

We classify all risks to which BHP is exposed using our Group Risk

Architecture. This is a tool designed to identify, analyse, monitor and

report risk, which provides a platform to understand and manage risks.

Similar risks are considered together in groups and categories. This gives

the Board and management visibility over the aggregate exposure to

risks on a Group-wide basis and supports performance monitoring

and reporting against BHP’s risk appetite.

Risk appetite

BHP’s Risk Appetite Statements, aligned to our Group Risk Architecture,

are approved by the Board and are a foundational element of our Risk

Framework. They provide guidance to management on the amount

and type of risk we seek to take in pursuing our objectives.

Key risk indicators

Key risk indicators (KRIs) are set by management to help monitor

performance against our risk appetite. They also support decision-

making by providing management with information about financial and

non-financial risk exposure at a Group level. Each KRI has a target or

optimal level of risk we seek to take, as well as upper and lower limits.

Where either limit is exceeded, management will review potential causes

to understand if BHP may be taking too little or too much risk and to

identify whether further action is required.

Risk culture

Our risk management approach is underpinned by a risk culture that

supports decision-making in accordance with BHP’s values, objectives

and risk appetite. We use a common foundation across BHP to build

the tools and capabilities required to enable us to understand, monitor

and manage our risk culture. These include the inclusion of risk-culture

assessments as part of our internal audit plan.

Strategic business decisions

Strategic business decisions and the pursuit of our strategic objectives

can inform, create or affect risks to which BHP is exposed. These risks

may represent opportunities as well as threats. Our Risk Appetite

Statements and KRIs assist in determining whether a proposed course

of action is within BHP’s risk appetite.

Our focus when managing risks associated with strategic business

decisions is to enable the pursuit of high-reward strategies. Therefore,

as well as having controls designed to protect BHP from threats, we

seek to implement controls to enable and/or enhance opportunities.

Risk governance

Three lines model

BHP uses the ‘three lines model’ to define the role of different teams

across the organisation in managing risk. This approach sets clear

accountabilities for risk management and provides appropriate ‘checks

and balances’ to support us in protecting and growing value.

The first line is provided by our frontline staff, operational management

and people in functional roles – anyone who makes decisions, deploys

resources or contributes to an outcome is responsible for identifying

and managing the associated risks.

The Risk team and other second-line teams are responsible for providing

expertise, support, monitoring and challenge on risk-related matters,

including by defining Group-wide minimum standards.

The third line, our Internal Audit team, is responsible for providing

independent and objective assurance over the control environment

(governance, risk management and internal controls) to the Board and

Executive Leadership Team. Additional assurance may also be provided

by external providers, such as our External Auditor.

The Risk team and Internal Audit team were combined in August 2022

to form a Risk, Insurance and Audit sub-function, led by a Chief Risk and

Audit Officer. This structure is designed to improve overall effectiveness

of both teams, including through alignment of second and third line

assurance activities across BHP, while maintaining the independence

of our Internal Audit team through appropriate safeguards.

BHP Board and Committees

The Board reviews and monitors the effectiveness of the Group’s

systems of financial and non-financial risk management and internal

control. The broad range of skills, experience and knowledge of the

Board assists in providing a diverse view on risk management. The Risk

and Audit Committee (RAC) and Sustainability Committee assist the

Board by reviewing and considering BHP’s material risk profile (covering

operational, strategic and emerging risks) on a biannual basis.

Performance against risk appetite is monitored and reported to the RAC,

as well as the Sustainability Committee for HSEC matters, supporting

the Board to challenge and hold management to account.

For information on other Board Committee

activities that support risk governance at BHP

refer to Corporate Governance Statement 5

Risk management helps us to protect and create value, and is

central to achieving our purpose and strategic objectives.

Our Risk Framework has four pillars: risk strategy, risk governance, risk process and risk intelligence.

Following the acquisition of OZ Minerals on 2 May 2023, activity is underway to integrate OZ Minerals’ operations and functions into our business. In order

to maintain operational stability and safety, the OZ Minerals risk framework and associated processes and governance activities will continue to apply to

OZ Minerals’ operations and functions, until they formally transition to BHP’s Risk Framework, which we anticipate will be completed by the end of CY2024.

Governance Financial Statements Additional Information

BHP Annual Report 2023 73

Operating and Financial Review

Risk process

Our Risk Framework requires identification and management of risks

(both threats and opportunities) to be embedded in business activities

through the following process:

– Risk identification – threats and opportunities are identified and each

is assigned an owner or accountable individual.

– Risk assessments – risks are assessed using appropriate and

internationally recognised techniques to determine their potential

impacts and likelihood, prioritise them and inform risk treatment options.

– Risk treatment – controls are implemented to prevent, minimise and/or

mitigate threats, and enable and/or enhance opportunities.

– Monitoring and review – risks and controls are reviewed periodically

and on an ad hoc basis (including where there are high-potential events

or changes in the external environment) to evaluate performance.

– Communication – relevant information is recorded in our enterprise

risk management system to support continuous improvement and

share risk intelligence across the Group.

Our Risk Framework includes requirements and guidance on the tools

and process to manage current and emerging risks.

Current risks

Current risks are risks that could impact BHP today or in the near future

and comprise current operational risks (risks that have their origin inside

BHP or occur as a result of our activities) and current strategic risks (risks

that may enhance or impede the achievement of our strategic objectives).

Current risks include material and non-material risks (as defined by

our Risk Framework). The materiality of a current risk is determined

by estimating the maximum foreseeable loss (MFL) if that risk was

to materialise. The MFL is the estimated impact to BHP in a worst-

case scenario without regard to probability and assuming all controls,

including insurance and hedging contracts, are ineffective.

For information on our risk factors

refer to OFR 8.1

Our focus for current risks is to prevent their occurrence or minimise their

impact should they occur, but we also consider how to maximise possible

benefits that might be associated with strategic risks (as described in the

Risk strategy section). Current material risks are required to be evaluated

once a year at a minimum to determine whether our exposure to the risk

is within our risk appetite.

Emerging risks

Emerging risks are newly developing or changing risks that are highly

uncertain and difficult to quantify. They are generally driven by external

influences and often cannot be prevented.

BHP maintains a ‘watch list’ of emerging themes and monitors associated

signals to interpret external events and trends, providing an evolving

view of the changing external environment and how it might impact our

business. We use the watch list and signal monitoring to support the

identification and management of emerging risks, as well as to inform

and test our corporate strategy.

Once identified, our focus for emerging risks is on structured monitoring

of the external environment, advocacy efforts to reduce the likelihood of

the threats manifesting and identifying options to increase our resilience

to these threats.

Risk intelligence

The Risk team provides the RAC, Sustainability Committee and senior

management with insights on risk management across BHP. Risk reports

may include trends and aggregate exposure for our most significant risks,

performance against risk appetite, updates on the Risk Framework and risk

management priorities, an overview of (and material changes in) BHP’s

material risk profile and updates on emerging risk themes and signals.

We maintain a risk insights dashboard designed to provide current, data-

driven and actionable risk intelligence to our people at all levels of the

business to support decision-making. This tool empowers the business to

manage risks more effectively, with increased accuracy and transparency.

The Board, RAC and Sustainability Committee also receive other reports

to support the Board to review and monitor the effectiveness of BHP’s

systems of financial and non-financial risk management. Examples of

these include internal audit reports, ethics and investigations reports,

compliance reports and the Chief Executive Officer’s report.

For information on our risk factors

refer to OFR 8.1

8.1 Risk factors

Our risk factors are described below and may occur

as a result of our activities globally, including in

connection with our operated and non-operated

assets, third parties engaged by BHP or through

our value chain.

These risks, individually or collectively, could threaten our strategy,

business model, future performance, solvency or liquidity and reputation.

They could also materially and adversely affect the health and safety of our

people or members of the public, the environment, the communities where

we or our third-party partners operate, or the interests of our partners

and stakeholders, which could in each case lead to litigation, regulatory

investigation or enforcement action (including class actions or actions

arising from contractual, legacy or other liabilities associated with divested

assets), or a loss of partner, stakeholder and/or investor confidence.

References to ‘financial performance’ include our financial condition and

liquidity, including due to decreased profitability or increased operating

costs, capital spend, remediation costs or contingent liabilities. BHP is

also exposed to other risks that are not described in this section.

Each risk factor may present opportunities as well as threats. We take

certain risks for strategic reward in the pursuit of our strategy and purpose,

including to grow our asset portfolio and develop the right capabilities for

the future of our business. Some of the potential threats and opportunities

associated with each of our risk factors are described below, along with the

key controls to manage them. These controls are not exhaustive and many

Group-wide controls (such as Our Code of Conduct, Risk Framework,

mandatory minimum performance requirements for risk management,

health, safety and other matters, dedicated non-operated joint venture

teams and our Contractor Management Framework) help to support

effective and efficient management of all risks in line with our risk appetite.

While we implement preventative and/or mitigating controls designed to

reduce the likelihood of a threat from occurring and minimise the impacts

if it does, these may not always be effective.

74 BHP Annual Report 2023

8 How we manage risk continued

Examples of potential opportunities

– Our commitment to our communities, the environment and the safety

and wellbeing of our people may increase operational resilience and

partner and stakeholder confidence, enhancing our ability to attract

and retain talent and access (or lower the cost of) capital.

– Collaborating with industry peers and relevant organisations on

minimum standards (such as the internationally recognised Flight

Safety Foundation’s Basic Aviation Risk Standard, Global Industry

Standard on Tailings Management, Large Open Pit Project guidelines

on open-pit mining design and management, and the Cave Mining

2040 Consortium on deep mining design and management) supports

improvements to wider industry management of operational risks and

may also identify opportunities to improve our own practices.

Key management actions

– Planning, designing, constructing, operating, maintaining and

monitoring surface and underground mines, water and tailings storage

facilities, and other infrastructure and equipment in a manner designed

to maintain structural integrity, prevent incidents and protect our people,

assets, communities, the environment and other stakeholders.

– Specifying minimum requirements and technical specifications,

such as for transportation (including high-occupancy vehicles,

fixed and rotary wing aircraft and their operators) and geotechnical

(including characterisation, design, ground control and monitoring),

and compliance with operating specifications, industry codes and

other relevant standards, including BHP’s mandatory minimum

performance requirements.

– Continuing to focus on improving our management of safety risk,

including the investigation and response to the two fatal incidents

at WAIO and Olympic Dam, and through programs such as the

Fatality Elimination and Field Leadership Programs.

– Defining key governance roles, such as a dam owner (an internal BHP

individual who is accountable for maintaining effective governance

and integrity of each tailings storage facility) and providing training

and qualifications for our people.

– Inspections, technical reviews, audits and other assurance activities,

such as independent dam safety reviews and geotechnical

review boards.

– Maintaining evacuation routes, supporting equipment, crisis

and emergency response plans and business continuity plans.

– Incorporating future climate projections into risks associated

with operational events through ongoing assessment of physical

climate-related risks.

Risk factor: Operational events

FY2023 insights

Our acquisition of OZ Minerals has increased our operational

footprint and consequently, our exposure to risks associated

with operational events.

For more information refer to

OFR 6.1 – Safety

OFR 6.12 – Climate change

OFR 6.16 – Tailings storage facilities

OFR 7 – Samarco

More information can be found at

bhp.com/sustainability

Risks associated with operational events in

connection with our activities globally, resulting

in significant adverse impacts on our people,

communities, the environment or our business.

Why is this important to BHP?

We engage in activities that have previously and have the potential

to further cause harm to our people and assets, communities, other

stakeholders and/or the environment, including serious injuries, illness

and fatalities, loss of infrastructure, amenities and livelihood, and damage

to sites of cultural significance. An operational event at our operated

or non-operated assets or through our value chain could also cause

damage or disruptions to our assets and operations, impact our financial

performance, result in litigation or class actions and cause long-term

damage to our licence to operate and reputation. Potential physical

climate-related impacts could increase the likelihood and/or severity

of risks associated with operational events. Impacts of operational events

may also be amplified if we fail to respond in a way that is consistent

with our corporate values, and partner and stakeholder expectations.

Examples of potential threats

– Air, land (road and rail) and marine transportation events (such

as aircraft crashes or vessel collisions, groundings or hydrocarbon

release) that occur while transporting people, supplies or products

to exploration, operation or customer locations, which include remote

and environmentally sensitive areas in Australia, South America,

Asia, the United States, Canada and Sweden.

– Failure of a water or tailings storage facility, such as the tragic failure

of the Fundão dam at Samarco in 2015 or a failure at one of our other

facilities in Australia, Chile, Peru, the United States, Canada or Brazil.

– Unplanned fire events or explosions (on the surface or underground).

– Geotechnical instability events (such as failure of underground

excavations, which may be subject to greater risk than surface mines,

unexpected large wall instabilities in our open-pit mines, or potential

interaction between our mining activities and community infrastructure

or natural systems), including at our mines in Australia, Chile, Peru,

the United States, Canada or Brazil.

– Critical infrastructure, equipment, or hazardous materials containment

failures (the risk of which may increase with potential physical climate-

related impacts), other occupational or process safety events or

workplace exposures.

– Operational events experienced by third parties, which may also result

in unavailability of shared critical infrastructure (such as railway lines

or ports) or transportation routes (such as the Port Hedland channel

in Western Australia).

– Our operations, workforce, communities, supply chains and customers

may be exposed to changes in the frequency, intensity and/or duration

of intense storms, drought, flooding, wildfire and other extreme weather

or weather-related events and patterns (such as extreme heat).

Governance Financial Statements Additional Information

BHP Annual Report 2023 75

Operating and Financial Review

Risk factor: Significant social or environmental impacts

– Our global social value framework and projects funded through social

investment may improve partner and stakeholder relations, enhance

community trust and increase investor confidence and demand for

our commodities.

– Greater clarity, transparency and standards associated with regulatory

regimes that support and protect communities and the environment

may increase requirements across our sector, generating competitive

advantage for companies that have already invested in social and

environmental performance.

– Building our reputation for sustainable and responsible operating

practices (for example, through certification of our operations to third-

party standards such as The Copper Mark, which was awarded with

full accreditation to three of our copper assets in FY2023, following

provisional award in FY2022) may increase demand for some of

our commodities and improve our access to talent and capital.

Key management actions

– The Our Requirements for Community and Our Requirements for

Environment and Climate Change standards provide requirements and

practices that are designed to strengthen our social, human rights and

environmental performance. Our Human Rights Policy Statement, Water

Stewardship Position Statement, Climate Transition Action Plan 2021

and Indigenous Peoples Policy Statement set out our targets, goals,

commitments and/or approach to these matters.

– Engaging in regular, open and transparent dialogue with partners

and stakeholders to better understand their expectations, concerns

and interests, undertaking research to better understand partner

and stakeholder perceptions, and taking those considerations into

account in planning and execution activities.

– Building social value into our decision-making process, along with

financial considerations, including through our social value framework

and 2030 goals.

– Building partner and stakeholder trust and contributing to environmental

and community resilience, including through collaborating on shared

challenges (such as climate change, nature and biodiversity loss and

water stewardship), enhanced external reporting of our operated assets’

potential impacts on nature and biodiversity, and maximising the value

of social investments (including contributing to climate-related mitigation

and adaptation initiatives and the delivery of nature-positive outcomes)

through our social investment strategy.

– Conducting regular research and impact assessments for operated

assets to better understand the social, environmental, human rights,

Indigenous peoples and economic context. This supports us to identify

and analyse potential partner, stakeholder, community and human rights

impacts, including modern slavery risks and emerging issues. We also

complete risk-based due diligence screening on suppliers through our

Ethical Supply Chain and Transparency program.

– Integrating closure into our planning, decision-making and other

activities through the life cycle of our operated assets, as set out

in our mandatory minimum performance requirements for closure

and legacy management.

FY2023 insights

Our exposure to risks with potentially significant social or

environmental impacts increased in FY2023 due to growing external

expectations to meet targets and complexity and interconnectedness

of climate, environment and community risks.

For more information refer to

OFR 6.6 – People

OFR 6.12 – Climate change

OFR 6.14 – Community

OFR 6.15 – Indigenous peoples

OFR 6.13 – Environment

More information can be found at

bhp.com/sustainability

Risks associated with significant impacts of our

operations on and contributions to communities

and environments throughout the life cycle of

our assets and across our value chain.

Why is this important to BHP?

The long-term viability of our business is closely connected to the wellbeing

of the communities and environments where we have a presence and our

business is subject to increasing, complex and changing regulatory and

stakeholder expectations. At any stage of the asset life cycle, our activities

and operations may have or be perceived to have significant adverse

impacts on communities and environments. In these circumstances, we

may fail to meet the evolving expectations of our partners and stakeholders

(including investors, governments, employees, suppliers, customers and

Indigenous peoples and other community members) whose support is

needed to realise our strategy and purpose. This could lead to loss of

partner or stakeholder support or regulatory approvals, increased taxes

and regulation, enforcement action, litigation or class actions, or otherwise

impact our licence to operate and adversely affect our reputation, ability

to attract and retain talent, ability to access capital, operational continuity

and financial performance.

Examples of potential threats

– Engaging in or being associated with activities (including through non-

operated joint ventures and our value chain) that have or are perceived

to have individual or cumulative adverse impacts on the environment,

climate change, biodiversity and land management, water access and

management, supply chain or responsible sourcing requirements,

human rights or Indigenous peoples’ rights or cultural heritage.

– Failing to meet evolving partner or stakeholder expectations in

connection with our alignment with global frameworks and societal

goals, legal and regulatory obligations, acceptability of mining activities,

relationships with Indigenous peoples, community wellbeing and

the way we invest in communities or our approach to environment,

climate change, biodiversity and land management, water access and

management, supply chain or responsible sourcing requirements,

human rights, Indigenous peoples’ rights or cultural heritage priorities.

– Political, regulatory and judicial developments (such as legislation

to enact policy positions on climate change mitigation or, adaptation,

nature-related risk or human rights) could increase uncertainty in

relation to our operating environment, requiring us to adjust our

business plans or strategy. For example, changes to regulations

may require us to modify mine plans, limit our access to reserves

and resources, alter the timing or increase costs associated with the

development of and production from, or closure and rehabilitation of

our assets, increase sourcing costs or expose BHP to unanticipated

environmental or other legacy liabilities.

– Failing to identify and manage physical climate-related risks and/

or nature-related risks to communities, biodiversity and ecosystems.

For example, loss of important biodiversity and/or ecosystems as a

result of operational activities (e.g. unauthorised clearing of vegetation)

could result in land access restrictions, a decrease in demand for

our products or limit our access to new opportunities.

Examples of potential opportunities

– Our support for responsible stewardship of natural resources may

enhance the resilience of the environments and communities where

we operate to threats (including potential physical climate-related

impacts and nature loss). For example, BHP has released context-

based water targets for a number of our operated assets and has

completed and published a pilot case study on the application of

natural capital accounting principles at a closed and rehabilitated

mine site to understand how we can better incorporate nature-

related threats and opportunities into our strategic planning,

risk management and capital allocation decisions.

– Strong social performance, including sustainable mining and a

focus on the wellbeing of communities, could generate competitive

advantage in the jurisdictions where we operate.

76 BHP Annual Report 2023

8 How we manage risk continued

Risk factor: Low-carbon transition

Examples of potential opportunities

– Our copper, nickel, iron ore, metallurgical coal and uranium provide

essential building blocks for existing and new renewable and alternative

power generation and electric vehicles, and can play an important part

in the transition to a low-carbon economy.

– Our potash fertiliser options can promote more efficient and profitable

agriculture and help alleviate the increased competition for arable

land, including due to implementation of nature-based solutions

to help address climate change and global population growth.

– Increased collaboration with customers, suppliers and original

equipment manufacturers, such as BHP’s partnerships with HBIS Group,

China Baowu, JFE, POSCO and Tata Steel to explore technologies

to reduce GHG emissions across the steel value chain, can provide

opportunities for the development of new products and markets.

Key management actions

– Establishing public positions on and mandatory minimum performance

requirements for managing climate change threats and opportunities,

which are set out in our Climate Change Report 2020, our Climate

Transition Action Plan 2021 and the Our Requirements for Environment

and Climate Change standard.

– Using climate-related scenarios (including our 1.5°C scenario),

themes and signposts (such as monitoring policy, regulatory, legal,

technological, market and other societal developments) to evaluate

the resilience of our portfolio, allocate capital and inform our strategy.

– Considering transition risks (including carbon prices) when making

capital expenditure decisions or allocating capital through our Capital

Allocation Framework, supporting the prioritisation of capital and

investment approval processes.

– Seeking to mitigate our exposure to risks arising from policy and

regulation in our operating jurisdictions and markets by reducing

our operational GHG emissions and taking a product stewardship

approach to GHG emissions in our value chain.

– Informing investors on progress to date and plans for achieving

our operational (Scope 1 and Scope 2) emission targets and goals

through our Operational Decarbonisation Presentation.

– Advocating for the introduction of an effective, long-term policy framework

that can deliver a measured transition to a low-carbon economy.

Risks associated with the transition

to a low-carbon economy.

Why is this important to BHP?

Transition risks arise from policy, regulatory, legal, technological, market and

other societal responses to the challenges posed by climate change and the

transition to a low-carbon economy. As a world-leading resources company,

BHP is exposed to a range of transition risks that could affect the execution

of our strategy or our operational efficiency, asset values and growth options,

resulting in a material adverse impact on our financial performance, share

price or reputation, including increased potential for litigation. Conversely,

transition risks may also present opportunities for our diverse portfolio

and through decarbonisation of our business. The complex and pervasive

nature of climate change means transition risks are interconnected with and

may amplify our other risk factors. Additionally, the inherent uncertainty of

potential societal responses to climate change may create a systemic risk

to the global economy and our business.

Examples of potential threats

– Introduction or improvement of low-carbon technologies or changes

in customer preference for products that support the transition to a

low-carbon economy may decrease demand for some of our products

(which may be abrupt or unanticipated), increase our costs or decrease

the availability of key inputs to production. For example:

– Rapid shift to alternative steelmaking technology pathways (including

electric arc furnace (EAF) and direct reduced iron (DRI) steelmaking)

may reduce anticipated demand for our metallurgical coal (refer

to OFR 6.12) and may result in the early closure or divestment

of our metallurgical coal mines.

– Increased recovery and reuse rates of commodities may reduce

demand for our products.

– New battery technologies that use no or less nickel could enter

the market and reduce demand for our nickel products.

– Adverse macroeconomic changes, such as a decline in global economic

activity, could be exacerbated by the transition to a low-carbon economy

and reduce anticipated demand for our future-facing commodities,

such as copper and nickel.

– Perceptions of climate-related financial risk and/or social concerns around

climate change may result in investors divesting our securities or changing

their expectations or requirements for investment in our securities, cause

financial institutions not to provide financing or other products (such as

insurance cover) to BHP or to our suppliers or customers, affect our

suppliers’ willingness to provide goods or services, and affect our customers’

wish to procure our commodities. In turn, these factors could increase our

costs and adversely impact our ability to optimise our portfolio and pursue

growth opportunities.

– Perceived or actual misalignment of BHP’s climate actions (goals,

targets and performance) with societal and investor expectations,

or a failure to deliver our climate actions, may result in damage to

our reputation, reduced investor confidence, climate-related litigation

(including class actions) or give rise to other adverse regulatory,

legal or market responses.

– Sub-optimal selection, implementation or effectiveness of technology that is

intended to contribute towards the delivery of our climate targets, goals and

strategies, or unavailability of that technology (including due to the failure

of trials of new technology, a failure of external equipment manufacturers

to deliver on schedule or competition for limited supply) could prevent, limit,

delay or increase costs in achieving our plans for operational decarbonisation.

– Changes in laws, regulations, policies, obligations, government actions

and our ability to anticipate and respond to such changes, including GHG

emission targets, restrictive licensing, carbon taxes, carbon offsetting

regulations, border adjustments or the addition or removal of subsidies,

may give rise to adverse regulatory, legal or market responses. For example,

the implementation of regulations intended to reduce GHG emissions in the

steel industry in China could adversely impact demand for our metallurgical

coal or iron ore. In addition, inadequate market supply of credible carbon

credits or price volatility in carbon markets could increase our operating

costs or result in adverse social value or compliance implications.

Inconsistent regulatory regimes globally may increase the likelihood

of an inadvertent failure to or inability to comply with some regulations

and exacerbate the impacts of transition risks.

FY2023 insights

Our exposure to transition risks increased over FY2023 due to greater

societal expectations for accelerated decarbonisation by companies and

significant regulatory developments across the globe, including provisional

agreement of the scope and implementation of the EU Carbon Border

Adjustment Mechanism and the introduction of the Inflation Reduction

Act in the United States, which may help to accelerate the low-carbon

transition. Additionally, Australia passed legislation to apply reforms to the

‘Safeguard Mechanism’ intended to reduce Scope 1 GHG emissions at

its largest industrial facilities on a trajectory consistent with achieving the

national GHG emission reduction targets. These external developments

present both threat and opportunity for BHP as we continue to increase

our portfolio exposure to future-facing commodities, including through

our acquisition of OZ Minerals.

For more information refer to

BHP Climate Change Report 2020

BHP Climate Transition Action Plan 2021

OFR 3 – Positioning for the future

OFR 6.12 – Climate change

More information can be found at

bhp.com/climate

Governance Financial Statements Additional Information

BHP Annual Report 2023 77

Operating and Financial Review

Risk factor: Adopting technologies and maintaining digital security

Examples of potential opportunities

– Applying digital solutions across our operations may unlock

greater productivity and safety performance. For example, using

predictive analytics to enable operations to identify asset condition

and efficiencies may improve safety, production and equipment

availability, and reduce maintenance and other costs.

– Technology solutions to reduce GHG emissions may support BHP, our

suppliers and customers in achieving climate action targets and goals.

For example, in March 2023, BHP announced that it would collaborate

with two of China’s leading copper producers, China Copper and

Daye Nonferrous, including to develop technology and innovations

for copper smelting and refining, with the aim of supporting the

global energy transition.

– Developing and applying AI in mine planning, remote operation

and advanced robotic technologies may identify or provide access

to previously unknown or inaccessible deposits and development

of end-to-end autonomous mining systems.

– Using digital simulations and predictive trend modelling may enable

us to optimise the deployment of new technologies, such as automation

and electrification, support early identification of process variances

and faults, and support the marketing of our products to customers.

Key management actions

– Our assets, functions and projects are responsible for managing

localised or project-specific exposure to technology and cyber risks,

including risks associated with business-critical technology systems.

Enterprise-level risks that are specific to technology, such as those that

pose a greater threat to our wider business and strategic opportunities,

are generally managed by our global Technology team and other

relevant stakeholders to support delivery of our technology strategy.

– A maturing Data Strategy that is enabling our ownership

and management of critical data that drives our adoption of

digital technologies.

– We collaborate with industry and research partners to develop

technological solutions.

– We employ a number of measures designed to protect against, detect

and respond to cyber events or attacks, including BHP’s mandatory

minimum performance requirements for technology and cybersecurity,

cybersecurity performance requirements for suppliers, cybersecurity

resilience programs, an enterprise security framework and cybersecurity

standards, cybersecurity risk and control guidance, security awareness

programs and training to build capability, security assessments and

continuous monitoring, restricted physical access to hardware and

crisis management plans.

FY2023 insights

As we continued to leverage technology and enable digital

transformation in FY2023, our exposure to associated risks increased.

Cybersecurity threat conditions remained elevated with multiple

high-profile cyber incidents experienced by businesses. We continue

to focus on strengthening management of cybersecurity risk across

BHP, as well as monitoring any third-party events (including in relation

to our suppliers) that might impact our business.

For more information refer to

OFR 2 – Why BHP

Risks associated with adopting and implementing

new technologies, and maintaining the effectiveness

of our existing digital landscape (including cyber

defences) across our value chain.

Why is this important to BHP?

Our business and operational processes are increasingly dependent

on the effective application and adoption of technology, which we use

as a lever to deliver on our current and future operational, financial and

social objectives. This exposes BHP to risks originating from adopting

or implementing new technologies or failing to take appropriate action

to position BHP for the digital future, which may impact the capabilities

we require, the effectiveness and efficiency of our operations and our

ability to compete effectively. New technology adopted in our business

may not perform as anticipated and may result in unintended impacts

on our operations. We may also fail to maintain the effectiveness of

our existing and future digital landscape, including cyber defences,

exposing us to technology availability, reliability and cybersecurity risks.

These could lead to operational events, commercial disruption (such as

an inability to process or ship our products), corruption or loss of system

data, misappropriation or loss of funds, unintended loss or disclosure

of commercial or personal information, enforcement action or litigation,

which could also impact the environment and partners, suppliers and

stakeholders across our value chain. Additionally, an inability to adequately

maintain existing technology or implement critical new technology,

or any sustained disruption to our existing technology may adversely

affect our licence to operate, reputation, results of operations and

financial performance.

Examples of potential threats

– Failure to invest in appropriate technologies or to keep pace with

advancements in technology that support the pursuit of our objectives

may adversely impact the effectiveness or efficiency of our business

and erode our competitive advantage. For example, a failure to

implement appropriate technologies that support our assets to produce

higher-grade commodities or less waste from existing resources could

limit our ability to sell our commodities or reduce costs.

– Failure to identify, access and secure necessary infrastructure and

key inputs (including electricity, internet bandwidth, data, software,

licences or other rights in intellectual property, hardware and talent)

to support new technology innovations and advanced technologies

may adversely affect our ability to adopt, operate or retain access to

those technologies. This includes AI and machine learning, process

automation, robotics, data analytics, cloud computing, smart devices

and remote working solutions. For example, adopting new technology

to reduce GHG emissions using alternative energy sources may

require new infrastructure, while effective implementation of new

digital technologies (such as machine learning) may be heavily

dependent on access to data.

– Failure to adopt or successfully integrate new technology or technology

enhancements may result in impacts to our business and operations.

This could lead to operational stoppage events, commercial disruption

(such as an inability to pay or accept payment), inability to disclose

accurately or an inability to adequately maintain existing technology.

– Failure or outage of our information or operational technology systems.

– Cyber events or attacks on our information or operational technology

systems, including on third-party partners and suppliers (such as our

cloud service providers). For example, a cyber attack could result in

a failure of business-critical technology systems at one or more of our

assets, which may reduce operational productivity and/or adversely

impact safety.

78 BHP Annual Report 2023

8 How we manage risk continued

Risk factor: Ethical misconduct

Key management actions

– Setting the ‘tone from the top’ through Our Charter, which is central

to our business and describes our purpose, values and how we

measure success.

– Implementing internal policies, standards, systems and processes

for governance and compliance to support an appropriate culture

and prioritise respectful behaviours at BHP, including:

– Our Code of Conduct and BHP’s mandatory minimum performance

requirements for business conduct, market disclosure and

other matters

– training on Our Code of Conduct and in relation to anti-corruption,

market conduct and competition

– ring fencing protocols to separate potentially competing businesses

within BHP

– governance and compliance processes, including classification of

sensitive transactions, as well as accounting, procurement and other

internal controls, and tailored monitoring of control effectiveness

– oversight and engagement with high-risk areas by our Ethics and

Investigations, Compliance and Internal Audit teams, and the Risk

and Audit Committee

– review and endorsement by our Compliance team of the highest-

risk transactions, such as gifts and hospitality, engagement of

third parties, community donations and sponsorships above

defined thresholds

– automated counterparty and transaction screening against lists

of entities subject to trade sanctions

– our EthicsPoint anonymous reporting service and complaints

mechanism, supported by an ethics and investigations framework

and central investigations team

– campaigns and sessions held globally by our leaders to set

expectations around racism, sexual harassment and other

disrespectful behaviours, including our ‘Active Bystander’ training

in FY2023 that is designed to empower everyone across BHP

to call out disrespectful and harmful behaviours

– Continuing to enforce Our Code of Conduct via appropriate

investigations and responses, including disciplinary action, in addition

to deployment of appropriate safety controls to prevent harm.

– Requiring anti-corruption and human rights risks to be considered

as part of our new country entry approval process.

FY2023 insights

Our exposure to ethical misconduct risks increased in FY2023,

including due to the acquisition of OZ Minerals and its operations in

South America. Implementation of anti-corruption controls, including

in-person anti-corruption training and due diligence on new and existing

vendors is a key focus area for our Compliance and Integration teams.

With BHP’s continued focus on portfolio growth, there is a potential for

further increases in exposure in higher-risk jurisdictions. Controls to

manage these risks are informed by new country entry and counter

party due diligence.

For more information refer to

Our Charter and Our Code of Conduct

OFR 6.7 – Sexual harassment

OFR 6.9 – Ethics and business conduct

Corporate Governance Statement

Risks associated with actual or alleged deviation

from societal or business expectations of

ethical behaviour (including breaches of

laws or regulations) and wider or cumulative

organisational cultural failings, resulting

in significant reputational impacts.

Why is this important to BHP?

Actual or alleged conduct of BHP or our people or third-party suppliers that

deviates from the standard of ethical behaviour expected of us could result

in reputational damage or a breach of law or regulations. Such conduct

includes fraud, corruption, anti-competitive behaviour, money laundering,

breaching trade or financial sanctions, market manipulation, privacy

breaches, ethical misconduct and wider organisational cultural failings.

A failure to act ethically or legally may result in negative publicity,

investigations, public inquiries, regulatory enforcement action, litigation

or other civil or criminal proceedings, or increased regulation. It could also

threaten the validity of our tenements or permits, or adversely impact our

reputation, results of operations, financial performance or share price.

Impacts may be amplified if our senior leaders fail to uphold BHP’s values

or address actual or alleged misconduct in a way that is consistent with

societal, partner and stakeholder expectations. Our workplace culture may

also be eroded, adversely affecting our ability to attract and retain talent.

Risks and impacts are also heightened by the complex and continuously

evolving legal and regulatory frameworks that apply to the jurisdictions

where we operate and potentially conflicting obligations under different

national laws.

Examples of potential threats

– Failing to prevent breaches of international standards, laws, regulations

or other legal, regulatory, ethical, environmental, governance or

compliance obligations, such as external misstatements, inaccurate

financial or operational reporting or a breach of our continuous

disclosure obligations.

– Corruption (for example, in connection with the acquisition of early-

stage options in a country with weaker governance standards), market

misconduct or anti-competitive behaviour, including in relation to our

joint venture operations.

– Failing to comply with trade or financial sanctions (which are complex

and subject to rapid change and may potentially result in conflicting

obligations), health, safety and environmental laws and regulations,

native title and other land right or tax or royalty obligations.

– Failing to protect our people from harm (including to mental and

physical health) due to misconduct that takes place in connection

with their work, such as discrimination or sexual harassment.

Examples of potential opportunities

– Our capability to manage ethical misconduct risks may expand

portfolio growth options by providing greater assurance that we

can operate legally and ethically in high-risk jurisdictions.

– Managing ethical misconduct risks in line with societal, partner and

stakeholder expectations may distinguish BHP from competitors and

enhance our ability to raise capital, attract and retain talent, engage

with governments and communities in new jurisdictions, obtain

permits, partner with external organisations or suppliers, or market

our products to customers.

– Playing a leading role in the management of ethical misconduct risks,

such as sexual harassment risks, may help BHP to increase ethical

and behavioural standards across the resources industry.

Governance Financial Statements Additional Information

BHP Annual Report 2023 79

Operating and Financial Review

Risk factor: Optimising growth and portfolio returns

Examples of potential opportunities

– Acquisition of new resources or acceleration of organic growth options in

future-facing commodities may strengthen and diversify our portfolio and

protect and grow value over the long term.

– Ability to predict long-term commodity demand, supply and price trends

may lead to BHP being able to identify and acquire new future-facing

commodities and assets ahead of our competitors or exit from declining

commodities in a timely manner, strengthening our portfolio and leading

to long-term, higher portfolio returns.

– BHP may be perceived as a welcome and valued or preferred partner

for the development of new resource opportunities, enabling us to

secure new assets or exploration opportunities to create long-term

optionality in the portfolio.

Key management actions

– Strategies, processes and frameworks to grow and protect our portfolio

and to assist in delivering ongoing returns to shareholders include:

– our Capital Allocation Framework, corporate planning processes

and investment approval processes

– our annual reviews (including resilience testing) of portfolio valuations

– our exploration, ventures (such as BHP Ventures), accelerators (such

as BHP Xplor) and business development programs, which focus on

replenishing our resource base and enhancing our portfolio (including

creating and securing more options in future-facing commodities)

– our long-term strategic outlook and ongoing strategic processes

to assess our competitive advantage and enable the identification

of threats to or opportunities for our portfolio through forecasting

and scenario modelling

– monitoring signals to interpret external events and trends, and

designing commodity strategies and price protocols that are

reviewed by management and the Board

– our balance sheet and liquidity framework, which is designed to

maintain a robust balance sheet with sufficient liquidity and access

to diverse sources of funding, to enable us to be ready to pursue

growth opportunities as and when they arise

– Ongoing implementation of BHP’s strategy including, for example,

through the OZ Minerals acquisition (refer to FY2023 insights for

further details), BHP Ventures investments and further investments

in early-stage options in future-facing commodities.

– Pursuing a considered approach to new country entry, including further

building our capability to operate in higher-risk jurisdictions, in order

to support portfolio opportunities.

– Further developing BHP’s social value proposition to position BHP

as a preferred partner for the development of resource opportunities

in line with the expectations of local communities, host governments

and other global stakeholders.

FY2023 insights

Our exposure to risks associated with optimising growth and portfolio

returns remained stable in FY2023 as a result of the execution of key

management actions in the context of continued volatility and uncertainty

across global economies, fiscal regimes and industrial relations, and

societal expectations. In FY2023, we completed our acquisition of OZ

Minerals to increase portfolio exposure to future-facing commodities and

provide us with the opportunity to realise synergies and add to our pipeline

of growth options. We also announced the proposed sale of the Daunia

and Blackwater mines in Queensland as we continue to optimise and

consolidate our portfolio.

For more information refer to

OFR 3 – Positioning for the future

OFR 9 – Performance by commodity

Financial Statements note 23 ‘Financial risk management’

Risks associated with our ability to position our

asset portfolio to generate returns and value for

shareholders, including through acquisitions,

mergers and divestments.

Why is this important to BHP?

We make decisions and take actions in pursuit of our strategy to optimise

our asset portfolio and to secure and create growth options in future-facing

commodities (such as copper, nickel and potash). These may include, for

example, active portfolio changes (such as our acquisition of OZ Minerals

and the proposed sale of the Daunia and Blackwater mines in Queensland)

supporting innovative early-stage mineral exploration companies through BHP

Xplor, and maturing and developing organic growth options across our existing

portfolio. A strategy that does not support BHP’s objectives and/or ill-timed

execution of our strategy, or other circumstances, may lead to a loss of value that

impacts our ability to deliver returns to shareholders and fund our investment and

growth opportunities. It may also result in our asset portfolio being less resilient to

climate-related risks or movements in commodity prices or inflationary pressures

and other macroeconomic factors. In the short term, adverse movements in

commodity prices may reduce our cash flow, ability to access capital and our

dividends. A failure to optimise our asset portfolio for structural movements in

commodity prices (including those arising from climate-related risks) over the

long term may result in asset impairments and could adversely affect the results

of our operations, financial performance and returns to investors.

Examples of potential threats

– Commodity prices have historically been and may continue to be subject

to significant volatility, including due to global economic and geopolitical

factors, industrial activity, commodity supply and demand (including

inventory levels), technological change, product substitution, tariffs,

interest rate movements and exchange rate fluctuations. Our usual

policy and practice is to sell our products at prevailing market prices

and, as such, movements in commodity prices may affect our financial

performance. Long-term price volatility, sustained low prices or increases

in costs may adversely impact our financial performance as we do not

generally have the ability to offset costs through price increases.

– Failure to optimise our portfolio through effective and efficient acquisitions,

exploration, large project delivery, mergers, divestments or expansion

of existing assets (including due to sub-optimal capital prioritisation)

may adversely impact our performance and/or returns to investors.

– Failure to identify potential changes in commodity attractiveness and

missed entry or commodity exit opportunities, may result in decreased

return on capital spend for or overpayment to acquire or invest in new

assets or projects, stranded assets or reduced divestment proceeds.

– Failure to achieve expected commercial objectives from assets or

investments, such as cost savings, increased revenues or improved

operational performance (including as a result of inaccurate commodity

price assumptions or resources and reserves estimates), may result

in returns that are lower than anticipated and loss of value. This could

be exacerbated by impacts from factors such as climate-related risks,

supply chain disruptions (for example, disruption in the energy sector

impacting our end-user markets), labour shortages, inflationary pressures

and unfavourable exchange rates, creating operational headwinds and

challenging on-time and on-budget project delivery.

– Renegotiation or nullification of permits, inability to secure new permits

or approvals, increased royalties, such as the increase in coal royalties

in Queensland and the mining royalty law in Chile, expropriation or

nationalisation of our assets, or other legal, regulatory, political, judicial or

fiscal or monetary policy instability or changes may increase our costs or

adversely impact our ability to achieve expected commercial objectives from

assets or investments, access reserves, develop, maintain or operate our

assets, enter new jurisdictions, or otherwise optimise our portfolio.

– Inability to predict long-term trends in the supply, demand and price of

commodities and optimise our asset portfolio accordingly may restrict

our ability to generate long-term returns from the portfolio. For example,

slowing economic growth in China, political and trade tensions, market

volatility or the global transition to a low-carbon economy may result in

lower demand and prices for some of our products, which may in turn

adversely impact our portfolio returns.

80 BHP Annual Report 2023

8 How we manage risk continued

Key management actions

– Monitoring and assessing our ability to access key markets, and

maintaining sales plans, product placement and business resilience

strategies and relationships with relevant partners and stakeholders.

– Maintaining response plans for various scenarios (including physical

disruptions of logistics) to mitigate disruptions to our ability to access

key markets.

– Monitoring geopolitical and macroeconomic developments and trends,

including through signal monitoring and our enterprise-level watch

list of emerging themes, to provide an early indication of events that

could impact our ability to access or offer opportunities in relation

to key markets.

– Identifying weather and/or climate-related vulnerabilities and

implementing controls to mitigate disruptions to our ability to

physically access key markets.

– Diversifying our asset and commodity portfolio, such as our ongoing

investment in potash through the Jansen Potash Project, to reduce

exposure to market concentration risks.

Risk factor: Accessing key markets

FY2023 insights

Exposure to risks associated with our access to key markets increased

in FY2023 due to changes in our external environment over which

we have limited influence. The continuing Ukraine conflict, rising

geopolitical tensions among major economies, increasing resource and

economic nationalism as well as increased volatility and uncertainty

in the international trading, business and financial environment, could

cause disruption of global supply chains and affect macroeconomic

conditions and our ability to sell to particular customers or markets.

Risks associated with market concentration

and our ability to sell and deliver products into

existing and future key markets, impacting

our economic efficiency.

Why is this important to BHP?

We rely on the sale and delivery of the commodities we produce to customers

around the world. Changes to laws, international trade arrangements,

contractual terms or other requirements and/or geopolitical developments

could result in physical, logistical or other disruptions to our operations in or the

sale or delivery of our commodities to key markets. These disruptions could

affect sales volumes or prices obtained for our products, adversely impacting

our financial performance, results of operations and growth prospects.

Examples of potential threats

– Government actions, including economic sanctions, tariffs or other

trade restrictions, imposed by or on countries where we operate or into

which we sell or deliver our products may prevent BHP from selling

or make it more difficult for BHP to sell in key markets.

– Physical disruptions to the delivery of our products to customers in

key markets, including due to the disruption of shipping routes, closure

or blockage of ports or land logistics (road or rail) or military conflict.

In some cases, physical disruptions may be driven or intensified by

weather and climate variability, including as potentially exacerbated

or affected by climate change.

– Legal or regulatory changes (such as royalties or taxes; government-

mandated price caps, port, export or import restrictions or customs

requirements, shipping/maritime regulatory changes; restrictions on

movements or imposition of quarantines; or changing environmental

restrictions or regulations, including measures with respect to carbon-

intensive industries or imports) and commercial changes (such as

changes to the standards, preferences and requirements of customers)

may adversely impact our ability to sell, deliver or realise full market

value for our products.

– Failure to maintain strong relationships with customers or changes

to customer demands for our products may reduce our market share

or adversely impact our financial performance.

– Increasing geopolitical tensions may adversely affect our strategic

and business planning decisions and/or increase the time it takes us

to manage our access to key markets, particularly if we fail to detect or

anticipate deviations in the geopolitical environment in a timely manner.

Examples of potential opportunities

– Monitoring macroeconomic, societal, geopolitical and policy

developments and trends may reveal new markets or commodities,

identify opportunities to strengthen secondary markets for existing

products or identify a potential competitive advantage or price

premium for existing products.

– Developing strategic partnerships and strong, mutually beneficial

relationships with our customers may enable us to create value.

– Building a deep understanding of geopolitical threats and opportunities

and their potential impacts on global trade flows and our business

could enhance our strategy, business planning and response,

providing a potential future competitive advantage.

– Identifying the potential for weather and climate variability, including

as potentially exacerbated or affected by climate change, to disrupt

delivery of products, and implementing management measures,

may increase the resilience of our operations and value chain.

– Monitoring signals and building relationships with and understanding

the perspectives of influential partners and stakeholders may improve

our ability to understand and provide input to policy development,

and respond to and manage any impacts from policy changes

(such as trade policies).

Governance Financial Statements Additional Information

BHP Annual Report 2023 81

Operating and Financial Review

Risk factor: Inadequate business resilience

Key management actions

– Implementing Group-wide controls to enhance business resilience,

including BHP’s mandatory minimum performance requirements for

security, crisis and emergency management and business continuity

plans, and seeking to maintain an investment grade credit rating.

– Monitoring our current state of readiness (preparedness, redundancy

and resilience), including through scenario analysis and business

resilience exercises, supporting organisational capability in our

operations, functions and senior management to effectively and

efficiently respond to and recover from adverse events should

they materialise.

– Monitoring the external environment, including political and economic

factors, through signal monitoring, our geopolitical monitoring and

public policy frameworks and our enterprise-level watch list of emerging

themes, to support early identification of policy changes or adverse

events for which we may need to increase preparedness.

– Identifying security threats that could directly or indirectly impact

our operations and people in countries of interest to BHP.

– Implementing our Adaptation Strategy with respect to physical

climate-related risks, including requiring operated assets and functions

to identify and progressively assess physical climate-related risks

(including to our value chain) and seeking to build climate change

adaptation into their plans, activities and investments.

– Maintaining quality, centralised climate data covering each of our

operating locations so that our people have access to appropriate

data to support climate studies that can be used to inform

investment decisions around enhancing our operational resilience.

FY2023 insights

Our exposure to risks associated with inadequate business resilience

increased in FY2023. According to the United Nations Framework

Convention on Climate Change Secretariat’s NDC Synthesis Report

(released in September 2022), the world is not currently on track to

keep global average temperature increases below 2°C, and thus our

exposure to climate-related risks continued to grow. Our acquisition of

OZ Minerals has increased our operational footprint, and consequently,

our exposure to physical climate-related risks. Significant natural

disasters and prolonged weather events continue to be experienced

across the globe, which may affect production at our assets.

For more information refer to

BHP Climate Change Report 2020

BHP Climate Transition Action Plan 2021

OFR 6.12 – Climate change

OFR 6.13 – Environment

OFR 6.10 – Security services

bhp.com/sustainability

Risks associated with unanticipated or

unforeseeable adverse events and a failure of

planning and preparedness to respond to, manage

and recover from adverse events (including

potential physical climate-related impacts).

Why is this important to BHP?

In addition to the threats described in our other risk factors, our business

could experience unanticipated, unforeseeable or other adverse events

(internal or external) that could harm our people, disrupt our operations

or value chain, or damage our assets or corporate offices, including our

non-operated assets in which BHP has a non-controlling interest. A failure

to identify or understand exposure, adequately prepare for these events

(including maintaining business continuity plans) or build wider organisational

resilience may inhibit our (or our third-party partners’) ability to respond and

recover in an effective and efficient manner. This includes a failure to build

resilience to physical climate-related risks. Material adverse impacts on

our business include reduced ability to access resources, markets and the

operational or other inputs required by our business, reduced production

or sales of, or demand for, our commodities, or increased regulation, which

could adversely impact our financial performance, share price or reputation

and could lead to litigation (including class actions).

Examples of potential threats

– Geopolitical, global economic, regional or local developments or

adverse events, such as social unrest, strikes, work stoppages,

labour disruptions, social activism, terrorism, bomb threats, economic

slowdown, acts of war or other significant disruptions in areas

where we operate or have interests.

– Extreme weather and climate-related events, such as heatwaves,

extreme precipitation and flooding, hurricanes, cyclones and fires.

For example, significant wet weather in Australia contributed to a fall

in production volumes in the December 2022 half year for iron ore,

metallurgical coal and energy coal.

– Other natural events, including earthquakes, tsunamis, solar flares

and pandemics.

– Potential physical climate-related impacts, such as acute risks that are

event driven (including increased frequency and severity of extreme

weather events) and chronic risks resulting from longer-term changes in

climate patterns. Hazards may include changes in precipitation patterns,

water shortages, rising sea levels, increased storm intensity, prolonged

extreme temperatures and increased drought, fire and flooding.

– Failure by suppliers, contractors or joint venture partners to perform

existing contracts or obligations (including due to insolvency), such as

construction of large projects or supply of key inputs to our business

(for example, consumables for our mining equipment).

– Failure of our risk management or other processes (including controls)

to prepare for or manage any of the risks discussed in this Risk factors

section may inhibit our (or our third-party partners’) ability to manage

any resulting adverse events and may disrupt our operations or

adversely impact our financial performance or reputation.

Examples of potential opportunities

– Risk identification and management supports proactive, focused and

prioritised deployment of resources to reduce exposure to adverse

events. It may be used to inform priorities and strategies across BHP,

supporting a proportionate and cost-effective response, which could

provide a competitive advantage at a regional or global level.

– Building wider organisational resilience may enable us to maintain

dividends to shareholders amid adverse external events and make

growth-generating, counter-cyclical investments, as well as to help

us mitigate the impacts of unforeseeable adverse events.

– Adaptation to climate change across our operations and in our value

chain could enhance the safety, productivity and climate resilience

of our operated assets, position BHP as a supplier of choice and

enhance our ability to consistently grow value. Support for climate-

vulnerable communities and ecosystems may also improve our

social value proposition.

82 BHP Annual Report 2023

9 Performance by commodity

Management believes the following information presented by commodity

provides a meaningful indication of the underlying financial and operating

performance of the assets, including equity accounted investments, of

each reportable segment. Information relating to assets that are accounted

for as equity accounted investments is shown to reflect BHP’s share,

unless otherwise noted, to provide insight into the drivers of these assets.

For more information as to the statutory determination of our reportable

segments, refer to Financial Statements note 1 ‘Segment reporting’.

Unit costs is one of our non-IFRS financial measures used to monitor

the performance of our individual assets and is included in the analysis

of each reportable segment. For the definition and method of calculation

of our non-IFRS financial measures, including Underlying EBITDA and

Unit costs, refer to OFR 10.

9.1 Copper

Detailed below is financial and operating information for our Copper assets

comparing FY2023 to FY2022.

Year ended 30 June

US$M 2023 2022

Revenue 16,027 16,849

Underlying EBITDA 6,653 8,565

Net operating assets 34,542 27,420

Capital expenditure 2,698 2,528

Underlying ROCE 12% 16%

Total copper production (kt) 1,717 1,574

Average realised prices

Copper (US$/lb) 3.65 4.16

Key drivers of Copper’s financial results

Price overview

Copper prices were volatile over the second half of FY2023, with two-way

fluctuations based on expectations of China’s recovery, and mounting

demand risks in the OECD, with indicators of manufacturing weakness

widespread. Historically extremely low global copper inventories and the

sector’s ongoing operational performance challenges have helped prices

hold up relatively well – though our realised price was 12 per cent lower

compared to FY2022.

In the near term, we expect demand to be met by a combination of rising

primary and scrap supply. A small surplus or a balanced market is the

most likely outcome for the current year, with operational disruptions

being a key swing factor.

In the medium and longer term, traditional demand (such as home building,

electrical equipment and household appliances) is expected to remain

solid while the decarbonisation mega-trend is expected to bolster demand.

In terms of meeting that demand, we anticipate that the cost curve is likely

to steepen as challenges to the development of new resources (such as

societal expectations, decarbonisation and water challenges) progressively

increase. We anticipate that the industry is likely to enter the final third of

this decade with a low inventory buffer and therefore elevated prices may

endure throughout this period.

Production

Total Copper production for FY2023 increased by 9 per cent to 1,717 kt.

Escondida copper production increased by 5 per cent to 1,055 kt primarily

due to higher concentrator feed grade of 0.82 per cent, compared to 0.78

per cent in FY2022. The positive impact of the higher grade was partially

offset by the impact of road blockades across Chile in the December 2022

quarter, which reduced availability of some key mine supplies.

Pampa Norte copper production increased by 3 per cent to 289 kt

including a record 240 kt at Spence and 49 kt at Cerro Colorado. This was

largely a result of higher concentrator throughput at the Spence Growth

Option (SGO), partially offset by lower production at Cerro Colorado as

it transitions towards closure.

Following the completion of the acquisition of OZ Minerals Ltd (OZL),

we are establishing the Copper South Australia province. Production from

Copper South Australia was 232 kt, comprised of full-year production from

Olympic Dam of 212 kt and two months of production from Prominent

Hill and Carrapateena of 8 kt and 12 kt, respectively. Olympic Dam

delivered record BHP copper production as a result of continued strong

concentrator and smelter performance following the major smelter

maintenance campaign (SCM21) in the prior period. Record annual gold

and silver production was also achieved following the implementation

of debottlenecking initiatives in the prior period, 27 per cent higher than

the previous gold production record.

Antamina copper production decreased by 8 per cent to 138 kt,

reflecting the expected lower copper feed grades, partially offset by

higher throughput. Zinc production was 1 per cent higher at 125 kt,

reflecting higher throughput.

Following the acquisition of OZL, Carajás produced 1.6 kt of copper

and 1.2 troy koz of gold.

Financial results

Copper revenue decreased by US$0.8 billion to US$16.0 billion in

FY2023 due to lower average realised copper prices partially offset

by higher sales volumes.

Underlying EBITDA for Copper decreased by US$1.9 billion to

US$6.7 billion. Price impacts, net of price-linked costs, decreased

Underlying EBITDA by US$1.6 billion. Higher sales volumes increased

Underlying EBITDA by US$1.4 billion due to record production at Olympic

Dam in FY2023 following the planned major smelter maintenance

campaign (SCM21) in the prior period, higher feed grade at Escondida

and higher throughput at SGO.

Controllable cash costs increased by US$766 million, primarily due to

planned unfavourable inventory movements to ensure consistent feed

to SGO at Spence and drawdown of inventory built during SCM21 in

the prior period at Olympic Dam.

Inflation negatively impacted Underlying EBITDA by US$701 million.

Equity accounted investment profits attributable to Antamina decreased

by US$269 million due to lower realised copper prices.

Escondida unit costs increased by 17 per cent to US$1.40 per pound at

realised exchange rates, primarily driven by inflationary cost pressures

including higher contractor costs.

Spence unit costs increased by 24 per cent to US$2.11 per pound at

realised exchange rates, primarily driven by inflationary cost pressures

and planned unfavourable inventory movements to ensure consistent

feed to SGO.

Outlook

Total Copper production of between 1,720 and 1,910 kt is expected

in FY2024.

Escondida production of between 1,080 and 1,180 kt is expected in

FY2024, reflecting both an expected increase in concentrator feed

grade and concentrator throughput compared to FY2023.

Spence production of between 210 and 250 kt is expected in FY2024,

with planned higher concentrator grade and concentrator throughput but

lower stacking grade for cathodes. Cerro Colorado continues to transition

towards planned closure by December 2023, with production for the six

months until closure expected to be approximately 9 kt.

Copper South Australia production of between 310 and 340 kt is expected

in FY2024 and will include the transfer of small volumes of copper

concentrate from Prominent Hill to Olympic Dam for processing.

Antamina copper production of 120 to 140 kt and zinc production

of between 85 and 105 kt is expected in FY2024.

Escondida unit costs in FY2024 are expected to be between US$1.40

and US$1.70 per pound (at an exchange rate of USD/CLP 810).

Spence unit costs in FY2024 are expected to be between US$2.00

and US$2.30 per pound (at an exchange rate of USD/CLP 810).

Governance Financial Statements Additional Information

BHP Annual Report 2023 83

Operating and Financial Review

9.2 Iron Ore

Detailed below is financial and operating information for our Iron Ore

assets comparing FY2023 to FY2022.

Year ended 30 June

US$M 2023 2022

Revenue 24,812 30,767

Underlying EBITDA 16,692 21,707

Net operating assets 16,643 16,823

Capital expenditure 1,966 1,848

Underlying ROCE 67% 91%

Total iron ore production (Mt) 257 253

Average realised prices

Iron ore (US$/wmt, FOB) 92.54 113.10

Key drivers of Iron Ore’s financial results

Price overview

In the iron ore market, conditions were better in the second half of FY2023

than in the first half, but there are two key uncertainties for the coming six

months. The first is how effectively China’s stimulus policy is implemented,

especially with regards to real estate. The second revolves around the

breadth, timing and severity of any mandated steel production cuts.

Our estimate of real-time cost support sits in the US$80-US$100/t range

on a 62 per cent CFR (cost and freight) basis. That is unchanged from

our previous reporting period.

In the medium term, China’s demand for iron ore is expected to be lower

than it is today as it moves beyond its crude steel production plateau and

the scrap-to-steel ratio rises, though we expect demand for our products

from elsewhere in developing Asia will offset this to a degree.

Production

Total Iron Ore production increased by 1 per cent to 257 Mt.

WAIO achieved record production of 253 Mt (285 Mt on a 100 per cent

basis), reflecting continued strong supply chain performance, including

improved rail performance and increased car dumper utilisation. This was

partially offset by the temporary suspension of operations following

the fatality in February, unfavourable weather impacts from Tropical

Cyclone Ilsa in the June 2023 quarter and the ongoing planned tie-in

of Port Debottlenecking Project 1 (PDP1), which remains on track to

be completed in CY2024.

South Flank remains on track to ramp up to full production capacity

of 80 Mtpa (100 per cent basis) by the end of FY2024. Current year

performance has contributed to record annual production at the Mining

Area C hub and record WAIO lump sales. Additionally, the deployment

of autonomous haul trucks at South Flank was completed in May 2023.

Samarco production increased by 11 per cent to 4.5 Mt (BHP share),

as a result of higher concentrator throughput.

Financial results

Total Iron Ore revenue decreased by US$6.0 billion to US$24.8 billion in

FY2023, reflecting lower average realised prices and lower sales volumes

as a result of building inventory in China for portside sales.

Underlying EBITDA for Iron Ore decreased by US$5.0 billion to

US$16.7 billion primarily due to lower average realised prices, net of price

linked costs, of US$5.0 billion. Other items such as inflation and higher fuel

and energy costs, particularly higher diesel prices and increased labour

and contractor costs, were partially offset by favourable foreign exchange

rate impacts.

WAIO unit costs increased by 6 per cent to US$17.79 per tonne at realised

exchange rates predominantly due to inflationary cost pressures, net

drawdown of inventory to support the supply chain and spend associated

with the ramp up of South Flank, partially offset by favourable exchange

rate movements.

Outlook

WAIO production is expected to increase to between 250 and 260 Mt

(282 and 294 Mt on a 100 per cent basis) in FY2024.

WAIO unit costs in FY2024 are expected to be between US$17.40 and

US$18.90 per tonne (based on an exchange rate of AUD/USD 0.67).

Samarco production is expected to be between 4 and 4.5 Mt (BHP share)

in FY2024.

9.3 Coal

Detailed below is financial and operating information for our Coal assets

comparing FY2023 to FY2022.

Year ended 30 June

US$M 2023 2022

Revenue 10,958 15,549

Underlying EBITDA 4,998 9,504

Net operating assets 7,266 7,650

Capital expenditure 657 621

Underlying ROCE 47% 91%

Total metallurgical coal production (Mt)

29 37

Total energy coal production (Mt)

14 18

Average realised prices

Metallurgical coal (US$/t) 271.05 347.10

Hard coking coal (HCC) (US$/t) 273.59 366.82

Weak coking coal (WCC) (US$/t) 251.13 296.51

Thermal coal (US$/t) 236.51 216.78

1 BHP divested its 80 per cent interest in BMC in May 2022, which included

7.9Mt of metallurgical coal production.

2 BHP divested its 33.3 per cent interest in Cerrejón on 11 January 2022,

which included 4.2 Mt of energy coal production.

Key drivers of Coal’s financial results

Price overview

Metallurgical coal

Metallurgical coal prices moved lower in FY2023 as the global energy

shock receded, steel production in OECD importing regions declined,

and supply conditions improved across multiple jurisdictions. Against this

backdrop the re-opening of the Chinese import market for Australian

coals has had little discernible impact on trade flows or pricing.

As has been the case in other commodities, India has been a bright

spot in metallurgical coal, with imports expected to grow around 4.5 per

cent in CY2023, against a two per cent decline for the remainder of the

seaborne trade.

In the near term, we expect a modest improvement in seaborne demand

from OECD importing regions as they see a gradual pickup in their steel

industries, while India is expected to continue with its current momentum.

The availability of landborne imports, and the operational performance

of Chinese domestic mines, are key uncertainties for assessing what

China’s call on the seaborne trade might be in CY2024.

Over the longer term, we believe that higher quality metallurgical coals

(such as those produced by our BMA assets) will continue to be required

in blast furnace steel making for decades, driven by the growth of the steel

industry in hard coking coal importing countries such as India. In particular,

such higher quality hard coking coals are expected to be valued for their

role in reducing the greenhouse gas emissions intensity of blast furnaces.

And with the major seaborne supply region of Queensland having become

less conducive to long-life capital investment as a result of changes to the

royalty regime, the scarcity value of higher quality hard coking coals may

well increase over time.

Production

Metallurgical coal

BMA production of 29 Mt (58 Mt on a 100 per cent basis) was in line with

the prior period. The significant wet weather experienced in the first three

quarters was offset by strong underlying operational performance, in

particular continued improvement in truck productivity at Goonyella and

Daunia following the completion of their transitions to autonomous fleet.

Production for the period was further supported by a drawdown of raw coal

inventory and improved labour availability compared to the prior period.

84 BHP Annual Report 2023

9 Performance by commodity continued

Energy coal

NSWEC production increased by 3 per cent to 14.2 Mt driven by an

improvement in weather conditions in the second half of the year and an

uplift in truck productivity compared to the prior period. Additional deployed

capacity into the new mining area also resulted in an uplift in prime

stripping volumes.

Financial results

Coal revenue decreased by US$4.6 billion to US$11.0 billion in FY2023 mainly

due to lower average realised prices and divestment of BMC in the prior period.

Underlying EBITDA for Coal decreased by US$4.5 billion to US$5.0 billion.

Price impacts decreased Underlying EBITDA by US$2.1 billion, while

price-linked costs increased by US$0.5 billion, despite the lower price

environment, as a result of the new Queensland Government royalty

regime. The divestment of BMC in FY2022 reduced EBITDA in FY2023

by US$1.4 billion.

Lower volumes of US$0.2 billion were due to the timing of shipments while

controllable cash costs increased by US$0.2 billion primarily due to increased

maintenance activity, increased labour costs and inventory drawdowns due

to significant wet weather. Other items such as inflation and fuel and energy

costs reduced Underlying EBITDA by US$0.4 billion. This was partially offset

by favourable foreign exchange rate impacts of US$0.3 billion.

BMA unit costs increased by 8 per cent to US$96 per tonne primarily due to

inflationary cost pressures, higher maintenance activity and the drawdown

of mine inventories, which were partially offset by favourable exchange

rate movements.

NSWEC unit costs increased by 16 per cent to US$82 per tonne due to

inflationary cost pressures and higher port toll charges at the NCIG coal

export terminal, partially offset by favourable exchange rate movements.

Outlook

BMA coal production for FY2024 is expected to be between 28 and 31 Mt

(56 and 62 Mt on a 100 per cent basis).

During FY2024, the Group plans to rebuild BMA’s mine inventories which

have been drawn down over the past three years to balance the supply

chain and maximise value amidst the significant weather disruptions.

We are progressing with the sale of the Blackwater and Daunia mines

for value.

Given the negative impact on investment economics of the Queensland

Government’s decision to raise coal royalty rates and the increase in

sovereign risk as a result of this decision, we will not be investing in any

further growth in Queensland, however we will sustain and optimise our

existing operations.

BMA unit costs in FY2024 are expected to be between US$95 and

US$105 per tonne (based on an exchange rate of AUD/USD 0.67).

NSWEC production for FY2024 is expected to be between 13 and 15 Mt.

9.4 Other assets

Detailed below is an analysis of Other assets’ financial and operating

performance comparing FY2023 to FY2022.

Nickel West

Key drivers of Nickel West’s financial results

Price overview

The nickel industry moved into further surplus over the course of FY2023

as Indonesian supply continued to grow apace at a time of slowing economic

growth. Battery demand is anticipated to record healthy growth across

CY2023, but a de-stocking episode across the EV value chain early in

the year made its presence felt across all the battery raw materials.

Relatively tight fundamentals in Class-I exchange traded metal have

continued to co-exist with considerable over-supply of intermediates

and Class-II products.

Longer term, we believe nickel will be a core beneficiary of the electrification

mega-trend and that nickel sulphides will be particularly attractive.

Production

Nickel West production increased by 4 per cent to 80 kt due to an increased

proportion of concentrate and matte products and inventory drawdowns.

This was partially offset by the slower than planned ramp up of the refinery

following planned maintenance in the December 2022 quarter and a

heavy rain event at the Mt Keith operations in early April 2023 impacting

mine progression.

During the year, Nickel West experienced ongoing issues with the quality

and volume of ore deliveries from Mincor Resources containing high levels

of arsenic, and in March 2023 advised that it would no longer accept off-

specification product. In the second half, Nickel West purchased more third-

party products compared to the first half, including higher cost third-party

concentrate to offset the impact of the ore supply issues.

Financial results

Revenue increased by US$0.1 billion to US$2.0 billion in FY2023 reflecting

higher realised prices for nickel metal due to the sales mix offset by lower

realised prices for intermediate products.

Nickel West’s Underlying EBITDA decreased from US$0.4 billion in

FY2022 to US$0.2 billion in FY2023. Controllable cash costs increased by

US$0.2 billion driven by inventory drawdowns to mitigate disruption caused

by the heavy rain event at Mt Keith, unplanned outages and third-party ore

delivery issues. Other items such as inflation and fuel and energy costs

reduced Underlying EBITDA by US$0.2 billion. This was partially offset

by higher volumes of US$0.1 billion and favourable foreign exchange

rate impacts of US$0.1 billion.

Outlook

Production is expected to be between 77 and 87 kt in FY2024, weighted

to the second half of the year due to planned refinery maintenance in the

first half.

The West Musgrave nickel project in Western Australia is in early stages of

execution following the final investment decision by OZL in September 2022

(prior to the acquisition by BHP).

Potash

Potash recorded an Underlying EBITDA loss of US$205 million in FY2023,

compared to a loss of US$147 million in FY2022.

Our major potash project under development at Jansen is tracking to plan

with first production still targeted for the end of CY2026, compared to the

initial target of CY2027. During FY2024, we intend to transition from civil

works into steel and equipment installation on the surface and underground,

as well as continuing with equipment procurement. Port construction is also

expected to continue. The feasibility study for Jansen Stage 2 continues

to progress and is on track to be completed during FY2024.

9.5 Impact of changes

to commodity prices

The prices we obtain for our products are a key driver of value for BHP.

Fluctuations in these commodity prices affect our results, including cash

flows and asset values. The estimated impact of changes in commodity

prices in FY2023 on our key financial measures is set out below.

Impact on profit

after taxation

(US$M)

Impact on

Underlying

EBITDA

(US$M)

US¢1/lb on copper price 24 34

US$1/t on iron ore price 159 227

US$1/t on metallurgical coal price 12 17

US$1/t on energy coal price 9 13

US¢1/lb on nickel price 1 1

Governance Financial Statements Additional Information

BHP Annual Report 2023 85

Operating and Financial Review

10 Non-IFRS financial information

We use various non-IFRS financial information to reflect our underlying financial performance.

Non-IFRS financial information is not defined or specified under the requirements of IFRS, but is derived from the Group’s Consolidated Financial Statements

prepared in accordance with IFRS. The non-IFRS financial information and the below reconciliations included in this document are unaudited. The non-IFRS

financial information presented is consistent with how management review financial performance of the Group with the Board and the investment community.

Sections 10.1 and 10.2 outline why we believe non-IFRS financial information is useful and the calculation methodology. We believe non-IFRS financial

information provides useful information, however should not be considered as an indication of, or as a substitute for, statutory measures as an indicator of

actual operating performance (such as profit or net operating cash flow) or any other measure of financial performance or position presented in accordance

with IFRS, or as a measure of a company’s profitability, liquidity or financial position.

The following tables provide reconciliations between non-IFRS financial information and their nearest respective IFRS measure.

Exceptional items

To improve the comparability of underlying financial performance between reporting periods, some of our non-IFRS financial information adjusts the relevant

IFRS measures for exceptional items.

For more information on exceptional items refer to Financial Statements note 3 ‘Exceptional items’.

Exceptional items are those gains or losses where their nature, including the expected frequency of the events giving rise to them, and impact is

considered material to the Group’s Consolidated Financial Statements. The exceptional items included within the Group’s profit from Continuing

and Discontinued operations for the financial years are detailed below.

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

Continuing operations

Revenue − − −

Other income − 840 34

Expenses excluding net finance costs, depreciation, amortisation and impairments (103) (494) (545)

Depreciation and amortisation − − −

Net impairments − − (2,371)

Profit/(loss) from equity accounted investments, related impairments and expenses 215 (676) (1,456)

Profit/(loss) from operations 112 (330) (4,338)

Financial expenses (452) (290) (85)

Financial income − − −

Net finance costs (452) (290) (85)

Profit/(loss) before taxation (340) (620) (4,423)

Income tax (expense)/benefit (266) (454) (1,057)

Royalty-related taxation (net of income tax benefit) − − −

Total taxation (expense)/benefit (266) (454) (1,057)

Profit/(loss) after taxation from Continuing operations (606) (1,074) (5,480)

Discontinued operations

Profit/(loss) after taxation from Discontinued operations − 8,159 (317)

Profit/(loss) after taxation from Continuing and Discontinued operations (606) 7,085 (5,797)

Total exceptional items attributable to non-controlling interests (107) − (24)

Total exceptional items attributable to BHP shareholders (499) 7,085 (5,773)

Exceptional items attributable to BHP shareholders per share (US cents) (9.8) 140.0 (114.2)

Weighted basic average number of shares (Million) 5,064 5,061 5,057

86 BHP Annual Report 2023

10 Non-IFRS financial information continued

Non-IFRS financial information derived from Consolidated Income Statement

Underlying attributable profit

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

Profit after taxation from Continuing and Discontinued operations attributable to BHP shareholders 12,921 30,900 11,304

Total exceptional items attributable to BHP shareholders

499

(7,085) 5,773

Underlying attributable profit 13,420 23,815 17,077

1 For more information refer to Financial Statements note 3 ‘Exceptional items’.

Underlying basic earnings per share

Year ended 30 June

2023

US cents

2022

US cents

2021

US cents

Basic earnings per ordinary share 255.2 610.6 223.5

Exceptional items attributable to BHP shareholders per share

9.8

(140.0) 114.2

Underlying basic earnings per ordinary share 265.0 470.6 337.7

1 For more information refer to Financial Statements note 3 ‘Exceptional items’.

Underlying attributable profit – Continuing operations

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

Profit after taxation from Continuing and Discontinued operations attributable to BHP shareholders 12,921 30,900 11,304

(Profit)/loss after taxation from Discontinued operations attributable to members of BHP − (10,655) 225

Total exceptional items attributable to BHP shareholders

499 (7,085) 5,773

Total exceptional items attributable to BHP shareholders for Discontinued operations

−

8,159 (317)

Underlying attributable profit – Continuing operations 13,420 21,319 16,985

1 For more information refer to Financial Statements note 3 ‘Exceptional items’.

2 For more information refer to Financial Statements note 28 ‘Discontinued operations’.

Underlying basic earnings per share – Continuing operations

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

Underlying attributable profit – Continuing operations 13,420 21,319 16,985

Weighted basic average number of shares (Million)

5,064

5,061 5,057

Underlying attributable earnings per ordinary share – Continuing operations (US cents)

265.0

421.2 335.9

Underlying EBITDA

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

Profit from operations 22,932 34,106 25,515

Exceptional items included in profit from operations

(112)

330 4,338

Underlying EBIT

22,820

34,436 29,853

Depreciation and amortisation expense

5,061

5,683 5,084

Net impairments

515 2,507

Exceptional item included in Depreciation, amortisation and impairments

–

– (2,371)

Underlying EBITDA

27,956

40,634 35,073

1 For more information refer to Financial Statements note 3 ‘Exceptional items’.

Underlying EBITDA – Segment

Year ended 30 June 2023

US$M Copper Iron Ore Coal

Group and

unallocated

items/

eliminations

Total

Group

Profit from operations 5,281 14,376 4,295 (1,020) 22,932

Exceptional items included in profit from operations

(471) 295 – 64 (112)

Depreciation and amortisation expense 1,810 1,993 697 561 5,061

Net impairments 33 28 6 8 75

Underlying EBITDA 6,653 16,692 4,998 (387) 27,956

Governance Financial Statements Additional Information

BHP Annual Report 2023 87

Operating and Financial Review

Year ended 30 June 2022

US$M Copper Iron Ore Coal

Group and

unallocated

items/

eliminations

Total

Group

Profit from operations 6,249 18,823 9,582 (548) 34,106

Exceptional items included in profit from operations

81 648 (849) 450 330

Depreciation and amortisation expense 1,765 2,203 762 953 5,683

Net impairments 470 33 9 3 515

Underlying EBITDA 8,565 21,707 9,504 858 40,634

Year ended 30 June 2021

US$M Copper Iron Ore Coal

Group and

unallocated

items/

eliminations

Total

Group

Profit from operations 6,665 22,975 (2,144) (1,981) 25,515

Exceptional items included in profit from operations

144 1,319 1,567 1,308 4,338

Depreciation and amortisation expense 1,608 1,971 845 660 5,084

Net impairments 72 13 1,077 1,345 2,507

Exceptional item included in Depreciation, amortisation and impairments

− − (1,057) (1,314) (2,371)

Underlying EBITDA 8,489 26,278 288 18 35,073

1 For more information refer to Financial Statements note 3 ‘Exceptional items’.

2 Group and unallocated items includes functions, other unallocated operations, including Potash, Nickel West, West Musgrave (acquired on 2 May 2023 as part of the

acquisition of OZ Minerals Ltd), legacy assets and consolidation adjustments.

Year ended 30 June 2023

US$M

Profit from

operations

Exceptional

items included

in profit from

operations

Depreciation and

amortisation

Net

impairments

Exceptional

items included

in Depreciation,

amortisation and

impairments

Underlying

EBITDA

Potash (207) − 2 − − (205)

Nickel West 57 − 105 2 − 164

Other

(870) 64 454 6 − (346)

Total (1,020) 64 561 8 − (387)

Year ended 30 June 2022

US$M

Profit from

operations

Exceptional

items included

in profit from

operations

Depreciation

and amortisation

Net

impairments

Exceptional

items included

in Depreciation,

amortisation and

impairments

Underlying

EBITDA

Potash (149) − 2 − − (147)

Nickel West 327 − 91 2 − 420

Other

(726) 450 860 1 − 585

Total (548) 450 953 3 − 858

Year ended 30 June 2021

US$M

Profit from

operations

Exceptional

items included

in profit from

operations

Depreciation

and amortisation

Net

impairments

Exceptional

items included

in Depreciation,

amortisation and

impairments

Underlying

EBITDA

Potash (1,489) 1,320 2 1,314 (1,314) (167)

Nickel West 146 3 79 31 − 259

Other

(638) (15) 579 − − (74)

Total (1,981) 1,308 660 1,345 (1,314) 18

1 For more information refer to Financial Statements note 3 ‘Exceptional items’.

2 Other includes functions, other unallocated operations, including legacy assets, West Musgrave (acquired on 2 May 2023 as part of the acquisition of OZ Minerals Ltd)

and consolidation adjustments.

88 BHP Annual Report 2023

10 Non-IFRS financial information continued

Underlying EBITDA margin

Year ended 30 June 2023

US$M Copper Iron Ore Coal

Group and

unallocated

items/

eliminations

Total

Group

Revenue – Group production 14,164 24,791 10,958 2,009 51,922

Revenue – Third-party products 1,863 21 − 11 1,895

Revenue 16,027 24,812 10,958 2,020 53,817

Underlying EBITDA – Group production 6,635 16,693 4,998 (387) 27,939

Underlying EBITDA – Third-party products 18 (1) − − 17

Underlying EBITDA

6,653 16,692 4,998 (387) 27,956

Segment contribution to the Group’s Underlying EBITDA

23% 59% 18% 100%

Underlying EBITDA margin

47% 67% 46% 54%

Year ended 30 June 2022

US$M Copper Iron Ore Coal

Group and

unallocated

items/

eliminations

Total

Group

Revenue – Group production 13,946 30,748 15,549 1,860 62,103

Revenue – Third-party products 2,903 19 − 73 2,995

Revenue 16,849 30,767 15,549 1,933 65,098

Underlying EBITDA – Group production 8,529 21,707 9,504 858 40,598

Underlying EBITDA – Third-party products 36 − − − 36

Underlying EBITDA

8,565 21,707 9,504 858 40,634

Segment contribution to the Group’s Underlying EBITDA

22% 54% 24% 100%

Underlying EBITDA margin

61% 71% 61% 65%

Year ended 30 June 2021

US$M Copper Iron Ore Coal

Group and

unallocated

items/

eliminations

Total

Group

Revenue – Group production 13,482 34,457 5,154 1,543 54,636

Revenue – Third-party products 2,244 18 − 23 2,285

Revenue 15,726 34,475 5,154 1,566 56,921

Underlying EBITDA – Group production 8,425 26,277 288 18 35,008

Underlying EBITDA – Third-party products 64 1 − − 65

Underlying EBITDA

8,489 26,278 288 18 35,073

Segment contribution to the Group’s Underlying EBITDA

24% 75% 1% 100%

Underlying EBITDA margin

62% 76% 6% 64%

1 Group and unallocated items includes functions, other unallocated operations, including Potash, Nickel West, West Musgrave (acquired on 2 May 2023 as part of the

acquisition of OZ Minerals Ltd), legacy assets and consolidation adjustments. Revenue not attributable to reportable segments comprises the sale of freight and fuel

to third parties. Exploration and technology activities are recognised within relevant segments.

2 We differentiate sales of our production (which may include third-party product feed) from direct sales of third-party products to better measure our operational profitability

as a percentage of revenue. We may buy and sell third-party products to ensure a steady supply of product to our customers where there is occasional production

variability or shortfalls from our assets.

3 Percentage contribution to Group Underlying EBITDA, excluding Group and unallocated items.

4 Underlying EBITDA margin excludes third-party products.

Effective tax rate

Year ended 30 June

2023 2022 2021

Profit before

taxation

US$M

Income

tax expense

US$M %

Profit before

taxation

US$M

Income

tax expense

US$M %

Profit before

taxation

US$M

Income

tax expense

US$M %

Statutory effective tax rate 21,401 (7,077) 33.1 33,137 (10,737) 32.4 24,292 (10,616) 43.7

Adjusted for:

Exchange rate movements − 94 − (233) − (33)

Exceptional items

340 266 620 454 4,423 1,057

Adjusted effective tax rate 21,741 (6,717) 30.9 33,757 (10,516) 31.2 28,715 (9,592) 33.4

1 For more information refer to Financial Statements note 3 ‘Exceptional items’.

Governance Financial Statements Additional Information

BHP Annual Report 2023 89

Operating and Financial Review

Non-IFRS financial information derived from Consolidated Cash Flow Statement

Capital and exploration expenditure

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

Capital expenditure (purchases of property, plant and equipment) 6,733 5,855 5,612

Add: Exploration and evaluation expenditure 350 256 192

Capital and exploration expenditure (cash basis) – Continuing operations 7,083 6,111 5,804

Capital expenditure (purchases of property, plant and equipment) – Discontinued operations − 1,050 994

Add: Exploration and evaluation expenditure – Discontinued operations − 384 322

Capital and exploration expenditure (cash basis) – Discontinued operations − 1,434 1,316

Capital and exploration expenditure (cash basis) – Total operations 7,083 7,545 7,120

Free cash flow

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

Net operating cash flows from Continuing operations 18,701 29,285 25,883

Net investing cash flows from Continuing operations (13,065) (4,973) (6,325)

Free cash flow – Continuing operations 5,636 24,312 19,558

Net operating cash flows from Discontinued operations − 2,889 1,351

Net investing cash flows from Discontinued operations − (904) (1,520)

Net cash completion payment on merger of Petroleum with Woodside − (683) −

Cash and cash equivalents disposed on merger of Petroleum with Woodside − (399) −

Free cash flow – Discontinued operations − 903 (169)

Free cash flow – Total operations 5,636 25,215 19,389

Non-IFRS financial information derived from Consolidated Balance Sheet

Net debt and gearing ratio

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

Interest bearing liabilities – Current 7,173 2,622 2,628

Interest bearing liabilities – Non current 15,172 13,806 18,355

Total interest bearing liabilities 22,345 16,428 20,983

Comprising:

Borrowing 19,326 13,852 17,087

Lease liabilities 3,019 2,576 3,896

Less: Lease liability associated with index-linked freight contracts 287 274 1,025

Less: Cash and cash equivalents 12,428 17,236 15,246

Less: Net debt management related instruments

(1,572) (1,688) 557

Less: Net cash management related instruments

36 273 34

Less: Total derivatives included in net debt (1,536) (1,415) 591

Net debt 11,166 333 4,121

Net assets 48,530 48,766 55,605

Gearing 18.7% 0.7% 6.9%

1 Represents the net cross currency and interest rate swaps included within current and non-current other financial assets and liabilities.

2 Represents the net forward exchange contracts related to cash management included within current and non-current other financial assets and liabilities.

Net debt waterfall

Year ended 30 June

2023

US$M

2022

US$M

Net debt at the beginning of the period (333) (4,121)

Net operating cash flows 18,701 32,174

Net investing cash flows (13,065) (6,959)

Net financing cash flows (10,315) (22,767)

Net (decrease)/increase in cash and cash equivalents from Continuing and Discontinued operations (4,679) 2,448

Carrying value of interest bearing liability net (proceeds)/repayments (4,893) 2,194

Carrying value of debt related instruments settlements/(proceeds) 677 −

Carrying value of cash management related instruments (proceeds)/settlements (331) (378)

Fair value change on hedged loans 803 1,286

Fair value change on hedging derivatives (691) (1,277)

Foreign currency exchange rate changes on cash and cash equivalents (134) (458)

Lease additions (excluding leases associated with index-linked freight contracts) (472) (736)

Acquisition of subsidiaries and operations

(1,111) −

Divestment and demerger of subsidiaries and operations − 492

Other (2) 217

Non-cash movements (1,607) (476)

Net debt at the end of the period (11,166) (333)

1 US$1,111 million of Interest bearing liabilities were acquired on 2 May 2023 as part of the acquisition of OZ Minerals Ltd. Excludes US$104 million cash acquired which

is included in Net investing cash flows.

90 BHP Annual Report 2023

10 Non-IFRS financial information continued

Net operating assets

The following table reconciles Net operating assets for the Group to Net assets on the Consolidated Balance Sheet.

Year ended 30 June

2023

US$M

2022

US$M

Net assets

48,530

48,766

Less: Non-operating assets

Cash and cash equivalents (12,428) (17,236)

Trade and other receivables

(26) (72)

Other financial assets

(996) (1,363)

Current tax assets (508) (263)

Deferred tax assets (56) (56)

Add: Non-operating liabilities

Trade and other payables

277 201

Interest bearing liabilities 22,345 16,428

Other financial liabilities

1,764 1,851

Current tax payable 611 3,032

Non-current tax payable 68 87

Deferred tax liabilities 4,299 3,063

Net operating assets 63,880 54,438

Net operating assets

Copper 34,542 27,420

Iron Ore 16,643 16,823

Coal 7,266 7,650

Group and unallocated items

5,429 2,545

Total 63,880 54,438

1 Represents loans to associates, external finance receivable and accrued interest receivable included within other receivables.

2 Represents cross currency and interest rate swaps, forward exchange contracts related to cash management and investment in shares, other investments and receivables

contingent on outcome of future events relating to mining and regulatory approvals.

3 Represents accrued interest payable included within other payables.

4 Represents cross currency and interest rate swaps and forward exchange contracts related to cash management.

5 Group and unallocated items include functions, other unallocated operations, including Potash, Nickel West, West Musgrave (acquired on 2 May 2023 as part of the

acquisition of OZ Minerals Ltd), legacy assets and consolidation adjustments.

Governance Financial Statements Additional Information

BHP Annual Report 2023 91

Operating and Financial Review

Other non-IFRS financial information

Principal factors that affect Revenue, Profit from operations and Underlying EBITDA

The following table describes the impact of the principal factors that affected Revenue, Profit from operations and Underlying EBITDA for FY2023 and

relates them back to our Consolidated Income Statement.

For information on the method of calculation of the principal factors that affect Revenue, Profit from operations and Underlying EBITDA refer to

OFR 10.2.

Revenue

US$M

Total expenses,

Other income

and Profit/

(loss) from

equity

accounted

investments

US$M

Profit from

operations

US$M

Depreciation,

amortisation

and

impairments

and

Exceptional

Items

US$M

Underlying

EBITDA

US$M

Year ended 30 June 2022

Revenue 65,098

Other income 1,398

Expenses excluding net finance costs (32,371)

Profit/(loss) from equity accounted investments, related impairments and expenses (19)

Total other income, expenses excluding net finance costs and Profit/(loss)

from equity accounted investments, related impairments and expenses (30,992)

Profit from operations 34,106

Depreciation, amortisation and impairments

6,198

Exceptional item included in Depreciation, amortisation and impairments −

Exceptional items 330

Underlying EBITDA 40,634

Change in sales prices (9,182) − (9,182) − (9,182)

Price-linked costs − (83) (83) − (83)

Net price impact (9,182) (83) (9,265) − (9,265)

Change in volumes 1,637 (92) 1,545 − 1,545

Operating cash costs − (1,318) (1,318) − (1,318)

Exploration and business development − (108) (108) − (108)

Change in controllable cash costs

− (1,426) (1,426) − (1,426)

Exchange rates (5) 672 667 − 667

Inflation on costs − (1,412) (1,412) − (1,412)

Fuel, energy, and consumable price movements − (272) (272) − (272)

Non-cash − 7 7 − 7

One-off items − (411) (411) − (411)

Change in other costs (5) (1,416) (1,421) − (1,421)

Asset sales − − − − −

Ceased and sold operations (2,260) 826 (1,434) − (1,434)

New and acquired operations 315 (258) 57 − 57

Other (1,786) 1,052 (734) − (734)

Depreciation, amortisation and impairments − 1,062 1,062 (1,062) −

Exceptional items − 442 442 (442) −

Year ended 30 June 2023

Revenue 53,817

Other income 394

Expenses excluding net finance costs (31,873)

Profit/(loss) from equity accounted investments, related impairments and expenses 594

Total other income, expenses excluding net finance costs and Profit/(loss)

from equity accounted investments, related impairments and expenses (30,885)

Profit from operations 22,932

Depreciation, amortisation and impairments

5,136

Exceptional item included in Depreciation, amortisation and impairments −

Exceptional items (112)

Underlying EBITDA 27,956

1 Depreciation and impairments that we classify as exceptional items are excluded from depreciation, amortisation and impairments. Depreciation, amortisation

and impairments includes non-exceptional impairments of US$75 million (FY2022: US$515 million).

2 Collectively, we refer to the change in operating cash costs and change in exploration and business development as Change in controllable cash costs. Operating cash

costs by definition do not include non-cash costs. The change in operating cash costs also excludes the impact of exchange rates and inflation, changes in fuel, energy

costs and consumable costs, changes in exploration and evaluation and business development costs and one-off items. These items are excluded so as to provide

a consistent measurement of changes in costs across all segments, based on the factors that are within the control and responsibility of the segment.

92 BHP Annual Report 2023

10 Non-IFRS financial information continued

Underlying return on capital employed (ROCE)

Year ended 30 June

2023

US$M

2022

US$M

2021

US$M

Profit after taxation from Continuing and Discontinued operations 14,324 33,055 13,451

Exceptional items

606 (7,085) 5,797

Subtotal 14,930 25,970 19,248

Adjusted for:

Net finance costs 1,531 1,128 1,305

Exceptional items included within net finance costs

(452) (290) (85)

Income tax expense on net finance costs (342) (287) (337)

Profit after taxation excluding net finance costs and exceptional items 15,667 26,521 20,131

Net assets at the beginning of the period 48,766 55,605 52,175

Net debt at the beginning of the period 333 4,121 12,044

Capital employed at the beginning of the period 49,099 59,726 64,219

Net assets at the end of the period 48,530 48,766 55,605

Net debt at the end of the period 11,166 333 4,121

Capital employed at the end of the period 59,696 49,099 59,726

Average capital employed 54,398 54,413 61,973

Underlying return on capital employed 28.8% 48.7% 32.5%

1 For more information refer to Financial Statements note 3 ‘Exceptional items’.

Underlying return on capital employed (ROCE) by segment

Year ended 30 June 2023

US$M Copper Iron Ore Coal

Group and

unallocated

items/

eliminations

Total

Continuing

Discontinued

operations

Total

Group

Profit after taxation excluding net finance costs and

exceptional items 3,293 10,300 2,970 (896) 15,667 − 15,667

Average capital employed 27,738 15,323 6,281 5,056 54,398 − 54,398

Underlying return on capital employed 12% 67% 47% − 28.8% − 28.8%

Year ended 30 June 2022

US$M Copper Iron Ore Coal

Group and

unallocated

items/

eliminations

Total

Continuing

Petroleum

Discontinued

operations

Total

Group

Profit after taxation excluding net finance costs and

exceptional items 3,981 13,896 6,293 (256) 23,914 2,607 26,521

Average capital employed 24,310 15,275 6,893 3,196 49,674 4,739 54,413

Underlying return on capital employed 16% 91% 91% − 48.1% – 48.7%

1 Group and unallocated items includes functions, other unallocated operations, including Potash, Nickel West, West Musgrave (acquired on 2 May 2023 as part of the

acquisition of OZ Minerals Ltd), legacy assets and consolidation adjustments.

Underlying return on capital employed (ROCE) by asset

Year ended 30 June 2023

US$M

Western

Australia

Iron Ore Antamina Escondida

BHP

Mitsubishi

Alliance

Pampa

Norte

Copper

South

Australia

Nickel

West Potash

New

South

Wales

Energy

Coal

Other

Total

Continuing

Discontinued

operations

Total

Group

Profit after taxation

excluding net finance costs

and exceptional items 10,318 426 2,808 1,837 131 166 (49) (137) 1,212 (1,045) 15,667 − 15,667

Average capital employed 19,420 1,314 10,183 6,672 4,278 11,681 1,114 4,020 (591) (3,693) 54,398 − 54,398

Underlying return on

capital employed 53% 32% 28% 28% 3% 1% (4%) − − − 28.8% − 28.8%

Year ended 30 June 2022

US$M

Western

Australia

Iron Ore Antamina Escondida

BHP

Mitsubishi

Alliance

Pampa

Norte

Copper

South

Australia

Nickel

West Potash

New

South

Wales

Energy

Coal

Other

Total

Continuing

Petroleum

Discontinued

operations

Total

Group

Profit after taxation

excluding net finance costs

and exceptional items 14,051 684 3,346 4,153 81 (9) 250 (123) 1,309 172 23,914 2,607 26,521

Average capital employed 18,783 1,284 9,891 6,725 4,380 8,660 650 3,321 (413) (3,607) 49,674 4,739 54,413

Underlying return on

capital employed 75% 53% 34% 62% 2% (0%) 38% − − − 48.1% – 48.7%

1 Includes Olympic Dam as well as Prominent Hill and Carrapateena which were acquired on 2 May 2023 as part of the acquisition of OZ Minerals Ltd.

2 Potash ROCE has not been shown because it is distorted as the asset is non-producing and in its development phase.

3 NSWEC ROCE has not been shown as it is distorted by negative capital employed due to the rehabilitation provision being the primary balance remaining on Balance Sheet

following previous impairments.

4 Includes West Musgrave (acquired on 2 May 2023 as part of the acquisition of OZ Minerals Ltd) which has not been shown because ROCE is distorted as the asset is non-

producing and in its development phase.

Governance Financial Statements Additional Information

BHP Annual Report 2023 93

Operating and Financial Review

Units costs

Unit costs do not include the review of employee entitlements and allowances which are included in Group and unallocated.

For further information refer to Financial Statements note 27 ‘Employee benefits, restructuring and post-retirement employee

benefits provisions’.

The calculation of Escondida and Spence unit costs is set out in the table below.

US$M

Escondida unit costs Spence unit costs

FY2023 FY2022 FY2023 FY2022

Revenue

8,847

9,500

2,072

2,146

Underlying EBITDA

4,934 6,198 767

1,170

Gross costs

3,913 3,302 1,305

976

Less: by-product credits

459 430 137

Less: freight

202 230 48

Net costs

3,252 2,642 1,120

842

Sales (kt)

1,051 1,001 241

224

Sales (Mlb)

2,317 2,206 531

494

Cost per pound (US$)

1.40 1.20 2.11 1.70

1 FY2023 based on average realised exchange rates of USD/CLP 864 (FY2022 USD/CLP 811).

The calculation of WAIO unit costs is set out in the table below.

US$M

WAIO unit costs

FY2023 FY2022

Revenue 24,678 30,632

Underlying EBITDA

16,660

21,788

Gross costs

8,018

8,844

Less: freight

1,876

2,497

Less: royalties

1,714

2,134

Net costs

4,428

4,213

Sales (kt, equity share)

248,883

250,688

Cost per tonne (US$)

17.79 16.81

1 FY2023 based on an average realised exchange rate of AUD/USD 0.67 (FY2022 AUD/USD 0.73).

The calculation of BMA and NSWEC unit costs is set out in the table below.

US$M

BMA unit costs NSWEC unit costs

FY2023 FY2022 FY2023 FY2022

Revenue

7,652

10,254

3,306

3,034

Underlying EBITDA

3,197 6,335 1,840

1,807

Gross costs

4,455 3,919 1,466

1,227

Less: freight

32 50 −

−

Less: royalties

1,667 1,282 324

227

Net costs

2,756 2,587 1,142

1,000

Sales (kt, equity share)

28,571 29,049 13,864

14,124

Cost per tonne (US$)

96.46 89.06 82.37 70.80

1 FY2023 based on an average realised exchange rate of AUD/USD 0.67 (FY2022 AUD/USD 0.73).

94 BHP Annual Report 2023

10 Non-IFRS financial information continued

10.1 Definition and calculation of non-IFRS financial information

Non-IFRS financial

information

Reasons why we believe the non-IFRS financial information

are useful Calculation methodology

Underlying attributable

profit

Allows the comparability of underlying financial performance

by excluding the impacts of exceptional items.

Allows the comparability of underlying financial performance by

excluding the impacts of exceptional items and the contribution

of Discontinued operations and is also the basis on which our

dividend payout ratio policy is applied.

Profit after taxation from Continuing and Discontinued operations

attributable to BHP shareholders excluding any exceptional items

attributable to BHP shareholders.

Underlying attributable

profit – Continuing

operations

Underlying attributable profit from Continuing operations also

excludes the contribution of Discontinued operations from the

above metrics.

Underlying basic

earnings per share

On a per share basis, allows the comparability of underlying

financial performance by excluding the impacts of exceptional

items.

On a per share basis, allows the comparability of underlying

financial performance by excluding the impacts of exceptional

items and the contribution of Discontinued operations.

Underlying attributable profit divided by the weighted basic average

number of shares.

Underlying basic

earnings per share –

Continuing operations

Underlying attributable profit – Continuing operations divided

by the weighted basic average number of shares.

Underlying EBITDA Used to help assess current operational profitability excluding

the impacts of sunk costs (i.e. depreciation from initial investment).

Each is a measure that management uses internally to assess

the performance of the Group’s segments and make decisions

on the allocation of resources.

Earnings before net finance costs, depreciation, amortisation

and impairments, taxation expense, Discontinued operations

and exceptional items. Underlying EBITDA includes BHP’s share

of profit/(loss) from investments accounted for using the equity

method including net finance costs, depreciation, amortisation

and impairments and taxation expense/(benefit).

Underlying EBITDA

margin

Underlying EBITDA excluding third-party product EBITDA,

divided by revenue excluding third-party product revenue.

Underlying EBIT Used to help assess current operational profitability excluding net

finance costs and taxation expense (each of which are managed

at the Group level) as well as Discontinued operations and any

exceptional items.

Earnings before net finance costs, taxation expense, Discontinued

operations and any exceptional items. Underlying EBIT includes

BHP’s share of profit/(loss) from investments accounted for

using the equity method including net finance costs and taxation

expense/(benefit).

Profit from operations Earnings before net finance costs, taxation expense and

Discontinued operations. Profit from operations includes Revenue,

Other income, Expenses excluding net finance costs and BHP’s

share of profit/(loss) from investments accounted for using the equity

method including net finance costs and taxation expense/(benefit).

Capital and exploration

expenditure

Used as part of our Capital Allocation Framework to assess

efficient deployment of capital. Represents the total outflows

of our operational investing expenditure.

Represents the total outflows of our operational investing

expenditure excluding the contribution of Discontinued operations.

Purchases of property, plant and equipment and exploration

and evaluation expenditure including the contribution of

Discontinued operations.

Capital and exploration

expenditure –

Continuing operations

Purchases of property, plant and equipment and exploration

and evaluation expenditure.

Free cash flow It is a key measure used as part of our Capital Allocation

Framework. Reflects our operational cash performance inclusive

of investment expenditure, which helps to highlight how much

cash was generated in the period to be available for the

servicing of debt and distribution to shareholders.

Reflects our operational cash performance inclusive of

investment expenditure, but excluding the contribution

of Discontinued operations.

Net operating cash flows less net investing cash flows.

Free cash flow –

Continuing operations

Net operating cash flows from Continuing operations less

net investing cash flows from Continuing operations.

Net debt Net debt shows the position of gross debt less index-linked

freight contracts offset by cash immediately available to pay debt

if required and any associated derivative financial instruments.

Liability associated with index-linked freight contracts, which are

required to be remeasured to the prevailing freight index at each

reporting date, are excluded from the net debt calculation due

to the short-term volatility of the index they relate to not aligning

with how the Group uses net debt for decision making in relation

to the Capital Allocation Framework. Net debt includes the fair

value of derivative financial instruments used to hedge cash

and borrowings to reflect the Group’s risk management strategy

of reducing the volatility of net debt caused by fluctuations in

foreign exchange and interest rates.

Net debt, along with the gearing ratio, is used to monitor the

Group’s capital management by relating net debt relative to

equity from shareholders.

Interest bearing liabilities less liability associated with index-linked

freight contracts less cash and cash equivalents less net cross

currency and interest rate swaps less net cash management

related instruments for the Group at the reporting date.

Gearing ratio Ratio of Net debt to Net debt plus Net assets.

Net operating assets Enables a clearer view of the assets deployed to generate

earnings by highlighting the net operating assets of the business

separate from the financing and tax balances. This measure

helps provide an indicator of the underlying performance of

our assets and enhances comparability between them.

Operating assets net of operating liabilities, including the carrying

value of equity accounted investments and predominantly excludes

cash balances, loans to associates, interest bearing liabilities,

derivatives hedging our net debt, assets held for sale, liabilities

directly associated with assets held for sale and tax balances.

Governance Financial Statements Additional Information

BHP Annual Report 2023 95

Operating and Financial Review

Non-IFRS financial

information

Reasons why we believe the non-IFRS financial information

are useful Calculation methodology

Underlying return on

capital employed (ROCE)

Indicator of the Group’s capital efficiency and is provided on an

underlying basis to allow comparability of underlying financial

performance by excluding the impacts of exceptional items.

Profit after taxation excluding exceptional items and net finance

costs (after taxation) divided by average capital employed.

Profit after taxation excluding exceptional items and net finance

costs (after taxation) is profit after taxation from Continuing and

Discontinued operations excluding exceptional items, net finance

costs and the estimated taxation impact of net finance costs.

These are annualised for a half year end reporting period.

The estimated tax impact is calculated using a prima facie taxation

rate on net finance costs (excluding any foreign exchange impact).

Average capital employed is calculated as the average of net assets

less net debt for the last two reporting periods.

Adjusted effective

tax rate

Provides an underlying tax basis to allow comparability of

underlying financial performance by excluding the impacts

of exceptional items.

Total taxation expense/(benefit) excluding exceptional items and

exchange rate movements included in taxation expense/(benefit)

divided by Profit before taxation from Continuing operations

excluding exceptional items.

Unit cost Used to assess the controllable financial performance of the

Group’s assets for each unit of production. Unit costs are adjusted

for site specific non-controllable factors to enhance comparability

between the Group’s assets.

Ratio of net costs of the assets to the equity share of sales

tonnage. Net costs is defined as revenue less Underlying EBITDA

and excludes freight and other costs, depending on the nature of

each asset. Freight is excluded as the Group believes it provides

a similar basis of comparison to our peer group.

Escondida and Spence unit costs exclude:

– by-product credits being the favourable impact of by-products

(such as gold or silver) to determine the directly attributable

costs of copper production.

WAIO, BMA and NSWEC unit costs exclude:

– royalties as these are costs that are not deemed to be under

the Group’s control, and the Group believes exclusion provides

a similar basis of comparison to our peer group.

10.2 Definition and calculation of principal factors

The method of calculation of the principal factors that affect the period on period movements of Revenue, Profit from operations and Underlying EBITDA

are as follows:

Principal factor Method of calculation

Change in sales prices Change in average realised price for each operation from the prior period to the current period, multiplied by current

period sales volumes.

Price-linked costs

Change in price-linked costs (mainly royalties) for each operation from the prior period to the current period, multiplied

by current period sales volumes.

Change in volumes Change in sales volumes for each operation multiplied by the prior year average realised price less variable unit cost.

Controllable cash costs Total of operating cash costs and exploration and business development costs.

Operating cash costs Change in total costs, other than price-linked costs, exchange rates, inflation on costs, fuel, energy, and consumable

price movements, non-cash costs and one-off items as defined below for each operation from the prior period to the

current period.

Exploration and evaluation

and business development

Exploration and evaluation and business development expense in the current period minus exploration and business

development expense in the prior period.

Exchange rates Change in exchange rate multiplied by current period local currency revenue and expenses.

Inflation on costs Change in inflation rate applied to expenses, other than depreciation and amortisation, price-linked costs,

exploration and business development expenses, expenses in ceased and sold operations and expenses in new

and acquired operations.

Fuel, energy, and consumable

price movements

Fuel and energy expense and price differences above inflation on consumables in the current period minus fuel

and energy expense in the prior period.

Non-cash Change in net impact of capitalisation and depletion of deferred stripping from the prior period to the current period.

One-off items Change in costs exceeding a pre-determined threshold associated with an unexpected event that had not occurred

in the last two years and is not reasonably likely to occur within the next two years.

Asset sales Profit/(loss) on the sale of assets or operations in the current period minus profit/(loss) on sale of assets or operations

in the prior period.

Ceased and sold operations Underlying EBITDA for operations that ceased or were sold in the current period minus Underlying EBITDA for

operations that ceased or were sold in the prior period.

New and acquired operations Underlying EBITDA for operations that were acquired in the current period minus Underlying EBITDA for operations

that were acquired in the prior period.

Share of profit/(loss) from equity

accounted investments

Share of profit/(loss) from equity accounted investments for the current period minus share of profit/(loss) from equity

accounted investments in the prior period.

Other Variances not explained by the above factors.

96 BHP Annual Report 2023

11 Other information

11.1 Company details

BHP Group Limited’s registered office and global headquarters are at 171

Collins Street, Melbourne, Victoria 3000, Australia. ‘BHP’, the ‘Company’, the

‘Group’, ‘our business’, ‘organisation’, ‘we’, ‘us’, ‘our’ and ‘ourselves’ refer to

BHP Group Limited, and except where the context otherwise requires, our

subsidiaries. Refer to Financial Statements note 30 ‘Subsidiaries’ for a list of

our significant subsidiaries. Those terms do not include non-operated assets.

This Report covers functions and assets (including those under exploration,

projects in development or execution phases, sites and closed operations)

that have been wholly owned and/or operated by BHP or that have been

owned as a BHP-operated joint venture

operated by BHP (referred to in

this Report as ‘operated assets’ or ‘operations’) from 1 July 2022 to 30 June

2023. On 2 May 2023, we completed our acquisition of OZ Minerals Limited

and its subsidiaries (OZ Minerals). This Report includes the OZ Minerals

data and information that is required to be disclosed under legal and

regulatory requirements or necessary to meet applicable voluntary standards

and benchmarks. The Annual Report includes financial and production

data for OZ Minerals for the period from the date of acquisition and other

information relating to OZ Minerals where expressly stated, including

Additional Information 2, 4 and 5. OZ Minerals information and data is not

otherwise included in the Annual Report unless otherwise stated.

BHP also holds interests in assets that are owned as a joint venture but not

operated by BHP (referred to in this Report as ‘non-operated joint ventures’

or ‘non-operated assets’). Notwithstanding that this Report may include

production, financial and other information from non-operated assets,

non-operated assets are not included in the BHP Group and, as a result,

statements regarding our operations, assets and values apply only to our

operated assets unless stated otherwise. BHP Group Limited has, a primary

listing on the Australian Securities Exchange. BHP holds a standard listing on

the London Stock Exchange, a secondary listing on the Johannesburg Stock

Exchange and an ADR program listed on the New York Stock Exchange.

11.2 Forward-looking statements

This Report contains forward-looking statements, which involve risks and

uncertainties. Forward-looking statements include all statements, other than

statements of historical or present facts, including: statements regarding trends

in commodity prices and currency exchange rates; demand for commodities;

global market conditions, reserves and resources and production forecasts;

expectations, plans, strategies and objectives of management; climate

scenarios; approval of certain projects and consummation of certain

transactions; closure, divestment, acquisition or integration of certain assets,

operations or facilities (including associated costs or benefits); anticipated

production or construction commencement dates; capital costs and

scheduling; operating costs and supply of materials and skilled employees;

anticipated productive lives of projects, mines and facilities; the availability,

implementation and adoption of new technologies; provisions and contingent

liabilities; and tax, legal and other regulatory developments. Forward-looking

statements may be identified by the use of terminology, including, but not

limited to, ‘intend’, ‘aim’, ‘ambition’, ‘aspiration’, ‘goal’, ‘target’, ‘project’, ‘see’,

‘anticipate’, ‘estimate’, ‘plan’, ‘objective’, ‘believe’, ‘expect’, ‘commit’, ‘may’,

‘should’, ‘need’, ‘must’, ‘will’, ‘would’, ‘continue’, ‘forecast’, ‘guidance’, ‘trend’ or

similar words. These statements discuss future expectations or performance,

or provide other forward-looking information.

Examples of forward-looking statements contained in this Report include,

without limitation, statements describing (i) our strategy, our values and

how we define our success; (ii) our expectations regarding future demand

for certain commodities, in particular copper, nickel, iron ore, metallurgical

coal, potash and steel, and our intentions, commitments or expectations

with respect to our supply of certain commodities, including copper,

nickel, iron ore, potash, uranium and gold; (iii) our future exploration and

partnership plans and perceived benefits and opportunities, including our

focus to grow our copper, nickel and potash assets; (iv) the structure of

our organisation and portfolio and perceived benefits and opportunities; (v)

our business outlook, including our outlook for long-term economic growth

and other macroeconomic and industry trends; (vi) our projected and

expected production and performance levels and development projects;

(vii) our expectations regarding our investments, including in potential

growth options and technology and innovation, and perceived benefits and

opportunities; (viii) our reserves and resources; (ix) our plans for our major

projects and related budget and capital allocations; (x) our expectations,

commitments and objectives with respect to sustainability, decarbonisation,

natural resource management, climate change and portfolio resilience

and timelines and plans to seek to achieve or implement such objectives,

including our 2030 goals and ‘Pathway to 2030’, our approach to equitable

change and transitions, our Climate Transition Action Plan, Climate

Change Adaptation Strategy and goals, targets and strategies to seek to

reduce or support the reduction of greenhouse gas emissions, and related

perceived costs, benefits and opportunities for BHP; (xi) the assumptions,

beliefs and conclusions in our climate change related statements and

strategies, including in our Climate Change Report 2020, for example, in

respect of future temperatures, energy consumption and greenhouse gas

emissions, and climate-related impacts; (xii) our commitment to social

value; (xiii) our commitments to sustainability reporting, frameworks,

standards and initiatives; (xiv) our commitments to improve or maintain

safe tailings storage management; (xv) our commitments to achieve

certain inclusion and diversity targets, aspirations and outcomes; (xvi)

our commitments to achieve certain targets and outcomes with respect to

Indigenous peoples and the communities where we operate; and (xvii) our

commitments to achieve certain health and safety targets and outcomes.

Forward-looking statements are based on management’s expectations and

reflect judgements, assumptions, estimates and other information available,

as at the date made. BHP cautions against reliance on any forward-looking

statements. These statements do not represent guarantees or predictions of

future financial or operational performance and involve known and unknown

risks, uncertainties and other factors, many of which are beyond our control and

which may cause actual results to differ materially from those expressed in the

statements contained in this Report. For example, our future revenues from our

assets, projects or mines described in this Report will be based, in part, on the

market price of the commodities produced, which may vary significantly from

current levels. These variations, if materially adverse, may affect the timing

or the feasibility of the development of a particular project, the expansion of

certain facilities or mines, or the continuation of existing assets. In addition, there

are limitations with respect to scenario analysis, including any climate-related

scenario analysis, and it is difficult to predict which, if any, of the scenarios might

eventuate. Scenario analysis is not an indication of probable outcomes and

relies on assumptions that may or may not prove to be correct or eventuate.

Other factors that may affect the actual construction or production

commencement dates, revenues, costs or production output and

anticipated lives of assets, mines or facilities include: (i) our ability to

profitably produce and deliver the products extracted to applicable markets;

(ii) the impact of economic and geopolitical factors, including foreign

currency exchange rates on the market prices of the commodities we

produce and competition in the markets in which we operate; (iii) activities

of government authorities in the countries where we sell our products and

in the countries where we are exploring or developing projects, facilities

or mines, including increases in taxes and royalties or implementation

of trade or export restrictions; (iv) changes in environmental and other

regulations; (v) political or geopolitical uncertainty; (vi) labour unrest; and

(vii) other factors identified in the risk factors set out in OFR 8.1.

Except as required by applicable regulations or by law, BHP does not

undertake to publicly update or review any forward-looking statements,

whether as a result of new information or future events. Past performance

cannot be relied on as a guide to future performance.

Emissions and energy consumption data

Due to the inherent uncertainty and limitations in measuring greenhouse gas

(GHG) emissions and operational energy consumption under the calculation

methodologies used in the preparation of such data, all GHG emissions and

operational energy consumption data or references to GHG emissions and

operational energy consumption volumes (including ratios or percentages)

in this Report are estimates. There may also be differences in the manner

that third parties calculate or report GHG emissions or operational energy

consumption data compared to BHP, which means third-party data may not

be comparable to our data.

For information on how we calculate our GHG emissions and

operational energy consumption data refer to the BHP Scopes 1, 2

and 3 GHG Emissions Calculation Methodology 2023 available at

bhp.com/climate

This Report is made in accordance with a resolution of the Board.

Ken MacKenzie

Chair

Dated: 22 August 2023

1 References in this Annual Report to a ‘joint venture’ are used for convenience to

collectively describe assets that are not wholly owned by BHP. Such references are

not intended to characterise the legal relationship between the owners of the asset.

GovernanceOperating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 97

Governance

Corporate Governance Statement

1 Corporate governance at BHP 98

2 FY2023 corporate governance highlights 98

3 BHP’s governance structure 99

4 Board composition and succession 100

5 Board Committees 104

6 Management 107

7 Shareholders and reporting 108

8 Culture and conduct 109

9 Risk management and assurance 110

10 US requirements 111

Directors’ Report

1 Review of operations, principal activities

and state of affairs

112

2 Directors 112

3 Share interests 112

4 Share capital and buy-back programs 113

5 Secretaries 114

6 Indemnities and insurance 114

7 Dividends 114

8 Auditors 114

9 Non-audit services 114

10 Exploration, research and development 114

11 ASIC Instrument 2016/191 114

12 Proceedings on behalf of BHP Group Limited 114

13 Performance in relation to environmental regulation 114

14 Additional information 114

Remuneration Report

People and Remuneration Committee Chair letter

to shareholders

116

1 Remuneration governance 118

2 Executive KMP remuneration framework 119

3 Remuneration for the CEO and other Executive KMP 121

4 Remuneration for Non-executive Directors 127

5 Statutory KMP remuneration and other disclosures 128

98 BHP Annual Report 2023

1 Corporate governance at BHP

Good corporate governance underpins the way we conduct business.

This Corporate Governance Statement sets out the corporate governance framework currently in place for the Group, including the key policies

and practices.

BHP was fully compliant with the Recommendations of the fourth edition of the ASX Corporate Governance Council’s Corporate Governance Principles

and Recommendations (ASX Fourth Edition) throughout FY2023. The ASX Fourth Edition is available at asx.com.au.

BHP also complied with the governance requirements that apply to us as a result of our London Stock Exchange (LSE) and New York Stock Exchange

(NYSE) listings and our registration with the Securities and Exchange Commission (SEC) in the United States.

This Corporate Governance Statement is current as at 22 August 2023 and has been approved by the Board.

More information about our corporate governance framework and practices can be found on our website at bhp.com/governance, which includes links

to our Appendix 4G and each of the publicly available documents referenced in this Corporate Governance Statement.

2 FY2023 corporate governance highlights

Key highlights

External Board evaluation

An external Board evaluation was conducted to

assess performance and effectiveness of the

Board as a whole and its Committees.

Governance review

A review was undertaken of the Board

Governance Document and Committee

Charters. The aim was to review

Board and Committee responsibilities

and streamline and modernise

these documents.

Investor engagement

We facilitated several investor engagement

events and held presentations and

briefings on key topics, for example

operational decarbonisation, our Industry

Association Review and climate-related

financial disclosures.

Diversity

We achieved gender balance on our Board in

FY2023 (which we define as a minimum 40

per cent women and 40 per cent men in line

with the definition used by entities such as the

International Labour Organization).

Financial Statements Additional Information

BHP Annual Report 2023 99

Governance

3 BHP’s governance structure

Operating and Financial Review

Board

The Board has ultimate responsibility for overseeing BHP’s governance.

The role of the Board, as set out in the Board Governance Document, is

to represent shareholders and promote and protect the interests of BHP

in the short and long term.

The Board Governance Document outlines the Board’s responsibilities and

processes, including the matters specifically reserved for the Board, the

authority delegated to the CEO and the accountability of the CEO for that

authority, and guidance on the management of the relationship between

the Board and the CEO. The Board Governance Document was updated

in FY2023 as part of the governance review with effect from 1 July 2023.

The matters reserved for the Board as set out in the revised Board

Governance Document include:

– appointing the CEO and determining the terms of appointment

– approving the appointment of Executive Leadership Team (ELT) members

and material changes to the organisational structure involving direct reports

to the CEO

– succession planning for the CEO and direct reports to the CEO

– monitoring the performance of the CEO and the Group

– monitoring Board composition, processes and performance

– approving the Group’s values, Our Code of Conduct, purpose and risk appetite

– establishing, approving and assessing measurable objectives for achieving

gender diversity in the composition of the Board, senior executives and

workforce generally and assessing the Group’s progress in achieving those

measurable objectives

– approving strategy, annual budgets, balance sheet management and

funding strategy

– approving commitments, capital and non-capital items, acquisitions and

divestments above specified limits

– approving the dividend policy and determining dividends

– approving significant social, community and sustainability policies, including

those related to climate change and public sustainability goals and targets

– reviewing and monitoring the effectiveness of the Group’s systems of

principal and emerging financial and non-financial risk management and

internal control, and making sure there is an appropriate risk management

framework in place

– determining and adopting documents (including the publication of reports

and statements to shareholders) that are required by BHP’s Constitution,

statute or by other external regulation

– determining and approving matters that are required by BHP’s Constitution,

statute or by other external regulation to be determined or approved by

the Board

The Board Governance Document is available at bhp.com/governance.

Committees

The Board has established Committees to assist it in exercising its authority,

including monitoring the performance of BHP, to gain assurance that

progress is being made towards our purpose within the limits delegated by

the Board. There are four Committees: the Nomination and Governance

Committee, Risk and Audit Committee, Sustainability Committee and People

and Remuneration Committee (previously referred to as the Remuneration

Committee prior to 1 July 2023). Each Committee is delegated authority by

the Board under its Charter. These Charters were updated in FY2023 as part

of the governance review and are available at bhp.com/governance.

More information on each of the Committees

is set out in section 5.

Chair

The Chair is responsible for leading the Board and ensuring it operates to high

governance standards. In particular, the Chair facilitates constructive Board

relations and the effective contribution of all Non-executive Directors.

Group Company Secretary

The Group Company Secretary is accountable to the Board and advises the

Chair, the Board and individual Directors on all matters of governance process.

Chief Executive Officer

The Chief Executive Officer (CEO) is accountable to the Board for the

authority that is delegated to the CEO and for the performance of the Group.

The CEO works in a constructive partnership with the Board and is required

to report regularly to the Board on progress.

Access to management

The Board has extensive access to members of senior management who

frequently attend Board and Committee meetings. Management makes

presentations and engages in discussions with Directors, answers questions

and provides input and perspective on their areas of responsibility.

The Board also engages with members of management at site visits.

The Board also holds discussions in the absence of management at each

Board meeting.

Governance structure

Board

Shareholders

Nomination and

Governance Committee

Risk and

Audit Committee

Sustainability

Committee

People and

Remuneration Committee

CEO

Executive Leadership Team

Our People

100 BHP Annual Report 2023

Skills and experience

Gary Goldberg has over 35 years’ global executive

experience, including deep experience in mining, strategy,

risk, commodity value chain, capital allocation discipline

and public policy.

Gary was the Chief Executive Officer of Newmont

Corporation (from 2013 to 2019), and prior to that,

President and Chief Executive Officer of Rio Tinto

Minerals. Gary has also been a Non-executive Director

of Port Waratah Coal Services Limited and Rio Tinto

Zimbabwe, and served as Vice Chair of the World Gold

Council, Treasurer of the International Council on Mining

and Metals, and Chair of the National Mining Association

in the United States.

Gary is recognised for his leadership in bringing the

mining industry together to raise standards in safety

and environmental performance in conjunction with

community and government partnerships in America and

around the world. He has management experience in

implementing strategies focused on safety, decarbonisation

and transformational investment for commodities with

long-dated cycles, along with his contribution to policy

development in environmental management globally.

Current appointments

Gary is a Director of Imperial Oil Limited (since May 2023).

Gary

Goldberg

BS (Mining

Engineering), MBA

Independent Non-

executive Director

since February 2020.

Senior Independent

Director since

21 December 2020.

NG S

4 Board composition and succession

4.1 Board of Directors

The Board currently has 10 members. The Directors’ qualifications, experience and special responsibilities are listed below.

Skills and experience

Mike Henry has over 30 years’ experience in the global

mining and petroleum industry, spanning operational,

commercial, safety, technology and marketing roles.

Mike joined BHP in 2003 and has been a member of the

Executive Leadership Team since 2011. Prior to joining

BHP, Mike worked in the resources industry in Canada,

Japan and Australia.

Mike brings deep operational and market knowledge

across a range of commodities and a strategic approach

to resource and skills development to implement BHP’s

strategy and future growth options that will support global

economic growth and decarbonisation. He is focused on

creating safe, high-performance culture, enabled by an

inclusive workplace in which people are empowered at

every level through the BHP operating system.

Mike is committed to building strong relationships

with governments, Indigenous partners, community

stakeholders and business partners to ensure BHP’s

activities deliver mutual benefit to these stakeholders

while driving strong value for shareholders. Mike brings

a disciplined approach to the Board’s considerations of

capital allocation in assets, technology, commodities and

risk management.

Mike

Henry

BSc (Chemistry)

Non-independent

Director since

January 2020

Chief Executive Officer

since 1 January 2020.

Skills and experience

Terry Bowen has significant executive experience across

a range of diversified industries, with deep financial and

risk management, capital allocation and supply chain

management expertise.

Terry was formerly Managing Partner and Head of

Operations at BGH Capital and an Executive Director and

Finance Director of Wesfarmers Limited. Prior to this, Terry

held senior executive roles within Wesfarmers, including as

Finance Director of Coles, Managing Director of Industrial

and Safety, and Finance Director of Wesfarmers Landmark.

Terry brings extensive experience in the development and

oversight of complex frameworks for the identification,

assessment and assurance of risk, a systematic focus

on financial discipline and delivery of attractive returns to

shareholders. Terry has insightful perspectives from working

in industries that impact on consumers, their communities

and policy formation.

Current appointments

Terry is a Non-executive Director of Coles Group Limited

(since October 2022), Chair of the Operations Group

at BGH Capital (since January 2020) and a Director of

Transurban Group (since February 2020), Navitas Pty

Limited (since July 2019) and the West Coast Eagles

Football Club (since May 2017).

Terry

Bowen

BAcct, FCPA, MAICD

Independent Non-

executive Director

since October 2017.

RA NG

Skills and experience

Xiaoqun Clever has over 20 years’ experience in technology

with a focus on software engineering, data and AI,

cybersecurity and digitalisation.

Xiaoqun was formerly Chief Technology Officer of Ringier AG

and ProSiebenSat.1 Media SE and Chief Operating Officer

of Technology and Innovation at SAP and President of SAP

Labs China.

Xiaoqun brings significant expertise in the development,

selection and implementation of business transforming

technology, innovation and assessment of opportunities and

risks in digital disruption. She has knowledge and relationships

across the technology and innovation start-up sector across

Europe, Asia and North America and brings depth to the

Board’s review of managing cybersecurity risks as well as

assessment of opportunities to invest in proven and emerging

technologies in the discovery of new mineral deposits, safer

and more cost-effective processing, and technologies to

reduce GHG emissions and support the energy transition.

Current appointments

Xiaoqun is a Non-executive Director of Amadeus IT Group SA

(since June 2020) and on the Supervisory Board of Infineon

Technologies AG (since February 2020). Xiaoqun is also the

Co-Founder and Chief Executive Officer of LuxNova Suisse

GmbH (since April 2018).

Xiaoqun

Clever

Diploma in

Computer Science

and International

Marketing, MBA

Independent Non-

executive Director

since October 2020.

Skills and experience

Ken MacKenzie has global executive experience and a

deeply strategic approach, with a focus on operational

excellence, capital discipline and the creation of long-term

shareholder value.

Ken was the Managing Director and Chief Executive Officer of

Amcor Limited, a global packaging company with operations

in over 40 countries, from 2005 until 2015.

Ken brings business management and leadership skills

in global supply chains and governance gained during his

career in developed and emerging markets in the Americas,

Australia, Asia and Europe. Ken has experience in leading

strategic transformation at a business and enterprise-

wide level. His commitment to continuous learning and

skills development provides valuable insights to Board

deliberations and guidance to BHP’s leadership team

in navigating the fast-changing dynamics of the global

economy and markets.

Current appointments

Ken currently sits on the Advisory Board of American

Securities Capital Partners LLC (since January 2016)

and is a part-time adviser at Barrenjoey (since April 2021).

Ken

MacKenzie

BEng, FIEA, FAICD

Independent

Non-executive

Director since

September 2016.

Chair since

1 September 2017.

Skills and experience

Ian Cockerill has 48 years’ experience in mining beginning

his career as a geologist in 1975, converting to a mining

engineering career in 1976, followed by extensive experience

in operational, project and executive roles around the world.

Ian was formerly the Chair of both Polymetal International plc

and BlackRock World Mining Trust plc, Lead Independent

Director of Ivanhoe Mines Ltd, Non-executive Director

of Orica Limited (from July 2010 to August 2019) and

Endeavour Mining Corporation (from September 2013 to

March 2019). Ian previously held several senior positions

at Anglo American Corporation including Technical Director

of Gold and Uranium Division, which included responsibility

for African and international operations, and was the Chief

Executive Officer of Gold Fields from 2002 to 2008.

Ian’s technical and management experience globally across

a range of commodities, together with his experiences as

an operational leader and investor in numerous mining

jurisdictions, bring a unique focus to understanding the risks

and reward of prospective resources, cost of development

and operations and valued input into the assessment of

opportunities to strengthen the portfolio of world class and

sustainable assets.

Current appointments

Ian is currently Senior Independent Director of Endeavour

Mining Corporation (since May 2022), the Chair of Cornish

Lithium Ltd (since April 2022) and a Non-executive Director

of I-Pulse Inc (since September 2010). Ian is also a Director

of the Leadership for Conservation in Africa.

Ian

Cockerill

MSc (Mining and

Mineral Engineering),

BSc (Hons.)

(Geology),

AMP – Oxford

Templeton College

Independent Non-

executive Director

since April 2019.

RA S

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 101

Governance

Skills and experience

Dion Weisler has extensive global executive experience,

including transformation and commercial experience in the

global information technology sector, with a focus on capital

discipline and stakeholder engagement.

Dion was formerly a Director and the President and Chief

Executive Officer of HP Inc. (from 2015 to 2019) and

continued as a Director and Senior Executive Adviser

(until May 2020). Dion previously held a number of senior

executive roles at Lenovo Group Limited, was General

Manager Conferencing and Collaboration at Telstra

Corporation and held various positions at Acer Inc.,

including as Managing Director, Acer UK.

Dion brings experience in transforming megatrends into

opportunities and growth and valuable insight on the power

of innovation, technology and data. Dion’s experience also

demonstrates insights into strategy development in the

global energy transition, where safety, decarbonisation and

stakeholder management are critical.

Current appointments

Dion is a Non-executive Director of Intel Corporation (since

June 2020), a Non-executive Director of Thermo Fisher

Scientific Inc. (since March 2017) and a Non-executive

Director of Sapia & Co Ltd (since January 2022).

Dion

Weisler

BASc (Computing),

Honorary Doctor

of Laws

Independent Non-

executive Director

since June 2020.

Skills and experience

Christine O’Reilly has over 30 years’ experience in the

financial and infrastructure sectors, with deep financial and

public policy expertise and experience in large-scale capital

projects and transformational strategy.

Christine was the Chief Executive Officer of the GasNet

Australia Group and Co-Head of Unlisted Infrastructure

Investments at Colonial First State Global Asset

Management, following an early career in investment

banking and audit at Price Waterhouse. Christine has also

served as a Non-executive Director of Medibank Private

Limited (from March 2014 to November 2021), Transurban

Group (from April 2012 to October 2020), CSL Limited

(from February 2011 to October 2020) and Energy Australia

Holdings Limited (from September 2012 to August 2018).

Christine has a deep understanding of financial drivers

of the businesses and experience in capital allocation

discipline across sectors that have long dated paybacks

for shareholders and stakeholders. Her insights into cost

efficiency and cash flow as well as the impact of policy on

innovation, investment and project development are key

inputs for the Board.

Current appointments

Christine is a Non-executive Director of Australia and New

Zealand Banking Group (since November 2021), Stockland

Limited (since August 2018), and the Baker Heart and

Diabetes Institute (since June 2013).

Christine

O’Reilly

BBus

Independent Non-

executive Director

since October 2020.

Skills and experience

Stefanie Wilkinson was appointed Group Company

Secretary effective March 2021. Prior to joining BHP,

Stefanie was a Partner at Herbert Smith Freehills, a firm

she was with for 15 years, specialising in corporate law

and governance for listed companies. Earlier in her career,

Stefanie was a solicitor at Allen & Overy in the Middle

East. Stefanie is a fellow of the Governance Institute

of Australia.

Stefanie

Wilkinson

BA, LLB (Hons),

LLM, FGIA

Group Company

Secretary since

March 2021.

Skills and experience

Catherine Tanna has more than 30 years’ experience in the

resources, oil and gas, power generation and retailing sectors.

Catherine was formerly Managing Director of Energy

Australia between 2014 and 2021. Prior to this, she held

senior executive roles with Shell and BG Group with

responsibility for international operations across Africa, North

Asia, Russia, North America, Latin America and Australia.

Catherine was also a member of the Board of the Reserve

Bank of Australia (from 2011 to 2021) and a Director of the

Business Council of Australia (from 2016 to 2021).

Catherine has a track record in leading cultural change and

sponsoring gender equity, diversity and inclusion across

business and more broadly. She brings an understanding

of and contribution to complex regulatory and policy

environments. Catherine’s experience in seeking to

align customer and community expectations, particularly

Indigenous communities, with those of the enterprise and

regulators, provides unique insight and input to the Board.

Current appointments

Catherine is a Non-executive Director at Bechtel

Corporation (since May 2023), Senior Advisor at McKinsey

& Company Inc (since April 2022), a member of the

Advisory Board of Fujitsu Australia (since February 2022)

and a Director of Australians for Indigenous Constitutional

Recognition (since January 2023).

Catherine

Tanna

LLB, Honorary

Doctor of Business

Independent Non-

executive Director

since April 2022.

Key to Committee membership

Committee Chair

Committee member

Risk and Audit

Nomination and Governance

People and Remuneration

Sustainability

Skills and experience

Michelle Hinchliffe has over 20 years’ experience as

a partner in KPMG’s financial services division.

Michelle was formerly a partner of KPMG and held a

number of roles, including as the UK Chair of Audit, a

member of the KPMG UK Executive Committee, and led

KPMG’s financial services practice in Australia and was a

member of the KPMG Australia Board.

Michelle has expertise and experience in understanding

the complexities of multi-national firms operating in multiple

reporting and regulatory frameworks across Europe,

the Americas, Asia and African continents. Her financial

expertise and audit experience across a range of industries

and businesses, including Australia, bring insights to the

Board on BHP’s assessment of risk, returns and its long-

term capital plan to create financial strength and support

BHP’s future growth.

Current appointments

Michelle is a Non-executive Director of Santander UK plc

and Santander UK Group Holdings Plc (since June 2023)

and Macquarie Group Limited and Macquarie Bank Limited

(since March 2022).

Michelle

Hinchliffe

BCom, FCA, ACA

Independent Non-

executive Director

since March 2022.

102 BHP Annual Report 2023

4.2 Director independence

The Board is committed to ensuring that a majority of Directors are independent.

The Board has adopted a policy that it uses to determine the independence

of its Directors.

The BHP Policy on the Independence of Directors was reviewed and updated

during FY2023 and came into effect on 1 July 2023.

The Policy on the Independence of Directors is available at

bhp.com/governance

Determination of Director independence

The Board confirms that it considers all current Non-executive Directors,

including the Chair, to be independent of management and any business,

interest or other relationship that could or could be perceived to materially

interfere with the exercise of objective, unfettered or independent

judgement by the Director or the Director’s ability to act in the best interests

of the BHP Group rather than an individual shareholder or other group.

A determination of independence is carried out upon a Director’s

appointment, annually, and at any other time where the change in

circumstances of a Director warrant reconsideration. Some Directors hold

or have previously held positions in companies that BHP has commercial

relationships with. The Board has assessed the relationships between

BHP and the companies in which Directors hold or held positions and has

concluded that the relationships do not interfere with the Directors’ exercise

of objective, unfettered or independent judgement, or their ability to act in

the best interests of BHP.

Conflicts of interest

In accordance with Australian law, if a situation arises for consideration

where a Director has a material personal interest, the affected Director takes

no part in decision making unless approval is provided by the non-interested

Directors. Provisions for Directors’ interests are set out in the Constitution

of BHP Group Limited.

4.3 Board appointments and

succession planning

BHP adopts a structured and rigorous approach to Board succession

planning to guard against unforeseen departures and facilitate the orderly

replacement of current Directors, and oversees the development of a

diverse pipeline. This process is continuous, allowing the Board to ensure

there is a right balance on the Board between experience and fresh

perspectives, and the Board continues to be fit for purpose.

As part of this process, John Mogford and Malcolm Broomhead retired

from the Board in October 2022 and November 2022 respectively.

Before the Board formally appoints a person or puts a person forward

for election, the Board, with the assistance of external consultants, will

conduct appropriate background and reference checks as to that person’s

character, experience, education and criminal and bankruptcy history.

The Board has adopted a letter of appointment that contains the terms

on which Non-executive Directors will be appointed, including the

basis upon which they will be indemnified by the Group. The letter of

appointment defines the role of Directors, including the expectations

in terms of independence, participation, time commitment and

continuous improvement. Written agreements are in place for all Non-

executive Directors.

4.4 Director induction, training

and development

Upon appointment, each new Non-executive Director undertakes an

induction program tailored to their needs. Non-executive Directors also

undertake an induction program when they join a new Committee, which

is tailored to the areas specific to that Committee’s role and the Director’s

previous experience.

Following the induction program, Non-executive Directors participate in

continuous improvement activities through a training and development

program, which is overseen by the Nomination and Governance

Committee to help ensure that Directors, individually and collectively,

develop and maintain the skills and knowledge to assist them in performing

their role effectively. The training and development program is periodically

reviewed to maximise effectiveness and to ensure it is tailored to Directors’

needs and the Board’s areas of focus.

Throughout the year, the Chair discusses development areas with each

Director. Board Committees review and agree their needs for more

briefings. The benefit of this approach is that induction and learning

opportunities can be tailored to Directors’ Committee memberships, as

well as the Board’s specific areas of focus. This approach is also intended

to ensure a coordinated process for succession planning, Board renewal,

training and development and Committee composition. In turn, these

processes are relevant to the Nomination and Governance Committee’s

role in identifying appropriate Non-executive Director candidates.

Examples of activities in the training and development program include:

– briefings and development sessions to provide each Director with a

deeper understanding of the activities, environment, key issues and

direction of the assets, along with broader sustainability, climate-related

and geopolitical considerations

– site visits to provide insights into key issues at the site and to provide

an opportunity for direct engagement with a cross-section of workforce,

community members, contractors and other stakeholders

– engagement with the Forum on Corporate Responsibility (FCR), which

comprises civil society leaders in various fields of sustainability, to

discuss FCR members’ views on current and emerging trends and risks

4.5 Director skills, experience

and attributes

Overarching statement of Board requirements

At BHP, we know inclusive and diverse teams are safer and more

productive. This is because people in these teams feel safe to speak up,

share their ideas and different points of view, and work together to solve

problems and make better decisions.

The BHP Board is no different, and believes its members should comprise

Directors with a broad range of skills and diversity for the Board to:

– provide the breadth and depth of understanding necessary to effectively

create long-term shareholder value

– protect and promote the interests of BHP and the creation of social value

– ensure the talent, capability and culture of BHP support the long-term

delivery of our strategy

Attributes and commitment to role

All Directors are expected to comply with Our Code of Conduct, act with

integrity, lead by example and promote the desired culture.

The Board believes each Non-executive Director has demonstrated the

attributes of sufficient time to undertake the responsibilities of the role,

honesty and integrity, and a preparedness to question, challenge and

critique throughout the year through their participation in Board meetings,

and the other activities they have undertaken in their roles.

4 Board composition and succession continued

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 103

Governance

Skills matrix

The Board, supported by the Nomination and Governance Committee,

reviews the skills and diversity represented by the Directors on the Board

and determines whether the composition and mix of those skills remains

appropriate to achieve BHP’s purpose and strategy.

The Board maintains a skills matrix that identifies the skills and experience

the Board needs for the next period of BHP’s development, considering

BHP’s circumstances and the changing external environment.

The Board skills matrix identifies the future-facing skills the Board intends to

build, acquire and retain over the medium term in anticipation of its needs as

it pursues its strategy of securing growth options in future-facing commodities.

The Board skills matrix not only indicates the skills the Board currently

possesses, but also provides an illustration of the new skills the Board

intends to acquire and indicates the preferred manner in which it intends to

acquire them.

The Board collectively possesses all the skills and experience set out in the

skills matrix, and each Director satisfies the Board requirements and attributes

discussed above.

4.6 Diversity

BHP has adopted an Inclusion and Diversity Position Statement, which sets

out our diversity policy and our priorities to accelerate the development of a

more inclusive work environment and to enhance overall workplace diversity.

BHP’s Inclusion and Diversity Position Statement is available at

bhp.com/careers/inclusion-diversity and is summarised in OFR 6.6

Our aspiration is to achieve gender balance on our Board, among our senior

exectives and across our workforce by FY2025. We define gender balance

as a minimum 40 per cent women and 40 per cent men, in line with the

definitions used by entities such as the International Labour Organization.

The Board is responsible for approving the measurable objectives for

achieving diversity in the composition of the Board, senior executives and

workforce generally and assessing the Group’s progress in achieving those

measurable objectives.

In FY2023, the Board approved the objective to increase the

representation of women across the BHP workforce by 3 per cent from

the FY2022 objective of 32.8 per cent. During FY2023, BHP increased

the representation of women working at BHP by 2.9 percentage points,

with women now representing 35.2 per cent of the global workforce.

For more information on our focus areas for diversity during FY2023 and

the respective proportions of men and women on the Board, in senior

executive positions and across the whole workforce, refer to OFR 6.6.

The Board’s composition reflects gender balance and a diversity

of experience, education and geographic background.

Additional diversity data is also available in the

BHP ESG Standards and Databook 2023 available at

bhp.com/sustainability

Skills and attributes

Number of

Directors

Mining

Senior executive who has deep operating or technical mining experience with a large company operating in multiple countries; successfully optimised and led a

suite of large, global, complex operating assets that have delivered consistent and sustaining levels of high performance (related to cost, returns and throughput);

successfully led exploration projects with proven results and performance; delivered large capital projects that have been successful in terms of performance and

returns; and a proven record in terms of health, safety and environmental performance and results.

Global experience

Global experience gained from working, managing business units and residing in multiple geographies over an extended period of time, including a deep

understanding of and experience with global markets, and macro-political and economic environments.

Strategy

Senior executive who has had accountability for enterprise-wide strategy development and implementation in industries with long cycles, and developing and leading

business transformation strategies.

Commodity value chain and customers

End-to-end value or commodity chain experience – understanding of consumers and customers, marketing demand drivers (including specific geographic markets)

and other aspects of commodity chain development.

Financial acumen

Extensive experience and the capability to evaluate financial statements and understand key financial drivers of the business, bringing a deep understanding of

corporate finance and internal financial controls.

Operating risk

Extensive experience with the development and oversight of complex frameworks focused on the identification, assessment and assurance of operational workplace,

health, safety, environmental, climate and community risks.

Technology

Recent experience and expertise with the development, selection and implementation of leading and business transforming technology and innovation, and

responding to digital disruption.

Capital allocation and cost efficiency

Extensive direct experience gained through a senior executive role in capital allocation discipline, cost efficiency and cash flow, with proven long-term performance.

Social value, community and stakeholder engagement

Extensive track record of positive external stakeholder engagement, including in relation to community issues and social responsibility. In-depth understanding of

public policy, government relations and the intersection between value generation and corporate reputation.

Board tenure and diversity

Gender diversityRegion of nationality

Australia 60%

Europe/UK 20%

North

America 20%

Female 40%

Male 60%

Tenure

0 > 3 years 40%

3 > 6 years 60%

104 BHP Annual Report 2023

As at 30 June 2023, 40 per cent of Directors are female and the BHP Board

satisfies the target in the UK Listing Rules and the guidance of having at

least 30 per cent of Directors of each gender in accordance with the ASX

Fourth Edition. BHP also satisfies the UK Listing Rule target of having at

least one Director from a minority ethnic background on the Board.

BHP does not currently satisfy the UK Listing Rule target that at least one

of the senior positions on the Board (which for BHP is the Chair, Chief

Executive Officer and Senior Independent Director) is held by a woman.

Prior to Gary Goldberg taking on the role of Senior Independent Director

in December 2020, that position had been held by a woman since 2015.

As part of its succession planning, the Board reviews the skills and

diversity (including gender, age, personal strengths and social and ethnic

backgrounds) represented by Directors on the Board and determines

whether the composition and mix of those skills and diversity remains

appropriate to achieve BHP’s purpose and strategy.

The tables in Additional information 7 set out the information required under

the UK Listing Rules on diversity as at 30 June 2023. The data presented

in these tables was collected by requesting all members of the Board, ELT

and Group Company Secretary self-report in questionnaires that include the

tables prescribed by the UK Listing Rules.

4.7 Board evaluation

The Board is committed to transparency in assessing the performance

of Directors. The Board conducts regular evaluations of its performance,

the performance of its Committees, the Group Chair, Directors and the

governance processes that support the Board’s work.

An external board evaluation is conducted approximately every three

years and was conducted in FY2023. The evaluation assessed the

performance of the Board as a whole and its Committees. The scope of

the review included Board and Committee performance and effectiveness.

It considered the balance of skills, experience, independence and

knowledge of the Group on the Board, its diversity and culture, and the

operation of governance processes.

Review of individual Director performance

The Board has adopted a policy for all Non-executive Directors to seek

re-election annually. The Board uses the results of Director performance

evaluations in considering whether to nominate a Director for re-election

by shareholders.

In FY2023, an assessment was conducted of each Director’s performance

with the assistance of an external service provider that does not have any

other connection with the Group or individual Directors.

The assessment of Directors focused on the contribution of each Director

to the work of the Board and its Committees, and the expectations of

Directors as set out in BHP’s governance framework. In addition, the

assessment focused on how each Director contributes to Board cohesion

and effective relationships with fellow Directors, commits the time

required to fulfil their role and effectively performs their responsibilities.

Directors were asked to comment on areas where their fellow Directors

contribute the greatest value and potential areas for development.

The reviewer provided feedback received to the Chair, which was then

discussed with Directors. Feedback relating to the Chair was discussed

with the Chair by the Senior Independent Director. As a result of these

outcomes, the review supported the Board’s decision to recommend each

Director standing for re-election.

Committee assessments

Following an assessment of its work, each Committee concluded that it

had met the requirements under its Terms of Reference in FY2023.

5 Board Committees

The Board has four standing Committees and has delegated a number

of duties to each Committee to assist the Board in exercising its

responsibilities and discharging its duties. Each Committee’s Charter

sets out the Committee’s roles and responsibilities. These Charters were

reviewed and updated in FY2023 as part of the governance review.

The aim was to review Board and Committee responsibilities and

streamline and modernise the documents in order to best support BHP’s

strategy and purpose. The updated Charters took effect from 1 July 2023

and are available at bhp.com/governance.

BHP’s Board and Committee governance structure facilitates a considered

and integrated approach on key matters, for example:

– Climate change is a Board-level issue. The Board is responsible for the

governance and oversight of climate change issues, including in relation

to our strategic approach, risk management and public disclosures.

The Board approves significant social, community and sustainability

policies, including those related to climate change and public

sustainability goals and targets, and oversees performance against

our strategy, goals and targets. The Board is supported by each of

its Committees:

– The Nomination and Governance Committee reviews and makes

recommendations to the Board on the Group’s significant social,

community and sustainability policies, including those related

to climate change. The Committee also reviews and makes

recommendations to the Board on the Group’s public

sustainability-related goals and targets.

– The Risk and Audit Committee is responsible for assisting the Board

in overseeing and reviewing emerging and priority group risks,

including those that are climate-related risks, risk management and

internal controls. The Risk and Audit Committee also reviews and

recommends to the Board public financial disclosures related to

sustainability matters including climate change reports and climate

transition action plans.

– The Sustainability Committee is responsible for assisting the Board

with overseeing climate performance and reviews the performance

of the Group in relation to climate-related decisions and actions.

– The People and Remuneration Committee is responsible for

considering and assessing performance measures for the ELT and

performance outcomes against those measures. In doing so, the

Committee considers recommendations from the Sustainability

Committee in relation to health, safety, environment, climate and

community measures.

– Sexual harassment is a Board-level issue, supported by the Risk

and Audit Committee on the risk and compliance aspects and the

Sustainability Committee on the safety, operational aspects and

security controls.

– Technology and cyber risk are Board-level issues, supported by the Risk

and Audit Committee, which reviews emerging and principal risks facing

the Group, including cyber risk.

The Board appoints the members and Chair of each Committee.

Only independent, Non-executive Directors can be Committee Chairs.

The members and key roles and responsibilities of each Committee are

set out below.

For Committee attendance and members during FY2023

refer to Directors’ Report 2

4 Board composition and succession continued

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 105

Governance

5.1 Nomination and Governance Committee

Members

Ken MacKenzie (Chair), Terry Bowen, Gary Goldberg, Christine O’Reilly

Key responsibilities/role and focus

The Nomination and Governance Committee oversees succession planning and processes, Board and Director performance evaluation, Director training

and development, and advises and makes recommendations on the corporate governance framework and practices.

Under the updated Charter, from 1 July 2023 the Nomination and Governance Committee also reviews and recommends to the Board for approval the

Group’s significant social, community and sustainability policies. This change utilises the existing governance role of the Committee and supports the

Board with sustainability-related matters that encompass issues that affect the whole of the Group, including areas of strategy, risk and reporting, people

and remuneration.

Key activities in FY2023:

Succession planning processes

– Identification of suitable Non-executive

Director candidates

– Board and Committee succession

– Partnering with search firms regarding

candidate searches

Evaluation and training

– External Board review and Director development

– 2023 training and development program

Corporate governance practices

– Review of Board Governance Document and

Committee Charters

– Independence of Non-executive Directors

– Authorisation of situations of actual or

potential conflict

– Crisis management

5.2 Risk and Audit Committee

Members

Terry Bowen (Chair), Xiaoqun Clever, Ian Cockerill, Michelle Hinchliffe, Christine O’Reilly

Key responsibilities/role and focus

The Risk and Audit Committee oversees and monitors financial reporting, other periodic reporting, external and internal audit, capital management,

risk management and internal control, and assists the Board in reviewing emerging and principal risks facing the Group.

Key activities in FY2023:

Integrity of Financial Statements and

funding matters

– Accounting matters for consideration, materiality

limits, half-year and full-year results

– Sarbanes-Oxley Act of 2002 (SOX) compliance

– Financial governance procedures

– Funding and guarantee updates

– Samarco dam failure provision, including related

provisions and contingent liabilities

– Carrying value of BHP’s assets

– Climate-related financial statement and

risk disclosures

– Closure and rehabilitation provisions

– Disputes and litigation updates

External Auditor and integrity of the

audit process

– Status and results of the external audit

– Management and External Auditor

closed sessions

– Audit plan and review of the External

Auditor’s performance

– External Auditor independence and non-

audit services

Effectiveness of systems of internal

control and risk management

– Reports on the significant risks facing the Group

and the Group’s systems of risk management

and internal control

– Internal audit reports, annual internal audit

plan and review of performance of the Internal

Audit team

– Reports on sexual harassment, serious breaches

of business conduct, regulatory compliance and

grievance and investigation processes

– Reserves and resources updates

106 BHP Annual Report 2023

5.3 Sustainability Committee

Members

Gary Goldberg (Chair), Ian Cockerill, Catherine Tanna, Dion Weisler

Key responsibilities/role and focus

The Sustainability Committee oversees the Group’s health, safety, environment, climate and community performance, including implementation of the

Group’s strategy, policies and processes in relation to these matters.

The Sustainability Committee oversees operational aspects of sustainability decision-making, including on health, safety, environment, climate and

community issues, and emerging areas of risk related to the Group’s operations and its engagement with customers, suppliers and communities.

Key activities in FY2023:

Implementation of strategy, policy

and processes

– Site visits to engage with partners and

stakeholders and gain a greater understanding

of the Group’s operations, culture, material risks

and risk management processes, and other

issues relevant to the specific site

– Review of BHP’s performance and processes

in relation to health, safety, environment,

climate and community matters, including

sexual harassment safety controls, Indigenous

engagement, cultural heritage, community

relations, closure and rehabilitation, biodiversity

and human rights

Compliance and reporting

– Review of sustainability reporting, including

consideration of processes for preparation and

assurance provided by EY

– Review of BHP’s Modern Slavery Statement

– Review of BHP’s first Global Industry Standard

on Tailings Management public disclosure

– Review of internal audit reports and approval

of the health, safety, environment, climate and

community components of the internal audit plan

Performance

– Monitoring progress against 2030 goals that

relate to health, safety, environment, climate

and community

– Review of safety and sustainability performance

outcomes for the prior financial year, and

reviewing and recommending to the People

and Remuneration Committee, the proposed

measures for the following financial year.

– Review of the Health, Safety and Environment

(HSE) function and Group HSE Officer

5.4 People and Remuneration Committee

Members

Christine O’Reilly (Chair), Catherine Tanna, Dion Weisler

Key responsibilities/role and focus

During FY2023, the Remuneration Committee’s role involved overseeing and monitoring the remuneration framework and practices (including the

adoption of incentive plans and levels of reward for the CEO and other ELT members) and compliance with remuneration-related requirements, as well

as important functions relating to people, such as the review, at least annually, of remuneration by gender.

As of 1 July 2023, the Committee has become the People and Remuneration Committee. Under the revised Charter, the focus on people has

been expanded and includes overseeing implementation of the Group’s key strategies and policies relating to people, including for the attraction,

recruitment, motivation and retention of employees, remuneration, employee engagement, leadership and talent development, industrial relations

and employee conduct.

In addition, as of 1 July 2023, the People and Remuneration Committee:

– monitors the effectiveness of the Group’s people and culture strategy and makes recommendations to the Board on the Group’s values, Code of

Conduct and purpose

– reviews reports and metrics on material workforce trends, employee engagement, industrial relations and people governance processes

– reviews and makes recommendations to the Board on the Group’s policies on diversity and inclusion, and reviews measurable objectives for achieving

diversity below Board level. The Nomination and Governance Committee continues to review and make recommendations to the Board on Board-

level diversity

Key activities in FY2023:

Remuneration

– Remuneration for the Group Chair

– Remuneration for the CEO, other ELT members

and the Group Company Secretary

– Performance measures, performance levels and

incentive award outcomes

People

– Review of workforce engagement

– Review of the alignment of incentives and reward

with culture

– Review of remuneration by gender

Incentive plans

– Considering BHP’s various employee incentive

plan documents and arrangements, including

proposed changes to them

For more information on BHP’s remuneration practices and

policies, including on hedging BHP shares and equity instruments,

please refer to the 2023 Remuneration Report.

5 Board Committees continued

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 107

Governance

6 Management

Below the level of the Board, key management decisions are made by the CEO, the ELT, management committees and members of management in

accordance with their delegated authority.

6.1 Executive Leadership Team

David Lamont

BComm, CA

Chief Financial Officer

David Lamont re-joined BHP and was appointed

Chief Financial Officer in December 2020. David is

responsible for overseeing the Group’s Reporting,

Tax, Treasury, Investor Relations, Risk and Internal

Audit teams. David had previously held senior roles

at BHP between 2001 and 2006, including Chief

Financial Officer of its Carbon Steel Materials and

Energy Coal businesses. Prior to re-joining BHP,

David was the Chief Financial Officer of ASX-listed

global biotech company CSL Limited, and had also

served in similar roles at Minerals and Metals Group,

OZ Minerals Limited, PaperlinX Limited and Incitec

Pivot Limited.

Laura Tyler

BSc (Geology (Hons)),

MSc (Mining Engineering)

Chief Technical Officer

Laura Tyler joined BHP in 2004 and was appointed

Chief Technical Officer in September 2020. Laura is

responsible for Minerals Exploration, Centres of

Excellence, Technology and Innovation. Laura has

previously held senior roles at BHP, including Chief

Geoscientist and Asset President of Olympic Dam.

Prior to joining BHP, Laura worked for Western

Mining Corporation, Newcrest Mining and Mount

Isa Mines in various technical and operational roles.

Jad Vodopija

BA, PGDip (Industrial Relations and Human

Resource Management), MComm

Chief People Officer

Jad Vodopija rejoined BHP in 2019 and was

appointed Chief People Officer in July 2022. Jad is

responsible for organisational strategy, talent and

resource management, leadership development and

workforce performance. Jad has previously held

senior roles at BHP, including Vice President, Human

Resources. Prior to rejoining BHP, Jad was Vice

President Human Resources at Orica from 2016,

before which she had built her career at BHP and

earlier on at Ford Motor Company.

Caroline Cox

BA (Hons), MA, LLB, BCL

Chief Legal, Governance and External Affairs Officer

Caroline Cox joined BHP in 2014 and was appointed

Chief Legal, Governance and External Affairs

Officer in November 2020. Caroline is responsible

for Legal, Governance, Ethics and Investigations,

Compliance, Communications, Corporate and

Government Affairs and Sustainability and Climate

Change. Caroline has previously held senior roles at

BHP, including Vice President Legal, Group General

Counsel, and Group General Counsel & Company

Secretary. Prior to joining BHP, Caroline was a

Partner at Herbert Smith Freehills.

Geraldine Slattery

BSc, Physics, MSc, International Management

(Oil & Gas)

President, Australia

Geraldine Slattery joined BHP in 1994 and was

appointed President Australia in October 2022.

Geraldine leads BHP’s Australian operations in

Western Australia, Queensland and New South

Wales. Geraldine has previously held senior roles,

including President Petroleum from March 2019 to

31 May 2022. Geraldine has more than 28 years

of experience with BHP, including as President

Petroleum, Asset President Conventional and prior

to that in several senior operational and business

leadership roles across the Petroleum business in the

United Kingdom, Australia and the United States.

Johan van Jaarsveld

BEng (Chem), MCom, Applied Finance,

PhD (Eng), Extractive Metallurgy

Chief Development Officer

Johan van Jaarsveld joined BHP in 2016 and was

appointed Chief Development Officer in September

2020. Johan is responsible for strategy, acquisitions

and divestments, securing early-stage growth

options and ventures. Prior to joining BHP, Johan

held executive positions in resources and finance,

including at Barrick Gold Corporation, Goldman

Sachs and The Blackstone Group.

Edgar Basto

BSc, Metallurgy

Chief Operating Officer

Edgar Basto joined BHP in 1989 and was appointed

Chief Operating Officer in October 2022. Edgar is

responsible for the BHP Operating System (BOS),

BHP’s global Performance and Improvement,

Health, Safety and Environment functions and

Copper South Australia, including the integration

of the former OZ Minerals operations into our

business. Edgar has previously held senior roles,

including President Minerals Australia, Asset

President of Western Australia Iron Ore and Asset

President Escondida (Chile).

Vandita Pant

BCom (Hons), MBA, Business Administration

Chief Commercial Officer

Vandita Pant joined BHP in 2016 and was appointed

Chief Commercial Officer in July 2019. Vandita is

responsible for Sales and Marketing, Procurement,

Maritime and for developing BHP’s views on global

commodities markets and macro trends. Vandita has

previously held senior roles at BHP, including Group

Treasurer and Head of Europe. Prior to joining BHP,

Vandita held a wide range of executive roles with

ABN Amro and Royal Bank of Scotland.

Ragnar Udd

BAppSc (Mining Engineering), MEng, MBA)

President Americas

Rag Udd joined BHP in 1997 and was appointed

President Americas in November 2020. Rag is

responsible for BHP’s copper operations in Chile and

potash operations in Canada. Rag has previously

held senior roles at BHP in operations, logistics,

projects and technology, including most recently as

Acting Chief Technology Officer and Asset President

of BHP Mitsubishi Alliance.

108 BHP Annual Report 2023

6.2 Senior management succession

A senior management succession process is conducted to support pipeline

stability for critical roles. A talent deep dive is conducted by the Board at least

once a year to evaluate these pipelines, including the diversity of the pipeline.

Senior management succession is viewed from a five-year perspective

that considers the readiness of successors across time horizons, contexts

and future capability demands. Select Board members are involved in the

interview process for executive-level appointments one level below the CEO

and occasionally for roles two levels below the CEO. Appropriate checks

are undertaken before appointing a member of the ELT. BHP has a written

agreement with each ELT member setting out the terms of their appointment.

7 Shareholders and reporting

7.1 Shareholder and stakeholder engagement

BHP shareholder engagement practices

BHP engages regularly with our shareholders to understand their views and feedback and we have an investor relations program to provide avenues for

effective and timely two-way communication with investors.

We encourage shareholders to make their views known to us. Shareholders can contact us at any time through our Investor Relations team, with contact

details available at bhp.com. In addition, shareholders can communicate with us and our registrar electronically.

Shareholder engagement practices

Presentations and briefings

We hold a number of presentations and briefings related to financial results,

climate change, strategy and other key topics. Presentation materials for

briefings and speeches containing new and substantive information are

available on our website at bhp.com.

Direct engagement

We engage directly with institutional shareholders and investor

representative organisations around the world to discuss strategy and

governance and to enable our management, Board and Committees

to be up to date on investor expectations and continuously improve

the governance processes of BHP.

We also engage directly with retail shareholders and their representatives.

In addition to our regular investor meetings program, in FY2023 we held

direct engagement sessions on our Industry Association Review and on

climate-related financial disclosures to obtain feedback from investors

on our approach.

Webcasts and Q&A sessions

We provide webcasts and Q&A sessions as forums to update

shareholders on results or other key announcements.

Annual General Meeting

Our Annual General Meeting (AGM) provides an opportunity for all

investors to hear about BHP’s performance and to question and

engage with the Board (see below for more information).

Website

All relevant corporate governance information, including our Annual

Report, is available on our website at bhp.com. All ASX announcements

are promptly posted to the website. BHP encourages direct contact

from shareholders and our website has a ‘Contact Us’ form for contact

with our Investor Relations team. Anyone who is interested in receiving

news from BHP can subscribe to receive email alerts.

Chair investor meetings

The Chair regularly meets with investors to discuss Board priorities and

seek shareholder feedback. The People and Remuneration Committee

Chair also regularly meets with investors and proxy advisors to

discuss remuneration.

Our Annual General Meeting

We facilitate and encourage shareholder participation at our AGM.

The AGM provides an update for shareholders on our performance

and offers an opportunity for shareholders to ask questions and vote.

The External Auditor is also available to answer questions at the AGM.

Information on our AGM is available at

bhp.com/meetings

6 Management continued

6.3 Performance evaluation

of executives

The performance of executives and other senior employees is reviewed

on an annual basis. The annual performance review process considers

the performance of executives against criteria designed to capture ‘what’ is

achieved and ‘how’ it is achieved. All performance assessments of executives

include how effective they have been in undertaking their role and what they

have achieved against their specified key performance indicators.

A performance evaluation was conducted for all members of the ELT during

FY2023. For the CEO, the performance evaluation was led by the Chair of the

Board on behalf of all the Non-executive Directors and was discussed with the

People and Remuneration Committee and considered by the Board.

Before the AGM, shareholders are provided with all material information

in BHP’s possession relevant to their decision on whether to elect or

re-elect a Director. Copies of the speeches delivered by the Chair and

CEO at the AGM are released to the relevant stock exchanges and

posted on our website.

Proceedings at shareholder meetings are webcast live from our website.

Substantive resolutions at general meetings are decided by a poll rather

than by a show of hands.

A summary of proceedings and the outcome of voting on the items

of business are released to the relevant stock exchanges and posted

on our website as soon as they are available.

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 109

Governance

Stakeholder engagement practices

7.2 Market Disclosure

BHP is committed to timely and balanced disclosure of market

sensitive information.

BHP’s Market Disclosure and Communications policy sets out the

processes designed to ensure compliance with BHP’s relevant disclosure

obligations and outlines the way in which information is communicated

to shareholders, the investment community and the market. It outlines

how we identify and distribute information to shareholders and market

participants and sets out the role of the Disclosure Committee in

managing compliance with market disclosure obligations.

The Board receives copies of material market announcements promptly

after they have been released.

Where BHP gives a new and substantive investor or analyst presentation,

it releases a copy of the presentation materials to the market ahead of

the presentation.

The Market Disclosure and

Communications policy is available at

bhp.com/governance

In addition, we have disclosure controls in place for periodic disclosures,

including the Operational Review, our results announcements, debt

investor documents (such as the prospectus for the Euro or Australian

Medium Term Notes) and Annual Report documents, which must

comply with relevant regulatory requirements.

More information about these verification

processes can be found in the Periodic Disclosure –

Disclosure Controls document available at

bhp.com/governance

8 Culture and conduct

Code of Conduct

We are committed to the highest level of governance and strive to foster

a culture that values and rewards exemplary ethical standards, personal

and corporate integrity and respect for others.

The Board, together with management, plays a critical role in setting

and reinforcing the culture of the Group.

Our Code of Conduct is approved by the Board and is based on

Our Charter values of Sustainability, Integrity, Respect, Performance,

Simplicity and Accountability. It applies to all our Directors, senior

executives and employees.

Our Code of Conduct includes our policies on speaking up and anti-bribery

and corruption, sets out standards of behaviour for our people and is an

important statement of the culture at BHP.

For more information on our policies on speaking up and our

commitment against corruption refer to OFR 6.9

EthicsPoint

We have mechanisms in place for anyone to raise a query about Our

Code of Conduct or make a report if they feel Our Code of Conduct has

been breached. EthicsPoint is our 24-hour confidential reporting tool for

reporting misconduct and can be used by employees, contractors and

external partners and stakeholders, including members of the public to

raise concerns about misconduct that has either happened to them or

they have witnessed. All reports received in EthicsPoint are reviewed and

categorised by the Ethics team. Once categorised, reports are assigned

in accordance with internal policy and processes to an investigator,

line leader or appropriate team for resolution. All significant Our Code

of Conduct matters and key trends from investigations are reported to

the Risk and Audit Committee. These are then reported to the Board

as part of its report-out process.

For more information on EthicsPoint refer to OFR 6.9

More information on ethics and business conduct is available at

bhp.com/ethics

Site visits

Site visits provide an opportunity for Directors to engage directly with the

workforce, community members and contractors. Site visits in FY2023

included to Olympic Dam (August 2022), WAIO (November 2022), Nickel

West (February 2023), Escondida, Spence and Samarco (June 2023).

Direct engagement with a cross-section

of the workforce

Directors also have the opportunity to engage directly with team members

at Board and Committee meetings, at Director briefing sessions, and during

visits to our offices (for example, attendance at the FY2023 HSEC Awards

and informal lunches with a cross-section of the workforce).

Forum on Corporate Responsibility

Engagement with the Forum on Corporate Responsibility provides Directors

the opportunity to engage with civil society leaders on their views on key

risks and issues facing BHP.

Events

Various events throughout the year, such as retail shareholder events in

Australia and the UK and the AGM, provide opportunities for engagement

with a range of partners and stakeholders, including government officials,

community members, Traditional Owners and other Indigenous partners

and non-government organisations.

Stakeholder engagement

The Board considers effective stakeholder engagement a key element

of its governance and oversight role. The strategic framework, our 2030

goals, our purpose and Risk Appetite Statement reflect the significance

of external partners and stakeholders in decision-making.

There are multiple ways the views of partners and stakeholders,

beyond shareholders, are brought to the Board and its Committees.

Examples of reports that are provided to the Board include Employee

Perception Survey findings, gender pay gap reports and updates from the

CEO and Chief People Officer. In addition, the Risk and Audit Committee

and Sustainability Committee receive reports on engagement with

regulators. The Risk and Audit Committee receives reports on material

litigation and disputes with third parties and complaints raised through the

confidential reporting platform, EthicsPoint. The Sustainability Committee

also receives updates on Community Perception Survey findings.

110 BHP Annual Report 2023

9 Risk management and assurance

9.2 External audit and

financial reporting

Integrity of Financial Statements

The RAC assists the Board in assuring the integrity of the Financial

Statements. The RAC evaluates and makes recommendations to the

Board about the appropriateness of accounting policies and practices,

areas of judgement, compliance with accounting standards, stock

exchange and legal requirements and the results of the external audit.

CEO and CFO assurance

For the FY2023 full year and half year, the CEO and CFO have certified

that in their opinion, BHP’s financial records have been properly

maintained and those Financial Statements present a true and fair view

of our financial condition and operating results and are in accordance

with accounting standards and applicable regulatory requirements.

The CEO and CFO have also certified to the Board that this opinion was

formed on the basis of a sound system of risk management and internal

control and the system is operating efficiently and effectively. The RAC

considered these certifications when recommending the Financial

Statements to the Board for approval.

External Auditor

The RAC manages the relationship with the External Auditor on behalf

of the Board. It considers the independence and reappointment of the

External Auditor each year, as well as remuneration and other terms

of engagement and makes a recommendation to the Board.

Evaluation of External Auditor and external

audit process

The RAC evaluates the objectivity and independence of the External

Auditor and the quality and effectiveness of the external audit

arrangements, including through:

– reviewing the terms of engagement of the External Auditor

– considering the external audit plan, in particular to gain assurance

that it is tailored to reflect changes in circumstances from the prior

year and reviewing the plan during the audit engagement

– meeting with the audit partners, particularly the lead audit engagement

partners, throughout the year and without management present

– discussing with the audit engagement partners the skills and

experience of the broader audit team

– considering the quality of the External Auditor’s performance

following the completion of the audit

In addition, the RAC reviews the integrity, independence and objectivity

of the External Auditor and assesses whether there is any element of

the relationship that impairs or appears to impair the External Auditor’s

judgement or independence. The External Auditor also certifies its

independence to the RAC.

Non-audit services

Although the External Auditor provides some non-audit services to the

Group, the objectivity and independence of the External Auditor are

safeguarded through restrictions on the provision of these services

with some services prohibited from being undertaken.

9.1 Risk management

governance structure

Risk governance

The Risk and Audit Committee (RAC) oversees and assists the Board in

risk management and reviewing the emerging and principal risks facing

the Group, including financial and non-financial risks that could threaten

the Group’s business model, future performance, solvency, liquidity

or reputation. This includes business technology security, cyber risk,

climate-related risk and legal and ethical compliance programs. The Board

requires the CEO to implement a system of control for identifying and

managing risk. The Risk team is accountable for this system, known

as BHP’s Risk Framework, and also supports, challenges and verifies

risk management activities to give assurance to management and the

Board. The Directors, through the RAC, monitor and, at least annually,

will review the effectiveness of the Group’s systems of risk management

and internal control and make a recommendation to the Board on whether

they continue to be sound and whether the Group is operating with due

regard to the risk appetite set by the Board.

For more information

refer to OFR 8

Internal audit

The Internal Audit team provides assurance to the Board, CEO and

Executive Leadership Team on whether risk management, internal control

and governance processes are adequate and functioning. The Internal

Audit team is independent of the External Auditor. The RAC evaluates and,

if thought fit, approves the Terms of Reference of the Internal Audit team

and the annual internal audit plan and monitors the effectiveness of the

internal audit activities.

The RAC approves the appointment and dismissal of the Chief Audit

Officer (which is currently the Chief Risk and Audit Officer) and assesses

their performance, independence and objectivity. During FY2023, the Chief

Risk and Audit Officer reported directly to the RAC and functional oversight

of the Internal Audit team was provided by the Chief Financial Officer.

Effectiveness of systems of internal control

and risk management

In delegating authority to the CEO, the Board has established CEO limits,

outlined in the Board Governance Document. These limits require the CEO

to ensure there is a system of control in place for identifying and managing

risk in BHP. Through the RAC, the Directors regularly review these

systems for their effectiveness. These reviews include assessing whether

processes continue to meet evolving external governance requirements.

The RAC oversees and reviews the internal controls and risk management

systems (including procedures, processes and systems for, among other

things, budgeting and forecasting, provisions, financial controls, financial

reporting and reporting of reserves and resources, compliance, preventing

fraud and serious breaches of business conduct, speak-up procedures,

and protecting information and data systems). Any material breaches of

Our Code of Conduct, including breaches of our anti-bribery and corruption

requirements and any material incidents reported under our speak-up

procedures are reported quarterly to the RAC by the Chief Compliance

Officer. These reports are then communicated to the Board through the

report-out process.

During FY2023, management presented an assessment of the material

risks facing BHP and the effectiveness of the Group’s systems of risk

management. The reviews were overseen by the RAC, with findings and

recommendations reported to the Board. In addition to considering key

risks facing BHP, the Board assessed the effectiveness of internal controls

over key risks identified through the work of the Board Committees.

Having carried out a review during FY2023, the Board is satisfied with the

effectiveness of BHP’s risk management and internal control systems.

Environmental and social risks

BHP’s risk factors (including material exposure to environmental and

social risks) and how we manage these risks are described in OFR 8.

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 111

Governance

Pre-approved services

The RAC has adopted a policy titled Provision of Audit and Other Services

by the External Auditor covering the RAC’s pre-approval policies and

procedures to maintain the independence of the External Auditor.

The categories of ‘pre-approved’ services are:

– Audit services – work that constitutes the agreed scope of the statutory

audit and includes the statutory audits of BHP and its entities (including

interim reviews). The RAC monitors the audit services engagements and

if necessary, approves any changes in terms and conditions resulting from

changes in audit scope, Group structure or other relevant events.

– Audit-related and other assurance services – work that is outside the

scope of the statutory audit but is consistent with the role of the external

statutory auditor. This category includes work that is reasonably related

to the performance of an audit or review and is a logical extension of

the audit or review scope, is of an assurance or compliance nature and

is work that the external auditors must or are best placed to undertake

and is permissible under the relevant applicable standard.

– Tax services – identification of public subsidies and tax incentives and

support regarding tax inspections by tax authorities, but only when

support from the external auditor or audit firm is required by law.

Activities outside the scope of the categories above are not ‘pre-approved’

and must be approved by the RAC prior to engagement, regardless of

the dollar value involved. In addition, any engagement for other services

with a value over US$250,000, even if listed as a ‘pre-approved’ service,

requires the approval of the RAC.

All engagements for non-audit services, whether ‘pre-approved’ or not and

regardless of the dollar value involved, are reported quarterly to the RAC.

While not prohibited by BHP’s policy, any proposed engagement of the

External Auditor relating to internal control requires specific prior approval

from the RAC. In addition, while the categories of ‘pre-approved’ services

include a list of certain pre-approved services, the use of the External

Auditor to perform these services will always be subject to our overriding

governance practices as articulated in the policy.

In addition, the RAC did not approve any services during the year ended

30 June 2023 pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of SEC

Regulation S-X (provision of services other than audit).

Fees paid to BHP’s External Auditor during FY2023 for audit and other

services were US$14.230 million, of which 72 per cent comprised audit fees

(including in relation to SOX matters), 13 per cent for audit-related fees and

15 per cent for all other fees. No fees were paid in relation to tax services.

For information on the fees paid refer to Financial Statements note 36

‘Auditor’s remuneration’.

Our Provision of Audit and Other Services by the External Auditor

policy is available at bhp.com/governance

Management’s assessment of internal control over financial reporting

Management is responsible for establishing and maintaining adequate

internal control over financial reporting (as defined in Rule 13a-15(f) and

Rule 15d-15(f) under the Exchange Act).

Because of its inherent limitations, internal control over financial reporting

may not prevent or detect misstatements and, even when determined to be

effective, can only provide reasonable assurance with respect to financial

statement preparation and presentation. Projections of any evaluation of

effectiveness to future periods are subject to the risk that controls may

become inadequate because of changes in conditions, or the degree of

compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including

our CEO and CFO, the effectiveness of BHP’s internal control over financial

reporting was evaluated based on the framework and criteria established in

Internal Controls – Integrated Framework (2013), issued by the Committee

of the Sponsoring Organizations of the Treadway Commission. Based on

this evaluation, management concluded that internal control over financial

reporting was effective as at 30 June 2023. BHP acquired 100 per cent of OZ

Minerals Limited on 2 May 2023 and therefore, management has excluded

this business from its assessment of internal control over financial reporting

as of 30 June 2023. Total assets and revenues of this business excluded from

the assessment represented approximately 8.4 per cent and 0.6 per cent,

respectively, of BHP’s consolidated financial statement amounts as of and for

the year ended 30 June 2023. There were no material weaknesses in BHP’s

internal controls over financial reporting identified by management as at

30 June 2023

BHP has engaged independent registered public accounting firm, EY,

to issue an audit report on our internal control over financial reporting

for inclusion in the Financial Statements of the Annual Report and the

Annual Report on Form 20-F as filed with the SEC.

There were no changes in our internal control over financial reporting

during FY2023 that materially affected or were reasonably likely to

materially affect our internal control over financial reporting.

During FY2023, the RAC reviewed our compliance with the obligations

imposed by SOX, including evaluating and documenting internal controls

as required by section 404 of SOX.

Management’s assessment of disclosure controls and procedures

Management, with the participation of our CEO and CFO, performed

an evaluation of the effectiveness of the design and operation of our

disclosure controls and procedures as at 30 June 2023. Disclosure controls

and procedures are designed to provide reasonable assurance that the

material financial and non-financial information required to be disclosed

by BHP, including in the reports it files or submits under the Exchange

Act, is recorded, processed, summarised and reported on a timely basis.

This information is accumulated and communicated to BHP’s management,

including our CEO and CFO, as appropriate, to allow timely decisions

regarding required disclosure. Based on the evaluation, management

(including the CEO and CFO) concluded that, as at 30 June 2023,

our disclosure controls and procedures are effective in providing that

reasonable assurance.

There are inherent limitations to the effectiveness of any system of

disclosure controls and procedures, including the possibility of human

error and the circumvention or overriding of the controls and procedures.

Even effective disclosure controls and procedures can only provide

reasonable assurance of achieving their control objectives.

In the design and evaluation of our disclosure controls and procedures,

management was required to apply its judgement in evaluating the cost-

benefit relationship of possible controls and procedures.

10 US requirements

BHP Group Limited is a registrant with the SEC in the United States.

It is classified as a foreign private issuer and has American Depositary

Shares listed on the NYSE.

We have reviewed the governance requirements applicable to foreign private

issuers under SOX, including the rules promulgated by the SEC and the

rules of the NYSE, and are satisfied that we comply with those requirements.

Under NYSE rules, foreign private issuers such as BHP are required to

disclose any significant ways our corporate governance practices differ from

those followed by US companies under the NYSE corporate governance

standards. After a comparison of our corporate governance practices with

the requirements of Section 303A of the NYSE-Listed Company Manual

followed by US companies, two significant differences were identified:

– Rule 10A-3 of the Exchange Act requires NYSE-listed companies to

ensure their audit committees are directly responsible for the appointment,

compensation, retention and oversight of the work of the External Auditor

unless the company’s governing law or documents or other home country

legal requirements require or permit shareholders to ultimately vote

on or approve these matters. Under the terms of our Constitution, our

shareholders are ultimately responsible for the appointment and retention

of the External Auditor and are required to vote on the appointment

of the External Auditor from time to time (as required under Australian

law). The RAC remains directly responsible for the compensation

and oversight of the work of the External Auditor.

– Under Section 303A.08 of the NYSE Listed Company Manual,

shareholders must be given the opportunity to vote on all equity-

compensation plans and material revisions thereto, with certain

exemptions. Under Australian law, BHP Group Limited is not required

to provide for shareholder votes on all equity-compensation plans or

revisions thereto. Shareholder approval is required for issues of shares

to Directors and accordingly is sought only for certain incentive awards

to the CEO. The Remuneration Report voted on by shareholders at the

Annual General Meeting describes Board and executive remuneration.

All incentive programs offered to the Board and/or Executives are

intended to comply with our remuneration framework.

112 BHP Annual Report 2023

Directors’ Report

The information presented by the Directors in this Directors’ Report relates to BHP Group Limited and its subsidiaries. The Operating and Financial Review

(OFR), the Remuneration Report and the ‘Lead Auditor’s Independence Declaration’ are incorporated by reference into and form part of this Directors’ Report.

1 Review of operations, principal activities and state of affairs

A review of the operations of BHP during FY2023, the results of those operations during FY2023 and the expected results of those operations in future

financial years are set out in the OFR 1–7, 9 and 11. Information on the likely developments in BHP’s operations in future years and the expected results

of those operations also appears in that section.

We have excluded certain information from the OFR, to the extent permitted by Australian law, on the basis that such information relates to impending

developments or matters in the course of negotiation and disclosure would be seriously prejudicial to the interests of BHP. This is because such disclosure

could be misleading due to the fact it is premature or preliminary in nature, relates to commercially sensitive contracts, would undermine confidentiality

between BHP and our suppliers and clients, or would otherwise unreasonably damage BHP. The categories of information omitted include forward-looking

estimates and projections prepared for internal management purposes, information regarding BHP’s assets and projects, which is developing and susceptible

to change, and information relating to commercial contracts and pricing modules.

Our principal activities, including significant changes in the nature of BHP’s principal activities during FY2023 are disclosed in the OFR.

There were no significant changes in BHP’s state of affairs that occurred during FY2023 and no significant post balance date events other than as disclosed

in the OFR and Financial Statements note 35 ‘Subsequent events’.

No other matter or circumstance has arisen since the end of FY2023 that has significantly affected or is expected to significantly affect the operations,

the results of operations or state of affairs of BHP in future years.

2 Directors

The Directors who served at any time during FY2023 or up until the date of this Directors’ Report are listed in the Board and Board Committee attendance

table below. Information on the current Directors, including their terms of service, qualifications, experience and special responsibilities, and directorships

of other listed companies held in the last three years, is set out in the Corporate Governance Statement. This information is incorporated by reference into

and forms part of this Directors’ Report.

Director attendances at meetings

The Board meets as often as required. During FY2023, the Board met 15 times.

Members of the Executive Leadership Team and other members of senior management attend meetings of the Board by invitation.

Each Board Committee provides a standing invitation for any Non-executive Director to attend Committee meetings (rather than just limiting attendance

to Committee members). Committee agendas and papers are provided to all Directors to ensure they are aware of matters to be considered.

Board and Board Committee attendance in FY2023

Board

Risk and Audit

Committee

Nomination and

Governance Committee

People and

Remuneration

Committee

Sustainability

Committee

Terry Bowen 15/15 10/10 5/5

Malcolm Broomhead

7/7

Xiaoqun Clever 15/15 10/10

Ian Cockerill 15/15 10/10 5/5

Gary Goldberg 15/15 5/5 5/5

Mike Henry 15/15

Michelle Hinchliffe 15/15 10/10

Ken MacKenzie 15/15 5/5

John Mogford

6/6 2/2

Christine O’Reilly 15/15 10/10 5/5 5/5

Catherine Tanna 15/15 5/5 5/5

Dion Weisler 14/15

5/5 5/5

1 Malcolm Broomhead served as a Non-executive Director from 31 March 2010 until his retirement from the Board on 10 November 2022.

2 John Mogford served as a Non-executive Director from 1 October 2017 until his retirement as a member of the Board and the Sustainability Committee on 31 October 2022.

3 Dion Weisler was unable to attend the Board meeting on 9 November 2022 due to a pre-existing commitment.

3 Share interests

Directors’ shareholdings

Details of Directors’ shareholdings in BHP as at the date of this Directors’ Report are shown in the table below. All Directors have met the minimum

shareholding requirement under their Terms of Appointment as at 30 June 2023. No rights or options over shares in BHP Group Limited are held by

any of the Non-executive Directors. We have not made available to any Directors any interest in a registered scheme.

Operating and Financial Review Financial Statements Additional InformationGovernance

BHP Annual Report 2023 113

Director Number of shares held

Terry Bowen 11,000

Xiaoqun Clever 8,539

Ian Cockerill 14,299

Gary Goldberg 16,000

Mike Henry

677,218

Michelle Hinchliffe 8,508

Ken MacKenzie 58,446

Christine O’Reilly 9,420

Catherine Tanna 10,400

Dion Weisler 7,544

1 The number of shares held refers to shares held either directly, indirectly or beneficially by Directors as at 22 August 2023. Where applicable, the information includes shares

held in the name of a spouse, superannuation fund, nominee and/or other controlled entities.

2 As at 22 August 2023, Mike Henry also holds 1,010,277 rights and options over shares in BHP Group Limited.

Executive Key Management Personnel

Interests held by members of the Executive Key Management Personnel (KMP) under employee equity plans as at 30 June 2023 are set out in the tables

contained in the ‘Equity awards’ section in the Remuneration Report 5.2.

The table below sets out the relevant interests in shares in BHP Group Limited held directly, indirectly or beneficially, as at the date of this Directors’

Report by those senior executives who were Executive KMP (other than the Executive Director) on that date.

Executive KMP member Number of shares held

Edgar Basto 146,806

David Lamont 86,235

Geraldine Slattery 164,088

Ragnar Udd 131,559

1 The number of shares held refers to shares held either directly, indirectly or beneficially as at 22 August 2023. Where applicable, the information includes shares held in the

name of a spouse, superannuation fund, nominee and/or other controlled entities.

4 Share capital and buy-back programs

During FY2023, we did not make any on-market or off-market purchases of BHP Group Limited ordinary shares under any share buy-back program. As at the

date of this Directors’ Report, there were no current on-market buy-backs.

Some of our executives receive rights over BHP shares as part of their remuneration arrangements. Entitlements may be satisfied by the transfer of existing

shares, which are acquired on-market by the Employee Share Ownership Plan Trusts or, in respect of some entitlements, by the issue of shares.

The number of shares referred to in column A below were purchased to satisfy awards made under the various BHP Group employee share schemes

during FY2023.

Period

Total number of shares

purchased and transferred

to employees to satisfy

employee awards

Average price

paid per share

US$

Total number of shares

purchased as part of

publicly announced

plans or programs

Maximum number of

shares that may yet be

purchased under the

plans or programs

1 Jul 2022 to 31 Jul 2022 – – – –

1 Aug 2022 to 31 Aug 2022 – – – –

1 Sep 2022 to 30 Sep 2022 – – – –

1 Oct 2022 to 31 Oct 2022 – – – –

1 Nov 2022 to 30 Nov 2022 – – – –

1 Dec 2022 to 31 Dec 2022 – – – –

1 Jan 2023 to 31 Jan 2023 – – – –

1 Feb 2023 to 28 Feb 2023 – – – –

1 Mar 2023 to 31 Mar 2023 2,952,003 29.52 – –

1 Apr 2023 to 30 Apr 2023 – – – –

1 May 2023 to 31 May 2023 – – – –

1 Jun 2023 to 30 Jun 2023 – – – –

Total 2,952,003 29.52 – –

1 The shares were purchased on the ASX and the sale price has been converted into US dollars using the average weekly exchange rate of the week that such purchases

took place.

2 BHP Group Limited is able to buy back and cancel BHP Group Limited shares within the ‘10/12 limit’ without shareholder approval in accordance with section 257B of the

Australian Corporations Act 2001. Any future on-market share buy-back program would be conducted in accordance with the Australian Corporations Act 2001 and with the

ASX Listing Rules.

As at the date of this Directors’ Report, there were 15,155,838 unvested equity awards outstanding in relation to BHP Group Limited ordinary shares

held by 23,498 holders. The expiry dates of these unvested equity awards range between August 2023 and August 2027 and there is no exercise price.

3,497,366 fully paid ordinary shares in BHP Group Limited were issued as a result of the exercise of rights over unissued shares during or since the end

of FY2023. No options over unissued shares or unissued interests in BHP have been granted during or since the end of FY2023 and no shares or interests

were issued as a result of the exercise of an option over unissued shares or interests during or since the end of FY2023. For more information refer to

Financial Statements note 26 ‘Employee share ownership plans’. For information on movements in share capital during and since the end of FY2023

refer to Financial Statements note 17 ‘Share capital’.

114 BHP Annual Report 2023

Directors’ Report continued

5 Secretaries

Stefanie Wilkinson is the Group Company Secretary. For details of her

qualifications and experience refer to Corporate Governance Statement

4.1. Prakash Kakkad, LLB, LPC is also a Company Secretary of BHP

Group Limited as at 30 June 2023. Both have experience in a company

secretariat role or other relevant fields arising from time spent in other

large listed companies or other relevant entities.

6 Indemnities and insurance

Rule 146 of the BHP Group Limited Constitution requires the company to

indemnify, to the extent permitted by law, each Officer of BHP Group Limited

against liability incurred in or arising out of the conduct of the business of

BHP or the discharge of the duties of the Officer. The Directors named in

4.1 of the Corporate Governance Statement, the Company Secretaries and

other Officers of BHP Group Limited have the benefit of this requirement,

as do individuals who formerly held one of those positions.

In accordance with this requirement, BHP Group Limited has entered

into Deeds of Indemnity, Access and Insurance (Deeds of Indemnity)

with its Directors.

We have a policy that BHP will, as a general rule, support and hold harmless

an employee, including an employee appointed as a Director of a subsidiary

who, while acting in good faith, incurs personal liability to others as a result

of working for BHP.

In addition, as part of the arrangements to effect the demerger of South32,

we agreed to indemnify certain former Officers of BHP who transitioned

to South32 from certain claims and liabilities incurred in their capacity

as Directors or Officers of South32.

The terms of engagement for certain services include that we must

compensate and reimburse EY for, and protect EY against any loss,

damage, expense, or liability incurred by EY in respect of third-party claims

arising from a breach by BHP of any obligation under the engagement terms.

We have insured against amounts that we may be liable to pay to Directors,

Company Secretaries or certain employees (including former Officers)

pursuant to Rule 146 of the Constitution of BHP Group Limited or that we

otherwise agree to pay by way of indemnity. The insurance policy also

insures Directors, Company Secretaries and some employees (including

former Officers) against certain liabilities (including legal costs) they may

incur in carrying out their duties. For this Directors’ and Officers’ insurance,

we paid premiums of US$17.2 million excluding taxes during FY2023.

No indemnity in favour of a current or former Officer of BHP Group Limited

or in favour of the External Auditor, was called on during FY2023.

7 Dividends

A final dividend of 80 US cents per share will be paid on 28 September

2023, resulting in total cash dividends determined in respect of FY2023

of 170 US cents per share.

For information on the dividends paid refer to Financial Statements

note 17 ‘Share capital’ and note 19 ‘Dividends’.

8 Auditors

A copy of the declaration given by our External Auditor to the Directors in

relation to the auditors’ compliance with the independence requirements

of the Australian Corporations Act 2001 and the Professional Code of

Conduct for External Auditors is set out in Financial Statements 3.

No current Officer of BHP has held the role of director or partner of the

Group’s current external auditor.

9 Non-audit services

For information on the non-audit services undertaken by BHP’s External

Auditor, including the amounts paid for non-audit services, refer to Financial

Statements note 36 ‘Auditor’s remuneration’. All non-audit services were

approved in accordance with the process set out in the Policy on Provision

of Audit and Other Services by the External Auditor. No non-audit services

were carried out that were specifically excluded by the Policy on Provision of

Audit and Other Services by the External Auditor. Based on advice provided

by the Risk and Audit Committee, the Directors have formed the view that

the provision of non-audit services is compatible with the general standard

of independence for auditors, and that the nature of non-audit services

means that auditor independence was not compromised. The reason for

this view is that the objectivity and independence of the External Auditor

are safeguarded through restrictions on the provision of these services

with some services prohibited from being undertaken.

For more information about our policy in relation to the provision of non-

audit services by the external auditor refer to ‘External audit and financial

reporting’ in our Corporate Governance Statement 9.2.

10 Exploration, research

and development

Companies within the Group carry out exploration and research and

development necessary to support their activities. Details are provided

in OFR 5 ‘Our assets’, OFR 9 ‘Performance by commodity’ and

Resources and Reserves in the Annual Report.

11 ASIC Instrument 2016/191

BHP Group Limited is an entity to which the Australian Securities and

Investments Commission (ASIC) Corporations (Rounding in Financial/

Directors’ Reports) Instrument 2016/191 applies. Amounts in this

Directors’ Report and the Financial Statements, except estimates of future

expenditure or where otherwise indicated, have been rounded to the

nearest million dollars in accordance with ASIC Instrument 2016/191.

12 Proceedings on behalf

of BHP Group Limited

No proceedings have been brought on behalf of BHP Group Limited,

nor has any application been made, under section 237 of the Australian

Corporations Act 2001.

13 Performance in relation

to environmental regulation

BHP seeks to be compliant with all applicable environmental laws and

regulations relevant to its operations. We monitor compliance on a regular

basis, including through external and internal means, to minimise the risk

of non-compliance. For more information on BHP’s performance in relation

to health, safety and the environment refer to OFR 6.8, 6.1 and 6.13.

For the purposes of section 299 (1)(f) of the Australian Corporations Act

2001, in FY2023 BHP was levied 10 fines in relation to environmental laws

and regulations at our operated assets, the total amount payable being

US$69,692.39.

14 Additional information

BHP Group Limited has a branch registered in the United Kingdom.

The Group, through various subsidiaries, has also established branches

in a number of other countries.

The Directors’ Report is approved in accordance with a resolution

of the Board.

Ken MacKenzie Mike Henry

Chair Chief Executive Officer

Dated: 22 August 2023

Governance

Remuneration Report

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 115

People and Remuneration Committee Chair letter

to shareholders

116

1 Remuneration governance 118

2 Executive KMP remuneration framework 119

2.1 How the remuneration framework is set 119

2.2 Remuneration framework operation 119

2.3 Remuneration mix 120

3 Remuneration for the CEO and other Executive KMP 121

3.1 FY2023 remuneration received by the CEO 121

3.2 FY2023 CDP performance outcomes 121

3.3 FY2023 LTIP performance outcomes 125

3.4 Overarching discretion and vesting underpin 125

3.5 LTIP allocated during FY2023 126

3.6 FY2024 remuneration for the CEO and other

Executive KMP

126

4 Remuneration for Non-executive Directors 127

4.1 Remuneration framework of Non-executive Directors 127

4.2 Non-executive Directors’ remuneration in FY2023

and FY2024

127

5 Statutory KMP remuneration and other disclosures 128

5.1 KMP remuneration table 128

5.2 Equity awards 129

5.3 Estimated value range of equity awards 130

5.4 Ordinary shareholdings and transactions 130

5.5 Prohibition on hedging of BHP shares and

equity instruments

131

5.6 Share ownership guidelines and the MSR 131

5.7 Transactions with KMP 131

Abbreviation Item

AGM Annual General Meeting

CDP Cash and Deferred Plan

CEO Chief Executive Officer

DEP Dividend equivalent payment

ELT Executive Leadership Team

GHG Greenhouse gas

HSEC Health, safety, environment and community

IFRS International Financial Reporting Standards

Abbreviation Item

KMP Key Management Personnel

LTIP Long-Term Incentive Plan

MAP Management Award Plan

MSR Minimum shareholding requirement

ROCE Return on capital employed

S&S Safety and sustainability

TSR Total shareholder return

116 BHP Annual Report 2023

People and Remuneration Committee Chair letter to shareholders

Dear Shareholders,

I am pleased to introduce BHP’s Remuneration Report for the financial year to 30 June 2023.

During FY2023, the Remuneration Committee (Committee) continued to focus on achieving

remuneration outcomes that both fairly reflect the performance of BHP and the contribution of our

employees, and are aligned with the interests of shareholders and other key stakeholders.

Our approach and framework

In a year where we have reported two tragic fatalities, it is important we draw on our performance-

based remuneration framework for BHP executives, which reinforces that health and safety is our most

pressing priority. Understandably, and with the support of management, there has been an impact on

remuneration outcomes from these events. Further detail is provided below.

More broadly, the Committee is focused on a remuneration approach that supports the Group’s global

strategy and enables us to attract, retain and motivate our executives while incentivising them to build a

long-term sustainable and value-adding business. This is critical to delivering the best outcomes for all

BHP shareholders.

As BHP is a global organisation, the Committee is also mindful of navigating the remuneration priorities

and expectations of our executives and shareholders in multiple jurisdictions. At the 2022 AGM, we pleasingly received strong support for our remuneration

framework and outcomes, with over 97 per cent voting in favour of the Remuneration Report.

FY2023 represents the fourth year of operating our revised remuneration framework and we believe it is continuing to serve shareholders well. The key

changes to variable remuneration for the CEO that took effect from 1 July 2019 were to significantly reduce the LTIP grant size from 400 per cent of base

salary (on a face value basis) to 200 per cent, and to rebalance to a CDP award with a long-term focus. The CDP award is determined by a balanced

scorecard and is delivered one-third as a cash award and two-thirds as an equity award that is deferred equally for two-year and five-year periods.

This structure aligns participants’ incentive remuneration with performance over the short, medium and long-term.

As of 1 July 2023, the Committee has become the People and Remuneration Committee. The focus on people has expanded and includes overseeing the

implementation of the Group’s key strategies and policies relating to people, including for the attraction, recruitment, motivation and retention of employees,

remuneration, employee engagement, leadership and talent development, industrial relations and employee conduct.

Performance

The tragic deaths of two of our colleagues during the year have been deeply felt. Our absolute priority remains to eliminate fatalities and serious injuries at BHP.

Our financial results for the year were strong, underpinned by reliable production together with capital and cost discipline as we managed lower commodity

prices and inflationary pressures. Our balance sheet is robust and deliberately positioned to support portfolio growth in the commodities the world needs for

population growth, urbanisation and decarbonisation.

In Canada, our investment in potash progresses at pace with first production at Jansen on track for the latter half of 2026, and we are creating a new copper

province in South Australia following the acquisition of OZ Minerals. We are investing strategically in new ideas, technologies and countries through exploration

and early-stage copper and nickel prospects to capture future growth opportunities.

We continue to build an inclusive, high-performance culture and a more sustainable business, which are key to our future competitiveness and ability to deliver

sector-leading returns. Today, more than 35 per cent of our employees are female and we have increased Indigenous representation globally. We are taking

action to reduce our operational GHG emissions through renewable electricity supplies and supporting the development of electric trucks, trains and light

vehicles. As of today, BHP has among the lowest absolute operational GHG emissions of the major miners.

Commodity demand has remained relatively robust in China and India even as developed world economies have slowed substantially. In the near term,

China’s trajectory is contingent on the effectiveness of recent policy measures. We expect buoyant growth in India with strong construction activity underpinning

an expansion in steelmaking capacity. More broadly, there is increased recognition of the importance of critical minerals and strategies across the globe to

incentivise investment in supply and demand, which provides opportunities and challenges.

FY2023 CDP

The FY2023 CDP scorecard used to assess Mike Henry’s annual performance comprises stretching performance measures based on three elements

– safety and sustainability (S&S, referred to in prior years as HSEC), financial and personal performance with respect to delivering a number of group

performance elements. The Committee assessed the CEO’s performance against these scorecard elements, which resulted in a FY2023 CDP outcome

of 96 per cent against a target of 100 per cent (and 64 per cent of the maximum). Despite strong financial performance and having progressed a number

of important strategic objectives, the CEO was uncomfortable with this level of award in the current environment and, having reflected on the two fatalities

during the year after a four-year period of no fatalities, expressed his view to the Committee that it should consider a reduced CDP outcome for him of 90

per cent. The Committee took on board this feedback and exercised its downward discretion to determine a final outcome of 90 per cent against a target of

100 per cent (and 60 per cent of the maximum). The Board and Committee believe this outcome is appropriately aligned with BHP’s values, the shareholder

experience, and the interests of the Group’s other key stakeholders.

For the S&S measures, the outcome took into account the two tragic fatalities at BHP’s operated sites during FY2023. The weighting for significant HSEC

events is 10 per cent of a total 25 per cent for the S&S measures. A negative 10 per cent impact was applied (before a further downwards discretion was

applied as described above) and resulted in a zero outcome for significant HSEC events in FY2023. The progress in mitigating significant HSEC events

during the year has otherwise been sound, with continued progress on the implementation of controls for sexual harassment, but with more to be done.

For the sustainability measures within S&S, strong progress was made against both our climate change and Indigenous partnerships targets, and as a

consequence of this, the CDP scorecard assessment for the S&S measures overall was 22 per cent out of a target of 25 per cent.

For the financial measures, after fully eliminating the impacts of commodity prices during the year, operating performance at our assets was slightly below the

challenging targets set at the commencement of the year. The CDP scorecard assessment for the financial measure was 47 per cent out of a target of 50 per cent.

The financial measures outcome includes a negative 3 per cent impact from the costs of remediating the two issues relating to employee entitlements and

allowances announced on 1 June 2023. These issues, dating back a number of years, affect a number of our current and former employees in Australia.

Further detail is discussed in 6.6 People. Based on currently available information, the cost of remediating these issues is estimated to be US$280 million pre-tax,

incorporating on-costs including associated superannuation and interest payments and this has been reflected in the Group’s FY2023 financial results. BHP has

self-reported to the Fair Work Ombudsman and engaged Protiviti, a global assurance firm, which is currently undertaking a thorough review of our payroll systems.

We will monitor the outcome of the review and engagement with the regulatory authorities and these may consequently impact remuneration outcomes in the future.

From a personal contribution perspective, the Committee considered Mike Henry’s performance against his group measures. These included projects and

initiatives in respect of social value, people, performance and portfolio. The Committee considered Mike’s performance against his group objectives was

slightly ahead of expectations and assessed it as 27 per cent against the target of 25 per cent.

Christine O’Reilly

Chair, People

and Remuneration

Committee

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 117

Governance

The CDP scorecard outcomes for other ELT members and the short-term incentive pool applicable to the majority of BHP employees below the ELT level,

were, like the CEO, below the 100 per cent target. For the same reasons as the CEO, the ELT also proposed a moderation to their final CDP outcomes to the

Committee for consideration. The Committee considered this input and applied a downwards exercise of discretion to the CDP outcomes for this group, in

addition to the zero outcome for significant HSEC events in FY2023.

2018 LTIP award

The vesting outcome for the 2018 LTIP award was 100 per cent. The LTIP performance condition is relative TSR against two separate index measures – a

sector peer group and MSCI World Index. BHP outperformed both the sector peer group and the MSCI World Index. The value of the 2018 LTIP award at the

time of vesting in 2023 is above the value of the award at the time it was granted in 2018 due to the increase in share price and strong dividends during the

five-year vesting period. In terms of value realised, 48 per cent is due to the value at the time the awards were granted and 52 per cent is due to share price

appreciation and dividends. This reflects the experience of shareholders over the period.

In considering vesting of the 2018 LTIP award, the Board and Committee have also conducted their normal holistic review of business performance over the

five years since the award was granted to ensure this level of vesting was appropriate. More information on the 2018 LTIP vesting outcome, including the

five-year holistic business review covering S&S performance, profitability, cash flow, balance sheet health, returns to shareholders, corporate governance and

conduct, is included in 3.3 FY2023 LTIP performance outcomes and 3.4 Overarching discretion and vesting underpin.

As noted above, from FY2020, we revised our remuneration framework to reduce the weighting of future LTIP grants in the overall CEO and other Executive

KMP remuneration packages. Pre-existing grants remained on foot and vesting of these awards would be determined on the basis of existing service and

performance conditions.

More information on the overall remuneration outcomes for the CEO for the year, and how the outcomes are aligned to performance during FY2023, is provided

in 3.1 FY2023 remuneration received by the CEO. Having considered the overall remuneration outcome for the CEO carefully, the Committee concluded it was a

fair reflection of performance and the experience of shareholders, and the application of any downwards discretion to the vesting of the LTIP was not warranted.

FY2024 remuneration

For FY2024, the Committee determined that the CEO’s base salary would increase by 4 per cent, effective 1 September 2023. In making this decision, we

have conducted updated benchmarking and considered the external market demand for global senior executive talent. We benchmark the CEO and other

executives’ remuneration against CEO and executive roles in other global companies of similar complexity, reach and industry, and also have regard to the

relative size of comparator companies. This detailed benchmarking ensures BHP’s executive remuneration remains competitive to attract, motivate and retain

key talented executives and is consistent with the global market.

The Committee considers the CEO’s base salary increase to be modest in this context, and it is below the median salary increase applied for other BHP

employees. Other components of the CEO’s total target remuneration (pension contributions, benefits, CDP and LTIP) remain unchanged and, where

relevant, as percentages of base salary. A summary of the CEO’s arrangements for FY2024 is set out below.

Fixed remuneration CDP LTIP

– Base salary US$1.820 million per

annum, an increase of 4% from

1 September 2023.

– Pension contribution 10% of

base salary.

– Target cash award of 80% of base salary (maximum 120%).

– Plus two awards of deferred shares each of equivalent value

to the cash award, vesting in two and five years, respectively.

– Three performance categories:

– S&S – 25%

– Financial – 50%

– Group – 25%

– The LTIP grant is based on a face value of

200% of base salary.

– Our LTIP awards have challenging relative TSR

performance hurdles measured over five years.

The majority of the CEO’s remuneration package continues to be delivered in BHP equity, not in cash, and the CEO’s remuneration is deliberately tied to the

performance of the business. In addition, the CEO is required to meet a MSR of five times pre-tax base salary and this applies for two years post-retirement.

This ensures the CEO’s remuneration is aligned to the experience of BHP’s shareholders. As at the date of this Report, the CEO’s BHP shareholding is in

excess of his MSR.

The Committee has also reviewed the base salaries and total target remuneration packages for other Executive KMP. The Committee determined these

would also increase by 4 per cent, effective 1 September 2023. This increase is also based on updated benchmarking data and has regard to the global

market for senior executive talent. An additional increase has been determined for Ragnar Udd reflecting his continued strong performance and development

in role. Other aspects of other Executive KMP remuneration arrangements remain unchanged.

Remuneration outcomes for the Chair and Non-executive Directors

Fees for the Chair and Non-executive Directors are reviewed annually and are benchmarked against global companies of similar complexity, size, reach and

industry. As a consequence of considering the updated benchmarking, global market positioning and peer company relativities, a decision has been made

that the following fees will increase with effect from 1 July 2023: the Chair fee and the Non-executive Directors base fee will rise by 5 per cent and the fees

for the Senior Independent Director and Chair of the Risk and Audit Committee will rise by 10 per cent. This is the first increase in fees for the Chair and Non-

executive Directors since 2011 (and reductions were made in 2015 and 2017). The increases are considered appropriate given current benchmarking and the

increased expectations, accountabilities and workloads of each of the Chair and Non-executive Directors. Having conducted this review, it was determined

that there was no change required to the fees for other Committee roles or other allowances.

In FY2023, BHP acquired OZ Minerals, and as a consequence, modest fees were paid to certain Non-executive Directors for additional or extra services

performed in FY2023 in connection with the acquisition.

Summary

Our approach to executive remuneration is to deliberately align remuneration with performance and provide a significant component as at-risk variable pay.

We are confident the outcomes this year are consistent with the performance of BHP and the experience of our shareholders while also recognising our critical

need to attract, motivate and retain our executives in order to progress our strategic objectives and deliver the best outcomes for all BHP shareholders.

We look forward to ongoing dialogue with and the support of BHP’s shareholders. As always, we welcome your feedback and comments on any aspect of

this Report.

Christine O’Reilly

Chair, People and Remuneration Committee

22 August 2023

118 BHP Annual Report 2023

1 Remuneration governance

Board oversight

The Board oversees the structure of remuneration for the Group (including

the CEO) and that it is aligned with BHP’s values, purpose, strategy and

risk appetite including in relation to non-financial risk and with the long-

term interests of BHP and its shareholders.

The Board approves the remuneration framework for the Chair, CEO

and other members of the ELT on recommendation from the People and

Remuneration Committee. No Director or executive is involved in deciding

their own remuneration. The objective of the remuneration framework is to:

– support the execution of the Group’s business strategy

– encourage and sustain a culture aligned to BHP’s values, purpose and

risk appetite, including in relation to non-financial risk

– provide competitive remuneration, which is linked to performance, to

attract, motivate and retain highly skilled executives on a global basis

The Board approves the remuneration arrangements and outcomes for the

Chair and CEO on recommendation from the Committee.

People and Remuneration Committee

The Board has established the Committee to support and advise the Board

on people and remuneration matters, as set out in the Committee Charter

available at bhp.com. Each of the Committee members are independent

Non-executive Directors. The current members of the Committee are:

Christine O’Reilly (Chair), Catherine Tanna and Dion Weisler.

Further detail on the role and focus of the Committee can be found in

5.4 of the Corporate Governance Statement, and details of meeting

attendances can be found in 2 Directors’ Report.

The Committee has extensive access to members of senior management

and regularly invites them to attend meetings to provide reports and

updates. However, members of management are not present when

decisions are considered or taken concerning their own remuneration.

The Committee can also draw on services from a range of external

sources, including independent remuneration advisers.

The Committee sets the remuneration framework for the Executive KMP,

including the CEO. The Committee is briefed on and considers prevailing

market and economic conditions where our Executive KMP are based, the

competitive environment and the positioning and relativities of pay and

employment conditions across the wider BHP workforce.

The Committee’s approach to remuneration outcomes is that the

fundamental driver should be performance and overall remuneration

should be fair to the individual, and remuneration levels should be market

competitive and accurately reflect the CEO’s and other Executive KMP’s

responsibilities and contributions, while aligning with the expectations of

our shareholders and considering the positioning and relativities of pay and

employment conditions across the wider BHP workforce.

The Committee considers shareholder views and those of the wider

community when setting this remuneration framework. We proactively

engage directly with our institutional and investor representative

shareholders regularly around the world to discuss remuneration and

governance matters. This feedback is used as input into decision-making

in relation to our remuneration framework and its application and ensures

Directors are aware of matters raised and have a deep understanding

of current shareholder and other stakeholder views when formulating

remuneration decisions.

Engagement of independent remuneration advisers

The Committee may appoint and instruct expert advisers who are advisers

solely to the Committee, including remuneration consultants to assist the

Committee with advice in relation to the Group’s remuneration strategy,

framework and policies. The Committee may meet with external advisers

without management being present. Potential conflicts of interest are

taken into account when remuneration consultants are selected and their

terms of engagement regulate their level of access to, and require their

independence from, BHP’s management.

PwC was appointed to act as an independent remuneration adviser

in FY2016 and is currently the only remuneration adviser appointed

by the Committee. In that capacity, PwC may provide remuneration

recommendations in relation to KMP, however, it did not provide any

remuneration recommendations in FY2023.

Service contracts

The terms of employment for the CEO and Executive KMP are formalised

in their employment contracts. The current contracts of the CEO and

Executive KMP are not fixed term. BHP may choose to terminate a

contract on up to 12 months’ notice. BHP can require an executive to

work through the notice period or may terminate the individual’s contract

immediately by paying base salary plus pension contributions in lieu of the

notice period. The CEO and Executive KMP must provide up to 12 months’

notice for voluntary resignation.

KMP for FY2023

This Remuneration Report describes the remuneration policies, practices,

outcomes and governance for the KMP of BHP during FY2023. At BHP,

KMP consists of the Directors (including the CEO), as well as certain

members of our ELT who have authority and responsibility for planning,

directing and controlling the activities of the Group directly or indirectly.

For FY2023, after due consideration, the Committee determined the KMP

comprised the following individuals:

– Mike Henry, CEO and Executive Director

– Edgar Basto, President Minerals Australia from 1 July 2022 to

30 September 2022 and Chief Operating Officer from 1 October 2022

to 30 June 2023. The Chief Operating Officer role is a new position that

was created with effect from 1 October 2022

– David Lamont, Chief Financial Officer

– Geraldine Slattery, Senior Executive Officer from 1 July 2022 to

30 September 2022 and President Australia from 1 October 2022 to

30 June 2023. The Senior Executive Officer role ceased to exist from

1 October 2022

– Ragnar Udd, President Americas

– All Non-executive Directors – for details of Non-executive Directors,

including dates of appointment or cessation (where relevant), refer to 2

Directors’ Report

These individuals have held their positions and were KMP for the whole of

FY2023, unless stated otherwise.

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 119

Governance

2 Executive KMP remuneration framework

BHP has an overarching remuneration framework for Executive KMP that guides the Committee’s decisions and is designed to support our strategy and

reinforce our culture and values.

Market competitive to

attract, motivate and

retain high-quality and

experienced executives

Reinforce BHP’s purpose and

support the delivery of our

strategy and behaviours aligned

to Our Charter values

Rewards achievement of

outperformance that balances

long-term sustainability and

risk appetitie with shareholder

wealth creation

Simple and transparent

The LTIP is a long-term equity award

that focuses executives’ efforts on the

achievement of sustainable long-term

value creation and success of the Group

(including appropriate management of

business risks).

Purpose and link to strategyComponentsApproach and link to performance

Performance rights.

Annual long-term variable pay opportunity

allocated as awards of performance rights,

which are subject to a five-year relative TSR

performance condition. The performance

rights are designed to align executives’

reward with sustained shareholder wealth

creation in excess of relevant comparator

group(s), through the relative TSR

performance condition.

Relative TSR has been chosen as an

appropriate measure as it enables an

objective external assessment over a

sustained period on a basis that is familiar

to shareholders.

Market competitive fixed remuneration is

paid in order to attract, motivate and retain

high-quality and experienced executives,

and provide appropriate remuneration for

these important roles in the Group.

Base salary, pension contributions

and benefits.

Competitive fixed remuneration is aligned to

global complexity, size, reach and industry,

and reflects executives’ responsibilities,

location, skills, performance, qualifications

and experience.

Fixed remuneration

The CDP is an annual cash and equity

award that encourages and focuses

executives’ efforts for the relevant financial

year on the delivery of the Group’s strategic

priorities, balancing financial and non-

financial performance, to deliver short,

medium and long-term success aligned

to our purpose and Our Charter, and to

motivate executives to strive to achieve

stretch performance objectives.

Cash and deferred shares.

Annual variable pay opportunity provided

in cash and two and five-year deferred

shares with the outcome determined by

the assessment of performance against a

balanced scorecard linked to execution of

business strategy. A balanced scorecard

of short, medium and long-term elements

including S&S (25% weighting), financial

(50% weighting) and individual performance

measures (25% weighting) are chosen on

the basis that they are expected to have

a significant short, medium and long-term

impact on the success of the Group, with

appropriate targets for each measure that

will appropriately motivate executives to

achieve outperformance that contributes to

the long-term sustainability of the Group and

shareholder wealth creation.

CDP

LTIP

2.2 Remuneration framework operation

These principles are the same as those that apply to other employees, however Executive KMP arrangements have a greater emphasis on and a

higher proportion of remuneration that is at-risk as performance-related variable pay.

The table below shows the components of our remuneration framework.

2.1 How the remuneration framework is set

The four principles that underpin the remuneration framework for Executive KMP are:

2.2 Remuneration framework operation continued

120 BHP Annual Report 2023

2 Executive KMP remuneration framework continued

2.3 Remuneration mix

The diagram below provides the scenarios for the potential total remuneration of the CEO and other Executive KMP at different levels of performance.

Remuneration mix for the CEO and other Executive KMP

Consists of fixed remuneration, which comprises base salary, pension contributions

(10 per cent of base salary) and other benefits (notional 10 per cent of base salary),

details of which are set out in 5.1 KMP remuneration table.

Consists of fixed remuneration, target CDP (a cash award of 80 per cent of base salary

plus two awards of deferred shares each of equivalent value to the cash award, vesting

in two and five years, respectively) and LTIP. The LTIP value in the chart is based on the

fair value of the award, which is 41 per cent of the face value of 200 per cent of base

salary for the CEO and 175 per cent for other Executive KMP. The potential impact of

future share price movements is not included in the value of deferred CDP shares or

LTIP awards.

Consists of fixed remuneration, maximum CDP (a cash award of 120 per cent of base

salary plus two awards of deferred shares each of equivalent value to the cash award,

vesting in two and five years respectively), and LTIP (in the chart based on the face

value of 200 per cent of base salary for the CEO and 175 per cent for other Executive

KMP). The potential impact of future share price movements is not included in the value

of deferred CDP shares or LTIP awards.

Minimum

Target

Maximum

CEO and other Executive KMP

CEO

Other Executive KMP

100%

27%

28%

18% 18% 18%

19% 19% 19%

19%

15%

Fixed remuneration CDP (cash) LTIP

CDP (2 year deferred shares)

32%

18% 28%

17% 17% 17%17%

18% 18% 18%

The maximum opportunity represented above is the most that could potentially be paid for each remuneration component. It does not reflect any intention

by the Group to award that amount.

Assessment of performanceDelivery and vesting

Cessation of

employment

Malus and

clawback

1 ‘Good leaver’ treatment may apply where the reason for the cessation of employment with BHP is due to retirement, retrenchment or redundancy, termination by

mutual agreement, or such other circumstances that do not constitute resignation or termination for cause.

A CDP award is determined based on the assessment of each scorecard

measure by the Committee and the Board, with guidance provided by other

relevant Board Committees (including the Sustainability Committee and Risk

and Audit Committee) in respect of S&S, financial and other measures.

If performance is below the threshold level for any measure, no CDP award

will be provided in respect of that portion of the CDP award opportunity.

The Committee retains discretion to adjust all or a part of any CDP award

in the event the Committee does not consider the outcomes to be a true

reflection of the performance of the Group or considers that individual

performance or other circumstances makes this an inappropriate outcome.

This is an important mitigation against the risk of unintended award outcomes.

CDP awards are provided as cash and two awards of deferred shares, each of

equivalent value to the cash award, vesting in two and five years, respectively.

Awards of deferred shares comprise rights to receive ordinary BHP shares in

the future at the end of the deferral periods. Before the awards vest, these rights

are not ordinary shares and do not carry entitlements to ordinary dividends or

other shareholder rights; however, a DEP is provided on vested awards. The

Committee also has a discretion to settle CDP deferred shares in cash.

Vesting of five-year deferred shares under the CDP is underpinned by a holistic

review of performance at the end of the five-year vesting period, including a

review of S&S performance, profitability, cash flow, balance sheet health, returns

to shareholders, corporate governance and conduct over the five-year period.

On cessation of employment, a ‘good leaver’

may receive a pro-rated cash

award based on performance for that year. For a ‘good leaver’, their unvested

CDP deferred awards generally remain on foot (wholly or in part) unless the

Committee determines otherwise. If the executive is not a ‘good leaver’, all

unvested CDP deferred awards will lapse.

In FY2022 we enhanced our malus and clawback policy. The policy applies to CDP awards (including cash and deferred share awards), MAP awards and LTIP

awards. Malus and clawback provisions apply whether or not awards are made in the form of cash or equity, whether or not the equity has vested, and whether or

not employment is ongoing. Details of the malus and clawback policy, including circumstances in which it would apply, is set out on page 111 of BHP’s 2022 Annual

Report.

Vesting of the LTIP award is dependent on BHP’s TSR relative to the TSR of

relevant comparator group(s) over a five-year performance period.

Achievement against each TSR hurdle is assessed by the Committee and

the Board, based on external data reviewed and confirmed by independent

remuneration consultants.

25% of the award will vest where BHP’s TSR is equal to the median TSR of

the relevant comparator group(s), as measured over the performance period.

Where TSR is below the median, awards will not vest.

Vesting occurs on a sliding scale between the median TSR of the relevant

comparator group(s) up to a nominated level of TSR outperformance over the

relevant comparator group(s), as determined by the Committee, above which

100% of the award will vest.

Where the TSR performance condition is not met, there is no retesting and

awards will lapse. The Committee also retains discretion to lapse any portion

or all of the award where it considers the vesting outcome is not appropriate

given Group or individual performance, or other circumstances apply that makes

the vesting outcome an inappropriate outcome. This is an important mitigation

against the risk of unintended outcomes.

LTIP awards consist of rights to receive ordinary BHP shares in the future if the

performance and service conditions are met.

Before vesting, these rights are not ordinary shares and do not carry

entitlements to ordinary dividends or other shareholder rights; however, a DEP

is provided on vested awards. The Committee also has a discretion to settle

LTIP awards in cash.

Vesting of five-year performance rights under the LTIP is underpinned by a

holistic review of performance at the end of the five-year performance period,

including a review of S&S performance, profitability, cash flow, balance sheet

health, returns to shareholders, corporate governance and conduct over the

five-year period.

On cessation of employment, for a ‘good leaver’

their unvested LTIP awards

generally remain on foot on termination and are pro-rated for the portion of the

vesting period served. These awards are eligible for vesting in the ordinary

course, subject to any applicable performance conditions. If the executive is not

a ‘good leaver’, all unvested LTIP awards will lapse.

CDP

LTIP

CDP (5 year deferred shares)

3 Remuneration for the CEO and other Executive KMP

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 121

Governance

The amount of remuneration actually received each year depends on the achievement of business and individual performance measures that generate

sustained shareholder value. Before deciding on the final incentive outcomes for the CEO and other Executive KMP, the Committee considers the achievement

of pre-determined performance conditions. The Committee then applies its overarching discretion to determine what it considers to be a fair and commensurate

remuneration level in order to decide if the outcome should be reduced. In this way, the Committee believes it can set a remuneration level for the CEO and other

Executive KMP that is sufficient to incentivise and is also fair and commensurate with shareholder expectations and prevailing market conditions.

3.1 FY2023 remuneration received by the CEO

The table below is a voluntary non-statutory disclosure of the remuneration received by the CEO during FY2023 and FY2022. This table is unaudited

and differs from the audited remuneration calculated in accordance with the Australian Accounting Standards (refer to 5.1 KMP remuneration table and

Financial Statements note 26 ‘Employee share ownership plans’). This table is designed to provide greater transparency for shareholders and reflects

actual remuneration received, with the CDP and LTIP included below representing those amounts that have been received as a consequence of satisfying

performance conditions in the relevant financial year.

The difference between the disclosure in the table below and the remuneration disclosed in 5.1 KMP remuneration table relates to the CDP and LTIP.

The remuneration calculated in accordance with Australian Accounting Standards requires the fair value of the CDP and LTIP to be calculated at the time

of grant and to be amortised over the relevant vesting periods regardless of the performance outcome. This may not reflect what the executive receives.

In the table below, the CDP and LTIP values relate to the performance outcomes and actual amount received each year under the CDP (i.e. against the

CDP scorecard) and the LTIP (i.e. based on the LTIP vesting outcome).

Details of the components of remuneration are contained in 2 Executive KMP remuneration framework and the values in the table are explained further in

the notes below.

US$(’000) Base salary Benefits

Pension

CDP

LTIP

Total

Mike Henry FY2023 1,742 7 174 3,762 8,032 13,717

FY2022 1,700 168 170 3,917 9,353 15,308

1 Benefits are non-pensionable and include net movements in leave balances, private family health insurance, car parking, fringe benefits tax and personal tax return

preparation in required countries.

2 FY2023 and FY2022 pension contributions were provided based on 10 per cent of base salary.

3 The values shown are the full CDP value (cash and deferred equity) earned based on performance during FY2023 and FY2022. The FY2023 CDP award will be provided

one-third in cash in September 2023 and two-thirds in deferred equity, with one-third due to vest at the end of FY2025 and one-third due to vest at the end of FY2028 (on

the terms of the CDP). The FY2022 CDP award was provided one-third in cash in September 2022 and two-thirds in deferred equity, with one-third due to vest at the end of

FY2024 and one-third due to vest at the end of FY2027 (on the terms of the CDP).

4 The LTIP award values for FY2023 and FY2022 are based on the full awards Mike Henry received in 2018 and 2017, respectively, when he was President Operations,

Minerals Australia (prior to becoming and with no proration applied for time as CEO), and 100 per cent of the awards vesting. The 2018 LTIP award value in FY2023 is an

estimate calculated on the average share price for the month of July 2023 (which will be updated for the actual share price on the vesting date in the 2024 Remuneration

Report); whereas the 2017 LTIP award value in FY2022 was calculated on the actual share price on the vesting date (and updated from the 2022 Remuneration Report in

which the value was an estimate calculated on the average share price for the month of July 2022).

A revised remuneration framework took effect from 1 July 2019 and significantly reduced the LTIP grant size for the CEO from 400 per cent of base salary

(on a face value basis) to 200 per cent and a rebalancing to a CDP award with a long-term focus. As a result, the remuneration for Mike Henry reported

above reflects the transition to this structure and includes the full amounts of the CDP award earned during FY2023 and FY2022 (i.e. irrespective that

some elements of the CDP award are deferred) together with the full amounts of the pre-existing LTIP awards vesting at the end of FY2023 and FY2022

which were granted in 2018 and 2017, respectively (i.e. when the LTIP award size was double the current grant size).

Had the current remuneration framework been in place when Mike’s 2018 and 2017 LTIP awards were granted and a reduced size awarded, the

reported LTIP values would have been US$4.016 million for FY2023 and US$4.677 million for FY2022 (instead of US$8.032 and US$9.353 million in the

table above). The reported total remuneration would have therefore been US$9.701 million for FY2023 and US$10.632 million for FY2022 (instead of

US$13.717 million and US$15.308 million in the table above).

3.2 FY2023 CDP performance outcomes

The Board and the Committee assessed the Executive KMP’s CDP outcomes in light of the Group’s performance in FY2023 and took into account

performance against the measures in each Executive KMP’s CDP scorecard.

For the CEO, the Board and the Committee assessment against the CDP scorecard measures resulted in a CDP outcome for FY2023 at 96 per cent against the

target of 100 per cent (or 64 per cent against maximum). Despite strong financial performance and having progressed a number of important strategic objectives,

the CEO was uncomfortable with this level of award in the current environment and, having reflected on the two fatalities during the year after a four-year period

of no fatalities, expressed his view to the Committee that it should consider a reduced CDP outcome for him of 90 per cent. The Committee took on board this

feedback and exercised its downward discretion to determine a final outcome of 90 per cent against a target of 100 per cent (and 60 per cent of the maximum).

The CEO’s final CDP scorecard outcome for FY2023 is summarised in the following tables, including a narrative description of each performance

measure and the CEO’s level of achievement, as determined by the Committee and approved by the Board. The level of performance for each measure

is determined based on a range of threshold (the minimum necessary to qualify for any reward outcome), target (where the performance requirements are

met), and maximum (where the performance requirements are significantly exceeded).

Summary of outcomes for the CEO

Performance measure

Weighting

for FY2023 Threshold Target Maximum

Percentage outcome

Mike Henry

S&S Significant HSEC events

Sustainability

10%

15%

22%

Financial 50%

47%

Group 25% 27%

Sub-total

Committee discretion

100%

96%

-6%

Total 100%

90%

122 BHP Annual Report 2023

3 Remuneration for the CEO and other Executive KMP continued

3.2 FY2023 CDP performance outcomes continued

Safety and sustainability (S&S)

The S&S targets (known as HSEC targets in prior years) for the CEO are aligned to the Group’s 2030 goals. As it has done for several years, when

assessing S&S performance against the scorecard targets, the Committee seeks guidance from the Sustainability Committee. The Committee has taken

a holistic view of Group performance in critical areas, including considering any additional matters outside the scorecard targets that the Sustainability

Committee has provided and considers relevant.

The performance commentary below is provided against the significant HSEC events (including fatalities) scorecard targets, which were set on the basis

of operated assets only.

Scorecard targets

No significant health, safety (including fatalities),

environment or community events during the

year.

Performance against scorecard targets

– In what is clearly a tragic and unacceptable

outcome, we lost two of our colleagues during

FY2023, one in February 2023 at Western

Australia Iron Ore and one in April 2023 at

Olympic Dam. Our imperative is to continue to

build our focus on fatality elimination and safety

through field leadership, hazard identification

and effective risk management.

– The weighting of fatalities is 10 percentage

points of the total 25 percentage points

allocated to the whole S&S category.

This results in a zero outcome for this measure.

– No other significant health, environment or

community incidents occurred during FY2023.

Significant HSEC events

Measure outcome Zero

Scorecard targets

Reported Scopes 1 and 2 GHG emissions at our

operated assets in FY2023 are at 10.7MtCO

-e.

>95% of study phase decarbonisation projects

are presented for tollgates or milestones as

scheduled.

Deliver majority of laboratory scale research

scoped for FY2023, progress Memorandum

of Understanding (MOU) level commitments

to detailed project proposals, and complete

design study on the potential for a multiparty

consortium.

Performance against scorecard targets

– For FY2023, we improved on our operational

GHG emissions scorecard target of

10.7 MtCO

-e, with an outcome of 9.8 MtCO

-e.

This was better than performance of 5% or

more below the target, which was required for a

maximum outcome. However, having reviewed

actual production levels at certain operated

assets, the outcome for this measure was

determined by the Committee to still be above

target, but not quite at a maximum outcome

– 100% of study phase decarbonisation projects

were progressed as planned, exceeding the

scorecard target outcome. A decarbonisation

trial in relation to a CAT battery early learner

truck was commenced, which was required for

a maximum outcome.

– The delivery of 100% of laboratory scale research

scoped for FY2023 was achieved; MOU level

commitments towards GHG emission reduction

were achieved, including under agreements with

JFE Steel, HBIS Group, ArcelorMittal, Tata Steel,

POSCO, Zenith Steel and China Baowu; a design

study on the potential for a multiparty consortium

was achieved for a carbon capture, utilisation and

storage hub and we announced a partnership

with Hatch to commence a design study to

pilot an electric smelting furnace (all required to

achieve the scorecard target). Additionally, we

have secured agreements for pilots and trials with

customers targeted at enabling the reduction of

carbon emission intensity by at least 10% (this

being required to achieve a maximum outcome).

Climate change

The overall outcome against the total S&S measures for FY2023 was 22 per cent out of the target of 25 per cent, with a zero outcome against a target of

10 per cent for the significant HSEC events measure and an outcome of 22 per cent against a target of 15 per cent for sustainability measures.

Measure outcome Above target, close to maximum

Scorecard targets

No significant cultural heritage events during

the year.

Achieve significant uplift from FY2022 total

global spend on Indigenous, Traditional Owner

and First Nations vendor procurement, achieve

FY2023 Indigenous employment participation

targets and release a revised Global Indigenous

Peoples Strategy.

Performance against scorecard targets

– No significant cultural heritage incidents

occurred during FY2023.

– Indigenous, Traditional Owner and First Nations

vendor procurement significantly exceeded

targets set with US$333 million in Indigenous

procurement spend in FY2023 (a 122% uplift

from FY2022). Our overall FY2023 Indigenous

employment participation targets were met.

We released a revised global Indigenous

Peoples Policy Statement following global

consultation with Indigenous partners (all

required to achieve target). Additionally, we

implemented formal mechanisms in all regions

to incorporate Indigenous voices in decision

making (this being required to achieve a

maximum outcome).

Indigenous partnerships

Measure outcome Maximum

The performance commentary below is provided against the sustainability scorecard targets, which were set on the basis of operated assets only

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 123

Governance

Financial

ROCE is underlying profit after taxation (excluding after-taxation finance costs and exceptional items) divided by average capital employed. ROCE is

the key financial measure against which CDP outcomes for our senior executives are measured and is, in our view, a relevant measure to assess the

financial performance of the Group for this purpose. While ROCE excludes exceptional items, the Committee reviews each exceptional item to assess if it

should be included in the result when determining the ROCE CDP outcome.

When we are assessing management’s performance, we make adjustments to the ROCE result to allow for changes in commodity prices, foreign

exchange movements and other material items (from the levels assumed in setting the targets) to ensure the assessment appropriately measures

outcomes that are within the control and influence of the Group and its executives. Of these, changes in commodity prices have historically been the

most material due to volatility in prices and the impact on Group revenue and ROCE. As it has done for several years, the Committee seeks guidance

each year from the Risk and Audit Committee when assessing financial performance against scorecard targets.

The outcome against the ROCE measure for FY2023 was 47 per cent out of the target of 50 per cent.

As noted above, the financial measures outcome includes a negative 3 per cent impact from the costs of remediating the two employee entitlements

and allowances issues announced on 1 June 2023. These issues, dating back a number of years, affect a number of our current and former employees

in Australia. Further detail is discussed in 6.6 People. Based on currently available information, the cost of remediating these issues is estimated to be

US$280 million pre-tax, incorporating on-costs including associated superannuation and interest payments and this has been reflected in the Group’s

FY2023 financial results. BHP has self-reported to the Fair Work Ombudsman and engaged Protiviti, a global assurance firm, which is currently

undertaking a thorough review of our payroll systems. We will monitor the outcome of the review and engagement with the regulatory authorities and

these may consequently impact remuneration outcomes in the future.

Scorecard targets

For FY2023, the target for ROCE was 29.9%, with a threshold of 25.6% and

a maximum of 33.5%.

Achievement of the ROCE target will result in a target CDP outcome. The

ROCE target considers the upside opportunities and downside risks inherent

in BHP’s businesses, and is an outcome the Committee believes would be a

level of performance that shareholders would view positively. The maximum

and threshold are an appropriate range of ROCE outcomes, given the

upside opportunities and downside risks, which represent an upper limit of

stretch outperformance that would represent the maximum CDP award, and

a lower limit of underperformance below which no CDP award should be

made.

The performance range around target is subject to a greater level of

downside risk than there is upside opportunity, mainly due to physical and

regulatory asset constraints. Accordingly, the range between threshold and

target is somewhat greater than that between target and maximum. For

maximum, the Committee takes care not to create leveraged incentives that

encourage executives to push for short-term performance that goes beyond

our risk appetite and current operational capacity.

The Committee retains and has a track record of applying downward

discretion (but not upwards discretion) to ensure the CDP outcome is

appropriately aligned with the overall performance of the Group for the year,

and is fair and equitable to management and shareholders.

Performance against scorecard targets

ROCE of 28.8% was reported by BHP for FY2023. Adjusted for the factors

outlined below, ROCE is 29.3%, which is slightly below target. The following

adjustments were made to ensure the outcomes appropriately reflect the

performance of management for the year:

– The full elimination of the impacts of movements in commodities prices

and exchange rates decreased ROCE by 0.8 percentage points.

– Adjustments for other material items made to ensure the outcomes reflect

the performance of management for the year increased ROCE by 1.3

percentage points. This was mainly due to the elimination of the negative

effect on reported ROCE outcomes of higher asset values in the closing

balance sheet due to the acquisition of OZ Minerals late in FY2023.

This adjustment was necessary to ensure the basis of the ROCE outcome

for CDP purposes was the same as the basis upon which the ROCE

target for FY2023 was set.

– Having reviewed the FY2023 exceptional items (as described in Financial

Statements note 3 ‘Exceptional items’), the Committee determined these

should not be considered for the purposes of determining the FY2023

ROCE CDP outcome and that no further action was required in respect of

exceptional items.

The key driver of the FY2023 ROCE outcome of 29.3% being slightly below

the target for FY2023 of 29.9% set at the commencement of the year was

the inclusion of the costs of remediating the two employee entitlements

and allowances issues announced on 1 June 2023. Otherwise, in Minerals

Australia and Minerals Americas, performance was broadly in line with the

CDP targets set at the commencement of the year.

ROCE

Measure outcome Slightly below target

124 BHP Annual Report 2023

3 Remuneration for the CEO and other Executive KMP continued

3.2 FY2023 CDP performance outcomes continued

Social value

Group measures for the CEO

Group measures for the CEO are determined at the commencement of the financial year. The application of group measures remains an important element

of effective performance management. These measures seek to provide a balance between the financial and non-financial performance requirements

that maintain our position as a leader in our industry. The CEO’s group measures for FY2023 included contribution to BHP’s overall performance and the

management team, and the delivery of projects and initiatives within the scope of the CEO role as specified by the Board, as set out in the table below.

Scorecard targets

Finalise the launch and successful public

positioning of the revised global Indigenous

Peoples Policy Statement and ensure it is

embedded across the business.

Performance against scorecard targets

– The global Indigenous Peoples Policy Statement was developed and successfully launched

following extensive engagement with Traditional Owners and First Nations organisations, investors,

and employees.

– In conjunction with this, we accelerated mutually beneficial relationships with 12 Traditional Owners and

10 First Nations groups through agreement making programs in support of asset plans. Assets partnered

with our Indigenous Engagement teams to progress sensitive cultural heritage issues with Traditional

Owners and worked with Traditional Owners to achieve exploration agreements, together with entering

into several significant Indigenous partnerships.

Overall, the performance of the CEO against the group measures for FY2023 was assessed as slightly ahead of expectations and warranted an outcome of 27 per

cent against the target of 25 per cent.

People

Scorecard targets

Increase in female participation by 3 percentage

points.

Engagement and Perception Survey (EPS)

improvement survey-on-survey over the year

and substantively improve lower performing

teams.

Ensure the successful execution of the FY2023

critical programs of work under the Sexual

Harassment strategy.

Performance against scorecard targets

– Female participation increased in FY2023 by 2.9 percentage points to 35.2% at 30 June 2023,

compared to 32.3% at 30 June 2022.

– Our EPS survey results continue to see us placed in the top quartile of the Global Companies

Benchmark, with an improvement survey-on-survey over the year, with engagement increasing 1

percentage point since last year. There was a 25% improvement in lower performing teams, which

was a focus for the EPS.

– In FY2023, the Sexual Harassment Prevention Project Management Office continued to increase transparency,

drive accountability and rigorous governance, incorporate organisational lessons learned and best practice into

key programs of work and regularly engage senior management and the Board. Most critical programs of work

were delivered, however, there is more to do in respect of Active Bystander and Contractor training.

Measure outcome Slightly below target

Performance

Scorecard targets

>90% of BHP Operating System (BOS)

deployments completed, >90% Operational

Excellence Indicator (OEI) improving

assessment-on-assessment for sites in ‘sustain’,

and OEI > 40 at end of deployments.

Simplification of the capital investment lifecycle,

improved culture, capability and standards

embedded globally to accelerate improvements in

capital efficiency.

Deliver material progress on the Brazil strategy.

Performance against scorecard targets

– Our BOS deployment is ahead of target (94% deployment across assets and functions versus the target

of >90%). There has been an improvement in OEI scores assessment-on-assessment for 88% of all

sites, while only 80% of sites in sustain (against target of >90%) have shown an improvement. 85% of

sites reached an OEI >40 by the end of their deployment.

– Initiatives implemented in FY2023 to simplify the investment lifecycle, reduce schedule time and increase

efficiency, included simplifying the Our Requirements for Capital Projects standard to reduce review

time for less complex projects, deploying a Global Projects Onboarding Tool and deploying a centralised

resource hub for projects standards, tools, and templates to improve efficiency and reduce rework.

Key capabilities and standards were embedded globally to improve capital efficiency, including the creation

of a Global Value Optimisation tool to facilitate the capture of capital efficiency improvements.

– Significant progress has been made on the Renova Priority Programs. Over 500 community

resettlement cases were completed. More than 94,000 compensation payments have been made and

301,000 compensation claims closed. In relation to Samarco’s judicial reorganisation, negotiations with

a group of Samarco’s lenders have resulted in an ‘in principle’ agreement which will form the basis for a

resolution of the reorganisation.

Measure outcome Slightly below target

Measure outcome Above target

Scorecard targets

Execute against the strategy and plan with respect

to OZ Minerals as agreed by the Board.

Progress growth levers:

– investments in early-stage future-facing

commodity growth options;

– develop and embed Innovation options in the

business plan;

– accelerate Jansen Stage 2; and

– continue to build the exploration pipeline and

commence exploration activities in new areas.

Performance against scorecard targets

– The OZ Minerals acquisition was successfully executed via a Scheme of Arrangement with an

approval from OZ Minerals shareholders. Day one proceeded to plan with safe and stable operations.

The critical milestones of the first payroll and first month-end reporting also ran smoothly. Integration is

on track, with a strong focus on people and synergies.

– Progress has been positive with respect to growth levers. We evaluated over 10 opportunities which

led to the completion of 4 investments in future-facing commodities. In the Innovation space 2

initiatives moved from the develop stage to the demonstrate phase. The Jansen Stage 2 identification

phase study was approved in October 2022. There has been strong progress in exploration screening

activities and physical exploration work has commenced in 5 new search spaces.

Portfolio

Measure outcome Above target

The CDP performance measures for other Executive KMP for FY2023 are similar to those of the CEO outlined above. However, for the other Executive KMP, the

weighting of each performance measure will vary to reflect the focus required from each Executive KMP role. As with the CEO, individual performance measures

are determined at the start of the financial year. These include the other Executive KMP’s contribution to the delivery of projects and initiatives within the scope

of their role and the overall performance of the Group. Individual performance of other Executive KMP was reviewed against these measures by the Committee

and, on average, were considered to have largely met expectations but warranted an outcome slightly below target. For the same reasons as the CEO, the ELT

also proposed a moderation to their final CDP outcomes for consideration. The Committee considered this input and applied a downwards exercise of discretion

to the CDP outcomes for this group, in addition to the zero outcome for significant HSEC events in FY2023.

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 125

Governance

The diagram below represents the FY2023 CDP weightings and outcomes against the original scorecard for other Executive KMP.

Performance categories

Other Executive

KMP with region

responsibility

Other Executive

KMP without region

responsibility Threshold Target Maximum

S&S

Group 12.5% 25%

Region 12.5% 0%

Financial

Group 25% 50%

Region 25% 0%

Individual 25% 25%

BHP Minerals Australia Minerals America

3.3 FY2023 LTIP performance outcomes

The five-year performance period for the 2018 LTIP award for relevant Executive KMP ended on 30 June 2023. Vesting is subject to the achievement of

the relative TSR performance conditions and any discretion applied by the Committee (refer to 3.4 Overarching discretion and vesting underpin).

For the 2018 LTIP award to vest in full, BHP’s TSR over the performance period from 1 July 2018 to 30 June 2023 must have been at or exceeded the

80th percentile of the Sector Group TSR and the MSCI World Index TSR (World TSR). TSR includes returns to BHP shareholders in the form of share

price movements along with dividends paid and reinvested in BHP (including cash and in-specie dividends).

BHP’s TSR performance was positive 128.4 per cent over the five-year period from 1 July 2018 to 30 June 2023. This is above the 80th percentile of the

Sector Group TSR of positive 97.3 per cent and above the 80th percentile of the World TSR of positive 92.0 per cent over the same period. This level of

performance results in 100 per cent vesting for the 2018 LTIP award. The value of the CEO’s vested 2018 LTIP award has been reported in 3.1 FY2023

remuneration received by the CEO.

The graph below shows BHP’s performance relative to comparator groups.

BHP vs. Sector Group and MSCI World TSR over 2018 LTIP cycle

TSR since 1 July 2018 (%)

160%

120%

80%

40%

–40%

June 18 June 19 June 20 June 21 June 22 June 23

Years ended 30 June

BHP TSR Sector Group 50th percentile TSR Sector Group 80th percentile TSR

World (MSCI) 50th percentile TSR World (MSCI) 80th percentile TSR

The value of the 2018 LTIP award at the time of vesting in 2023 is higher than the value of the award at the time it was granted in 2018. The share price

has risen appreciably during the five-year period and there have been strong dividends. Of the value realised, 48 per cent is due to the value at the time

the awards were granted and 52 per cent is due to share price appreciation and dividends. This value increment due to share price appreciation and

dividends is consistent with the experience of shareholders over the period.

3.4 Overarching discretion and vesting underpin

The rules of the CDP and LTIP and the terms and conditions of the awards provide the Committee with an overarching discretion to reduce the number of

awards that will vest, notwithstanding that the performance conditions or the relevant service conditions have been met.

This overarching discretion is a holistic, qualitative judgement and is applied as an underpin test before final vesting is confirmed. It is an important risk

management tool to ensure vesting is not simply driven by a formula or the passage of time that may give unexpected or unintended remuneration outcomes.

The Committee considers its discretion carefully each year ahead of the scheduled vesting of CDP and LTIP equity awards in August. It considers

performance holistically over the five-year period, including a five-year ‘look back’ on S&S performance, profitability, cash flow, balance sheet health,

returns to shareholders, corporate governance and conduct. For the five years from FY2019 to FY2023, the Committee noted BHP’s continued progress

in S&S outcomes (noting, however, the two fatalities in the current year have been taken into account in determining CDP outcomes for FY2023), strong

126 BHP Annual Report 2023

3 Remuneration for the CEO and other Executive KMP continued

operational performance with improving production and cost performance, and significant returns to shareholders, together with no governance or conduct

issues of note.

Firstly, in respect of the vesting of CDP two-year deferred shares (granted in November 2021 in respect of performance in FY2021), the Committee did

not identify any reason to exercise its downwards discretion. The Committee noted the two employee entitlements and allowances issues announced on

1 June 2023, including the impact on CDP outcomes for FY2023, and intends to monitor the outcome of the review underway and engagement with the

regulatory authorities and this may consequently impact remuneration outcomes in the future.

Secondly, in respect of the vesting of the 2018 LTIP five-year performance rights, the formulaic outcome of the 2018 LTIP was 100 per cent vesting.

Having undertaken the ‘look back’ review described above, the Committee concluded the vesting outcome was appropriate given Group and individual

performance, and that no reasons were identified to warrant the exercise of its downwards discretion. There is no upwards discretion available to the

Committee in respect of the LTIP and the overarching discretion may only reduce the number of awards that may vest.

3.5 LTIP allocated during FY2023

Following shareholder approval at the 2022 AGM, 118,853 LTIP awards (in the form of performance rights) were granted to the CEO on 22 November

2022. The face value of the CEO’s award was 200 per cent of his base salary of US$1.750 million at the time of grant. The fair value of the awards

is ordinarily calculated by multiplying the face value of the award by the fair value factor of 41 per cent (for the current plan design, as determined by

the independent adviser to the Committee). The 118,853 LTIP awards for the CEO was determined based on the US$ face value of the LTIP awards

of US$3.500 million and calculated using the average share price and US$/A$ exchange rate over the 12 months up to and including 30 June 2022.

LTIP awards granted to other Executive KMP during FY2023 were determined on the same basis as described above for the CEO, except that awards for

other Executive KMP had a face value of 175 per cent of base salary.

In addition to the LTIP terms set out in 2 Executive KMP remuneration framework, the Committee determined the following terms for the 2022 LTIP:

Performance period – 1 July 2022 to 30 June 2027

Performance

conditions

– Vesting is conditional on two relative TSR performance measures.

– An averaging period of six months will be used in the TSR calculations.

– BHP’s TSR relative to the median TSR of the MSCI World Metals and Mining Index (Sector Group TSR) and the MSCI World Index

(World TSR) will determine the vesting of 67% and 33% of the award, respectively.

– For each portion of the award to vest in full, BHP’s TSR must be at or exceed the 80th percentile of the Sector Group TSR or the

World TSR (as applicable). Threshold vesting (25% of each portion of the award) occurs where BHP’s TSR equals the 50th percentile

(i.e. the median) of the Sector Group TSR or the World TSR (as applicable). Vesting occurs on a sliding scale between the 50th and

80th percentiles.

3.6 FY2024 remuneration for the CEO and other Executive KMP

The remuneration for the CEO and other Executive KMP in FY2024 will be in accordance with 2.2 Remuneration framework operation and the main

elements are set out in the table below.

Base salary CDP LTIP

Base salaries are reviewed and benchmarked

annually against external market demand for

senior executive talent to ensure they remain

competitive. Following the review, if the Board

and Committee assess and determine a base

salary increase should apply to the CEO and/

or other Executive KMP, the increase will be

applicable from 1 September.

For FY2024, the Committee determined that

the CEO’s base salary would increase by 4%,

effective 1 September 2023, to US$1.820 million.

The Committee has also reviewed the base

salaries and total target remuneration packages

for other Executive KMP. The Committee

determined these would also increase by 4%,

effective 1 September 2023. An additional

increase of 5.7% has been determined for

Ragnar Udd reflecting his continued strong

performance and development in role.

The Board and the Committee set the CEO CDP

scorecard performance categories and measures

each year.

For FY2024, the balanced scorecard includes

S&S measures (25% weighting) such as

significant events, safety, climate change and

Indigenous partnerships, a ROCE financial

measure (50% weighting), and group and

individual measures (25% weighting) relating

to projects and initiatives in respect of people,

performance and portfolio. The specific group

and individual performance measures vary for

Executive KMP to reflect the focus required from

each of them in their role.

Notably, certain S&S, group and individual

measures have a long-term focus where they are

set with a view to achieving longer-term ambitions.

For example, annual GHG emission reduction

targets are aligned to the ultimate achievement

of BHP’s medium-term target of at least a 30%

reduction in operational GHG emissions from

FY2020 levels by FY2030, however, progress

towards this is not expected to be linear. As a

consequence, vesting of five-year deferred shares

under the CDP is underpinned by a holistic review

of performance at the end of the five-year vesting

period, allowing for performance against the

longer-term ambitions to be considered.

The FY2024 LTIP award for the CEO has a

maximum face value of US$3.640 million,

being 200% of the CEO’s base salary at the

time of grant. The number of LTIP awards

expected to be granted in FY2024 is 125,124

and has been determined using the share

price and US$/A$ exchange rate over the

12 months up to and including 30 June 2023.

The granting of this LTIP award is subject to

the approval of shareholders at the 2023 AGM.

If approved, the award will be granted following

the AGM (i.e. in or around November 2023,

subject to securities dealing considerations).

The FY2024 LTIP award will use the same

performance and service conditions as the

FY2023 LTIP award.

LTIP awards granted to other Executive KMP

during FY2024 will be calculated on the same

basis as described above for the CEO, except

that awards for other Executive KMP will have

a maximum face value of 175%.

3.4 Overarching discretion and vesting underpin continued

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 127

Governance

4 Remuneration for Non-executive Directors

Our remuneration framework for Non-executive Directors aligns with the Australian Securities Exchange Corporate Governance Council’s Principles and

Recommendations (4th Edition).

4.1 Remuneration framework of Non-executive Directors

The following table shows the components for Non-executive Directors’ remuneration. Non-executive Directors are not eligible to participate in any CDP

or LTIP awards.

Fees Benefits

Purpose and link

to strategy

Competitive fees are paid in order to attract and retain high-quality

individuals, and to provide appropriate remuneration for the role undertaken.

Fees are set at a competitive level based on benchmarks and advice

provided by external advisers.

Competitive benefits are paid in order to attract and retain high-

quality individuals and adequately remunerate them for the role

undertaken, including the considerable travel burden.

Components The Chair is paid a single fee for all responsibilities. Non-executive

Directors are paid a base fee and relevant committee membership fees.

Committee Chairs and the Senior Independent Director are paid an

additional fee to reflect their extra responsibilities.

All fee levels are reviewed annually and any changes are ordinarily

effective from 1 July.

Fee levels reflect the size and complexity of the Group and the

geographies where the Group operates. The economic environment

and the financial performance of the Group are taken into account.

Consideration is also given to salary reviews across the rest of the Group.

Where the payment of pension contributions is required by law, these

contributions are deducted from the Director’s overall fee entitlements.

Travel allowances are paid on a per-trip basis reflecting the

considerable travel burden imposed on members of the Board as

a consequence of the global nature of the organisation and apply

when a Director needs to travel to attend a Board meeting or site

visits at our multiple geographic locations.

As a consequence of our prior dual listed company structure, Non-

executive Directors are required to prepare personal tax returns

in Australia and the UK, regardless of whether they reside in one

or neither of those countries. They are accordingly reimbursed for

the costs of personal tax return preparation in whichever of the UK

and/or Australia is not their place of residence (including payment

of the tax cost associated with the provision of the benefit).

Letters of appointment

The Board has adopted a letter of appointment that contains the terms on which Non-executive Directors will be appointed, including the basis upon which

they will be indemnified by the Group. The Board has adopted a policy under which all Non-executive Directors must seek re-election at the AGM each year.

As a result of requiring re-election each year, Non-executive Directors do not have a fixed term in their letter of appointment.

The maximum aggregate fees payable to Non-executive Directors (including the Chair) were approved by shareholders at the 2008 AGMs at US$3.800 million

per annum. This sum includes base fees, Committee fees and pension contributions. Travel allowances and non-monetary benefits are not included in this limit.

Payments on early termination or loss of office

There are no provisions in any of the Non-executive Directors’ appointment arrangements for compensation payable on early termination of their directorship.

A Non-executive Director may resign on reasonable notice. No payments are made to Non-executive Directors on loss of office.

4.2 Non-executive Directors’ remuneration in FY2023 and FY2024

The remuneration for the Non-executive Directors was paid in FY2023 and will be paid in FY2024 in accordance with the remuneration framework set out

above. Fee levels for the Non-executive Directors and the Chair are reviewed annually. The review includes benchmarking against peer companies, with

the assistance of external advisers (but not by the Committee-appointed independent remuneration adviser).

As a consequence of considering the updated benchmarking, global market positioning and peer company relativities, a decision has been made that the

following fees will increase with effect from 1 July 2023: the Chair fee and the Non-executive Directors base fee will rise by 5 per cent and the fees for the

Senior Independent Director and Chair of the Risk and Audit Committee will rise by 10 per cent. This is the first increase in fees for the Chair and Non-

executive Directors since 2011 (and reductions were made in 2015 and 2017). The increases are considered appropriate given current benchmarking

and the increased expectations, accountabilities and workloads of each of the Chair and Non-executive Directors. Having conducted this review, it was

determined that there was no change required to the fees for other Committee roles or other allowances.

The below table sets out the annualised total remuneration and total fixed fees for both FY2023 and FY2024 (including the increases from 1 July 2023).

Non-executive Directors do not have any performance-based at-risk remuneration or receive any equity awards as part of their remuneration, therefore

the totals shown below are total remuneration and total fixed fee.

Levels of fees and travel allowances for Non-executive Directors (in US$) FY2023 FY2024

Base annual fee 160,000 168,000

Plus additional fees for:

Senior Independent Director 48,000 53,000

Committee Chair:

Risk and Audit 60,000 66,000

People and Remuneration 45,000 45,000

Sustainability 45,000 45,000

Nomination and Governance No additional fee No additional fee

Committee membership:

Risk and Audit 32,500 32,500

People and Remuneration 27,500 27,500

Sustainability 27,500 27,500

Nomination and Governance 18,000 18,000

Travel allowance:

Less than 10 hours 7,000 7,000

10 hours or more 15,000 15,000

Chair’s fee 880,000 925,000

1 In relation to travel for Board and shareholder meetings, the time thresholds relate to a flight time in excess of three hours to travel to the meeting location (i.e. one way flight

time). Only one travel allowance is paid per round trip.

128 BHP Annual Report 2023

5 Statutory KMP remuneration and other disclosures

5.1 KMP remuneration table

The table below has been prepared in accordance with relevant accounting standards. Remuneration data for KMP are for the periods of FY2022 and

FY2023 that they were KMP. More information on the framework and operation of each element of remuneration is provided earlier in this Report.

Share-based payments

The figures included in the shaded columns of the statutory table below for share-based payments were not actually provided to the Executive KMP,

including the CEO, during FY2023 or FY2022. These amounts are calculated in accordance with accounting standards and are the amortised IFRS fair

values at grant date of equity and equity-related instruments that have been granted to the executives. For information on awards that were allocated and

vested during FY2023 and FY2022 refer to 5.2 Equity awards.

US$(‘000)

Financial

year

Base salary/

fees

Short-term benefits

Post-

employment

benefits Share-based payments

Total

Annual cash

incentive

Non-monetary

benefits

Other

benefits

Retirement

benefits

Value

of CDP

awards

2,6

Value

of LTIP

awards

Executive Director

Mike Henry FY2023 1,742 1,254 7 – 174 2,107 2,206 7,490

FY2022 1,700 1,306 168 – 170 1,890 2,297 7,531

Other Executive KMP

Edgar Basto FY2023 975 704 2 – 98 1,030 820 3,629

FY2022 950 646 45 – 95 698 786 3,220

David Lamont FY2023 975 733 15 – 98 960 608 3,389

FY2022 950 730 37 300 95 615 1,754 4,481

Geraldine Slattery FY2023 950 665 113 400 95 1,117 947 4,287

FY2022 850 700 – 695 128 1,019 856 4,248

Ragnar Udd FY2023 917 711 49 – 92 911 748 3,428

FY2022 850 653 32 – 85 576 676 2,872

Non-executive Directors

Terry Bowen FY2023 241 – – 40 17 – – 298

FY2022 248 – – 32 15 – – 295

Malcolm Broomhead

FY2023 61 – – 15 6 – – 82

FY2022 165 – – 31 12 – – 208

Ian Cockerill FY2023 208 – – 106 12 – – 326

FY2022 233 – – 61 – – – 294

Xiaoqun Clever FY2023 181 – – 79 12 – – 272

FY2022 193 – – 18 – – – 211

Anita Frew

FY2022 81 – – 2 – – – 83

Gary Goldberg FY2023 284 – – 101 – – – 385

FY2022 301 – – 71 – – – 372

Michelle Hinchliffe

FY2023 186 – – 37 6 – – 229

FY2022 64 – – 30 – – – 94

Susan Kilsby

FY2022 69 – – 16 – – – 85

Ken MacKenzie FY2023 863 – – 63 17 – – 943

FY2022 863 – – 32 17 – – 912

John Mogford

FY2023 63 – – 33 – – – 96

FY2022 234 – – 17 – – – 251

Christine O’Reilly FY2023 268 – – 55 – – – 323

FY2022 276 – – 32 – – – 308

Catherine Tanna

FY2023 198 – – 52 17 – – 267

FY2022 49 – – 30 4 – – 83

Dion Weisler FY2023 198 – – 55 17 – – 270

FY2022 191 – – 32 14 – – 237

1 Base salaries and fees shown in this table reflect the amounts paid over the 12-month period from 1 July 2022 to 30 June 2023 for each Executive KMP and Non-executive Director.

In FY2023 the Executive KMP base salaries were increased from 1 September 2022 as follows: David Lamont’s to US$0.980 million, Edgar Basto’s to US$0.980 million, Ragnar Udd’s to

US$0.930 million. Geraldine Slattery’s base salary increased to US$0.875 million from 1 September 2022 and she was then appointed as President Australia on 1 October 2022 on a base

salary of US$0.980 million. In FY2023, the fees for the following Non-executive Directors include special exertion fees for additional services they performed in connection with the acquisition

of OZ Minerals: Terry Bowen received an additional fee of US$20,000 as Chair of the Transaction Committee and Christine O’Reilly and Gary Goldberg received US$12,500 each and

Malcolm Broomhead received US$8,500 as members of the Transaction Committee.

2 Annual cash incentive in this table is the cash portion of CDP awards each Executive KMP earned in respect of performance during each financial year. CDP is provided one-third

in cash and two-thirds in deferred equity (which are included in the Share-based payments columns of the table). The cash portion of CDP awards is paid in September of the year

following the relevant financial year. The minimum possible value awarded to each individual is nil and the maximum is 360 per cent of base salary (120 per cent in cash and 240 per

cent in deferred equity). For FY2023, Executive KMP earned the following CDP awards as a percentage of the maximum (the remaining portion has been forfeited): Mike Henry 60

per cent, Edgar Basto 60 per cent, David Lamont 63 per cent, Geraldine Slattery 58 per cent, and Ragnar Udd 65 per cent.

3 Non-monetary benefits are non-pensionable and include items such as net leave accruals, private family health insurance, car parking, fringe benefits tax and personal tax return

preparation in required countries.

4 Other benefits are non-pensionable and for FY2023 include a one-off relocation allowance (with no trailing entitlements) provided to Geraldine Slattery relating to her international

relocation from the United States to Australia. For FY2022, other benefits include a sign-on award provided to David Lamont on commencement of employment; an encashment

of annual leave entitlements under the US annual leave policy for Geraldine Slattery, together with a retention award for Geraldine to ensure her services were retained by BHP

after the August 2021 announcement of the merger of the Petroleum business with Woodside. The majority of the amounts disclosed for benefits for Non-executive Directors are

usually travel allowances (amounts of between US$nil and US$105,000 for FY2023) however, the COVID-19 pandemic restricted Non-executive Director travel during FY2022.

For FY2023, amounts of between US$nil and US$3,000 are included in respect of tax return preparation; and amounts of between US$nil and US$1,400 are included in respect of

the reimbursement of the tax cost associated with the provision of taxable benefits.

5 Retirement benefits for each Executive KMP in FY2022 and FY2023 were 10 per cent of base salary as per the remuneration framework, with the exception of the retirement benefits

reported for Geraldine Slattery of 15 per cent of base salary for FY2022 in accordance with prior remuneration framework. Non-executive Director fees are inclusive of minimum

superannuation contributions of up to 10.5 per cent of remuneration for FY2023 in accordance with Australian superannuation legislation. No other pension contributions were paid.

6 The IFRS fair value of CDP and LTIP awards is estimated at grant date. Refer to Financial Statements note 26 ‘Employee share ownership plans’.

7 The FY2023 remuneration for Malcolm Broomhead and John Mogford relates to part of the year only, as they retired from the Board on 10 November 2022 and 31 October 2022,

respectively. The FY2022 remuneration for Anita Frew and Susan Kilsby relates to part of the year only, as they retired from the Board on 11 November 2021.

8 The FY2022 remuneration for Michelle Hinchliffe and Catherine Tanna relates to part of the year only, as they joined the Board on 1 March 2022 and 4 April 2022 respectively.

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 129

Governance

5.2 Equity awards

The interests held by Executive KMP under the Group’s employee equity plans are set out in the table below. Each equity award is a right to acquire one

ordinary share in BHP Group Limited upon satisfaction of the vesting conditions. Our mandatory minimum performance requirements for securities dealing

governs and restricts dealing arrangements and the provision of shares on vesting or exercise of awards. No interests under the Group’s employee equity

plans are held by related parties of Executive KMP.

Approval from BHP’s shareholders for the issue of equity awards to the CEO under the CDP and LTIP was obtained under ASX Listing Rule 10.14 at the

2022 AGM.

DEP applies to awards provided to Executive KMP under the CDP and LTIP as detailed in 2 Executive KMP remuneration framework. No DEP is payable on

MAP awards previously provided to Executive KMP.

Executive KMP received or will receive awards under the CDP and LTIP. The terms and conditions of CDP and LTIP awards, including the performance

conditions, are described in 2 Executive KMP remuneration framework.

BHP senior management who are not KMP receive awards under the MAP. While no MAP awards were granted to Executive KMP after becoming KMP,

as noted in the table below, Edgar Basto, Geraldine Slattery and Ragnar Udd still hold MAP awards that were allocated to them prior to commencing their

Executive KMP service.

Award type

Date

of grant

At 1 July

2022 Granted Uplift

Vested Lapsed

At 30

June

2023

Award

vesting

date

Market price on date of: Gain on

awards

(‘000)

DEP on

awards

(‘000)Grant

Vesting

Mike Henry

CDP 22-Nov-22 – 44,335 – – – 44,335 Aug 27 A$43.48 – – –

CDP 22-Nov-22 – 44,335 – – – 44,335 Aug 24 A$43.48 – – –

CDP 23-Nov-21 49,304 – 5,942 – – 55,246 Aug 26 A$38.05 – – –

CDP 23-Nov-21 49,304 – 5,942 – – 55,246 Aug 23 A$38.05 – – –

CDP 20-Oct-20 44,348 – 5,344 – – 49,692 Aug 25 A$35.90 – – –

CDP 20-Oct-20 44,348 – – 44,348 – – 19 Aug 22 A$35.90 A$41.55 A$1,843 A$224

CDP 22-Nov-22 – – 5,344 5,344 – – 22 Nov 22 A$43.48 A$43.48 A$232 A$36

LTIP 22-Nov-22 – 118,853 – – – 118,853 Aug 27 A$43.48 – – –

LTIP 23-Nov-21 107,183 – 12,916 – – 120,099 Aug 26 A$38.05 – – –

LTIP 20-Oct-20 140,239 – 16,899 – – 157,138 Aug 25 A$35.90 – – –

LTIP 20-Nov-19 153,631 – 18,513 – – 172,144 Aug 24 A$37.24 – – –

LTIP 18-Dec-18 172,413 – 20,776 – – 193,189 Aug 23 A$33.50 – – –

LTIP 24-Nov-17 218,020 – – 218,020 – – 19 Aug 22 A$27.97 A$41.55 A$9,059 A$2,108

LTIP 22-Nov-22 – – 26,272 26,272 – – 22 Nov 22 A$43.48 A$43.48 A$1,142 A$300

Edgar Basto

CDP 22-Nov-22 – 21,936 – – – 21,936 Aug 27 A$43.48 – – –

CDP 22-Nov-22 – 21,936 – – – 21,936 Aug 24 A$43.48 – – –

CDP 23-Nov-21 30,604 – – – – 30,604 Aug 26 A$38.05 – – –

CDP 23-Nov-21 30,604 – – – – 30,604 Aug 23 A$38.05 – – –

LTIP 22-Nov-22 – 58,237 – – – 58,237 Aug 27 A$43.48 – – –

LTIP 23-Nov-21 58,725 – – – – 58,725 Aug 26 A$38.05 – – –

LTIP 20-Oct-20 76,835 – – – – 76,835 Aug 25 A$35.90 – – –

MAP 19-May-20 31,649 – – – – 31,649 Aug 24 A$35.05 – – –

MAP 19-May-20 31,649 – – – – 31,649 Aug 23 A$35.05 – – –

MAP 25-Sep-19 31,649 – – 31,649 – – 19 Aug 22 A$36.53 A$41.55 A$1,315 –

David Lamont

Performance

1-Dec-20 86,279 – – 69,023 17,256 – 19 Aug 22 A$38.56 A$41.55 A$2,868 A$311

CDP 22-Nov-22 – 24,775 – – – 24,775 Aug 27 A$43.48 – – –

CDP 22-Nov-22 – 24,775 – – – 24,775 Aug 24 A$43.48 – – –

CDP 23-Nov-21 18,009 – –

– – 18,009 Aug 26 A$38.05 – – –

CDP 23-Nov-21 18,009 – – – – 18,009 Aug 23 A$38.05 – – –

LTIP 22-Nov-22 – 58,237 – – – 58,237 Aug 27 A$43.48 – – –

LTIP 23-Nov-21 58,725 – – – – 58,725 Aug 26 A$38.05 – – –

LTIP 1-Dec-20 76,835 – – – – 76,835 Aug 25 A$38.56 – – –

Geraldine Slattery

CDP 22-Nov-22 – 23,784 – – – 23,784 Aug 27 A$43.48 – – –

CDP 22-Nov-22 – 23,784 – – – 23,784 Aug 24 A$43.48 – – –

CDP 23-Nov-21 28,258 – – – – 28,258 Aug 26 A$38.05 – – –

CDP 23-Nov-21 28,258 – – – – 28,258 Aug 23 A$38.05 – – –

CDP 20-Oct-20 28,562 – – – – 28,562 Aug 25 A$35.90 – – –

CDP 20-Oct-20 28,562 – – 28,562 – – 19 Aug 22 A$35.90 A$41.55 A$1,187 A$145

LTIP 22-Nov-22 – 58,237 – – – 58,237 Aug 27 A$43.48 – – –

LTIP 23-Nov-21 52,543 – – – – 52,543 Aug 26 A$38.05 – – –

LTIP 20-Oct-20 60,660 – – – – 60,660 Aug 25 A$35.90 – – –

LTIP 20-Nov-19 117,371 – – – – 117,371 Aug 24 A$37.24 – – –

MAP 21-Feb-19 31,965 – – – – 31,965 Aug 23 A$34.83 – – –

MAP 21-Feb-19 31,965 – – 31,965 – – 19 Aug 22 A$34.83 A$41.55 A$1,328 –

Ragnar Udd

CDP 22-Nov-22 – 22,167 – – – 22,167 Aug 27 A$43.48 – – –

CDP 22-Nov-22 – 22,167 – – – 22,167 Aug 24 A$43.48 – – –

130 BHP Annual Report 2023

5 Statutory KMP remuneration and other disclosures continued

Award type

Date

of grant

At 1 July

2022 Granted Uplift

Vested Lapsed

At 30

June

2023

Award

vesting

date

Market price on date of: Gain on

awards

(‘000)

DEP on

awards

(‘000)Grant

Vesting

CDP 23-Nov-21 18,415 – – – – 18,415 Aug 26 A$38.05 – – –

CDP 23-Nov-21 18,415 – – – – 18,415 Aug 23 A$38.05 – – –

LTIP 22-Nov-22 – 55,266 – – – 55,266 Aug 27 A$43.48 – – –

LTIP 23-Nov-21 52,543 – – – – 52,543 Aug 26 A$38.05 – – –

LTIP 2-Nov-20 68,748 – – – – 68,748 Aug 25 A$33.81 – – –

MAP 21-Aug-20 23,790 – – – – 23,790 Aug 24 A$38.36 – – –

MAP 21-Aug-20 23,790 – – – – 23,790 Aug 23 A$38.36 – – –

MAP 25-Sep-19 23,790 – – 23,790 – – 19 Aug 22 A$36.53 A$41.55 A$989 –

1 Uplift awards granted as a consequence of the merger of the Petroleum business with Woodside. Uplift awards for the CEO were granted on 22 November 2022 following the approval at

the 2022 AGM and for other Executive KMP were granted on 17 June 2022.

2 Where the vesting date is not yet known, the estimated vesting month is shown. Where awards lapse, the lapse date is shown. If the vesting conditions are met, awards will vest on or as

soon as practicable after the first non-prohibited period date occurring after 30 June of the preceding year of vest. The year of vesting is the second (CDP two-year awards), third (MAP),

fourth (MAP) or fifth (MAP, CDP five-year awards and LTIP) financial year after grant. All awards are conditional awards and have no exercise period, exercise price or expiry date; instead

ordinary fully paid shares are automatically delivered upon the vesting conditions being met. Where vesting conditions are not met, the conditional awards will immediately lapse.

3 The market price shown is the closing price of BHP shares on the relevant date of grant. No price is payable by the individual to receive a grant of awards. The IFRS fair value of the CDP

and LTIP awards granted in FY2023 at the grant date of 22 November 2022 are as follows: CDP – A$43.48 and LTIP – A$30.44.

4 The market price shown is the closing price of BHP shares on the relevant date of vest.

5 The gain on awards is calculated using the market price on date of vesting or exercise (as applicable) less any exercise price payable. The amounts that vested and were lapsed for the

awards during FY2023 are as follows: CDP – 100 per cent vested; LTIP – 100 per cent vested; MAP – 100 per cent vested. The gain on the uplift award granted to the CEO in November

2022 was calculated using the market price on 22 November 2022.

6 Sign-on performance shares granted on employment as a consequence of forfeiting shares from prior employment with CSL. In FY2022 the Committee exercised its discretion and

determined to vest 80 per cent or 69,023 performance shares. The amount not vested was lapsed. A holding lock applies to the vested shares until August 2023.

5.3 Estimated value range of equity awards

The current face value (and estimate of the maximum possible total value) of equity awards allocated during FY2023 and yet to vest are the awards as set

out in the previous table multiplied by the current share price of BHP Group Limited. The minimum possible total value of the awards is nil. The actual value

that may be received by participants in the future cannot be determined as it is dependent on and therefore fluctuates with the share price of BHP Group

Limited at the date that any particular award vests or is exercised.

Five-year share price, dividend and earnings history

The table below provides the five-year share price history for BHP Group Limited, history of dividends paid and the Group’s earnings.

FY2023 FY2022 FY2021 FY2020 FY2019

Share price at beginning of year (A$) 40.05 48.22 35.82 41.68 33.60

Share price at end of year (A$) 44.99 41.25 48.57 35.82 41.16

Dividends paid (A$) 3.92 10.18¹ 2.07 2.13 3.08²

Attributable profit (US$ million, as reported) 12,921 30,900 11,304 7,956 8,306

1 The FY2022 dividends paid includes A$5.38 in respect of the in-specie dividend associated with the merger of the Petroleum business with Woodside.

2 The FY2019 dividends paid includes A$1.41 in respect of the special dividend associated with the divestment of Onshore US.

The highest and lowest closing share price during FY2023 were A$49.95 and A$36.10 respectively.

5.4 Ordinary shareholdings and transactions

The number of ordinary shares in BHP Group Limited held directly, indirectly or beneficially, by each individual (including shares held in the name of all close

members of the Director’s or Executive KMP’s family and entities over which either the Director or Executive KMP or the family member has, directly or

indirectly, control, joint control or significant influence) is shown below. No shares are held nominally by any KMP or their related parties. These are ordinary

shares held without performance conditions or restrictions and are included in MSR calculations for each individual.

Held at 1 July 2022 Purchased

Received as

remuneration

Sold

Held at

30 June 2023

Mike Henry 521,592 – 293,984 138,358 677,218

Edgar Basto 130,038 – 31,649 14,881 146,806

David Lamont 6,345 – 79,890 – 86,235

Geraldine Slattery

2 3

127,382 – 60,527 23,821 164,088

Ragnar Udd 118,955 – 23,790 11,186 131,559

Terry Bowen 11,000 – – – 11,000

Malcolm Broomhead

19,000 – – – 19,000

Xiaoqun Clever 8,000 539 – – 8,539

Ian Cockerill 14,299 – – – 14,299

Gary Goldberg

12,000 4,000 – – 16,000

Michelle Hinchliffe 8,508 – – – 8,508

Ken MacKenzie 52,351 6,095 – – 58,446

John Mogford

13,938 – – – 13,938

Christine O’Reilly 9,420 – – – 9,420

Catherine Tanna 10,400 – – – 10,400

Dion Weisler 7,544 – – – 7,544

1 Includes DEP in the form of shares on equity awards vesting, where applicable, as disclosed in 5.2 Equity awards.

2 The following BHP Group Limited shares were held in the form of American Depositary Shares: 2,042 for Geraldine Slattery and 8,000 for Gary Goldberg.

3 The opening balance for Geraldine Slattery has been adjusted to include an additional 150 shares.

4 Shares shown as held by Malcolm Broomhead and John Mogford at 30 June 2023 are their balances at the date of their retirement from the Board on 10 November 2022 and

31 October 2022, respectively.

5.2 Equity awards continued

Operating and Financial Review Financial Statements Additional Information

BHP Annual Report 2023 131

Governance

5.5 Prohibition on hedging of BHP

shares and equity instruments

The Executive KMP may not use unvested BHP equity awards as collateral

or hedge the value of any unvested BHP equity awards or the value of

shares and securities held as part of meeting the MSR.

Any securities that have vested and are no longer subject to restrictions,

or not held as part of meeting the MSR, may be subject to hedging

arrangements or used as collateral, provided that prior consent is obtained.

5.6 Share ownership guidelines

and the MSR

The share ownership guidelines and the MSR help to ensure the interests

of Directors, executives and shareholders remain aligned.

The CEO and other Executive KMP are expected to grow their holdings to

the MSR from the scheduled vesting of their employee awards over time.

The MSR is tested at the time that shares are to be sold. Shares may be

sold to satisfy tax obligations arising from the granting, holding, vesting,

exercise or sale of the employee awards or the underlying shares whether

the MSR is satisfied at that time or not.

For FY2023:

– The MSR for the CEO was five times annual pre-tax base salary. At the

end of FY2023, the CEO met the MSR.

– The MSR for other Executive KMP was three times annual pre-tax base

salary. At the end of FY2023, the other Executive KMP met the MSR,

except for David Lamont, as he was appointed as Executive KMP on

1 December 2020.

– No Executive KMP sold or purchased shares during FY2023, other than

sales to satisfy taxation obligations.

A two-year post-retirement shareholding requirement for the CEO applies

from the date of retirement, which will be the lower of the CEO’s MSR or

the CEO’s actual shareholding at the date of retirement.

Subject to securities dealing constraints, Non-executive Directors have

agreed to apply at least 25 per cent of their remuneration (base fees plus

Committee fees) to the purchase of BHP shares until they achieve an MSR

equivalent in value to one year of remuneration (base fees plus Committee

fees). Thereafter, they must maintain at least that level of shareholding

throughout their tenure. At the end of FY2023, each Non-executive Director

met the MSR.

5.7 Transactions with KMP

During the financial year, there were no transactions between the Group

and its subsidiaries and KMP (including their related parties) (2022: US$

nil; 2021: US$ nil). There were no amounts payable by or loans with KMP

(including their related parties) at 30 June 2023 (2022: US$ nil).

A number of KMP hold or have held positions in other companies

(i.e. personally related entities) where it is considered they control or

significantly influence the financial or operating policies of those entities.

There have been no transactions with those entities and no amounts

were owed by the Group to personally related entities or any other related

parties (2022: US$ nil; 2021: US$ nil).

This Remuneration Report was approved by the Board on 22 August 2023

and signed on its behalf by:

Christine O’Reilly

Chair, People and Remuneration Committee

22 August 2023

Financial Statements

In this section:

1 Consolidated Financial Statements 133

1.1 Consolidated Income Statement 133

1.2 Consolidated Statement of Comprehensive Income 133

1.3 Consolidated Balance Sheet 134

1.4 Consolidated Cash Flow Statement 135

1.5 Consolidated Statement of Changes in Equity 136

1.6 Notes to the Financial Statements 139

2 Directors’ declaration 194

3 Lead Auditor’s Independence Declaration under

Section 307C of the Australian Corporations Act 2001

195

4 Independent auditor’s report to the members

of BHP Group Limited

196

Notes to the Financial Statements

Performance

1 Segment reporting 139

2 Revenue 141

3 Exceptional items 142

4 Significant events – Samarco dam failure 144

5 Expenses and other income 148

6 Income tax expense 149

7 Earnings per share 151

Working capital

8 Trade and other receivables 152

9 Trade and other payables 152

10 Inventories 152

Resource assets

11 Property, plant and equipment 153

12 Intangible assets 155

13 Impairment of non-current assets 156

14 Deferred tax balances 158

15 Closure and rehabilitation provisions 160

16 Climate change 162

Capital Structure

17 Share capital 166

18 Other equity 167

19 Dividends 168

20 Provisions for dividends and other liabilities 168

Financial Management

21 Net debt 169

22 Leases 171

23 Net finance costs 173

24 Financial risk management 173

Employee matters

25 Key management personnel 179

26 Employee share ownership plans 179

27 Employee benefits, restructuring and

post-retirement employee benefits provisions

182

Group and related party information

28 Discontinued operations 184

29 Business combinations 185

30 Subsidiaries 186

31 Investments accounted for using the equity method 187

32 Interests in joint operations 189

33 Related party transactions 189

Unrecognised items and uncertain events

34 Contingent liabilities 190

35 Subsequent events 190

Other items

36 Auditor’s remuneration 190

37 BHP Group Limited 191

38 Deed of Cross Guarantee 191

39 New and amended accounting standards and

interpretations and changes to accounting policies

193

132 BHP Annual Report 2023

BHP Annual Report 2023 133

Operating and Financial Review

Governance Financial Statements Additional Information

1 Consolidated Financial Statements

1.1 Consolidated Income Statement

for the year ended 30 June 2023

Notes

2023

US$M

2022

US$M

2021

US$M

Continuing operations

Revenue 2 53,817 65,098 56,921

Other income

5 394 1,398 380

Expenses excluding net finance costs

5 (31,873) (32,371) (30,871)

Profit/(loss) from equity accounted investments, related impairments and expenses

31 594 (19) (915)

Profit from operations 22,932 34,106 25,515

Financial expenses (2,060) (1,050) (1,290)

Financial income 529 81 67

Net finance costs

23 (1,531) (969) (1,223)

Profit before taxation 21,401 33,137 24,292

Income tax expense (6,691) (10,430) (10,376)

Royalty-related taxation (net of income tax benefit) (386) (307) (240)

Total taxation expense

6 (7,077) (10,737) (10,616)

Profit after taxation from Continuing operations 14,324 22,400 13,676

Discontinued operations

Profit/(loss) after taxation from Discontinued operations 28 − 10,655 (225)

Profit after taxation from Continuing and Discontinued operations 14,324 33,055 13,451

Attributable to non-controlling interests 1,403 2,155 2,147

Attributable to BHP shareholders 12,921 30,900 1 1,304

Basic earnings per ordinary share (cents)

7 255.2 610.6 223.5

Diluted earnings per ordinary share (cents)

7 254.7 609.3 223.0

Basic earnings from Continuing operations per ordinary share (cents)

7 255.2 400.0 228.0

Diluted earnings from Continuing operations per ordinary share (cents)

7 254.7 399.2 227.5

The accompanying notes form part of these Financial Statements.

1.2 Consolidated Statement of Comprehensive Income

for the year ended 30 June 2023

Notes

2023

US$M

2022

US$M

2021

US$M

Profit after taxation from Continuing and Discontinued operations 14,324 33,055 13,451

Other comprehensive income

Items that may be reclassified subsequently to the income statement:

Hedges:

Gains/(losses) taken to equity 95 (914) 863

(Gains)/losses transferred to the income statement (148) 881 (837)

Loss transferred to initial carrying amount of hedged item 35 − −

Exchange fluctuations on translation of foreign operations taken to equity − (5) 5

Exchange fluctuations on translation of foreign operations transferred to income statement − (54) −

Tax recognised within other comprehensive income

6 5 10 (8)

Total items that may be reclassified subsequently to the income statement (13) (82) 23

Items that will not be reclassified to the income statement:

Re-measurement (losses)/gains on pension and medical schemes (18) 24 58

Equity investments held at fair value 17 (8) (2)

Tax recognised within other comprehensive income

6 7 (9) (20)

Total items that will not be reclassified to the income statement 6 7 36

Total other comprehensive (loss)/income (7) (75) 59

Total comprehensive income 14,317 32,980 13,510

Attributable to non-controlling interests 1,400 2,160 2,158

Attributable to BHP shareholders 12,917 30,820 1 1,352

The accompanying notes form part of these Financial Statements.

134 BHP Annual Report 2023

1 Consolidated Financial Statements continued

1.3 Consolidated Balance Sheet

as at 30 June 2023

Notes

2023

US$M

2022

US$M

ASSETS

Current assets

Cash and cash equivalents

21 12,428 17,236

Trade and other receivables

8 4,594 5,426

Other financial assets

24 470 629

Inventories

10 5,220 4,935

Current tax assets 508 263

Other 131 175

Total current assets 23,351 28,664

Non-current assets

Trade and other receivables

8 148 153

Other financial assets

24 1,115 802

Inventories

10 1,403 1,315

Property, plant and equipment

11 71,818 61,295

Intangible assets

12 1,610 1,369

Investments accounted for using the equity method

31 1,620 1,420

Deferred tax assets

14 56 56

Other 175 92

Total non-current assets 77,945 66,502

Total assets 101,296 95,166

LIABILITIES

Current liabilities

Trade and other payables

9 6,296 6,687

Interest bearing liabilities

21 7,173 2,622

Other financial liabilities

24 402 579

Current tax payable 611 3,032

Provisions

4,15,20,27 4,514 3,965

Deferred income 47 34

Total current liabilities 19,043 16,919

Non-current liabilities

Trade and other payables

9 4 –

Interest bearing liabilities

21 15,172 13,806

Other financial liabilities

24 2,157 1,997

Non-current tax payable 68 87

Deferred tax liabilities

14 4,299 3,063

Provisions

4,15,20,27 1 1,973 10,478

Deferred income 50 50

Total non-current liabilities 33,723 29,481

Total liabilities 52,766 46,400

Net assets 48,530 48,766

EQUITY

Share capital 4,737 4,638

Treasury shares (41) (31)

Reserves

18 13 12

Retained earnings 39,787 40,338

Total equity attributable to BHP shareholders 44,496 44,957

Non-controlling interests

18 4,034 3,809

Total equity 48,530 48,766

The accompanying notes form part of these Financial Statements.

The Financial Statements were approved by the Board of Directors on 22 August 2023 and signed on its behalf by:

Ken MacKenzie Mike Henry

Chair Chief Executive Officer

BHP Annual Report 2023 135

Operating and Financial Review

Governance Financial Statements Additional Information

1.4 Consolidated Cash Flow Statement

for the year ended 30 June 2023

Notes

2023

US$M

2022

US$M

2021

US$M

Operating activities

Profit before taxation from Continuing operations 21,401 33,137 24,292

Adjustments for:

Depreciation and amortisation expense 5,061 5,683 5,084

Impairments of property, plant and equipment, financial assets and intangibles 75 515 2,507

Net finance costs 1,531 969 1,223

(Profit)/loss from equity accounted investments, related impairments and expenses (594) 19 915

Other 546 (350) 573

Changes in assets and liabilities:

Trade and other receivables 867 (703) (2,389)

Inventories (44) (865) (405)

Trade and other payables (1,086) 727 1,149

Provisions and other assets and liabilities 131 (248) 486

Cash generated from operations 27,888 38,884 33,435

Dividends received 347 1,018 728

Interest received 545 58 97

Interest paid (1,090) (657) (766)

Proceeds/(settlements) of cash management related instruments 331 378 (401)

Net income tax and royalty-related taxation refunded 232 105 222

Net income tax and royalty-related taxation paid (9,552) (10,501) (7,432)

Net operating cash flows from Continuing operations 18,701 29,285 25,883

Net operating cash flows from Discontinued operations

28 – 2,889 1,351

Net operating cash flows 18,701 32,174 27,234

Investing activities

Purchases of property, plant and equipment (6,733) (5,855) (5,612)

Exploration and evaluation expenditure (350) (256) (192)

Exploration and evaluation expenditure expensed and included in operating cash flows 294 199 134

Investment in subsidiaries, operations and joint operations, net of cash

29 (5,868) − −

Net investment and funding of equity accounted investments (557) (266) (553)

Proceeds from sale of assets 444 221 158

Proceeds/(settlements) from sale of subsidiaries, operations and joint operations net of their cash 82 1,255 (3)

Other investing (377) (271) (257)

Net investing cash flows from Continuing operations (13,065) (4,973) (6,325)

Net investing cash flows from Discontinued operations

28 – (904) (1,520)

Net cash completion payment on merger of Petroleum with Woodside

28 – (683) −

Cash and cash equivalents disposed on merger of Petroleum with Woodside

28 – (399) −

Net investing cash flows (13,065) (6,959) (7,845)

Financing activities

Proceeds from interest bearing liabilities 8,182 1,164 568

(Settlements)/proceeds of debt related instruments (677) − 167

Repayment of interest bearing liabilities (3,289) (3,358) (8,357)

Purchase of shares by Employee Share Ownership Plan (ESOP) Trusts (88) (149) (234)

Dividends paid (13,268) (17,851) (7,901)

Dividends paid to non-controlling interests (1,175) (2,540) (2,127)

Net financing cash flows from Continuing operations (10,315) (22,734) (17,884)

Net financing cash flows from Discontinued operations

28 – (33) (38)

Net financing cash flows (10,315) (22,767) (17,922)

Net (decrease)/increase in cash and cash equivalents from Continuing operations (4,679) 1,578 1,674

Net increase/(decrease) in cash and cash equivalents from Discontinued operations – 1,952 (207)

Net cash completion payment on merger of Petroleum with Woodside – (683) −

Cash and cash equivalents disposed on merger of Petroleum with Woodside – (399) −

Cash and cash equivalents, net of overdrafts, at the beginning of the financial year 17,236 15,246 13,426

Foreign currency exchange rate changes on cash and cash equivalents (134) (458) 353

Cash and cash equivalents, net of overdrafts, at the end of the financial year

21 12,423 17,236 15,246

The accompanying notes form part of these Financial Statements.

136 BHP Annual Report 2023

1 Consolidated Financial Statements continued

1.5 Consolidated Statement of Changes in Equity

for the year ended 30 June 2023

US$M

Attributable to BHP shareholders

BHP Group Limited

Reserves

Retained

earnings

Total equity

attributable

to BHP

shareholders

Non-

controlling

interests

Total

equity

capital

Treasury

Balance as at 1 July 2022 4,638 (31) 12 40,338 44,957 3,809 48,766

Total comprehensive income – – 4 12,913 12,917 1,400 14,317

Transactions with owners:

BHP Group Limited shares issued 99 (99) – – – – −

Purchase of shares by ESOP Trusts – (88) – – (88) – (88)

Employee share awards exercised net of employee contributions net of tax – 177 (132) (45) – – −

Vested employee share awards that have lapsed, been cancelled or forfeited – – (1) 1 – – −

Accrued employee entitlement for unexercised awards net of tax – – 130 – 130 – 130

Dividends – – – (13,420) (13,420) (1,175) (14,595)

Balance as at 30 June 2023 4,737 (41) 13 39,787 44,496 4,034 48,530

Attributable to BHP shareholders

Share capital Treasury shares

US$M

BHP

Group

Limited

BHP

Group

Plc

BHP

Group

Limited

BHP

Group

Plc Reserves

Retained

earnings

Total equity

attributable

to BHP

shareholders

Non-

controlling

interests

Total

equity

Balance as at 1 July 2021 1 , 111 1,057 (32) (1) 2,350 46,779 51,264 4,341 55,605

Total comprehensive income − − − − (90) 30,910 30,820 2,160 32,980

Transactions with owners:

BHP Group Limited shares issued 172 − (172) − − − − − −

Purchase of shares by ESOP Trusts − − (148) (1) − − (149) − (149)

Employee share awards exercised net of employee

contributions net of tax − − 321 2 (207) (1 16) − − −

Vested employee share awards that have lapsed,

been cancelled or forfeited − − − − (30) 30 − − −

Accrued employee entitlement for unexercised

awards net of tax − − − − 143 − 143 − 143

Corporate structure unification 3,355 (1,057) − − (2,298) − − − −

Dividends − − − − − (17,720) (17,720) (2,540) (20,260)

In specie dividend on merger of Petroleum

with Woodside − − − − − (19,559) (19,559) − (19,559)

Divestment of subsidiaries, operations and

joint operations − − − − − − − (157) (157)

Transfers within equity on divestment of

subsidiaries, operations and joint operations − − − − (14) 14 − − −

Equity contributed net of tax − − − − 158 − 158 5 163

Balance as at 30 June 2022 4,638 − (31) − 12 40,338 44,957 3,809 48,766

Balance as at 1 July 2020 1 , 111 1,057 (5) − 2,306 43,396 47,865 4,310 52,175

Total comprehensive income − − − − 22 1 1,330 1 1,352 2,158 13,510

Transactions with owners:

Purchase of shares by ESOP Trusts − − (229) (5) − − (234) − (234)

Employee share awards exercised net of employee

contributions net of tax − − 202 4 (149) (57) − − −

Vested employee share awards that have lapsed,

been cancelled or forfeited − − − − (4) 4 − − −

Accrued employee entitlement for unexercised

awards net of tax − − − − 175 − 175 − 175

Dividends − − − − − (7,894) (7,894) (2,127) (10,021)

Balance as at 30 June 2021 1 , 111 1,057 (32) (1) 2,350 46,779 51,264 4,341 55,605

The accompanying notes form part of these Financial Statements.

BHP Annual Report 2023 137

Operating and Financial Review

Governance Financial Statements Additional Information

Basis of preparation

The Consolidated Financial Statements (Financial Statements) comprise

BHP Group Limited (BHP or the Company) together with its controlled

entities (Group) for the year ended 30 June 2023. BHP Group Limited,

incorporated and domiciled in Australia, is a for-profit company limited by

shares which are publicly traded on the Australian Securities Exchange.

BHP Group Limited also has a standard listing on the London Stock

Exchange (LSE), a secondary listing on the Johannesburg Stock Exchange

and is listed on the New York Stock Exchange (NYSE) in the United States.

Prior to 31 January 2022, BHP Group Limited and BHP Group Plc, an

incorporated UK-listed company, operated together as a single-for-profit

economic entity under a Dual Listed Company (DLC) structure comprising

a common Board of Directors, unified management structure and joint

objectives. On 31 January 2022, BHP unified its corporate structure under

BHP Group Limited.

Directors of BHP have included information in the Financial Statements

they deem to be material and relevant to the understanding of the Financial

Statements. Disclosure may be considered material and relevant if the

dollar amount is significant due to its size or nature, or the information is

important to understand the:

– Group’s current year results

– impact of significant changes in the Group’s business or

– aspects of the Group’s operations that are important to

future performance

The Board of Directors resolved to authorise the issue of the financial

report on 22 August 2023.

Basis of preparation and measurement

The Group’s Financial Statements as at and for the year ended

30 June 2023:

– are a consolidated general purpose financial report

– have been prepared in accordance with the requirements of:

– the Australian Corporations Act 2001 (Corporations Act 2001)

– Australian Accounting Standards and other authoritative

pronouncements of the Australian Accounting Standards Board

(AASB) and International Financial Reporting Standards as issued

by the International Accounting Standards Board (IASB) (collectively

referred to as IFRS)

– are prepared on a going concern basis as the Directors:

– have made an assessment of the Group’s ability to continue as a

going concern for the 12 months from the date of this report

– consider it appropriate to adopt the going concern basis of accounting

in preparing the Group’s Financial Statements

– measure items on the basis of historical cost principles, except for the

following items:

– derivative financial instruments and certain other financial assets and

liabilities, which are carried at fair value

– non-current assets or disposal groups that are classified as held-

for-sale or held-for-distribution, which are measured at the lower of

carrying amount and fair value less costs to sell

– include significant accounting policies in the notes to the Financial

Statements that summarise the recognition and measurement basis

used and are relevant to an understanding of the Financial Statements

– apply a presentation currency of US dollars, consistent with the

predominant functional currency of the Group’s operations. Amounts are

rounded to the nearest million dollars, unless otherwise stated, in

accordance with ASIC (Rounding in Financial/Directors’ Reports)

Instrument 2016/191

– present reclassified comparative information where required for

consistency with the current year’s presentation

– adopt all new and amended standards and interpretations under IFRS

that are mandatory for application in periods beginning on 1 July 2022.

None had a significant impact on the Financial Statements. Refer note

39 ‘New and amended accounting standards and interpretations and

changes to accounting policies’ for details

– have not early adopted any standards and interpretations that have

been issued or amended but are not yet effective, other than as outlined

in note 39 ‘New and amended accounting standards and interpretations

and changes to accounting policies’

The accounting policies are consistently applied by all entities included in

the Financial Statements.

In assessing the appropriateness of the going concern assumption over

the going concern period, management has stress tested BHP’s most

recent financial projections to incorporate a range of potential future

outcomes by considering BHP’s principal risks. The Group’s financial

forecasts, including downside commodity price and production scenarios,

demonstrate that the Group believes that it has sufficient financial

resources to meet its obligations as they fall due throughout the going

concern period. As such, the Financial Statements continue to be prepared

on the going concern basis.

Principles of consolidation

In preparing the Financial Statements, the effects of all intragroup balances

and transactions have been eliminated.

A list of significant entities in the Group, including subsidiaries, joint

arrangements and associates at 30 June 2023 is contained in note 30

‘Subsidiaries’, note 31 ‘Investments accounted for using the equity method’

and note 32 ‘Interests in joint operations’.

Subsidiaries: The Financial Statements of the Group include the

consolidation of BHP Group Limited (the Company or parent entity) and

its subsidiaries, being the entities controlled by the parent entity during the

year (and, in prior periods, BHP Group Plc and its subsidiaries while the

DLC was in effect). Control exists where the Group:

– has power over the investee

– is exposed to, or has rights to, variable returns from its involvement with

the entity

– has the ability to affect those returns through its power to direct the

activities of the entity

The ability to approve the operating and capital budget of an entity and the ability

to appoint key management personnel are decisions that demonstrate that the

Group has the existing rights to direct the relevant activities of an entity.

The results of subsidiaries acquired or disposed of during the year are

included in profit or loss from the date the Company gains control until the

date when the Company ceases to control the subsidiary. When the Group

loses control of a subsidiary, the gain or loss on disposal is recognised in

profit or loss.

Where the Group’s interest is less than 100 per cent, the interest

attributable to outside shareholders is reflected in non-controlling interests.

Changes in the Group’s interests in subsidiaries that do not result in a

loss of control are accounted for as equity transactions. The carrying

amount of the Group’s interests and the non-controlling interests are

adjusted to reflect the changes in their relative interests in the subsidiaries.

Any difference between the amount by which the non-controlling interests

are adjusted and the fair value of the consideration paid or received is

recognised directly in equity and attributed to the owners of the Company.

The financial information of subsidiaries is prepared for the same reporting

period as the Group. The acquisition method of accounting is used to

account for the Group’s business combinations.

Joint arrangements: The Group undertakes a number of business activities

through joint arrangements, which exist when two or more parties have

joint control. Joint arrangements are classified as either joint operations or

joint ventures, based on the contractual rights and obligations between the

parties to the arrangement:

– Joint operations: A joint operation is an arrangement in which the Group

shares joint control, primarily via contractual arrangements with other

parties. In a joint operation, the Group has rights to the underlying

assets and obligations for the liabilities relating to the arrangement.

138 BHP Annual Report 2023

1 Consolidated Financial Statements continued

This includes situations where the parties benefit from the joint activity

through a share of the output, rather than by receiving a share of the

results of trading. In relation to the Group’s interest in a joint operation,

the Group recognises: its assets and liabilities, including its share of

any assets and liabilities held or incurred jointly; revenue from the sale

of its share of the output and its share of any revenue generated from

the sale of the output by the joint operation; and its expenses including

its share of expenses incurred jointly. All such amounts are allocated

in accordance with the terms of the arrangement, which is usually in

proportion to the Group’s interest in the joint operation.

The Group accounts for the assets, liabilities, revenue and expenses

relating to its interest in a joint operation in accordance with the IFRS

Standards applicable to the particular assets, liabilities, revenue

and expenses.

– Joint ventures: A joint venture is a joint arrangement in which the parties

that share joint control have rights to the net assets of the arrangement.

A separate vehicle, not the parties, will have the rights to the assets and

obligations for the liabilities relating to the arrangement. More than an

insignificant share of output from a joint venture is sold to third parties,

which indicates the joint venture is not dependent on the parties to the

arrangement for funding, nor do the parties have an obligation for the

liabilities of the arrangement. Joint ventures are accounted for using the

equity method as outlined below.

Associates: The Group accounts for investments in associates using the

equity method as outlined below. An entity is considered an associate

where the Group is deemed to have significant influence but not control or

joint control. Significant influence is presumed to exist where the Group:

– has over 20 per cent but less than 50 per cent of the voting rights of an

entity, unless it can be clearly demonstrated that this is not the case or

– holds less than 20 per cent of the voting rights of an entity; however, has

the power to participate in the financial and operating policy decisions

affecting the entity

The Group uses the term ‘equity accounted investments’ to refer to joint

ventures and associates collectively.

Under the equity method, an investment in an associate or a joint venture

is recognised initially at cost and adjusted thereafter to recognise the

Group’s share of the profit or loss and other comprehensive income of

the associate or joint venture. When the Group’s share of losses of an

associate or a joint venture exceeds the Group’s interest in that associate

or joint venture, the Group discontinues recognising its share of further

losses. Additional losses are recognised only to the extent that the Group

has incurred legal or constructive obligations or made payments on behalf

of the associate or joint venture.

Foreign currencies

Transactions related to the Group’s worldwide operations are conducted

in a number of foreign currencies. The majority of the subsidiaries, joint

arrangements and associates within each of the operations have assessed

US dollars as the functional currency, however, some subsidiaries, joint

arrangements and associates have functional currencies other than US dollars.

Transactions and monetary items denominated in foreign currencies are

translated into US dollars as follows:

Foreign currency item Applicable exchange rate

Transactions Date of underlying transaction

Monetary assets and liabilities Period-end rate

Foreign exchange gains and losses resulting from translation are

recognised in the income statement, except for qualifying cash flow hedges

(which are deferred to equity) and foreign exchange gains or losses on

foreign currency provisions for site closure and rehabilitation costs (which

are capitalised in property, plant and equipment for operating sites).

On consolidation, the assets, liabilities, income and expenses of foreign

operations with non-US dollar functional currencies are translated into US

dollars using the following applicable exchange rates:

Foreign currency amount Applicable exchange rate

Income and expenses Date of underlying transaction

Assets and liabilities Period-end rate

Equity Historical rate

Reserves Historical rate

Foreign exchange differences resulting from translation are initially

recognised in the foreign currency translation reserve and subsequently

transferred to the income statement on disposal of a foreign operation.

Significant accounting policies, judgements and estimates

The Group’s accounting policies require the use of judgement, estimates

and assumptions. All judgements, estimates and assumptions are based

on the most current facts and circumstances and are reassessed on an

ongoing basis. Actual results in future reporting periods may differ for

these estimates under different assumptions and conditions.

Further information regarding the Group’s significant judgements and key

estimates and assumptions, being those where changes may materially

affect financial results and the carrying amount of assets and liabilities

to be reported in the next reporting period, are embedded within the

following notes:

Note

4 Significant events – Samarco dam failure

6 Taxation

11 Overburden removal costs

11 Depreciation of property, plant and equipment

13 Impairment of non-current assets

15 Closure and rehabilitation provisions

22 Leases

29 Business combinations

Additional information including sensitivity analysis, where appropriate,

has been provided in the relevant notes to enhance an understanding

of the impact of key estimates and assumptions on the Group’s financial

position and performance.

Reserve estimates

Reserves are estimates of the amount of product that can be

demonstrated to be able to be economically and legally extracted from

the Group’s properties. In order to estimate reserves, assumptions are

required about a range of technical and economic factors, including

quantities, qualities, production techniques, recovery efficiency,

production and transport costs, commodity supply and demand,

commodity and carbon prices and exchange rates.

Estimating the quantity and/or quality of reserves requires the size,

shape and depth of ore bodies to be determined by analysing geological

data, such as drilling samples and geophysical survey interpretations.

Economic assumptions used to estimate reserves change from period-

to-period as additional technical and operational data is generated.

This process may require complex and difficult geological judgements to

interpret the data.

Reserve impact on financial reporting

Estimates of reserves may change from period-to-period as the economic

assumptions used to estimate reserves change and additional geological

data is generated during the course of operations. Changes in reserves

may affect the Group’s financial results and financial position in a number

of ways, including:

– asset carrying values may be affected due to changes in estimated

future production levels

– depreciation, depletion and amortisation charged to the income

statement may change where such charges are determined on the

units of production basis, or where the useful economic lives of

assets change

– overburden removal costs recorded on the balance sheet or charged

to the income statement may change due to changes in stripping ratios

or the units of production basis of depreciation

– closure and rehabilitation provisions may change where changes in

estimated reserves affect expectations about the timing or cost of

these activities

– the carrying amount of deferred tax assets may change due to

changes in estimates of the likely recovery of the tax benefits

BHP Annual Report 2023 139

Operating and Financial Review

Governance Financial Statements Additional Information

1.6 Notes to the Financial Statements

Performance

1 Segment reporting

Reportable segments

The Group operated three reportable segments during FY2023, which are aligned with the commodities that are extracted and marketed and reflect the

structure used by the Group’s management to assess the performance of the Group.

Reportable segment Principal activities

Copper Mining of copper, silver, zinc, molybdenum, uranium and gold

Iron Ore Mining of iron ore

Coal Mining of metallurgical coal and energy coal

Group and unallocated items includes functions, other unallocated operations including Potash, Nickel West, West Musgrave, legacy assets and

consolidation adjustments. Revenue not attributable to reportable segments comprises the sale of freight and fuel to third parties, as well as revenues

from unallocated operations. Exploration and technology activities are recognised within relevant segments.

Year ended 30 June 2023

US$M Copper Iron Ore Coal

Group and

unallocated

items/

eliminations Group total

Revenue 16,027 24,812 10,958 2,020 53,817

Inter-segment revenue – – – – –

Total revenue 16,027 24,812 10,958 2,020 53,817

Underlying EBITDA 6,653 16,692 4,998 (387) 27,956

Depreciation and amortisation (1,810) (1,993) (697) (561) (5,061)

Impairment losses

(33) (28) (6) (8) (75)

Underlying EBIT 4,810 14,671 4,295 (956) 22,820

Exceptional items

471 (295) – (64) 112

Net finance costs (1,531)

Profit before taxation 21,401

Capital expenditure (cash basis) 2,698 1,966 657 1,412 6,733

Profit/(loss) from equity accounted investments,

related impairments and expenses 854 (256) – (4) 594

Investments accounted for using the equity method 1,530 – – 90 1,620

Total assets 40,366 25,025 11,087 24,818 101,296

Total liabilities 5,824 8,382 3,821 34,739 52,766

Year ended 30 June 2022

US$M Copper Iron Ore Coal

Group and

unallocated

items/

eliminations Group total

Revenue 16,849 30,767 15,549 1,933 65,098

Inter-segment revenue − − − − −

Total revenue 16,849 30,767 15,549 1,933 65,098

Underlying EBITDA 8,565 21,707 9,504 858 40,634

Depreciation and amortisation (1,765) (2,203) (762) (953) (5,683)

Impairment losses

(470) (33) (9) (3) (515)

Underlying EBIT 6,330 19,471 8,733 (98) 34,436

Exceptional items

(81) (648) 849 (450) (330)

Net finance costs (969)

Profit before taxation 33,137

Capital expenditure (cash basis) 2,528 1,848 621 858 5,855

Profit/(loss) from equity accounted investments,

related impairments and expenses 577 (595) − (1) (19)

Investments accounted for using the equity method 1,415 − − 5 1,420

Total assets 32,762 24,613 11,524 26,267 95,166

Total liabilities 5,342 7,790 3,874 29,394 46,400

140 BHP Annual Report 2023

1 Consolidated Financial Statements continued

1 Segment reporting continued

Year ended 30 June 2021

US$M Copper Iron Ore Coal

Group and

unallocated

items/

eliminations Group total

Revenue 15,726 34,475 5,154 1,566 56,921

Inter-segment revenue − − − − −

Total revenue 15,726 34,475 5,154 1,566 56,921

Underlying EBITDA 8,489 26,278 288 18 35,073

Depreciation and amortisation (1,608) (1,971) (845) (660) (5,084)

Impairment losses

(72) (13) (20) (31) (136)

Underlying EBIT 6,809 24,294 (577) (673) 29,853

Exceptional items

(144) (1,319) (1,567) (1,308) (4,338)

Net finance costs (1,223)

Profit before taxation 24,292

Capital expenditure (cash basis) 2,180 2,188 579 665 5,612

Profit/(loss) from equity accounted investments, related impairments

and expenses 692 (1,126) (480) (1) (915)

Investments accounted for using the equity method 1,482 − − 260 1,742

Total assets

31,517 26,171 11,030 40,209 108,927

Total liabilities

4,589 7,508 3,518 37,707 53,322

1 Impairment losses exclude exceptional items of US$ nil (2022: US$ nil; 2021: US$2,371 million).

2 Exceptional items reported in Copper and Group and unallocated include fair value changes on Samarco related forward exchange derivatives of US$471 million (2022:

US$(81) million; 2021: US$136 million), Samarco dam failure costs of US$(64) million (2022: US$(13) million; 2021: US$(14) million), and Samarco related other income of

US$ nil (2022: US$ nil ; 2021: US$34 million). Refer to note 3 ‘Exceptional items’ for further information.

3 Group and unallocated FY2021 total assets and total liabilities include Petroleum assets and liabilities that were disclosed as part of the Petroleum segment before the

merger of the Group’s oil and gas portfolio with Woodside Energy Group Ltd (‘Woodside’) in FY2022.

Geographical information

Revenue by location of customer

2023

US$M

2022

US$M

2021

US$M

Australia 1,702 1,649 1,871

Europe 1,961 2,129 886

China 31,205 36,618 39,653

Japan 6,971 8,401 4,387

India 3,447 5,215 2,189

South Korea 2,997 4,786 3,420

Rest of Asia 3,583 4,303 2,934

North America 1,382 1,282 1,147

South America 569 715 426

Rest of world – − 8

53,817 65,098 56,921

Non-current assets by location of assets

2023

US$M

2022

US$M

2021

US$M

Australia 51,961 43,250 48,612

North America 5,081 3,964 9,701

South America 19,047 18,280 18,548

Rest of world 685 150 1,851

Unallocated assets

1,171 858 3,522

77,945 66,502 82,234

1 Unallocated assets comprise deferred tax assets and other financial assets.

Underlying EBITDA

Underlying EBITDA is earnings before net finance costs, depreciation, amortisation and impairments, taxation expense, Discontinued operations and any

exceptional items. Underlying EBITDA includes BHP’s share of profit/(loss) from investments accounted for using the equity method including net finance

costs, depreciation, amortisation and impairments and taxation expense/(benefit).

Exceptional items are excluded from Underlying EBITDA in order to enhance the comparability of such measures from period-to-period and provide

investors with further clarity in order to assess the performance of the Group’s operations. Management monitors exceptional items separately. Refer to

note 3 ‘Exceptional items’ for additional detail.

Segment assets and liabilities

Total segment assets and liabilities of reportable segments represents operating assets and operating liabilities, including the carrying amount of

equity accounted investments and predominantly excludes cash balances, loans to associates, interest bearing liabilities and deferred tax balances.

The carrying value of investments accounted for using the equity method represents the balance of the Group’s investment in equity accounted

investments, with no adjustment for any cash balances, interest bearing liabilities or deferred tax balances of the equity accounted investment.

BHP Annual Report 2023 141

Operating and Financial Review

Governance Financial Statements Additional Information

2 Revenue

Revenue by segment and asset

2023

US$M

2022

US$M

2021

US$M

Escondida 8,847 9,500 9,470

Pampa Norte 2,491 2,670 1,801

Copper South Australia

2,806 1,776 2,211

Third-party products 1,863 2,903 2,244

Other 20 − −

Total Copper

16,027 16,849 15,726

Western Australia Iron Ore 24,678 30,632 34,337

Third-party products 21 19 18

Other 113 116 120

Total Iron Ore 24,812 30,767 34,475

BHP Mitsubishi Alliance 7,652 10,254 3,537

New South Wales Energy Coal 3,306 3,035 839

Other

– 2,260 778

Total Coal

10,958 15,549 5,154

Group and unallocated items

2,020 1,933 1,566

Inter-segment adjustment – − −

Total revenue 53,817 65,098 56,921

1 Includes Olympic Dam as well as Prominent Hill and Carrapateena since acquisition on 2 May 2023 as part of the acquisition of OZ Minerals Ltd (OZL).

2 Total Copper revenue includes: copper US$14,902 million (2022: US$15,992 million; 2021: US$14,812 million) and other US$1,125 million

(2022: US$857 million; 2021: US$914 million). Other consists of silver, zinc, molybdenum, uranium and gold.

3 Comparative periods include revenue related to BHP Mitsui Coal (BMC) divested in May 2022.

4 Total Coal revenue includes: metallurgical coal US$7,430 million (2022: US$11,990 million; 2021: US$4,260 million) and energy coal US$3,528 million (2022:

US$3,559 million; 2021: US$894 million).

5 Group and unallocated items revenue includes: Nickel West US$2,009 million (2022: US$1,926 million; 2021: US$1,545 million) and other revenue US$11 million

(2022: US$7 million; 2021: US$21 million).

Revenue consists of revenue from contracts with customers of US$53,910 million (2022: US$65,504 million; 2021: US$55,562 million) and other

revenue predominantly relating to provisionally priced sales of US$(93) million (2022: US$(406) million; 2021: US$1,359 million).

Recognition and measurement

The Group generates revenue from the production and sale of commodities. Revenue is recognised when or as control of the promised goods or services

passes to the customer. In most instances, control passes when the goods are delivered to a destination specified by the customer, typically on board

the customer’s appointed vessel. Revenue from the provision of services is recognised over time as the services are provided, but does not represent a

significant proportion of total revenue and is aggregated with the respective asset and product revenue for disclosure purposes.

The amount of revenue recognised reflects the consideration to which the Group expects to be entitled in exchange for transferring goods or services.

Where the Group’s sales are provisionally priced, the final price depends on future index prices. The amount of revenue initially recognised is based on

the relevant forward market price. Adjustments between the provisional and final price are accounted for under IFRS 9/AASB 9 ‘Financial Instruments’

(IFRS 9), separately recorded as other revenue and presented as part of the total revenue of each asset. The period between provisional pricing and

final invoicing is typically between 60 and 120 days.

Revenue from the sale of significant by-products is included within revenue. Where a by-product is not significant, revenue is credited against costs.

The Group applies the following practical expedients:

– expected consideration is not adjusted for the effects of the time value of money if the period between the delivery and when the customer pays for the

promised good or service is one year or less

– no disclosure is provided for information relating to unfulfilled performance obligations, either due to the expected duration of the contract term being

one year or less, or for longer term contracts, because the entity has a right to consideration (and can recognise revenue) for goods delivered

142 BHP Annual Report 2023

1 Consolidated Financial Statements continued

3 Exceptional items

Exceptional items are those gains or losses where their nature, including the expected frequency of the events giving rise to them, and impact is

considered material to the Financial Statements. Such items included within the Group’s profit from Continuing operations for the year are detailed below.

Exceptional items attributable to Discontinued operations are detailed in note 28 ‘Discontinued operations’.

Year ended 30 June 2023

Gross

US$M

Tax

US$M

Net

US$M

Exceptional items by category

Samarco dam failure (340) 17 (323)

Chilean tax reform – (283) (283)

Total (340) (266) (606)

Attributable to non-controlling interests – (107) (107)

Attributable to BHP shareholders (340) (159) (499)

Samarco Mineração S.A. (Samarco) dam failure

The loss of US$323 million (after tax) relates to the Samarco dam failure, which occurred in November 2015, and comprises the following:

Year ended 30 June 2023 US$M

Other income –

Expenses excluding net finance costs:

Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure (103)

Profit/(loss) from equity accounted investments, related impairments and expenses:

Samarco dam failure provision (256)

Fair value change on forward exchange derivatives 471

Net finance costs (452)

Income tax benefit 17

Total

(323)

1 Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.

Chilean tax reform

On 17 May 2023, the Chilean Lower House approved a Royalty Bill which will implement a 1 per cent royalty on revenues, a margin based tax with rates

ranging between 8 per cent and 26 per cent, and a 46.5 per cent cap to the overall Chilean tax burden of mining companies.

The President of the Lower House formally declared the legislative process complete on 12 June 2023, following receipt of the Chilean President’s formal

confirmation that he had waived his veto power to oppose any of the provisions of the Royalty Bill. On 13 July 2023, the Constitutional Court finalised its

review of certain aspects of the Royalty Bill, relating only to the distribution of proceeds.

Applying judgement, it was determined that the proposed tax rates were substantively enacted prior to 30 June 2023, as the scope of the Constitutional

Court review did not extend to reviewing the tax rates.

While the timing of when the Group’s operations will be impacted by the reform depends on existing stability agreements, relevant deferred tax positions

have been remeasured by US$283 million in the Group’s FY2023 financial statements.

The exceptional items relating to the years ended 30 June 2022 and 30 June 2021 are detailed below.

30 June 2022

Year ended 30 June 2022

Gross

US$M

Tax

US$M

Net

US$M

Exceptional items by category

Samarco dam failure (1,032) (31) (1,063)

Impairment of US deferred tax assets − (423) (423)

Corporate structure unification costs (428) − (428)

BHP Mitsui Coal (BMC) gain on disposal 840 − 840

Total (620) (454) (1,074)

Attributable to non-controlling interests − − −

Attributable to BHP shareholders (620) (454) (1,074)

Samarco Mineração S.A. (Samarco) dam failure

The loss of US$1,063 million related to the Samarco dam failure, which occurred in November 2015, and comprises the following:

Year ended 30 June 2022 US$M

Other income −

Expenses excluding net finance costs:

Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure (66)

Profit/(loss) from equity accounted investments, related impairments and expenses:

Samarco impairment expense −

Samarco dam failure provision (595)

Fair value change on forward exchange derivatives (81)

Net finance costs (290)

Income tax expense (31)

Total

(1,063)

1 Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.

BHP Annual Report 2023 143

Operating and Financial Review

Governance Financial Statements Additional Information

3 Exceptional items continued

Impairment of US deferred tax assets

The Group recognised an impairment charge of US$423 million (after tax) in relation to deferred tax assets where the recoverability had historically been

reliant on Petroleum earnings in the same tax group. While these tax assets remained with the Group following the merger of the Group’s oil and gas

portfolio with Woodside, the impairment charge reflected the extent of other forecasted future earnings against which the assets can be recovered.

Corporate structure unification costs

The Group incurred transaction costs associated with the unification of the Group corporate structure under its existing Australian parent company, BHP

Group Limited, which was completed on 31 January 2022.

BHP Mitsui Coal (BMC) gain on disposal

On 3 May 2022 the Group sold its 80 per cent interest in BHP Mitsui Coal Pty Ltd (BMC) to Stanmore SMC Holdings Pty Ltd, a wholly owned subsidiary

of Stanmore Resources Limited (Stanmore Resources).

Stanmore Resources paid US$1.1 billion cash consideration at completion plus a preliminary completion adjustment of US$218 million for working capital.

Deferred consideration of US$222 million comprised US$100 million in cash, outstanding at 30 June 2022 and subsequently received on 3 November

2022, with potential for an additional amount of up to US$150 million (US$122 million discounted) in a price-linked earnout payable in the 2024

calendar year.

Details of the gain on disposal is as follows:

US$M

BHP share of net assets disposed 631

Gross consideration 1,318

Transaction and other directly applicable costs (69)

Income tax expense −

Deferred consideration 222

Gain on disposal 840

30 June 2021

Year ended 30 June 2021

Gross

US$M

Tax

US$M

Net

US$M

Exceptional items by category

Samarco dam failure (1,087) (71) (1,158)

COVID-19 related costs (499) 138 (361)

Impairment of Energy coal assets (1,523) (651) (2,174)

Impairment of Potash assets (1,314) (473) (1,787)

Total (4,423) (1,057) (5,480)

Attributable to non-controlling interests (34) 10 (24)

Attributable to BHP shareholders (4,389) (1,067) (5,456)

Samarco Mineração S.A. (Samarco) dam failure

The loss of US$1,158 million related to the Samarco dam failure, which occurred in November 2015, and comprises the following:

Year ended 30 June 2021 US$M

Other income 34

Expenses excluding net finance costs:

Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure (46)

Profit/(loss) from equity accounted investments, related impairments and expenses:

Samarco impairment expense (111)

Samarco dam failure provision (1,015)

Fair value change on forward exchange derivatives 136

Net finance costs (85)

Income tax expense (71)

Total

(1,158)

1 Refer to note 4 ‘Significant events – Samarco dam failure’ for further information.

COVID-19 related costs

The exceptional item reflects the directly attributable COVID-19 pandemic related additional costs for the Group for FY2021, including costs associated

with the increased provision of health and hygiene services, the impacts of maintaining social distancing requirements and demurrage and other standby

charges related to delays caused by COVID-19. At the time, COVID-19 was considered a single protracted globally pervasive event.

However, as the pandemic has continued to evolve, certain impacts that were initially considered to be potentially short-term in nature are now expected

to continue over a number of reporting periods. These activities are now considered to be part of business as usual operations and, as such, from FY2022

any incremental costs have not been classified as an exceptional item.

Impairment of Energy coal assets

The Group recognised an impairment charge of US$1,704 million (after tax) in relation to New South Wales Energy Coal (NSWEC) reflecting the status

of the divestment process and current market conditions for thermal coal, the strengthening Australian dollar and changes to the mine plan. In addition,

the Group recognised an impairment charge of US$470 million (after tax) for Cerrejón, reflecting the expected net sales proceeds.

Impairment of Potash assets

The Group recognised an impairment charge of US$1,787 million (after tax) in relation to Potash. The impairment charge reflected an analysis of market

perspectives and the value that we expected a market participant to attribute to our investments to date.

144 BHP Annual Report 2023

1 Consolidated Financial Statements continued

4 Significant events – Samarco dam failure

On 5 November 2015, the Samarco Mineração S.A. (Samarco) iron ore operation in Minas Gerais, Brazil, experienced a tailings dam failure that resulted

in a release of mine tailings, flooding the communities of Bento Rodrigues, Gesteira and Paracatu and impacting other communities downstream (the

Samarco dam failure). Refer to section on ‘Samarco’ in the Operating and Financial Review.

Samarco is jointly owned by BHP Billiton Brasil Ltda (BHP Brasil) and Vale S.A. (Vale). BHP Brasil’s 50 per cent interest is accounted for as an equity

accounted joint venture investment. BHP Brasil does not separately recognise its share of the underlying assets and liabilities of Samarco, but instead

records the investment as one line on the balance sheet. Each period, BHP Brasil recognised its 50 per cent share of Samarco’s profit or loss and

adjusted the carrying value of the investment in Samarco accordingly. Such adjustment continued until the investment carrying value was reduced to US$

nil, with any additional share of Samarco losses only recognised to the extent that BHP Brasil has an obligation to fund the losses. After applying equity

accounting, any remaining carrying value of the investment is tested for impairment.

Any charges relating to the Samarco dam failure incurred directly by BHP Brasil or other BHP entities are recognised 100 per cent in the Group’s results.

The financial impacts of the Samarco dam failure on the Group’s income statement, balance sheet and cash flow statement for the year ended 30 June

2023 are shown in the tables below and have been treated as an exceptional item.

Financial impacts of Samarco dam failure

2023

US$M

2022

US$M

2021

US$M

Income statement

Other income

– − 34

Expenses excluding net finance costs:

Costs incurred directly by BHP Brasil and other BHP entities in relation to the Samarco dam failure

(103) (66) (46)

Profit/(loss) from equity accounted investments, related impairments and expenses:

Samarco impairment expense

– − (111)

Samarco dam failure provision

(256) (595) (1,015)

Fair value change on forward exchange derivatives

471 (81) 136

Profit/(loss) from operations 112 (742) (1,002)

Net finance costs

(452) (290) (85)

Loss before taxation (340) (1,032) (1,087)

Income tax benefit/(expense)

17 (31) (71)

Loss after taxation (323) (1,063) (1,158)

Balance sheet movement

Trade and other payables (6) (1) (5)

Derivatives 337 (160) 136

Tax liabilities 17 (31) (71)

Provisions (260) (629) (741)

Net decrease/(increase) in liabilities 88 (821) (681)

2023

US$M

2022

US$M

2021

US$M

Cash flow statement

Loss before taxation (340) (1,032) (1,087)

Adjustments for:

Samarco impairment expense

– − 111

Samarco dam failure provision

256 595 1,015

Fair value change on forward exchange derivatives

(471) 81 (136)

Proceeds of cash management related instruments 134 79 –

Net finance costs

452 290 85

Changes in assets and liabilities:

Trade and other payables 6 1 5

Net operating cash flows 37 14 (7)

Net investment and funding of equity accounted investments

(448) (256) (470)

Net investing cash flows (448) (256) (470)

Net decrease in cash and cash equivalents (411) (242) (477)

1 Proceeds from insurance settlements.

2 Includes legal and advisor costs incurred.

3 Impairment expense from working capital funding provided during the period.

4 US$(33) million (2022: US$691 million; 2021: US$836 million) change in estimate and US$289 million (2022: US$(96) million; 2021: US$179 million) exchange translation.

5 The Group enters into forward exchange contracts to limit the Brazilian reais exposure on the dam failure provision. While not applying hedge accounting, the fair

value changes in the forward exchange instruments are recorded within Profit/(loss) from equity accounted investments, related impairments and expenses in the

Income Statement.

6 Amortisation of discounting of provision.

7 Includes tax on forward exchange derivatives and other taxes incurred during the period.

8 Includes US$ nil (2022: US$ nil; 2021: US$(111) million) funding provided during the period and US$(448) million (2022: US$(256) million; 2021: US$(359) million)

utilisation of the Samarco dam failure provision.

Equity accounted investment in Samarco

BHP Brasil’s investment in Samarco remains at US$ nil. No dividends have been received by BHP Brasil from Samarco during the period and Samarco

currently does not have profits available for distribution.

BHP Annual Report 2023 145

Operating and Financial Review

Governance Financial Statements Additional Information

4 Significant events – Samarco dam failure continued

Provision related to the Samarco dam failure

2023

US$M

2022

US$M

At the beginning of the financial year 3,421 2,792

Movement in provision 260 629

Comprising:

Utilised (448) (256)

Adjustments charged to the income statement:

Change in cost estimate (33) 691

Amortisation of discounting impacting net finance costs 452 290

Exchange translation 289 (96)

At the end of the financial year 3,681 3,421

Comprising:

Current 1,876 1,815

Non-current 1,805 1,606

At the end of the financial year 3,681 3,421

Samarco dam failure provision and contingencies

As at 30 June 2023, BHP Brasil has identified a provision and certain contingent liabilities arising as a consequence of the Samarco dam failure.

The provision only reflects the future cost estimates associated with the delivery of programs set out in the Framework Agreement (see below).

Contingent liabilities will only be resolved when one or more uncertain future events occur or related impacts become capable of reliable measurement

and, as such, determination of contingent liabilities disclosed in the financial statements requires significant judgement regarding the outcome of

future events. A number of the claims below do not specify the amount of damages sought and, where this is specified, amounts could change as the

matter progresses.

Ultimately, future changes in all those matters for which a provision has been recognised or contingent liability disclosed could have a material adverse

impact on BHP’s business, competitive position, cash flows, prospects, liquidity and shareholder returns.

The following table summarises the current status of significant ongoing matters relating to the Samarco dam failure, along with developments during the

financial year, and the associated treatment in the Financial Statements:

Item Provision

Contingent

liability

Samarco dam failure – Framework Agreement

On 2 March 2016, BHP Brasil, Samarco and Vale entered into a Framework Agreement with the Federal Government of Brazil, the states

of Espirito Santo and Minas Gerais, and certain other public authorities to establish a foundation (Fundação Renova) that is developing

and executing environmental and socio-economic programs (Programs) to remediate and provide compensation for damage caused by the

Samarco dam failure (the Framework Agreement).

Key programs include those for financial assistance and compensation of impacted persons and those for remediation of impacted areas and

resettlement of impacted communities.

Samarco has primary responsibility for funding Fundação Renova with each of BHP Brasil and Vale having secondary funding obligations

in proportion to their 50 per cent shareholding in Samarco. While Samarco has recommenced operations, Samarco’s long-term cash

flow generation remains highly sensitive to factors including returning to full production capacity, commodity prices and foreign exchange

rates. Further, under the proposed resolution to the Samarco Judicial Reorganisation (refer to Samarco Judicial Reorganisation below),

Samarco’s funding of Fundação Renova would be capped at US$1 billion for the period CY2024 to CY2030.

Given the proposed Samarco funding cap and uncertainty associated with Samarco’s long-term cash flow generation, BHP Brasil has recognised a

provision reflecting the Group’s current best estimate of the costs to be incurred in completing the Programs under the Framework Agreement.

Uncertainty exists around the scope and cost of the programs, including as a result of ongoing legal actions in relation to the number

of individuals eligible for compensation and the amount of damages to which they are entitled. Further, the provision reflects only the

estimated cost of completing the Programs as the Group is unable to provide a range of possible outcomes or a reliable estimate of other

existing or future claims (as outlined below).

Federal Public Prosecution Office claim

BHP Brasil is among the defendants named in a claim brought by the Federal Public Prosecution Office on 3 May 2016, seeking R$155

billion (approximately US$32 billion) for reparation, compensation and moral damages in relation to the Samarco dam failure.

Under a Governance Agreement ratified on 8 August 2018, BHP Brasil, Samarco and Vale were to establish a process to renegotiate the

Programs over two years with the Federal and State prosecutors to progress settlement of this claim. The Federal Public Prosecution

Office claim was suspended from the date of ratification of the Governance Agreement and, although the suspension period has formally

elapsed, no material development has occurred.

Since early CY2021, the parties have been engaging in negotiations to seek a settlement of obligations under the Framework Agreement

and Federal Public Prosecution Office claim. Outcomes of the negotiations are highly uncertain, and it is therefore not possible to provide

a reliable estimate of potential outcomes and there is a risk that a negotiated outcome may be materially higher than the cost estimates of

delivering the programs under the Framework Agreement.

BHP Brasil, Samarco and Vale maintain security, as required by the Governance Agreement, with the security currently comprising

insurance bonds and a charge over certain Samarco assets.

Australian class action complaint

BHP Group Limited is named as a defendant in a shareholder class action filed in the Federal Court of Australia on behalf of persons who

acquired shares in BHP Group Limited on the Australian Securities Exchange (ASX) or shares in BHP Group Plc (now BHP Group (UK) Ltd)

on the London Stock Exchange (LSE) and Johannesburg Stock Exchange (JSE) in periods prior to the Samarco dam failure.

The amount of damages sought is unspecified.

146 BHP Annual Report 2023

1 Consolidated Financial Statements continued

Item Provision

Contingent

liability

United Kingdom group action complaint

BHP Group (UK) Ltd (formerly BHP Group Plc) and BHP Group Limited are named as defendants in group action claims for damages filed in

the courts of England. These claims were filed on behalf of certain individuals, governments, businesses and communities in Brazil allegedly

impacted by the Samarco dam failure.

The amount of damages sought in these claims is unspecified. A trial in relation to BHP’s liability for the dam failure is listed for October 2024.

In December 2022, the BHP defendants filed their defence and a contribution claim against Vale. The contribution claims contends that if

BHP’s defence is not successful and the BHP defendants are ordered to pay damages to the claimants, Vale should contribute to any amount

payable. Vale contested the jurisdiction of the English courts to determine this contribution claim, with the court dismissing Vale’s application

on 7 August 2023. Subject to the outcome of any appeals by Vale in relation to jurisdiction and directions from the Court, the contribution

claim will proceed in the UK.

Criminal charges

The Federal Prosecutors’ Office has filed criminal charges against BHP Brasil, Samarco and Vale and certain employees and former

employees of BHP Brasil (Affected Individuals) in the Federal Court of Ponte Nova, Minas Gerais.

BHP Brasil rejects outright the charges against the company and the Affected Individuals and is defending itself from all charges while fully

supporting each of the Affected Individuals in their defence of the charges.

Civil public action commenced by Associations concerning the use of TANFLOC for water treatment

The Vila Lenira Residents Association, State of Espirito Santo Rural Producers and Artisans Association, Colatina Velha Neighbourhood

Residents Association, and United for the Progress of Palmeiras Neighbourhood Association have filed a lawsuit against Samarco, BHP

Brasil and Vale and others, including the State of Minas Gerais, the State of Espirito Santo and the Federal Government.

The plaintiffs allege that the defendants carried out a clandestine study on the citizens of the locations affected by the Fundão Dam Failure,

using TANFLOC – a tannin-based flocculant/coagulant – that is currently used for wastewater treatment applications. The plaintiffs claim that

this product allegedly put the population at risk due to its alleged experimental qualities.

The plaintiffs are seeking multiple kinds of relief – material damages, moral damages, loss of profits – and that the defendants should pay for

water supply in all locations where there is no water source other than the Doce River.

The defendants have presented their defences and the Court’s decision is still pending.

Other claims

BHP Brasil is among the companies named as defendants in a number of legal proceedings initiated by individuals, non-governmental

organisations, corporations and governmental entities in Brazilian Federal and State courts following the Samarco dam failure. The other

defendants include Vale, Samarco and Fundação Renova.

The lawsuits include claims for compensation, environmental reparation and violations of Brazilian environmental and other laws, among

other matters. The lawsuits seek various remedies including reparation costs, compensation to injured individuals and families of the

deceased, recovery of personal and property losses, moral damages and injunctive relief.

In addition, government inquiries and investigations relating to the Samarco dam failure have been commenced by numerous agencies of

the Brazilian government and are ongoing.

Additional lawsuits and government investigations relating to the Samarco dam failure could be brought against BHP Brasil and other BHP

entities in Brazil or other jurisdictions.

4 Significant events – Samarco dam failure continued

BHP Annual Report 2023 147

Operating and Financial Review

Governance Financial Statements Additional Information

4 Significant events – Samarco dam failure continued

Commitments

Under the terms of the Samarco joint venture agreement, BHP Brasil does

not have an existing obligation to fund Samarco.

However, BHP Brasil has agreed to fund a total of up to US$915 million for

the Fundação Renova programs during calendar year 2023. Any additional

requests for funding or future investment provided would be subject to a

future decision by BHP Brasil, accounted for at that time.

Samarco judicial reorganisation

Samarco filed for Judicial Reorganisation (JR) in April 2021, with the

Second Business State Court for the Belo Horizonte District of Minas

Gerais, State of Minas Gerais, Brazil (JR Court), after multiple enforcement

actions taken by certain financial creditors of Samarco which threatened

Samarco’s operations.

The JR is an insolvency proceeding that provides a means for Samarco

to seek to restructure its financial debts and establish a stable financial

position that allows Samarco to continue to rebuild its operations

and strengthen its ability to meet its Fundação Renova related

funding obligations. Samarco’s operations have continued during the

JR proceeding.

On 31 May 2023, Samarco, BHP Brasil and Vale entered into a

Restructuring Support Agreement (RSA) with certain Samarco financial

creditors. The RSA outlines the proposed parameters for a restructure

of Samarco’s financial debts, to be implemented through a consensual

judicial reorganisation plan (Consensual Plan), subject to approval by the

creditors of Samarco and ratification by the JR Court.

On 28 July 2023, Samarco and one of the financial creditors jointly filed

the Consensual Plan with the JR Court, that aims at implementing and is

consistent with the transactions contemplated in the RSA. Concurrent with

the filing of the Consensual Plan, the parties also filed terms of adhesion

that demonstrate approval of the Consensual Plan by the majority of

Samarco’s creditors as required under Brazilian Bankruptcy Law.

Once ratified by the JR Court and confirmed by the United States

Bankruptcy Court for the Southern District of New York, the Samarco debt

restructure, including payments to Samarco employees and suppliers as

stipulated in the Plan and the issuance of new debt instruments to financial

creditors is expected to be executed in the first half of FY2024.

The proposed terms of the Plan are not expected to impact Fundação

Renova’s ability to undertake the remediation and compensation

Programs. Samarco’s funding of Renova is proposed to be capped at

US$1 billion for the period CY2024 to CY2030. BHP Brasil has considered

this proposed cap, along with Samarco’s long-term forecast cash flows,

when determining the dam failure related provision at 30 June 2023.

Key judgements and estimates

Judgements: The outcomes of litigation are inherently difficult to

predict and significant judgement has been applied in assessing the

likely outcome of legal claims and determining which legal claims

require recognition of a provision or disclosure of a contingent liability.

The facts and circumstances relating to these cases are regularly

evaluated in determining whether a provision for any specific claim

is required.

Management has determined that a provision can only be recognised

for obligations under the Framework Agreement as at 30 June 2023.

It is not yet possible to provide a range of possible outcomes or a

reliable estimate of potential future exposures to BHP in connection to

the contingent liabilities noted above, given their status.

Estimates: The provision for the Samarco dam failure reflects the

Group’s estimate of the remaining costs to complete Programs

under the Framework Agreement and requires the use of significant

judgements, estimates and assumptions. Based on current estimates,

it is expected that approximately 85 per cent of remaining costs for

Programs under the Framework Agreement will be incurred by June

2025, largely attributable to the finalisation of the resettlement program

and closure of the Novel system (application system for impacted

individuals to lodge compensation claims).

While the provision has been measured based on the latest information

available as at 30 June 2023, changes in facts and circumstances are

likely in future reporting periods and may lead to material revisions

to these estimates. However, it is currently not possible to determine

what facts and circumstances may change, therefore revisions in future

reporting periods due to the key estimates and factors outlined below

cannot be reliably measured.

The key estimates that may have a material impact upon the provision

in the next and future reporting periods include the:

– number of people eligible for financial assistance and compensation

and the corresponding amount of expected compensation; and

– costs to complete key infrastructure programs.

The provision may also be affected by factors including but not

limited to:

– potential changes in scope of work and funding amounts required

under the Framework Agreement including the impact of further

technical analysis, community participation required under the

Governance Agreement and rulings made by the Federal Court;

– the outcome of ongoing negotiations with State and Federal

Prosecutors, including review of Fundação Renova’s Programs as

provided in the Governance Agreement;

– actual costs incurred;

– updates to discount and foreign exchange rates; and

– the outcomes of Samarco’s judicial reorganisation and resolution

of uncertainty in respect of the nature and extent of Samarco’s

long-term cash generation.

In addition, the provision may be impacted by decisions in, or resolution

of, existing and potential legal claims in Brazil and other jurisdictions,

including the outcome of the United Kingdom group action and the

negotiations seeking a definitive and substantive settlement of the

obligations under the Framework Agreement and the R$155 billion

(approximately US$32 billion) Federal Public Prosecution Office claim.

Outcomes of the negotiations are highly uncertain and it is therefore not

possible to provide a reliable estimate of potential outcomes.

Given these factors, future actual cash outflows may differ from the

amounts currently provided and changes to any of the key assumptions

and estimates outlined above could result in a material impact to the

provision in the next and future reporting periods.

148 BHP Annual Report 2023

1 Consolidated Financial Statements continued

4 Significant events – Samarco dam failure continued

The following section includes disclosure of amounts recognised or disclosed by Samarco in its financial statements for matters to which Samarco (and not the

Group) is a party.

Samarco

Dam failure related provision and contingencies

In addition to its obligations under the Framework Agreement as at 30 June

2023, Samarco has recognised a provision of US$0.4 billion (30 June 2022:

US$0.3 billion), based on currently available information. The magnitude,

scope and timing of these additional costs are subject to a high degree of

uncertainty and Samarco has indicated that it anticipates that it will incur future

costs beyond those provided. These uncertainties are likely to continue for a

significant period and changes to key assumptions could result in a material

change to the amount of the provision in future reporting periods. Any such

unrecognised obligations are therefore contingent liabilities and, at present, it

is not practicable to estimate their magnitude or possible timing of payment.

Accordingly, it is also not possible to provide a range of possible outcomes

or a reliable estimate of total potential future exposures at this time.

Samarco is also named as a defendant in a number of other legal proceedings

initiated by individuals, non-governmental organisations, corporations

and governmental entities in Brazilian Federal and State courts following

the Samarco dam failure. The lawsuits include claims for compensation,

environmental rehabilitation and violations of Brazilian environmental and other

laws, among other matters. The lawsuits seek various remedies including

rehabilitation costs, compensation to injured individuals and families of

the deceased, recovery of personal and property losses, moral damages

and injunctive relief. In addition, government inquiries and investigations

relating to the Samarco dam failure have been commenced by numerous

agencies of the Brazilian government and are ongoing. Given the status of

proceedings it is not possible to provide a range of possible outcomes or a

reliable estimate of total potential future exposures to Samarco.

Additional lawsuits and government investigations relating to the Samarco

dam failure could be brought against Samarco.

Samarco insurance

Samarco has standalone insurance policies in place with Brazilian

and global insurers. Insurers’ loss adjusters or claims representatives

continue to investigate and assist with the claims process for matters not

yet settled. As at 30 June 2023, an insurance receivable has not been

recognised by Samarco in respect of ongoing matters.

Samarco commitments

At 30 June 2023, Samarco has commitments of US$1.0 billion (30 June

2022: US$0.7 billion). Following the dam failure, Samarco invoked force

majeure clauses in a number of long-term contracts with suppliers and

service providers to suspend contractual obligations.

Samarco non-dam failure related provisions and

contingent liabilities

The following non-dam failure related matters pre-date and are unrelated

to the Samarco dam failure. Samarco is currently contesting both of

these matters in the Brazilian courts. Given the status of these tax

matters, the timing of resolution and potential economic outflow for

Samarco is uncertain.

Brazilian Social Contribution Levy

Samarco has received tax assessments for the alleged non-payment

of Brazilian Social Contribution Levy for the calendar years 2007-

2014. Based on its assessment of currently available information as at

30 June 2023, Samarco recognised gross provisions of US$1.1 billion,

US$0.9 billion net of US$0.2 billion court deposits paid (30 June 2022:

nil) and disclosed contingent liabilities of US$0.2 billion (30 June 2022:

US $1.2 billion). As at 30 June 2023, BHP Brasil’s 50% share of the

impact of the provision recognised by Samarco is reflected in the Group’s

equity accounting for Samarco.

Brazilian corporate income tax rate

Samarco has received tax assessments, and disclosed contingent

liabilities, for alleged incorrect calculation of Corporate Income Tax

(IRPJ) in respect of the 2000-2003 and 2007-2014 income years totalling

approximately US$1.1 billion (30 June 2022: US$0.9 billion).

5 Expenses and other income

2023

US$M

2022

US$M

2021

US$M

Employee benefits expense:

Wages and salaries 4,539 4,197 4,018

Employee share awards 97 109 88

Social security costs 4 4 3

Pension and other post-retirement obligations 339 338 274

Less employee benefits expense classified as exploration and evaluation expenditure (35) (30) (26)

Changes in inventories of finished goods and work in progress 301 (774) (321)

Raw materials and consumables used 6,710 5,991 4,899

Freight and transportation 2,299 2,319 1,900

External services 4,768 4,525 4,640

Third-party commodity purchases 1,878 2,959 2,220

Net foreign exchange (gains)/losses (197) (326) 293

Fair value change on derivatives

135 (29) 87

Government royalties paid and payable 3,841 4,014 3,080

Exploration and evaluation expenditure incurred and expensed in the current period 294 199 134

Depreciation and amortisation expense 5,061 5,683 5,084

Net impairments:

Property, plant and equipment 73 515 2,474

Goodwill and other intangible assets 2 − 33

All other operating expenses 1,764 2,677 1,991

Total expenses 31,873 32,371 30,871

Insurance recoveries – (4) (46)

(Gain)/loss on disposal of subsidiaries and operations

(8) (840) 2

Dividend income

(19) (241) (2)

Other income

(367) (313) (334)

Total other income (394) (1,398) (380)

1 Fair value change on derivatives is principally related to commodity price contracts, foreign exchange contracts and embedded derivatives used in the ordinary course of

business as well as derivatives used as part of the funding of dividends.

2 Mainly relates to the divestment of BMC in FY2022. Refer to note 3 ‘Exceptional items’ for further information.

3 During FY2022, the Group received dividends of US$238 million from Cerrejón, which reduced completion proceeds net of transaction costs to US$50 million.

On 11 January 2022, BHP completed the sale of its 33.33 per cent interest in Cerrejón to joint venture partner, Glencore plc.

4 Other income is generally income earned from transactions outside the course of the Group’s ordinary activities and may include certain management fees from

non-controlling interests and joint arrangements, royalties and commission income.

BHP Annual Report 2023 149

Operating and Financial Review

Governance Financial Statements Additional Information

5 Expenses and other income continued

Recognition and measurement

Other income is recognised when it is probable that the economic benefits associated with a transaction will flow to the Group and can be reliably

measured. Dividend income is recognised upon declaration.

6 Income tax expense

2023

US$M

2022

US$M

2021

US$M

Total taxation expense comprises:

Current tax expense 6,690 10,673 9,018

Deferred tax expense 387 64 1,598

Total taxation expense 7,077 10,737 10,616

2023

US$M

2022

US$M

2021

US$M

Factors affecting income tax expense for the year

Income tax expense differs to the standard rate of corporation tax as follows:

Profit before taxation 21,401 33,137 24,292

Tax on profit at Australian prima facie tax rate of 30 per cent 6,420 9,941 7,288

Derecognition of deferred tax assets and current year tax losses

526 1,087 2,640

Tax on remitted and unremitted foreign earnings 137 441 485

Foreign exchange adjustments 94 (233) (33)

Tax rate changes – − (1)

Amounts (over)/under provided in prior years (18) (80) (57)

Tax effect of profit/(loss) from equity accounted investments, related impairments and expenses

(37) (19) 315

Recognition of previously unrecognised tax assets (109) (3) (28)

Impact of tax rates applicable outside of Australia (558) (801) (669)

Other 236 97 436

Income tax expense 6,691 10,430 10,376

Royalty-related taxation (net of income tax benefit)

386 307 240

Total taxation expense 7,077 10,737 10,616

1 Includes the tax impacts related to the exceptional impairments of US deferred tax assets in the year ended 30 June 2022 and, NSWEC and Potash in the year ended

30 June 2021, as presented in note 3 ‘Exceptional items’.

2 The loss from equity accounted investments, related impairments and expenses is net of income tax, with the exception of the Samarco forward exchange derivatives

described in note 4 ‘Significant events – Samarco dam failure’. This item removes the prima facie tax effect on such loss, related impairments and expenses, excluding the

impact of the Samarco forward exchange derivatives which are taxable.

3 Includes the revaluation of deferred tax balances in the year ended 30 June 2023, following the substantive enactment of the Chilean Royalty Bill, as presented in note 3

‘Exceptional items’.

Income tax recognised in other comprehensive income is as follows:

2023

US$M

2022

US$M

2021

US$M

Income tax effect of:

Items that may be reclassified subsequently to the income statement:

Hedges:

Gains/(losses) taken to equity (29) 274 (259)

(Gains)/losses transferred to the income statement 45 (264) 252

Others (11) − (1)

Income tax credit/(charge) relating to items that may be reclassified subsequently to the income statement 5 10 (8)

Items that will not be reclassified to the income statement:

Re-measurement gains/(losses) on pension and medical schemes 7 (9) (21)

Others – − 1

Income tax credit/(charge) relating to items that will not be reclassified to the income statement 7 (9) (20)

Total income tax credit/(charge) relating to components of other comprehensive income

12 1 (28)

1 Included within total income tax relating to components of other comprehensive income is US$12 million relating to deferred taxes and US$ nil relating to current taxes

(2022: US$1 million and US$ nil; 2021: US$(28) million and US$ nil).

150 BHP Annual Report 2023

1 Consolidated Financial Statements continued

6 Income tax expense continued

Recognition and measurement

Taxation on the profit/(loss) for the year comprises current and deferred tax. Taxation is recognised in the income statement except to the extent

that it relates to items recognised directly in equity or other comprehensive income, in which case the tax effect is also recognised in equity or other

comprehensive income.

Current tax Deferred tax Royalty-related taxation

Current tax is the

expected tax on the

taxable income for the

year, using tax rates

and laws enacted or

substantively enacted

at the reporting

date, and any

adjustments to tax

payable in respect of

previous years.

Deferred tax is the tax expected to be payable or recoverable on differences between the

carrying amounts of assets and liabilities in the financial statements and the corresponding

tax bases used in the computation of taxable profit, and is accounted for in accordance

with IAS 12/AASB 112 ‘Income Taxes’ (IAS 12).

Deferred tax is generally provided on temporary differences arising between the tax

bases of assets and liabilities and their carrying amounts in the Financial Statements.

Deferred tax assets are recognised to the extent that it is probable that future taxable

profits will be available against which the temporary differences can be utilised.

Deferred tax is not recognised for temporary differences relating to:

– initial recognition of goodwill

– initial recognition of assets or liabilities in a transaction that is not a business combination and

that affects neither accounting nor taxable profit, except where the transaction gives rise to

equal and offsetting taxable and deductible temporary differences

– investment in subsidiaries, associates and jointly controlled entities where the Group is able

to control the timing of the reversal of the temporary difference and it is probable that they will

not reverse in the foreseeable future

Deferred tax is measured at the tax rates that are expected to be applied when the

asset is realised or the liability is settled, based on the laws that have been enacted or

substantively enacted at the reporting date.

Current and deferred tax assets and liabilities are offset when the Group has a legally

enforceable right to offset and when the tax balances are related to taxes levied by the

same tax authority and the Group intends to settle on a net basis, or realise the asset and

settle the liability simultaneously.

The carrying amount of deferred tax assets is reviewed at each reporting date and

reduced to the extent that it is no longer probable that sufficient taxable profits will be

available to allow all or part of the asset to be recovered.

Royalties are treated as taxation

arrangements (impacting

income tax expense/(benefit))

when they are imposed under

government authority and the

amount payable is calculated

by reference to revenue derived

(net of any allowable deductions)

after adjustment for temporary

differences. Obligations arising

from royalty arrangements that

do not satisfy these criteria are

recognised as current liabilities

and included in expenses.

International Tax Reform – Pillar Two Model Rules

The Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting published the Pillar

Two model rules designed to address the tax challenges arising from the digitalisation of the global economy.

It is unclear if the Pillar Two model rules create additional temporary differences, whether to remeasure deferred taxes for the Pillar Two model rules and

which tax rate to use to measure deferred taxes. In response to this uncertainty, on 23 May 2023 and 27 June 2023, respectively, the IASB and AASB

issued amendments to IAS 12 ‘Income taxes’ introducing a mandatory temporary exception to the requirements of IAS 12 under which a company does

not recognise or disclose information about deferred tax assets and liabilities related to the proposed OECD/G20 BEPS Pillar Two model rules. The Group

applied the temporary exception at 30 June 2023.

Uncertain tax and royalty matters

The Group operates across many tax jurisdictions. Application of tax law can be complex and requires judgement to assess risk and estimate outcomes.

These judgements are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the

amount of tax assets and tax liabilities, including deferred tax, recognised on the balance sheet and the amount of other tax losses and temporary differences not

yet recognised. The evaluation of tax risks considers both amended assessments received and potential sources of challenge from tax authorities. The status

of proceedings for these matters will impact the ability to determine the potential exposure and in some cases, it may not be possible to determine a range of

possible outcomes or a reliable estimate of the potential exposure.

Tax and royalty matters with uncertain outcomes arise in the normal course of business and occur due to changes in tax law, changes in interpretation of tax law,

periodic challenges and disagreements with tax authorities and legal proceedings.

Tax and royalty obligations assessed as having probable future economic outflows capable of reliable measurement are provided for as at 30 June 2023.

Matters with a possible economic outflow and/or presently incapable of being measured reliably are contingent liabilities and disclosed in note 34 ‘Contingent

liabilities’. Details of uncertain tax and royalty matters relating to Samarco are disclosed in note 4 ‘Significant events – Samarco dam failure’.

BHP Annual Report 2023 151

Operating and Financial Review

Governance Financial Statements Additional Information

6 Income tax expense continued

Key judgements and estimates

Income tax classification

Judgements: The Group’s accounting policy for taxation, including royalty-related taxation, requires management’s judgement as to the types of

arrangements considered to be a tax on income in contrast to an operating cost.

Deferred tax

Judgements: Judgement is required in:

– determining the amount of deferred tax assets to be recognised based on the likely timing and the level of future taxable profits;

– assessing whether changes in tax regimes or applicable tax rates are substantively enacted at the reporting date;

– recognising deferred tax liabilities arising from temporary differences in investments. These deferred tax liabilities caused principally by retained

earnings held in foreign tax jurisdictions are recognised unless repatriation of retained earnings can be controlled and is not expected to occur in the

foreseeable future.

In FY2023, judgement was applied in determining the Chilean Royalty Bill was substantively enacted at the reporting date. It was considered that the

process of enactment was complete and the remaining steps for enactment would not change the outcome of the tax rates to be applied in measuring

the deferred tax assets and liabilities.

Estimates: The Group assesses the recoverability of recognised and unrecognised deferred taxes, including losses in Australia, the United States and

Canada on a consistent basis. Estimates and assumptions relating to projected earnings and cash flows as applied in the Group impairment process

are used for operating assets.

These forecasts are also used to estimate the royalty related tax rates to apply when the deferred tax assets are realised and deferred tax liabilities

are settled, in revaluing the deferred tax balances following the substantive enactment of the Chilean Royalty Bill.

7 Earnings per share

2023 2022 2021

Earnings attributable to BHP shareholders (US$M)

– Continuing operations 12,921 20,245 11,529

– Total 12,921 30,900 11,304

Weighted average number of shares (Million)

– Basic 5,064 5,061 5,057

– Diluted 5,073 5,071 5,068

Basic earnings per ordinary share (US cents)

– Continuing operations 255.2 400.0 228.0

– Total 255.2 610.6 223.5

Diluted earnings per ordinary share (US cents)

– Continuing operations 254.7 399.2 227.5

– Total 254.7 609.3 223.0

Headline earnings per ordinary share (US cents)

– Basic 256.1 439.0 284.8

– Diluted 255.7 438.1 284.2

Refer to note 28 ‘Discontinued operations’ for basic earnings per share and diluted earnings per share for Discontinued operations.

Earnings on American Depositary Shares represent twice the earnings for BHP Group Limited ordinary shares.

Headline earnings is a Johannesburg Stock Exchange defined performance measure and is reconciled from earnings attributable to ordinary

shareholders as follows:

2023

US$M

2022

US$M

2021

US$M

Earnings attributable to BHP shareholders 12,921 30,900 11,304

Adjusted for:

(Gain)/loss on sales of PP&E, Investments and Operations

(9) (95) (50)

Impairments of property, plant and equipment, financial assets and intangibles 75 515 2,633

Samarco impairment expense – − 111

Cerrejόn impairment expense – − 466

Gain on disposal of BHP Mitsui Coal – (840) −

Gain on merger of Petroleum – (8,167) −

Tax effect of above adjustments (17) (97) (60)

Subtotal of adjustments 49 (8,684) 3,100

Headline earnings 12,970 22,216 14,404

Diluted headline earnings 12,970 22,216 14,404

1 Included in other income.

Recognition and measurement

Diluted earnings attributable to BHP shareholders are equal to the earnings attributable to BHP shareholders.

Prior to the Group’s corporate structure unification, the calculation of the number of ordinary shares used in the computation of basic earnings per share

was the aggregate of the weighted average number of ordinary shares of BHP Group Limited and BHP Group Plc outstanding during the period after

deduction of the number of shares held by the Billiton Employee Share Ownership Trust and the BHP Group Limited Employee Equity Trust (previously

known as ‘BHP Billiton Limited Employee Equity Trust’). Effective from 31 January 2022, the aggregate of the weighted average number of ordinary

shares of only BHP Group Limited is considered in the computation of basic earnings per share. Refer to note 17 ‘Share capital’ for details on unification.

152 BHP Annual Report 2023

1 Consolidated Financial Statements continued

7 Earnings per share continued

For the purposes of calculating diluted earnings per share, the effect of 9 million dilutive shares has been taken into account for the year ended 30 June

2023 (2022: 10 million shares; 2021: 11 million shares). The Group’s only potential dilutive ordinary shares are share awards granted under the employee

share ownership plans for which terms and conditions are described in note 26 ‘Employee share ownership plans’. Diluted earnings per share calculation

excludes instruments which are considered antidilutive.

At 30 June 2023, there are no instruments which are considered antidilutive (2022: nil; 2021: nil).

Working capital

8 Trade and other receivables

2023

US$M

2022

US$M

Trade receivables 3,418 4,411

Other receivables

1,324 1,168

Total 4,742 5,579

Comprising:

Current 4,594 5,426

Non-current 148 153

1 Other receivables mainly relate to indirect tax refunds and receivables from joint venture partners.

Recognition and measurement

Trade receivables are recognised initially at their transaction price or, for those receivables containing a significant financing component, at fair value.

Trade receivables are subsequently measured at amortised cost using the effective interest method, less an allowance for impairment, except for

provisionally priced receivables which are subsequently measured at fair value through profit or loss under IFRS 9.

The collectability of trade and other receivables is assessed continuously. At the reporting date, specific allowances are made for any expected credit

losses based on a review of all outstanding amounts at reporting period-end. Individual receivables are written off when management deems them

unrecoverable. The net carrying amount of trade and other receivables approximates their fair values.

Credit risk

Trade receivables generally have terms of less than 30 days. The Group has no material concentration of credit risk with any single counterparty and is

not dominantly exposed to any individual industry.

Credit risk can arise from the non-performance by counterparties of their contractual financial obligations towards the Group. To manage credit risk, the

Group maintains Group-wide procedures covering the application for credit approvals, granting and renewal of counterparty limits, proactive monitoring

of exposures against these limits and requirements triggering secured payment terms. As part of these processes, the credit exposures with all

counterparties are regularly monitored and assessed on a timely basis. The credit quality of the Group’s customers is reviewed and the solvency of each

debtor and their ability to pay the receivable is considered in assessing receivables for impairment.

The 10 largest customers represented 31 per cent (2022: 34 per cent) of total credit risk exposures managed by the Group.

Receivables are deemed to be past due or impaired in accordance with the Group’s terms and conditions. These terms and conditions are determined on

a case-by-case basis with reference to the customer’s credit quality, payment performance and prevailing market conditions. As at 30 June 2023, trade

receivables of US$8 million (2022: US$103 million) were past due but not impaired. The majority of these receivables were less than 30 days overdue.

At 30 June 2023, trade receivables are stated net of provisions for expected credit losses of US$9 million (2022: US$3 million).

9 Trade and other payables

2023

US$M

2022

US$M

Trade payables 4,893 5,360

Other payables 1,407 1,327

Total 6,300 6,687

Comprising:

Current 6,296 6,687

Non-current 4 −

10 Inventories

2023

US$M

2022

US$M Definitions

Raw materials and consumables 2,106 1,713 Spares, consumables and other supplies yet to be utilised in the production process or

in the rendering of services.

Work in progress 3,514 3,827 Commodities currently in the production process that require further processing by the

Group to a saleable form.

Finished goods 1,003 710 Commodities ready-for-sale and not requiring further processing by the Group.

Total

6,623 6,250

Comprising: Inventories classified as non-current are not expected to be utilised or sold within

12 months after the reporting date or within the operating cycle of the business.

Current 5,220 4,935

Non-current 1,403 1,315

1 Inventory write-downs of US$100 million were recognised during the year (2022: US$163 million; 2021: US$58 million). Inventory write-downs of US$37 million made in

previous periods were reversed during the year (2022: US$23 million; 2021: US$26 million).

BHP Annual Report 2023 153

Operating and Financial Review

Governance Financial Statements Additional Information

10 Inventories continued

Recognition and measurement

Regardless of the type of inventory and its stage in the production process, inventories are valued at the lower of cost and net realisable value. Cost is

determined primarily on the basis of average costs and involves estimates of expected metal recoveries and work in progress volumes, calculated using

available industry, engineering and scientific data. These estimates are periodically reassessed by the Group taking into account technical analysis and

historical performance.

For processed inventories, cost is derived on an absorption costing basis. Cost comprises costs of purchasing raw materials and costs of production,

including attributable mining and manufacturing overheads taking into consideration normal operating capacity.

Inventory quantities are assessed primarily through surveys and assays.

Resource assets

11 Property, plant and equipment

Land and

buildings

US$M

Plant and

equipment

US$M

Other mineral

assets

US$M

Assets under

construction

US$M

Exploration

and evaluation

US$M

Total

US$M

Net book value – 30 June 2023

At the beginning of the financial year 8,079 35,500 8,494 9,031 191 61,295

Additions

194 1,024 842 6,332 56 8,448

Acquisition of subsidiaries and operations

88 2,256 4,612 720 – 7,676

Remeasurements of index-linked freight contracts

– 53 – – – 53

Depreciation for the year (586) (4,156) (225) – – (4,967)

Impairments for the year

– (73) – – – (73)

Disposals (2) (6) – – – (8)

Transfers and other movements 367 2,056 (419) (2,602) (8) (606)

At the end of the financial year

8,140 36,654 13,304 13,481 239 71,818

– Cost 15,258 85,394 19,420 14,245 1,029 135,346

– Accumulated depreciation and impairments (7,118) (48,740) (6,116) (764) (790) (63,528)

Net book value – 30 June 2022

At the beginning of the financial year 8,072 44,682 8,941 10,432 1,686 73,813

Additions

41 1,935 792 5,872 137 8,777

Remeasurements of index-linked freight contracts

− (369) − − − (369)

Depreciation for the year (663) (5,564) (276) − − (6,503)

Impairments for the year

(14) (499) (2) − − (515)

Disposals (3) (22) − − − (25)

Divestment and demerger of subsidiaries and operations

(448) (8,007) (545) (3,549) (842) (13,391)

Transfers and other movements 1,094 3,344 (416) (3,724) (790) (492)

At the end of the financial year

8,079 35,500 8,494 9,031 191 61,295

– Cost 14,823 81,218 14,353 9,755 981 121,130

– Accumulated depreciation and impairments (6,744) (45,718) (5,859) (724) (790) (59,835)

1 Includes change in estimates and net foreign exchange gains/(losses) related to the closure and rehabilitation provisions for operating sites. Refer to note 15 ‘Closure and

rehabilitation provisions’.

2 Relates to the acquisition of OZL on 2 May 2023. Refer to note 29 ‘Business combinations’ for more information.

3 Relates to remeasurements of index-linked freight contracts including continuous voyage charters (CVCs). Refer to note 22 ‘Leases’.

4 Refer to note 13 ‘Impairment of non-current assets’ for information on impairments.

5 Includes the carrying value of the Group’s right-of-use assets relating to land and buildings and plant and equipment of US$2,809 million (2022: US$2,361 million).

Refer to note 22 ‘Leases’ for the movement of the right-of-use assets.

6 BMC and Petroleum were disposed in May 2022 and June 2022 respectively. Refer to notes 3 ‘Exceptional items’ and 28 ‘Discontinued operations’ for more information.

Recognition and measurement

Property, plant and equipment

Property, plant and equipment is recorded at cost less accumulated depreciation and impairment charges. Cost is the fair value of consideration given

to acquire the asset at the time of its acquisition or construction and includes the direct costs of bringing the asset to the location and the condition

necessary for operation and the estimated future costs of closure and rehabilitation of the facility.

Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease

liabilities. Refer to note 22 ‘Leases’ for further details. Right-of-use assets are presented within the category of property, plant and equipment according to

the nature of the underlying asset leased.

Exploration and evaluation

Exploration costs are incurred to discover mineral resources. Evaluation costs are incurred to assess the technical feasibility and commercial viability of

resources found.

Exploration and evaluation expenditure is charged to the income statement as incurred, except in the following circumstances in which case the

expenditure may be capitalised:

– the exploration and evaluation activity is within an area of interest that was previously acquired as an asset acquisition or in a business combination

and measured at fair value on acquisition or

– the existence of a commercially viable mineral deposit has been established

A regular review of each area of interest is undertaken to determine the appropriateness of continuing to carry forward costs in relation to that area.

Capitalised costs are only carried forward to the extent that they are expected to be recovered through the successful exploitation of the area of interest or

alternatively by its sale. To the extent that capitalised expenditure is no longer expected to be recovered, it is charged to the income statement.

154 BHP Annual Report 2023

1 Consolidated Financial Statements continued

11 Property, plant and equipment continued

Development expenditure

When proven mineral reserves are determined and development is sanctioned, capitalised exploration and evaluation expenditure is reclassified as

assets under construction within property, plant and equipment. All subsequent development expenditure is capitalised and classified as assets under

construction, provided commercial viability conditions continue to be satisfied.

The Group may use funds sourced from external parties to finance the acquisition and development of assets and operations. Finance costs are

expensed as incurred, except where they relate to the financing of construction or development of qualifying assets. Borrowing costs directly attributable

to acquiring or constructing a qualifying asset are capitalised during the development phase.

In the instance where saleable material is extracted prior to the commissioning of a project/site, sale proceeds are recognised as revenue, with associated

costs also recognised in the income statement. On completion of development, all assets included in assets under construction are reclassified as either

plant and equipment or other mineral assets and depreciation commences.

Other mineral assets

Other mineral assets comprise:

– capitalised exploration, evaluation and development expenditure for assets in production

– mineral rights acquired

– capitalised development and production stripping costs

Overburden removal costs

The process of removing overburden and other waste materials to access mineral deposits is referred to as stripping. Stripping is necessary to obtain

access to mineral deposits and occurs throughout the life of an open-pit mine. Development and production stripping costs are classified as other mineral

assets in property, plant and equipment.

Stripping costs are accounted for separately for individual components of an ore body. The determination of components is dependent on the mine plan

and other factors, including the size, shape and geotechnical aspects of an ore body. The Group accounts for stripping activities as follows:

Development stripping costs

These are initial overburden removal costs incurred to obtain access to mineral deposits that will be commercially produced. These costs are capitalised

when it is probable that future economic benefits (access to mineral ores) will flow to the Group and costs can be measured reliably.

Once the production phase begins, capitalised development stripping costs are depreciated using the units of production method based on the proven

and probable reserves of the relevant identified component of the ore body which the initial stripping activity benefits.

Production stripping costs

These are post initial overburden removal costs incurred during the normal course of production activity, which commences after the first saleable

minerals have been extracted from the component. Production stripping costs can give rise to two benefits, the accounting for which is outlined below:

Production stripping activity

Benefits of stripping activity Extraction of ore (inventory) in current period. Improved access to future ore extraction.

Period benefited Current period Future period(s)

Recognition and

measurement criteria

When the benefits of stripping activities are realised in

the form of inventory produced; the associated costs

are recorded in accordance with the Group’s inventory

accounting policy.

When the benefits of stripping activities are improved access

to future ore; production costs are capitalised when all the

following criteria are met:

– the production stripping activity improves access to a specific

component of the ore body and it is probable that economic

benefits arising from the improved access to future ore

production will be realised

– the component of the ore body for which access has been

improved can be identified

– costs associated with that component can be

measured reliably

Allocation of costs Production stripping costs are allocated between the inventory produced and the production stripping asset using a life-of-

component waste-to-ore (or mineral contained) strip ratio. When the current strip ratio is greater than the estimated life-of-

component ratio a portion of the stripping costs is capitalised to the production stripping asset.

Asset recognised from

stripping activity

Inventory Other mineral assets within property, plant and equipment.

Depreciation basis Not applicable On a component-by-component basis using the units of

production method based on proven and probable reserves.

Key judgements and estimates

Judgements: Judgement is applied by management in determining the components of an ore body.

Estimates: Estimates are used in the determination of stripping ratios and mineral reserves by component. Changes to estimates related to life-

of-component waste-to-ore (or mineral contained) strip ratios and the expected ore production from identified components are accounted for

prospectively and may affect depreciation rates and asset carrying values.

BHP Annual Report 2023 155

Operating and Financial Review

Governance Financial Statements Additional Information

11 Property, plant and equipment continued

Depreciation

Depreciation of assets, other than land, assets under construction and capitalised exploration and evaluation that are not depreciated, is calculated

using either the straight-line (SL) method or units of production (UoP) method, net of residual values, over the estimated useful lives of specific assets.

The depreciation method and rates applied to specific assets reflect the pattern in which the asset’s benefits are expected to be used by the Group.

The Group’s proved and probable reserves for minerals assets are used to determine UoP depreciation unless doing so results in depreciation charges

that do not reflect the asset’s useful life. Where this occurs, alternative approaches to determining reserves are applied, to provide a phasing of periodic

depreciation charges that better reflects the asset’s expected useful life.

Where assets are dedicated to a mine lease, the useful lives below are subject to the lesser of the asset category’s useful life and the life of the mine

lease, unless those assets are readily transferable to another productive mine.

Assets classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell and therefore not depreciated.

Key estimates

The determination of useful lives, residual values and depreciation methods involves estimates and assumptions and is reviewed annually.

Any changes to useful lives or any other estimates or assumptions, including the expected impact of climate change and the transition to a lower

carbon economy, may affect prospective depreciation rates and asset carrying values. The table below summarises the principal depreciation methods

and rates applied to major asset categories by the Group.

Category Buildings

Plant and

equipment Mineral rights

Capitalised exploration, evaluation and

development expenditure

Typical depreciation methodology SL SL UoP UoP

Depreciation rate 25-50 years 3-30 years

Based on the rate of

depletion of reserves

Based on the rate of

depletion of reserves

Commitments

The Group’s commitments for capital expenditure were US$3,975 million as at 30 June 2023 (2022: US$2,820 million). The Group’s commitments related

to leases are included in note 22 ‘Leases’.

12 Intangible assets

2023 2022

Goodwill

US$M

Other

intangibles

US$M

Total

US$M

Goodwill

US$M

Other

intangibles

US$M

Total

US$M

Net book value

At the beginning of the financial year 1,197 172 1,369 1,197 240 1,437

Additions – 51 51 − 36 36

Acquisition of subsidiaries and operations

192 – 192 − − −

Amortisation for the year – (94) (94) − (60) (60)

Impairments for the year

– (2) (2) − − −

Disposals – (15) (15) − (16) (16)

Divestment and demerger of subsidiaries and operations

– − – − (66) (66)

Transfers and other movements – 109 109 − 38 38

At the end of the financial year 1,389 221 1,610 1,197 172 1,369

– Cost 1,389 1,529 2,918 1,197 1,363 2,560

– Accumulated amortisation and impairments – (1,308) (1,308) − (1,191) (1,191)

1 Relates to the acquisition of OZL on 2 May 2023. Refer to note 29 ‘Business combinations’ for more information.

2 Refer to note 13 ‘Impairment of non-current assets’ for information on impairments.

3 Relates to the merger of Petroleum with Woodside in FY2022. Refer to note 28 ‘Discontinued operations’ for more information.

Recognition and measurement

Goodwill

Where the fair value of the consideration paid for a business acquisition exceeds the fair value of the identifiable assets, liabilities and contingent liabilities

acquired, the difference is treated as goodwill. Where consideration is less than the fair value of acquired net assets, the difference is recognised

immediately in the income statement. Goodwill is not amortised and is measured at cost less any impairment losses.

Other intangibles

The Group capitalises amounts paid for the acquisition of identifiable intangible assets, such as software, licences and initial payments for the acquisition

of mineral lease assets, where it is considered that they will contribute to future periods through revenue generation or reductions in cost. These assets,

classified as finite life intangible assets, are carried in the balance sheet at the fair value of consideration paid (cost) less accumulated amortisation and

impairment charges. Intangible assets with finite useful lives are amortised on a straight-line basis over their useful lives. The estimated useful lives are

generally no greater than eight years.

Initial payments for the acquisition of intangible mineral lease assets are capitalised and amortised over the term of the permit. A regular review is

undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area. Capitalised costs are

only carried forward to the extent that they are expected to be recovered through the successful exploitation of the area of interest or alternatively by its

sale. To the extent that capitalised expenditure is no longer expected to be recovered, it is charged to the income statement.

Assets classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell and therefore not amortised.

156 BHP Annual Report 2023

1 Consolidated Financial Statements continued

13 Impairment of non-current assets

Cash generating unit Segment

2023

Property, plant

and equipment

US$M

Goodwill

and other

intangibles

US$M

Equity-

accounted

investment

US$M

Total

US$M

Other Various 73 2 – 75

Total impairment of non-current assets 73 2 – 75

Reversal of impairment – – – –

Net impairment of non-current assets – Continuing operations 73 2 – 75

Net impairment of non-current assets – Discontinued operations – – – –

Net impairment of non-current assets 73 2 – 75

Cash generating unit Segment

2022

Property, plant

and equipment

US$M

Goodwill

and other

intangibles

US$M

Equity-

accounted

investment

US$M

Total

US$M

Cerro Colorado Copper 455 − − 455

Other Various 60 − − 60

Total impairment of non-current assets 515 − − 515

Reversal of impairment − − − −

Net impairment of non-current assets – Continuing operations 515 − − 515

Net impairment of non-current assets – Discontinued operations − − − −

Net impairment of non-current assets 515 − − 515

Recognition and measurement

Impairment tests for all non-financial assets (excluding goodwill) are performed when there is an indication of impairment. Goodwill is tested for impairment

at least annually. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount

of the cash generating unit (CGU) to which the asset belongs, being the smallest identifiable group of assets that generates cash inflows that are largely

independent of the cash inflows from other assets or groups of assets. If the carrying amount of the asset or CGU exceeds its recoverable amount, the

asset or CGU is impaired and an impairment loss is charged to the income statement so as to reduce the carrying amount in the balance sheet to its

recoverable amount.

Previously impaired assets (excluding goodwill as impairment losses are not reversed in subsequent periods) are reviewed for possible reversal of previous

impairment at each reporting date. Impairment reversal cannot exceed the carrying amount that would have been determined (net of depreciation) had no

impairment loss been recognised for the asset or CGU. Such reversal is recognised in the income statement. There were no reversals of impairment in the

current or prior year.

How recoverable amount is calculated

The recoverable amount is the higher of an asset’s or CGU’s fair value less cost of disposal (FVLCD) and its value in use (VIU).

Fair value less cost of disposal

FVLCD is an estimate of the amount that a market participant would pay for an asset or CGU, less the cost of disposal. FVLCD for mineral assets is

generally determined using independent market assumptions to calculate the present value of the estimated future post-tax cash flows expected to arise

from the continued use of the asset, including the anticipated cash flow effects of any capital expenditure to enhance production or reduce cost, and its

eventual disposal where a market participant may take a consistent view. Cash flows are discounted using an appropriate post-tax market discount rate to

arrive at a net present value of the asset, which is compared against the asset’s carrying value. FVLCD may also take into consideration other market-

based indicators of fair value. FVLCD are based primarily on Level 3 inputs as defined in note 24 ‘Financial risk management’ unless otherwise noted.

Value in use

VIU is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form and

its eventual disposal or closure. VIU is determined by applying assumptions specific to the Group’s continued use and cannot take into account future

development. These assumptions are different to those used in calculating FVLCD and consequently the VIU calculation is likely to give a different result

(usually lower) to a FVLCD calculation.

Impairment of non-current assets (excluding goodwill)

No material impairment of non-current assets for the year ended 30 June 2023.

Impairment of non-current assets relating to the year ended 30 June 2022 are detailed below.

Impairment of Cerro Colorado

The Group recognised a pre-tax impairment charge of US$455 million. The impairment charge primarily related to an increase in closure and rehabilitation

provision at Cerro Colorado due to additional work required to re-profile waste dumps for closure and an increase in scope for the closure activities.

Impairment test for goodwill

The carrying amount of goodwill has been allocated to the CGUs, or groups of CGUs, as follows:

Cash generating unit

2023

US$M

2022

US$M

Olympic Dam 1,010 1,010

OZ Minerals Limited provisional goodwill 192 –

Other 187 187

Total goodwill 1,389 1,197

BHP Annual Report 2023 157

Operating and Financial Review

Governance Financial Statements Additional Information

13 Impairment of non-current assets continued

For the purpose of impairment testing, goodwill has been allocated to CGUs or groups of CGUs, that are expected to benefit from the synergies of

previous business combinations, which represent the level at which management will monitor and manage goodwill.

The Olympic Dam goodwill has been tested for impairment at 31 December 2022, as part of the Olympic Dam CGU. Details of the goodwill impairment

test are provided below.

On 2 May 2023, the Group acquired OZ Minerals Limited (OZL) (refer to note 29 ‘Business combination’ for details). The goodwill arising from the

acquisition of US$192 million represents the provisional amount, which could not be reliably allocated to a CGU or group of CGUs at 30 June 2023.

There were no indicators of impairment during the period from acquisition date to 30 June 2023 to suggest that the provisional goodwill had been

impaired. Therefore, as at 30 June 2023, this goodwill has not yet been subject to any impairment testing.

Goodwill held by other CGUs is US$187 million (2022: US$187 million). This represents less than one per cent of net assets at 30 June 2023

(2022: less than one per cent). There was no impairment of other goodwill in the year to 30 June 2023 (2022: US$ nil).

Olympic Dam goodwill

Impairment test conclusion The Group performed an impairment test of the Olympic Dam CGU, including goodwill, as at 31 December 2022

and an impairment charge was not required. A goodwill impairment test was not required at 30 June 2023 as there

were no indicators of impairment.

How did the goodwill arise? Goodwill arose on the acquisition of WMC Resources Ltd in June 2005.

Segment Olympic Dam is part of the Copper reportable segment.

How were the

valuations calculated?

FVLCD methodology using DCF techniques has been applied in determining the recoverable amount of

Olympic Dam.

Significant assumptions

and sensitivities

The valuation of Olympic Dam exceeded its carrying amount by approximately US$4.2 billion (2022: US$2.4 billion)

and is most sensitive to changes in copper and gold commodity prices, production volumes, operating costs and

discount rates. The valuation applied a post-tax real discount rate of 6.5 per cent (2022: 6.5 per cent).

Changes in copper and gold commodity price forecasts, estimated production volumes and operating costs and

discount rates in the period between 31 December 2022 and 30 June 2023, including an increase to the discount

rate applied to Olympic Dam to 7.0 per cent, did not result in an indicator of impairment.

Further, it is considered that there are no reasonably possible changes in copper and gold price forecasts,

operating cost estimates or the discount rate that would, in isolation, result in the estimated recoverable amount

being equal to the carrying amount.

A production volume decrease of 9.9 per cent (2022: 6 per cent) across all commodities (copper, gold, silver

and uranium) would, in isolation, result in the estimated recoverable amount being equal to the carrying amount.

Typically, changes in any one of the aforementioned assumptions (including operating performance) would be

accompanied by a change in another assumption which may have an offsetting impact. Action is usually taken to

respond to adverse changes in assumptions to mitigate the impact of any such change.

Key judgements and estimates that have been applied in the FVLCD valuation are disclosed further below.

158 BHP Annual Report 2023

1 Consolidated Financial Statements continued

13 Impairment of non-current assets continued

Key judgements and estimates

Judgements: Assessment of indicators of impairment or impairment

reversal and the determination of CGUs for impairment purposes require

significant management judgement.

Indicators of impairment may include changes in the Group’s operating

and economic assumptions, including those arising from changes in

reserves or mine planning, updates to the Group’s commodity supply,

demand and price forecasts, or the possible additional impacts from

emerging risks including those related to climate change and the

transition to a low-carbon economy.

Climate change

The Group’s impairment assessments may be impacted by climate

change and the transition to a low-carbon economy. Further detail is

provided in note 16 ‘Climate Change’.

Estimates: The Group performs a recoverable amount determination

for an asset or CGU when there is an indication of impairment or

impairment reversal.

When the recoverable amount is measured by reference to FVLCD,

in the absence of quoted market prices or binding sale agreement,

estimates are made regarding the present value of future post-tax cash

flows. These estimates are made from the perspective of a market

participant and include prices, future production volumes, operating

costs, capital expenditure, closure and rehabilitation costs, taxes, risking

factors applied to cash flows and discount rates. The cash flow forecasts

may include net cash flows expected from the extraction, processing

and sale of material that does not currently qualify for inclusion in ore

reserves. Reserves and resources are included in the assessment

of FVLCD to the extent that it is considered probable that a market

participant would attribute value to them.

When recoverable amount is measured using VIU, estimates are made

regarding the present value of future cash flows based on internal

budgets and forecasts and life of asset plans. Key estimates are similar

to those identified for FVLCD, although some assumptions and values

may differ as they reflect the perspective of management rather than a

market participant.

All estimates require judgements and assumptions and are subject to

risk and uncertainty that may be beyond the control of the Group; hence,

there is a possibility that changes in circumstances will materially alter

projections, which may impact the recoverable amount of an asset

or CGU at each reporting date. While no indicators of impairment, or

impairment reversal, were identified across the Group’s CGUs at 30 June

2023, the carrying value of the Spence and Nickel West CGUs are the

most susceptible to changes in the significant estimates outlined below in

the next reporting period.

The significant estimates impacting the Group’s recoverable amount

determinations are:

Commodity prices

Commodity prices were based on latest internal forecasts which assume

short-term market prices will revert to the Group’s assessment of

long-term price. These price forecasts reflect management’s long-term

views of global supply and demand, built upon past experience of the

commodity markets and are benchmarked with external sources of

information such as analyst forecasts. Prices are adjusted based upon

premiums or discounts applied to global price markers to reflect the

location, nature and quality of the Group’s production, or to take into

account contracted prices.

Future production volumes

Estimated production volumes were based on detailed data and took

into account development plans established by management as part

of the Group’s long-term planning process. When estimating FVLCD,

assumptions reflect all reserves and resources that a market participant

would consider when valuing the respective CGU, which in some cases

are broader in scope than the reserves that would be used in a VIU

test. In determining FVLCD, risk factors may be applied to reserves and

resources which do not meet the criteria to be treated as proved.

Cash outflows (including operating costs, capital expenditure,

closure and rehabilitation costs and taxes)

Cash outflows are based on internal budgets and forecasts and life of

asset plans. Cost assumptions reflect management experience and

expectations. Tax assumptions reflect existing and substantively enacted

tax and royalty regimes and rates applicable in the jurisdiction of the

CGU. In the case of FVLCD, cash flow projections include the anticipated

cash flow effects of any capital expenditure to enhance production or

reduce cost where a market participant may take a consistent view.

VIU does not take into account future development.

Discount rates

The Group uses real post-tax discount rates applied to real post-tax cash

flows. The discount rates are derived using the weighted average cost of

capital methodology. Adjustments to the rates are made for any risks that

are not reflected in the underlying cash flows, including country risk.

14 Deferred tax balances

The movement for the year in the Group’s net deferred tax position is as follows:

2023

US$M

2022

US$M

2021

US$M

Net deferred tax (liability)/asset

At the beginning of the financial year (3,007) (1,402) (91)

Acquisition of subsidiaries and operations

(867) − −

Income tax charge recorded in the income statement

2,3

(387) (125) (1,325)

Income tax credit/(charge) recorded directly in equity 6 (42) 42

Divestment and demerger of subsidiaries and operations

– (1,439) −

Other movements 12 1 (28)

At the end of the financial year (4,243) (3,007) (1,402)

1 Relates to the acquisition of OZL on 2 May 2023. Refer to note 29 ‘Business combinations’ for more information.

2 Includes Discontinued operations income tax (charge)/credit to the income statement in 2022 of US$(61) million (2021: US$273 million).

3 Includes US$(283) million revaluation of deferred tax balances in the year ended 30 June 2023, following the substantive enactment of the Chilean Royalty Bill. Refer to note

3 ‘Exceptional items’ for more information.

4 Relates to the divestment of BMC and merger of Petroleum with Woodside. Refer to notes 3 ‘Exceptional items’ and 28 ‘Discontinued operations’ for more information.

For recognition and measurement refer to note 6 ‘Income tax expense’ .

BHP Annual Report 2023 159

Operating and Financial Review

Governance Financial Statements Additional Information

14 Deferred tax balances continued

The composition of the Group’s net deferred tax assets and liabilities recognised in the balance sheet and the deferred tax expense charged/(credited)

to the income statement is as follows:

Deferred tax assets Deferred tax liabilities Charged/(credited) to the income statement

2023

US$M

2022

US$M

2023

US$M

2022

US$M

2023

US$M

2022

US$M

2021

US$M

Type of temporary difference

Depreciation

(629) (526) 6,259 4,844 452 554 488

Exploration expenditure 11 9 (1) − (2) 13 347

Employee benefits 27 21 (425) (322) (94) 20 (68)

Closure and rehabilitation 143 104 (1,753) (1,448) (296) 24 (515)

Resource rent tax – − – − – (129) (309)

Other provisions 64 70 (210) (192) 4 49 77

Deferred income 14 51 – (1) 37 (31) (31)

Deferred charges (82) (57) 644 584 85 7 68

Investments, including foreign tax credits 225 139 370 365 (54) (298) 414

Foreign exchange gains and losses (14) (13) 190 154 42 33 63

Tax losses 276 225 (214) (307) 37 28 678

Lease liability

18 17 (767) (594) (83) (10) 67

Other 3 16 206 (20) 259 (135) 46

Total 56 56 4,299 3,063 387 125 1,325

1 Includes deferred tax associated with the recognition of right-of-use assets and lease liabilities on adoption of IFRS 16. Refer to note 22 ‘Leases’.

The composition of the Group’s unrecognised deferred tax assets and liabilities is as follows:

2023

US$M

2022

US$M

Unrecognised deferred tax assets

Tax losses and tax credits

8,572 8,462

Investments in subsidiaries

1,661 1,597

Mineral rights

3,287 2,781

Other deductible temporary differences

1,912 1,777

Total unrecognised deferred tax assets 15,432 14,617

Unrecognised deferred tax liabilities

Investments in subsidiaries

2,179 2,099

Total unrecognised deferred tax liabilities 2,179 2,099

1 At 30 June 2023, the Group had income and capital tax losses with a tax benefit of US$5,709 million (2022: US$5,777 million) and tax credits of US$2,863 million (2022:

US$2,685 million), which are not recognised as deferred tax assets, because it is not probable that future taxable profits or capital gains will be available against which the

Group can utilise the benefits.

The gross amount of tax losses carried forward that have not been recognised is as follows:

Year of expiry

2023

US$M

2022

US$M

Income tax losses

Not later than one year 22 −

Later than one year and not later than two years 5 −

Later than two years and not later than five years 47 43

Later than five years and not later than 10 years 549 248

Later than 10 years and not later than 20 years 1,317 1,290

Unlimited 4,889 4,157

6,829 5,738

Capital tax losses

Not later than one year – −

Later than two years and not later than five years – −

Unlimited 13,870 14,173

Gross amount of tax losses not recognised 20,699 19,911

Tax effect of total losses not recognised 5,709 5,777

Of the US$2,863 million of tax credits, US$2,405 million expires not later than 10 years (2022: US$2,129 million) and US$458 million expires later than 10 years and not later

than 20 years (2022: US$556 million).

2 The Group has deferred tax assets and deferred tax liabilities associated with undistributed earnings of subsidiaries that have not been recognised because the Group is

able to control the timing of the reversal of the temporary differences and it is not probable that these differences will reverse in the foreseeable future. Where the Group has

undistributed earnings held by associates and joint interests, the deferred tax liability will be recognised as there is no ability to control the timing of the potential distributions.

3 The Group has deductible temporary differences relating to mineral rights for which deferred tax assets have not been recognised because it is not probable that future capital

gains will be available against which the Group can utilise the benefits. The deductible temporary differences do not expire under current tax legislation.

4 The Group has other deductible temporary differences for which deferred tax assets have not been recognised because it is not probable that future taxable profits will be

available against which the Group can utilise the benefits. The deductible temporary differences do not expire under current tax legislation.

160 BHP Annual Report 2023

1 Consolidated Financial Statements continued

15 Closure and rehabilitation provisions

2023

US$M

2022

US$M

At the beginning of the financial year 8,689 11,910

Capitalised amounts for operating sites:

Change in estimate 510 1,579

Exchange translation (50) (694)

Adjustments charged/(credited) to the income statement:

Increases to existing and new provisions 47 174

Exchange translation (8) (58)

Released during the year (35) (42)

Other adjustments to the provision:

Amortisation of discounting impacting net finance costs 839 554

Acquisition of subsidiaries and operations

168 −

Divestment and demerger of subsidiaries and operations – (4,477)

Expenditure on closure and rehabilitation activities (273) (316)

Exchange variations impacting foreign currency translation reserve – (3)

Other movements – 62

At the end of the financial year 9,887 8,689

Comprising:

Current 520 475

Non-current 9,367 8,214

Operating sites 7,366 6,198

Closed sites 2,521 2,491

1 Relates to the acquisition of OZL on 2 May 2023. Refer to note 29 ‘Business combinations’ for more information.

Profile of closure and rehabilitation cash flows

The table below indicates the estimated profile of the Group’s closure and rehabilitation provisions. The profile reflects the undiscounted forecast cash

flows that underpin the provisions. In some instances, the Group has an obligation to rehabilitate and maintain a closed site for an indefinite period.

For the purpose of this analysis, the cashflow period has been restricted to 100 years.

Proportion of the Group’s undiscounted forecast cashflows

2023

2022

In one year or less 3 3

In more than one year but not more than two years 4 3

In more than two years but not more than five years 8 9

In more than five years but not more than ten years 14 15

In more than ten years 71 70

Total 100 100

The Group is required to close and rehabilitate sites and associated facilities at the end of or, in some cases, during the course of production to a

condition acceptable to the relevant authorities, as specified in licence requirements and the Group’s closure performance requirements.

The key components of closure and rehabilitation activities are:

– the removal of all unwanted infrastructure associated with an operation

– the return of disturbed areas to a safe, stable and self-sustaining condition, consistent with the agreed post-closure land use

Recognition and measurement

Provisions for closure and rehabilitation are recognised by the Group when:

– it has a present legal or constructive obligation as a result of past events

– it is more likely than not that an outflow of resources will be required to settle the obligation

– the amount can be reliably estimated

BHP Annual Report 2023 161

Operating and Financial Review

Governance Financial Statements Additional Information

15 Closure and rehabilitation provisions continued

Initial recognition and measurement Subsequent measurement

Closure and rehabilitation provisions are

initially recognised when an environmental

disturbance first occurs. The individual site

provisions are an estimate of the expected

value of future cash flows required to close

the relevant site using current standards

and techniques and taking into account risks

and uncertainties. Individual site provisions

are discounted to their present value using

currency specific discount rates aligned to

the estimated timing of cash outflows.

When provisions for closure and

rehabilitation are initially recognised, the

corresponding cost is capitalised as an

asset, representing part of the cost of

acquiring the future economic benefits

of the operation.

The closure and rehabilitation asset, recognised within property, plant and equipment, is depreciated over

the life of the operations. The value of the provision is progressively increased over time as the effect of

discounting unwinds, resulting in an expense recognised in net finance costs.

The closure and rehabilitation provision is reviewed at each reporting date to assess if the estimate continues

to reflect the best estimate of the obligation. If necessary, the provision is remeasured to account for factors

such as:

– additional disturbance during the period

– revisions to estimated reserves, resources and lives of operations including any changes to expected

operating lives arising from the Group’s latest assessment of the potential impacts of climate change and

the transition to a low-carbon economy

– developments in technology

– changes to regulatory requirements and environmental management strategies

– changes in the estimated extent and costs of anticipated activities, including the effects of inflation

and movements in foreign exchange rates

– movements in interest rates affecting the discount rate applied

Changes to the closure and rehabilitation estimate for operating sites are added to, or deducted from,

the related asset and amortised on a prospective basis over the remaining life of the operation, generally

applying the units of production method.

Costs arising from unforeseen circumstances, such as the contamination caused by unplanned discharges,

are recognised as an expense and liability when the event gives rise to an obligation that is probable and

capable of reliable estimation.

Closed sites

Where future economic benefits are no longer expected to be derived through operation, changes to the associated closure and remediation costs are

charged to the income statement in the period identified. This amounted to US$4 million in the year ended 30 June 2023 (2022: US$74 million; 2021:

US$483 million).

Key estimates

Closure cost estimates are generally based on conceptual level studies

early in the operating life of an asset with more detailed studies and

planning performed as closure risks (including those related to climate

change) are identified and/or as an asset, or parts thereof, near closure.

As such, the recognition and measurement of closure and rehabilitation

provisions requires the use of significant estimates and assumptions,

including, but not limited to:

– the extent (due to legal or constructive obligations) of potential activities

required for the removal of infrastructure, decharacterisation of tailings

storage facilities and rehabilitation activities

– costs associated with future closure activities

– the extent and period of post-closure monitoring and maintenance,

including water management

– applicable discount rates

– the timing of cash flows and ultimate closure of operations

The extent, cost and timing of future closure activities may also be

impacted by the potential physical impacts of climate change and the

transition to a low-carbon economy. Further detail is provided in note 16

‘Climate Change’.

Estimates for post-closure monitoring and maintenance reflect the

Group’s strategies for individual sites, which may include possible

relinquishment. The period of monitoring and maintenance included in

the provision requires judgement and considers regulatory and licencing

requirements, the outcomes of studies and management’s current

assessment of stakeholder expectations.

While progressive closure is performed across a number of operations,

significant activities are generally undertaken at the end of the production

life at the individual sites, the estimated timing of which is informed by

the Group’s current assumptions relating to demand for commodities and

carbon pricing, and their impact on the Group’s long-term price forecasts.

Approximately 51 per cent (2022: 48 per cent) of the Group’s total

undiscounted forecast cashflows are expected to be incurred after more

than 30 years, reflecting the long-lived nature of many of the Group’s

operations which have remaining production lives ranging from 1-103

years (2022: 2-104 years). The discount rates applied to the Group’s

closure and rehabilitation provisions are determined by reference to the

currency of the closure cash flows, the period over which the cash flows

will be incurred and prevailing market interest rates (where available).

The Group continues to monitor current market conditions with no change

made to the Group’s discount rates in the current year.

While the closure and rehabilitation provisions reflect management’s

best estimates based on current knowledge and information, further

studies, trials and detailed analysis of relevant knowledge and resultant

closure activities for individual assets continue to be performed

throughout the life of asset. Such studies and analysis can impact the

estimated costs of closure activities. Estimates can also be impacted by

the emergence of new closure and rehabilitation techniques, changes

in regulatory requirements and stakeholder expectations for closure

(including costs associated with equitable transition), development of

new technologies, risks relating to climate change and the transition

to a low-carbon economy, and experience at other operations.

These uncertainties may result in future actual expenditure differing

from the amounts currently provided for in the balance sheet.

Sensitivity

A 0.5 per cent increase in the discount rates applied at 30 June 2023

would result in a decrease to the closure and rehabilitation provision

of approximately US$758 million, a decrease in property, plant and

equipment of approximately US$568 million in relation to operating sites

and an income statement credit of approximately US$190 million in respect

of closed sites. In addition, the change would result in a decrease of

approximately US$44 million to depreciation expense and a US$26 million

increment in net finance costs for the year ending 30 June 2024.

Given the long-lived nature of the majority of the Group’s assets, the

majority of final closure activities are generally not expected to occur for

a significant period of time.

However, a one-year acceleration in forecast cash flows of the Group’s

closure and rehabilitation provisions, in isolation, would result in an

increase to the provision of approximately US$209 million, an increase in

property, plant and equipment of US$148 million in relation to operating

sites and an income statement charge of US$61 million in respect of

closed sites.

162 BHP Annual Report 2023

1 Consolidated Financial Statements continued

16 Climate change

The Group recognises that warming of the climate is unequivocal, the human influence is clear and physical impacts are unavoidable. Identifying,

monitoring and assessing the actual and potential impacts of climate change is complex and the Group continues to develop its assessment of the actual

and potential financial impacts of climate-related risks and opportunities, including the transition to a low-carbon economy and physical risk impacts.

The Group’s current climate change strategy focuses on:

– building a portfolio to support the megatrends shaping our world, including future-facing commodities (copper, nickel and potash) and steelmaking

materials (iron ore and metallurgical coal)

– reducing operational greenhouse gas (GHG) emissions

– investing in low GHG emissions technologies

– supporting GHG emissions reductions in our value chain and promoting product stewardship

– managing climate-related risks (threats and opportunities)

– working with others to enhance the global policy and market response

Areas of the financial statements that may potentially be impacted in connection with this strategy throughout the value creation and delivery cycle of the

Group’s operations, include:

Phase Areas of potential financial statement impact

Exploration and acquisition – Financial impact of portfolio decisions

Development and mining /

Process and logistics

– Impact of transition risks (threats and opportunities) on asset carrying values

– Physical risk impacts on asset carrying values

– Acquisition of carbon credits, and application of carbon pricing assumptions

– Useful economic lives of property, plant and equipment

– Expenditure on operational decarbonisation

– Expenditure to support value chain decarbonisation

Sales, marketing and procurement – Key transition materials and future-facing commodities and the revenue they generate

– Expenditure to support value chain decarbonisation

Closure and rehabilitation – Physical risk impacts on asset carrying values

– Timing, scope and expected cost of closure and rehabilitation activities

At the date of issue of these Financial Statements, indicators show the appropriate measures are not in place globally to drive decarbonisation at the

pace or scale required for the aims of the Paris Agreement to be achieved as the most likely future outcome. As such, the significant judgements and key

estimates used in the preparation of these financial statements reflect the Group’s current operational planning cases (described below) which are not

currently aligned with a 1.5°C temperature outcome.

However, while not the basis of preparation of these financial statements, the Group continues to assess the potential financial statement impacts of the

1.5°C temperature outcome goal of the Paris Agreement under the Group’s 1.5°C scenario

Future changes to the Group’s climate change strategy or global decarbonisation signposts may impact the Group’s significant judgements and key

estimates, and result in material changes to financial results and the carrying values of certain assets and liabilities in future reporting periods.

Financial impact of portfolio decisions

During FY2023, the Group completed the acquisition of OZ Minerals Limited (OZL) and announced the proposed divestment of its interest in the

Daunia and Blackwater lower-quality metallurgical coal mines, currently part of the BHP Mitsubishi Alliance (BMA). Further information in respect of the

acquisition of OZL is included in note 29 ‘Business combinations’. Given the timing of the acquisition, the OZL assets will be incorporated into the Group’s

climate-related assessments, and associated disclosures, in FY2024 as integration of the business continues.

These activities support the continued reshaping of the Group’s portfolio to focus on future-facing commodities, iron ore and higher quality metallurgical

coal. They follow the completion, in FY2022, of the merger of the Group’s Petroleum business with Woodside and the divestment of the Group’s interests

in BHP Mitsui Coal Pty Ltd (BMC) and the Cerrejón non-operated energy coal joint venture.

Also in FY2022, the Group announced that it would retain New South Wales Energy Coal (NSWEC) in its portfolio, seek the relevant approvals to

continue mining beyond the current consent that expires at the end of FY2026 and proceed with a managed process to cease mining at the asset by the

end of FY2030.

Following impairments recognised in previous periods, the net carrying value of NSWEC at 30 June 2023 is approximately negative US$220 million

comprising property, plant and equipment (PP&E) of approximately US$530 million and closure provisions and other liabilities of approximately

US$750 million. As at 30 June 2023, the potential exposure to further impairment for NSWEC is limited to the book value of PP&E of US$530 million, with

the forecast cash flows over the proposed operating period supporting the current carrying value. Further, the useful lives of NSWEC PP&E do not exceed

the remaining proposed operating period.

Impact of transition risks (threats and opportunities) on asset carrying values

Significant judgements and key estimates in relation to the preparation of the Financial Statements are impacted by the Group’s current assessment of

the range of economic and climate-related conditions that could exist in the world’s transition to a low-carbon economy, considering the current trajectory

of society and the global economy as a whole.

For example, demand for the Group’s commodities may decrease due to policy, regulatory (including carbon pricing mechanisms), legal, technological,

market or societal responses to climate change, resulting in a proportion of a cash generating unit’s (CGU) reserves becoming incapable of extraction in

an economically viable fashion.

1 This scenario requires steep global annual emissions reduction, sustained for decades, to stay within a 1.5°C carbon budget. 1.5°C is above pre-industrial levels. For more

information about the assumptions, outputs and limitations of our 1.5°C scenario refer to the BHP Climate Change Report 2020 available at bhp.com. The Group is preparing

an updated 1.5°C scenario in FY2024.

BHP Annual Report 2023 163

Operating and Financial Review

Governance Financial Statements Additional Information

16 Climate change continued

To support strategic decision making, the Group develops a number of divergent climate scenarios and pathways. In FY2023, the Group’s One Energy

View, being the Group’s current estimates of the most likely future states for the global economy and associated sub-systems, was updated to reflect

three different pathways under which most developed economies would reach net zero around 2050, with other large economies reaching net zero in

2060 and 2070. While the global gross domestic product assumptions and the pace and drivers of decarbonisation vary across the pathways, each

pathway results in a global average temperature increase of around 2°C by 2100.

The Group uses the One Energy View pathways as inputs to the Group’s operational planning cases as they reflect the Group’s current best estimates of the most

likely range of future states for the global economy and associated sub-systems. These pathways inform updates to the Group’s commodity supply and demand

outlooks and are used, in conjunction with other market sources of information, to determine the Group’s short and long-term price outlooks. Other sources of

information include commodity price forward curves, consensus price outlooks and commodity specific price outlooks sourced from industry analysts.

Given the complexity and inherent uncertainty of climate modelling, these pathways are reviewed periodically to reflect new information, with a process in

place to assess the need to update internal long-term price outlooks for developments in the periods between pathway updates.

The Group reflects the operational planning cases and associated price outlooks in the internal valuations used as the basis for the Group’s

impairment assessments.

The discount rate used in the internal valuations reflects a real post-tax weighted average cost of capital (WACC), including country and state risk premia

where appropriate, and ranges from 7.0 per cent to 9.5 per cent across the Group (FY2022: 6.0 per cent to 8.5 per cent). Cash flow forecasts used as the

basis for impairment testing include asset specific risks, including climate-related risks such as operational interruptions as a result of physical climate-

related risks, and therefore the Group does not include a separate climate-related risk adjustment in the Group’s WACC.

Physical risk impacts on asset carrying values

The Group’s operations are exposed to physical climate-related risks. In FY2023, the Group progressed impact evaluations of physical climate-related

risks to better understand the potential impacts to site operations, safety, productivity and cost, with these assessments to continue in FY2024.

The Group’s consideration of potential physical climate-related risk impacts when developing the Group’s operating plans, including factors such as

operational interruptions caused by extreme weather events, therefore considers only the Group’s current best estimates of the potential financial impacts

of certain climate-related physical risks.

Given the complexity of physical risk modelling and the ongoing nature of the Group’s physical risk assessment process, the identification of additional

risks and/or the detailed development of the Group’s response may result in material changes to financial results and the carrying values of assets and

liabilities in future reporting periods.

Acquisition of carbon credits and application of carbon pricing assumptions

The Group’s carbon credits and offsetting strategy is currently being managed at a consolidated Group level. However, individual investment decisions

and asset valuations used for the purposes of impairment testing, consider carbon price assumptions for major Group operational, competitor and

customer countries by applying a carbon price to estimated unmitigated Scopes 1 and 2 GHG emissions over the life of the respective operation.

In determining the Group’s forecast, factors including a country’s current and announced climate policies, targets and societal factors, such as public

acceptance and demographics, are considered. As at the date of these Financial Statements, the carbon price used in asset valuations reflects the

following ranges:

US$ real (January 2022) per tCO

FY2030

Low

FY2030

High

FY2050

Low

FY2050

High

Australia 25 75 150 225

Brazil 5 50 125 200

Chile 8 41 150 225

Canada 65 102 200 225

Key customer countries − 175 25 250

The Group acquires carbon credits for the purposes of both compliance and possible voluntary surrender or retirement to achieve the Group’s net zero

operational GHG emissions long-term goal by CY2050. The Group may also sell to optimise carbon credits depending on internal use requirements or

originate carbon credits through project development or direct investment.

Expenditure on carbon credits during FY2023 amounted to approximately US$15 million. The Group did not voluntarily surrender or retire any carbon

credits during FY2023.

From FY2024, the Group will be subject to the reforms made to Australia’s Safeguard Mechanism in FY2023 which, in effect, levy a carbon price for

large facilities by requiring the surrender of eligible credits when their Scope 1 emissions exceed a progressively declining legislated limit (known as a

baseline). As such, in future reporting periods, the Group may recognise liabilities where an obligation to purchase eligible carbon credits exists and/or

intangible assets for carbon credits acquired or generated to meet those obligations.

Useful economic lives of property, plant and equipment

The determination of useful lives of the Group’s PP&E requires judgement, including consideration of the Group’s climate change strategy, targets and

goals, decarbonisation plans and the possible impact of transition risks on demand for the Group’s commodities.

Useful lives are reviewed each reporting period, including to ensure they do not exceed the remaining expected operating life of the operation in which

they are utilised, and are updated as required. The remaining lives of the Group’s operations reflect the Group’s operational planning cases and their

underlying climate-related assumptions.

A key component of the Group’s operational decarbonisation strategy is the displacement of diesel within the Group’s operations, particularly the haul

truck fleet. The Group is supporting the development of new equipment by original equipment manufacturers, including entering into partnerships focused

on the development and trialling of electrical locomotives and haul trucks.

While technical and commercial development of the technology needed is progressing, the Group’s operating plans generally assume replacement of haul

trucks, and other diesel powered equipment, at the end of their useful lives in line with the Group’s regular fleet renewal programs. For example, a significant

proportion of the Group’s current WAIO mining fleet is due for replacement prior to the expected availability of battery electric vehicle solutions. As such, the

Group’s decarbonisation plans have not had a material impact on the estimated remaining useful lives of the Group’s existing fleet of assets in FY2023.

164 BHP Annual Report 2023

1 Consolidated Financial Statements continued

16 Climate change continued

Expenditure on operational decarbonisation

The Group has set a target to reduce its operational GHG emissions

(Scopes 1 and 2 from our operated assets) by at least 30 per cent from the

Group’s FY2020 baseline levels by FY2030 and a goal to achieve net zero

operational GHG emissions by CY2050.

Given the timing of the OZ Minerals Limited acquisition, the Group plans

to update the baseline for both the Group’s medium-term target and long-

term goal in FY2024.

The Group’s operational decarbonisation activities during FY2023 largely

focused on the transition of the Group’s electricity supply to renewable

sources. The Group also continued to progress projects in relation

to displacement of diesel and managing fugitive methane, however

expenditure in these areas is expected to increase towards the second half

of the decade.

A significant proportion of the Group’s renewable electricity is currently

sourced through power purchase agreements and judgement is required in

determining the appropriate accounting treatment of such arrangements.

Depending on the specific terms and conditions, power purchase

agreements may be recognised as:

– an expense when incurred

– a financial derivative; or

– a lease liability, with an associated right of use asset

At 30 June 2023, the Group recognised derivatives associated with

renewable power purchase agreements (including those signed

arrangements in which supply will commence in future periods) with a

fair value of approximately US$50 million. No significant leases have

been recognised by the Group in relation to renewable power purchase

agreements at 30 June 2023.

Capital expenditure associated with renewable power purchase

agreements is generally limited and, given the early stage of development

of diesel displacement and management of fugitive methane, capital

expenditure on decarbonisation in FY2023 was not material.

Capital and operating expenditures associated with projects aimed at

contributing to the achievement of the Group’s operational GHG emissions

medium-term target and long-term goal have been incorporated into

the estimated future cash flows of the Group’s assets. These cash flow

estimates form the basis of the Group’s impairment assessments as

outlined in further detail in note 13 ‘Impairment of non-current assets’.

Of the total future capital expenditure on operational decarbonisation, the

Group expects to spend around US$4 billion (nominal terms) by FY2030,

with the majority of decarbonisation capital over this period being spent on

diesel-displacement projects

Many of the projects planned to commence before FY2030 are likely to

extend beyond the Group’s medium-term target period, and are expected

to make a substantial contribution towards the Group’s long-term goal of

net zero operational GHG emissions by CY2050. Significant expenditure

on fleet renewal at certain assets, for example Olympic Dam, is expected

to occur after FY2030.

As the Group’s climate response is further integrated into business-

as-usual planning, the spending on climate initiatives is expected

to increasingly form part of ordinary course business expenditures.

Any change to the Group’s climate change strategy could impact the

expected level of expenditure on operational decarbonisation and the

associated financial statement significant judgements and key estimates.

Capex spend FY24 – FY30 by asset

WAIO 40%

Escondida 31%

BMA 12%

Pampa Norte and Potash 11%

Olympic Dam and Nickel West 6%

Expenditure to support value chain decarbonisation

The Group continues to invest, including in partnership with others,

in potential GHG emissions reduction opportunities in its value chain

through technology innovation and development to support reductions to

its total reported Scope 3 emissions inventory, with a particular focus on

steelmaking and maritime emissions.

However, while we seek to influence reduction opportunities, Scope 3

emissions occur outside of our direct control. Reduction pathways are

dependent on the development, and upstream or downstream deployment

of, solutions and/or supportive policy. Where possible, the financial

impact of the Group’s activities in support of the development of Scope 3

reduction pathways is reflected in the financial statements. For example,

the Group recognised additional lease liabilities, and associated right

of use assets, of US$90 million during FY2023 when chartering of the

Group’s new dual-fuelled LNG vessels. Further detail of the Group’s leases

is provided in note 22 ‘Leases’.

It is, however, currently not possible to reliably estimate or measure the full

potential financial statement impacts of the Group’s pursuit of its Scope 3

goals and targets.

Key transition materials and future-facing commodities, and the

revenue they generate

There is no agreed or established approach to defining revenue from

commodities that are key to the transition to a low-carbon economy.

The investor-led initiative Climate Action 100+ is developing a Diversified

Mining Net Zero Standard with the draft Standard defining key transition

materials. The FTSE Green Revenues Classification System is a taxonomy

contributing to the transition to a low-carbon economy.

Applying the Climate Action 100+ draft Standard definitions and the

FTSE Russel taxonomy would result in the Group classifying copper,

nickel and uranium as key transition materials. FY2023 revenue for these

commodities was US$14.9 billion, US$1.9 billion (comprised of Battery-

suitable

US$1.0 billion and Other US$0.9 billion) and US$0.4 billion

respectively. (FY2022: US$16.0 billion, US$1.7 billion and US$0.2 billion,

respectively).

2 Based on latest business plans and excluding recently acquired OZL assets.

In respect of diesel-displacement, amounts included in the US$4 billion reflect

incremental estimated spend above internal combustion engine replacement costs

and supporting site infrastructure.

3 Battery-suitable nickel is defined as nickel briquettes, nickel powder and nickel

sulphate. It does not include off-specification nickel metal. Calculated based on

gross revenue from battery suitable nickel multiplied by percentage of BHP’s

sales of battery-suitable nickel, as applicable to battery material suppliers.

Where a customer’s planned end use is not known with certainty to be for battery

supply, assumptions of usage have been made using historical nickel usage for

those customers.

BHP Annual Report 2023 165

Operating and Financial Review

Governance Financial Statements Additional Information

16 Climate change continued

Timing and expected cost of closure and rehabilitation activities

The extent, cost and timing of the Group’s future closure activities may

be impacted by potential physical climate-related impacts. In estimating

the potential cost of closure activities, the Group considers factors such

as long-term weather outlooks, for example forecast changes in rainfall

patterns. Closure cost estimates also consider the impact of the Group’s

climate change strategy on the costs and timing of performing closure

activities and the impact of new technology where appropriately developed

and tested. For example, closure cost estimates largely continue to reflect

the use of existing fuel sources for the Group’s equipment while the Group

continues to invest in the development of alternative fuel sources and

fleet electrification.

The estimated cost of closure activities includes management’s current

best estimate in relation to post-closure monitoring and maintenance,

which may be required for significant periods beyond the completion of

other closure activities and is therefore exposed to potential long-term

climate-related impacts. While reflecting management’s current best

estimate, the cost of post-closure monitoring and maintenance may

change in future reporting periods as the understanding of, and potential

long-term impacts from, climate change continue to evolve.

Given the long-lived nature of the majority of the Group’s assets, the

majority of final closure activities are not expected to occur for a significant

period of time. However, acknowledging the wide range of potential

energy transition impacts for metallurgical coal demand, and for illustrative

purposes only, a five-year acceleration in forecast cash flows relating to

the Group’s metallurgical coal closure and rehabilitation provisions, in

isolation, would be estimated to result in an increase to the provision of

approximately 15 per cent, which approximates to US$250 million.

Further, while the Group’s NSWEC closure provision remains subject to

estimation and assumptions, the timing of closure is no longer considered

materially susceptible to potential long-term climate-related impacts.

More detail on the key judgements and estimates impacting the Group’s

closure and rehabilitation provisions is presented in note 15 ‘Closure and

rehabilitation provisions’.

Paris Agreement and 1.5°C scenarios

As governments, institutions, companies, and society increasingly focus

on addressing climate change, the potential for a non-linear and/or more

rapid transition and the subsequent impact on climate-related threats and

opportunities increases.

Accordingly, in addition to the operational planning cases, the Group

utilises a range of scenarios, including its 1.5°C scenario, when

testing the resilience of its portfolio, forming strategy and making

investment decisions.

The Group continues to monitor global decarbonisation signposts and

updates its operational planning cases, price outlooks and cost of carbon

assumptions and assessments relating to strategy and capital allocation

accordingly. When such signposts indicate the appropriate measures are

in place for achievement of a 1.5ºC scenario, this will be reflected in the

Group’s operational planning cases.

Capital allocation

While a 1.5°C scenario does not currently represent one of the inputs to

the Group’s operational planning cases, the Group has systematically

integrated its 1.5°C scenario into the Group’s strategy and capital

allocation process to test the extent to which its capital allocation is aligned

with a rapidly decarbonising global economy.

Specifically, in addition to consideration of the Group’s operational planning

cases, the Group applies its 1.5°C scenario to assess whether future

demand for the Group’s products supports ongoing capital investment.

The internal allocation of capital under the Group’s Capital Allocation

Framework and all major investment decisions continue to require an

assessment of investment viability under the Group’s 1.5°C scenario.

Integration of the Group’s 1.5°C scenario into the capital allocation

process is intended to mitigate the risk of stranded assets, and associated

impairments, should the appropriate global measures to achieve a 1.5°C

outcome be adopted.

Demand for the Group’s commodities impacting price outlooks

The Group acknowledges that there are a range of possible energy

transition scenarios, including those that are aligned with the aims of

the Paris Agreement, that may indicate different outcomes for individual

commodities. The Group examines the resilience of its portfolio to a 1.5°C

scenario (the Group’s 1.5°C scenario) on an ongoing basis by considering

the impact of commodity price estimates under that scenario using the

Group’s latest operating plans.

There are inherent limitations with scenario analysis and it is difficult to

predict which, if any, of the scenarios might eventuate and none of the

scenarios considered constitutes a definitive outcome for the Group.

However, the long-term commodity price estimates under the Group’s

1.5°C scenario reflect the world needing more steel, copper, potash and

nickel in the next 30 years when compared to the last 30 years. In addition,

the Group’s portfolio is transitioning towards higher quality iron ore and

metallurgical coal that enable steelmakers to be more efficient and operate

with a lower GHG emissions intensity.

The Group considers that is it currently impracticable to fully assess all

potential Financial Statement impacts under the Group’s 1.5°C scenario.

However, the Group has carried out analysis which indicates that the

long-term commodity price outlooks under this scenario for iron ore,

copper, metallurgical coal, nickel and potash are either largely consistent

with or favourable to the price outlooks in the Group’s current operational

planning cases. Given these positive long-term price outlooks, price-only

sensitivities to the Group’s long-term 1.5°C price outlook indicate that there

would not be any asset impairments for those commodities.

Further, acknowledging the wide range of potential energy transition

impacts for metallurgical coal demand, the Group has also performed

additional price-only sensitivities for the Group’s metallurgical coal

assets. These price-only sensitivities reflect different price outlooks

while assuming that all other factors in the asset valuations, such as

production and sales volumes, capital and operating expenditures, carbon

pricing and the discount rate, remain unchanged from those used in the

Group’s FY2023 metallurgical coal impairment assessments. As such,

the sensitivities do not attempt to assess all potential financial statement

impacts, including impacts on asset valuations, that may arise under the

Group’s 1.5°C scenario.

Under the Group’s operational planning case assumptions, headroom in

excess of US$6.5 billion currently exists between the carrying value of the

Group’s metallurgical coal assets and their estimated valuation. As such,

these sensitivities indicate that adverse movements in long-term price

assumptions, in isolation, would reduce the current headroom on the

Group’s metallurgical coal assets but, given the current headroom, may not

result in an impairment.

Price-only sensitivities reflect the following price outlooks published in

August 2022 by Wood Mackenzie, a research and consultancy business

for the global energy, power and renewables, subsurface, chemicals, and

metals and mining industries:

Price source

CY2030 Price

(real, US$/

tonne)

CY2050 Price

(real, US$/

tonne)

Base case 159 170

1.5°C scenario 127 135

No impairment is indicated by these price-only sensitivities.

The Group does not disclose the Group’s internally generated long-term

price outlooks for individual commodities, including those under the

Group’s 1.5°C scenario, given their commercial sensitivity.

166 BHP Annual Report 2023

1 Consolidated Financial Statements continued

Capital structure

17 Share capital

BHP Group Limited BHP Group Plc

2023

2022

2021

2022

2021

Share capital issued

Opening number of shares 5,062,323,190 2,945,851,394 2,945,851,394 2,112,071,796 2,112,071,796

Issue of shares 3,497,366 4,400,000 − − −

Corporate structure unification − 2,112,071,796 − (2,112,071,796) −

Purchase of shares by ESOP Trusts (6,442,571) (8,704,669) (7,587,353) (63,567) (185,054)

Employee share awards exercised following vesting 6,081,843 8,522,684 6,948,683 77,748 173,644

Movement in treasury shares under Employee Share Plans 360,728 181,985 638,670 (14,181) 11,410

Closing number of shares 5,065,820,556 5,062,323,190 2,945,851,394 − 2,112,071,796

Comprising:

Shares held by the public 5,064,408,782 5,061,272,144 2,944,982,333 − 2,112,057,615

Treasury shares 1,411,774 1,051,046 869,061 − 14,181

Other share classes

5.5% Preference shares of £1 each – − − − 50,000

Special Voting share of no par value – − 1 − −

Special Voting share of US$0.50 par value – − − − 1

DLC Dividend share – − 1 − −

During FY2023, BHP Group Limited issued 3,497,366 fully paid ordinary shares to the BHP Group Limited Employee Equity Trust and to Solium Capital

(Australia) Pty Ltd at A$40.51 per share (2022: 4,400,000 fully paid ordinary shares at A$52.99 per share), to satisfy the vesting of employee share awards

and related dividend equivalent entitlements under those employee share plans.

Share capital of BHP Group Limited at 30 June 2023 is composed of the following categories of shares:

Ordinary shares fully paid Treasury shares

Each fully paid ordinary share of BHP Group

Limited carries the right to one vote at a meeting

of the Company.

Treasury shares are fully paid ordinary shares of BHP Group Limited that are held by the ESOP Trusts for

the purpose of issuing shares to employees under the Group’s Employee Share Plans. Treasury shares are

recognised at cost and deducted from equity, net of any income tax effects. When the treasury shares are

subsequently sold or reissued, any consideration received, net of any directly attributable costs and income

tax effects, is recognised as an increase in equity. Any difference between the carrying amount and the

consideration, if reissued, is recognised in retained earnings.

As a result of the corporate structure unification on 31 January 2022, 2,112,071,796 fully paid ordinary shares in BHP Group Limited were issued to BHP

Group Plc shareholders in a one for one exchange of their BHP Group Plc ordinary shares, resulting in BHP Group Limited becoming the sole parent

company of the Group with a single set of shareholders.

The following classes of shares existed prior to the Group’s unification on 31 January 2022:

Special Voting shares Preference shares DLC Dividend share

Each of BHP Group Limited and BHP Group Plc

had issued one Special Voting share to facilitate

joint voting by shareholders of BHP Group Limited

and BHP Group Plc on Joint Electorate Actions.

These shares were bought back for nominal value

in January 2022 and subsequently cancelled.

Preference shares had the right to repayment of

the amount paid up on the nominal value and any

unpaid dividends in priority to the holders of any

other class of shares in BHP Group Plc on a return

of capital or winding up.

These shares were acquired by way of gift from

J.P. Morgan and subsequently cancelled on

31 January 2022.

The DLC Dividend share supported the Dual Listed

Company (DLC) equalisation principles in place since

the merger in 2001, including the requirement that

ordinary shareholders of BHP Group Plc and BHP

Group Limited were paid equal cash dividends per

share. This share enabled efficient and flexible capital

management across the DLC and was issued on

23 February 2016 at par value of US$10.

This share was bought back for nominal value in

January 2022 and subsequently cancelled.

BHP Annual Report 2023 167

Operating and Financial Review

Governance Financial Statements Additional Information

18 Other equity

2023

US$M

2022

US$M

2021

US$M Recognition and measurement

Share premium account − − 518 The share premium account represented the premium paid on the issue of BHP

Group Plc shares recognised in accordance with the UK Companies Act 2006. It was

transferred to the common control reserve as part of the unification of the Group's

corporate structure.

Capital redemption reserve − − 177 The capital redemption reserve represented the par value of BHP Group Plc shares

that were purchased and subsequently cancelled. It was transferred to the common

control reserve as part of unification of the Group's corporate structure.

Common control reserve (1,603) (1,603) − The common control reserve arose on unification of the Group’s corporate structure

and represents the residual on consolidation between BHP Group Ltd’s investment

in BHP Group Plc (now known as BHP Group (UK) Ltd) and BHP Group Plc’s share

capital, share premium and capital redemption reserve at the time of unification.

Employee share awards reserve 171 174 268 The employee share awards reserve represents the accrued employee entitlements to

share awards that have been charged to the income statement and have not yet been

exercised.

Once exercised, the difference between the accumulated fair value of the awards and

their historical on-market purchase price is recognised in retained earnings.

Cash flow hedge reserve 10 41 100 The cash flow hedge reserve represents hedging gains and losses recognised on

the effective portion of cash flow hedges. The cumulative deferred gain or loss on the

hedge is recognised in the income statement when the hedged transaction impacts

the income statement, or is recognised as an adjustment to the cost of non-financial

hedged items. The hedging reserve records the portion of the gain or loss on a

hedging instrument in a cash flow hedge that is determined to be an effective hedge

relationship.

Cost of hedging reserve (1) (19) (54) The cost of hedging reserve represents the recognition of certain costs of hedging for

example, basis adjustments, which have been excluded from the hedging relationship

and deferred in other comprehensive income until the hedged transaction impacts the

income statement.

Foreign currency translation

reserve

(14) (14) 43 The foreign currency translation reserve represents exchange differences arising from

the translation of non-US dollar functional currency operations within the Group into

US dollars.

Equity investments reserve 9 (8) 15 The equity investment reserve represents the revaluation of investments in shares

recognised through other comprehensive income. Where a revalued financial asset is

sold, the relevant portion of the reserve is transferred to retained earnings.

Non-controlling interest

contribution reserve

1,441 1,441 1,283 The non-controlling interest contribution reserve represents the excess of

consideration received over the book value of net assets attributable to equity

instruments when acquired by non-controlling interests.

Total reserves 13 12 2,350

Summarised financial information relating to each of the Group’s subsidiaries with non-controlling interests (NCI) that are material to the Group before any

intra-group eliminations is shown below:

US$M

2023 2022

Minera

Escondida

Limitada

Other individually

immaterial

subsidiaries

(incl. intra-group

eliminations) Total

Minera

Escondida

Limitada

Other individually

immaterial

subsidiaries

(incl. intra-group

eliminations) Total

Group share (per cent) 57.5 57.5

Current assets 3,144 2,929

Non-current assets 12,160 11,636

Current liabilities (1,598) (2,192)

Non-current liabilities (5,413) (4,762)

Net assets 8,293 7,611

Net assets attributable to NCI 3,525 509 4,034 3,235 574 3,809

Revenue 8,847 9,500

Profit after taxation 2,365 3,522

Other comprehensive income (8) 11

Total comprehensive income 2,357 3,533

Profit after taxation attributable to NCI 1,005 398 1,403 1,497 658 2,155

Other comprehensive income attributable to NCI (3) − (3) 5 − 5

Net operating cash flow 3,168 4,519

Net investing cash flow (1,351) (860)

Net financing cash flow (1,620) (4,029)

Dividends paid to NCI 712 463 1,175 1,760 780 2,540

While the Group controls Minera Escondida Limitada, the non-controlling interests hold certain protective rights that restrict the Group’s ability to sell

assets held by Minera Escondida Limitada, or use the assets in other subsidiaries and operations owned by the Group. Minera Escondida Limitada is also

restricted from paying dividends without the approval of the non-controlling interests.

168 BHP Annual Report 2023

1 Consolidated Financial Statements continued

19 Dividends

Year ended 30 June 2023 Year ended 30 June 2022 Year ended 30 June 2021

Per share

US cents

Total

US$M

Per share

US cents

Total

US$M

Per share

US cents

Total

US$M

Dividends paid during the period

Prior year final dividend 175 8,858 200 10,119 55 2,779

Interim dividend 90 4,562 150 7,601 101 5,115

265 13,420 350 17,720 156 7,894

1 5.5 per cent dividend on 50,000 preference shares of £1 each determined and paid for financial year 2021. No dividend paid for the financial year 2022. These preference

shares were cancelled on 31 January 2022.

Dividends paid during the period differs from the amount of dividends paid in the Consolidated Cash Flow Statement as a result of foreign exchange gains

and losses relating to the timing of equity distributions between the record date and the payment date. Additional derivative settlements of US$161 million

were made as part of the funding of the dividend paid during the period and is disclosed in Proceeds/(settlements) of cash management related

instruments in the Consolidated Cash Flow Statement.

Each American Depositary Share (ADS) represents two ordinary shares of BHP Group Limited. Dividends determined on each ADS represent twice the

dividend determined on each BHP Group Limited ordinary share.

Dividends are determined after period-end and announced with the results for the period. Interim dividends are determined in February and paid in March.

Final dividends are determined in August and paid in September. Dividends determined are not recorded as a liability at the end of the period to which

they relate. Subsequent to year-end, on 22 August 2023, BHP Group Limited determined a final dividend of 80 US cents per share (US$4,052 million),

which will be paid on 28 September 2023 (30 June 2022: final dividend of 175 US cents per share – US$8,857 million; 30 June 2021: final dividend of 200

US cents per share – US$10,114 million).

BHP Group Limited dividends for all periods presented are, or will be, fully franked based on a tax rate of 30 per cent.

2023

US$M

2022

US$M

2021

US$M

Franking credits as at 30 June 7,953 7,007 14,302

Franking credits arising on the future payment/(refund) of taxes relating to the period (261) 2,043 1,799

Total franking credits available

7,692 9,050 16,101

1 The payment of the final 2023 dividend determined after 30 June 2023 will reduce the franking account balance by US$1,737 million.

20 Provisions for dividends and other liabilities

The disclosure below excludes closure and rehabilitation provisions (refer to note 15 ‘Closure and rehabilitation provisions’), employee benefits, restructuring

and post-retirement employee benefits provisions (refer to note 27 ‘Employee benefits, restructuring and post-retirement employee benefits provisions’) and

provisions related to the Samarco dam failure (refer to note 4 ‘Significant events – Samarco dam failure’).

2023

US$M

2022

US$M

At the beginning of the financial year 674 581

Acquisition of subsidiaries and operations

61 –

Dividends determined 13,420 17,720

Charge/(credit) for the year:

Underlying 156 493

Discounting 2 1

Exchange variations (161) 122

Released during the year (62) (48)

Utilisation (35) (96)

Dividends paid (13,268) (17,851)

Divestment and demerger of subsidiaries and operations − (146)

Transfers and other movements (18) (102)

At the end of the financial year 769 674

Comprising:

Current 384 356

Non-current 385 318

1 Relates to the acquisition of OZL on 2 May 2023. Refer to note 29 ‘Business combinations’ for more information.

BHP Annual Report 2023 169

Operating and Financial Review

Governance Financial Statements Additional Information

Financial management

21 Net debt

The Group seeks to maintain a strong balance sheet and deploys its capital with reference to the Capital Allocation Framework.

The Group monitors capital using the net debt balance and the gearing ratio, being the ratio of net debt to net debt plus net assets.

The net debt definition includes the fair value of derivative financial instruments used to hedge cash and borrowings which reflects the Group’s risk

management strategy of reducing the volatility of net debt caused by fluctuations in foreign exchange and interest rates.

Under IFRS 16/AASB16 ‘Leases’, vessel lease contracts are required to be remeasured at each reporting date to the prevailing freight index. While these

liabilities are included in the Group interest bearing liabilities, they are excluded from the net debt calculation as they do not align with how the Group

assesses net debt for decision making in relation to the Capital Allocation Framework. In addition, the freight index has historically been volatile which

creates significant short-term fluctuation in these liabilities.

US$M

2023 2022

Current Non-current Current Non-current

Interest bearing liabilities

Bank loans 5,310 2,192 397 2,075

Notes and debentures 1,337 10,482 1,690 9,673

Lease liabilities 521 2,498 519 2,057

Bank overdraft and short-term borrowings 5 − − −

Other − − 16 1

Total interest bearing liabilities 7,173 15,172 2,622 13,806

Less: Lease liability associated with index-linked freight contracts 114 173 113 161

Less: Cash and cash equivalents

Cash 7,206 − 5,728 −

Short-term deposits 5,222 − 11,508 −

Less: Total cash and cash equivalents 12,428 − 17,236 −

Less: Derivatives included in net debt

Net debt management related instruments

(113) (1,459) (358) (1,330)

Net cash management related instruments

36 − 273 −

Less: Total derivatives included in net debt (77) (1,459) (85) (1,330)

Net debt 11,166 333

Net assets 48,530 48,766

Gearing 18.7% 0.7%

1 Represents the net cross currency and interest rate swaps designated as effective hedging instruments included within current and non-current other financial assets

and liabilities.

2 Represents the net forward exchange contracts included within current and non-current other financial assets and liabilities.

Cash and short-term deposits are disclosed in the cash flow statement net of bank overdrafts and interest bearing liabilities at call.

2023

US$M

2022

US$M

2021

US$M

Total cash and cash equivalents 12,428 17,236 15,246

Bank overdrafts and short-term borrowings (5) − −

Total cash and cash equivalents, net of overdrafts 12,423 17,236 15,246

Cash and cash equivalents includes US$95 million (2022: US$127 million) restricted by legal or contractual arrangements.

Recognition and measurement

Cash and short-term deposits in the balance sheet comprise cash at bank and on hand and highly liquid cash deposits with short-term maturities that

are readily convertible to known amounts of cash with insignificant risk of change in value. The Group considers that the carrying value of cash and

cash equivalents approximate fair value due to their short-term to maturity. Refer to note 22 ‘Leases’ and note 24 ‘Financial risk management’ for the

recognition and measurement principles for lease liabilities and other financial liabilities.

Interest bearing liabilities and cash and cash equivalents include balances denominated in the following currencies:

Interest bearing liabilities Cash and cash equivalents

2023

US$M

2022

US$M

2023

US$M

2022

US$M

USD 16,289 8,813 5,925 7,654

EUR 3,050 3,463 544 2,656

GBP 1,587 2,621 674 30

AUD 1,233 783 1,797 3,360

CAD 7 584 3,362 3,437

Other 179 164 126 99

Total 22,345 16,428 12,428 17,236

The Group enters into derivative transactions to convert the majority of its exposures above into US dollars. Further information on the Group’s risk

management activities relating to these balances is provided in note 24 ‘Financial risk management’.

170 BHP Annual Report 2023

1 Consolidated Financial Statements continued

21 Net debt continued

Liquidity risk

The Group’s liquidity risk arises from the possibility that it may not be able to settle or meet its obligations as they fall due and is managed as part of the

portfolio risk management strategy. Operational, capital and regulatory requirements are considered in the management of liquidity risk, in conjunction

with short-term and long-term forecast information.

Recognising the cyclical volatility of operating cash flows, the Group has defined minimum target cash and liquidity buffers to be maintained to mitigate

liquidity risk and support operations through the cycle.

The Group’s strong credit profile, diversified funding sources, its minimum cash buffer and its committed credit facilities ensure that sufficient liquid funds

are maintained to meet its daily cash requirements.

The Group’s Moody’s credit rating changed from A2/P-1 to A1/P-1 outlook stable (long-term/short-term). The Group’s Standard & Poor’s rating has

remained at A-/A-1 outlook stable (long-term/short-term).

There were no defaults on the Group’s liabilities during the period.

Counterparty risk

The Group is exposed to credit risk from its financing activities, including short-term cash investments such as deposits with banks and derivative

contracts. This risk is managed by Group Treasury in line with the counterparty risk framework, which aims to minimise the exposure to a counterparty

and mitigate the risk of financial loss through counterparty failure.

Exposure to counterparties is monitored at a Group level across all products and includes exposure with derivatives and cash investments.

Investments and derivatives are only transacted with approved counterparties who have been assigned specific limits based on a quantitative credit risk

model. These limits are updated at least bi-annually. Additionally, derivatives are subject to tenor limits and investments are subject to concentration limits

by rating.

Derivative fair values are inclusive of valuation adjustments that take into account both the counterparty and the Group’s risk of default.

Standby arrangements and unused credit facilities

The Group’s committed revolving credit facility operates as a back-stop to the Group’s uncommitted commercial paper program. The combined amount

drawn under the facility or as commercial paper will not exceed US$5.5 billion. As at 30 June 2023, US$ nil commercial paper was drawn (2022:

US$ nil). The facility is due to mature on 10 October 2026. A commitment fee is payable on the undrawn balance and interest is payable on any

drawn balance comprising a reference rate plus a margin. The agreed margins are typical for a credit facility extended to a company with the Group’s

credit rating.

Maturity profile of financial liabilities

The maturity profile of the Group’s financial liabilities based on the undiscounted contractual amounts, taking into account the derivatives related to debt,

is as follows:

2023

US$M

Bank loans,

debentures and

other loans

Expected

future interest

payments

Derivatives

related to

debentures

Other

derivatives

Obligations

under lease

liabilities

Trade

and other

payables

Total

Due for payment:

In one year or less or on demand 6,659 757 536 257 658 6,175 15,042

In more than one year but not more than two years 1,399 595 388 126 538 4 3,050

In more than two years but not more than five years 4,058 1,410 399 267 1,031 − 7,165

In more than five years 8,093 3,693 1,020 211 1,846 − 14,863

Total 20,209 6,455 2,343 861 4,073 6,179 40,120

Carrying amount 19,326 − 1,755 804 3,019 6,179 31,083

2022

US$M

Bank loans,

debentures and

other loans

Expected

future interest

payments

Derivatives

related to

debentures

Other

derivatives

Obligations

under lease

liabilities

Trade

and other

payables

Total

Due for payment:

In one year or less or on demand 2,109 492 525 221 579 6,608 10,534

In more than one year but not more than two years 1,634 427 300 112 443 − 2,916

In more than two years but not more than five years 2,609 1,032 492 246 936 − 5,315

In more than five years 7,550 3,705 1,467 245 1,470 − 14,437

Total 13,902 5,656 2,784 824 3,428 6,608 33,202

Carrying amount 13,852 − 1,824 752 2,576 6,608 25,612

1 Excludes input taxes of US$121 million (2022: US$79 million) included in other payables. Refer to note 9 ‘Trade and other payables’.

BHP Annual Report 2023 171

Operating and Financial Review

Governance Financial Statements Additional Information

22 Leases

Movements in the Group’s lease liabilities during the year are as follows:

2023

US$M

2022

US$M

At the beginning of the financial year 2,576 3,896

Additions 542 866

Acquisition of subsidiaries and operations

423 −

Remeasurements of index-linked freight contracts 53 (369)

Lease payments

(706) (1,288)

Foreign exchange movement 12 (126)

Amortisation of discounting 130 125

Divestment and demerger of subsidiaries and operations

− (492)

Transfers and other movements (11) (36)

At the end of the financial year 3,019 2,576

Comprising:

Current liabilities 521 519

Non-current liabilities 2,498 2,057

1 Relates to the acquisition of OZL on 2 May 2023. Refer to note 29 ‘Business combinations’ for more information.

2 Includes US$ nil (2022: US$39 million) related to Discontinued operations.

3 Relates to the divestment of BMC and merger of Petroleum with Woodside in FY2022. Refer to notes 3 ‘Exceptional items’ and 28 ‘Discontinued operations’ for

more information.

A significant proportion by value of the Group’s lease contracts relate to plant facilities, office buildings and vessels. Lease terms for plant facilities and

office buildings typically run for over 10 years and vessels from four to 10 years. Other leases include port facilities, various equipment and vehicles.

The lease contracts contain a wide range of different terms and conditions including extension and termination options and variable lease payments.

The Group’s lease obligations are included in the Group’s Interest bearing liabilities and, with the exception of vessel lease contracts that are priced with

reference to a freight index, form part of the Group’s net debt.

The maturity profile of lease liabilities based on the undiscounted contractual amounts is as follows:

Lease liability

2023

US$M

2022

US$M

Due for payment:

In one year or less or on demand 658 579

In more than one year but not more than two years 538 443

In more than two years but not more than five years 1,031 936

In more than five years

1,846 1,470

Total 4,073 3,428

Carrying amount 3,019 2,576

1 Includes US$808 million (2022: US$707 million) due for payment in more than ten years.

At 30 June 2023, commitments for leases not yet commenced based on undiscounted contractual amounts were US$1,271 million (2022: US$928 million).

Movements in the Group’s right-of-use assets during the year are as follows:

2023 2022

Land and

buildings

US$M

Plant and

equipment

US$M

Total

US$M

Land and

buildings

US$M

Plant and

equipment

US$M

Total

US$M

Net book value

At the beginning of the financial year 452 1,909 2,361 638 2,712 3,350

Additions 192 350 542 41 825 866

Acquisition of subsidiaries and operations

− 423 423 − − −

Remeasurements of index-linked freight contracts − 53 53 − (369) (369)

Depreciation expensed during the period (71) (462) (533) (103) (872) (975)

Depreciation classified as exploration − − − − (3) (3)

Impairments for the year − − − (7) − (7)

Divestment and demerger of subsidiaries and operations

− − − (116) (313) (429)

Transfers and other movements − (37) (37) (1) (71) (72)

At the end of the financial year 573 2,236 2,809 452 1,909 2,361

– Cost 758 4,088 4,846 745 4,307 5,052

– Accumulated depreciation and impairments (185) (1,852) (2,037) (293) (2,398) (2,691)

1 Relates to the acquisition of OZL on 2 May 2023. Refer to note 29 ‘Business combinations’ for more information.

2 Relates to the divestment of BMC and merger of Petroleum with Woodside in FY2022. Refer to notes 3 ‘Exceptional items’ and 28 ‘Discontinued operations’ for

more information.

Right-of-use assets are included within the underlying asset classes in Property, plant and equipment. Refer to note 11 ‘Property, plant and equipment’.

172 BHP Annual Report 2023

1 Consolidated Financial Statements continued

22 Leases continued

Amounts recorded in the income statement and the cash flow statement for the year were:

2023

US$M

2022

US$M

2021

US$M Included within

Income statement

Depreciation of right-of-use assets 533 964 753 Profit from operations

Short-term, low-value and variable lease costs

795 847 834 Profit from operations

Interest on lease liabilities 130 119 102 Financial expenses

Cash flow statement

Principal lease payments 576 1,130 732 Cash flows from financing activities

Lease interest payments 130 119 102 Cash flows from operating activities

1 Relates to US$714 million of variable lease costs (2022: US$585 million; 2021: US$510 million), US$47 million of short-term lease costs (2022: US$222 million; 2021:

US$294 million) and US$34 million of low-value lease costs (2022: US$40 million; 2021: US$30 million). Variable lease costs include contracts for hire of mining service

equipment, drill rigs and transportation services. These contracts contain variable lease payments based on usage and asset performance.

Recognition and measurement

All leases with the exception of short-term (under 12 months) and low-value leases are recognised on the balance sheet, as a right-of-use asset

and a corresponding interest bearing liability. Lease liabilities are initially measured at the present value of the future lease payments from the lease

commencement date and are subsequently adjusted to reflect the interest on lease liabilities, lease payments and any remeasurements due to, for

example, lease modifications or a change to future lease payments linked to an index or rate. Lease payments are discounted using the interest rate

implicit in the lease or, where the rate is not readily determinable, the interest payments are discounted at the Group’s weighted average incremental

borrowing rate, adjusted to reflect factors specific to the lease, including where relevant the currency, tenor and location of the lease.

In addition to containing a lease, the Group’s contractual arrangements may include non-lease components. For example, certain mining services

arrangements involve the provision of additional services, including maintenance, drilling activities and the supply of personnel. The Group has elected to

separate these non-lease components from the lease components in measuring lease liabilities. Non-lease components are accounted for in accordance

with the accounting policies applied to each underlying good or service received.

Low-value and short-term leases continue to be expensed to the income statement. Variable lease payments not dependent on an index or rate are

excluded from lease liabilities, and expensed to the income statement.

Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease

liabilities. The cost will initially correspond to the lease liability, adjusted for initial direct costs, lease payments made prior to lease commencement,

capitalised provisions for closure and rehabilitation and any lease incentives received.

The lease asset and liability associated with all index-linked freight contracts, including continuous voyage charters (CVCs), are measured at each

reporting date based on the prevailing freight index (generally the Baltic C5 index).

Lease costs are recognised in the income statement over the lease term in the form of depreciation on the right-of-use asset and the unwinding of finance

charges on the lease liability.

Where the Group is the operator of an unincorporated joint operation and all investors are parties to a lease, the Group recognises its proportionate share

of the lease liability and associated right-of-use asset. In the event the Group is the sole signatory to a lease, and therefore has the sole legal obligation to

make lease payments, the lease liability is recognised in full. Where the associated right-of-use asset is sub-leased (under a finance sub-lease) to a joint

operation, for instance where it is dedicated to a single operation and the joint operation has the right to direct the use of the asset, the Group (as lessor)

recognises its proportionate share of the right-of-use asset and a net investment in the lease, representing amounts to be recovered from the other parties

to the joint operation. If the Group is not party to the head lease contract but sub-leases the associated right-of-use asset (as lessee), it recognises its

proportionate share of the right-of-use asset and a lease liability which is payable to the operator.

Key judgements and estimates

Judgements: Certain contractual arrangements not in the form of a

lease require the Group to apply significant judgement in evaluating

whether the Group controls the right to direct the use of assets and

therefore whether the contract contains a lease. Management considers

all facts and circumstances in determining whether the Group or the

supplier has the rights to direct how, and for what purpose, the underlying

assets are used in certain mining contracts and other arrangements,

including outsourcing and shipping arrangements. Judgement is used to

assess which decision-making rights mostly affect the benefits of use of

the assets for each arrangement.

Where a contract includes the provision of non-lease services, judgement

is required to identify the lease and non-lease components.

Estimates: Where the Group cannot readily determine the interest rate

implicit in the lease, estimation is involved in the determination of the

weighted average incremental borrowing rate to measure lease liabilities.

The incremental borrowing rate reflects the rates of interest a lessee

would have to pay to borrow over a similar term, with similar security, the

funds necessary to obtain an asset of similar value to the right-of-use

asset in a similar economic environment. Under the Group’s portfolio

approach to debt management, the Group does not specifically borrow for

asset purchases. Therefore, the incremental borrowing rate is estimated

referencing the Group’s corporate borrowing portfolio and other similar

rated entities, adjusted to reflect the terms and conditions of the lease

(including the impact of currency, credit rating of subsidiary entering

into the lease and the term of the lease), at the inception of the lease

arrangement or the time of lease modification.

The Group estimates stand-alone prices, where such prices are not readily

observable, in order to allocate the contractual payments between lease

and non-lease components.

BHP Annual Report 2023 173

Operating and Financial Review

Governance Financial Statements Additional Information

23 Net finance costs

2023

US$M

2022

US$M

2021

US$M

Financial expenses

Interest expense using the effective interest rate method:

Interest on bank loans, overdrafts and all other borrowings 997 491 607

Interest capitalised at 5.71% (2022: 2.90%; 2021: 2.83%)

(271) (113) (204)

Interest on lease liabilities 130 119 102

Discounting on provisions and other liabilities 1,293 645 353

Other gains and losses:

Fair value change on hedged loans (803) (1,286) (779)

Fair value change on hedging derivatives 691 1,277 704

Loss on bond repurchase

− − 395

Exchange variations on net debt 9 (99) 99

Other 14 16 13

Total financial expenses 2,060 1,050 1,290

Financial income

Interest income (529) (81) (67)

Net finance costs 1,531 969 1,223

1 Interest has been capitalised at the rate of interest applicable to the specific borrowings financing the assets under construction or, where financed through general

borrowings, at a capitalisation rate representing the average interest rate on such borrowings. Tax relief for capitalised interest is approximately US$81 million (2022:

US$34 million; 2021: US$61 million).

2 Relates to the additional cost on settlement of two multi-currency hybrid debt repurchase programs and the unwind of the associated hedges, included in a total cash

payment of US$3,402 million disclosed in repayment of interest bearing liabilities in the Consolidated Cash Flow Statement.

Recognition and measurement

Interest income is accrued using the effective interest rate method. Finance costs are expensed as incurred, except where they relate to the financing of

construction or development of qualifying assets.

24 Financial risk management

24.1 Financial risks

Financial and capital risk management strategy

The financial risks arising from the Group’s operations comprise market, liquidity and credit risk. These risks arise in the normal course of business and

the Group manages its exposure to them in accordance with the Group’s portfolio risk management strategy. The objective of the strategy is to support

the delivery of the Group’s financial targets, while protecting its future financial security and flexibility by taking advantage of the natural diversification

provided by the scale, diversity and flexibility of the Group’s operations and activities.

As part of the risk management strategy, the Group monitors target gearing levels and credit rating metrics under a range of different stress test scenarios

incorporating operational and macroeconomic factors.

Market risk management

The Group’s activities expose it to market risks associated with movements in interest rates, foreign currencies and commodity prices. Under the strategy

outlined above, the Group seeks to achieve financing costs, currency impacts, input costs and commodity prices on a floating or index basis.

In executing the strategy, financial instruments are potentially employed in three distinct but related activities. The following table summarises these

activities and the key risk management processes:

Activity Key risk management processes

1 Risk mitigation

On an exception basis, hedging for the purposes of mitigating risk related to specific and significant

expenditure on investments or capital projects will be executed if necessary to support the Group’s

strategic objectives.

Execution of transactions within

approved mandates.

2 Economic hedging of commodity sales, operating costs, short-term cash deposits,

other monetary items and debt instruments

Where Group commodity production is sold to customers on pricing terms that deviate from the

relevant index target and where a relevant derivatives market exists, financial instruments may

be executed as an economic hedge to align the revenue price exposure with the index target and

US dollars.

Where debt is issued in a currency other than the US dollar and/or at a fixed interest rate, fair value

and cash flow hedges may be executed to align the debt exposure with the Group’s functional

currency of US dollars and/or to swap to a floating interest rate.

Where short-term cash deposits and other monetary items are denominated in a currency other than

US dollars, derivative financial instruments may be executed to align the foreign exchange exposure to

the Group’s functional currency of US dollars.

Measuring and reporting the exposure in

customer commodity contracts and issued

debt instruments.

Executing hedging derivatives to align the

total group exposure to the index target.

Execution of transactions within

approved mandates.

3 Strategic financial transactions

Opportunistic transactions may be executed with financial instruments to capture value from perceived

market over/under valuations.

Execution of transactions within

approved mandates.

Primary responsibility for the identification and control of financial risks, including authorising and monitoring the use of financial instruments for the above

activities and stipulating policy thereon, rests with the Financial Risk Management Committee under authority delegated by the Chief Executive Officer.

174 BHP Annual Report 2023

1 Consolidated Financial Statements continued

24 Financial risk management continued

Interest rate risk

The Group is exposed to interest rate risk on its outstanding borrowings and short-term cash deposits from the possibility that changes in interest rates will affect

future cash flows or the fair value of fixed interest rate financial instruments. Interest rate risk is managed as part of the portfolio risk management strategy.

The majority of the Group’s debt is issued at fixed interest rates. The Group has also drawn on a facility of US$5.0 billion to fund the acquisition of OZL

that was referenced to floating rates. The Group has entered into interest rate swaps and cross currency interest rate swaps to convert most of its fixed

interest rate exposure to floating US dollar interest rate exposure. As at 30 June 2023, 98 per cent of the Group’s borrowings were exposed to floating

interest rates inclusive of the effect of swaps (2022: 80 per cent).

The fair value of interest rate swaps and cross currency interest rate swaps in hedge relationships used to hedge both interest rate and foreign currency

risks are shown in the valuation hierarchy in section 24.4 ‘Derivatives and hedge accounting’.

Based on the net debt position as at 30 June 2023, taking into account interest rate swaps and cross currency interest rate swaps, it is estimated that a

one percentage point increase in the Secured Overnight Financing Rate (SOFR) interest rate will decrease the Group’s equity and profit after taxation by

US$58 million (2022: increase of US$29 million). This assumes the change in interest rates is effective from the beginning of the financial year and the

fixed/floating mix and balances are constant over the year.

Interest Rate Benchmark Reform

The London Interbank Offered Rate (LIBOR) and other benchmark interest rates are being replaced by alternative risk-free rates (ARR) as part of inter-

bank offer rate (IBOR) reform. Sterling LIBOR ceased to be published on 1 January 2022 and USD LIBOR will no longer be published after 30 June 2023.

Amendments to IFRS 9/AASB 9 ‘Financial Instruments’, IFRS 7/AASB 7 ‘Financial Instruments: Disclosures’ and IFRS 16/AASB 16 ‘Leases’ in relation

to IBOR reform early adopted by the Group in previous periods impact the Group’s cross currency and interest rate swaps, which prior to IBOR reform

referenced the US LIBOR benchmark, and the associated hedge accounting.

These amendments provide relief from applying certain hedge accounting requirements to hedging arrangements directly impacted by IBOR reform.

In particular, where changes to the Group’s instruments arise solely as a result of IBOR reform and do not change the economic substance of the Group’s

arrangements, the Group is able to maintain its existing hedge relationships and accounting.

During the year ended 30 June 2023, the Group actively transitioned all impacted cross currency and interest rate swaps from US LIBOR to the

alternative, widely adopted SOFR benchmark. As the transition resulted solely from IBOR reform, the Group has applied the relief available in IFRS 9 and

continues to apply hedge accounting to its hedging arrangements, including accounting for ineffectiveness. Refer to section 24.4 ‘Derivatives and hedge

accounting’ for further information.

The Group does not hold any material lease arrangements that contain reference to the existing benchmarks and as a result there is no material impact

on lease liabilities or right-of-use assets at 30 June 2023.

The Group’s revolving credit facility was restructured to reference to Alternative Reference Rates (ARRs) and remains undrawn. Furthermore, in the

period, Escondida has executed new SOFR linked loans and has amended existing US LIBOR linked loans with lenders, so that the applicable floating

interest rate reference 3M or 6M Term SOFR rates.

Currency risk

The US dollar is the predominant functional currency within the Group and as a result, currency exposures arise from transactions and balances in

currencies other than the US dollar. The Group’s potential currency exposures comprise:

– translational exposure in respect of non-functional currency monetary items

– transactional exposure in respect of non-functional currency expenditure and revenues

The Group’s foreign currency risk is managed as part of the portfolio risk management strategy.

Translational exposure in respect of non-functional currency monetary items

Monetary items, including financial assets and liabilities, denominated in currencies other than the functional currency of an operation are restated at the end

of each reporting period to US dollar equivalents and the associated gain or loss is taken to the income statement. The exception is foreign exchange gains

or losses on foreign currency denominated provisions for closure and rehabilitation at operating sites, which are capitalised in property, plant and equipment.

The Group has entered into cross currency interest rate swaps and foreign exchange forwards to convert its significant foreign currency exposures in respect

of monetary items into US dollars. Fluctuations in foreign exchange rates are therefore not expected to have a significant impact on equity and profit after tax.

The following table shows the carrying values of financial assets and liabilities at the end of the reporting period denominated in currencies other than the

US dollar that are exposed to foreign currency risk:

Net financial (liabilities)/assets – by currency of denomination

2023

US$M

2022

US$M

AUD (4,168) (3,649)

CLP (74) (602)

GBP 353 388

EUR 217 280

Other 43 187

Total (3,629) (3,396)

The principal non-functional currencies to which the Group is exposed are the Australian dollar, the Chilean peso, the Pound sterling and the Euro. Based on

the Group’s net financial assets and liabilities as at 30 June 2023, a weakening of the US dollar against these currencies (one cent strengthening in

Australian dollar, 10 pesos strengthening in Chilean peso, one penny strengthening in Pound sterling and one cent strengthening in Euro), with all other

variables held constant, would decrease the Group’s equity and profit after taxation by US$15 million (2022: decrease of US$16 million).

BHP Annual Report 2023 175

Operating and Financial Review

Governance Financial Statements Additional Information

24 Financial risk management continued

Transactional exposure in respect of non-functional currency expenditure and revenues

Certain operating and capital expenditure is incurred in currencies other than an operation’s functional currency. To a lesser extent, certain sales revenue

is earned in currencies other than the functional currency of operations and certain exchange control restrictions may require that funds be maintained

in currencies other than the functional currency of the operation. These currency risks are managed as part of the portfolio risk management strategy.

The Group may enter into forward exchange contracts when required under this strategy.

Commodity price risk

The risk associated with commodity prices is managed as part of the portfolio risk management strategy. Substantially all of the Group’s commodity

production is sold on market-based index pricing terms, with derivatives used from time to time to achieve a specific outcome.

Financial instruments with commodity price risk comprise forward commodity and other derivative contracts with net liabilities at fair value of

US$20 million (2022: net liabilities of US$56 million).

Provisionally priced commodity sales and purchases contracts

Provisionally priced sales or purchases volumes are those for which price finalisation, referenced to the relevant index, is outstanding at the reporting

date. Provisional pricing mechanisms within these sales and purchases arrangements have the character of a commodity derivative. Trade receivables

or payables under these contracts are carried at fair value through profit or loss using Level 2 valuation inputs based on forecast selling prices in

the quotation period. The Group’s exposure at 30 June 2023 to the impact of movements in commodity prices upon provisionally invoiced sales and

purchases volumes was predominately around copper.

The Group had 314 thousand tonnes of copper exposure as at 30 June 2023 (2022: 289 thousand tonnes) that was provisionally priced. The final price

of these sales and purchases volumes will be determined during the first half of FY2024. A 10 per cent change in the price of copper realised on the

provisionally priced sales, with all other factors held constant, would increase or decrease profit after taxation by US$184 million (2022: US$162 million).

The relationship between commodity prices and foreign currencies is complex and movements in foreign exchange rates can impact commodity prices.

Liquidity risk

Refer to note 21 ‘Net debt’ for details on the Group’s liquidity risk.

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.

The Group is exposed to credit risk from its operating activities (primarily from customer receivables) and from its financing activities, including deposits

with banks and financial institutions, other short-term investments, interest rate and currency derivative contracts and other financial instruments.

Refer to note 8 ‘Trade and other receivables’ and note 21 ‘Net debt’ for details on the Group credit risk.

24.2 Recognition and measurement

All financial assets and liabilities, other than derivatives and trade receivables, are initially recognised at the fair value of consideration paid or received,

net of transaction costs as appropriate. Financial assets are initially recognised on their trade date.

Financial assets are subsequently carried at fair value or amortised cost based on:

– the Group’s purpose, or business model, for holding the financial asset

– whether the financial asset’s contractual terms give rise to cash flows that are solely payments of principal and interest

The resulting Financial Statements classifications of financial assets can be summarised as follows:

Contractual cash flows Business model Category

Solely principal and interest Hold in order to collect contractual cash flows Amortised cost

Solely principal and interest Hold in order to collect contractual cash flows and sell Fair value through other comprehensive income

Solely principal and interest Hold in order to sell Fair value through profit or loss

Other Any of those mentioned above Fair value through profit or loss

Solely principal and interest refers to the Group receiving returns only for the time value of money and the credit risk of the counterparty for financial

assets held. The main exceptions for the Group are provisionally priced receivables and derivatives which are measured at fair value through profit or loss

under IFRS 9.

The Group has the intention of collecting payment directly from its customers in most cases, however the Group also participates in receivables

financing programs in respect of selected customers. Receivables in these portfolios which are classified as ‘hold in order to sell’, are provisionally priced

receivables and are therefore held at fair value through profit or loss prior to sale to the financial institution.

With the exception of derivative contracts and provisionally priced trade payables which are carried at fair value through profit or loss, the Group’s

financial liabilities are classified as subsequently measured at amortised cost.

The Group may in addition elect to designate certain financial assets or liabilities at fair value through profit or loss or to apply hedge accounting where

they are not mandatorily held at fair value through profit or loss.

Fair value measurement

The carrying amount of financial assets and liabilities measured at fair value is principally calculated based on inputs other than quoted prices that are

observable for these financial assets or liabilities, either directly (i.e. as unquoted prices) or indirectly (i.e. derived from prices). Where no price information

is available from a quoted market source, alternative market mechanisms or recent comparable transactions, fair value is estimated based on the Group’s

views on relevant future prices, net of valuation allowances to accommodate liquidity, modelling and other risks implicit in such estimates.

The inputs used in fair value calculations are determined by the relevant segment or function. The functions support the assets and operate under

a defined set of accountabilities authorised by the Executive Leadership Team. Movements in the fair value of financial assets and liabilities may be

recognised through the income statement or in other comprehensive income according to the designation of the underlying instrument.

176 BHP Annual Report 2023

1 Consolidated Financial Statements continued

24 Financial risk management continued

For financial assets and liabilities carried at fair value, the Group uses the following to categorise the inputs to the valuation method used based on the

lowest level input that is significant to the fair value measurement as a whole:

IFRS 13 Fair value hierarchy Level 1 Level 2 Level 3

Valuation inputs Based on quoted prices (unadjusted)

in active markets for identical

financial assets and liabilities.

Based on inputs other than quoted prices

included within Level 1 that are observable

for the financial asset or liability, either

directly (i.e. as unquoted prices) or

indirectly (i.e. derived from prices).

Based on inputs not observable in the market

using appropriate valuation models, including

discounted cash flow modelling.

24.3 Financial assets and liabilities

The financial assets and liabilities are presented by class in the table below at their carrying amounts.

IFRS 13

Fair value hierarchy

Level

IFRS 9 Classification

2023

US$M

2022

US$M

Current cross currency and interest rate swaps

2 Fair value through profit or loss 34 −

Current other derivative contracts

2,3 Fair value through profit or loss 407 326

Current other financial assets Amortised cost − 100

Current other investments

1,2 Fair value through profit or loss 29 203

Non-current cross currency and interest rate swaps

2 Fair value through profit or loss 149 136

Non-current other derivative contracts

2,3 Fair value through profit or loss 228 16

Non-current other financial assets

3 Fair value through profit or loss 246 273

Non-current investment in shares 1,3 Fair value through other

comprehensive income

224 138

Non-current other investments

1,2 Fair value through profit or loss 268 239

Total other financial assets 1,585 1,431

Cash and cash equivalents Amortised cost 12,428 17,236

Trade and other receivables

Amortised cost 1,506 1,674

Provisionally priced trade receivables 2 Fair value through profit or loss 2,705 3,478

Total financial assets 18,224 23,819

Non-financial assets 83,072 71,347

Total assets 101,296 95,166

Current cross currency and interest rate swaps

2 Fair value through profit or loss 147 358

Current other derivative contracts 2 Fair value through profit or loss 176 118

Current other financial liabilities

Amortised cost 79 103

Non-current cross currency and interest rate swaps

2 Fair value through profit or loss 1,608 1,466

Non-current other derivative contracts

2,3 Fair value through profit or loss 82 31

Non-current other financial liabilities

Amortised cost 467 500

Total other financial liabilities 2,559 2,576

Trade and other payables

Amortised cost 5,338 5,223

Provisionally priced trade payables 2 Fair value through profit or loss 841 1,385

Bank overdrafts and short-term borrowings

Amortised cost 5 −

Bank loans

Amortised cost 7,502 2,472

Notes and debentures

Amortised cost 11,819 11,363

Lease liabilities

3,019 2,576

Other

Amortised cost − 17

Total financial liabilities 31,083 25,612

Non-financial liabilities 21,683 20,788

Total liabilities 52,766 46,400

1 All of the Group’s financial assets and financial liabilities recognised at fair value were valued using market observable inputs categorised as Level 2 unless specified

otherwise in the following footnotes.

2 Cross currency and interest rate swaps are valued using market data including interest rate curves and foreign exchange rates. A discounted cash flow approach is used to

derive the fair value of cross currency and interest rate swaps at the reporting date.

3 Includes net other derivative assets of US$46 million related to power purchase contract agreements that are categorised as Level 3 (2022: US$ nil).

4 Includes investments held by BHP Foundation which are restricted and not available for general use by the Group of US$290 million (2022: US$252 million) of which other

investments (mainly US Treasury Notes) of US$138 million categorised as Level 1 (2022: US$119 million).

5 Includes receivables contingent on outcome of future events relating to mining and regulatory approvals of US$246 million (2022: US$233 million).

6 Excludes input taxes of US$531 million (2022: US$427 million) included in other receivables.

7 Includes the discounted settlement liability in relation to the cancellation of power contracts at the Group’s Escondida operations.

8 Excludes input taxes of US$121 million (2022: US$79 million) included in other payables.

9 All interest bearing liabilities, excluding lease liabilities, are unsecured.

10 Lease liabilities are measured in accordance with IFRS 16/AASB 16 ‘Leases’.

The carrying amounts in the table above generally approximate to fair value. In the case of US$534 million (2022: US$3,018 million) of fixed rate debt not

swapped to floating rate, the fair value at 30 June 2023 was US$538 million (2022: US$3,126 million). The fair value is determined using a method that

can be categorised as Level 2 and uses inputs based on benchmark interest rates, alternative market mechanisms or recent comparable transactions.

For financial instruments that are carried at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the

fair value hierarchy by reassessing categorisation at the end of each reporting period. There were no transfers between categories during the period.

BHP Annual Report 2023 177

Operating and Financial Review

Governance Financial Statements Additional Information

24 Financial risk management continued

Offsetting financial assets and liabilities

The Group enters into money market deposits and derivative transactions under International Swaps and Derivatives Association master netting

agreements that do not meet the offsetting criteria in IAS 32/AASB 132 ‘Financial Instruments: Presentation’, but allow for the related amounts to be set-

off in certain circumstances. The amounts set out as cross currency and interest rate swaps in the table above represent the derivative financial assets

and liabilities of the Group that may be subject to the above arrangements and are presented on a gross basis.

24.4 Derivatives and hedge accounting

The Group uses derivatives to hedge its exposure to certain market risks and may elect to apply hedge accounting.

Hedge accounting

Derivatives are included within financial assets or liabilities at fair value through profit or loss unless they are designated as effective hedging instruments.

Financial instruments in this category are classified as current if they are due or expected to be settled within 12 months otherwise they are classified as

non-current.

Where hedge accounting is applied, at the start of the transaction, the Group documents the type of hedge, the relationship between the hedging

instrument and hedged items and its risk management objective and strategy for undertaking various hedge transactions. The documentation also

demonstrates that the hedge is expected to be effective.

The Group applies the following types of hedge accounting to its derivatives hedging the interest rate and currency risks of its notes and debentures:

– Fair value hedges – the fair value gain or loss on interest rate and cross currency swaps relating to interest rate risk, together with the change in the

fair value of the hedged fixed rate borrowings attributable to interest rate risk are recognised immediately in the income statement. If the hedge no

longer meets the criteria for hedge accounting, the fair value adjustment on the note or debenture is amortised to the income statement over the period

to maturity using a recalculated effective interest rate.

– Cash flow hedges – changes in the fair value of cross currency interest rate swaps which hedge foreign currency cash flows on the notes and

debentures are recognised directly in other comprehensive income and accumulated in the cash flow hedging reserve. To the extent a hedge is

ineffective, changes in fair value are recognised immediately in the income statement.

When a hedging instrument expires, or is sold, terminated or exercised, or when a hedge no longer meets the criteria for hedge accounting, any

cumulative gain or loss existing in equity at that time remains in equity and is amortised to the income statement over the period to the hedged

item’s maturity.

When hedged, the Group hedges the full notional value of notes or debentures. However, certain components of the fair value of derivatives are not

permitted under IFRS 9 to be included in the hedge accounting above. Certain costs of hedging are permitted to be recognised in other comprehensive

income. Any change in the fair value of a derivative that does not qualify for hedge accounting, or is ineffective in hedging the designated risk due to

contractual differences between the hedged item and hedging instrument, is recognised immediately in the income statement.

The table below shows the carrying amounts of the Group’s notes and debentures by currency and the derivatives which hedge them:

– The carrying amount of the notes and debentures includes foreign exchange remeasurement to period-end rates and fair value adjustments when

included in a fair value hedge.

– The breakdown of the hedging derivatives includes remeasurement of foreign currency notional values at period-end rates, fair value movements

due to interest rate risk, foreign currency cash flows designated into cash flow hedges, costs of hedging recognised in other comprehensive income,

ineffectiveness recognised in the income statement and accruals or prepayments.

– The hedged value of notes and debentures includes their carrying amounts adjusted for the offsetting derivative fair value movements due to foreign

currency and interest rate risk remeasurement.

2023

US$M

Carrying

amount of

notes and

debentures

Fair value of derivatives

Hedged value

of notes and

debentures

Foreign

exchange

notional at

spot rates

Interest

rate risk

Recognised

in cash flow

hedging

reserve

Recognised

in cost of

hedging

reserve

Recognised in

the income

statement

Accrued

cash flows Total

A B C D E F G B to G A + B + C

USD 7,245 − 214 − − 32 23 269 7,459

GBP 1,566 522 274 24 (9) (69) 35 777 2,362

EUR 3,008 434 302 (39) 10 (49) (132) 526 3,744

Total 11,819 956 790 (15) 1 (86) (74) 1,572 13,565

2022

US$M

Carrying

amount of

notes and

debentures

Fair value of derivatives

Hedged value

of notes and

debentures

Foreign

exchange

notional at

spot rates

Interest

rate risk

Recognised

in cash flow

hedging

reserve

Recognised

in cost of

hedging

reserve

Recognised in

the income

statement

Accrued

cash flows Total

A B C D E F G B to G A + B + C

USD 4,740 − (16) − − (7) 86 63 4,724

GBP 2,599 796 (115) (35) 13 26 42 727 3,280

EUR 3,449 585 112 (16) 8 (4) 45 730 4,146

CAD 575 167 5 (8) 6 (3) 1 168 747

Total 11,363 1,548 (14) (59) 27 12 174 1,688 12,897

1 Predominantly related to ineffectiveness.

2 Includes US$534 million (2022: US$3,018 million) of fixed rate debt not swapped to floating rate that is not in a hedging relationship.

The weighted average interest rate payable is USD SOFR +1.54 per cent (2022: USD LIBOR + 1.74 per cent). Refer to note 23 ‘Net finance costs’ for

details of net finance costs for the year.

178 BHP Annual Report 2023

1 Consolidated Financial Statements continued

24 Financial risk management continued

Movements in reserves relating to hedge accounting

The following table shows a reconciliation of the components of equity and an analysis of the movements in reserves for all hedges. For a description of

these reserves, refer to note 18 ‘Other equity’.

2023

US$M

Cash flow hedging reserve Cost of hedging reserve

Gross Tax Net Gross Tax Net Total

At the beginning of the financial year 59 (18) 41 (27) 8 (19) 22

Add: Change in fair value of hedging

instrument recognised in OCI 95 (29) 66 − − − 66

Less: Reclassified from reserves to financial

expenses – recognised through OCI (174) 53 (121) 26 (8) 18 (103)

Less: Loss/(gain) transferred to balance sheet

related items 35 (11) 24 − − − 24

At the end of the financial year 15 (5) 10 (1) − (1) 9

2022

US$M

Cash flow hedging reserve Cost of hedging reserve

Gross Tax Net Gross Ta x Net Total

At the beginning of the financial year 142 (42) 100 (77) 23 (54) 46

Add: Change in fair value of hedging

instrument recognised in OCI (914) 274 (640) − − − (640)

Less: Reclassified from reserves to financial

expenses – recognised through OCI 831 (250) 581 50 (15) 35 616

At the end of the financial year 59 (18) 41 (27) 8 (19) 22

Changes in interest bearing liabilities and related derivatives resulting from financing activities

The movement in the year in the Group’s interest bearing liabilities and related derivatives are as follows:

2023

US$M

Interest bearing liabilities

Derivatives

liabilities/

(assets)

Bank

loans

Notes and

debentures

Lease

liabilities

Bank

overdraft and

short-term

borrowings Other

Cross

currency and

interest rate

swaps Total

At the beginning of the financial year 2,472 11,363 2,576 − 17 1,688

Proceeds from interest bearing liabilities 5,450 2,732 − − − − 8,182

Settlements of debt related instruments − − − − − (677) (677)

Repayment of interest bearing liabilities (1,087) (1,610) (576) − (16) − (3,289)

Change from Net financing cash flows 4,363 1,122 (576) − (16) (677) 4,216

Other movements:

Acquisition of subsidiaries and operations 688 − 423 − − −

Interest rate impacts − (803) − − − 691

Foreign exchange impacts (23) 128 12 − − (127)

Lease additions − − 542 − − −

Remeasurement of index-linked freight contracts − − 53 − − −

Other interest bearing liabilities/derivative related changes 2 9 (11) 5 (1) (3)

At the end of the financial year 7,502 11,819 3,019 5 − 1,572

2022

US$M

Interest bearing liabilities

Derivatives

(assets)/

liabilities

Bank loans

Notes and

debentures

Lease

liabilities

Bank overdraft

and short-term

borrowings Other

Cross

currency and

interest rate

swaps Total

At the beginning of the financial year 2,260 14,769 3,896 − 58 (557)

Proceeds from interest bearing liabilities 1,150 − − − 14 − 1,164

Settlements of debt related instruments − − − − − − −

Repayment of interest bearing liabilities

(941) (1,232) (1,163) − (55) − (3,391)

Change from Net financing cash flows 209 (1,232) (1,163) − (41) − (2,227)

Other movements:

Divestment and demerger of subsidiaries and operations − − (492) − − −

Interest rate impacts − (1,286) − − − 1,277

Foreign exchange impacts 3 (894) (126) − (2) 898

Lease additions − − 866 − − −

Remeasurement of index-linked freight contracts − − (369) − − −

Other interest bearing liabilities/derivative related changes − 6 (36) − 2 70

At the end of the financial year 2,472 11,363 2,576 − 17 1,688

1 FY2022 includes US$33 million of Discontinued operations cash flows.

BHP Annual Report 2023 179

Operating and Financial Review

Governance Financial Statements Additional Information

Employee matters

25 Key management personnel

Key management personnel compensation comprises:

2023

US$

2022

US$

2021

US$

Short-term employee benefits 13,599,217 13,979,139 14,081,625

Post-employment benefits 659,020 634,363 744,951

Share-based payments 11,455,666 11,165,439 11,601,866

Total 25,713,903 25,778,941 26,428,442

Key Management Personnel (KMP) includes the roles which have the authority and responsibility for planning, directing and controlling the activities

of BHP. These are Non-executive Directors, the CEO, the Chief Financial Officer, the Chief Operating Officer, the President Australia and the

President Americas.

Transactions and outstanding loans/amounts with key management personnel

There were no purchases by key management personnel from the Group during FY2023 (2022: US$ nil; 2021: US$ nil).

There were no amounts payable by key management personnel at 30 June 2023 (2022: US$ nil; 2021: US$ nil).

There were no loans receivable from or payable to key management personnel at 30 June 2023 (2022: US$ nil; 2021: US$ nil).

Transactions with personally related entities

A number of Directors of the Group hold or have held positions in other companies (personally related entities) where it is considered they control or

significantly influence the financial or operating policies of those entities. There were no reportable transactions with those entities and no amounts were

owed by the Group to personally related entities at 30 June 2023 (2022: US$ nil; 2021: US$ nil).

For more information on remuneration and transactions with key management personnel, refer to the Remuneration Report under Governance.

26 Employee share ownership plans

Awards, in the form of the right to receive ordinary shares in BHP Group Limited have been granted under the following employee share ownership plans:

Cash and Deferred Plan (CDP), Short-Term Incentive Plan (STIP), Long-Term Incentive Plan (LTIP), Management Award Plan (MAP), Commencement

awards and the all-employee share plan, Shareplus.

Some awards are eligible to receive a cash payment, or the equivalent value in shares, equal to the dividend amount that would have been earned on the

underlying shares awarded to those participants (the Dividend Equivalent Payment, or DEP). The DEP is provided to the participants once the underlying

shares are allocated or transferred to them. Awards under the plans do not confer any rights to participate in a share issue; however, there is discretion

under each of the plans to adjust the awards in response to a variation in the share capital of BHP Group Limited.

180 BHP Annual Report 2023

1 Consolidated Financial Statements continued

26 Employee share ownership plans continued

The table below provides a description of each of the plans.

Plan CDP and STIP LTIP and MAP Commencement awards Shareplus

Type Short-term incentive Long-term incentive Long-term incentive All-employee share

purchase plan

Overview

The CDP was implemented

in FY2020 as a replacement

for the STIP, both of which are

generally plans for Executive KMP

and members of the Executive

Leadership Team who are not

Executive KMP.

Under the CDP, two thirds of the

value of a participant’s short-term

incentive amount is awarded

as rights to receive BHP Group

Limited shares at the end of the

vesting period (and the remaining

one third is delivered in cash).

Two awards of deferred shares are

granted, each of the equivalent

value to the cash award, vesting in

two and five years respectively.

Under the STIP, half of the value of

a participant’s short-term incentive

amount was awarded as rights

to receive BHP Group Limited

shares at the end of the two-year

vesting period.

The LTIP is a plan for Executive KMP and

members of the Executive Leadership Team

who are not Executive KMP, and awards are

granted annually.

The MAP is a plan for BHP senior

management who are not Executive KMP.

The number of share rights awarded is

determined by a participant’s role and grade.

Awards may be granted

to new members of the

Executive Leadership

Team recruited into

the Group to replace

awards foregone from a

previous company.

Employees may

contribute up to

US$5,000 to acquire

shares in any plan

year. On the third

anniversary of

the start of a plan

year, the Group will

match the number of

acquired shares.

Vesting

conditions

CDP: Service conditions only for

the two-year award. Vesting of the

five-year award is subject to service

conditions and also to holistic

review of performance at the end

of the five-year vesting period,

including a five-year view on Safety

and Sustainability (previously

HSEC) performance, profitability,

cash flow, balance sheet health,

returns to shareholders, corporate

governance and conduct.

STIP: Service conditions only.

LTIP: Service and performance conditions.

From FY2023 BHP’s Total Shareholder

Return

(TSR) performance relative to two

Morgan Stanley Capital International (MSCI)

market indices, the MSCI World Metals and

Mining Index (“Sector Group TSR”) and the

MSCI World Index (“World TSR”). The Sector

Group TSR over a five-year performance

period determines the vesting of 67 per cent

of the awards, while performance relative to

the World TSR determines the vesting of 33

per cent of the awards. For awards granted

prior to FY2023, TSR performance relative

to a bespoke sector peer group and the

MSCI World Index determines the vesting

of 67 per cent and 33 per cent of the award,

respectively.

25 per cent of the award will vest where

BHP’s TSR is equal to the median TSR

of the relevant comparator group(s), as

measured over the performance period.

Where TSR is below the median, awards

will not vest. Vesting occurs on a sliding

scale when BHP’s TSR measured over the

performance period is between the median

TSR of the relevant comparator group(s) up

to a nominated level of TSR outperformance

over the relevant comparator group(s), as

determined by the Committee, above which

100 per cent of the award will vest.

MAP: Service conditions only.

Service and

performance conditions.

The People and

Remuneration

Committee has absolute

discretion to determine

if the performance

condition has been

met and whether any,

all or part of the award

will vest (or otherwise

lapse), having regard to

personal performance

and the underlying

financial performance

of the Group during the

performance period.

To the extent the

performance condition

is not achieved,

awards will lapse.

There is no retesting

of the performance

condition.

Vested awards may be

subject to a holding lock.

Service conditions only.

Vesting

period

CDP – 2 and 5 years

STIP – 2 years

LTIP – 5 years

MAP – 1 to 5 years

2 years 3 years

Dividend

Equivalent

Payment

CDP – Yes

STIP – Yes

LTIP – Yes

MAP – Varies

Yes No

Exercise

period

None None None None

1 For LTIP awards granted prior to unification and where the five-year performance period ends after unification, the TSR at the start of the performance period is based on the

weighted average of the TSRs of BHP Group Limited and BHP Group Plc and the TSR at the end of the performance period is based on the TSR of BHP Group Limited.

BHP Annual Report 2023 181

Operating and Financial Review

Governance Financial Statements Additional Information

26 Employee share ownership plans continued

Employee share awards

2023

Number of

awards at the

beginning of the

financial year

Number of

awards issued

during the year

Number of

awards vested

and exercised

Number of

awards

lapsed

Number of

awards at the

end of the

financial year

Weighted

average

remaining

contractual

life (years)

Weighted

average share

price at exercise

date

BHP Group Limited

CDP awards 707,994 435,244 155,158 19,499 968,581 2.1 A$41.62

STIP awards 83,810 − 83,810 − − − A$41.55

LTIP awards 3,143,477 622,992 1,175,882 31,791 2,558,796 2.2 A$41.59

MAP awards

7,094,173 2,404,671 2,353,273 491,845 6,653,726 1.2 A$41.74

Commencement awards

86,279 − 69,025 17,254 − − A$41.55

Shareplus 4,914,470 3,089,822 2,330,077 550,364 5,123,851 1.3 A$44.88

1 There were no awards vested and exercisable at the end of the financial year.

Fair value and assumptions in the calculation of fair value for awards issued

2023

Weighted average

fair value of

awards granted

during the year

US$

Risk-free

interest rate

Estimated

life of awards

Share price at

grant date

Estimated

volatility of

share price Dividend yield

BHP Group Limited

CDP awards 28.88 n/a 2 and 5 years A$43.48 n/a n/a

LTIP awards 20.22 3.33% 5 years A$43.48 34.0% n/a

MAP awards

21.17 n/a 1-3 years A$37.96/A$46.97 n/a

7.5% up to 30 June 2024 and

5.0% per annum thereafter

Shareplus 18.94 2.35% 3 years A$52.39 n/a

7.5% up to 30 June 2024 and

5.0% per annum thereafter

1 Includes MAP awards granted on 21 September 2022 and 3 April 2023.

Recognition and measurement

The fair value at grant date of equity-settled share awards is charged to the income statement over the period for which the benefits of employee services

are expected to be derived. The fair values of awards granted were estimated using a Monte Carlo simulation methodology and Black-Scholes option

pricing technique and consider the following factors:

– exercise price

– expected life of the award

– current market price of the underlying shares

– expected volatility using an analysis of historic volatility over different rolling periods. For the LTIP, it is calculated for all sector comparators and the

published MSCI World Index

– expected dividends

– risk-free interest rate, which is an applicable government bond rate

– market-based performance hurdles

– non-vesting conditions

Where awards are forfeited because non-market-based vesting conditions are not satisfied, the expense previously recognised is

proportionately reversed.

The tax effect of awards granted is recognised in income tax expense, except to the extent that the total tax deductions are expected to exceed the

cumulative remuneration expense. In this situation, the excess of the associated current or deferred tax is recognised in equity and forms part of the

employee share awards reserve. The fair value of awards as presented in the tables above represents the fair value at grant date.

In respect of employee share awards, the Group utilises the BHP Group Limited Employee Equity Trust. The trustee of this trust is an independent

company, resident in Jersey. The trust uses funds provided by the Group to acquire ordinary shares to enable awards to be made or satisfied.

The ordinary shares may be acquired by purchase in the market or by subscription at not less than nominal value.

182 BHP Annual Report 2023

1 Consolidated Financial Statements continued

27 Employee benefits, restructuring and post-retirement employee benefits provisions

2023

US$M

2022

US$M

Employee benefits

1,749 1,351

Restructuring

28 27

Post-retirement employee benefits

373 281

Total provisions 2,150 1,659

Comprising:

Current 1,734 1,319

Non-current 416 340

2023

Employee

benefits

US$M

Restructuring

US$M

Post-retirement

employee

benefits

US$M

Total

US$M

At the beginning of the financial year 1,351 27 281 1,659

Acquisition of subsidiaries and operations

25 − − 25

Charge/(credit) for the year:

Underlying 1,675 26 75 1,776

Discounting − − 19 19

Net interest expense − − (5) (5)

Exchange variations (21) − 34 13

Released during the year (66) − (2) (68)

Remeasurement gains taken to retained earnings − − 18 18

Utilisation (1,204) (25) (47) (1,276)

Transfers and other movements (11) − − (11)

At the end of the financial year 1,749 28 373 2,150

1 The expenditure associated with total employee benefits will occur in a pattern consistent with when employees choose to exercise their entitlement to benefits.

2 Total restructuring provisions include provisions for terminations and office closures.

3 The net liability recognised in the Consolidated Balance Sheet includes US$151 million present value of funded defined benefits pension obligation (2022: US$165 million)

offset by fair value of defined benefit scheme assets US$(159) million (2022: US$(169) million), US$79 million present value of unfunded defined pension and post-retirement

medical benefits obligation (2022: US$85 million) and US$302 million unfunded post-employment benefits obligation in Chile (2022: US$200 million).

4 Relates to the acquisition of OZL on 2 May 2023. Refer to note 29 ‘Business combinations’ for more information.

BHP Annual Report 2023 183

Operating and Financial Review

Governance Financial Statements Additional Information

27 Employee benefits, restructuring and post-retirement employee benefits provisions continued

Recognition and measurement

Provisions are recognised by the Group when:

– there is a present legal or constructive obligation as a result of past events

– it is more likely than not that a permanent outflow of resources will be required to settle the obligation

– the amount can be reliably estimated and measured at the present value of management’s best estimate of the cash outflow required to settle the

obligation at the reporting date

Provision Description

Employee

benefits

Liabilities for benefits accruing to employees up until the reporting date in respect of wages and salaries, annual leave and any

accumulating sick leave are recognised in the period the related service is rendered.

Liabilities recognised in respect of short-term employee benefits expected to be settled within 12 months are measured at the

amounts expected to be paid when the liabilities are settled.

Liabilities for other long-term employee benefits, including long service leave, are measured as the present value of estimated future

payments for the services provided by employees up to the reporting date.

Liabilities that are not expected to be settled within 12 months are discounted at the reporting date using market yields of high-quality

corporate bonds or government bonds for countries where there is no deep market for corporate bonds. The rates used reflect the

terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

In relation to industry-based long service leave funds, the Group’s liability, including obligations for funding shortfalls, is determined

after deducting the fair value of dedicated assets of such funds.

Liabilities for short and long-term employee benefits (other than unpaid wages and salaries) are disclosed within employee benefits.

Other liabilities for unpaid wages and salaries related to the current period are recognised in other creditors.

Review of employee allowances and entitlements

On 1 June 2023, the Group disclosed the identification of two issues with certain allowances and entitlements affecting a number of

current and former employees in Australia. The identified issues relate to rostered employees having leave incorrectly deducted on public

holidays since 2010 (Leave issue) and certain employees at Port Hedland being entitled to additional allowances due to an error with the

employment entity in their contract (Port Hedland issue). The Group self-reported the issues to the Fair Work Ombudsman in Australia.

The Group has applied extensive resources to the review and analysis of its records, with a dedicated team established to investigate

and remediate the issues. Since the date of the announcement, the Group has progressed its analysis and has commenced

contacting impacted employees. The Group has commenced paying additional allowances to those current employees impacted

by the Port Hedland issue. The Group has also corrected the leave balances of current employees impacted by the Leave Issue.

The Group’s current best estimate of the cost of remediating the two issues, recognised in employee benefit provisions at 30 June

2023, is US$265 million, incorporating on-costs including associated superannuation and interest payments. The calculation of this

provision involved a substantial volume of data and a significant degree of complexity with further detailed modelling and validation

required to determine the final cost of remediation. As such, uncertainty remains in the amount and timing of final remediation costs,

with the outcomes also subject to continuing engagement with regulatory authorities, including the Fair Work Ombudsman.

A further US$15 million of other related costs were recognised in the year ended 30 June 2023, which do not form part of the

employee benefit provision.

As the Group has applied judgement in determining the provision for 30 June 2023, there is a risk that the provision may be adjusted

in future reporting periods as the remediation process continues.

The Group has also engaged a global assurance firm to conduct a thorough review of the Group’s payroll systems. As this review is

ongoing there is a risk that other instances of non-compliance requiring remediation may be identified and, as such, that associated

provisions may be recognised in future reporting periods.

Restructuring Restructuring provisions are recognised when:

– the Group has developed a detailed formal plan identifying the business or part of the business concerned, the location and

approximate number of employees affected, a detailed estimate of the associated costs, and an appropriate timeline

– the restructuring has either commenced or been publicly announced and can no longer be withdrawn

Payments that are not expected to be settled within 12 months of the reporting date are measured at the present value of the

estimated future cash payments expected to be made by the Group.

Post-retirement

employee

benefits

Defined contribution pension schemes and multi-employer pension schemes

For defined contribution schemes or schemes operated on an industry-wide basis where it is not possible to identify assets

attributable to the participation by the Group’s employees, the pension charge is calculated on the basis of contributions payable.

The Group contributed US$358 million during the financial year (2022: US$324 million; 2021: US$301 million) to defined contribution

plans and multi-employer defined contribution plans. These contributions are expensed as incurred.

Defined benefit pension and post-retirement medical schemes

The Group operates or participates in a number of defined benefit pension schemes throughout the world, all of which are closed to

new entrants. The funding of the schemes complies with local regulations. The assets of the schemes are generally held separately

from those of the Group and are administered by trustees or management boards. The Group also operates a number of unfunded

post-retirement medical schemes in the United States, Canada and Europe.

For defined benefit schemes, an asset or liability is recognised in the balance sheet based at the present value of defined benefit

obligations less, where funded, the fair value of plan assets, except that any such asset cannot exceed the present value of

expected refunds from and reductions in future contributions to the plan. Full actuarial valuations are prepared by local actuaries

for all schemes, using discount rates based on market yields at the reporting date on high-quality corporate bonds or by reference

to national government bonds if high-quality corporate bonds are not available. Where funded, scheme assets are invested in a

diversified range of asset classes, predominantly comprising bonds and equities.

184 BHP Annual Report 2023

1 Consolidated Financial Statements continued

Group and related party information

28 Discontinued operations

On 1 June 2022 (Completion date) BHP completed the merger of the Group’s oil and gas portfolio with Woodside Energy Group Limited (‘Woodside’).

Woodside acquired the entire share capital of BHP Petroleum International Pty Ltd (‘BHP Petroleum’) in exchange for 914,768,948 newly issued

Woodside ordinary shares.

On the Completion Date, the Group paid a fully franked in specie dividend in the form of Woodside shares to eligible BHP shareholders. Eligible BHP

shareholders received one Woodside share for every 5.5340 BHP shares they held on the Group’s register at the record date of 26 May 2022.

As part of completion and in order to reflect the economic effective date of 1 July 2021, the Group made a net cash payment of US$0.7 billion (net of

completion adjustments) to Woodside in addition to US$0.4 billion in cash that was left in the BHP Petroleum bank accounts to fund ongoing operations.

The total cash transfer of US$1.1 billion reflected the net cash flows generated by BHP Petroleum between 1 July 2021 and Completion Date adjusted for

dividends Woodside would have paid on the newly issued Woodside ordinary shares, had the Merger completed on 1 July 2021.

There was no contribution of Discontinued operations to the Group’s profit and cash flows for the year ended 30 June 2023. The contribution of

Discontinued operations for the years ended 30 June 2022 and 30 June 2021 is detailed below:

Income statement – Discontinued operations

2022

US$M

2021

US$M

Profit/(loss) after taxation from operating activities 2,496 (225)

Net gain on Petroleum merger with Woodside (after tax) 8,159 −

Profit/(loss) after taxation 10,655 (225)

Attributable to non-controlling interests − −

Attributable to BHP shareholders 10,655 (225)

Basic earnings/(loss) per ordinary share (cents) 210.5 (4.5)

Diluted earnings/(loss) per ordinary share (cents) 210.1 (4.5)

The total comprehensive income attributable to BHP shareholders from Discontinued operations was a gain of US$10,596 million for the year ended

30 June 2022 (2021: US$231 million loss).

The conversion of options and share rights would decrease the loss per share for the year ended 30 June 2021, therefore its impact has been excluded

from the diluted earnings per share calculation.

Cash flows from Discontinued operations

2022

US$M

2021

US$M

Net operating cash flows 2,889 1,351

Net investing cash flows

(904) (1,520)

Net financing cash flows

(33) (38)

Net increase/(decrease) in cash and cash equivalents from Discontinued operations 1,952 (207)

Net cash completion payment on merger of Petroleum with Woodside (683) −

Cash and cash equivalents disposed (399) −

Total cash impact 870 (207)

1 Includes purchases of property, plant and equipment and capitalised exploration related to drilling and development expenditure of US$1,144 million for FY2022

(2021:US$1,020 million), proceeds from sale of subsidiaries, operations and joint operations, net of cash of US$91 million for FY2022 (2021: investment of US$480 million),

proceeds from sale of assets of US$151 million for FY2022 (2021: US$39 million) and other investing outflows of US$2 million for FY2022 (2021: outflow of US$59 million).

2 Represents net repayment of interest bearing liabilities of US$33 million for FY2022 (2021: US$38 million).

Exceptional items – Discontinued operations

Exceptional items are those gains or losses where their nature, including the expected frequency of the events giving rise to them, and impact is

considered material to the Financial Statements.

There were no exceptional items related to Discontinued operations for the year ended 30 June 2023.

Exceptional items related to Discontinued operations included within the Group’s profits for the years ended 30 June 2022 and 30 June 2021 are

detailed below.

Year ended 30 June 2022

Gross

US$M

Tax

US$M

Net

US$M

Exceptional items by category

Net gain on Petroleum merger with Woodside

8,167 (8) 8,159

Total 8,167 (8) 8,159

Attributable to non-controlling interests − − −

Attributable to BHP shareholders 8,167 (8) 8,159

1 The tax expense associated with the exceptional item reflects the tax impact of transaction costs and other restructuring related activities undertaken pre-merger. There were

no further tax impacts arising on the net gain on merger of our Petroleum business with Woodside as generated tax losses were either offset with capital gains in other

entities in the Group, or not recognised on the basis that it is not probable that future capital gains will be available against which the Group can utilise the tax losses.

BHP Annual Report 2023 185

Operating and Financial Review

Governance Financial Statements Additional Information

28 Discontinued operations continued

Net gain on disposal of Discontinued operations

Details of the net gain on Petroleum merger with Woodside is presented below:

2022

US$M

Net assets disposed 10,172

Fair value of Woodside shares

19,566

Net cash completion payment on merger of Petroleum with Woodside

(683)

Foreign currency translation reserve transferred to the income statement 54

Other provisions and related indemnities recognised at completion (353)

Transaction and other directly attributable costs (245)

Income tax expense (8)

Net gain on Petroleum merger with Woodside 8,159

1 Represents the consideration received being the fair value of 914,768,948 Woodside ordinary shares received using the closing ASX share price of A$29.76 on 31 May 2022

(US$21.39 equivalent based on an exchange rate of AUD/USD 0.7187).

2 Reflects the net cash flows generated by BHP Petroleum between 1 July 2021 and Completion Date adjusted for dividends Woodside would have paid on the newly issued

Woodside ordinary shares, had the Merger completed on 1 July 2021.

Year ended 30 June 2021

Gross

US$M

Tax

US$M

Net

US$M

Exceptional items by category

Impairment of Potash assets

− (278) (278)

COVID-19 related costs (47) 8 (39)

Total (47) (270) (317)

Attributable to non-controlling interests − − −

Attributable to BHP shareholders (47) (270) (317)

1 The exceptional item reflects the impairment of tax losses originally expected to be recoverable against taxable profits from the Group’s Potash assets. The impairment is

included in Discontinued operations as the entity with the losses transferred to Woodside and therefore the losses are no longer available to the Group.

29 Business combinations

OZ Minerals Limited

On 2 May 2023 (Acquisition Date), the Group acquired 100 per cent of the issued share capital of OZ Minerals Limited (OZL) for a net cash consideration

of US$5.9 billion. The terms of the acquisition did not include any contingent consideration.

OZL is a mining and exploration company with a portfolio of operating, development and exploration stage projects both in Australia and internationally.

OZL’s primary activities consist of Prominent Hill and Carrapateena copper-gold mines in South Australia, West Musgrave copper-nickel development

project in Western Australia and Carajás East copper-gold hub in Brazil. This acquisition provides the Group with further exposure to copper, nickel

and uranium.

Acquisition related costs of US$107 million and integration costs of US$24 million have been expensed and included in other operating expenses in the

income statement.

The provisional fair values of the identifiable assets and liabilities acquired as of the date of acquisition were:

2023

US$M

Assets

Cash and cash equivalents 104

Trade and other receivables

Other financial assets 7

Inventories 329

Property, plant and equipment 7,676

Intangible assets – goodwill 192

Current tax receivable 36

Other assets 25

Total assets 8,446

Liabilities

Trade and other payables 242

Interest bearing liabilities 1,111

Deferred tax liabilities

867

Provisions 254

Total liabilities 2,474

Identifiable net assets acquired 5,972

Total consideration paid

3,4

5,972

Cash and cash equivalents acquired (104)

Net cash consideration paid 5,868

1 This represents the gross contractual amount for trade and other receivables all of which is expected to be collected.

2 This primarily represents the difference between the provisional fair value of the mineral rights acquired and the corresponding tax base.

3 The Group executed a forward exchange contract to hedge the foreign exchange exposure on the consideration made in AUD. On maturity of the hedging instrument, a

hedge loss of US$35 million was capitalised to the cost of the acquisition.

4 The consideration paid by the Group was A$26.50 (at the average hedged exchange rate of AUD/USD 0.6681) per OZL share over 337,314,920 shares and excluded a

special dividend of A$1.75 per OZL share which was paid by OZL to its shareholders immediately prior to acquisition.

186 BHP Annual Report 2023

1 Consolidated Financial Statements continued

29 Business combinations continued

The fair values disclosed are provisional as at 30 June 2023. Due to the size, complexity and timing of the acquisition, the valuation process is ongoing

and will be completed within 12 months of the acquisition.

Goodwill of US$192 million has been provisionally recognised, representing the excess of consideration paid above the provisional fair value of the

acquired assets and liabilities. The goodwill primarily arises from the deferred tax liability recognised at acquisition due to a difference between the

provisional fair value of mineral rights acquired and the corresponding tax base. The goodwill represents the provisional amount, which could not be

reliably allocated to a CGU or group of CGUs at 30 June 2023.

None of the goodwill recognised is expected to be deductible for tax purposes.

OZL contributed revenue of US$315 million and profit after taxation of US$17 million to the Group from acquisition date to 30 June 2023. The estimated

OZL contribution to revenue and profit after taxation of the combined Group for the year ended 30 June 2023, had the acquisition occurred on 1 July

2022, would have been US$1,410 million and US$114 million, respectively.

There were no business combinations entered into by the Group in the previous financial year.

Key judgements and estimates

Judgements: Judgement is required to determine the fair value of assets acquired and liabilities assumed at acquisition date in a business

combination, which could have a material impact on goodwill.

Estimates: The Group used the discounted cash-flow method to measure the fair value of mineral rights. Key assumptions used included commodity

prices, production volumes, life of mine, cash outflows (including operating costs, capital expenditure, closure and rehabilitation costs and taxes),

discount rates and risking factors.

30 Subsidiaries

Significant subsidiaries of the Group are those with the most significant contribution to the Group’s net profit or net assets. The Group’s interest in the

subsidiaries’ results are listed in the table below.

Significant subsidiaries

Country of

incorporation

Principal activity

Group’s interest

2023

2022

Coal

Hunter Valley Energy Coal Pty Ltd Australia Coal mining 100 100

Copper

BHP Olympic Dam Corporation Pty Ltd Australia Copper and uranium mining 100 100

Compañia Minera Cerro Colorado Limitada Chile Copper mining 100 100

Minera Escondida Ltda

Chile Copper mining 57.5 57.5

Minera Spence SA Chile Copper mining 100 100

OZ Minerals Carrapateena Pty Ltd

Australia Copper, gold and silver mining 100 –

OZ Minerals Prominent Hill Operations Pty Ltd

Australia Copper, gold and silver mining 100 –

Iron Ore

BHP Iron Ore (Jimblebar) Pty Ltd

Australia Iron ore mining 85 85

BHP Iron Ore Pty Ltd Australia Service company 100 100

BHP (Towage Service) Pty Ltd Australia Towing services 100 100

Marketing

BHP Billiton Freight Singapore Pte Limited Singapore Freight services 100 100

BHP Billiton Marketing AG Switzerland Marketing and trading 100 100

BHP Billiton Marketing Asia Pte Ltd Singapore Marketing support and other services 100 100

Group and Unallocated

BHP Billiton Finance B.V. The Netherlands Finance 100 100

BHP Billiton Finance Limited Australia Finance 100 100

BHP Billiton Finance (USA) Limited Australia Finance 100 100

BHP Canada Inc. Canada Potash development 100 100

BHP Group Operations Pty Ltd Australia Administrative services 100 100

BHP Nickel West Pty Ltd Australia Nickel mining, smelting, refining and administrative services 100 100

OZ Minerals Musgrave Operations Pty Ltd

Australia Copper and nickel mining 100 –

WMC Finance (USA) Limited Australia Finance 100 100

1 As the Group has the ability to direct the relevant activities at Minera Escondida Ltda, it has control over the entity. The assessment of the most relevant activity in this

contractual arrangement is subject to judgement. The Group establishes the mine plan and the operating budget and has the ability to appoint the key management

personnel, demonstrating that the Group has the existing rights to direct the relevant activities of Minera Escondida Ltda.

2 The acquisition of BHP’s 100 per cent interest in OZ Minerals Limited completed on 2 May 2023. Refer to note 29 ‘Business combinations’ for further information.

3 The Group has an effective interest of 92.5 per cent in BHP Iron Ore (Jimblebar) Pty Ltd; however, by virtue of the shareholder agreement with ITOCHU Iron Ore Australia Pty

Ltd and Mitsui & Co. Iron Ore Exploration & Mining Pty Ltd, the Group’s interest in the Jimblebar mining operation is 85 per cent, which is consistent with the other respective

contractual arrangements at Western Australia Iron Ore.

BHP Annual Report 2023 187

Operating and Financial Review

Governance Financial Statements Additional Information

31 Investments accounted for using the equity method

Significant interests in equity accounted investments of the Group are those with the most significant contribution to the Group’s net profit or net assets.

The Group’s ownership interest in significant equity accounted investments results are listed in the table below.

Significant associates

and joint ventures

Country of incorporation/

principal place of business

Associate or

joint venture Principal activity Reporting date

Ownership interest

2023

2022

Compañía Minera Antamina S.A.

(Antamina)

Peru Associate Copper and zinc mining 31 December 33.75 33.75

Samarco Mineração S.A.

(Samarco)

Brazil Joint venture Iron ore mining 31 December 50.00 50.00

Voting in relation to relevant activities in Antamina, determined to be the approval of the operating and capital budgets, does not require unanimous

consent of all participants to the arrangement, therefore joint control does not exist. Instead, because the Group has the power to participate in the

financial and operating policies of the investee, this investment is accounted for as an associate.

Samarco is jointly owned by BHP Billiton Brasil Ltda (BHP Brasil) and Vale S.A. (Vale). As the Samarco entity has the rights to the assets and obligations

to the liabilities relating to the joint arrangement and not its owners, this investment is accounted for as a joint venture.

The Group is restricted in its ability to make dividend payments from its investments in associates and joint ventures as any such payments require the

approval of all investors in the associates and joint ventures. The ownership interest at the Group’s and the associates’ or joint ventures’ reporting dates

are the same. When the annual financial reporting date is different to the Group’s, financial information is obtained as at 30 June in order to report on an

annual basis consistent with the Group’s reporting date.

The movement for the year in the Group’s investments accounted for using the equity method is as follows:

Year ended 30 June 2023

US$M

Investment in

associates

Investment in

joint ventures

Total equity

accounted

investments

At the beginning of the financial year 1,420 − 1,420

Profit/(loss) from equity accounted investments, related impairments and expenses

379 215 594

Investment in equity accounted investments 149 − 149

Dividends received from equity accounted investments (328) − (328)

Other

− (215) (215)

At the end of the financial year 1,620 − 1,620

1 Represents financial impacts of Samarco dam failure in the Group’s loss from equity accounted investments, related impairments and expenses. Refer to note 4 ‘Significant

events – Samarco dam failure’ for further information.

The following table summarises the financial information relating to each of the Group’s significant equity accounted investments. BHP Brasil’s 50 per cent

portion of Samarco’s commitments, for which BHP Brasil has no funding obligation, is US$500 million (2022: US$350 million).

2023

US$M

Associates Joint ventures

TotalAntamina

Individually

immaterial

Samarco

Individually

immaterial

Current assets 1,519 537

Non-current assets 5,670 5,739

Current liabilities (774) (11,167)

Non-current liabilities (1,944) (10,614)

Net assets/(liabilities) – 100% 4,471 (15,505)

Net assets/(liabilities) – Group share 1,509 (7,753)

Adjustments to net assets related to accounting policy adjustments (79) 291

Investment in Samarco − 516

Impairment of the carrying value of the investment in Samarco − (1,041)

Additional share of Samarco losses − 6,034

Unrecognised losses − 1,953

Carrying amount of investments accounted for using the equity method 1,430 190 − − 1,620

Revenue – 100% 4,350 1,554

Profit/(loss) from Continuing operations – 100% 1,571 (3,018)

Share of profit/(loss) of equity accounted investments 530 (1,509)

Adjustments to share of profit/(loss) related to accounting policy adjustments (79) 23

Impairment of the carrying value of the investment in Samarco − −

Additional share of Samarco losses − 452

Fair value change on forward exchange derivatives − 471

Unrecognised losses − 778

Profit/(loss) from equity accounted investments, related impairments and expenses 451 (72) 215 − 594

Comprehensive income – 100% 1,571 (3,018)

Share of comprehensive income/(loss) – Group share in equity

accounted investments 451 (72) 215 − 594

Dividends received from equity accounted investments 327 1 − − 328

188 BHP Annual Report 2023

1 Consolidated Financial Statements continued

31 Investments accounted for using the equity method continued

2022

US$M

Associates Joint ventures

TotalAntamina

Individually

immaterial

Samarco

Individually

immaterial

Current assets 1,275 499

Non-current assets 5,293 5,717

Current liabilities (847) (10,830)

Non-current liabilities (1,851) (7,873)

Net assets/(liabilities) – 100% 3,870 (12,487)

Net assets/(liabilities) – Group share 1,306 (6,244)

Adjustments to net assets related to accounting policy adjustments − 268

Investment in Samarco − 516

Impairment of the carrying value of the investment in Samarco − (1,041)

Additional share of Samarco losses − 5,326

Unrecognised losses − 1,175

Carrying amount of investments accounted for using the equity method 1,306 114 − − 1,420

Revenue – 100% 5,264 1,670

Profit/(loss) from Continuing operations – 100% 2,133 (528)

Share of profit/(loss) of equity accounted investments 720 (276)

Impairment of the carrying value of the investment in Samarco − −

Additional share of Samarco losses − 290

Fair value change on forward exchange derivatives − (81)

Unrecognised losses − (609)

Profit/(loss) from equity accounted investments, related impairments and expenses 720 (63) (676) − (19)

Comprehensive income – 100% 2,133 (528)

Share of comprehensive income/(loss) – Group share in equity accounted investments 720 (63) (676) − (19)

Dividends received from equity accounted investments 776 11 − − 787

2021

US$M

Associates Joint ventures

TotalAntamina Cerrejón

Individually

immaterial Samarco

Individually

immaterial

Revenue – 100% 4,822 844 814

Profit/(loss) from Continuing operations – 100% 1,847 (43) (2,202)

Share of profit/(loss) of equity accounted investments 623 (14) (1,076)

Impairment of the carrying value of the investment in Cerrejón − (466) −

Impairment of the carrying value of the investment in Samarco − − (111)

Additional share of Samarco losses − − 85

Fair value change on forward exchange derivatives − − 136

Unrecognised losses − − (24)

Profit/(loss) from equity accounted investments, related impairments

and expenses 623 (480) (68) (990) − (915)

Comprehensive income/(loss) – 100% 1,847 (43) (2,202)

Share of comprehensive income/(loss) – Group share in equity

accounted investments 623 (480) (68) (990) − (915)

Dividends received from equity accounted investments 714 13 10 − − 737

1 The unrecognised share of gain for the period was US$76 million (2022: unrecognised share of gain for the period was US$16 million), which decreased the cumulative

losses to US$141 million (2022: decrease to US$217 million).

2 Refer to note 4 ‘Significant events – Samarco dam failure’ for further information regarding the financial impact of the Samarco dam failure which occurred in November 2015

on BHP Brasil’s share of Samarco’s losses.

3 Includes cash and cash equivalents of US$138 million (2022: US$106 million).

4 Includes current financial liabilities (excluding trade and other payables and provisions) of US$7,154 million (2022: US$6,837 million).

5 Relates mainly to dividends declared by Samarco that remain unpaid at balance date and which, in accordance with the Group’s accounting policy, are recognised when

received not receivable.

6 Working capital funding provided to Samarco during the period is capitalised as part of the Group’s investments in joint ventures and disclosed as an impairment included

within the Samarco impairment expense line item.

7 In the year ended 30 June 2016 BHP Brasil adjusted its investment in Samarco to US$ nil (resulting from US$(655) million share of loss from Samarco and US$(525) million

impairment). Additional cumulative impairment losses relating to working capital funding of US$(516) million have also been recognised.

8 BHP Brasil has recognised accumulated additional share of Samarco losses of US$(6,034) million resulting from US$(4,795) million provisions relating to the Samarco dam

failure, including US$(1,239) million recognised as net finance costs.

9 Share of Samarco’s losses for which BHP Brasil does not have an obligation to fund.

10 Includes depreciation and amortisation of US$144 million (2022: US$205 million; 2021: US$154 million), interest income of US$42 million (2022: US$19 million; 2021:

US$1 million), interest expense of US$1,384 million (2022: US$628 million; 2021: US$492 million) and income tax (expense)/benefit of US$(213) million (2022: US$(7)

million; 2021: US$(303) million).

11 Includes accounting policy adjustments mainly related to the removal of foreign exchange gains on excluded dividends payable.

BHP Annual Report 2023 189

Operating and Financial Review

Governance Financial Statements Additional Information

32 Interests in joint operations

Significant joint operations of the Group are those with the most significant contributions to the Group’s net profit or net assets. The Group’s interest in the

joint operations results are listed in the table below.

Significant joint operations Country of operation Principal activity

Group’s interest

2023

2022

Mt Goldsworthy

Australia Iron ore mining 85 85

Mt Newman

Australia Iron ore mining 85 85

Yandi

Australia Iron ore mining 85 85

Central Queensland Coal Associates Australia Coal mining 50 50

1 These contractual arrangements are controlled by the Group and do not meet the definition of joint operations. However, as they are formed by contractual arrangement and

are not entities, the Group recognises its share of assets, liabilities, revenue and expenses arising from these arrangements.

Assets held in joint operations subject to significant restrictions are as follows:

Group’s share

2023

US$M

2022

US$M

Current assets 1,561 1,928

Non-current assets 26,370 26,256

Total assets

27,931 28,184

1 While the Group is unrestricted in its ability to sell a share of its interest in these joint operations, it does not have the right to sell individual assets that are used in these joint

operations without the unanimous consent of the other participants. The assets in these joint operations are also restricted to the extent that they are only available to be used

by the joint operation itself and not by other operations of the Group.

33 Related party transactions

The Group’s related parties are predominantly subsidiaries, associates and joint ventures, and key management personnel of the Group.

Disclosures relating to key management personnel are set out in note 25 ‘Key management personnel’. Transactions between each parent company and

its subsidiaries are eliminated on consolidation and are not disclosed in this note.

– All transactions to/from related parties are made at arm’s length, i.e. at normal market prices and rates and on normal commercial terms.

– Outstanding balances at year-end are unsecured and settlement occurs in cash. Loan amounts owing from related parties represent secured loans

made to associates and joint ventures under co-funding arrangements. Such loans are made on an arm’s length basis.

– No guarantees are provided or received for any related party receivables or payables.

– No provision for expected credit losses has been recognised in relation to any outstanding balances and no expense has been recognised in respect of

expected credit losses due from related parties.

– There were no other related party transactions in the year ended 30 June 2023 (2022: US$ nil), other than those with post-employment benefit plans

for the benefit of Group employees. These are shown in note 27 ‘Employee benefits, restructuring and post-retirement employee benefits provisions’.

– Related party transactions with Samarco are described in note 4 ‘Significant events – Samarco dam failure’ .

Further disclosures related to related party transactions are as follows:

Transactions with related parties

Joint ventures Associates

2023

US$M

2022

US$M

2023

US$M

2022

US$M

Sales of goods/services − − − −

Purchases of goods/services − − 1,589.094 1,852.132

Interest income − − − 0.398

Interest expense − − − 0.005

Dividends received − − 327.679 787.208

Net loans made to/(repayments from) related parties − − − (23.554)

Outstanding balances with related parties

Joint ventures Associates

2023

US$M

2022

US$M

2023

US$M

2022

US$M

Trade amounts owing to related parties – − 246.239 351.607

Loan amounts owing to related parties − − − −

Trade amounts owing from related parties – − 6.730 6.855

Loan amounts owing from related parties − − − −

190 BHP Annual Report 2023

1 Consolidated Financial Statements continued

Unrecognised items and uncertain events

34 Contingent liabilities

2023

US$M

2022

US$M

Associates and joint ventures

1,094 1,541

Subsidiaries and joint operations

1,184 925

Total 2,278 2,466

1 There are a number of matters, for which it is not possible at this time to provide a range of possible outcomes or a reliable estimate of potential future exposures, and for

which no amounts have been included in the table above.

A contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by occurrence or non-occurrence of one

or more uncertain future events not wholly within the control of the Group. A contingent liability may also be a present obligation arising from past events

but is not recognised on the basis that an outflow of economic resources to settle the obligation is not viewed as probable, or the amount of the obligation

cannot be reliably measured.

When the Group has a present obligation, an outflow of economic resources is assessed as probable and the Group can reliably measure the obligation,

a provision is recognised.

The Group has entered into various counter-indemnities of bank and performance guarantees related to its own future performance, which are in the

normal course of business. The likelihood of these guarantees being called upon is considered remote.

The Group presently has tax matters, litigation and other claims, for which the timing of resolution and potential economic outflow are uncertain.

Obligations assessed as having probable future economic outflows capable of reliable measurement are provided at reporting date and matters

assessed as having possible future economic outflows capable of reliable measurement are included in the total amount of contingent liabilities above.

Individually significant matters, including narrative on potential future exposures incapable of reliable measurement, are disclosed below, to the extent that

disclosure does not prejudice the Group.

Uncertain tax and

royalty matters

The Group is subject to a range of taxes and royalties across many jurisdictions, the application of which is uncertain

in some regards. Changes in tax law, changes in interpretation of tax law, periodic challenges and disagreements with

tax authorities, and legal proceedings result in uncertainty of the outcome of the application of taxes and royalties to the

Group’s business.

To the extent uncertain tax and royalty matters give rise to a contingent liability, an estimate of the potential liability is

included within the table above, where it is capable of reliable measurement.

Samarco

contingent liabilities

The table above includes contingent liabilities related to the Group’s equity accounted investment in Samarco to the extent

they are capable of reliable measurement. Details of contingent liabilities related to Samarco are disclosed in note 4

‘Significant events – Samarco dam failure’.

Divestments

and demergers

Where the Group divests or demerges entities, it is generally agreed to provide certain indemnities to the acquiring or

demerged entity. Such indemnities include those provided as part of the demerger of South32 Ltd in May 2015, divestment

of Group’s Onshore US assets in September 2018 and October 2018, divestment of BMC in May 2022 and the merger

of the Group’s Petroleum business with Woodside in June 2022. No material claims have been made pursuant to these

indemnities as at 30 June 2023.

35 Subsequent events

On 14 August 2023, an application to commence a class action was filed in the High Court of South Africa on behalf of current and former mineworkers,

and the dependants of certain mineworkers, who have contracted coal mine dust lung disease and who work or have worked on specified coal mines

in South Africa between 1965 to date. ‘BHP Billiton Plc Incorporated’ was named as one of four respondents, alongside South32 SA Holdings Limited,

South32 Coal SA (Pty) Limited, and Seriti Power (Proprietary) Limited. The amount of damages sought by the Applicants on behalf of the putative class

is unspecified. Given the preliminary status of this matter, it is not possible at this time to provide a range of possible outcomes or a reliable estimate of

potential future exposures for the Group. However, the Group anticipates that claims for indemnification may be made under the terms of the Separation

Deed agreed as part of the demerger of South32 Limited in 2015.

Other than the matters outlined above or elsewhere in the Financial Statements, no matters or circumstances have arisen since the end of the financial

year that have significantly affected, or may significantly affect, the operations, results of operations or state of affairs of the Group in subsequent

accounting periods.

Other items

36 Auditor’s remuneration

2023

US$M

2022

US$M

2021

US$M

Fees payable to the Group’s auditors for assurance services

Audit of the Group’s Annual Report 9.700 9.816 10.642

Audit of the accounts of subsidiaries, joint ventures and associates 0.551 0.605 1.234

Audit-related assurance services required by legislation to be provided by the auditor 1.808 1.933 1.770

Other assurance and agreed-upon procedures under legislation or contractual arrangements 1.991 7.938 1.867

Total assurance services 14.050 20.292 15.513

Fees payable to the Group’s auditors for non-assurance services

Other services 0.180 − −

Total other services 0.180 − −

Total fees 14.230 20.292 15.513

All amounts were paid to EY or EY affiliated firms with fees determined, and predominantly billed, in US dollars.

BHP Annual Report 2023 191

Operating and Financial Review

Governance Financial Statements Additional Information

36 Auditor’s remuneration continued

Fees payable to the Group’s auditors for assurance services

Audit of the Group’s Annual Report comprises fees for auditing the statutory financial report of the Group and includes audit work in relation to compliance

with section 404 of the US Sarbanes-Oxley Act.

Audit-related assurance services required by legislation to be provided by the auditors mainly comprises review of the half-year report.

Other assurance services comprise assurance in respect of the Group’s sustainability reporting, economic contribution reporting, and other non-

statutory reporting.

Fees payable to the Group’s auditors for other services

Other services provided in FY2023 relate to an independent assessment of technology project governance. No amounts were payable for other services

in FY2022 or FY2021.

37 BHP Group Limited

BHP Group Limited does not present unconsolidated parent company Financial Statements. Selected financial information of the BHP Group Limited

parent company is as follows:

2023

US$M

2022

US$M

Income statement information for the financial year

Profit after taxation for the year 10,924 22,871

Total comprehensive income 10,925 22,868

Balance sheet information as at the end of the financial year

Current assets 3,579 4,778

Total assets 39,232 43,565

Current liabilities 1,476 3,176

Total liabilities 1,637 3,517

Share capital 4,449 4,350

Treasury shares (41) (31)

Reserves 165 168

Retained earnings 33,022 35,561

Total equity 37,595 40,048

Parent company guarantees

BHP Group Limited has guaranteed certain financing arrangements available to subsidiaries of US$5,499 million at 30 June 2023 (2022:

US$6,980 million).

BHP Group Limited and its wholly owned subsidiary BHP Group (UK) Ltd (formerly BHP Group Plc) have severally, fully and unconditionally guaranteed

the payment of the principal and premium, if any, and interest, including certain additional amounts that may be payable in respect of the notes issued

by 100 per cent owned finance subsidiary, BHP Billiton Finance (USA) Ltd. BHP Group Limited and BHP Group (UK) Ltd have guaranteed the payment

of such amounts when they become due and payable, whether on an interest payment date, at the stated maturity of the notes, by declaration or

acceleration, call for redemption or otherwise. The guaranteed liabilities at 30 June 2023 amounted to US$4,234 million (2022: US$4,234 million).

In addition, BHP Group Limited and BHP Group (UK) Ltd have severally guaranteed a Group Revolving Credit Facility of US$5,500 million (2022:

US$5,500 million), which remains undrawn.

In FY2023, BHP Group Limited has severally, fully and unconditionally guaranteed the payment of principal and premium, if any, and interest related to

US$2,750 million of US Global bonds issued by BHP Billiton Finance (USA) Ltd. In addition, BHP Group Limited has severally, fully and unconditionally

guaranteed a US$5,000 million acquisition facility drawn in FY2023 by its wholly owned subsidiary, BHP Lonsdale Investments Pty Ltd.

38 Deed of Cross Guarantee

BHP Group Limited together with certain wholly owned subsidiaries set out below have entered into a Deed of Cross Guarantee (Deed) dated 6 June

2016 or have subsequently joined the Deed by way of an Assumption Deed. The effect of the Deed is that BHP Group Limited has guaranteed to pay any

outstanding liabilities upon the winding up of any wholly owned subsidiary that is party to the Deed. Wholly owned subsidiaries that are party to the Deed

have also given a similar guarantee in the event that BHP Group Limited or another party to the Deed is wound up.

The wholly owned subsidiaries that are identified below are relieved from the requirements to prepare and lodge audited financial statements.

The following companies are parties to the Deed and members of the Closed Group as at 30 June 2023:

BHP (Towage Services) Pty Ltd

OS ACPM Pty Ltd

BHP Direct Reduced Iron Pty Limited OS MCAP Pty Ltd

BHP Iron Ore Pty Ltd

UMAL Consolidated Pty Ltd

BHP Minerals Pty Ltd

BHP Freight Pty Ltd

BHP WAIO Pty Ltd

BHP Group Operations Pty Ltd

Pilbara Gas Pty Limited BHP Innovation Pty Ltd

BHP Coal Pty Ltd

BHP Lonsdale Investments Pty Ltd

BHP MetCoal Holdings Pty Ltd

BHP Minerals Holdings Proprietary Limited

Broadmeadow Mine Services Pty Ltd BHP Nickel West Pty Ltd

Central Queensland Services Pty Ltd BHP Olympic Dam Corporation Pty Ltd

Hay Point Services Pty Limited The Broken Hill Proprietary Company Pty Ltd

BHP Yakabindie Nickel Pty Ltd

1 These companies are parties to the Deed and are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports and

Directors’ reports.

192 BHP Annual Report 2023

1 Consolidated Financial Statements continued

38 Deed of Cross Guarantee continued

A Consolidated Statement of Comprehensive Income and Retained Earnings and Consolidated Balance Sheet, comprising BHP Group Limited and the

wholly owned subsidiaries that are party to the Deed for the years ended 30 June 2023 and 30 June 2022 are as follows:

Consolidated Statement of Comprehensive Income and Retained Earnings

2023

US$M

2022

US$M

Revenue 32,649 38,159

Other income 5,553 6,077

Expenses excluding net finance costs (21,703) (15,293)

Net finance costs (1,002) (172)

Total taxation expense (3,562) (5,651)

Profit after taxation 11,935 23,120

Total other comprehensive income − (3)

Total comprehensive income 11,935 23,117

Retained earnings at the beginning of the financial year 40,196 50,277

Net effect on retained earnings of entities added to/removed from the Deed − (62)

Profit after taxation for the year 11,935 23,120

Transfers to and from reserves (44) (84)

Dividends (13,420) (33,055)

Retained earnings at the end of the financial year 38,667 40,196

Consolidated Balance Sheet

2023

US$M

2022

US$M

ASSETS

Current assets

Cash and cash equivalents 3 13

Trade and other receivables 1,678 1,527

Loans to related parties 6,123 8,697

Other financial assets 4 284

Inventories 2,344 2,582

Current tax assets 79 –

Other 113 75

Total current assets 10,344 13,178

Non-current assets

Trade and other receivables 34 43

Other financial assets 326 234

Inventories 546 456

Property, plant and equipment 37,069 36,199

Intangible assets 1,140 1,120

Investments in Group companies 33,176 26,800

Other 6 –

Total non-current assets 72,297 64,852

Total assets 82,641 78,030

LIABILITIES

Current liabilities

Trade and other payables 3,574 3,919

Loans from related parties 19,564 9,966

Interest bearing liabilities 5,168 213

Other financial liabilities − 26

Current tax payable − 1,783

Provisions 1,961 1,611

Deferred income 4 8

Total current liabilities 30,271 17,526

Non-current liabilities

Trade and other payables 5 –

Loans from related parties 2,800 10,014

Interest bearing liabilities 657 586

Other financial liabilities 38 –

Deferred tax liabilities 773 874

Provisions 4,408 3,896

Deferred income 3 5

Total non-current liabilities 8,684 15,375

Total liabilities 38,955 32,901

Net assets 43,686 45,129

EQUITY

Share capital – BHP Group Limited 4,737 4,638

Treasury shares (41) (31)

Reserves 323 326

Retained earnings 38,667 40,196

Total equity 43,686 45,129

BHP Annual Report 2023 193

Operating and Financial Review

Governance Financial Statements Additional Information

39 New and amended accounting standards and interpretations and changes to accounting policies

New and amended accounting pronouncements adopted in the current year

Amendment to IAS 16/AASB 116 ‘Property, Plant and Equipment’ (IAS 16)

On 1 July 2022, the Group adopted an amendment to IAS 16 that requires an entity to recognise the sales proceeds from selling items produced while

preparing property, plant and equipment for its intended use, along with the costs associated with producing that revenue, in profit or loss, instead of

deducting the amounts received from the cost of the asset.

The amendment applies retrospectively to items of property, plant and equipment made available for use on or after 1 July 2020. However, no significant

impacts have been identified in respect of the years ended 30 June 2022 and 30 June 2021 and, as such, comparative period financial information has

not been restated.

Amendment to IAS 12/AASB112 ‘Income taxes’ (IAS 12)

At 30 June 2023, the Group has adopted amendments to IAS12 issued by the IASB and AASB on 23 May 2023 and 27 June 2023, respectively, in

relation to the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS)

Pillar Two income tax. The amendments introduced a temporary exception to the requirements of IAS 12 under which a company does not recognise or

disclose information about deferred tax assets and liabilities related to the proposed Pillar Two model rules.

Refer to note 6 ‘Income tax expense’ for more information.

New and amended accounting pronouncements on issue but not yet effective

A number of other accounting standards and interpretations have been issued and will be applicable in future periods. While these remain subject to

ongoing assessment, no significant impacts have been identified to date.

These pronouncements have not been applied in the preparation of these Financial Statements.

194 BHP Annual Report 2023

2 Directors’ declaration

In accordance with a resolution of the Directors of BHP Group Limited, the Directors declare that:

(a) in the Directors’ opinion the Financial Statements and notes are in accordance with the Australian Corporations Act 2001 (Cth), including:

(i) complying with the applicable Accounting Standards and the Australian Corporations Regulations 2001 (Cth); and

(ii) giving a true and fair view of the assets, liabilities, financial position and profit or loss of BHP Group Limited and the Group as at 30 June 2023

and of their performance for the year ended 30 June 2023

(b) the Financial Statements comply with International Financial Reporting Standards, as disclosed in the Basis of preparation to the Financial Statements

(c) to the best of the Directors’ knowledge, the management report (comprising the Operating and Financial Review and Directors’ Report) includes a fair

review of the development and performance of the business and the position of the Group and the undertakings included in the consolidation taken as

a whole, together with a description of the principal risks and uncertainties that the Group faces

(d) in the Directors’ opinion there are reasonable grounds to believe that BHP Group Limited will be able to pay its debts as and when they become due

and payable

(e) as at the date of this declaration, there are reasonable grounds to believe that BHP Group Limited and each of the Closed Group entities identified

in note 38 to the Financial Statements will be able to meet any liabilities to which they are, or may become, subject because of the Deed of Cross

Guarantee between BHP Group Limited and those group entities pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785

(f) the Directors have been given the declarations required by Section 295A of the Australian Corporations Act 2001 (Cth) from the Chief Executive

Officer and Chief Financial Officer for the financial year ended 30 June 2023

Signed in accordance with a resolution of the Board of Directors.

Ken MacKenzie

Chair

Mike Henry

Chief Executive Officer

22 August 2023

BHP Annual Report 2023 195

Operating and Financial Review

Governance Financial Statements Additional Information

3 Lead Auditor’s Independence Declaration under Section

307C of the Australian Corporations Act 2001

Auditor’s independence declaration to the directors of BHP Group Limited

As lead auditor for the audit of the financial report of BHP Group Limited for the financial year ended 30 June 2023, I declare to the best of my

knowledge and belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;

(b) no contraventions of any applicable code of professional conduct in relation to the audit; and

This declaration is in respect of BHP Group Limited and the entities it controlled during the financial year.

Ernst & Young

Rodney Piltz

Partner

Melbourne

22 August 2023

A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation

196 BHP Annual Report 2023

4 Independent auditor’s report to the members

of BHP Group Limited

Report on the audit of the financial report

Opinion

We have audited the financial report of BHP Group Limited (the Company) and its subsidiaries (collectively the Group), which comprises the

consolidated balance sheet as at 30 June 2023, the consolidated income statement, consolidated statement of comprehensive income, consolidated

statement of changes in equity and consolidated cash flow statement for the year then ended, notes to the financial statements, including a summary

of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:

a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2023 and of its consolidated financial performance for

the year ended on that date; and

b. Complying with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB), Australian

Accounting Standards and the Corporations Regulations 2001.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the

Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in accordance with the auditor

independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s

APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial

report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our consideration of climate change

The Group has assessed climate-related risks as threats and opportunities that have the potential to impact the financial statements as outlined in

Note 16 of the financial report. These risks and opportunities include both transition risks and physical risks arising from climate change and the

transition to a low carbon economy (climate change).

Our audit, with the assistance of our climate change specialists, considered the climate-related risks and opportunities that have the potential

to materially impact the basis of preparation, including the key judgements and estimates exercised by the Group in the preparation of the

financial report.

The Group has incorporated its current climate change strategy, including Board approved commitments and actions in the basis of preparation of

the financial report, reflecting the Group’s best estimate of the potential impact to the financial statements as at 30 June 2023.

The impacts of climate change are most material to the judgements and estimates involved in the assessment of the carrying value of property, plant

and equipment and the determination of closure and rehabilitation provisions.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current

year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do

not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in

that context.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report, including

in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of

material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below,

provide the basis for our audit opinion on the accompanying financial report.

A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation

BHP Annual Report 2023 197

Operating and Financial Review

Governance Financial Statements Additional Information

Assessment of the carrying value of property, plant and equipment

Why significant How our audit addressed the key audit matter

Refer to Note 11 ‘Property, plant and equipment’ and Note 13

‘Impairment of non-current assets’.

Accounting standards require an assessment of indicators of

impairment and impairment reversal annually, or more frequently if

indicators of impairment exist, for each cash generating unit (CGU).

The Group’s assessment of indicators of impairment and impairment

reversal included an evaluation of geo-political events and conflicts,

regulatory and legislative changes, macro-economic disruptions,

commodity price forecasts, reserve estimates, operating and capital

expenditure and asset performance. The Group focused on the CGUs

that were the most susceptible to changes in key estimates.

During the year, the Group determined that no indicators of impairment

or impairment reversal existed for the Group’s CGUs.

The assessment of indicators of impairment and impairment reversal

for CGUs was considered to be a key audit matter as it involved

significant judgement. Assessing the existence of indicators of

impairment or impairment reversal for a CGU is complex and

subjective due to the use of forward-looking estimates, which are

inherently difficult to determine with precision. There is also a level

of judgement applied by the Group in determining the key inputs into

these forward-looking estimates.

The key estimates in the Group’s determination of indicators of

impairment or impairment reversal, which influence whether or not

an estimate of the recoverable amount of a CGU is required were

as follows:

– Commodity prices: assumptions in relation to commodity price

forecasts are inherently uncertain. There is a risk that the

assumptions are not reasonable and may not appropriately

reflect changes in supply and demand, including the impact of

climate change.

– Reserves: assessing the estimation of reserves is complex as there

is significant estimation uncertainty in assessing the quantities of

reserves, and the amount that will be economically recovered based

on future production estimates over the asset life, including the

impact of climate change.

– Discount rates: given the long life of the Group’s assets, CGU

recoverable amounts are sensitive to the discount rate applied.

Determining the appropriate discount rate to apply to a CGU

is judgemental.

The Group’s current climate change strategy continues to assess

climate-related risks, including transition and physical risks.

The Group’s current understanding of the potential financial impacts

of climate change have been incorporated into the assessment of

indicators of impairment and impairment reversal, the results of which

are disclosed in Notes 13 and 16 of the financial report.

The primary audit procedures we performed, amongst others, included

the following:

– We evaluated the design of, and tested the operating effectiveness of,

the Group’s controls over the assessment for indicators of impairment

and impairment reversal.

– We performed an analysis for indicators of impairment and impairment

reversal, which included considering the performance of the assets

and external market conditions. Our procedures involved assessing the

key inputs such as commodity price forecasts, discount rates, reserve

estimation, operating and capital expenditure, comparable market data

and asset performance.

– We considered the impact of geo-political events and conflicts,

regulatory and legislative changes and macro-economic

disruptions as part of our evaluation of indicators of impairment and

impairment reversal.

– We involved our valuation specialists to assist in evaluating,

amongst other matters, the discount rates applied and commodity

price forecasts.

– We assessed commodity price forecasts assumed by the Group against

comparable market data.

The Group uses internal and external experts to provide geological,

metallurgical, mine planning and commodity price forecast information to

support key assumptions in the assessment of indicators of impairment or

impairment reversal.

With assistance from our mining reserves specialists, we examined the

information provided by the Group’s experts, including assessment of

the reserve estimation methodology against the relevant industry and

regulatory guidance. We also assessed the qualifications, competence

and objectivity of the internal and external experts.

Climate change related procedures:

With the assistance of our climate change and valuation specialists we

undertook the following procedures:

– Evaluated how the Group’s energy transition pathways, as outlined

in Note 16 of the financial report, were reflected in commodity price

forecasts and carbon price assumptions.

– Assessed how strategies to mitigate transition and physical risks,

such as the Group’s committed expenditure on decarbonisation

activities, were reflected into the forecast cashflows considered

as part of the Group’s assessment of indicators of impairment and

impairment reversal.

– Assessed the accuracy of the Group’s disclosure regarding climate-

related risks that have the potential to adversely impact long term

metallurgical coal pricing and the carrying value of the Group’s

metallurgical coal CGU’s.

– Considered the consistency of Other Information reported by the

Group in relation to its climate change strategy, with the key estimates

adopted in the Group’s assessment of indicators of impairment and

impairment reversal.

– Assessed the adequacy of the Group’s climate change disclosures in

Note 16 of the financial report.

We assessed the adequacy of the disclosures included in Notes 11 and

13 of the financial report.

A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation

198 BHP Annual Report 2023

4 Independent auditor’s report to the members

of BHP Group Limited

continued

Closure and rehabilitation provisions

Why significant How our audit addressed the key audit matter

Refer to Note 15 ‘Closure and rehabilitation provisions’.

The Group has closure and rehabilitation obligations to restore and

rehabilitate environmental disturbances created by its operations and

related sites.

These obligations arise from regulatory and legislative requirements

across multiple jurisdictions.

The key inputs used to determine the required closure and

rehabilitation provisions are:

– Life of the operation or site;

– Estimated cost of future closure and rehabilitation activities;

– Timing of the closure and rehabilitation activities;

– Discount rates; and

– Current regulatory and legislative requirements.

As a result of these inputs and the evaluation of climate- related

risks and strategies, closure and rehabilitation provisions have a

high degree of estimation uncertainty with a wide potential range of

reasonably possible outcomes.

Closure and rehabilitation provisions were considered to be a

key audit matter as the estimation of these provisions is complex,

involves a high degree of judgement and often requires specialist

expertise to estimate the costs required to satisfy closure and

rehabilitation obligations.

The Group’s current understanding of the potential financial impacts of

climate change have been incorporated into the related estimates, to

the extent they can be reliably measured, in the determination of the

closure and rehabilitation provisions, the results of which are disclosed

in Notes 15 and 16 of the financial report.

The primary audit procedures we performed, amongst others, included

the following:

– We evaluated the design of, and tested the operating effectiveness

of, the Group’s controls related to the determination of closure and

rehabilitation provision estimates.

– We evaluated the Group’s legal and regulatory obligations for closure

and rehabilitation, life of operation, future rehabilitation costs, discount

rates and timing of future cashflows.

– We assessed whether the future rehabilitation costs were consistent

with the closure plans prepared by the Group’s internal experts.

– We tested the mathematical accuracy of the closure and rehabilitation

provision calculations.

– We assessed the discount rates adopted to calculate the closure

and rehabilitation provisions, including benchmarking to comparable

market data.

– With the assistance of our rehabilitation subject matter specialists,

we evaluated a sample of closure and rehabilitation provisions for

operating and closed sites within the Group, including:

– Evaluation of the closure and rehabilitation plans with regard to

applicable regulatory and legislative requirements;

– Evaluation of the methodology used by the Group’s internal mine

closure engineers against industry practice and our understanding of

the business; and

– Assessment of the reasonableness of the timing of cash flows

and cost estimates against the closure and rehabilitation plan and

industry practice.

– The Group has used internal and external experts to support the

estimation of the mine closure and rehabilitation provisions. With the

assistance of our rehabilitation subject matter specialists, we assessed

the qualifications, competence and objectivity of the internal and

external experts and that the information provided by the Group’s

internal and external experts has been appropriately reflected in the

calculation of the closure and rehabilitation provisions.

Climate change related procedures:

With the assistance of our climate change and rehabilitation subject

matter specialists, we undertook the following procedures:

– Evaluated how physical risk has been incorporated into the

closure and rehabilitation provision estimates, such as the Group’s

current understanding of changes to long-term weather outlooks

and the potential to impact site closure designs and post-closure

monitoring activities.

– Evaluated the consistency of Other Information reported by the Group

in relation to its climate change strategy with the key inputs used to

determine the closure and rehabilitation provisions.

– For the Group’s metallurgical coal assets, we evaluated the potential for

climate change to shorten mine operating lives and therefore impact the

timing of closure activities.

– Assessed the reasonableness of the Group’s disclosure of the Profile

of closure and rehabilitation cashflows included in Note 15 of the

financial report and the impact of a five-year acceleration to the Group’s

metallurgical coal closure and rehabilitation provisions included in

Note 16.

We assessed the adequacy of the disclosures included in Notes 15 and

16 of the financial report.

A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation

BHP Annual Report 2023 199

Operating and Financial Review

Governance Financial Statements Additional Information

Samarco dam failure provisions recognised and contingent liabilities disclosures

Why significant How our audit addressed the key audit matter

Refer to Note 3 ‘Exceptional items’, Note 4 ‘Significant events –

Samarco dam failure’ and Note 34 ‘Contingent liabilities’.

There were a number of significant judgements and disclosures made

by the Group in relation to the Samarco dam failure, including:

– Determining the extent of the Group’s and BHP Billiton Brasil

Ltda’s legal obligation to continue to fund the costs associated

with the Samarco dam failure, and the quantification of the

continued obligation required by the Governance Agreement and

Framework Agreement;

– Determining the status, accounting treatment and quantification (if

applicable) of the legal claims against BHP Group Limited, BHP

Group (UK) Ltd, BHP Billiton Brasil Ltda and Samarco;

– Determining the status of any potential settlements; and

– Disclosures relating to the contingent liabilities from the various

legal claims and other circumstances that represent exposures to

the Group.

We identified the Samarco dam failure provisions recognised, and

contingent liabilities disclosures, as a key audit matter as auditing

these estimates is complex. There is a high degree of estimation

uncertainty, together with a wide range of reasonable outcomes.

Significant judgement was required in relation to assessing the

completeness and measurement of the estimated cash outflows

related to the provisions and contingent liabilities, including the

probability of the outflows. This is due to:

– The significant size of the potential claims, combined with the multi-

jurisdictional legal and regulatory environments;

– High degree of judgement and estimation around certain key

assumptions in the provision, including:

– Cost estimates of remediation and compensation requirements

for the Samarco dam failure;

– The number and compensation category of impacted people

entitled to compensation; and

– Nature and extent of remediation activities.

The primary audit procedures we performed, amongst others, included

the following:

– We assessed the design of, and tested the operating effectiveness

of, the Group’s controls over the Samarco dam failure accounting and

disclosure process. This included testing controls over:

– The determination of the provision for the remediation of the

Samarco dam failure, including significant assumptions such as the

cost estimate to remediate, the nature and extent of remediation

activities and compensation for the impacted peoples; and

– The Group’s assessment of the legal claims and determination of the

associated provision and related contingent liability disclosures.

– We assessed the key assumptions used to determine the provision

recorded by the Group in relation to potential obligations by:

– Understanding the impact of any court decisions on the number and

compensation category of impacted peoples;

– Understanding the impact of any Brazilian court decisions on the

infrastructure remediation program relating to the resettling of

communities impacted by the Samarco dam failure;

– Inquiring with the Group’s subject matter experts for the various

remediation programs regarding the cost estimate to remediate the

environment, residents’ wellbeing and infrastructure damaged by the

Samarco dam failure;

– Evaluating the qualifications, competence and objectivity of the

Group’s subject matter experts, and the independent external

party that contribute to the determination of the cash flow

estimates by considering their qualifications, scope of work and

remuneration structure;

– Comparing the nature and extent of remediation activities described

in the Framework Agreement to the activities included in the cash

flow forecasts;

– Selecting a sample of cost estimates included in the provision and

considering the underlying supporting documentation, such as

court decisions;

– Assessing the period in which a provision change was recorded by

understanding when the event that caused the change occurred;

– Determining whether or not it is possible to provide a range

of outcomes or a reliable estimate of any potential settlement

outcomes; and

– Evaluating the historical accuracy of prior year’s forecasted cash

flows with respect to the Group’s current year actual cash flows.

– We read the claims and assessed their status and considered whether

they now represented liabilities through:

– Inquiries with the Group’s internal legal advisors, senior

management, Group finance, and members of the Executive

Leadership Team, with respect to the ongoing proceedings;

– Inspection of correspondence with external legal advisors; and

– Independent confirmation letters received from external

legal advisors.

We assessed the disclosures regarding the environmental and legal

contingent liabilities as included in Note 34, and the relevant disclosures

regarding the significant events relating to Samarco dam failure as

included in Note 4 against the disclosure requirements of the relevant

Australian Accounting Standards.

A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation

200 BHP Annual Report 2023

4 Independent auditor’s report to the members

of BHP Group Limited

continued

Information other than the financial report and

auditor’s report thereon

The directors are responsible for the other information. The other information

comprises the information included in the Company’s 2023 annual report

other than the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information

and we do not and will not express any form of assurance conclusion

thereon, with the exception of the Remuneration Report and our related

assurance opinion.

In connection with our audit of the financial report, our responsibility

is to read the other information and, in doing so, consider whether the

other information is materially inconsistent with the financial report,

or our knowledge obtained in the audit or otherwise appears to be

materially misstated.

If, based on the work we have performed on the other information

obtained prior to the date of this auditor’s report, we conclude that there

is a material misstatement of this other information, we are required to

report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the financial

report

The directors of the Company are responsible for the preparation of

the financial report that gives a true and fair view in accordance with

International Financial Reporting Standards as issued by the IASB,

Australian Accounting Standards and the Corporations Act 2001 and for

such internal control as the directors determine is necessary to enable

the preparation of the financial report that gives a true and fair view and

is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing

the Group’s ability to continue as a going concern, disclosing, as applicable,

matters relating to going concern and using the going concern basis of

accounting unless the directors either intend to liquidate the Group or to

cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the

financial report

Our objectives are to obtain reasonable assurance about whether the

financial report as a whole is free from material misstatement, whether due

to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee

that an audit conducted in accordance with the Australian Auditing Standards

will always detect a material misstatement when it exists. Misstatements can

arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic

decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards,

we exercise professional judgement and maintain professional

scepticism throughout the audit. We also:

– Identify and assess the risks of material misstatement of the financial

report, whether due to fraud or error, design and perform audit

procedures responsive to those risks, and obtain audit evidence

that is sufficient and appropriate to provide a basis for our opinion.

The risk of not detecting a material misstatement resulting from

fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations or the

override of internal control.

– Obtain an understanding of internal control relevant to the audit

in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on

the effectiveness of the Group’s internal control.

– Evaluate the appropriateness of accounting policies used and the

reasonableness of accounting estimates and related disclosures

made by the directors.

– Conclude on the appropriateness of the directors’ use of the going

concern basis of accounting and, based on the audit evidence obtained,

whether a material uncertainty exists related to events or conditions

that may cast significant doubt on the Group’s ability to continue as a

going concern. If we conclude that a material uncertainty exists, we are

required to draw attention in our auditor’s report to the related disclosures

in the financial report or, if such disclosures are inadequate, to modify our

opinion. Our conclusions are based on the audit evidence obtained up to

the date of our auditor’s report. However, future events or conditions may

cause the Group to cease to continue as a going concern.

– Evaluate the overall presentation, structure and content of the

financial report, including the disclosures, and whether the financial

report represents the underlying transactions and events in a manner

that achieves fair presentation.

– Obtain sufficient appropriate audit evidence regarding the financial

information of the entities or business activities within the Group to

express an opinion on the financial report. We are responsible for the

direction, supervision and performance of the Group audit. We remain

solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters,

the planned scope and timing of the audit and significant audit findings,

including any significant deficiencies in internal control that we identify

during our audit.

We also provide the directors with a statement that we have complied

with relevant ethical requirements regarding independence, and to

communicate with them all relationships and other matters that may

reasonably be thought to bear on our independence, and where

applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated to the directors, we determine those

matters that were of most significance in the audit of the financial report of

the current year and are therefore the key audit matters. We describe these

matters in our auditor’s report unless law or regulation precludes public

disclosure about the matter or when, in extremely rare circumstances, we

determine that a matter should not be communicated in our report because

the adverse consequences of doing so would reasonably be expected to

outweigh the public interest benefits of such communication.

Report on the audit of the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in the Directors’

Report for the year ended 30 June 2023.

In our opinion, the Remuneration Report of BHP Group Limited for

the year ended 30 June 2023, complies with section 300A of the

Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and

presentation of the Remuneration Report in accordance with section

300A of the Corporations Act 2001. Our responsibility is to express an

opinion on the Remuneration Report, based on our audit conducted in

accordance with Australian Auditing Standards.

Ernst & Young

Rodney Piltz

Partner

Melbourne

22 August 2023

A member firm of Ernst & Young Global Limited

Liability limited by a scheme approved under Professional Standards Legislation

BHP Annual Report 2023 201

Additional InformationOperating and Financial Review Financial Statements

Governance

Additional information

1 Financial information summary 202

2 Information on mining operations 203

3 Financial information by commodity 217

4 Production 219

5 Mineral Resources and Ore Reserves 221

6 Major projects 234

7 People – performance data 234

8 Legal proceedings 235

9 Shareholder information 238

9.1 History and development 238

9.2 Markets 238

9.3 Organisational structure 238

9.4 Constitution 238

9.5 Share ownership 240

9.6 Dividends 242

9.7 American Depositary Receipts fees and charges 242

9.8 Government regulations 242

10 Glossary 244

202 BHP Annual Report 2023

1 Financial information summary

We prepare our Consolidated Financial Statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International

Accounting Standards Board. We publish our Consolidated Financial Statements in US dollars. All Consolidated Income Statement, Consolidated Balance

Sheet and Consolidated Cash Flow Statement information below has been derived from audited Financial Statements. For more information refer to the

Financial Statements.

Some information in this section has been presented on a Continuing operations basis to exclude the contribution from Discontinued operations.

Year ended 30 June

US$M 2023 2022 2021 2020 2019

Consolidated Income Statement (Financial Statements 1.1)

Revenue 53,817 65,098 56,921 38,924 38,446

Profit from operations 22,932 34,106 25,515 13,683 13,629

Profit after taxation from Continuing operations 14,324 22,400 13,676 8,628 8,528

Profit/(loss) after taxation from Discontinued operations − 10,655 (225) 108 657

Profit after taxation from Continuing and Discontinued operations attributable

to BHP shareholders (Attributable profit) 12,921 30,900 11,304 7,956 8,306

Profit after taxation from Continuing operations attributable to BHP shareholders 12,921 20,245 11,529 7,848 7,656

Dividends per ordinary share – paid during the period (US cents) 265.0 350.0 156.0 143.0 220.0

Dividends per ordinary share – determined in respect of the period (US cents) 170.0 325.0 301.0 120.0 235.0

In specie dividend on merger of Petroleum with Woodside (US cents) − 386.4 − − −

Basic earnings per ordinary share (US cents)

255.2 610.6 223.5 157.3 160.3

Diluted earnings per ordinary share (US cents)

254.7 609.3 223.0 157.0 159.9

Basic earnings from Continuing operations per ordinary share (US cents)

255.2 400.0 228.0 155.2 147.8

Diluted earnings from Continuing operations per ordinary share (US cents)

254.7 399.2 227.5 154.8 147.4

Number of ordinary shares (million)

– At period end 5,066 5,062 5,058 5,058 5,058

– Weighted average 5,064 5,061 5,057 5,057 5,180

– Diluted 5,073 5,071 5,068 5,069 5,193

Consolidated Balance Sheet (Financial Statements 1.3)

Total assets 101,296 95,166 108,927 105,733 101,811

Net assets 48,530 48,766 55,605 52,175 51,753

Share capital (including share premium) 4,737 4,638 2,686 2,686 2,686

Total equity attributable to BHP shareholders 44,496 44,957 51,264 47,865 47,169

Consolidated Cash Flow Statement (Financial Statements 1.4)

Net operating cash flows

18,701 32,174 27,234 15,706 17,871

Capital and exploration expenditure

4,5

7,083 7,545 7,120 7,640 7,566

Other financial information (OFR 10)

Net debt

11,166 333 4,121 12,044 9,446

Underlying attributable profit

13,420 23,815 17,077 9,060 9,124

Underlying attributable profit – Continuing operations 13,420 21,319 16,985 8,948 8,431

Underlying EBITDA

27,956 40,634 35,073 19,870 19,093

Underlying EBIT

22,820 34,436 29,853 15,130 14,581

Underlying basic earnings per share (US cents)

265.0 470.6 337.7 179.2 176.1

Underlying basic earnings per share – Continuing operations (US cents) 265.0 421.2 335.9 176.9 162.8

Underlying return on capital employed (per cent)

28.8 48.7 32.5 16.9 16.0

1 For more information on earnings per share refer to Financial Statements note 7 ‘Earnings per share’.

2 The Consolidated Balance Sheet for comparative periods includes the associated assets and liabilities in relation to Petroleum (merger with Woodside in FY2022), BMC

and Cerrejón (both disposed in FY2022) as IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’ does not require the Consolidated Balance Sheet to be

restated for comparative periods.

3 Net operating cash flows are after dividends received, net interest paid, proceeds and settlements of cash management related instruments, net taxation paid and includes

Net operating cash flows from Discontinued operations.

4 Capital and exploration and evaluation expenditure is presented on a cash basis and represents purchases of property, plant and equipment plus exploration and evaluation

expenditure from the Consolidated Cash Flow Statement and includes purchases of property, plant and equipment plus exploration and evaluation expenditure from

Discontinued operations. For more information refer to Financial Statements note 28 ‘Discontinued operations’. Exploration and evaluation expenditure is capitalised in

accordance with our accounting policies, as set out in Financial Statements note 11 ‘Property, plant and equipment’.

5 We use non-IFRS financial information to reflect the underlying performance of the Group. Underlying attributable profit, Underlying basic earnings per share and Underlying

return on capital employed includes Continuing and Discontinued operations. Refer to OFR 10 for a reconciliation of non-IFRS financial information to their respective

IFRS measure. Refer to OFR 10.1 for the definition and method of calculation of non-IFRS financial information. Refer to Financial Statements note 21 ‘Net debt’ for the

composition of Net debt.

Governance Financial Statements

BHP Annual Report 2023 203

Additional Information

Operating and Financial Review

2 Information on mining operations

Minerals Australia

Iron ore mining operations

The following table contains additional details of our iron ore mining operations. This table should be read in conjunction with OFR 5.1 and the production

table and reserves and resources tables in Additional information 4 and 5.

Mine & location

WAIO

Pilbara region, Western Australia

Newman West (Mt Whaleback, Orebodies 29, 30, 31 and 35)

Newman East (Orebodies 24, 25 and 32)

Mt Newman joint venture

Means of access

Private road

Ore transported by Mt Newman JV-owned rail to Port Hedland (427 km)

Type and amount

of ownership

BHP Minerals 85%

Mitsui-ITOCHU Iron 10%

ITOCHU Minerals and Energy of Australia 5%

Operator

BHP

Title, leases or options

and acreage involved

Mineral lease granted and held under the Iron Ore (Mount Newman) Agreement Act 1964 expires in 2030 with right to successive

renewals of 21 years each

ML244SA – approximately 78,934 hectares

History and stage

of property

Production stage

Production began at Mt Whaleback in 1969

Production from Orebodies 24, 25, 29, 30, 31, 32 and 35 complements production from Mt Whaleback

Production from Orebodies 31 and 32 started in 2015 and 2017 respectively

Mining at Orebody 18 ceased in 2020 after depletion

Mine type &

mineralisation style

Open-cut

Bedded ore types classified as per host Archaean or Proterozoic iron formation, which are Brockman and Marra Mamba; also present

is iron-rich detrital material

Power source

Power for all mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas-fired Yarnima power station

Power consumed in port operations is supplied via a contract with Alinta

Processing plants and

other available facilities

Newman Hub: primary crusher, ore handling plant, heavy media beneficiation plant, stockyard blending facility, single cell rotary

car dumper, train load out (nominal capacity 75 Mtpa)

Orebody 25 Ore processing plant (nominal capacity 12 Mtpa) ceased operation mid-FY2022

Key permit conditions

State Agreement contains conditions set by the Western Australian Government, including requirements for future development

proposals; environmental compliance and reporting obligations; closure and rehabilitation considerations; local procurement and

community plans/initiatives/investment requirements; payment of rent, taxes and government royalties

Tenements granted by the Western Australian Government under the Mining Act

Key permit conditions include resource reporting, environmental compliance and reporting, rehabilitation considerations and offset

payments and payment of lease rentals and royalties

Registered Indigenous Land Use Agreements with conditions, including appropriate native title compensation and opportunity sharing;

enshrine heritage protections and land access rights; and guarantee certain heritage, environment and consultation processes

Mine & location

WAIO

Pilbara region, Western Australia

Yandi joint venture

Means of access

Private road

Ore transported by Mt Newman JV-owned rail to Port Hedland (316 km)

Yandi JV’s railway spur links Yandi hub to Mt Newman JV main line

Type and amount

of ownership

BHP Minerals 85%

ITOCHU Minerals and Energy of Australia 8%

Mitsui Iron Ore Corporation 7%

Operator

BHP

Title, leases or options

and acreage involved

Mining lease granted pursuant to the Iron Ore (Marillana Creek) Agreement Act 1991 expires in 2033 with 1 renewal right to a further

21 years to 2054

M270SA – approximately 30,344 hectares

History and stage

of property

Production stage

Production began at the Yandi mine in 1992

Capacity of Yandi hub expanded between 1994 and 2013

Yandi commenced production ramp down activity in FY2022

Mine type &

mineralisation style

Open-cut

Channel iron deposits are Cainozoic fluvial sediments

Power source

Power for all mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas-fired Yarnima power station

Power consumed in port operations is supplied via a contract with Alinta

Processing plants and

other available facilities

2 primary crushers, 1 ore handling plant, stockyard blending facility and 1 train load out (nominal capacity 50 Mtpa)

Decommissioning of additional facilities, including 2 ore handling plants, 2 primary crushers and 1 train load out, is ongoing as part

of planned ramp down activities

Key permit conditions

State Agreement contains conditions set by the Western Australian Government, including requirements for future development

proposals; environmental compliance and reporting obligations; closure and rehabilitation considerations; local procurement and

community plans/initiatives/investment requirements; payment of rent, taxes and government royalties

Tenements granted by the Western Australian Government under the Mining Act

Key permit conditions include resource reporting, environmental compliance and reporting, rehabilitation considerations and offset

payments and payment of lease rentals, and royalties

Registered Indigenous Land Use Agreements with conditions, including appropriate native title compensation and opportunity sharing;

enshrine heritage protections and land access rights; and guarantee certain heritage, environment and consultation processes

204 BHP Annual Report 2023

2 Information on mining operations continued

Mine & location

WAIO

Pilbara region, Western Australia

Jimblebar

Bill’s Hill, Eastern Syncline and Mt Helen (jointly called Western Ridge deposits)

Jimblebar operation*

Means of access

Private road

Jimblebar ore is transported via overland conveyor (12.4 km) and by Mt Newman JV-owned rail to Port Hedland (428 km)

The Western Ridge deposits are located close to Newman Operations and all production will be trucked and/or transported

via overland conveyor

Type and amount

of ownership

BHP Minerals 85%

ITOCHU Minerals and Energy of Australia 8%

Mitsui & Co. Iron Ore Exploration & Mining 7%

*Jimblebar is an ‘incorporated’ venture with the above companies holding A Class Shares with rights to certain parts of mining lease

266SA held by BHP Iron Ore (Jimblebar) Pty Ltd (BHPIOJ)

BHP Minerals holds 100% of the B Class Shares, which has rights to all other Jimblebar assets

Operator

BHP

Title, leases or options

and acreage involved

Mining lease granted pursuant to the Iron Ore (McCamey’s Monster) Agreement Authorisation Act 1972 expires in 2030 with rights

to successive renewals of 21 years each

M266SA – approximately 51,756 hectares

History and stage

of property

Production stage

Production began in March 1989

From 2004, production was transferred to Wheelarra JV as part of the Wheelarra sublease agreement

This sublease agreement expired in March 2018

Ore was first produced from the newly commissioned Jimblebar Hub in late 2013

Jimblebar sells ore to the Newman JV proximate to the Jimblebar Hub

Production at Western Ridge commenced in FY2022

Mine type &

mineralisation style

Open-cut

Bedded ore types classified as per host Archaean or Proterozoic banded iron formation, which are Brockman and Marra Mamba;

also present is iron rich detrital material

Power source

Power for all mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas-fired Yarnima power station

Power consumed in port operations is supplied via a contract with Alinta

Processing plants and

other available facilities

3 primary crushers, ore handling plant, train loadout, stockyard blending facility and supporting mining hub infrastructure

(nominal capacity 71 Mtpa)

Production from the Western Ridge deposits will be processed through existing processing facility for Newman operations

Key permit conditions

State Agreement contains conditions set by the Western Australian Government, including requirements for future development

proposals; environmental compliance and reporting obligations; closure and rehabilitation considerations; local procurement and

community plans/initiatives/investment requirements; payment of rent, taxes and government royalties

Tenements granted by the Western Australian Government under the Mining Act

Key permit conditions include resource reporting, environmental compliance and reporting, rehabilitation considerations and offset

payments and payment of lease rentals, and royalties

Registered Indigenous Land Use Agreement with conditions, including appropriate native title compensation and opportunity sharing;

enshrine heritage protections and land access rights; and guarantee certain heritage, environment and consultation processes

Governance Financial Statements

BHP Annual Report 2023 205

Additional Information

Operating and Financial Review

Mine & location

WAIO

Pilbara region, Western Australia

Yarrie

Nimingarra

Mining Area C

South Flank

Mt Goldsworthy joint venture

Means of access

Private road

Yarrie and Nimingarra iron ore transported by Mt Goldsworthy JV-owned rail to Port Hedland (218 km)

Mining Area C iron ore transported by Mt Newman JV-owned rail to Port Hedland (360 km)

South Flank iron ore transported by overland conveyors (8–16 km) to the Mining Area C processing hub

Mt Goldsworthy JV railway spur links Mining Area C and South Flank to Yandi JV’s railway spur

Type and amount

of ownership

BHP Minerals 85%

Mitsui Iron Ore Corporation 7%

ITOCHU Minerals and Energy of Australia 8%

Operator

BHP

Title, leases or options

and acreage involved

1 mineral lease and 1 mining lease both granted pursuant to the Iron Ore (Goldsworthy – Nimingarra) Agreement Act 1972, expire in

2035, with rights to successive renewals of 21 years each. ML251SA and M263SA – approximately 15,623 hectares

A number of smaller mining leases granted under the Mining Act 1978 expire in 2026 with rights to successive renewals of 21 years.

5 leases – approximately 2,999 hectares

3 mineral leases granted under the Iron Ore (Mount Goldsworthy) Agreement Act 1964, which expire 2028, with rights to successive

renewals of 21 years each

ML235SA, ML249SA and ML281SA – approximately 91,124 hectares

History and stage

of property

Production stage

Operations commenced at Mt Goldsworthy in 1966 and at Shay Gap in 1973

Original Goldsworthy mine closed in 1982

Associated Shay Gap mine closed in 1993

Mining at Nimingarra mine ceased in 2007, then continued from adjacent Yarrie area

Production commenced at Mining Area C mine in 2003

Yarrie mine operations were suspended in February 2014

First ore at South Flank commenced in May 2021

Mine type &

mineralisation style

Mining Area C, South Flank, Yarrie and Nimingarra are open-cut

Bedded ore types classified as per host Archaean or Proterozoic iron formation, which are Brockman, Marra Mamba and Nimingarra;

also present is iron-rich detrital material

Power source

Power for Yarrie and Shay Gap is supplied by their own small diesel generating stations

Power for all remaining mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas-fired Yarnima power station

Power consumed in port operations is supplied via a contract with Alinta

Processing plants and

other available facilities

Mining Area C: 2 primary crushers, 2 ore handling plants, stockyard blending facility and train load out (nominal capacity 64 Mtpa)

South Flank: 2 primary crushers, 1 ore handling plant, stockyard and blending facility and train load out (nominal capacity 80 Mtpa)

Key permit conditions

State Agreement contains conditions set by the Western Australian Government, including requirements for future development

proposals; environmental compliance and reporting obligations; closure and rehabilitation considerations; local procurement and

community plans/initiatives/investment requirements; payment of rent, taxes and government royalties

Tenements granted by the Western Australian Government under the Mining Act

Key permit conditions include resource reporting, environmental compliance and reporting, rehabilitation considerations and offset

payments and payment of lease rentals and royalties

Registered Indigenous Land Use Agreements with conditions, including appropriate native title compensation and opportunity sharing;

enshrine heritage protections and land access rights; and guarantee certain heritage, environment and consultation processes

Mine & location

WAIO

Pilbara region, Western Australia

POSMAC joint venture

Means of access

Private road

POSMAC JV sells ore to Mt Goldsworthy JV at Mining Area C

Ore is transported via Mt Goldsworthy JV-owned rail and Mt Newman JV-owned rail to Port Hedland

Mt Goldsworthy JV railway spur links Mining Area C to Yandi JV’s railway spur

Type and amount

of ownership

BHP Minerals 65%

ITOCHU Minerals and Energy of Australia 8%

Mitsui Iron Ore Corporation 7%

POS-Ore 20%

Operator

BHP

Title, leases or options

and acreage involved

Sublease over part of Mt Goldsworthy Mining Area C mineral lease that expires on the earlier of termination of the mineral lease or the

end of the POSMAC JV

ML281SA – approximately 56,335 hectares

History and stage

of property

Production stage

Production commenced in October 2003

POSMAC JV sells all ore to Mt Goldsworthy JV at Mining Area C

Mine type &

mineralisation style

Open-cut

Bedded ore types classified as per host Archaean or Proterozoic iron formation, which is Marra Mamba

Power source

Power for all mine operations in the Central and Eastern Pilbara is supplied by BHP’s natural gas-fired Yarnima power station

Power consumed in port operations is supplied via a contract with Alinta

Processing plants and

other available facilities

POSMAC sells all ore to Mt Goldsworthy JV, which is then processed at Mining Area C

Key permit conditions

Key permit conditions of POSMAC joint venture are captured within the Mount Goldsworthy joint venture key permit conditions

outlined above

206 BHP Annual Report 2023

2 Information on mining operations continued

Coal mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.1 and the production table

and reserves and resources tables in Additional information 4 and 5.

Mine & location

BHP Mitsubishi Alliance

Bowen Basin, Queensland, Australia

Goonyella Riverside Broadmeadow

Daunia

Caval Ridge

Peak Downs

Saraji

Blackwater and Saraji South mines

Central Queensland Coal Associates joint venture

Means of access

Public road

Coal transported by rail to Hay Point, Gladstone, Dalrymple Bay and Abbot Point ports

Distances between the mines and port are between 160 km and 315 km

Type and amount

of ownership

BHP 50%

Mitsubishi Development 50%

Operator

BMA

Title, leases or options

and acreage involved

Mining leases, including undeveloped tenements, have expiry dates ranging up to 2043, renewable for further periods as Queensland

Government legislation allows

Approximately 125,100 hectares

Mining is permitted to continue under the legislation during the renewal application period

All required renewal applications were lodged and pending a decision from the Minister

History and stage

of property

Production stage

Goonyella mine commenced in 1971, merged with adjoining Riverside mine in 1989

Operates as Goonyella Riverside

Production commenced at:

Peak Downs in 1972

Saraji in 1974

Norwich Park in 1979

Blackwater in 1967

Broadmeadow (longwall operations) in 2005

Daunia in 2013

Caval Ridge in 2014

Production at Saraji South (formerly Norwich Park) ceased in May 2012. Since October 2022, limited product has been sourced from

Saraji South for processing at Saraji

Mine type &

mineralisation style

All open-cut except Broadmeadow (longwall underground)

Bituminous coal is mined from the Permian Moranbah and Rangal Coal measures

Products range from premium-quality, low-volatile, high-vitrinite hard coking coal to medium-volatile hard coking coal, to weak

coking coal, some pulverised coal injection (PCI) coal and medium ash thermal coal as a secondary product

Power source

Queensland electricity grid connection is under long-term contracts and energy purchased via Retail Agreements

Processing plants and

other available facilities

On-site beneficiation processing facilities

Combined nominal capacity in excess of 67 Mtpa

Key permit conditions

Key permit conditions are contained in the various legislation set by the Queensland Government and include conditions relating to

carrying out works in accordance with the environmental authority and approved development plans, payment of rents, reporting and

payment of royalties. Mining leases granted under the Central Queensland Coal Associates Agreement Act 1968 place an extraction

cap of 1,860 Mt

Governance Financial Statements

BHP Annual Report 2023 207

Additional Information

Operating and Financial Review

Mine & location

New South Wales

Energy Coal

Approximately 126 km northwest of Newcastle, New South Wales, Australia

Mt Arthur Coal

Means of access

Public road

Export coal transported by third-party rail to Newcastle port

Type and amount

of ownership

BHP 100%

Operator

BHP

Title, leases or options

and acreage involved

Current Development Consent expires in 2026

Mt Arthur Coal Mine (MAC) continues to work on obtaining new State and Commonwealth approvals to continue open-cut mining

at MAC beyond 30 June 2026

MAC holds 10 mining leases, 2 subleases and 2 exploration licences

MAC’s primary mining lease (ML 1487) was granted for a further 21-year term from June 2022

Total mining leases approximately 8,750 hectares

History and stage

of property

Production stage

Production commenced in 2002

Approval to expand mining granted in 2010 with an additional area also granted by an approval modification in 2014

Domestic sales ceased during FY2020 with conveyor to Bayswater and Liddell Power Stations decommissioned

On 16 June 2022, BHP announced the decision to cease mining at the asset by the end of FY2030

Mine type &

mineralisation style

Open-cut

Produces a medium rank bituminous thermal coal

Power source

New South Wales electricity grid connection under a deemed long-term contract and energy purchased via a Retail Agreement

Processing plants and

other available facilities

Beneficiation facilities: coal handling, preparation, washing plants

Nominal capacity in excess of 23 Mtpa

Key permit conditions

The project approval contains key conditions: (i) it requires MAC to be operated generally in accordance with the environmental

assessment; and (ii) permits extraction of up to 36 Mtpa of run of mine coal from underground and open-cut operations, with open-cut

extraction limited to 32 Mtpa

Nickel mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.1 and the production table

and reserves and resources tables in Additional information 4 and 5.

Mine & location

Nickel West

450 km north of Kalgoorlie, Western Australia

Mt Keith Mine

Mt Keith Satellite Mine (Yakabindie)

Mt Keith mine and concentrator

Means of access

Private road

Nickel concentrate transported by road to Leinster for drying and on-shipping

Type and amount

of ownership

BHP 100%

Operator

BHP

Title, leases or options

and acreage involved

Mining leases granted by Western Australian Government

Key leases expire between 2029 and 2036

First renewal of 21 years is as a right. Further renewals at government discretion

Mt Keith mining leases approximately 9,240 hectares

Mt Keith satellite mining leases approximately 3,835 hectares

History and stage

of property

Production stage

Commissioned in 1995 by WMC

Acquired in 2005 as part of WMC acquisition

Mt Keith Satellite Mine contains 2 open-pit mines: Six Mile Well in full production and Goliath currently being pre-stripped

Mine type &

mineralisation style

Open-cut

Disseminated textured magmatic nickel-sulphide mineralisation associated with a metamorphosed ultramafic intrusion

Power source

On-site third-party gas-fired turbines with backup from diesel engine generation

Contracts expire in December 2038

Natural gas sourced and transported under separate long-term contracts

Processing plants and

other available facilities

Concentration plant with a nominal capacity of 11 Mtpa of ore

Key permit conditions

Use of the land for the purposes set out by the Western Australian Government under granted mining tenements and broadly

comprise of submission of detailed mining proposals; payment of royalties, annual rent to the State Government; rates to relevant

local governments; compliance with environmental regulations and mine closure requirements and other reporting obligations.

Existing mining operations are also subject to an Indigenous Land Use Agreement (ILUA), which includes commitments for

payments made to trust accounts; Indigenous employment and business opportunities; heritage and cultural protections

208 BHP Annual Report 2023

2 Information on mining operations continued

Mine & location

Nickel West

375 km north of Kalgoorlie, Western Australia

Venus sub-level caving operation

B11 block caving operation

Camelot open-pit mine

Rocky’s Reward open-pit mine

Leinster mine complex and concentrator

Means of access

Public road

Nickel concentrate shipped by road and rail to Kalgoorlie Nickel Smelter

Type and amount

of ownership

BHP 100%

Operator

BHP

Title, leases or options

and acreage involved

Mining leases granted by Western Australian Government

Key leases expire between 2025 and 2040

Renewals of principal mineral lease in accordance with State Agreement ratified by the Nickel (Agnew) Agreement Act 1974

Leinster mining leases approximately 6,325 hectares

Camelot mining leases approximately 2,353 hectares

History and stage

of property

Production stage

Production commenced in 1979

Acquired in 2005 as part of WMC acquisition

Leinster underground ceased operations in 2013 and recommenced operations in 2016 with Venus sub-level cave now in operation

and B11 block cave developing its undercut and draw points

Rocky’s Reward open-pit mine ceased mining in 2021

Mine type &

mineralisation style

Open-cut and underground

Steeply dipping disseminated and massive textured nickel-sulphide mineralisation associated with metamorphosed ultramafic lava

flows and intrusions

Power source

On-site third-party gas-fired turbines with back up from diesel engine generation

Contracts expire in December 2038

Natural gas sourced and transported under separate long-term contracts

Processing plants and

other available facilities

Concentration plant with a nominal capacity of 3 Mtpa of ore

Key permit conditions

Use of the land for the purposes set out by the Western Australian Government in the Nickel (Agnew) Agreement Act 1974 and other

Nickel West granted tenements broadly comprise of submission of detailed mining proposals; payment of royalties, annual rent to

Western Australian Government; rates to relevant local governments; compliance with environmental regulations and mine closure

requirements and other reporting obligations. Existing mining operations are also subject to an Indigenous Land Use Agreement (ILUA),

which includes commitments for payments made to trust accounts; Indigenous employment and business opportunities; heritage and

cultural protections

Mine & location

Nickel West

450 km north of Kalgoorlie, Western Australia

Cliffs mine

Means of access

Private road

Nickel ore transported by road to Leinster or Mt Keith for further processing

Type and amount

of ownership

BHP 100%

Operator

BHP

Title, leases or options

and acreage involved

Mining leases granted by Western Australian Government

Key leases expire between 2025 and 2028

First renewal of 21 years is as of right. Further renewals at government discretion

Mining leases approximately 2,675 hectares

History and stage

of property

Production stage

Production commenced in 2008

Acquired in 2005 as part of WMC acquisition

Mine type &

mineralisation style

Underground

Steeply dipping massive textured nickel-sulphide mineralisation associated with metamorphosed ultramafic lava flows

Power source

Supplied from Mt Keith

Processing plants and

other available facilities

Mine site

Key permit conditions

Use of the land for the purposes set out by the Western Australian Government under granted mining tenements and broadly

comprise of submission of detailed mining proposals; payment of royalties, annual rent to the State Government; rates to relevant

local government; compliance with environmental regulations and mine closure requirements and other reporting obligations.

Existing mining operations are also subject to an Indigenous Land Use Agreement (ILUA), which includes commitments for

payments made to trust accounts; Indigenous employment and business opportunities; heritage and cultural protections

Governance Financial Statements

BHP Annual Report 2023 209

Additional Information

Operating and Financial Review

Mine & location

West Musgrave Projects

Musgrave Province, Western Australia

Means of access

Public road

Type and amount

of ownership

BHP 100%

Operator

BHP

Title, leases or options

and acreage involved

The Project is to develop two copper and nickel deposits (Babel pit and Nebo pit) within the West Musgrave Ranges of Western

Australia

M69/149, L69/56, L69/57 and L69/44

Development Envelope of 20,852 hectares

History and stage

of property

Scoping studies completed in 2017

Pre-feasibility study completed by OZ Minerals and Cassini Resources Ltd in 2020

Acquired by OZ Minerals in October 2020

Final investment decision in September 2022

Acquired in 2023 as part of OZ Minerals acquisition

Project stage

Mine type &

mineralisation style

Open-pit (still in project stage)

Magmatic nickel and copper sulphide

Power source

Long-term power expected to be delivered by an off-grid hybrid power system (wind, solar, battery and thermal generation)

Processing plants and

other available facilities

Crushing, vertical roller mill, flotation producing separate nickel and copper concentrates (still in project stage)

Key permit conditions

All key regulatory approvals in place and a Land access agreement signed with the Ngaanyatjarra people to develop two copper

and nickel deposits (Babel pit and Nebo pit) within the West Musgrave Ranges (including mining, accommodation, an airstrip and

processing facilities)

There are a number of strict conditions on cultural heritage, flora and fauna, inland waters and greenhouse gas, including:

– no more than 3,830 hectares clearing of native vegetation

– achieving net zero greenhouse gas emissions by 2040, including up to 60 megawatt (instantaneous load requirement)

of fossil fuel electricity generation with the remainder of the power supply to be generated through solar or wind

electricity generation

– abstraction of up to 7.5 gigalitres of groundwater per annum

– compliance with the Cultural Heritage Management Plan, including no direct disturbance of the ethnographic

exclusion zones

Nickel smelters, refineries and processing plants

Smelter, refinery

or processing plant

Nickel West

56 km south of Kalgoorlie, Western Australia

Kambalda nickel concentrator

Ownership

BHP 100%

Operator

BHP

Title, leases or options

Mineral leases granted by Western Australian Government

Key leases expire in 2028

Mining leases approximately 242 hectares

Key permit conditions

Use of the land for the purposes set out by the Western Australian Government under granted mining tenements and broadly

comprise of submission of detailed mining proposals; payment of royalties, annual rent to the State Government; rates to relevant

local government; compliance with environmental regulations and mine closure requirements and other reporting obligations

Product

Concentrate containing approximately 13% nickel

Power source

On-site third-party gas-fired turbines supplemented by access to grid power

Contracts expire in December 2038

Natural gas sourced and transported under separate long-term contracts

Nominal production

capacity

1.6 Mtpa ore

Nickel sourced through ore tolling and concentrate purchase arrangements with third parties in Kambalda and outer regions

Smelter, refinery or

processing plant

Nickel West

Kalgoorlie, Western Australia

Kalgoorlie nickel smelter

Ownership

BHP 100%

Operator

BHP

Title, leases or options

Freehold title over the property

Key permit conditions

Product

Matte containing approximately 65% nickel

Power source

On-site third-party gas-fired turbines supplemented by access to grid power

Contracts expire in December 2038

Natural gas sourced and transported under separate long-term contracts

Nominal production

capacity

110 ktpa nickel metal in matte

210 BHP Annual Report 2023

2 Information on mining operations continued

Smelter, refinery or

processing plant

Nickel West

30 km south of Perth, Western Australia

Kwinana nickel refinery

Ownership

BHP 100%

Operator

BHP

Title, leases or options

Freehold title over the property

Key permit conditions

Product

London Metal Exchange grade nickel briquettes, nickel powder

Also intermediate products, including copper sulphide, cobalt-nickel-sulphide, ammonium-sulphate

Nickel sulphate containing approximately 22% nickel

Power source

Power is sourced from the local grid, which is supplied under a retail contract, supplemented by a Power Purchase Agreement

with Merredin Solar Farm for 50% of its output

Nominal production

capacity

82.5 ktpa nickel metal in powder, briquettes and nickel sulphate (with approval to increase up to 90 ktpa)

99 kt–100 kt nickel sulphate (approximately 22 kt–24 kt nickel)

Copper South Australia

Copper mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.1 and 5.2, and the production

table and reserves and resources tables in Additional information 4 and 5.

Mine & location

Olympic Dam

560 km northwest of Adelaide, South Australia

Means of access

Public road

Copper cathode trucked to ports

Uranium oxide transported by road to ports

Gold bullion transported by road and plane

Type and amount

of ownership

BHP 100%

Operator

BHP

Title, leases or options

and acreage involved

Mining lease granted by South Australian Government expires in 2036. Approximately 17,788 hectares

Right of extension for 50 years (subject to remaining mine life)

History and stage

of property

Production stage

Acquired in 2005 as part of Western Mining Corporation (WMC) acquisition

Copper production began in 1988

Nominal milling capacity raised to 9 Mtpa in 1999

Optimisation project completed in 2002

New copper solvent extraction plant commissioned in 2004

Major smelter maintenance campaigns completed in 2017 and 2022

Mine type &

mineralisation style

Underground

Large poly-metallic deposit of iron oxide-copper-uranium-gold mineralisation

Power source

Electricity transmitted via BHP’s 275 kV power line from Port Augusta and ElectraNet’s system upstream of Port Augusta

Power is sourced from the local grid, which is supplied under a retail contract, currently supplemented by Power Purchase Agreement

with Iberdrola

Processing plants and

other available facilities

Underground automated train and trucking network feeding crushing, storage and ore hoisting facilities

2 grinding circuits

Nominal milling capacity of 11 Mtpa

Flash furnace produces copper anodes, which are then refined to produce copper cathodes

Electrowon copper cathode and uranium oxide concentrate produced by leaching and solvent extracting flotation tailings

Gold cyanide leach circuit and gold room producing gold bullion

Key permit conditions

The Roxby Downs (Indenture Ratification) Act 1982 (Indenture Act) applies to Olympic Dam’s operations. It contains conditions from the

South Australian Government, including relating to the protection and management of the environment; water; closure and rehabilitation

considerations; local procurement and community plans/initiatives/project commitments; and payment of royalties. Olympic Dam also

holds other relevant approvals and tenements granted by the South Australian Government, including under the SA Mining Act

Governance Financial Statements

BHP Annual Report 2023 211

Additional Information

Operating and Financial Review

Mine & location

Carrapateena

The Gawler Craton, South Australia, approximately 160 km north of Port Augusta

Means of access

60 km private access road

Copper concentrate trucked to ports

Type and amount

of ownership

BHP 100%

Operator

BHP

Title, leases or options

and acreage involved

The Carrapateena Project holds a Mining Lease (ML 6471) and five Miscellaneous Purposes Licences (MPL 149, 152, 153, 154 and

156), which were granted by the South Australian Government and expire in 2039, with the exception of MPL 149 which expires in 2038

Approximately 44,163 hectares in size across all six tenements

An application for tenement extensions can be made within six months of the tenement expiry date

History and stage

of property

2011 – OZ Minerals acquired Carrapateena exploration project

2014 – Pre-feasibility study completed

2016 – Carrapateena scoping study completed

2016 – Partnering agreement between OZ Minerals and Kokatha Aboriginal Corporation signed

2017 – Feasibility study updated

2017 – Works on enabling infrastructure commenced

2018 – Project approvals completed

2018 – Construction commenced

2019 – Construction completed

2019 – First saleable concentrate produced

2019 – Block Cave expansion pre-feasibility study commenced

2020 – 4.25 Mtpa ramp up achieved

2020 – Block Cave expansion pre-feasibility study completed

2020 – Block Cave expansion approved

2020 – New 270 km transmission line to Prominent Hill via Carrapateena commissioned

2020 – Early works on Western Access Road commenced

2021 – Block Cave expansion early works underway

2022 – Cave propagated to surface

Mine type &

mineralisation style

Underground

Iron oxide copper gold deposit

Power source

Electricity transmitted via private power line operated under a Build Own Operate Maintain (BOOM) agreement with Electranet

Energy purchased via Retail Agreement

Processing plants and

other available facilities

Conventional crushing, grinding and flotation on mine site

Key permit conditions

The Mining Act 1971 (Mining Act) and associated Mining Regulations 2020 apply to the Carrapateena Project. Each tenement

document (either ML or MPL) in conjunction with the operation’s Program for Environment Protection and Rehabilitation (PEPR)

outlines the conditions from the South Australian Government that must be complied with including those relating to the protection

and management of the environment, water, closure and rehabilitation

The Carrapateena Project is also approved by the Federal Government under the Environment Protection and Biodiversity

Conservation Act 1999 (EPBC Act) and as such has further conditions regarding nationally threatened flora and fauna species

Mine & location

Prominent Hill

650 km northwest of Adelaide, 130 km southeast of the town of Coober Pedy

Means of access

Mine access road (45 km off Stuart Highway)

Copper concentrate (containing gold and silver) trucked to Wirrida Railway siding via dedicated Concentrate Export Road

Type and amount

of ownership

BHP 100%

Operator

Underground mining services – Byrnecut

Processing and others – BHP

Title, leases or options

and acreage involved

Mining lease ML 6288 granted by South Australian Government expires in August 2041.

Miscellaneous purpose licences (MPL 81, 82, 83, 84, 91, 93, 94 96, 97, 101, 112 to 117 and 119 to 122) and extractive mineral leases

(EML 6234, 6236 to 6242, 6278 to 6296, 6299 to 6301)

Approximately 11.4 hectares

History and stage

of property

2009 – Malu open-pit mine commissioned

2012 – Ankata underground mine expansion commissioned

2015 – Malu underground mine expansion commissioned

2017 – Expansion of the underground operation with new northern decline (Liru)

2018 – Malu open-pit mine safely closed after more than 100 Mt of ore was mined over 10 years

2019 – Underground ramp up to 4.0 Mt

2019 – Prominent Hill expansion study commenced

2021 – Wira Shaft Mine expansion investment approved

2022 – Decision to increase the electric hoisting shaft’s capacity from 6 Mtpa to 6.5 Mtpa

Mine type &

mineralisation style

Underground

Iron oxide copper gold deposit

Power source

SA power grid via a high voltage power transmission line operated under a Build Own Operate Maintain agreement

Power purchased via retail agreement

Processing plants and

other available facilities

Conventional crushing, semi-autogenous grinding (SAG) and ball mill grinding circuit and flotation processing plant on site

Nameplate capacity of 10 Mtpa

Key permit conditions

MPEPR2022/137 Program for Environment Protection and Rehabilitation for Mineral Lease (ML) 6228 and Associated Extractive

Minerals Leases and Miscellaneous Purpose Licences

Department for Environment and Water: Water Licences 396811 and 396809

Environment Protection Authority Licence 22764

Environment Protection Authority Licence 51429: Licence to Carry out Mining or Mineral Processing pursuant to Radiation Protection

and Control Act 2021

212 BHP Annual Report 2023

2 Information on mining operations continued

Minerals Americas

Copper mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.3 and the production table

and reserves and resources tables in Additional information 4 and 5.

Mine & location

Escondida

Atacama Desert

170 km southeast of Antofagasta, Chile

Means of access

Private road available for public use

Copper cathode transported by rail to ports at Antofagasta and Mejillones

Copper concentrate transported by Escondida-owned pipelines to its Coloso port facilities

Type and amount

of ownership

BHP 57.5%

Rio Tinto 30%

JECO Corporation consortium comprising Mitsubishi, JX Nippon Mining and Metals 10%

JECO 2 Ltd 2.5%

Operator

BHP

Title, leases or options

and acreage involved

Mining concession from Chilean Government valid indefinitely (subject to payment of annual fees)

Mining concessions (exploitation) approximately 380,000 hectares

History and stage

of property

Production stage

Original construction completed and production commenced in 1990

Start of operations of the third concentrator plant in 2015

Inauguration of Escondida Water Supply desalination plant (CY2018) and its extension (CY2019)

Key permit conditions

Mining companies in Chile must obtain environmental approvals for their projects, issued by the Environmental Assessment Service

(SEA), in order to operate

Depending on the particular characteristics and/or extension of the relevant project to be assessed, approvals can be obtained

following a full Environmental Impact Study (EIA) or after a less complex Environmental Impact Declaration (DIA)

Mining companies must also pay a yearly fee for mining concession

Mine type &

mineralisation style

2 open-cut pits: Escondida and Escondida Norte

Escondida and Escondida Norte mineral deposits are adjacent but distinct supergene enriched porphyry copper deposits

Power source

Electricity sourced from 100% renewable sources

Renewable power purchase agreements (PPAs) signed in FY2020 commenced in FY2022 supplying 100% of Escondida

electricity needs

Tamakaya SpA (100% owned by BHP), which generates power from the Kelar gas-fired power plant, provides energy and operational

services to the market

Escondida-owned transmission lines connect to Chile’s northern power grid

Processing plants and

other available facilities

Crushing facilities feed concentrator and leaching processes

3 concentrator plants produce copper concentrate from sulphide ore by flotation extraction process (by-products: gold and silver)

2 solvent extraction and electrowinning plants produce copper cathode

Nominal capacity: 422 ktpd (nominal milling capacity) and 350 ktpa copper cathode (nominal capacity of tank house)

2 x 168 km concentrate pipelines, 167 km water pipeline

Port facilities at Coloso, Antofagasta

Desalinated water plant (total water capacity of 3,800 litres per second)

Governance Financial Statements

BHP Annual Report 2023 213

Additional Information

Operating and Financial Review

Mine & location

Pampa Norte Spence

Atacama Desert

162 km northeast of Antofagasta, Chile

Means of access

Public road

Copper cathode transported by rail to ports at Mejillones and Antofagasta

Copper concentrate transported by rail or trucks to port in Mejillones

Molybdenum concentrate is transported by trucks

Type and amount

of ownership

BHP 100%

Operator

BHP

Title, leases or options

and acreage involved

Mining concession from Chilean Government valid indefinitely (subject to payment of annual fees)

Mining concessions (exploitation): approximately 44,000 hectares

History and stage

of property

Production stage

First copper produced in 2006

Spence Growth Option (i.e. new 95 ktpd copper concentrator and molybdenum plants) produced first copper in December 2020 and

first molybdenum in April 2022

Key permit conditions

Mining companies in Chile must obtain environmental approvals for their projects, issued by the Environmental Assessment Service

(SEA), in order to operate

Depending on the particular characteristics and/or extension of the relevant project to be assessed, approvals can be obtained

following a full Environmental Impact Study (EIA) or after a less complex Environmental Impact Declaration (DIA)

Mining companies must also pay a yearly fee for mining concession

Mine type &

mineralisation style

Open-cut

Enriched and oxidised porphyry copper deposit containing in situ copper oxide mineralisation that overlies a near-horizontal sequence

of supergene sulphides, transitional sulphides and finally primary (hypogene) sulphide mineralisation

Power source

Spence-owned transmission lines connect to Chile’s northern power grid

Electricity purchased from external vendors

Renewable power agreements signed in FY2020 commenced in FY2022

Processing plants and

other available facilities

Crushing facilities feed concentrator and leaching processes

1 copper concentrator plant with 95 ktpd capacity (by-products: gold and silver), molybdenum plant and a 1,000 litres per second

desalinated water plant under a Build, Own, Operate, Transfer (BOOT) agreement

Dynamic leach pads, solvent extraction and electrowinning plant

Nominal capacity of tank house: 200 ktpa copper cathode

Mine & location

Pampa Norte

Cerro Colorado

Atacama Desert

120 km east of Iquique, Chile

Means of access

Public road

Copper cathode trucked to port at Iquique

Type and amount

of ownership

BHP 100%

Operator

BHP

Title, leases or options

and acreage involved

Mining concession from Chilean Government valid indefinitely (subject to payment of annual fees)

Current environmental licence expires at the end of CY2023

Mining concessions (exploitation): approximately 34,000 hectares

History and stage

of property

Production stage

Commercial production commenced in 1994

Expansions in 1996 and 1998

Key permit conditions

Mining companies in Chile must obtain environmental approvals for their projects, issued by the Environmental Assessment Service

(SEA) in order to operate

Depending on the particular characteristics and/or extension of the relevant project to be assessed, approvals can be obtained

following a full Environmental Impact Study (EIA), or after a less complex Environmental Impact Declaration (DIA)

Mining companies must also pay a yearly fee for mining concession

Mine type &

mineralisation style

Open-cut

Enriched and oxidised porphyry copper deposit containing in situ copper oxide mineralisation that overlies a near-horizontal sequence

of supergene sulphides, transitional sulphides and finally primary (hypogene) sulphide mineralisation

Power source

Electricity purchased from external vendors

Processing plants and

other available facilities

Crushing facilities, dynamic leach pads, solvent extraction plant, electrowinning plant

Nominal capacity of tank house: 130 ktpa copper cathode

214 BHP Annual Report 2023

2 Information on mining operations continued

Mine & location

Antamina

Andes mountain range

Mine: San Marcos – Ancash, 270 km northeast of Lima

Port: Huarmey – Ancash, 300 km north of Lima, Peru

Means of access

Public road

Copper and zinc concentrates transported by Antamina-owned pipeline to its Punta Lobitos port

Molybdenum and lead/bismuth concentrates transported by truck

Type and amount

of ownership

BHP 33.75%

Glencore 33.75%

Teck 22.5%

Mitsubishi 10%

Operator

Compañía Minera Antamina S.A.

Title, leases or options

and acreage involved

Mining rights from Peruvian Government held indefinitely, subject to payment of annual fees and supply of information on investment

and production

Total acreage: approximately 6,600 hectares

History and stage

of property

Production stage

Commercial production commenced in 2001

Key permit conditions

In April 2022, Antamina submitted to Peruvian authorities an Environmental Impact Study Modification (MEIA), which would enable

Antamina to extend its life from 2028 to 2036, maintaining annual production volumes within its current operational footprint

Mine type &

mineralisation style

Open-cut

Zoned porphyry and skarn deposit with central copper dominated ores and an outer band of copper-zinc dominated ores

Power source Contracts with individual power producers

Processing plants and

other available facilities

Primary crusher, concentrator, copper and zinc flotation circuits, bismuth/moly cleaning circuit

Nominal milling capacity 145 ktpd

304 km concentrate pipeline

Port facilities at Huarmey

Mine & location

Resolution

Superior/Project: Pinal – Arizona, 100 km east of Phoenix, United States

Means of access

Public road

Type and amount

of ownership

BHP 45%

Rio Tinto 55% (operator)

Operator

Resolution Copper Mining LLC

Title, leases or options

and acreage involved

Private land, patented and unpatented mining claims

Total acreage: approximately 46,000 acres

History and stage

of property

Exploration stage

The Resolution deposit is within the footprint of and adjacent to the historical Magma Copper Mine

The Resolution Non-Operated Joint Venture (NOJV) was formed in 2004 with Rio Tinto as operator

Key permit conditions

The Resolution Copper Project is subject to a federal permitting process pursuant to the National Environmental Policy Act (NEPA)

and other US legislation, including requirements for consultation, coordination and collaboration with Native American Tribes

The NEPA process is led by the US Forest Service

The Resolution Copper Project is also required to obtain several state and local permits, including air quality and groundwater

protection permits

Mine type &

mineralisation style

Underground

Porphyry copper and molybdenum deposit

Power source

115 kV power lines to East and West Plant sites with supply contract with Salt River Project

Processing plants and

other available facilities

Water treatment and reverse osmosis plant, two active underground shafts with associated support infrastructure, including hoisting,

ventilation and cooling, and a rail corridor connecting the site to the national rail network

Governance Financial Statements

BHP Annual Report 2023 215

Additional Information

Operating and Financial Review

Iron ore mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.3 and the production table

and reserves and resources tables in Additional information 4 and 5.

Mine & location

Samarco

Southeast Brazil

Samarco Mine: Mariana – Minas Gerais, 130 km southeast of Belo Horizonte

Port: Anchieta – Espírito Santo, 520 km east of Belo Horizonte

Means of access

Public road

Iron ore pellets exported via Samarco port facilities – Ubu Port

Type and amount

of ownership

BHP Brasil 50%

Vale S.A. 50%

Operator

Samarco Mineração S.A.

Title, leases or options

and acreage involved

Mining concessions granted by Brazilian Government subject to compliance with the mine plan

Samarco recommenced iron ore pellet production in December 2020, having met licensing requirements to restart operations

at its Germano complex in Minas Gerais and its Ubu complex in Espírito Santo

Mining rights for approximately 1,605 hectares

History and stage

of property

Production stage

Production began at Germano mine in 1977 and at Alegria complex in 1992

Second pellet plant built in 1997

Third pellet plant, second concentrator and second pipeline built in 2008

Fourth pellet plant, third concentrator and third pipeline built in 2014

Key permit conditions

Samarco has an operating licence (LOC – Corrective Operating License) obtained for the return of operations

For the continuity of operations, it has a long-term licensing plan that includes expansion of the mining area and new structures

for the disposal of waste and tailings

Mine type &

mineralisation style

Open-cut

Itabirites (metamorphic quartz-hematite rock) and friable hematite ores

Power source

Samarco holds interests in 2 hydroelectric power plants, which supply part of its electricity

Processing plants and

other available facilities

Samarco’s gradual restart of operations includes 1 concentrator and a new system of tailings disposal combining a confined pit

and filtration plant for dry stacking of sandy tailings

Beneficiation plants, pipelines, pellet plants and port facilities

Other mining operations

The following table contains additional details of our mining operations. This table should be read in conjunction with OFR 5.2 and the production table

and reserves and resources tables in Additional information 4 and 5.

Mine & location

Jansen Stage 1

(under construction)

Province of Saskatchewan, approximately 150 km east of Saskatoon, Canada

Means of access

Public road

Muriate of Potash (MOP) to be transported by rail to the port at Westshore Terminal in Delta, British Columbia, Canada

Type and amount

of ownership

BHP 100%

Operator

BHP

Title, leases or options

and acreage involved

The total area of the Jansen lease is approximately 1,156 square km

All surface lands have been acquired

History and stage

of property

Development stage

Stage 1 is currently under construction

Key permit conditions

The Jansen Project received Ministerial approval under the Saskatchewan Environmental Assessment Act

Following approval, various federal, provincial and municipal permits have been or will be obtained for construction and operation of

facilities

Mine type &

mineralisation style

Underground

The Lower Patience Lake (LPL) sub-member is the potash horizon targeted for Jansen. The LPL sub-member is composed

of sylvite (KCl), halite (NaCl) with variable amounts of disseminated insoluble and clay seams

Power source

Permanent power supply to be constructed

Processing plants and

other available facilities

Mill, buildings and other facilities and infrastructure are planned to be constructed

All piling activities for the mill and storage facilities were completed during FY2023

216 BHP Annual Report 2023

2 Information on mining operations continued

Mine & location

Pedra Branca

Água Azul do Norte, Pará

Approximately 160 km from Marabá and 900 km from Belém in the state of Pará, Brazil

Means of access

Public road

From Água Azul to Parauapebas from highway (PA 150) to be transported by train to the port of Itaqui in São Luiz, state of Maranhão,

Brazil

Type and amount

of ownership

BHP 100%

Operator

OZ Minerals Brasil

Title, leases or options

and acreage involved

The property belongs to OZ Minerals Brasil

History and stage

of property

2018 – OZ Minerals acquired mine operator Avanco Resources – including projects in the Carajás Copper Region and the Gurupi

Greenstone Belt

2019 – Construction commenced

2020 – First developmental ore sent to Antas for processing

2021 – Commencement of underground mining

2022 – Ramped up to full production

Key permit conditions

The closure plan to be updated in accordance with requirement from ANM (n° 68/2021) when the life of mine changes

Annual environmental report (RIAA) required to be submitted in accordance with the activities developed for the mine production

Mine type &

mineralisation style

Underground

Pedra Branca iron oxide copper gold deposit is hosted within the Carajás Mineral Province, which is located in the southern part of the

Amazon Craton. Locally the craton is overlain by metavolcanic-sedimentary units of the Rio Novo Group and the 2.76 Ga Itacaiúnas

Supergroup. The Itacaiúnas Supergroup hosts all the known Carajás iron oxide copper gold deposits and is thought to have been

deposited in a marine rift environment

Power source

2.4 MW required to operate mine coming from power lines from north of state (Tucurui hydroelectric plant). The expansion required is in

progress with new lines to achieve 7 MW

Processing plants and

other available facilities

Plant capacity is 1 Mtpa and the tailings are deposited in the exhausted mine

Mill, buildings and other facilities and infrastructure are in the Curionopolis district

Governance Financial Statements

BHP Annual Report 2023 217

Additional Information

Operating and Financial Review

3 Financial information by commodity

Management believes the following financial information presented by commodity provides a meaningful indication of the underlying financial performance

of the assets, including equity accounted investments, of each reportable segment. Information relating to assets that are accounted for as equity

accounted investments is shown to reflect BHP’s share, unless otherwise noted, to provide insight into the drivers of these assets.

For the purposes of this financial information, segments are reported on a statutory basis in accordance with IFRS 8/AASB 8 ‘Operating Segments’.

The tables for each commodity include an ‘adjustment for equity accounted investments’ to reconcile the equity accounted results to the statutory

segment results.

For a reconciliation of non-IFRS financial information to respective IFRS measures and an explanation as to the use of Underlying EBITDA

in assessing our performance refer to OFR 10.

For the definition and method of calculation of non-IFRS financial information refer to OFR 10.1.

For more information as to the statutory determination of our reportable segments refer to Financial Statements note 1 ‘Segment reporting’.

Year ended

30 June 2023

US$M Revenue

Underlying

EBITDA

Underlying

EBIT

Exceptional

items

Net

operating

assets

Capital

expenditure

Exploration

gross

Exploration

to profit

Copper

Escondida 8,847 4,934 4,070 12,207 1,351

Pampa Norte

2,491 754 244 4,487 647

Antamina

1,468 998 824 1,430 374

Copper South Australia

2,806 703 251 15,782 641

Other

20 (209) (228) 636 59

Total Copper from

Group production 15,632 7,180 5,161 471 34,542 3,072

Third-party products 1,863 18 18 − − −

Total Copper 17,495 7,198 5,179 471 34,542 3,072 151 148

Adjustment for equity

accounted investments

(1,468) (545) (369) − − (374) (6) (3)

Total Copper statutory result 16,027 6,653 4,810 471 34,542 2,698 145 145

Iron Ore

Western Australia Iron Ore 24,678 16,660 14,663 20,438 1,956

Samarco

− − − (3,695) −

Other 113 33 9 (100) 10

Total Iron Ore from

Group production 24,791 16,693 14,672 (295) 16,643 1,966

Third-party products 21 (1) (1) − − −

Total Iron Ore 24,812 16,692 14,671 (295) 16,643 1,966 96 52

Adjustment for equity

accounted investments − − − − − − − −

Total Iron Ore statutory result 24,812 16,692 14,671 (295) 16,643 1,966 96 52

Coal

BHP Mitsubishi Alliance 7,652 3,197 2,572 7,545 488

New South Wales

Energy Coal

3,455 1,953 1,868 (243) 156

Other − (39) (57) (36) 13

Total Coal from

Group production 11,107 5,111 4,383 − 7,266 657

Third-party products − − − − − −

Total Coal 11,107 5,111 4,383 − 7,266 657 13 6

Adjustment for equity

accounted investments

(149) (113) (88) − − − − −

Total Coal statutory result 10,958 4,998 4,295 − 7,266 657 13 6

Group and unallocated items

Potash − (205) (207) 4,469 647 1 1

Nickel West 2,009 164 57 1,189 637 52 48

Other

11 (346) (806) (229) 128 43 42

Total Group and

unallocated items 2,020 (387) (956) (64) 5,429 1,412 96 91

Inter-segment adjustment − − − − − − − −

Total Group 53,817 27,956 22,820 112 63,880 6,733 350 294

218 BHP Annual Report 2023

3 Financial information by commodity continued

Year ended

30 June 2022

US$M Revenue

Underlying

EBITDA

Underlying

EBIT

Exceptional

items

Net

operating

assets

Capital

expenditure

Exploration

gross

Exploration

to profit

Copper

Escondida 9,500 6,198 5,291 11,703 860

Pampa Norte

2,670 1,363 470 4,543 673

Antamina

1,777 1,289 1,143 1,306 323

Copper South Australia

1,776 409 (12) 9,877 966

Other

− (157) (173) (9) 29

Total Copper from

Group production 15,723 9,102 6,719 (81) 27,420 2,851

Third-party products 2,903 36 36 − − −

Total Copper 18,626 9,138 6,755 (81) 27,420 2,851 96 92

Adjustment for equity

accounted investments

(1,777) (573) (425) − − (323) (11) (7)

Total Copper statutory result 16,849 8,565 6,330 (81) 27,420 2,528 85 85

Iron Ore

Western Australia Iron Ore 30,632 21,788 19,669 20,376 1,847

Samarco

− − − (3,433) −

Other 116 (81) (198) (120) 1

Total Iron Ore from

Group production 30,748 21,707 19,471 (648) 16,823 1,848

Third-party products 19 – – − − −

Total Iron Ore 30,767 21,707 19,471 (648) 16,823 1,848 95 54

Adjustment for equity

accounted investments − − − − − − − −

Total Iron Ore statutory result 30,767 21,707 19,471 (648) 16,823 1,848 95 54

Coal

BHP Mitsubishi Alliance 10,254 6,335 5,708 7,802 491

New South Wales

Energy Coal

3,122 1,868 1,777 (121) 73

Other

2,260 1,363 1,283 (31) 57

Total Coal from

Group production 15,636 9,566 8,768 849 7,650 621

Third-party products − − − − − −

Total Coal 15,636 9,566 8,768 849 7,650 621 17 6

Adjustment for equity

accounted investments

(87) (62) (35) − − − − −

Total Coal statutory result 15,549 9,504 8,733 849 7,650 621 17 6

Group and unallocated items

Potash − (147) (149) 3,570 376 − −

Nickel West 1,926 420 327 721 362 42 37

Other

7 585 (276) (1,746) 120 17 17

Total Group and

unallocated items 1,933 858 (98) (450) 2,545 858 59 54

Inter-segment adjustment − − − − − − − −

Total Group 65,098 40,634 34,436 (330) 54,438 5,855 256 199

1 Group profit before taxation comprised Underlying EBITDA, exceptional items, depreciation, amortisation and impairments of US$5,024 million (FY2022: US$6,528 million)

and net finance costs of US$1,531 million (FY2022: US$969 million).

2 Total revenue from thermal coal sales, including BMA and NSWEC, was US$3,528 million (FY2022: US$3,559 million).

3 For more information on the reconciliation of non-IFRS financial information to our statutory measures, reasons for usefulness and calculation methodology, refer to OFR 10.

4 Excludes exceptional items relating to Net finance costs US$452 million and Income tax expense US$266 million (FY2022: Net finance costs US$290 million and Income tax

expense US$454 million).

5 Includes Spence and Cerro Colorado.

6 Antamina, SolGold and Resolution (the latter two included in Other) are equity accounted investments and their financial information presented above with the exception

of net operating assets reflects BHP Group’s share. Group and Copper level information is reported on a statutory basis which reflects the application of the equity

accounting method in preparing the Group financial statements – in accordance with IFRS. Underlying EBITDA of the Group and the Copper segment, includes depreciation,

amortisation and impairments (D&A), net finance costs and taxation expense of US$545 million (FY2022: US$573 million) related to equity accounted investments.

7 Includes Olympic Dam as well as Prominent Hill and Carrapateena which were acquired on 2 May 2023 as part of the acquisition of OZ Minerals Ltd. Results of assets

acquired as part of the acquisition of OZ Minerals Ltd are for the period from the date of acquisition.

8 Samarco is an equity accounted investment and its financial information presented above, with the exception of net operating assets, reflects BHP Billiton Brasil Ltda’s share.

All financial impacts following the Samarco dam failure have been reported as exceptional items in both reporting periods.

9 Includes Newcastle Coal Infrastructure Group (NCIG) which is an equity accounted investment and its financial information presented above, with the exception of net

operating assets, reflects BHP Group’s share. Total Coal statutory result excludes contribution related to NCIG until future profits exceed accumulated losses.

10 Other includes functions, other unallocated operations including legacy assets, West Musgrave (acquired on 2 May 2023 as part of the acquisition of OZ Minerals Ltd) and

consolidation adjustments. Revenue not attributable to reportable segments comprises the sale of freight and fuel to third parties, as well as revenues from unallocated

operations. Exploration and technology activities are recognised within relevant segments. Results of assets acquired as part of the acquisition of OZ Minerals Ltd are

for the period from the date of acquisition.

11 The divestment of BHP’s 80 per cent interest in BMC was completed on 3 May 2022. The Group’s share of BMC revenue, Underlying EBITDA, D&A, Underlying EBIT

and Capital expenditure has been presented within ‘Other’.

Governance Financial Statements

BHP Annual Report 2023 219

Additional Information

Operating and Financial Review

4 Production

The table below details our mineral and derivative product production for all operations for the three years ended 30 June 2023, 2022 and 2021.

Unless otherwise stated, the production numbers represent our share of production and include BHP’s share of production from which profit is derived

from our equity accounted investments. Production information for equity accounted investments is included to provide insight into the operational

performance of these entities. For information on minerals pricing during the past three years refer to OFR 9.

BHP interest

BHP share of production

Year ended 30 June

2023 2022 2021

Copper

Payable metal in concentrate (kt)

Escondida, Chile

57.5 832.7 802.6 871.7

Pampa Norte, Chile

100 125.3 111.2 27.4

Copper South Australia, Australia

100 19.9

Antamina, Peru

33.75 138.4 149.9 144.0

Carajas, Brazil

100 1.6

Total 1,117.9 1,063.7 1,043.1

Cathode (kt)

Escondida, Chile

57.5 222.6 201.4 196.5

Pampa Norte, Chile

100 163.5 170.0 190.8

Copper South Australia, Australia

100 212.5 138.4 205.3

Total 598.6 509.8 592.6

Total copper (kt) 1,716.5 1,573.5 1,635.7

Lead

Payable metal in concentrate (t)

Antamina, Peru

33.75 657 1,118 2,532

Total 657 1,118 2,532

Zinc

Payable metal in concentrate (t)

Antamina, Peru

33.75 125,048 123,200 145,089

Total 125,048 123,200 145,089

Gold

Payable metal in concentrate (troy oz)

Escondida, Chile

57.5 189,095 166,972 166,968

Pampa Norte, Chile

100 26,811 28,870 4,728

Copper South Australia, Australia

100 32,736

Carajas, Brazil

100 1,153

Total 249,795 195,842 171,696

Refined gold (troy oz)

Copper South Australia, Australia

100 186,029 119,517 145,998

Total 186,029 119,517 145,998

Total gold (troy oz) 435,824 315,359 317,694

Silver

Payable metal in concentrate (troy koz)

Escondida, Chile

57.5 5,074 5,334 5,759

Pampa Norte, Chile

100 1,318 1,011 214

Copper South Australia, Australia

100 201

Antamina, Peru

33.75 3,885 5,078 5,965

Total 10,478 11,423 11,938

Refined silver (troy koz)

Copper South Australia, Australia

100 1,089 743 810

Total 1,089 743 810

Total silver (troy koz) 11,567 12,166 12,748

Uranium

Payable metal in concentrate (t)

Copper South Australia, Australia

100 3,406 2,375 3,267

Total 3,406 2,375 3,267

Molybdenum

Payable metal in concentrate (t)

Pampa Norte, Chile

100 990 71 –

Antamina, Peru

33.75 1,172 798 863

Total 2,162 869 863

220 BHP Annual Report 2023

4 Production continued

BHP interest

BHP Group share of production

Year ended 30 June

2023 2022 2021

Iron ore

Production (kt)

Newman, Australia 85 56,945 57,041 63,221

Area C Joint Venture, Australia 85 107,375 94,431 52,386

Yandi Joint Venture, Australia 85 21,410 38,922 68,596

Jimblebar, Australia

85 66,801 58,782 67,393

Total Western Australia Iron Ore 252,531 249,176 251,596

Samarco, Brazil

50 4,512 4,071 1,938

Total iron ore 257,043 253,247 253,534

Metallurgical coal

Production (kt)

Blackwater, Australia 50 5,055 5,834 6,224

Goonyella Riverside, Australia 50 8,310 8,360 9,448

Peak Downs, Australia 50 5,480 4,944 5,892

Saraji, Australia 50 4,596 4,614 4,489

Daunia, Australia 50 1,989 1,491 1,928

Caval Ridge, Australia 50 3,590 3,899 3,903

Total BHP Mitsubishi Alliance (BMA) 29,020 29,142 31,884

South Walker Creek, Australia

80 – 4,941 4,887

Poitrel, Australia

80 – 2,981 3,854

Total BHP Mitsui Coal

– 7,922 8,741

Total metallurgical coal 29,020 37,064 40,625

Energy coal

Production (kt)

New South Wales Energy Coal, Australia 100 14,172 13,701 14,326

Cerrejón, Colombia

33.3 – 4,236 4,964

Total energy coal 14,172 17,937 19,290

Nickel

Saleable production (kt)

Nickel West, Australia

100 80.0 76.8 89.0

Total 80.0 76.8 89.0

Cobalt

Saleable production (t)

Nickel West, Australia 100 752 632 988

Total 752 632 988

1 BHP share of production includes the Group’s share of production for which profit is derived from our equity accounted investments, unless otherwise stated.

2 Metal production is reported on the basis of payable metal.

3 Shown on 100 per cent basis. BHP interest in saleable production is 57.5 per cent.

4 Includes Spence and Cerro Colorado.

5 Includes Olympic Dam and two months of production from Prominent Hill and Carrapateena from 1 May 2023, following the acquisition of OZ Minerals on 2 May 2023.

6 For statutory financial reporting purposes, this is an equity accounted investment. We have included production numbers from our equity accounted investments as the

level of production and operating performance from these operations impacts Underlying EBITDA of the Group. Our use of Underlying EBITDA is explained in OFR 4.3.

BHP completed the sale of its 33.3 per cent interest in Cerrejón on 11 January 2022. Production for Cerrejón reported until 31 December 2021.

7 Includes two months of production from 1 May 2023, following the acquisition of OZ Minerals on 2 May 2023.

8 Iron ore production is reported on a wet tonnes basis.

9 Shown on 100 per cent basis. BHP interest in saleable production is 85 per cent.

10 Metallurgical coal production is reported on the basis of saleable product. Production figures may include some thermal coal.

11 Shown on 100 per cent basis. BHP completed the sale of its 80 per cent interest in BHP Mitsui Coal (BMC) on 3 May 2022. Production reported until 30 April 2022.

12 Nickel contained in matte and refined nickel metal, including briquette, powder, nickel sulphate and by-product streams.

Governance Financial Statements

BHP Annual Report 2023 221

Additional Information

Operating and Financial Review

5 Mineral Resources and Ore Reserves

Resources are the estimated quantities of material that can potentially be

commercially recovered from BHP’s properties. Reserves are a subset

of resources that can be demonstrated to be able to be economically

and legally extracted. In order to estimate reserves, assumptions are

required about a range of technical and economic factors, including

quantities, qualities, production techniques, recovery efficiency, production

and transport costs, commodity supply and demand, commodity prices

and exchange rates.

The statement of Mineral Resources and Ore Reserves presented in

this Annual Report has been produced in accordance with the Australian

Securities Exchange (ASX) Listing Rules Chapter 5 and the Australasian

Code for Reporting of Exploration Results, Mineral Resources and Ore

Reserves, December 2012 (JORC Code).

Predicted sales prices, based on supply and demand forecast and current

and long-term historical average price trends, have been used. The Ore

Reserves tabulated are held within existing, permitted mining tenements.

Mineral leases are of sufficient duration (or convey a legal right to renew

for sufficient duration) to enable all reserves on the leased properties to

be mined in accordance with current production schedules. Ore Reserves

may include areas where some additional approvals remain outstanding,

however it is anticipated such approvals will be obtained within the

timeframe required by the current life-of-mine schedule.

Declaration tables

– All Mineral Resources and Ore Reserves presented are reported in

100 per cent terms (unless otherwise stated) and represent estimates

as at 30 June 2023.

– Tonnes are reported as dry metric tonnes (unless otherwise stated).

All tonnes and grade/quality information have been rounded, so small

differences may be present in the totals.

– The Measured and Indicated Mineral Resources are inclusive of

those Mineral Resources modified to produce the Ore Reserves.

Other reporting jurisdictions

The information contained in this document is expected to differ from that

reported to the United States Securities and Exchange Commission (SEC)

in our Annual Report on Form 20-F for the year ended 30 June 2023.

Mineral resources and mineral reserves reporting requirements for SEC

filings in the United States are set forth in S-K 1300. S-K 1300 requires

resources estimates to be reported exclusive of reserves estimates

and both reported only for the portion attributable to our interest in such

resources or reserves. In addition, specific disclosure requirements

pertaining to economic assumptions and interpretation of reasonable

prospects of economic extraction are expected to result in further

differences between the resources and reserves estimates presented

in this document and those to be reported in our Annual Report on

Form 20-F.

Key differences in the estimation of our resources and reserves pursuant to

the ASX Listing Rules and S-K 1300 are the economic inputs, commodity

prices and cost assumptions. Estimates we report in accordance with the

ASX Listing Rules and JORC Code (2012) are based on cost forecasts

and internally-generated projected long-term commodity prices, with the

exception being recently acquired deposits from OZ Minerals Ltd this year,

where estimates are based on their internally-generated prices and costs.

S-K 1300 requires mineral resources and mineral reserves estimates to

be based on a reasonable and justifiable commodity price selected by

a qualified person. Since S-K 1300 requires the disclosure of the prices

used in the estimation of mineral resources and mineral reserves, due

to commercial sensitivity regarding the disclosure of BHP’s internally

generated projected long-term commodity prices used in the estimation

of our Mineral Resources and Ore Reserves reported in accordance with

the ASX Listing Rules and JORC Code (2012), the estimates reported

in accordance with S-K 1300 are expected to be based on the historical

commodity prices over a timeframe relevant for the commodity (generally

three years). In addition, the estimates reported in accordance with

S-K 1300 are expected to be based on the historical average costs

over a timeframe of three years for production stage properties or, for

development stage properties, costs determined from first principles.

Our resources and reserves estimates to be reported in our Annual Report

on Form 20-F are therefore not directly comparable to those presented

in this document and should be considered in relation to the differing

reporting and disclosure requirements of the jurisdiction under which

they are presented.

Assurance and verification

BHP has internal controls over our Mineral Resources and Ore Reserves

estimation efforts that are designed to produce reasonable and reliable

estimates aligned with industry practice and our regulatory reporting

requirements. The governance for our estimation efforts is located at both the

asset and the BHP Group level within our Resource Centre of Excellence,

an internal assurance team independent of our Competent Persons and BHP

employees who are responsible for the estimations. The assets provide first-

line assurance on estimates through peer review and validation processes.

The Resource Centre of Excellence is responsible for assurance over the

processes implemented by the assets as they relate to Mineral Resources

and Ore Reserves estimations and the compiling of the estimates to be

reported in accordance with the ASX Listing Rules and JORC Code (2012).

Our internal controls utilise management systems, including, but not limited

to, formal quality assurance and quality control processes, standardised

procedures, workflow processes, data security covering record keeping,

chain of custody and data storage, supervision and management approval,

reconciliations, internal and external reviews and audits.

Our internal requirements and standards provide the basis for the governance

over the estimation and reporting of Mineral Resources and Ore Reserves and

provide technical guidance to all reporting assets. These internal requirements

and standards are periodically reviewed and updated for alignment with

industry practice and reporting regulations.

Our internal controls for exploration data, as they relate to Mineral Resources

and Ore Reserves estimations, are managed by our operating assets with

assurance provided by the Resource Centre of Excellence. These include

procedures and standards defining minimum requirements of critical aspects

to support exploration and resource development programs, spatial quality

control checks on measurement points (e.g. collar, down-hole survey), quality

control checks on samples, including laboratory data quality checks, geological

database audits and back-up routines and technical peer review across the

data gathering, integration and estimation processes.

Our internal controls for Mineral Resources and Ore Reserves estimations

include, but are not limited to:

– source data review from database extracts, using exploratory data

statistical analysis prior to use in the estimation of Mineral Resources.

Identification of data to exclude outliers and visual checks against

estimation domains

– peer reviews of the estimation inputs based on statistical studies and

estimation parameters as applied in industry standard estimation software

– visual and statistical validation of the estimates against source data and

where available reconciliation to previous models, operational models

and production data

– peer review of the classification applied, considering quantitative

measures and qualitative considerations

– peer review of assumptions applied that convert resources to reserves

– independent audits or reviews for new or materially changed Mineral

Resources and Ore Reserves

222 BHP Annual Report 2023

5 Mineral Resources and Ore Reserves continued

Operating assets manage internal risk registers relating to uncertainties in

the Mineral Resources and Ore Reserves estimates to direct future work

programs or estimation updates. These may include but are not limited to:

– areas of uncertainty in the estimates impacting local interpretations

– bulk density assumptions, based on sample testwork

or operational results

– metallurgical recovery assumptions, based on testwork

or plant performance

– changes in commodity prices, costs and exchange rate assumptions

– geotechnical and hydrogeological considerations impacting on

underground or open-cut mining assumptions

– ore loss and dilution, mining selectivity and production rate assumptions

– cut-off value changes to meet product specifications

– changes in environmental, permitting and social licence

to operate assumptions

Further to assurance activities by the assets specifically relating to the

estimation of resources and reserves, the Resource Centre of Excellence

with subject matter experts has developed standards and guidelines across

BHP for reviewing and documenting the information supporting our Mineral

Resources and Ore Reserves estimates, describing the methods used and

verifying the reliability of such estimates. These activities are supported by

the following controls:

– The reporting of Mineral Resources and Ore Reserves estimates are

required to follow BHP’s standard procedures for public reporting in

accordance with current regulatory requirements.

– Annual risk reviews are conducted with Competent Persons and BHP

employees on all Mineral Resources and Ore Reserves to be reported,

including a year-on-year change impact assessment, reconciliation

performance metrics for the operating mines and a control assessment

for the estimation inputs. The information and supporting documentation

are prepared by the Competent Persons relating to the estimates and

evaluated for compliance with BHP’s internal controls. Based on these

reviews, recommendations of endorsement are provided to our senior

management for the use and reporting of the Mineral Resources and

Ore Reserves.

– Periodic internal technical ‘deep dive’ assessments of Mineral Resources

and Ore Reserves are conducted on a frequency that is informed by

asset materiality and outcomes of the annual risk reviews.

– Management and closure reviews of actions assigned to Competent

Persons and BHP employees resulting from the annual risk reviews

and technical ‘deep dive’ assessments are conducted.

– Assurance is undertaken over the reporting documentation provided by

Competent Persons for public release and management and verification

of inputs into the BHP Resources and Reserves reporting database.

The BHP assets acquired through the acquisition of OZ Minerals Ltd did

not participate in the Resource Centre of Excellence annual risk reviews.

These assets have been part of assurance processes similar to those of the

Resource Centre of Excellence and have undergone independent reviews

within the last two years with no material issues identified.

The Resource Centre of Excellence also provides an annual update on

assurance activities and changes relating to our resources and reserves

estimation efforts to the Risk and Audit Committee (RAC) in connection

with the RAC’s responsibility over the effectiveness of systems of internal

control and risk management of BHP.

Inherent risks in the estimation of Mineral

Resources and Ore Reserves

Estimated annual cash flows from our future operations, estimated

production schedules, estimated capital expenditure and operating costs,

estimated site closure costs, estimated royalty and tax costs, valuation

assumptions and interpretations of geological data obtained from drill

holes and other exploration techniques may not necessarily be indicative

of future results. The assumptions and interpretations used to estimate our

Mineral Resources and Ore Reserves may change from period to period,

and because additional geological data generated during the course of

our operations may not be consistent with the data on which we based our

Mineral Resources and Ore Reserves, such estimates may change from

period to period or may need to be revised. No assurance can be given that

our Mineral Resources and Ore Reserves presented in this Annual Report

will be recovered at the grade, quality or quantities presented or at all.

There are numerous uncertainties inherent in the estimation of Mineral

Resources and Ore Reserves. Areas of uncertainty that may materially

impact our Mineral Resources and Ore Reserves estimates may include,

but are not limited to: (i) changes to long-term commodity prices, external

market factors, foreign exchange rates and other economic assumptions;

(ii) changes in geological interpretations of mineral deposits and geological

modelling, including estimation input parameters and techniques; (iii)

changes to metallurgical or process recovery assumptions which adversely

affect the volume, grade or qualities of our commodities produced (for

example, processing that results in higher deleterious elements that result in

penalties) or other changes to mining method assumptions; (iv) changes to

input assumptions used to derive the potentially mineable shapes applicable

to the assumed underground or open-pit mining methods used to constrain

the estimates; (v) changes to life of mine or production rate assumptions;

(vi) changes to dilution and mining recovery assumptions; (vii) changes

to cut-off grades applied to the estimates; (viii) changes to geotechnical

data, structures, rock mass strength, stress regime, hydrogeological,

hydrothermal or geothermal factors; (ix) changes to infrastructure supporting

the operations of or access to the applicable mine site; (x) changes to

mineral, surface, water or other natural resources rights; (xi) changes to

royalty, taxes, environmental, permitting and social licence assumptions

in the jurisdictions where we operate; and (xii) changes in capital or

operating costs.

Estimates of Mineral Resources are subject to further exploration and

evaluation of development and operating costs, grades, recoveries and other

material factors, and therefore, are subject to uncertainty. Mineral Resources

do not meet the threshold for Ore Reserves modifying factors, such as

engineering, legal or economic feasibility, that would allow for the conversion

to Ore Reserves. Accordingly, no assurance can be given that our Mineral

Resources not included in Ore Reserves will become recoverable Proved

and Probable Ore Reserves.

Governance Financial Statements

BHP Annual Report 2023 223

Additional Information

Operating and Financial Review

Competent Persons

This statement is based on and fairly represents information and supporting

documentation compiled by Competent Persons (as defined in the JORC

Code). All Competent Persons have, at the time of reporting, sufficient

experience relevant to the style of mineralisation and type of deposit

under consideration and to the activity they are undertaking to qualify

as a Competent Person.

Each Competent Person listed is an employee of BHP or a company in

which BHP has a controlling interest (unless otherwise stated) and declares

they have no issues that could be perceived by investors as a material

conflict of interest in preparing the reported information. All Competent

Persons are a Member or Fellow of the Australasian Institute of Mining

and Metallurgy (AusIMM) or the Australian Institute of Geoscientists (AIG)

or a Recognised Professional Organisation. Each Competent Person

consents to the inclusion in this Annual Report of the matters based on

their information in the form and context in which it appears.

Competent Persons

Copper

Mineral

Resources

Escondida: R Maureira (MAusIMM) employed by Minera

Escondida Limitada

Cerro Colorado: H Matias (MAusIMM)

Spence: R Ferrer (MAusIMM)

Pampa Escondida, Pinta Verde and Chimborazo: E Mulet

(MAusIMM) employed by Minera Escondida Limitada

Pantera and Pedra Branca: C Lollo (MAusIMM)

Succoth: P Ormond (MAusIMM)

Carrapateena and Fremantle Doctor: S Light (MAusIMM)

Prominent Hill: B Whittaker (MAusIMM)

Olympic Dam: D Clarke (MAusIMM)

Antamina: L Canchis (FAusIMM) employed by Compañía Minera

Antamina S.A.

Ore

Reserves

Escondida: F Barrera (MAusIMM) employed by Minera

Escondida Limitada

Cerro Colorado, Spence: P Elissetche (MAusIMM)

Pedra Branca: J Moura (MAusIMM)

Carrapateena: M Fargher (MAusIMM)

Prominent Hill: AM Ebbels (FAusIMM)

Olympic Dam: F Mello (MAusIMM)

Antamina: F Angeles (PEGBC) employed by Minera Antamina S.A.

Iron ore

Mineral

Resources

WAIO: C Allison (MAusIMM), E Maidens (MAIG),

P Whitehouse (MAusIMM)

Samarco: L Bonfioli (MAusIMM) employed by Samarco

Mineração S.A.

Ore

Reserves

WAIO: P K Chhajer (MAusIMM), H Mavhondo (MAusIMM),

A McLean (MAusIMM), C Burke (MAusIMM), A Balueva

(MAusIMM)

Coal

Resources

Goonyella Complex, Togara South: R Saha (MAusIMM)

Peak Downs: J L Young (MAusIMM)

Caval Ridge: C Williams (MAusIMM)

Saraji and Saraji South: S Cutler (MAusIMM)

Blackwater: M Passmore (MAusIMM)

Daunia: B Wesley (MAusIMM)

Mt Arthur Coal: J James (MAusIMM)

Coal

Reserves

Goonyella Complex: V Grajdan (MAusIMM) and C McGahan

(MAusIMM)

Peak Downs: P Gupta (MAusIMM)

Caval Ridge: R Sharma (MAusIMM)

Saraji: N Mohtaj (MAusIMM)

Saraji South and Daunia: G Bustos (MAusIMM)

Blackwater: R Campbell (MAusIMM)

Mt Arthur Coal: D Perkins (MAusIMM)

Potash

Mineral

Resources

Jansen: B Németh (MAusIMM), O Turkekul (APEGS)

Ore

Reserves

Jansen: J Sondergaard (MAusIMM)

Nickel

Mineral

Resources

Leinster: R Finch (MAusIMM), M Hope (MAusIMM),

G Merello (MAusIMM)

Mt Keith and Yakabindie: R Finch (MAusIMM)

Cliffs and Venus: G Merello (MAusIMM)

Jericho, Honeymoon Well: R Finch (MAusIMM)

and M Hope (MAusIMM)

West Jordan: M Hope (MAusIMM)

Nebo and Babel: P Ormond (MAusIMM)

Ore

Reserves

Leinster: B Hollins (MAusIMM); and G Williamson (FAusIMM)

employed by AMC Consultants

Mt Keith and Yakabindie: B Mullen (MAusIMM); and G Williamson

(FAusIMM) employed by AMC Consultants

Cliffs and Venus: B Hollins (MAusIMM)

Nebo and Babel: Y Sitorus (MAusIMM)

Annual Report compilation: F Bodycoat (MAusIMM), Resource Centre of

Excellence, BHP

224 BHP Annual Report 2023

5 Mineral Resources and Ore Reserves continued

1 Cut-off criteria:

Deposit Ore type Mineral Resources Ore Reserves

Escondida Oxide ≥ 0.20%SCu ≥ 0.20% SCu

Mixed ≥ 0.30%Cu −

Sulphide ≥ 0.25%Cu or ≥0.30%Cu depending on processing ≥ 0.30%Cu and greater than variable cut-off (V_COG) of the

concentrator. Sulphide ore is processed in the concentrator plants as

a result of an optimised mine plan with consideration of technical and

economical parameters in order to maximise net present value.

Sulphide Leach − ≥ 0.25%Cu and lower than V_COG and with >30% of copper carried

by more leachable copper minerals. Sulphide Leach ore is processed

by dump leaching as an alternative to the concentrator process.

Cerro Colorado Oxide & Supergene

Sulphide

≥ 0.25% Cu –

Transitional Sulphide

& Hypogene

Sulphide

≥ 0.20% Cu –

Spence All ore types ≥ 0.20% Cu ≥ 0.20%Cu

Pampa Escondida Sulphide ≥ 0.30% Cu –

Pinta Verde Oxide ≥ 0.20% Cu –

Sulphide ≥ 0.30% Cu –

Chimborazo Sulphide ≥ 0.30% Cu −

Pantera OC Sulphide ≥ 0.25% Cu −

Succoth OC Sulphide Net smelter return (NSR) cut-off of A$19/t which represents the mill-

limited break-even cut-off inclusive of processing, ore re-handling and

material handling costs per total tonne mined.

−

Pedra Branca UG Sulphide Cut-off based on NSR value of US$52/t. Cut-off based on NSR for two regions of the mine:

US$62/t above the upper mining level (925) and US$68/t

below the 925 mining level.

Carrapateena UG Sulphide Cut-off based on NSR value of A$25/t to generate a continuous shape

in which all material has the potential to be mined with block cave

mining method.

Cut-off based on NSR value of A$30/t for Block Cave 1 and

NSR A$34/t for Block Cave 2. Cut-off in the sub-level cave

varies by block between NSR A$65-90/t.

Prominent Hill UG Sulphide Cut-off based on NSR value of A$48/t, being life of mine break-even cut-

off of A$57/t multiplied by a factor of 0.83. An NSR of A$48/t is equivalent

to 0.52%Cu, 0.36g/tAu and 1.7g/tAg.

Cut-off varies with material handling requirements and is

between NSR value of A$65-75/t.

SP Sulphide & SP

Low-grade

Cut-off based on NSR value of A$17/t which is inclusive of re-handling

and processing costs.

Cut-off based on NSR value of A$17/t which is inclusive of

re-handling and processing costs.

Fremantle Doctor UG Sulphide Cut-off based on NSR value of A$25/t used to generate a continuous shape in

which all material has the potential to be mined with block caving method.

−

Copper

Mineral Resources

As at 30 June 2023 As at 30 June 2022

Commodity

deposit

Ore type

Measured Resources Indicated Resources

Inferred Resources Total Resources BHP

interest

Total Resources

Mt %Cu %SCu ppmMo g/tAu Mt %Cu %SCu ppmMo g/tAu Mt %Cu %SCu ppmMo g/tAu Mt %Cu %SCu ppmMo g/tAu Mt %Cu %SCu ppmMo g/tAu

Copper operations

Escondida

Oxide 84 0.57 – – – 22 0.58 – – – 5.0 0.65 – – – 111 0.58 – – – 57.5 126 0.58 – – –

Mixed 58 0.47 – – – 45 0.47 – – – 22 0.47 – – – 125 0.47 – – – 140 0.49 – – –

Sulphide 5,120 0.59 – – – 3,660 0.51 – – – 9,980 0.53 – – – 18,800 0.54 – – – 18,900 0.54 – – –

Cerro Colorado

Oxide 68 0.61 0.42 – – 113 0.62 0.44 – –

5.7 0.58 0.39 – – 187 0.62 0.43 – – 100 187 0.62 0.43 – –

Supergene Sulphide 48 0.58 0.11 – – 97 0.58 0.12 – – 22 0.64 0.13 – – 167 0.59 0.12 – – 167 0.59 0.12 – –

Transitional Sulphide 72 0.45 – – – 104 0.41 – – – 29 0.42 – – – 205 0.43 – – – 212 0.43 – – –

Hypogene Sulphide – – – – – – – – – – 1,700 0.36 – – – 1,700 0.36 – – – 1,690 0.36 – – –

Spence

Oxide 19 0.61 0.34 – – 1.6 0.58 0.41 – – – – – – – 21 0.61 0.35 – – 100 20 0.65 0.37 – –

Supergene Sulphide 90 0.54 0.11 – – 29 0.31 0.03 – – 0.3 0.42 0.09 – – 119 0.48 0.09 – – 100 0.55 0.10 – –

Transitional Sulphide 12 0.58 – 90 – 0.4 0.44 – 30 – – – – – – 12 0.58 – 90 – 16 0.59 – 90 –

Hypogene Sulphide 748 0.47 – 160 – 716 0.43 – 130 – 831 0.39 – 80 – 2,300 0.43 – 120 – 2,340 0.43 – 120 –

Copper projects

Pampa Escondida

Sulphide 294 0.53 – – 0.07 1,150 0.55 – – 0.10 5,420 0.44 – – 0.05 6,860 0.46 – – 0.06 57.5 6,890 0.46 – – 0.06

Pinta Verde

Oxide 109 0.60 – – – 64 0.53 – – – 15 0.54 – – – 188 0.57 – – – 57.5 188 0.57 – – –

Sulphide – – – – – 23 0.50 – – – 37 0.45 – – – 60 0.47 – – – 60 0.47 – – –

Chimborazo

Sulphide – – – – – 137 0.50 – – – 81 0.60 – – – 218 0.53 – – – 57.5 220 0.53 – – –

Pantera

OC Sulphide – – – – – 13 1.28 – – 0.17 7.1 1.09 – – 0.15 20 1.21 – – 0.17 100 – – – – –

Succoth

OC Sulphide – – – – – 61 0.57 – – – 57 0.52 – – – 120 0.54 – – – 100 – – – – –

Copper gold operations Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg

Pedra Branca

UG Sulphide 1.5 1.55 0.45 – 8.3 1.68 0.43 – 7.3 1.38 0.36 – 17 1.54 0.41 – 100 – – – –

Carrapateena

UG Sulphide 130 1.01 0.42 4 470 0.62 0.26 3 300 0.26 0.13 2 900 0.56 0.24 3 100 – – – –

Prominent Hill

UG Sulphide 45 1.17 0.59 3 51 0.86 0.89 2 66 0.85 0.90 2 162 0.94 0.81 3 100 – – – –

SP Sulphide 0.4 1.16 0.58 3 4.0 0.11 0.58 0.3 – – – – 4.4 0.19 0.58 0.5 – – – –

SP Low-grade – – – – 2.2 0.16 0.34 0.6 – – – – 2.2 0.16 0.34 0.6 – – – –

Copper gold project

Fremantle Doctor

UG Sulphide – – – – – – – – 100 0.51 0.33 1 100 0.51 0.33 1 100 – – – –

Copper uranium gold operation Mt %Cu kg/tU

g/tAu g/tAg Mt %Cu kg/tU

g/tAu g/tAg

Olympic Dam OC Sulphide 3,410 0.59 0.19 0.32 1 3,330 0.56 0.19 0.23 1 2,900 0.58 0.20 0.22 1 9,640 0.58 0.19 0.26 1 100 9,590 0.57 0.19 0.26 1

UG Sulphide 810 1.55 0.46 0.63 3 720 1.45 0.44 0.52 3 210 1.40 0.40 0.61 3 1,740 1.49 0.44 0.58 3 1,730 1.48 0.44 0.58 3

Copper zinc operation Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo

Antamina

Sulphide Cu only 190 0.81 0.14 7 270 392 0.83 0.14 9 260 603 0.85 0.14 8 240 1,190 0.84 0.14 8 250 33.75 1,210 0.82 0.14 8 250

Sulphide Cu-Zn 71 0.82 1.66 18 80 207 1.00 1.77 18 80 224 1.08 1.49 16 80 502 1.01 1.63 17 80 535 0.99 1.65 17 80

UG Sulphide Cu only – – – – – – – – – – 251 1.28 0.22 12 180 251 1.28 0.22 12 180 256 1.25 0.22 12 160

UG Sulphide Cu-Zn – – – – – – – – – – 166 1.14 1.41 16 60 166 1.14 1.41 16 60 158 1.16 1.41 15 60

Governance Financial Statements

BHP Annual Report 2023 225

Additional Information

Operating and Financial Review

Deposit Ore type Mineral Resources Ore Reserves

Olympic Dam OC Sulphide Variable between 0.1%Cu and 0.3%Cu −

UG Sulphide Variable between 0.6%Cu and 1.0%Cu Variable between 1.0%Cu and 1.7%Cu

Low-grade − ≥ 0.6% Cu

Antamina Sulphide Cu

only

Net value per concentrator hour (US$/hr) incorporating all material

revenue and cost factors and includes metallurgical recovery (see

footnote 9 for averages). Mineralisation at the US$0/hr limit is

approximately equivalent to 0.17%Cu, 2.4g/tAg, 130ppmMo with 7,147t/

hr mill throughput.

Net value per concentrator hour (US$/hr) incorporating all

material revenue and cost factors and includes metallurgical

recovery (see footnote 9 for averages). Mineralisation at the

US$6,000/hr limit is approximately equivalent to 0.17%Cu,

3.1g/tAg, 160ppmMo with 7,147t/hr mill throughput.

Sulphide Cu-Zn Net value per concentrator hour (US$/hr) incorporating all material

revenue and cost factors and includes metallurgical recovery (see

footnote 9 for averages). Mineralisation at the US$0/hr limit is

approximately equivalent to 0.05%Cu, 0.76%Zn, 2.1g/tAg with 6,392t/hr

mill throughput.

Net value per concentrator hour (US$/hr) incorporating all

material revenue and cost factors and includes metallurgical

recovery (see footnote 9 for averages). Mineralisation at the

US$6,000/hr limit

is approximately equivalent to 0.05%Cu, 0.83%Zn, 2.4g/tAg

with 6,392t/hr mill throughput.

UG Sulphide Cu

only

NSR value incorporating all material revenue and includes metallurgical

recovery. Only sub-level stoping mining method at US$53.8/t break-even

cut-off was applied, equivalent to 0.84%Cu, 8.8g/tAg and 140ppmMo.

Predicted metallurgical recoveries of 93% for Cu, 82% for Ag and 55%

for Mo.

–

UG Sulphide

Cu-Zn

NSR value incorporating all material revenue and includes metallurgical

recovery. Only sub-level stoping mining method at US$53.8/t break-even

cut-off was applied, equivalent to 0.65%Cu, 1.00%Zn and 11.9g/tAg.

Predicted metallurgical recoveries of 84% for Cu, 83% for Zn and 84%

for Ag.

–

2 %Cu is equivalent to %TCu which has been reported previously for copper operations and projects in Chile (Escondida, Cerro Colorado, Spence, Pampa Escondida, Pinta Verde

and Chimborazo).

3 Escondida – The decrease in Oxide and Mixed ore types was mainly due to depletion.

4 Spence – The increase in Oxide ore type was due to changes in economic parameters partially offset by depletion. The increase in Supergene Sulphide ore type was due to the

inclusion of economically viable reprocessed material which was previously not included. The decrease in Transitional Sulphide ore type was mainly due to depletion.

5 First-time reporting of Pantera, Succoth, Pedra Branca, Prominent Hill, Carrapateena and Fremantle Doctor deposits after the acquisition of OZ Minerals Ltd on 2 May 2023.

6 Antamina – The decrease in Sulphide Cu only ore type and increase in UG Sulphide Cu-Zn ore type was due to a resource estimate update supported by additional drilling.

Copper

Mineral Resources

As at 30 June 2023 As at 30 June 2022

Commodity

deposit

Ore type

Measured Resources Indicated Resources

Inferred Resources Total Resources BHP

interest

Total Resources

Mt %Cu %SCu ppmMo g/tAu Mt %Cu %SCu ppmMo g/tAu Mt %Cu %SCu ppmMo g/tAu Mt %Cu %SCu ppmMo g/tAu Mt %Cu %SCu ppmMo g/tAu

Copper operations

Escondida

Oxide 84 0.57 – – – 22 0.58 – – – 5.0 0.65 – – – 111 0.58 – – – 57.5 126 0.58 – – –

Mixed 58 0.47 – – – 45 0.47 – – – 22 0.47 – – – 125 0.47 – – – 140 0.49 – – –

Sulphide 5,120 0.59 – – – 3,660 0.51 – – – 9,980 0.53 – – – 18,800 0.54 – – – 18,900 0.54 – – –

Cerro Colorado

Oxide 68 0.61 0.42 – – 113 0.62 0.44 – –

5.7 0.58 0.39 – – 187 0.62 0.43 – – 100 187 0.62 0.43 – –

Supergene Sulphide 48 0.58 0.11 – – 97 0.58 0.12 – – 22 0.64 0.13 – – 167 0.59 0.12 – – 167 0.59 0.12 – –

Transitional Sulphide 72 0.45 – – – 104 0.41 – – – 29 0.42 – – – 205 0.43 – – – 212 0.43 – – –

Hypogene Sulphide – – – – – – – – – – 1,700 0.36 – – – 1,700 0.36 – – – 1,690 0.36 – – –

Spence

Oxide 19 0.61 0.34 – – 1.6 0.58 0.41 – – – – – – – 21 0.61 0.35 – – 100 20 0.65 0.37 – –

Supergene Sulphide 90 0.54 0.11 – – 29 0.31 0.03 – – 0.3 0.42 0.09 – – 119 0.48 0.09 – – 100 0.55 0.10 – –

Transitional Sulphide 12 0.58 – 90 – 0.4 0.44 – 30 – – – – – – 12 0.58 – 90 – 16 0.59 – 90 –

Hypogene Sulphide 748 0.47 – 160 – 716 0.43 – 130 – 831 0.39 – 80 – 2,300 0.43 – 120 – 2,340 0.43 – 120 –

Copper projects

Pampa Escondida

Sulphide 294 0.53 – – 0.07 1,150 0.55 – – 0.10 5,420 0.44 – – 0.05 6,860 0.46 – – 0.06 57.5 6,890 0.46 – – 0.06

Pinta Verde

Oxide 109 0.60 – – – 64 0.53 – – – 15 0.54 – – – 188 0.57 – – – 57.5 188 0.57 – – –

Sulphide – – – – – 23 0.50 – – – 37 0.45 – – – 60 0.47 – – – 60 0.47 – – –

Chimborazo

Sulphide – – – – – 137 0.50 – – – 81 0.60 – – – 218 0.53 – – – 57.5 220 0.53 – – –

Pantera

OC Sulphide – – – – – 13 1.28 – – 0.17 7.1 1.09 – – 0.15 20 1.21 – – 0.17 100 – – – – –

Succoth

OC Sulphide – – – – – 61 0.57 – – – 57 0.52 – – – 120 0.54 – – – 100 – – – – –

Copper gold operations Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg

Pedra Branca

UG Sulphide 1.5 1.55 0.45 – 8.3 1.68 0.43 – 7.3 1.38 0.36 – 17 1.54 0.41 – 100 – – – –

Carrapateena

UG Sulphide 130 1.01 0.42 4 470 0.62 0.26 3 300 0.26 0.13 2 900 0.56 0.24 3 100 – – – –

Prominent Hill

UG Sulphide 45 1.17 0.59 3 51 0.86 0.89 2 66 0.85 0.90 2 162 0.94 0.81 3 100 – – – –

SP Sulphide 0.4 1.16 0.58 3 4.0 0.11 0.58 0.3 – – – – 4.4 0.19 0.58 0.5 – – – –

SP Low-grade – – – – 2.2 0.16 0.34 0.6 – – – – 2.2 0.16 0.34 0.6 – – – –

Copper gold project

Fremantle Doctor

UG Sulphide – – – – – – – – 100 0.51 0.33 1 100 0.51 0.33 1 100 – – – –

Copper uranium gold operation Mt %Cu kg/tU

g/tAu g/tAg Mt %Cu kg/tU

g/tAu g/tAg

Olympic Dam OC Sulphide 3,410 0.59 0.19 0.32 1 3,330 0.56 0.19 0.23 1 2,900 0.58 0.20 0.22 1 9,640 0.58 0.19 0.26 1 100 9,590 0.57 0.19 0.26 1

UG Sulphide 810 1.55 0.46 0.63 3 720 1.45 0.44 0.52 3 210 1.40 0.40 0.61 3 1,740 1.49 0.44 0.58 3 1,730 1.48 0.44 0.58 3

Copper zinc operation Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo

Antamina

Sulphide Cu only 190 0.81 0.14 7 270 392 0.83 0.14 9 260 603 0.85 0.14 8 240 1,190 0.84 0.14 8 250 33.75 1,210 0.82 0.14 8 250

Sulphide Cu-Zn 71 0.82 1.66 18 80 207 1.00 1.77 18 80 224 1.08 1.49 16 80 502 1.01 1.63 17 80 535 0.99 1.65 17 80

UG Sulphide Cu only – – – – – – – – – – 251 1.28 0.22 12 180 251 1.28 0.22 12 180 256 1.25 0.22 12 160

UG Sulphide Cu-Zn – – – – – – – – – – 166 1.14 1.41 16 60 166 1.14 1.41 16 60 158 1.16 1.41 15 60

226 BHP Annual Report 2023

5 Mineral Resources and Ore Reserves continued

7 Approximate drill-hole spacings used to classify the reserves were:

Deposit Proved Reserves Probable Reserves

Escondida Oxide: 30m × 30m Oxide: 45m × 45m

Sulphide: 50m × 50m Sulphide: 90m × 90m

Sulphide Leach: 60m × 60m Sulphide Leach: 115m × 115m

Spence Oxide: 50m × 50m

100m × 100m for all ore types

Supergene Sulphide, Transitional Sulphide & Hypogene

Sulphide: 70m × 70m

Pedra Branca 25m × 50m 50m × 50m

Carrapateena − 25m to 100m

Prominent Hill <35m 35m to 75m

Olympic Dam 20m to 35m 35m to 70m

Antamina 25m to 45m 40m to 80m

8 Ore delivered to process plant.

9 Metallurgical recoveries for the operations were:

Deposit Metallurgical recovery

Escondida Oxide: 54%

Sulphide: 85%

Sulphide Leach: 42%

Spence Oxide: 80%

Supergene Sulphide: 81%

Carrapateena Cu 91%, Au 78%, Ag 71%

Prominent Hill UG and SP: Cu 86%, Au 83%, Ag 75%

SP Low-grade: Cu 65%, Au 55%

Olympic Dam Cu 94%, U3O8 68%, Au 70%, Ag 63%

Antamina Sulphide Cu only: Cu 93%, Zn 0%, Ag 82%, Mo 55%

Sulphide Cu-Zn: Cu 84%, Zn 83%, Ag 84%, Mo 0%

10 Metallurgical recoveries based on testwork:

Deposit Metallurgical recovery

Spence Transitional Sulphide and Hypogene Sulphide: Cu 87%, Mo

variable depending on mineralogy

Pedra Branca Cu 83-95%, Au 53-72%

11 Escondida – The decrease in Oxide and Sulphide ore types was mainly due to depletion. Oxide and Sulphide Leach ore types contribute 8 years and 29 years respectively to

the reported reserve life.

12 Cerro Colorado – Ore Reserves were depleted and the mining permit expires in December 2023.

13 Spence – The increase in Oxide ore type was due to a change in cut-off grade partially offset by depletion. The increase in Supergene ore type was due to changes in model

inputs partially offset by depletion The decrease in Transitional Sulphide ore type was mainly due to depletion. The decrease in Hypogene Sulphide ore type was mainly due

to changes in modifying factors and depletion.

14 Antamina – The decrease in Ore Reserves and reserve life was mainly due to depletion.

Copper

Ore Reserves

As at 30 June 2023 As at 30 June 2022

Commodity

deposit

1,7,8,9,10

Ore type

Proved Reserves Probable Reserves

Total Reserves Reserve

life

(years)

BHP

interest

Total Reserves Reserve

life

(years)

Mt %Cu %SCu ppmMo Mt %Cu %SCu ppmMo Mt %Cu %SCu ppmMo Mt %Cu %SCu ppmMo

Copper operations

Escondida

Oxide 119 0.52 – – 39 0.51 – – 158 0.52 – – 55 57.5 182 0.56 – – 57

Sulphide 3,140 0.69 – – 1,640 0.57 – – 4,780 0.64 – – 4,910 0.65 – –

Sulphide Leach 1,380 0.41 – – 270 0.41 – – 1,650 0.41 – – 1,650 0.42 – –

Cerro Colorado

Oxide – – – – – – – – – – – – 100 2.2 0.35 0.25 – 1.5

Supergene Sulphide – – – – – – – – – – – – 1.0 0.50 0.08 –

Transitional Sulphide – – – – – – – – – – – – 6.2 0.50 – –

Spence

Oxide 18 0.63 0.34 – 0.3 0.55 0.38 – 18 0.63 0.34 – 39 100 17 0.67 0.38 – 40

Supergene Sulphide 71 0.54 0.10 – 44 0.40 0.07 – 115 0.49 0.09 – 99 0.55 0.10 –

Transitional Sulphide 12 0.58 – 90 0.3 0.45 – 40 12 0.58 – 90 16 0.59 – 90

Hypogene Sulphide 704 0.47 – 160 509 0.45 – 110 1,210 0.46 – 140 1,410 0.45 – 150

Copper gold operations Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg

Pedra Branca

UG Sulphide 0.6 1.66 0.49 – 2.8 2.06 0.53 – 3.4 1.99 0.52 – 4.3 100 – – – – –

Carrapateena

UG Sulphide – – – – 189 1.04 0.41 4 189 1.04 0.41 4 22 100 – – – – –

Prominent Hill

UG Sulphide 24 1.19 0.56 3 30 0.84 0.71 2 54 0.99 0.64 3 10 100 – – – – –

SP Sulphide 0.4 1.16 0.58 3 4.0 0.11 0.58 0.3 4.4 0.19 0.58 0.5 – – – –

SP Low-grade – – – – 2.2 0.16 0.34 0.6 2.2 0.16 0.34 0.6 – – – –

Copper uranium gold operation Mt %Cu kg/tU

g/tAu g/tAg Mt %Cu kg/tU

g/tAu g/tAg

Olympic Dam

UG Sulphide 298 1.93 0.59 0.74 4 292 1.70 0.56 0.60 4

590 1.82 0.58 0.67 4 58 100 585 1.82 0.56 0.67 5 57

Low-grade – – – – – 44 0.79 0.27 0.34 2 44 0.79 0.27 0.34 2 42 0.81 0.27 0.33 2

Copper zinc operation Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo

Antamina

Sulphide Cu only 102 0.89 0.14 7 350 71 1.00 0.17 9 340 173 0.94 0.15 8 350 5 33.75 199 0.95 0.16 8 360 5.9

Sulphide Cu-Zn 33 0.91 1.85 14 90 47 1.03 1.92 16 80 80 0.98 1.89 15 80 111 0.93 1.97 14 80

Governance Financial Statements

BHP Annual Report 2023 227

Additional Information

Operating and Financial Review

Copper

Ore Reserves

As at 30 June 2023 As at 30 June 2022

Commodity

deposit

1,7,8,9,10

Ore type

Proved Reserves Probable Reserves

Total Reserves Reserve

life

(years)

BHP

interest

Total Reserves Reserve

life

(years)

Mt %Cu %SCu ppmMo Mt %Cu %SCu ppmMo Mt %Cu %SCu ppmMo Mt %Cu %SCu ppmMo

Copper operations

Escondida

Oxide 119 0.52 – – 39 0.51 – – 158 0.52 – – 55 57.5 182 0.56 – – 57

Sulphide 3,140 0.69 – – 1,640 0.57 – – 4,780 0.64 – – 4,910 0.65 – –

Sulphide Leach 1,380 0.41 – – 270 0.41 – – 1,650 0.41 – – 1,650 0.42 – –

Cerro Colorado

Oxide – – – – – – – – – – – – 100 2.2 0.35 0.25 – 1.5

Supergene Sulphide – – – – – – – – – – – – 1.0 0.50 0.08 –

Transitional Sulphide – – – – – – – – – – – – 6.2 0.50 – –

Spence

Oxide 18 0.63 0.34 – 0.3 0.55 0.38 – 18 0.63 0.34 – 39 100 17 0.67 0.38 – 40

Supergene Sulphide 71 0.54 0.10 – 44 0.40 0.07 – 115 0.49 0.09 – 99 0.55 0.10 –

Transitional Sulphide 12 0.58 – 90 0.3 0.45 – 40 12 0.58 – 90 16 0.59 – 90

Hypogene Sulphide 704 0.47 – 160 509 0.45 – 110 1,210 0.46 – 140 1,410 0.45 – 150

Copper gold operations Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg Mt %Cu g/tAu g/tAg

Pedra Branca

UG Sulphide 0.6 1.66 0.49 – 2.8 2.06 0.53 – 3.4 1.99 0.52 – 4.3 100 – – – – –

Carrapateena

UG Sulphide – – – – 189 1.04 0.41 4 189 1.04 0.41 4 22 100 – – – – –

Prominent Hill

UG Sulphide 24 1.19 0.56 3 30 0.84 0.71 2 54 0.99 0.64 3 10 100 – – – – –

SP Sulphide 0.4 1.16 0.58 3 4.0 0.11 0.58 0.3 4.4 0.19 0.58 0.5 – – – –

SP Low-grade – – – – 2.2 0.16 0.34 0.6 2.2 0.16 0.34 0.6 – – – –

Copper uranium gold operation Mt %Cu kg/tU

g/tAu g/tAg Mt %Cu kg/tU

g/tAu g/tAg

Olympic Dam

UG Sulphide 298 1.93 0.59 0.74 4 292 1.70 0.56 0.60 4

590 1.82 0.58 0.67 4 58 100 585 1.82 0.56 0.67 5 57

Low-grade – – – – – 44 0.79 0.27 0.34 2 44 0.79 0.27 0.34 2 42 0.81 0.27 0.33 2

Copper zinc operation Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo Mt %Cu %Zn g/tAg ppmMo

Antamina

Sulphide Cu only 102 0.89 0.14 7 350 71 1.00 0.17 9 340 173 0.94 0.15 8 350 5 33.75 199 0.95 0.16 8 360 5.9

Sulphide Cu-Zn 33 0.91 1.85 14 90 47 1.03 1.92 16 80 80 0.98 1.89 15 80 111 0.93 1.97 14 80

228 BHP Annual Report 2023

5 Mineral Resources and Ore Reserves continued

1 The Mineral Resources and Ore Reserves qualities listed refer to in situ mass percentage on a dry weight basis. Wet tonnes are reported for WAIO deposits and Samarco,

including moisture contents for WAIO: BKM – Brockman 3%, CID – Channel Iron Deposits 8%, DID – Detrital Iron Deposits 4%, MM – Marra Mamba 4%, NIM – Nimingarra

3.5% and Samarco: ROM – 6.5%.

2 A single cut-off grade was applied in WAIO per deposit ranging from 50-58%Fe with an additional threshold of <6%Al

applied to the DID ore type. For Samarco the cut-off

grade was 22%Fe.

3 WAIO – Mineral Resources and Ore Reserves are reported on a Pilbara basis by ore type to align with our production of blended lump products which comprises BKM and

MM ore types and blended fines products including CID. This also reflects our single logistics chain and associated management system.

4 WAIO – BHP interest is reported as Pilbara Ore Reserves tonnes weighted average across all joint ventures which can vary from year to year. BHP ownership varies between

85% and 100%.

5 WAIO – Mineral Resources are restricted to areas which have been identified for inclusion based on a risk assessment, including heritage sites.

6 Samarco – The decrease in Mineral Resources is due to the exclusion of environmentally sensitive areas.

Iron Ore

Mineral Resources

As at 30 June 2023 As at 30 June 2022

Commodity

deposit

1,2

Ore type

Measured Resources Indicated Resources

Inferred Resources Total Resources BHP

interest

Total Resources

Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI

Iron ore operations

WAIO

3,4,5

BKM 2,820 60.6 0.14 4.8 2.6 5.3 5,350 59.7 0.14 5.3 2.6 6.1 11,710 58.7 0.14 5.8 2.7 6.7 19,880 59.3 0.14 5.5 2.6 6.4 85 20,260 59.3 0.14 5.5 2.6 6.3

CID 340 55.8 0.05 6.3 2.3 11.0 350 56.2 0.06 6.5 2.3 10.3 870 54.7 0.06 6.8 3.0 11.1 1,560 55.3 0.06 6.6 2.7 10.9 1,570 55.3 0.06 6.6 2.7 10.9

DID – – – – – – 190 61.8 0.06 3.8 3.5 3.5 70 60.1 0.06 4.9 4.2 4.2 260 61.3 0.06 4.1 3.7 3.7 260 61.3 0.06 4.0 3.7 3.7

MM 1,610 61.5 0.07 3.3 1.8 6.3 1,770 59.7 0.06 4.7 2.2 7.0 4,640 59.1 0.07 5.1 2.4 7.2 8,020 59.7 0.07 4.7 2.2 7.0 8,180 59.8 0.07 4.6 2.2 7.0

NIM 10 59.0 0.08 10.1 1.2 3.9 120 61.6 0.06 8.0 1.1 1.6 70 60.4 0.05 10.0 1.2 1.7 200 61.1 0.06 8.8 1.1 1.8 200 61.1 0.06 8.8 1.2 1.8

Samarco

ROM 3,070 39.3 0.05 1,720 37.7 0.05 420 37.4 0.06 5,210 38.6 0.05 50 5,630 38.5 0.05

Ore Reserves

As at 30 June 2023 As at 30 June 2022

Commodity

deposit Ore type

Proved Reserves Probable Reserves

Total Reserves Reserve

life

(years)

BHP

interest

Total Reserves Reserve

life

(years)

Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI

Iron ore operation

WAIO

1,3,4,7,8,9,10,11,12

BKM 1,410 62.2 0.13 3.5 2.4 4.5 1,040 61.5 0.13 4.1 2.3 5.1 2,450 61.9 0.13 3.7 2.3 4.8 15 85 2,680 62.1 0.13 3.6 2.3 4.7 16

CID 50 56.6 0.05 5.5 1.8 11.2 10 57.4 0.05 4.8 1.8 10.9 60 56.6 0.05 5.5 1.8 11.2 60 57.0 0.05 5.4 1.6 11.0

MM 760 62.3 0.06 2.9 1.6 5.9 1,050 61.3 0.06 3.4 1.8 6.6 1,810 61.7 0.06 3.2 1.7 6.3 1,900 61.7 0.06 3.2 1.7 6.4

1 Tonnages are reported on an in situ moisture basis. Coal qualities are for a potential product on an air-dried basis.

2 Cut-off criteria:

Deposit Mining method Coal Resources Coal Reserves

Goonyella Complex OC ≥ 0.5m seam thickness, core yield ≥ 50% and ≤ 35% raw ash ≥ 0.5m seam thickness

UG ≥ 2.0m seam thickness, core yield ≥ 50% and ≤ 35% raw ash ≥ 2.5m seam thickness

Peak Downs OC ≥ 0.5m seam thickness and ≤ 35% raw ash ≥ 0.5m seam thickness

Caval Ridge OC ≥ 0.3m seam thickness and core yield ≥ 30% ≥ 0.4m seam thickness

Saraji

OC ≥ 0.5m seam thickness, core yield ≥ 35% and ≤ 35% raw ash ≥ 0.5m seam thickness

UG ≥ 2.0m seam thickness, core yield ≥ 35% and ≤ 35% raw ash –

Saraji South OC ≥ 0.5m seam thickness, core yield ≥ 50% ≥ 0.5m seam thickness

Blackwater OC ≥ 0.3m seam thickness, core yield ≥ 50% and ≤ 40% raw ash ≥ 0.3m seam thickness

UG ≥ 2.0m seam thickness, core yield ≥ 50% and ≤ 40% raw ash –

Daunia OC ≥ 0.3m seam thickness, core yield ≥ 50% and ≤ 35% raw ash ≥ 0.3m seam thickness

Metallurgical Coal

Coal Resources

As at 30 June 2023 As at 30 June 2022

Commodity

deposit

1,2

Mining

method

Coal

type

Measured Resources Indicated Resources

Inferred Resources Total Resources BHP

interest

Total Resources

Mt %Ash %VM %S Mt %Ash %VM %S Mt %Ash %VM %S Mt %Ash %VM %S Mt %Ash %VM %S

Metallurgical coal operations

Queensland coal

CQCA JV

Goonyella Complex OC Met 608 8.7 21.9 0.51 122 9.3 22.0 0.53

50 12.4 24.8 0.59 780 9.0 22.1 0.52 50 795 9.0 22.1 0.52

UG Met 1,416 9.8 20.8 0.53 423 10.3 19.4 0.54 662 9.3 18.9 0.51 2,501 9.7 20.0 0.52 2,508 9.7 20.0 0.52

Peak Downs OC Met 1,041 10.4 19.2 0.61 568 11.3 19.1 0.68 366 11.9 20.3 0.74 1,975 10.9 19.4 0.65 50 1,944 10.5 19.4 0.63

Caval Ridge OC Met 292 12.3 22.0 0.56 214 11.9 20.1 0.56 147 11.9 18.8 0.49 653 12.1 20.7 0.54 50 666 12.1 20.7 0.54

Saraji OC Met/Th 1,118 10.4 16.9 0.62 506 11.0 16.0 0.68 463 12.2 15.7 0.67 2,087 11.0 16.4 0.65 50 2,100 11.0 16.4 0.65

UG Met/Th 81 9.5 15.7 0.56 164 11.0 16.3 0.59 200 13.1 16.3 0.60 445 11.7 16.2 0.59 445 11.7 16.2 0.59

Saraji South OC Met 281 9.4 17.2 0.66 126 9.7 17.2 0.72 84 10.5 16.8 0.74 491 9.7 17.1 0.69 50 491 9.7 17.1 0.69

Blackwater OC Met/Th 308 5.2 29.6 0.42 528 5.5 29.7 0.44 779 6.6 29.8 0.43 1,615 6.0 29.7 0.43 50 1,628 6.0 29.7 0.43

UG Met/Th – – – – – – – – 222 7.2 29.1 0.36 222 7.2 29.1 0.36 222 7.2 29.1 0.36

Daunia OC Met/Th 87 12.9 20.2 0.42 19 18.8 18.9 0.43 9 30.2 17.1 0.35 115 15.1 19.8 0.42 50 120 15.1 19.8 0.42

Governance Financial Statements

BHP Annual Report 2023 229

Additional Information

Operating and Financial Review

Iron Ore

Mineral Resources

As at 30 June 2023 As at 30 June 2022

Commodity

deposit

1,2

Ore type

Measured Resources Indicated Resources

Inferred Resources Total Resources BHP

interest

Total Resources

Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI

Iron ore operations

WAIO

3,4,5

BKM 2,820 60.6 0.14 4.8 2.6 5.3 5,350 59.7 0.14 5.3 2.6 6.1 11,710 58.7 0.14 5.8 2.7 6.7 19,880 59.3 0.14 5.5 2.6 6.4 85 20,260 59.3 0.14 5.5 2.6 6.3

CID 340 55.8 0.05 6.3 2.3 11.0 350 56.2 0.06 6.5 2.3 10.3 870 54.7 0.06 6.8 3.0 11.1 1,560 55.3 0.06 6.6 2.7 10.9 1,570 55.3 0.06 6.6 2.7 10.9

DID – – – – – – 190 61.8 0.06 3.8 3.5 3.5 70 60.1 0.06 4.9 4.2 4.2 260 61.3 0.06 4.1 3.7 3.7 260 61.3 0.06 4.0 3.7 3.7

MM 1,610 61.5 0.07 3.3 1.8 6.3 1,770 59.7 0.06 4.7 2.2 7.0 4,640 59.1 0.07 5.1 2.4 7.2 8,020 59.7 0.07 4.7 2.2 7.0 8,180 59.8 0.07 4.6 2.2 7.0

NIM 10 59.0 0.08 10.1 1.2 3.9 120 61.6 0.06 8.0 1.1 1.6 70 60.4 0.05 10.0 1.2 1.7 200 61.1 0.06 8.8 1.1 1.8 200 61.1 0.06 8.8 1.2 1.8

Samarco

ROM 3,070 39.3 0.05 1,720 37.7 0.05 420 37.4 0.06 5,210 38.6 0.05 50 5,630 38.5 0.05

Ore Reserves

As at 30 June 2023 As at 30 June 2022

Commodity

deposit Ore type

Proved Reserves Probable Reserves

Total Reserves Reserve

life

(years)

BHP

interest

Total Reserves Reserve

life

(years)

Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI Mt %Fe %P %SiO

%Al

%LOI

Iron ore operation

WAIO

1,3,4,7,8,9,10,11,12

BKM 1,410 62.2 0.13 3.5 2.4 4.5 1,040 61.5 0.13 4.1 2.3 5.1 2,450 61.9 0.13 3.7 2.3 4.8 15 85 2,680 62.1 0.13 3.6 2.3 4.7 16

CID 50 56.6 0.05 5.5 1.8 11.2 10 57.4 0.05 4.8 1.8 10.9 60 56.6 0.05 5.5 1.8 11.2 60 57.0 0.05 5.4 1.6 11.0

MM 760 62.3 0.06 2.9 1.6 5.9 1,050 61.3 0.06 3.4 1.8 6.6 1,810 61.7 0.06 3.2 1.7 6.3 1,900 61.7 0.06 3.2 1.7 6.4

7 Approximate drill-hole spacings used to classify the reserves were:

Deposit Proved Reserves Probable Reserves

WAIO 50m × 50m 150m × 50m

8 WAIO – Recovery was 100% for all ore types (tonnage basis).

9 WAIO – Iron ore is marketed for WAIO as Lump (direct blast furnace feed) and Fines (sinter plant feed).

10 WAIO – Cut-off grades used to estimate Ore Reserves range from 50–62%Fe for all material types. Ore delivered to process facility.

11 WAIO – Ore Reserves are all located on State Agreement mining leases that guarantee the right to mine. Across WAIO, State Government approvals (including

environmental and heritage clearances) are required before commencing mining operations in a particular area. Included in the Ore Reserves are select areas where one

or more approvals remain outstanding, but where, based on the technical investigations carried out as part of the mine planning process and company knowledge and

experience of the approvals process, it is expected that such approvals will be obtained as part of the normal course of business and within the time frame required by the

current mine schedule.

12 WAIO – The decrease in BKM ore type and reserve life was due to depletion and changes in modifying factors.